BusinessDay 28 Aug 2018 by BusinessDay

Dear PMB, the Rule of Law is sacrosanct in democracy

resident Muhammadu Buhari again pushed the narrative against the observance of the rule of law at the weekend as he asserted that security and national interest should precede considerations of legality. Mr

Editorial President chose the 58th Annual Conference of the Nigerian Bar Association to make this assertion aimed at furthering a gradual but surefooted descent

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news you can trust I **TUESDAY 28 AUGUST 2018 I vol. 15, no 127 I N300

Buhari

into illiberalism and dictatorship. It is the wrong path.

The presidential declaration builds on the agenda initially floated by the Minister of Justice and Attorney-General of the Federation, Abubakar Malami. Defending the intransigence of the Federal Government regarding court orders on the release of former National Security Adviser Col Sambo Dasuki, Malami ar-

As GDP expands at fraction of potential Economists fear ‘lost decade’ as risk of double-dip recession increases •See GDP report analysis on pages A3-A6

xactly one year since Nigeria recovered from the economic recession; National Bureau of Statistics (NBS) yesterday announced that the country recorded national output of N16.58trillion, representing a growth of 1.50 percent in the second quarter (Q2) of the year which is significantly below the 7+ percent growth potential of the national economy. For the second consecutive quarter this year, economic growth has declined causing economists to wonder if the same trend will continue in the last two quarters of the year. A further decline in the growth

L-R: Mitchell Elegbe, group managing director, Interswitch Group; Cherry Eremosele, group chief product and marketing officer, Interswitch Group; Eloho Omame, managing director, Endeavour Nigeria, and Yinka Sanni, managing director/CEO, Stanbic IBTC Holdings plc., at the Interswitch Spark National Science Competition Masterclass I.O, in Lagos, yesterday.

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Pic by Pius Okeosisi

he current earnings season saw some companies report betterthan-expected profits, but shareholders did not seem impressed as they saw a decline in their share prices from the day

their first half (H1) 2018 report was released till the closing of market on Friday, 24th of August. BusinessDay analysis of companies that make up the NSE 30 Index (equivalent to 96 percent of total market capitalisation) showed that 7 companies that reported increased earnings had a decline in their share prices.

Analysis: Aramco’s difficult listing shows uncertainty over future of oil DIPO OLADEHINDE

wo years after, Saudi Arabia’s reforming young prince told the world he planned to sell shares in the kingdom’s crown jewel Saudi Aramco, the project seems to be fading as a combination of hubris on the valuation, an overambitious timetable, and Continues on page 34

Trump stirs controversy with ‘lifeless’ view of Buhari MICHEAL ANI, OWEDE AGBAJILEKE, Abuja & Christopher Akor

Investors sell first, ask questions later as earnings growth fails to boost stocks Cynthia Ikwuetoghu & Oghogho Edosomwan

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Buhari’s economic results fall short three years in EMEKA UCHEAGA & OMOBOLA ADU

gued that the rights of the nation are more important than that of an individual, claiming that Dasuki was responsible for the deaths of more than 100, 000 citizens. It was therefore okay to deny him his rights, in the Malami thesis.

Seplat Plc, which posted an earnings growth of 76.04 percent in H1 experienced a decline of 5.5 percent in its share price from N687.5 on July 30th, the day their financial result was released to N650 as of the close of the market on Friday. Transcorp Plc, with an earnings growth of 82.56 percent had

a 9.4 decrease in its share from N7.45 on July 27th to N6.75 on Friday. Guaranty Trust Bank (GTB) Plc reported a profit growth of 14.22 percent in its first half results but its share price has fallen by 3.9 percent from N39 on Continues on page 35

merican President Donald Trump is fuelling fresh controversy with revelation Monday that he described Nigeria’s President Muhammadu Buhari as “lifeless,” a global business Newspaper Financial Times reported. “The first meeting with Nigeria’s ailing 75-year-old MuhamContinues on page 34

Inside INEC Budget: National Assembly rejects N189bn, insists on N143bn P. 2

BUSINESS DAY

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businessday market monitor Commodities

NSE

Brent Oil

Biggest Gainer

Biggest Loser

$75.96

Total N181

Dangcem N230

Cocoa

US $2,342.00

1.91 pc

35,311.36

₦2,355,896.08

-2.13 pc

FMDQ Close

Everdon Bureau De Change

Bitcoin

Buy

+1.03 pc

Sell

Foreign Exchange

$-N 357.00 360.00 Market Spot ($/N) £-N 458.00 466.00 I&E FX Window 363.00 €-N 405.00 413.00 CBN Official Rate 306.10

3M 6M -0.23 0.00 11.18 13.24

Currency Futures ($/N)

fgn bonds

Treasury Bills 0.03

10 Y 0.18

20 Y 0.00

14.61

14.95

14.90

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

0.00 363.58

Apapa gridlock: Cocoa exporters count cost, importers’ margins eroded CHUKA UROKO, OGHOGHO EDOSOMWAN & SOBECHUKWU EZE

he gridlock and congestion which have become major features of Apapa, Nigeria’s premier port city, have continued to take their toll on both exporters and importers who make use of the two ports in Apapa for their export and import activities. Long travel time to Apapa from other parts of Nigeria which has graduated from days to weeks on a single trip is impacting significantly on businesses, increasing costs for exporters and eroding importers’ margins. About 30,000 metric tonnes of cocoa on its way to Apapa port was trapped recently, leading to huge expenses by exporters. Going to Apapa and Tin Can Island ports that previously took hours, now take almost four weeks as trucks struggle through craters, ditches and waterlogged roads to get there. “Export cargoes are either trapped in traffic jams or stored in transit warehouses in Lagos,” explained Pius Ayodele, president of the Cocoa Exporters Association of Nigeria. Wale Shittu, managing director of Agrotrack Limited, a cocoa-buying company, agrees, adding that farmgate cocoa prices have dropped as demand slowed because of difficulties in reaching the ports. Prices, he said, have fallen from N800, 000 ($2,208) per ton in July to N640,000 at the moment.

Nigeria currently ranks 5th alongside Cameroon as the world’s biggest cocoa producers. Its 2017 to 2018 output was estimated at 240,000 metric tonnes by the International Cocoa Organization (ICO). Akin Olusuyi, President of the Cocoa Processors Association of Nigeria, noted that “shipment delays are making it difficult for exporters to get credit from banks to finance their operations and about 1,760 tons of cocoa butter and cake are held up in the gridlock to the ports.” “Most of them have been in the traffic to the ports for close to three weeks and are still far away from the gates. The cargoes that would have translated into export proceeds for us are locked up in that horrific traffic,” Olusuyi added. Muda Yusuf, the Director General of the Lagos Chambers of Commerce Industry (LCCI), in an interview with Bloomberg, noted that “haulage costs have gone up about 400 percent because of the turnaround time to get to the ports, that is, the time it takes to get loaded and get out of the ports. This will either erode the profit margins of companies or get passed on to consumers.” The gridlock is affecting imports activities negatively as much as it affects exports. Activities ranging from cocoa exports to gasoline imports are down because of poor road infrastructure and congestion which dates back to neglect from successive

Suzanne Elumelu, celebrant, (sitting) flanked by her sons, Tony Elumelu, chairman, Heirs Holdings (2nd r); Peter Elumelu (4th r), and from left: King Ebitimi Emmanuel Banigo, Amanyanabo of Okpoama Kingdom, Bayelsa State; Rilwan Akiolu, Oba of Lagos; Folorunso Alakija; Agbogidi Chukwumeliaze, Obi of Onicha-Ugbo, and Adeyeye Enitan Ogunwusi, Ooni of Ife, at the 90th birthday celebration organised for Mrs Elumelu by her children in Lagos.

INEC Budget: National Assembly rejects N189bn, insists on N143bn KEHINDE AKINTOLA & OWEDE AGBAJILEKE, Abuja

T Oando eyes growth after curbing debt Cynthia Ikwuetoghu & Oghogho Edosomwan

ando Plc is looking to boost crude oil output from 2019 as the company aims to settle its $2.5 billion debt burden built up through the 2014 acquisition of oil and gas assets from U.S. giant ConocoPhillips. The company’s debt will be almost 90 percent lower by the third quarter (Q3) of 2019 of which the company has commenced preparation for its next stage of development. “We have purchased enough reserves and our job should really be to exploit those reserves,” Wale Tinubu, Chief Executive Officer of Oando Plc said in an interview with Bloomberg. According to Tinubu,”Oando focused on repaying the debt after the ConocoPhillips deal to cushion the impact of the financing costs, but that came at the expense of growth. The company, listed in Johannesburg and Lagos, is now able to increase its number of rigs and reopen oil fields, taking advantage of a recovery in the oil price.” “Oando has more than 450 million barrels of reserves following the ConocoPhillips acquisition and has interests in 14 oil exploration licenses in Africa’s biggest crude producer. Its Oando Energy Resources Inc. unit aims to grow production organically to 75,000 barrels a day by 2023 from 40,000 barrels, while also seeking “acquisition opportunities” which could help it exceed that goal”,Tinubu added. Moreover, the company sold parts of the business to focus on more profitable regions. Its disposal

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includes a stake in a gas distribution and power unit to Helios for $115.8 million, a partial divestment of 49 percent of the voting rights in Oando’s midstream business subsidiary, Oando Gas and Power Limited (OGP) in December 2016, majority stake in a service-station and fuelstorage and supply business. Tinubu stated that the company is focused on developing the export and wholesale of Nigeria crude oil aspect of its business. In his words, “We are focused on developing that side of our business, which is really to export Nigerian crude and bring in products wholesale.” On Nigeria government cap on gasoline price below market costs hindering importation from many private retailers, “It’s not popular to increase petrol prices,” Tinubu said. “The reason we don’t have a country that is exporting petroleum products is because of subsidies. Our refineries were never repaired because they never had enough cash flow to fix them. That’s because they were always selling product at a discount.” Nigeria restricts pump prices to 145 naira per litre ($0.46), a 67 percent hike making the country one of the 10 cheapest places in the world to buy gasoline, according to GlobalPetrolPrices.com. Last month, the CEO and his deputy Tinubu and his deputy, Mofe Boyo were ordered to pay $680 million in a dispute over corporate shareholdings. Oando shares have declined by 17 percent this year from N5.99 to its previous close at N5, valuing the company at N62.16 billion.

he National Assembly Joint Committee on INEC on Monday rejected the Independent National Electoral Commission (INEC) proposed budget of N189 billion, urging the electoral body to revert to the initial N143 billion earlier submitted by President Muhammadu Buhari. The lawmakers stated this after a closed door meeting of the Joint Committee chaired by Suleiman Nazif (PDP, Bauchi State). Nazif, who read out the resolution of the Joint Committee to newsmen in Abuja, urged the Commission to represent its budget based on N143 billion by Tuesday. It would be recalled that at a

budget defence session a fortnight ago, the Senate Committee on INEC had queried the conflicting figures presented by the Commission and President Buhari on the 2019 elections budget. While INEC chairman, Mahmoud Yakubu had told the joint committee that the sum of N189 billion should be approved in one fell swoop, Buhari in his letter dated July 17, 2018 had asked lawmakers to approve the amount in two tranches: N143,512,529,455 in 2018 and the balance of N45,695,015,438 for 2019. It was observed at the last meeting that while PDP lawmakers were in support of the President’s position, APC legislators threw their weight behind Yakubu’s proposal. Addressing journalists after a closed door session which lasted for 30 minutes, Nazif said: “The joint

committee has sat and has deliberated the position to adopt the N143 billion as presented by Mr. President at this point in time it is also the wish of this committee that INEC represents their budget of N143 billion as requested by Mr. President. “Therefore INEC has an opportunity to reprioritize and this committee will be ready to receive them. “This committee will be reconvening tomorrow (Tuesday) by 1pm so that we can consider the presentation by INEC”. Breakdown of the Commission’s earlier N189 billion proposal include: Election Operational Cost N134.4 billion, Election Technological Cost N27.5 billion, Election Administrative Cost N22.6billion and Miscellaneous Expenses N4.6 billion. The development comes exactly 172 days to the 2019 general elections.

LPG demand up 55% in three months, highlights growing domestic supply gap ... FG’s inaction on N60bn availability fund stalls domestic growth plans ISAAC ANYAOGU

igeria imported and distributed 165.71million litres of Liquefied Petroleum Gas (LPG) between April and June 2018, a 55 percent increase from 107.14million litres recorded in the first quarter of 2018 which highlights a growing supply gap by the Nigeria Liquefied Natural Gas Company (NLNG) to the local market. This is beaming a light on Nigeria’s plan to support domestic consumption of LPG through the creation of N60bn fund, a policy waiting on government’s action. According to data from the National Bureau of Statistics, the

months of April 2018 recorded the highest volumes of LPG imported into the country at 59.89 mln litres while the lowest volume was imported in June 2018. But this is proving insufficient to fill a yawning market where consumers are being persuaded to dump firewood and charcoal. Since 2007, Nigeria’s LPG consumption has grown from 70,000MT per annum to over 600,000MT per annum in 2016. Fifty percent of this supply has come from the NLNG according to the company’s record. Marketers are filling the gap by ramping up importation from neighbouring countries but there are concerns that this gap would worsen. “Nigeria’s LPG market is grow-

ing very fast and this increase is as a result of the import parity differential on imported LPG against domestic LPG,” Ifeanyi Uwandu, a frontier and emerging markets clean energy business expert and the founder of Kiakia Gas Nigeria Limited, an energy solutions service provider in Africa told BusinessDay by phone. The Federal Government last year approved a national gas policy which it claimed would establish medium to long-term targets for gas reserves growth and utilisation and record strategies to be pursued to ensure the successful implementation of the policy in accordance with Nigeria’s national socio-economic develop-

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COMMENT

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STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

here was a conversation in the year 2000 AD. The genesis of that conversation was the unpardonable state of affairs within a country of over 100 million peoplethe largest black nation on earth- on the historic dawn of the Twenty-first Century. The conversation took place in a technology acquisition class. Students of an executive MBA program in Technology Management expressed the view that whilst everything was changing in Nigeria, the country was getting relatively backward. Essentially, what added flavour to the conversation was the participation of the lecturer- a Nigerian professor of mechanical engineering- who was a member of two or more committees set-up by federal military governments in the 1970s and 1980s to sign various contracts on technology transfer matters between the country and some developed countries in Europe and America. So, if the Prof was professing to students on how nations acquired technology, why has Nigeria not joined the league of

Tuesday 28 August 2018

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Nigerian talents and the conversation in 2000A.D technologically advanced nations after several decades of political independence? Those in the team lacked appropriate knowledge on technology transfer issues at that time, according to the Prof. This is now history. Nigerians who have excelled in their professional callings are in the thousands but their accomplishments have not conferred on Nigeria the status of an industrialized nation. During the conversation, the erudite professor goes on to illuminate that in the USA in 1960s, Nigerian students were, and are still, doing very well academically in their colleges and universities. But why has the knowledge and skills acquired by talented Nigerians not contributed significantly to modern industrialism in Nigeria, some students demanded? The Prof ’s response was that the government never tasked its citizens on the kind of knowledge and skills they should acquire from abroad. We concluded the conversation by acknowledging that those on state scholarships at home and abroad were not tasked because there was no time the government of Nigeria had plans as to what the knowledge and skills embodied in its human capital would be used for. Perhaps, the vision to have Nigeria as the twentieth most industrialized nation in the world by 2020 would have been a starting point to harness brilliant ideas from talented Nigerians. But Nigeria lost the vision because our politicians have not at any time responded positively to the pervasive myopia in development theory- the neglect of the technology phenomenon. The good news is that Nigeria has

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The operating environment in Nigeria asphyxiates knowledge and abilities of our youth and it is responsible for the current surge in brain drain. Even a few of those without skill are not interested in Nigeria

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talents in all spheres of human endeavor: From liberal arts and humanities, through to medicine, science and technology, including mathematics and engineering. Nigerians, particularly our youths, have proved and are still proving their mettle. Talent is necessary but not sufficient to achieve national development. The talent of individuals must be discovered, harnessed, nurtured and managed so that they would contribute to national development. Talented youth (18-35years) constitute a large chunk of the country’s human capital. Regrettably, these youth have been frustrated by quota system and the federal character principle of the country. The consequence is that advancements in the country’s public institutions which ought to be drivers of development are neither based on

merit nor competence. The operating environment in Nigeria asphyxiates knowledge and abilities of our youth and it is responsible for the current surge in brain drain. Even a few of those without skill are not interested in Nigeria. Most of them have chosen to cross the Mediterranean Sea to Europe in search of greener pasture because they feel their country cannot assist them to actualize their dreams. The performance of any nation is only as good as those who lead her. A nation that aspires to greatness will invest in the future of her youth so that they can grow and not glow in poverty, ignorance and frustration. The year 2018 has been a year of great accomplishments for many Nigerian youth at home and abroad too numerous to mention in this piece. Those in the government responsible for the welfare of Nigerians have engaged themselves at full throttle in “politics of hatred” since the early part of the year. So, Nigerian youth have taken up the responsibility of flying high in their chosen endeavors. Recently, five Nigerian girls from Regina Pacis Secondary School Onitsha, Anambra State, represented Nigeria and Africa at the World Technovation Challenge in the Silicon Valley in San Francisco, USA, and won the Gold Medal in the contest. Technovation is a programme that offers girls around the world the opportunity to learn the programming skills they need to emerge as tech-entrepreneurs and leaders. As Nigerians felicitate with these young girls from Anambra State on their outstanding performance, the 2018 edition of the Young Managers Competition organized by the Nigerian Institute of Management

(Chartered) recently took place in Lagos. For this year’s competition, “a total of 246 young managers (men and women) applied for the competition, but only 154 participated in the online qualifying test.” At the end of the online test, nine young managers were adjudged qualified to be part of the final stage of the competition. To select the Young Manager on 8 August 2018, each of the nine contestants made a presentation on the topic “Rethinking Management in the Twentyfirst Century.” The panel of judges declared one Ayodeji Odeleye, an Estate Surveyor as the overall winner. It is not the first time in the history of Nigeria that Nigerians at home and abroad have excelled in their chosen endeavor. Nigerians have done well in the past, and they are still soaring in their chosen professions. But these achievements, either singly or collectively, have not been galvanized into national development. Why? If one wants to know how far a country can go in the 21st Century, one should count its highly effective teachers, involved parents, dedicated politicians and committed students. We would be deluding ourselves if policy makers think that Nigeria can develop out of confusion and frustration that have eaten deep into the fabrics of the society. Those in the government should show leadership, invest in our talents through educational sponsorships, and task them towards national development. Importantly, it’s the responsibility of the government to create an enabling environment for our talented youths to display their capacity and capability.

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Do you need an android antivirus?

KENNETH M. NNOROM Nnorom is a tech consultant in Lagos. He writes via nkpat04@ gmail.com

or years now the tech media has drilled into readers minds the importance of antivirus software, leading users to think to install some sort of security software is a good idea. But do you really need to install a resource and battery-hogging android antivirus app on your phone that is going to plague you with irritating notifications? According to Wikipedia, a computer virus is a type of malicious software that, when executed, replicates itself by modifying other computer programs and inserting its own code. Once a virus has successfully attached to a program/file, the virus will lie dormant without showing any sign until circumstances cause the device to execute its code. Developers use viruses for stealing passwords or data, logging keystrokes, corrupt-

ing files, spamming your email contacts, and even taking over your devices via Ransome-ware. In reality, android virus really does not exist; this is because there is no known android virus which is capable of replicating itself like computer virus. But there are android malware programs such as Ransome-ware, Screen locker, Spyware, Adware, Trojan which are used to do every negative function of a virus stated above. The difference is they cannot duplicate themselves like viruses but that does not make them less destructive. Research has shown that user behaviours are the major reasons phones get infected in the first place, here are some of the major ways you can get a malware. In-app malware still remains the main source of most android malware. Malware comes preinstalled in the back-end of malicious apps you mostly download and install outside play store or from APK files received from other users via app transfer media such as Xender. Since you cannot verify the sender’s download source, you risk receiving malware app from the person. Another factor is social engineering, which is one of the most popular malware delivery methods

because it involves manipulation of human emotions. Social engineers use spam phishing via email, instant messages, social media and more. The goal is to trick users into downloading malware or clicking a link to a compromised website that hosts the malware. To curb malware from third-party locations, Google has disabled installation of apps from such locations by default (can be enabled/disabled in security settings). And for those that install from Google Play Store exclusively, Google will continuously scan for and remove all malicious malware from play store and your phone. But for those who install from other locations but Google Play Store, an antivirus is recommended. Some of these antiviruses are capable of detecting malware as well as bringing some other helpful features to the table. However, some of them are notorious for drastically slowing down the phone and draining the battery. Having an antivirus or sticking to play store isnot enough there are still steps you need to take to protect your device after an app installation, steps such as carefully checking any app requesting permissions before agreeing to them. Keeping android up to date with all security patches is a great way to protect yourself from malware. Unfor-

tunately, it turns out Original Equipment Manufacturers(OEMs) are guilty of not sending a security update. To protect yourself from social engineered malware, you should apply a healthy dose of caution, just as wouldn’t click on an attachment in a dodgy email from a sender you do not recognise on your computer, and we hope you would apply that same thinking to suspicious links sent in Gmail on your phone or via WhatsApp or Facebook Messenger. After infection, you can still get rid of malware from your android phone and get your phone back to normalcy. All hope is not lost. Try booting your device into safe mode. Booting into this mode prevents the third-party app as well as malware from running. Booting into safe mode is different for various OEMs, the most common way is by pressing the power button to use the power off options, then press and hold Power Off to bring up an option to restart in Safe mode. If this does not work then you should search online on how to get your phone to safe mode. Another action to take is to uninstall suspected apps from your device. This is usually hit or miss but most times it works especially if you are very much aware of your phone and apps, check for newly installed,

just around the time when you noticed your phone misbehaving and uninstall it. You may not get this right first time, sometimes these apps will reject being uninstalled just because you have granted them administrative rights. To get rid of stubborn apps, you may disable administrative rights if need be.To deal with this,go to the apps menu and tap on Settings, Security, Device Administrators. You will find a list of app(s) with administrator status, unpick the box for the app you want to remove and then tap Deactivate on the next screen. You can then return to the apps menu and remove the app. Finally, android devices are very secure these days until you open up to the virus via applications. It is most recommended you stick to apps from play store which will, of course, keep you away from antivirus softwares which negatively affect the performance and battery life of your phone. Supposing your android phone or tablet does start acting oddly and you have reasons to believe malware is at play, a factory reset is all that is required to get rid of it.

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[#StopTheKillings] UK-Africa post-Brexit trade scenarios (1) RAFIQ RAJI “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

he second week of July started with the resignation of erstwhile UK Brexit secretary David Davis. The junior Brexit minister Steve Baker also called it quits. Their resignations came just days after a tumultuous Friday cabinet retreat in early July at Chequers, the British prime minister’s official country home, to harmonise the position of the government on Brexit. Not long afterwards, foreign secretary Boris Johnson also chose to leave the May government. But all seemed well after the retreat. And prime minister Theresa May was hailed for what was considered a hardwon victory; especially for a PM who despite her many failings seemed to continue to beat the odds. So, what changed? With

EJEVIOME ELOHO OTOBO AND OSELOKA H. OBAZE Ejeviome Eloho Otobo is a former director and deputy Head of the UN Peacebuilding Support Office at UN Headquarters in New York, where he acted as Assistant Secretary General from February-August 2009. Oseloka H. Obaze served as a UN Official at its headquarters in New York from 1991 to 2012. He is the MD/CEO of Selonnes Consult, a policy, governance and management consulting firm based in Awka, Nigeria.

uring his tenure as Secretary General, Kofi Atta Annan frequently reminded the world that “there could be no development without peace, no peace without development, and neither peace nor development without human rights”. That perspective embodied his deep aspirations for global peace and prosperity but, paradoxically, also reflected the bitter lessons of experience learnt in many conflict-afflicted zones in the world, not least the Rwanda and Srebrenica genocides in the 1990s, which occurred during his tenure as the Head of UN Peacekeeping Operations. Kofi Annan’s contributions to peace and security were wide ranging: encompassing efforts to

well-known sharp divisions within the cabinet, the beaming smiles by the ministers for the cameras did seem unnatural actually. It was revealed even then, though, that seven of the twentyseven ministers at the retreat did oppose Mrs May’s plan; which would allow for free trade between the UK and the EU but not allow free movement of people or subject the United Kingdom to the European Union’s judicial system. In any case, schemes are believed to be afoot to finally edge Mrs May out of Number 10; the prime minister’s office and residence. Costs of turbulence More importantly, the resignations undermine the British prime minister’s negotiating position with the European Union, officials of which must surely relish the disarray in London. And as the ongoing drama in the May government has been in the full glare of the public, the Europeans would expectedly become increasingly emboldened. They would be irrational otherwise. After all, they have thus far managed to push the Brits towards a softer and softer Brexit. That is, one where the UK’s exit is more

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By itself an expensive venture, the costs of Brexit have certainly been compounded by the turbulence of the May government. And it is clearly not all too certain she would be in power long enough to conclude negotiations with the European Union

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ceremonial than actual. Donald Tusk, president of the European Council now even talks of a noBrexit scenario. In a tweet after

the resignation of Mr Johnson, he remarked thus:“Politicians come and go but the problems they created for people remain. I can only regret that the idea of Brexit has not left with Davis and Johnson. But…who knows?”Imagine that? Incidentally, it is Mrs May’s softer Brexit stance that instigated the recent resignations. In the aftermath, she said her government would prepare for a range of Brexit outcomes including the scenario that she might not be able to secure a deal with the European Union. By itself an expensive venture, the costs of Brexit have certainly been compounded by the turbulence of the May government. And it is clearly not all too certain she would be in power long enough to conclude negotiations with the European Union. With the position of her potential replacement, opposition Labour leader Jeromy Corbyn, not all too clear either, the consequent uncertainty is proving to be expensive for the British economy by the day; as firms make contingency plans. UK manufacturers and retailers are palpably and understandably concerned, with their chief executives becoming increasingly vocal about

their frustrations. The turmoil at Number 10 is also reverberating through the cobbled streets of the Bank of England, the UK central bank. Already on a tightening drift, there might be some hesitation by its monetary policy committee members to rock the boat if the prospect of a leadership change on Downing Street remains. The central bankers hardly want to compound what are already mounting Brexit costs for the economy by an expected rate hike in August and later, that could instead of stemming rising inflation stifle growth more. In a parliamentary hearing in about mid-July, central bank governor Mark Carney was unequivocal about one Brexit scenario at least: “…in the event of a no-deal scenario…there would be big economic consequences.” In any case, the governor long signalled the Bank of England would do the needful on Brexit “whatever form it takes”. • An edited version was published by African Business magazine in August 2018. Final part of article planned for next week’s column. Send reactions to: comment@businessdayonline.com

Kofi Annan: In service of the world discourage needless conflicts, support peace operations, create or nurture institutions for peacebuilding, and develop norms and policies to promote inclusive development. Annan had presciently opposed U.S. and U.K. 2003 invasion of Iraq. Ahead of the invasion, during a meeting with visiting high-level British officials in New York, Annan was pressed hard to abandon his position and insistence on a Security Council resolution. Annan held his grounds, prompting Adam Thomson, then United Kingdom’s Deputy Permanent Representative, to quip, “SG, the coalition will proceed with or without U.N. support,” to which Annan retorted: “Ambassador, there comes a time when delusion meets with reality.” Today Annan’s position stands vindicated. Annan, unlike Boutros BoutrosGhali, was not steeped in African politics, but his commitment to durable peace on the African continent was immense, a fact reflected in his 1998 landmark report on the Causes of Conflict and the Promotion Durable Peace and Sustainable Development in Africa. Annan oversaw the massive peacekeeping deployment in response to rising conflicts in Africa, with about fifty percent (7 of 15) of U.N. peacekeeping operations and about eighty

percent of U.N. personnel (69,238 of 87,764) deployed in Africa at the end of his tenure in 2006. Even after he stepped down as Secretary General, Annan showed his commitment to promoting democracy and good governance in Africa, most notably by mediating between the parties to the postelection violence that erupted in Kenya in 2008. He also pushed hard for political reforms in Zimbabwe, but not regime change sought by Western nations. Annan successfully canvassed for “humanitarian intervention”, as a possible preemptive alternative to peacekeeping; though some suspected it was a policy not born of personal conviction, but as a safeguard against repeat of mistakes such as those in Rwanda and Srebrenica. Annan bought into the concept of “sovereignty as responsibility,” which gained impetus in 2001, well after Nelson Mandela publicly warned his fellow African Heads of State during the 1998 OAU Summit in Ougadougou, Burkina Faso, that “Africa has a right and duty to intervene to root out tyranny.” The resultant policy was the legitimization of the “responsibility to protect,” which though salutory, had a detracting flipside; most Africans worried that “responsibility to protect” would givecarte blanche to meddlesome global powers. Inspired by fundamental principles of the United Nations Char-

ter, in particular the notion of “promoting social progress and better standards of life in larger freedom”, Annan launched a number of human security initiatives to help people stricken by disease, poverty and war. The Global Fund for AIDS, Tuberculosis and Malaria stands as a testament to his effort to mobilise global response to tackle the scourge of these three diseases around the world. The Millennium Development Goals, agreed at the 2000Summit, was yet another initiative designed to fight poverty, which was the first of the eight goals. The establishment of the UN Peacebuilding Commission, which creation Annandescribed as “filling the gaping hole,” in the institutional framework for post-conflict reconstruction and development represented an important step in galvanising international support for countries emerging from conflict. Annan realised much earlier than many that in an era of globalisation, a strong partnership with private sector was required to make progress on many public policy issues. This provided the impetus for his advancing the idea of the Global Compact, which aimed to encourage global corporations to embrace principles relating to promotion of labour standards, respect for human rights, protection of

the environment, and combating corruption. Annan himself declaimed in a 2000 report that “weaving universal values into the fabric of global markets and corporate practices will help advance broad societal goals while securing open markets”. It is broadly acknowledged that “policy is most often limited less by some objective reality than it is by conceptual barriers of a stateman’s immagination.” The breadth and scope of policy initiatives launched by Annan and efforts exerted by him in the area of peace, development and human rights showed that heunderstood fully the dynamic nexus between these issues. But more importantly, he appreciated that the countries of the world must act in concert to achieve peace and prosperity. It is not for nothing that Annan has been described as a diligent man of peace. It is an accolade well-deserved and affirmed by the Nobel Peace Prize awarded to him in 2001. Yet, when things went wrong - and they did occasionally- and UN member states sought to lay blame on him, he was never bashful of self-deprecation; saying often that “SG”, the acronym for his secretarygeneral title, was a sobriquet for “scapegoat”. Send reactions to: comment@businessdayonline.com

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Tuesday 28 August 2018

Effects of Buharionomics

recent analysis by BusinessDay shows that the economic policies of the Buhari administration have had a deleterious effect on the stock market over the last three years. The Nigerian Stock Exchange broad index has only gained one percent in the last three years compared to the gains under former president Jonathan and Obasanjo which returned 29.7 percent and 904.2 percent respectively. The stock market index is popularly used as a proxy for the performance of companies in a country as stock prices are determined by estimating the present value of future cash flow of a business. If investors feel that companies will do well over a foreseeable future, stock prices typically rally. The index tends to retreat when risks are higher and the tendency for companies to perform well financially is lower. Also, during the same period, the stock market returned just three percent making it the worst market performance by any democratic President of Nigeria excluding former President Musa Yar’Adua who died in power.

The conclusion is inescapable: Despite stated attempts of the government to improve the ease of doing business, Nigeria has been quite inconducive for businesses since 2015 and this is traceable to the policy actions and inactions of the government. Upon ascending to power in 2015, it took six long months for the Presidency to name, screen and approve cabinet ministers, a process that never exceeded 2 months since 1999. The political uncertainty during this period pulled the index down by around 14.87 percent before the ministers were finally appointed in November 2015. More trouble followed in 2016 as the problem moved from political to economical. The continued decline in crude oil prices, followed by the first economic recession in 25 years weighed heavily on stock prices in 2016. Also in 2016, Nigeria suffered the biggest currency devaluation since 1999 in 2016 when official Naira to US Dollar exchange rate moved from the official figure of 197 N/$ to 305 N/$. In the parallel market, the Naira at a time exchanged for N500 to the Dollar. The inflation rate in the country doubled as a result of huge currency devaluation as inflation neared 20 percent at its

peak in 2016. As a result of the economic headwinds, 2016 became the year of the great loss for companies on the local bourse. A total of 17 companies from the NSE 30 index reported significant losses on the books as the economy slumped to a full year negative growth of -1.6 percent. The stock market fell by around 9.41 percent in the first five months of 2016 as the administration delayed five months to pass an economic stimulus budget to pull the economy out of recession. The stock market rallied 4.56 percent till year end after the budget signing which helped to offset some of the losses earlier in the year, bringing the total market loss in 2016 to 5.27 percent. In 2017 as the economy rebounded to a full year growth of 0.8 percent, the stock market rallied 42 percent as investors got excited by the economic recovery story which was largely supported by the strong rebound in crude oil price. The stock market this year has given up a significant amount of its gains from last year as the NSE index is down 9.36 percent year to date largely due to the political upheaval in the country as the

general elections draw closer. The average economic growth during President Olusegun Obasanjo’s regime was 8.5 percent between 1999 and 2007. Under the stewarship of President Goodluck Jonathan between 2011 and 2015, Nigeria’s economy expanded an average of 4.7 percent, almost half the growth achieved by his predecessor. But under President Buhari, average economic growth fell to a paltry 0.61 percent between 2015 and 2017. If economic growth improves to 2.1 percent this year, average economic growth under Buhari will improve to 0.98 percent. With analysts expecting stock prices to decline further as political uncertainty ravages the stock market, it is not unlikely that come February next year, the market performance under the current administration will fall into negative territory. These evidences are clear enough: the administration has not managed the economy well. But rather than listen and turn a new leaf, it continues on the same ruinous path while disingenuously blaming past administrations for the woes of the country. With such an attitude, no one needs a prophet to know that things will only get bad!

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Tuesday 28 August 2018

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Media analysts describe CPC action on DStv as aberration

Chivita active inspires consumers to get active

Stories by Daniel Obi Media Business Editor

ven as Consumer Protection Council, CPC insists that raising product price by DStv was illegal, media analysts also asserts that CPC action of stopping the price increase through action is an aberration in a free market economy. The media analysts who spoke to BusinessDay following the battle between CPC and DStv over product price increase also questioned the Consumer Protection Council of Nigeria frequent actions in attempting to regulate Pay TV fees in a free market like Nigeria. Bolaji Abimbola, the CEO of Indigo, a PR agency based in Lagos described CPC price intervention in DStv business as an aberration and abnormality. He asked CPC to concentrate in protecting consumer on quality of service and ensure that promotions on products are according to the law but not on price. Bolaji who works for some multinational companies in the FMCG sector said that there are factors that add up to cost which CPC may not understand. According to him, since there are options in the Pay TV market as in other services or products, he said subscribers have the choice to switch over to an-

other operator if they don’t like a particular service. “CPC cannot simply tell an operator not to increase price in a free market system”, he said Another media analyst asked whether “CPC is turning itself into a price control board”. He reminded CPC that Nigeria is operating a free market enterprise where consumers are disposed to product if they like the price. “I can’t understand why CPC is concentrating its efforts on DStv while it has not tried to regulate price of FMCG operators products and other services”, the media expert said. On the heels of this development, Celestine Okeke,a Lead Partner,Micro, Small and Medium Enterprise Advocacy and Support Initiative(MSME-ASI) was quoted as saying that the CPC should have taken engagement with the Multi-choice company rather than the ‘Nail and Hammer’ approach it applied. “If you don’t like DSTV you can move over to other cable

network operators. What the CPC could have done is to get the Presidency to discuss further with the DSTV and not using the ‘Nail and Hammer’ approach” The recent action is not the first regulatory intervention on the operations of DStv by CPC. In October 2015, officials of the Consumer Protection Council (CPC) in company of other government officials raided the head office of MultiChoice in Lagos owners of DStv. According to reports, the raid saw CPC officials leaving with laptop computers and important documents about the company’s operations. The raid was said to be connected with the hitch that developed in the CPC’s ongoing investigation then into MultiChoice’s consumer satisfaction initiatives. The hitch was said to have been occasioned by CPC’s demand that MultiChoice should hand over personal information of its subscribers

as well as its exclusive contract in Nigeria. The MultiChoice team, led by Managing Director, John Ugbe, was said to have drawn the attention of the CPC to the fact that the company owes its subscribers a duty to protect their personal information. The company, added sources, took time to explain that releasing sensitive information about subscribers, as requested, would amount to a breach of the trust subscribers reposed in the it when they signed up to its services. MultiChoice representatives were quoted to have expressed readiness to cooperate with the CPC in its effort to ensure that subscribers obtain improved customer satisfaction, but rejected the demand that verges on violation of subscribers’ confidentiality. After the investigation, the two organisations resolved the issue and addressed a joint press conference in July 2016 where CPC re-stated that its statutory role is to ensure that the rights of the Nigerian consumers are not trampled upon by brand owners, and not to strangulate businesses. Again the Consumer Protection Council, it would be recalled had recently gone to court, and lodged a complaint on the recent hike in price by the Multi-choice company, as the court granted Interim Order Prohibiting Increase in Dstv or GOtv Subscription Rates Pending further hearing and order of Court.

ew months after Chivita Active launched its new campaign, C’mon Get Active, to position the brand as an enabler for a healthy active life, the campaign is said to be inspiring a new social movement for consumers who are voting for active health by easily integrating Chivita Active into their daily routine as a partner in their journey for improved wellness and healthy lifestyle. The Chivita Active C’mon Get Active campaign, which is being driven across multi-

ple engagement platforms is very relatable to consumers because it is creative, simple and straight to the point in delivering key messages of wholesome nourishment, active health and wellness, a statement said. “Across Nigeria, #C’monGetActive continues to trend in the digital space offering consumers an opportunity to share their active health routine story and encourage one another”. The statement said analysts have commended the campaign for leveraging on the brand’s enabling role for regular healthy lifestyle activities to drive consumer preference and purchase intentions. They contend that the campaign reflects deep insights on the shift in consumption pattern as a result of growing social consciousness of wellness through active health, and Chivita Active’s brand purpose resonates with consumers who are already thinking in that direction.

MTN introduces mPulse, new proposition for tweens, teens in Nigeria

TN mPulse, the latest innovation from the leading ICT company, MTN Nigeria, made its debut recently at the Landmark Events Centre, Victoria Island, Lagos. The proposition designed for tweens and teens (ages 9-15) will enable them learn and gain useful skills while having fun. For the elaborate launch, MTN transformed the venue

into an impressive wonderland tagged “mPulse Planet,” providing attendees with lots of memorable attractions and activities. This included a Virtual Reality masterclass facilitated by a 13-year-old, JSS3 student, Obaloluwa Odelana and the youngest hyper-realism artist in Africa, Kareem Waris Olamilekan of Waspa Art both of whom inspired children at the event.

Women in Marketing & Communications BD Brand Talk Conference holds in Lagos this week

rand Communicator, foremost Brands and Marketing publication has concluded plans to host the 2nd edition of Women in Marketing & Communications Conference/ Awards (WIMCA) at Muson Centre, Onikan, Lagos this weekend. WIMCA is the foremost thought leadership platform for insights and contemporary trends in engaging female consumers and at the same time recognizing outstanding women and corporate organization for their contributions to the growth of their various industries and the country at large. This year’s event with the theme, “Women in Marketing Communications: The Press for

Progress”, according to the organisers promises to be the biggest gathering of female professionals in the field of Marketing and communications industry. According to the Convener of the Conference / Awards, Joshua Ajayi, Publisher of Brand Communicator, “the objective of the event is to celebrate women of outstanding achievements in the marketing and communications industry while creating a platform for networking among them. “It will also provide a mentorship platform for young and prospective professionals and to ignite the potential in women towards attaining enviable heights in marketing and management.

Building an effective corporate brand through event sponsorship Victor Okocha

n the lines of marketing communications for brands, nothing promotes and projects the image of brands like the sponsorship of major events with the right audience. Brand sponsorship is a marketing strategy in which a brand is supporting an event, activity or organization. Brand sponsorship has a far-reaching return on investment (ROI), it comes with immediate and long term benefits of increasing awareness, brand visibility, increase in sales, gain publicity, increase brand loyalty. When a brand sponsors a charitable and social events, it adds value to the company and increase its reputation in the area of giving back to the society other-

wise known as Corporate Social Responsibility (CSR). Corporate communication units of organizations can effectively market and promote the image of their brands in diverse sponsorship mediums – conferences, music festivals, sporting activities, entertainment among others. These are effective channels of maintaining a brands presence in the market place. For new brands at the verge of market penetration, at the growing stage, the brand does not need advertisement but activation. Thus, to brand managers, event sponsorship could be a very veritable medium and strategy of activating your brand and sustaining it with the right audience. In April 2017, Aiteo, a Nigerian energy conglomerate, signed a five-year deal worth N2.9 billion with the football adminis-

trators for the Nigerian federation cup. Aiteo, an energy giant, hitherto not well known, has had its brand crested in gold. This was a clear case of brand activation via sponsorship with the right audience and at the right time when so many corporate bodies were complaining of economic down turn. In the just concluded FIFA World Cup tournament that took place in Russia from 14th June – 15th July, 2018. The Nigerian Super Eagles attracted over N6 billion in sponsorship from top global and Nigeria brands. Of note, among these sponsors include- Coca-Cola, Nike, Cadbury Nigeria Plc, Nigerian Breweries Plc, Wapic Insurance Plc and Aiteo, the emerging energy giant that has taken soccer sponsorship as its core area of Corporate Social Responsibility. The Nigeria super eagles they

sponsored did not win the trophy at Russia 2018 but these brands have won the minds of so many individuals, organizations and government institutions as well. However, the super eagles early exit at the first round must have recorded a drop in sales across the sports entertainment and media business. In events sponsorship generally, brands that have the marketing strategy of identifying and sponsoring events being organized by media organizations can count their gains immediately and over time as media organizations are the vehicle for advertising, brand promotion, public relations and marketing communications in its entirety. Okocha works in the Conference Unit of BusinessDay

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Tuesday 28 August 2018

Advertising agency, Up in the Sky, registers Nigeria on intercontinental creative award map … Clinches Bronze at Loeries

ince two or three years ago, Nigerian agencies have always competed heartily in the Loeries and this year was no different. While the outcome may have been less than desired, one agency was able to register the name of the country on the medal table. With this yet, another achievement by the agency, it is believed that this will prompt more creative agencies from Nigeria to enter some of their excellent works to compete for the elusive Gold and Silver at the Loeries Creative awards next year. Loeries is Africa and the Middle East’s premier award that recognises, rewards, inspires and fosters creative excellence in the advertising and brand communication industry. Winning a Loerie is the highest accolade for creativity and innovation across our region. The Loeries promotes and supports creativity by helping marketers, agencies and consumers appreciate the value of fresh thinking, innovative ideas and outstanding execution. Up in the Sky, one of Nigeria’s vibrant advertising agencies that believes in the power of agency/ client collaboration recently won bronze in the Internet Video category at the grand finale of the 40th anniversary of the Loeries 2018 Creative Week. In a day that looked like Nigerian agencies and the nation’s advertising industry would miss out of the annual Loeries Creative Week for 2018, the Oje Ojeaga – led advertising agency saved the day for the country by winning bronze medal and put the name of the nation’s advertising industry on the medal table of Africa’s most prestigious awards. The work that earned Up in the Sky the bronze medal is Closed-A Short Film that tells the story of a young man who is struggling to make meaning of his world. It is an amazing short film that tells the story of shame, confusion and hope which was crafted for 9mobile (Etisalat) to promote Etisalat Prize for Literature. Aside the recent feat in Durban, South Africa venue of the Loeries 2018 award, the creative work Closed-A Short Film has also won awards in Nigeria (LAIF awards), West Africa (Pitcher Awards) and Africa/Middle East with the Loeries. The importance of this has manifested in the number of briefs Up in the Sky has received from local and international clients based on it and the other creative works. This can be safely said it has been a good testimonial for the agency’s capability. Closed-A Short Film is a 30-second short movie that won bronze

Up In The Sky Team

for its effective communication and great impact in the Internet Video category at the Loeries 2018 Awards, a proudly not-for-profit company that promotes and supports creativity by helping marketers, agencies and consumers appreciate the value of fresh thinking, innovative ideas and outstanding execution. According to Oje Ojeaga, Chief Executive Officer of Up in the Sky, “For last year’s Prize for Literature Campaign, 9Mobile wanted to push the envelope when it came to storytelling like never before. By opting to create a short film instead of an advert and drawing attention to the widespread problem of illiteracy, we the agency were challenged to find a convergence point for literature and film. It was a challenge we tackled with enthusiasm. Our aim was to tell a story without any dialogue that would still speak to hearts and minds and we are pleased we succeeded in doing that.” The two-day award ceremonies that took place on Friday 17 and Saturday 18 August, hosted by Donovan Goliath, saw 287 Loeries awarded across 14 categories including six Grands Prix, 31 Golds, 69 Silvers, 113 Bronzes, 18 Craft Golds and 50 Craft Certificates. More than 2,500 entries were received, with 15% of entries from outside South Africa. A total of 700 brands were represented by 265 agencies from 15 countries across Africa and the Middle East. The awards were judged by over 170 re-

gional and international industry leaders in their fields including international jury presidents Fabian Frese, Ian Mackenzie, Nicolas Courant and Sebastian Padilla. Culminating in the biggest creative gathering in the region, Loeries Creative Week brings together the best innovative minds from the industry for a festival that offers networking, creative inspiration and the recognition of great work. Up In The Sky, known for the quality job and detailed execution is a startup agency excited to create campaigns that make a difference... delivering creative work that is truly creative. Its lean team is proficient in building and executing campaigns across ATL, BTL AND TTL channels. Speaking on the agency’s quality of work, Idiare Atimomo, Chief Operating Officer of Up in the Sky said, “This award validates now more than ever that quality wins over quantity. Good creative work has universal appeal – it transcends language or even culture. As much as we are happy to have won a bronze medal on our very first submission, we believe we can do much better in the future – and will be working towards it.” As part of the agency’s future plans, Oje explained, “To be able to compete at the highest level, we need to master excellence in the work we do for clients. Not just in ideation. Not just in execution. Our entire pipeline must be engineered to deliver work that holds up to scrutiny from judges around the

world.” On the award-winning creative (Closed-A Short Film), Oje explained how the agency got its inspiration to create a winning work. “All our work is a team effort. We knew the core idea was to show how a life of illiteracy closed you off from the rest of the world – we just had to find a way to execute that idea that was not obvious and could be done without a single word spoken on screen. The director, Tolu Ajayi was as passionate about the idea as the client was and made invaluable contributions to the script at multiple points in the process. From the initial idea we had we built the script further to capture universal human emotions and clearly the cast also delivered in their performance.” Agencies compete at pitches to win business, compete for talent to deliver great creative work and compete at awards to benchmark their work against high standards of the profession. This show that winning awards are not for any ego – they are a validation of the quality of work. It is also an incredible morale boost for the team to do more, and encouraging them to come up with even bolder ideas. Oje added, “The meaningful impact of this creative can, however, be seen in the comments the agency receives from non-practitioners, the general public - those who felt a strong compassion and understanding for people who are illiterate only after watching CLOSED for instance. That is when we re-

ally feel we have made something meaningful and we tend to get such strong emotional responses from the public to all our award-winning work. Finally, and maybe most importantly, quality awards are a reassurance to the client that you can indeed win new customers and awards at the same time.” Talking about the impact of the creative, Idiare said, “it has made our existing clientele explore communication options beyond regular advertising. Films like CLOSED are the future of advertising; if we don’t make them, someone else will. Our operational philosophy has not changed – we love to do good work that works. Our vision for the agency has been to help demystify the practice of advertising by working on our mission which is to deliver simpler, better and faster creative solutions for our clients at all times.” Commenting on the recent feat of Up in the Sky at the Loeries 2018 Creative Awards, industry analysts say the agency has been able to give a good account of itself as a creative agency to look out for. According to them, ads that speak to shared human experiences tend to perform better on the international scene. For obvious reasons, if an ad requires a lot of specific cultural reference to be understood, it becomes harder for an international jury to appreciate it. Universal experiences like joy, fear, shame, pain and happiness deployed with skill in an ad will speak to any jury around the world, and this is the way to go.

Tuesday 28 August 2018

BUSINESS

COMPANIES & MARKETS

Pg. 16

Nestle, Unilever most efficient consumer firms in H1 on ROA Sobechukwu Eze

assets (ROA) ratio is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as

to how efficient a company’s management is at using its assets to generate earnings. The higher the ROA number, the better, because the company is earning more money on its investment.” Looking at the financials

Celebrating the life of a Nonagenarian: Suzanne Elumelu(sitting) the celebrant and the matriarch of Elumelu’s family, flanked from left: Tony Elumelu, son of the celebrant and chairman of Heirs Holdings; Femi Otedola, chairman of Forte Oil Plc; Segun Awolowo, CEO, Nigerian Export Promotion Council(NEPC); Aliko Dangote, president, Dangote Industries; Foluso Phillips, executive chairman, Phillips Consulting; Oscar Onyema, CEO, Nigerian Stock Exchange; and Peter Elumelu, son of celebrant, during the 90th birthday celebration organised for Mrs Elumelu by her children in Lagos at the weekend.

of 9 companies in the Nigerian Consumer Index, companies who have the same half year end on Nigerian Stock Exchange, it was seen that although most of the companies under observation made some good returns on using their asset, Nestle and Unilever were the only two companies who had an improvement when compare to the same period last year. Nestle Plc was the highest of them all with an ROA of 13.5 percent an improvement from the 11.3 percent it had in H1 2017. Unilever although was the fourth coming under Dangote Sugar and Nigeria Breweries who had an ROA of (6.8 percent and 5 percent) it was able to improve on the usage of its assets to generate its earnings, moving it up from 2.9 percent in H1 2017 to 4.3 percent in H1 2018. Speaking on the performance of these companies, Moses Hammed a research analyst at Investment One, said that “these tow companies are major players in the consumer index particularly Nestle who is well diversified with numerous products in the market and as the number one player in the market they determine the pace of that sector. They took some price

Food, Agro Allied Industries expands export to New Zealand

he largest and most modern Sorghum malting plants in Africa, Food, Agro, & Allied Industries Limited, one of Sona Group principal industrial units has expanded it exportation footprint to New Zealand with its made in Nigeria Malt extracts. This is in line with the Federal Government’s initiative to diversify the revenue stream of the country and improve economic growth. Speaking at the inauguration ceremony which took place at the factory in Sango-Otta, Ogun State, Arjan Mirchandani, chairman of Sona Group, said in a statement that the company is committed to promotion 100 per cent local content and will not rest on its agenda in ensuring that made in Nigeria products made by the company are readily available for consumers. “Our job is to make sure

PFAs are competing on ROIs in new fund levels

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

he first half results are out and it appears Nestle the major market m ove r in c o nsumer sub-sector sector has proven why it remains at the top. Its return on asset stands not just the highest but among the only two companies who grew its ROA, the other being Unilever when compared with other companies in the consumer index on the Nigeria Stock Exchange. Vivian Alozie told Businessday that “the Return on

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that we use and make 100 per cent local content. This exportation to New Zealand is the first of Food, Agro & Allied Industries as we intend to continue to produce Made in Nigeria products for exportation. Very soon we will be introducing rice flower and corn production that will be exported as well. “We are encouraged by government agencies to produce standard and quality products. Nigerians are intellectual people, if you pay money you must have your value and that’s what Sona Group is all about. We offer value that is expected from locally made products. In his remark, State Coordinator of Standards Organization of Nigeria (SON), Ayuba Samuel Ushe, commended Food, Agro & Allied industries for the bold step for keying into government’s initiative to drive export and foreign investment.

Ushe who was represented at the inauguration by Michael Ajagbonna said the event is a landmark achievement for the company and the nation at large. According to him, the step taken by Sona Group is an indication that the nation is moving towards a self-sufficient economy. “It means that the country is turning around in respect to quality and in terms of global dynamism. It will serve as foreign investment for us because people will start to have confidence in what we have in our nation and at the same time foreign currency exchange will improve. This exportation is a plus for the nation “ he stated. Managing Director, Food, Agro & Allied Industries, and KVS Murthy submitted that this product is 100 per cent local sorghum and it is proudly Made in Nigeria. He stated that the new de-

velopment at the company will help Nigeria reduce its dependence on imported goods. “As at 2015, we produced sorghum, glucose syrup, malt syrup, malt extract locally. Our requirement for the year as of now is 20,000 to 25,000 tonnes and we receive the Sorghum from Northern part of Nigeria such as Kano, Kaduna, Zaria etc., we store it in our warehouses, our silos and we are using the material time to time. It is completely automated, the material to the finishing product to the drum”, he explained. Mu r t h y s t r e s s e d t h e uniqueness of the product. ‘By using this product you are reducing the intake of sugar, this product is used as sweetener in some products. It is used in some beverage, and biscuits company also use it to reduce sugar and promote local content, most importantly it is Gluten free “ he stated.

increase recently although not a major one which really helped them”. “Unilever also followed suit in the price increase and did a right issue last year which they used to refinance their debt. This reduced the company’s finance cost, which helped boost their earnings and made them perform better than last year,” Hammed added. On further analysis of the companies’ financials it was seen that the Nestle’s profits were boosted by the reduction of its finance cost which reduced from 2.2 billion in H1 2017 to 280 million in H1 2018, an 87.1 percent decrease. The firm has been able to cut down on the interest expense of its liabilities and manage effectively its foreign exchange losses. Unilever was also able to cut down on its finance cost by 90 percent. Hammed went on to say that “the foreign exchange is more stable than last year due to the introduction of the I&E window by the government which has made it easier for these companies to import compared to last year. Last year Q1 was hard for Nestle due to this problem but now that government has done well in supporting the naira

and making foreign currency available, it has really helped boost their performance”. Other companies whose financials were looked at are McNichols who had an ROA of 2.1 percent in H1 2018 falling short from its 2.6 percent last year H1,Dangote flour mills had a ROA of 2.4 percent this year H1, falling from the 5.1 percent in had last year. Champion breweries’ ROA slightly fell from 0.9 percent last year H1 to 0.8 percent this year. Cadbury and International Breweries both had negative earnings this year H1 and last year. This year their PAT loss was even larger than the same period last year. The beer companies in this index all had their earnings fall when compared to the same period last year. “The beer companies have not really been faring well due to the huge competitions largely due to the coming in of Ab-Inbev which has led to the struggle for greater market share by the players involved and the introduction of the new tariffs which these companies have not been able to shift to the consumer. Nigeria Breweries tried increasing their prices but had to reverse it due to the effect on its volume,” Hammed said.

USAID to spend addition $26.5m on Nigeria’s development goals SEYI JOHN SALAU

he U.S. Agency for International Development (USAID) has announced an additional $26.5 million development assistance to support the development goals outlined in the bilateral development objectives assistance agreement signed in 2015 between the U.S. and Nigerian governments. Under the new funding agreement, $25 million will be used to strengthen good governance by supporting state governments’ efforts to bolster Nigeria’s Open Government Partnership commitments to improve transparency and fight corruption. While an additional $1.5 million will be to support a healthier, more educated population in targeted states through the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR). USAID is also partnering with federal and state health

ministry’s to build stronger health systems with the aim of guaranteeing equitable access to quality healthcare services nationwide. The additional new funding brings the total U.S. government assistance provided under the five-year development objectives agreement to $1.1 billion. Erin Holleran, acting mission director, USAID said Nigeria holds tremendous influence over the future of Africa as the most populous country in Africa, with the largest economy on the continent. “USAID is committed to partnering with the government and the people of Nigeria to address its development challenges,” said Holleran. USAID collaborated with Nigeria’s ministries of Budget and National Planning, Health, Agriculture, Power, and Education, as well as state-level government counterparts to structure the bilateral assistance agreement, which runs through 2020.

BUSINESS DAY

C002D5556

Tuesday 28 August 2018

COMPANIES & MARKETS

PFAs are competing on ROIs in new fund levels …AIICO, Axa Mansard, ARM Pension top in Fund IV Oghogho Edosomwan.

ension Fund Administrators (PFAs) are going to be competing in terms of returns on investment ROI in the different fund levels under the Multi-Fund Structure. According to analysis of the figures posted by the respected PFAs in their websites, AIICO pensions led in the retiree fund now called Fund IV with the highest Return on Investment of 1.86 percent from June 30th to July 31th, after the multi-fund structure was introduced in the country’s pension industry. Behind Aiico Pensions are; Axa Mansard pensions with 1.11 percent return, ARM Pension with 1.09 percent, NPF pension (1.07 percent), Pension Alliance Limited (1.06 percent), Oak pension limited (1.05 percent), TrustFund pension (1.05 percent), Verita Glanvills pension (1.03 percent) and Stanbic IBTC Pension Managers (1.01). A Retiree Account is a more conservative than the RSA in the sense that it is less exposed to the equities market. Where a Contributor is

retired and has applied for his/her benefit, the pension assets are moved from Retirement Savings Account to Retiree Account from where the total amount/monthly programmed withdrawal and Annuity Plans are drawn from. The Fund IV account allows maximum exposure to variable investment instrument of 0 percent to 10 percent. Variable income instruments are investments that generate income or returns that cannot be predetermined from the date the investments were made and are not guaranteed. Consequently, the allowable exposures to variable income instruments have been designed such that Fund I has the highest allowable limit, followed by Fund II, and fund III respectively. This reduces the risk and uncertainty of contributors in line with their ages. Pension fund managers with returns less than one percent are; Investment one pension (0.98 percent), Premium pension (0.96 percent), NLPC pension (0.95 percent), First Guarantee pension (0.93 percent), IEIAnchor pension(0.79 percent), Legacy pension (0.76 percent), Sigma pension (0.70 percent), Crusader

L-R: Orinayo Ayodele, community manager, Impact Hub Lagos; Ndukuba Akachukwu, member, Smart City Group; Erute Joshua, member; Popoola Oluwadamilare James, member; Yemi Keri, CEO, Heckerbella; Yusuf Al-ameen, team leader, Smart City Group; Collins Onuegbu, founder/executive vice chairman, Signal Alliance Limited, and Tosin Durotoye, director, Greenhouse Lab, during the presentation of cheque to the Smart City Group winner of 2018 BusinessDay CEO Apprentice in Lagos, at the weekend. Pic by Olawale Amoo.

Sterling pension (0.67 percent), Fidelity pension (0.55 percent), Leadway pension (0.44 percent), and Radix Pension (0.07 percent) for same period. However, only

NBC’s empowers 800 next generation youths KELECHI EWUZIE

igerian Bottling Company (NBC) Ltd in furtherance of its commitment to empower over 15,000 youths by 2019 recently engaged no less than eight hundred youths at a 3-day workshop in Kaduna State to improve their fortunes and create viable opportunities for economic growth. The workshop witnessed a large number of youths, scores of government officials, notable mentors, nongovernmental organisations and host of other dignitaries. Bala Bantex, deputy Governor of Kaduna while speaking during the programme, commended NBC for bringing the initiative to Kaduna noting that the Youth Empowered programme complements the government’s effort in empowering the youth of the state. Bantex the initiative represents needed contribution and necessary effort to support youth with vital

skills, adding that Kaduna is a young state with 89% of the population being young men and women. This demography has the potential to become the engine of growth if it is well trained and given the necessary opportunity. He further stated that the Kaduna State Government is ready to partner with NBC on any initiative to support the youths. “I want to use this opportunity to congratulate all the beneficiaries and advise them to see these opportunities provided by this workshop as a chance to pull from the wealth of knowledge of the facilitators. Once again, I want to thank NBC for this initiative,” he said. Ekuma Eze, country manager in charge of CSR, Nigerian Bottling Company Ltd explained that the company is committed to supporting the Nigerian youths by making them employable and self-reliant hence the reason for ensuring the Youth Empowered initiative is extended to every part of the country.

“We know this is the beginning of a positive engagement with the state government in terms of empowering the young people. We are always willing and ready to partner with the government to support the youth in releasing their potentials” he said. Eze revealed that the programme will climax with a business idea and vision where participants will be allowed to pitch their business ideas to panel of entrepreneurs who will select the best business idea. “Our commitment as a business is that we are going to incorporate a company for the winning group after which we would source for funding to enable them actualize their ideas” he said. The Youth Empowered workshop is part of the Coca-Cola Hellenic global initiative designed to support over 500,000 young unemployed people globally between the ages of 18-30 by 2020, to build life and business skills and long-lasting networks that would translate to meaningful employment and self-sufficiency.

APT pension had a negative return of 0.73 percent. According to analyst, the asset allocation structure of pension fund managers is important in determining

their returns. The National Pension Commission (PenCom) has specified how PFAs should structure their portfolio with the MultiFund structure which match-

es ones age and risk profile to one of the four distinct funds. Also, their investment strategy is another important factor that determines the returns of PFAs.

165.7m litres of LPG imported in Q2 – NBS

he National Bureau of Statistics (NBS), said 165.71 million litres of Liquefied Petroleum Gas (LPG) was imported into the country in the second quarter. The NBS disclosed this in its “Petroleum Products Importation and Consumption (Truck Out): LPG (Q2 2018)” report released on Sunday in Abuja. According to the report,

April recorded the highest volumes of LPG imported into the country at 59.89 million litres. It said 55.37 million litres was imported in May, while the lowest volume was imported in June at 50.45 million litres in the period under review. The News Agency of Nigeria (NAN) reports that March recorded the highest volume of LPG imported into the

country in the first quarter at 39.47million litres. NAN also reports that the same volume of 33.83million litres was imported in January and February in the first quarter. According to the bureau, the statewide distribution of truck-out volume for the second quarter showed that 105.49 million of LPG was distributed nationwide during the period under review.

NAFDAC confiscates fake products in Delta

he National Agency for Food and Drug Administration and Control (NAFDAC) has confiscated some unregistered regulated products in Asaba, Delta capital. Abubakar Jimoh, director of public Affairs, NAFDAC said this in a statement in Abuja on Saturday. Jimoh explained that among the items seized were various brands of unregistered insecticides worth N250, 000

adding that they were seized from hawkers in Ogbeogonogo Market. He said that the fake products were confiscated during a mop up carried out by NAFDAC’s team on Aug.16. The spokesperson stated that during the same operation, various brands of herbal medicine were also seized from hawkers in Okpanam near Asaba in Oshimili Nouth Local Government Area.

He disclosed that some regulated products with fake NAFDAC registration numbers were also seized from one woman identified as Mrs Faith Onyinyechi in Obodogba quarters. Jimoh said that NAFDAC was more committed and determined than ever to rid Nigeria’s markets of fake products and ensure that those dealing in substandard products were dealt with accordingly.

BUSINESS DAY

Tuesday 28 August 2018

CityFile

Flood ravages 3 Kaduna local council areas

ouses in three local government areas of Kaduna State have been ravaged byfloodafteraheavydownpour. Ben Kure, the executive secretary, Kaduna State Emergency Management Agency, said during an assessment of the affected areas on Friday, adding, however, that no life was lost to the flood. He attributed the flooding to blocked drainages and the construction of structures along water channels. According to him, the agency has been mandated to visit areas affected to ascertain the level of damage. He listed the affected areas as Abubakar Kigo road in Kaduna North; Barnawa in Kaduna South; Karatudu, Narayi and Sabon Tasha in Chikun Local Government Areas, among others. He said that no fewer than

30 persons were displaced by the flood at Romi and are now taking shelter at the community primary school. “We will ensure that the IDPs are taken care of in collaboration with other stakeholders for their wellbeing,” he said. Kurethereforecalledon residents to be more vigilant as the raining season was not yet over. The flooding occurred after a downpour which lasted several hours between Thursday and Friday. The incident came days after NEMA and the Kaduna State Environmental Protection Authority (KEPA) had issued an alert that some local government areas in the state were likely to experience flash flooding. KEPA had warned residents on Tuesday of the affected areas to be on the alert and vacate to safer places.

Four nabbed over sale of babies in Enugu

he police in Enugu have arrested four suspects in connection with an alleged plan to sell babies. Ebere Amaraizu, spokesperson of the police in Enugu, said in a statement that the suspects were arrested on August 21 based on intelligence information. According to Amaraizu, the suspects were arrested by police operatives of the Awkunanaw Division in Enugu. “Four persons that specialise in the illicit business of sale of babies and traf-

ficking have been nabbed by police operatives. “The suspects gave their names as Amarachi Igwe, Chekwube Ofornwa, Gidi Mohammed all of new Gariki Cattle Market Awkunanaw and One Ndubuisi Eze of Abakpa within Enugu. “They were promptly nabbed over their deal to sell a two-month-old male child. A manhunt had been intensified on the two other fleeing members of the gang,’’ he said Amaraizu added that the arrested suspects were helping police in their investigations.

Fayose boosts small businesses allots stalls to traders RAPHAEL ADEYANJU, Ado-Ekiti

s part of efforts to deepen small and medium scale enterprises in Ekiti, the state governor Ayodele Fayose has commenced allocation of shops in the newly constructed Oja Oba ultra modern market in Ado-Ekiti, to petty traders. This, according to officials is in fulfillment of promise the governor made to the indigenes to make the shops available before the end of his tenure in October. During the distribution which held at the market’s premises, Governor Fayose told the prospective buyers that the process would take a ballot system and would be characterised by fairness and transparency. He maintained that the shops were for the good of the common and ordinary man who in need of a means of livelihood.

He further disclosed that each shop to be distributed on the ground floor would be sold for N200,000 while price for shops on other floors would be communicated to prospective buyers in due course. Fayose said the shops on the ground floor were targeted at small scale traders who deal in perishable goods while other floors would house big scale traders including boutiques, electrical stores among others. He also urged those who won the ballot to pay the required amount within seven days so as not to lose the opportunity. Reacting to the perceived sabotage by the incoming administration, Govenor Fayose assured that adequate protection and proper documentation would be made so as to ensure that the process follows a smooth pattern recognised by the law of the land.

Lagos State Governor, Akinwunmi Ambode (m), with Controller of Prisons, Lagos Command, Nigeria Prisons Service, Mr. Tunde Ladipo (l), and Secretary to the State Government, Tunji Bello, during a courtesy visit to the governor at his residence in Epe, Lagos, weekend.

Ambode raises concern over prison congestion …donates to NPS, may grant pardon to some inmates JOSHUA BASSEY

he Lagos State governor, Akinwunmi Ambode has raised concern over the congestion of prisons, with over 70 per cent of inmates in the state awaiting trial. The governor called for major reforms to decongest prisons across the country. Ambode at the weekend when he received a delegation from the Nigeria Prison Services (NPS), Lagos command at his residence in Epe, led by Tunde Ladipo, the controller. Ambode assured that the State Advisory Council on Prerogative of Mercy would look into some of the cases of inmates and see the possibility of granting official pardon to prisoners who had shown remorse. According to him, the inmates of good behaviour and

those ready to contribute meaningfully to the society would also be pardoned. “I am very concerned about congestion of prisons in Lagos State. However, there is no better time to carry out reforms in our prisons, and it is necessary, especially as regards the decongestion of the prison,” he said. Ambode directed the special adviser on Primary Healthcare, Olufemi Onanuga, to provide adequate health services for all the prisons in the state so as to prevent outbreak of diseases. The governor also donated vehicles and other equipment to the Lagos Prisons Service, saying it was his administration’s contribution to make the prisons more conducive. “For a State like Lagos where development is ongoing, it is bound to attract people from other states and

neighbouring countries, and this means increase in population. “We are providing this critical assistance to the prison authorities to make them more efficient and make our prisons more conducive,” Ambode said. The Lagos command controller of prison, Ladipo, said that the visit was to remind the governor of their requests for some vehicles and equipment. These, he said, were to enhance their capacity to effectively transport and secure inmates awaiting trial. Ladipo said that as at January 31, 8,191 inmates — 7,887 males and 304 females were in custody across the five prison facilities in the state. He listed the prisons include the Maximum Security Prison, Kirikiri; Medium Security Prison, Kirikiri; Female

Security Prison, Kirikiri; Ikoyi Prisons and Badagry Prisons. Ladipo said that out of the number, 6,290 inmates were awaiting trial and attending the various court jurisdictions in the state. “The challenges toward fulfilling the responsibilities of effective prison duties are indeed overwhelming and seriously challenging especially in a state with a large inmate population like Lagos,” he said. Ladipo, who commended the governor for his support to security organisations, said the Lagos prison command was working toward reforming prisoners. He revealed that two inmates, Kabiru Tunwase and Oladipupo Moshood were currently pursuing PhD in Business Administration and Peace and Conflict Resolution respectively.

Police kill suspected armed robbers in A’Ibom ANIEFIOK UDONQUAK, Uyo

our suspected armed robbers have been gunned down by the police in Akwa Ibom State few days after they attacked a filling station near the country home of former governor, Godswill Akpabio. The masked gunmen who operated on motorcycles were killed during an operation in a bank at Ikot Ekpene after robbing ATM users and shop owners at gun point in broad daylight. Adeyemi Ogunjemilusi, the

Commissioner of Police (CP) in Akwa Ibom, said in Uyo that while four were gunned down in a gun battle with the police one of them Daniel Umoren was captured alive after sustaining gunshot wounds. “My men of Ikot Ekpene Division led by the Divisional Police Officer Benjamin Achegbani, trailed and engaged the hoodlums in a fierce shoot out , four of the armed robbers were shot dead while one Akwaowo Daniel Umoren of Ikot Inemme in Essien Udim local government area was arrested

with an AK47 with 60 rounds of 7.62mm live ammunition. “Items recovered from them include 5 locally made pistols, 8 live cartridges , 2 rounds of 5.5mm ammunition, 1 AK47 magazine,3 Expended cartridges , 2 masks, 6 assorted phones, three motorcycles and physical cash of N63,000. “Our pleminary investigation revealed that the same armed robbers were those responsible for the robbery at Gulfsafrin Filling station, located at Ukana Ikot Ntuen close to the residence of Godswill

Akpabio” Ogunjemilusi said. The CP attributed the recent upsurge in robbery operations in Ikot Ekpene to infiltration of the commercial motorcyclists union by armed robbers who pose as commercial motorcyclists warning that the curfew on motorcycles in the area would be sustained until the association fish out the fake members among them. “The command is poised to sustain her fight against every form of criminality in Akwa Ibom and committed to protection of lives and property,’’ he said.

BUSINESS DAY

AVIATION

GUIDE

C002D5556

Tuesday 28 August 2018

in association with

‘Nigerian pilots should be involved in new national carrier’ Abednego Galadima, the newly elected president of the National Association of Aircraft Pilots and Engineers (NAAPE), at the recent “Unveiling NAAPE Compendium of 50 Outstanding Nigerian Aircraft Pilots and Engineers” In Lagos bares his mind on the newly unveiled Nigerian Air and the benefits it brings. Galadima spoke on other initiatives he is trying to put in place in favour of unemployed pilots and engineers and to better rank safety performance of aviation activities in the country. Excerpts: In growing the profession, how are you handling the issue of unemployed pilots, and gathering more flying hours after graduation? t some point we have a case where we have over 200 to 250 unemployed associate pilots. Over 600 Pilots and engineers, are unemployed which is not good. You know the rate of unemployment in the country. This one is particularly a problem, because these two professions require you to be current and most of the ones that were trained, were trained with huge sums. So the investment will just be lost if they do not retain currency, because they will not be employable again without currency. That is why we are advocating that government do something. In fact, we have put in a proposal to a number of our partners; we are still looking for more partners to fund it. Just like what the government is doing for the unemployed through the N-Power programme. If that can be extended to aviation, NAAPE is willing to partner with anybody such that if Nigerian College of Aviation Technology (NCAT) is given some money, the young pilots will go and build hours flying aircraft there and also use simulator as well. It will help them build more hours to gather more experience and expertise. For the engineers too, we are putting a scheme in place in that proposal, where these people can be deployed in various aviation entities where we have senior engineers that will take them through On The Job training and guide them properly. These are the things we are doing. We

have a proposal just as I have said and we are approaching the Ministry of Transportation (Aviation Sector) with Local Content Development Board. We will approach Petroleum Trust Development Fund (PTDF), Industrial Training Fund (ITF) and approach their conscience. What can the Nigeria Civil Aviation Authority (NCAA) do better despite the safety record achievement of the country so far? We expect NCAA to continue to provide the necessary leadership in service such as navigation and communication. If they can fix the runway issue especially the one on 18 Left before it causes any major incidence, and other relevant complaints here and there. On our part NAAPE we announce the institution of an annual aviation safety awards going forward. With this initiative, we would have a technical board in place to review safety consciousness performances and safety practices in aviation, the culture. This is for both private and public organisations and then we will give them some rankings. We believe the initiative will entrench and reward safety culture. We are going to do that across board. We want to call on stakeholders to cooperate with us on this programme and partner with us, because it is a token that we are giving back as a body into the industry. Nigerian Air has been unveiled. How are you as NAAPE keying into the project? The project has our total support. Every investment in the airline business is always welcomed by NAAPE. For us, it is more than the National

Abednego Galadima

Carrier, we know that it will create jobs and our members stand to benefit more in that regard. We want that that National Carrier came in yesterday. We expect that due process must be followed and transparency should be harnessed. On the plight of former staff of Nigerian Airways, I want to seize this opportunity to call on government to please look into settling their arrears. Are you discussing with the Minister of Aviation on unemployed pilots and engineers as Nigerian Air is coming up? Like I said, we are putting an initiative in place. We hope that it would

be looked into well. More than that, if the National Carrier comes, it is a plus to us. While they absorb some, I am sure and there will be some migration from one airline to the other. It is our hope that some of the unemployed will find somewhere to fit in. They are talking about 5 aircraft to start the operation. You know that that will require a minimum of 50 pilots. The spiral effect will require more, 100 people engaged. I will always call on our people to be patriotic. The issue of compliance to Executive Order 5, giving Nigeria jobs to Nigerians is key to us. It is not justifiable to have an airline and just

go and be bringing expatriates, does not speak well of our patriotism. We expect that this patriotic zeal, the investors should have. I want our social partners to see us as such. We are partners in progress, not competitors. We are not competing with them. We are not in NAAPE to pull down businesses. No. When I assumed office, my dealings and my philosophy is always aiming at synergistic win-win. Win for the employer, win for the employee. Let them be rest assured that we are going to be partners. Once we engage, we understand ourselves more. The erroneous perception on the union is in the past. As a body (NAAPE), what do you expect from the government to make the industry better? As a body we expect that the aviation roadmap project should be adhered to. Particularly, we want to see a situation where a Maintenance Repair and Overhaul (MRO) facility comes to place, so that this huge capital flight we experience from maintenance aircraft would be checked. In so doing, it would improve on the experiences of our members. We want to see that one (MRO) come quickly. In terms of legislation, we want to see a situation where more is given to General Aviation where investors will find reasons to invest. The General Aviation operator is expected to go through the same process of getting Air Operators Certificate (AOC) with commercial operators defiles logic. In these days where we talk about small medium scale businesses, I think that should be factored into the scheme of things.

Air Peace takes delivery of 2nd B777, assures on international operations

ir Peace on Saturday took delivery of its second Boeing 777 -300 aircraft. In a related development, the airline, which made history as the first Nigerian carrier to acquire and take delivery of a Boeing 777-200 on February 23, 2018, assured that it would soon

announce dates for the launch of its long-haul operations to London, Houston, Dubai, Sharjah, Guangzhou-China, Mumbai and Johannesburg. The new aircraft, a 320-seater Boeing 777-300 named “Ojochide” and marked 5N-BUU, was flown into the Murtala Mohammed In-

ternational Airport, Lagos by Victor Egonu, Air Peace Chief Pilot, and Emmanuel Iwhiwhu, Senior First Officer. It touched down to a rousing welcome by staff of the carrier, aviation workers and water salute staged by men of the Fire Service of the Federal Airports Authority of

Nigeria (FAAN) at about 1.36 p.m. Speaking moments after the aircraft landed, Allen Onyema, Air Peace Chairman/Chief Executive Officer, assured that the airline was now ready to begin its international operations and fix the challenges of Nigerians, Africans and other travellers on the long-

haul routes. Onyema, who was represented by Oluwatoyin Olajide, Air Peace Chief Operating Officer, said the carrier’s international operations would boost Nigeria’s economy, create more jobs in the nation’s aviation and allied sectors and offer travellers an exceptional choice.

BDTECH

BUSINESS DAY

Tuesday 28 August 2018

In association with

The prospects of 5G in Nigeria Bayo Adekanmbi is the Chief Transformation Officer at MTN Nigeria responsible for accelerating business performance, innovation and advanced analytics. He is also the convener of Data Science Nigeria, a non-profit initiative dedicated to promoting data science in solving Nigeria’s business and social developmental problems. In this interview with Jumoke Akiyode-Lawanson, he talks about mobile technology, the future of data and the possibilities of a fifth generation (5G) revolution in Nigeria. Excerpt. Mobile technology has become an integral part of our lives, can you briefly expand on its capabilities? oday, communication technologies are all about connecting people- to loved ones, to knowledge, to opportunities and much more. But prior to this, it was predominantly being used for voice communication- connecting places.The world has moved from using telephones for simple voice calls to include data transfer, video conferencing, e-mail, instant messaging, and internet browsing, amongst others. At the heart of these services are mobile networks, which allow for the integration of communication media— be they voice, audio, video, or data—over a single common network. A great upgrade from the Public Switched Telephone Network (PSTN) i.e. your typical landline, which only allowed individuals to place calls at designated areas; mobile networks establish wireless connection to terminal devices by radio, thereby enabling mobile users to exchange information seamlessly any time, any place. They give people more advanced features including a larger transmission capacity, less battery power usage, wider geographical coverage area and reduced interference from other signals. Beyond the primary role of communication, mobile networks give people access to support and connections that has transformed every area of their lives, from health to financial services, transportation, to say the least.

What are the major limitations to the growth/development of mobile networks in Nigeria? While the telecommunications sector has grown significantly in Nigeria, it is inhibited by a number of factors – particularly funding, inadequate infrastructure and some bureaucracy in the approval of right of way. The vandalism of existing facilities, theft and multiple taxation by government agencies can also impede growth. Lack of infrastructure, especially electricity, increases the

Bayo Adekanmbi

cost of doing business, which in turn limits the availability of funds for expansion efforts. The telecoms industry is highly capital intensive and the higher operating costs caused by the reasons detailed above, pose a huge problem to the development of mobile networks. Often, loans have to be accessed in foreign markets, and with the instability of the Nigerian economic climate, the cost of borrowing increases the costs of operating in the market exponentially. These considerations limit the number of new entrants in the market, including those that provide support services like the maintenance of masts. 5G seems to be the rave of the moment – but have we fully explored and realised the potential of 3G and 4G? Technology has been evolving rapidly these past few years, offering bigger and better solutions. A few years back, consumers did not even know it was possible to have multiple functionalities on a mobile device, as they were still amazed by the mere fact that they could communicate over long distances. Why didn’t we wait for them to get enough of that feeling before introducing in-

ternet browsing and the like? It’s simple. As technology evolved, industry players were able to better project future uses of new solutions in their space; hence, they began to anticipate consumers’ needs. Over the years, the continuous trend of disruptive innovation has resulted in a more sophisticated, discerning customer, constantly looking for solutions that will maximise their user experience. With this reality, innovation has become a necessity. The 3G and 4G network may seem great, with the former offering webbrowsing and access to the Over the Top ecosystem, which allows you to make calls and send media that bypasses your network operator e.g. WhatsApp and the latter; higherspeed data and video streaming services, but 5G technology infrastructure has far better capabilities. What are the capabilities of 5G? The 5G network is expected to come with major improvements on its predecessors, with a range of new technologies. In terms of speed, the 5G network infrastructure will be up to ten times faster than the 4G network. 5G’s instant response time i.e. lower latency equips it to vastly improve quality of living; as users ob-

tain a better experience–from digital financial services for example, to self-driving cars, which will become more feasible than is currently possible on current 4G/LTE bandwidths. Also, it is expected to significantly change healthcare, particularly telemedicine, as we know it: It will support medical devices and innovative applications that will define new possibilities in imaging, diagnostics, and patient data analytics and treatment. 5G’s speed allows near-life videos that accommodate these possibilities in healthcare, as well as, virtual education and precision agriculture. The key advantages of 5G- tight network security and low power consumption-enables it to support mass machine type communication which was formerly unrealistic to implement, due to its predecessors’ limited capacity. This is expected to lead to the proliferation of smart home devices, logistics and utility metering. This next generation of mobile network is expected to be a key asset to support societal transformation, leading to the fourth industrial revolution, impacting multiple sectors. Are these capabilities plausible in a market like ours, which is still rife with underdevelopment? I believe some aspects of the technology will be utilised effectively in the Nigerian market, for example, digital financial services – which have become a vital aspect of our financial system – as well as, health and education. A more stable economic climate, investment in infrastructure, and generally, increased ease of doing business will be necessary to achieve full utilisation of the 5G technology. Besides, the technology is expected to be released in 2020, a lot can be done before then, if we are committed to change. What is MTN doing to see that these capabilities are fully realised? MTN constantly works to break barriers by democratising voice and data connectivity in order to improve user experience. To achieve

this, we have invested over N800 billion on network infrastructure in Nigeria. In 2017, we signed an MOU with Ericsson to collaborate on the rollout of 5G technologies in South Africa. A 5G trial was conducted early this year, and it achieved a throughput of more than 20Gbps with less than 5ms latency. This is the fastest internet speed achieved on a mobile network in Africa. The trial was based on 5G prototype radios and commercially available baseband hardware, which enabled 5G internet speed. We have also tested a range of 5G use cases and applications in our Test Lab in South Africa, which will lead to commercial deployment in the near future. Nigeria expects that MTN, being the largest telecommunications operator will be one of the first to deploy 5G. However, MTN’s plans to deploy 4G LTE has been stalled mainly because of its inability to make use of the 800MHz spectrum formerly used by Visafone which it acquired a few years ago. Do you see this as a hindrance also to the deployment of 5G in the future? As I mentioned earlier, consumers today are hungry for data. The deployment of the 800 MHz spectrum acquired from the Visafone deal is expected to cater directly to the increasing needs of our consumers. However, there has been an inability to make use of this spectrum due to regulatory issues. There has been a false perception that an increased level of investments into data networks will lead to market dominance, but we have to consider the bigger picture – in order to realize the goal to scale up broadband penetration to 30% by 2020 (as illustrated in the National Broadband Plan), there have to be continued investments into the data networks. 5G tests are still ongoing, and it is expected that it will go commercial by 2020. However, we fear we might face similar issues in deploying the 5G network. Therefore, it is essential that we continue to grow the capacity of the data network while 5G development is ongoing.

BUSINESS DAY

Tuesday 28 August 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Why it is important for businesses to build cyber resilience NIYI YUSUF – Country managing director, Accenture Nigeria

he confluence of social media, mobile devices, analytics and cloud solution especially pervasive platforms like Google, Facebook, Twitter, and WhatsApp, have led to remarkable advances in digital solutions that are improving the way we live and work. The digital trend is further accentuated in Nigeria by the youthful demography and increasingly affordable devices. Nigerian companies are racing into the digital future— adopting technology-enabled operating and business models that drive bottom- and topline growth. These include SMEs, Startups, FInTechs, Corporate and listed companies taking advantage of the many benefits going digital is offering business. But they are not prepared for the new cyber risks that come with the connected, data-driven future enterprise. According to Cybint, there is a hacker attack every 39 seconds. Since 2013 there are 3,809,448 records stolen from breaches every day while some industry conservative estimates indicate Cybercrime will generate at least $1.5 trillion in 2018 on a global level, and Nigeria is not immune. To be cyber resilient, companies need to infuse security into everything they do—and every new thing they are preparing to do. Future business relies upon constant, intimate digital connections with suppliers, partners, virtual workforce and customers to stay relevant and competitive. It

Muhammadu Buhari, President of the Federal Republic of Nigeria, receiving Umar Garba Danbatta, the executive vice chairman, NCC who paid sallah homage to the President in his hometown at Daura, Katsina state, on Wednesday 22nd August 2018.

uses intelligent technologies and big data in all facets of business operations—from C-suite decision making to crafting custom offers for internet shoppers in pursuit of profitable growth. Accenture, asked 1,400 C-suite executives, including Chief Information Security Officers (CISOs), how they prioritize security in new business initiatives, whether their security plans address future business needs, what security capabilities they have, and their level of internal and external collaboration on security. The company found that 38% of the companies bring the CISO into all discussions at the beginning stage of considering new business opportunities. Additionally, half of the CISOs admit that their responsibilities are growing faster than their ability to address them.

Business will continue to have more intimate digital connections with suppliers, partners, virtual workforce and customers to stay relevant and competitive. This comes with additional cyber risk. All that sensitive data, connectivity and automation multiplies the opportunities for hackers by expanding the “surface area” exposed to cyber-attack. And, because digital systems are so embedded in daily operations, the potential damage from even a single security incident is magnified. You do not need to roll back your digital agenda as there are ways to build the cyber resilience you need to grow confidently. To do this there are three key things you need to build into your business. The first is to develop a “bend, but don’t break” approach to securing the en-

terprise that combines the disciplines of cybersecurity, business continuity and enterprise resilience. The second is the ability to operate while under persistent threats and sophisticated attacks. This will enable your business embrace disruption safely, strengthen customer trust and boost shareholder value. Lastly, you must elevate the role of security in your organization and this requires leaders to communicate its importance and manage its application. Additionally, the organization can do five things to build cyber resilience 1. Make your business leaders Resilience Leaders - by including the security team in strategy sessions and extending expertise and accountability for cybersecurity to the front-line of the business. 2. Support the security

Konga begins back to school promo JUMOKE AKIYODELAWANSON

leader as a trusted business enabler - by helping the CISO to be more “business-savvy,” and creating new security roles within business units to bridge the gap between security and the business. 3. Make employees part of the solution - by ensuring all employees are trained in the basics and engaged to act as advocates for cybersecurity, and potentially using technology to track suspicious behaviors. 4. Be an advocate for protecting customers - by educating customers about how to protect themselves while securing consumer data to meet new regulation (such as the EU General Data Protection Regulation). 5. Think beyond your enterprise to your ecosystem - by collaborating with partners, suppliers and other third parties to share cybersecurity knowledge, products and services. You can win the war. Corporate security experts have made great progress in the war against cybercrime. But winning the next war will require both new strategies and new weapons. Top leaders can ensure the success of the connected, intelligent, autonomous business by making sure that security is a core competency across the organization. If they do this, companies will not only keep the enemy at bay, they will also build trust with customers and partners and develop the bulletproof business processes that will make them stronger competitors. With pervasive cyber resilience, the future business can grow with confidence.

Nexgo awards Global Accelerex as best partner on e-payment solutions JUMOKE AKIYODE-LAWANSON

lobal Accelerex, a top payment technology provider in Nigeria has received the Best Partner Award from Nexgo, of China’s biggest electronic payment and technology solutions provider. The award was which was presented during the Nexgo Partners’ Summit in Shenzhen, China, was given as an honour to enduring partnerships as well as consistency in delivering superior e-payment solutions. According to Global Accelerex, this honour came despite stiff competition from many other notable names in the digital industry world-wide and the company is once again proud to be

at the top. Tunde Ogungbade, the Managing Director of Global Accelerex, received the award dedicating it to the staff of the company and saying that; “the company is delighted to be recognised by Nexgo with the Partner of the Year award.” We are honoured to have received this recognition for providing customised terminal solutions that suit varying business needs not just in Nigeria, but across Africa, by our valued technical ally. We will not rest on our oars in the quest to deliver seamless e-payment technology to our customers,” Ogungbade said. The Nexgo Partners Award recognises outstanding partnership that is strategic and sustainable. It also

rewards partners that developed innovative payment applications which impacted positively on Nexgo’s developmental capability. This award comes just weeks after Global Accelerex was awarded Fintech Company of the Year at the Digital Pay Expo, the biggest e-payment event in Africa. “Global Accelerex is among the partners we signed-on at the early stage of international business and over the years, we have made remarkable achievement in terms of growth and contribution to the cashless policy in Nigeria. This is a win-win for both our companies as our alliance with partners like Global Accelerex has catapulted our position on the Nielson Report from No. 12 to No. 6,

while Global Accelerex has become the preferred payment terminal service provider in Nigeria. We believe in this partnership and know that in the coming years, we will witness new achievements of the two companies in Nigeria and Africa,” said Yang Min, Managing Director of Nexgo. Yuan Liang Wei, Deputy General Manager of Nexgo International said; “Global Accelerex has demonstrated a strong innovative culture. They received high marks for their collaborative work with Nexgo and their delivery of an array of cutting-edge solutions on payment terminals that work for Nigeria and SubSaharan Africa.” “The solutions Global Accelerex deploy on the

Nexgo family of products have tremendously improved the business system and performance of customers. We are honoured to have this company as a key partner in building a stronger alliance that fosters creativity,” Wei added. Global Accelerex has set the standard for innovation in cashless payment systems, not just in Nigeria, but in sub-Saharan Africa. It is renowned for its pedigree in world-class technology and excellent customer service, and its commitment to provide e-payment solutions that evolve with customers’ needs. By simplifying payment solutions, Global Accelerex help organisations accelerate their business processes to ensure maximum profitability.

s part of efforts aimed at giving its loyal customers the best summer shopping experience, Konga, one of Nigeria’s leading e-commerce companies, has put on sale thousands of products from its massive inventory at unprecedented discounts for its ‘Back to School’ promotion which runs from Monday August 27th to Sunday September 9th 2018. Konga says the promotion will offer eager shoppers access to the wide range of products online @ Konga.com and offline in every Konga retail store nationwide. Tagged #BacktoSchoolwithKonga, the two-week campaign will see genuine products across multiple categories including mobile phones, laptops and other computing devices such as notebooks, smart printers and Kids tablets, fashion items and accessories, a wide range of Electronics and the best Home and Kitchen appliances from the biggest brands. Further raising the excitement for the Konga Back to School campaign is a series of social media activities including quizzes which will pitch parents against their kids, a hashtag campaign that will see lucky winners visit the Konga office for a one-minute shopping fiesta, a photo contest on how kids spent their holidays, with winners getting Back to School essentials and school supplies as well as kiddies and adult games, among others. “With #BacktoSchoolwithKonga, we intend to offer not only returning students and other individuals a chance to shop a wide range of essential products for the new school season at amazing prices, we are also making a bold statement with bulk purchases and sweet deals for educational institutions nationwide, corporate organizations, small businesses and other bulk shoppers with flexible payment terms,” said Nick Imudia, Konga CEO Online. He added that; “In addition, shoppers can enjoy same day delivery on select items for orders placed before 12pm plus flexible payment such as pre-payment and our recently relaunched payment on delivery options, among others. You also enjoy multiple delivery options by K-Express as well as the choice of being able to pick up at any Konga retail store of your choice. Our customers can also walk into any of our stores nationwide and with the help of our staff, order the items not available in-store, then pay and collect when it is delivered at the store or we deliver it at their door-steps.”

BUSINESS DAY

Tuesday 28 August 2018

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Experts bemoan inadequate funding for STEM education KELECHI EWUZIE

s Nigeria continues to grapple with the unending challenges in her education space with its attendant socio-economic implications, experts have indentified need to revisit the issue of funding for Science, Technology, Engineering and Mathematics (STEM) education across all levels. The issue of short funding, they say, has failed to equip students with the right skills needed to compete globally. According to them, the federal government has consistently failed in its responsibility to fund STEM education which would have propel Nigeria to the height of being one of the 20 largest economies in the world by the year 2020. Ibilola Amao, principal consultant, Lonadek Oil and Gas said that at the moment the federal government has put

little or no resources towards actualising the vision 2020 as it pertains to STEM education . According to her, “If we could take 20 to 30 per cent of the money being spent or shared by politicians into education, Nigeria will not be where it is today. Countries that have succeeded have on an annual basis, increased their budgetary allocation on education”. Amao while speaking at the closing ceremony of a one week Vision 2020 youth empowerment initiative summer camp on Science, Technology, Engineering and Mathematics (STEM), for select public schools students in Lagos, said the essence of the STEM summer camp was to encourage talents to become game changers and problem solvers for a new Nigeria. She further opined that the programme also aimed to help students develop and implement innovative ideas that can make real life impact on the society, and also expose them to career opportunities available in the STEM industries

L-R: Anyalemechi Amarachi (3rd position academics), Lateef Aishat (Best behaved girl), Ivie Karen (Vision 2020 Programme Coordinator), Toyin Cameron (Public Affairs, Sasol Energy), Ibilola Amao (Principal Consultant, Lonadek), Joshua Phebe (1st position academics), Aluo Angelica (2nd position academics) and Olakunle Olatunji (Best behaved boy).

such as Energy, Infrastructure, Manufacturing, Engineering, Agriculture, Technology sectors of the economy. She called on the managers of the economy to ensure that the 2019 budget will be a total deviation from what we have at

hand, adding that there should be an increase in human capital development. Vision 2020 is a youth and national development initiative which commenced in May 2006. The initiative was aimed at developing leader-

Bowen, UNILAG, EKSU emerge winners of Maritime Blueprint Competition KELECHI EWUZIE

owen University, Iwo; University of Lagos (UNILAG) and Ekiti State University (EKSU), have emerged winners of the Maritime Blueprint Competition in which law students from six universities participated. The competition, sponsored by SIFAX Group, is one of the activities of the Taiwo Afolabi Annual Maritime Conference, which is in its third edition and held

in partnership with the Maritime Forum of the Faculty of Law, University of Lagos. At the end of the keenly-contested competition, which used a debate format, Bowen University, Iwo, represented by Adekeye Olanrewaju and Dunmade Samuel emerged the overall winner with 85 points while University of Lagos represented by Pius Bankong and Ipinnuoluwa Ade-Ademi and Ekiti State University by Durola Ayobami Tosin and Oyewole Sunday came second and third respectively with 81 and 78 points. Other schools that

participated were University of Benin, University of Ilorin and Obafemi Awolowo University, Ile-Ife. The first round of debate was on the merits and demerits of foreign direct investments in the maritime sector. The final round of the debate was on the topic “Port Costs & Port Charges: A Recurring Decimal Under Port Reform Regime.” Mouth-watering prizes including laptops, smart phones and cash were given to the winners. Taiwo Afolabi, group executive vice chairman, SI-

L-R: Durola Ayobami Tosin, Ekiti State University and third prize winner; Adekeye Olanrewaju and Dunmade Samuel, Bowen University and first prize winners; Basil Agboarumi, Acting Managing Director, Skyway Aviation Handling Company Limited (SAHCOL); Pius Bankong and Ipinnuoluwa Ade-Ademi, University of Lagos and second prize winners; Oyewole Sunday, Ekiti State University, third prize winner and Damilola Oguntade, Vice President, Maritime Forum, University of Lagos during the prize presentation for winners of the Taiwo Afolabi Maritime Blueprint Competition.

ship, entrepreneurial, professional and vocational skills among Nigerian youths, especially in the area of Science, Technology, Engineering, and Mathematics (STEM), and also provides them exposure to industry.

Toyin Cameron, Public Affairs Manager for SASOL in her charge to the participants emphasised the need for youths to embrace the act of personal branding. “ Youths at this stage should begin to create a brand and profile that they would be proud of in future,” she said. She urged them to act with seriousness on the knowledge and experiences they have garnered from the STEM camp for the betterment of themselves and Nigeria in general. The programme hosted about 41 students from 16 secondary schools in Lagos state. The camp comprised of classroom sessions, where students were exposed to STEM skills such as Robotics, STEM in the Society, Digital Marketing, Renewable Energy, Health and Safety. The summer camp programme created opportunity to enlighten and empower the students with STEM skills which can be further harnessed to solving challenges in our community.

ICAN inaugurates new chairman FAX Group, speaking on the competition, said the need to deepen the knowledge base of the law students and to stimulate their interest in the country’s maritime industry were responsible for the company’s sponsorship of the competition. “We don’t have enough maritime legal experts in the industry as I speak to you. Very few students also show interests in the legal aspect of the sector. Having identified this, the company decided to take up the sponsorship of the competition. “We believe that this gesture would go a long way in stimulating interest of students in maritime law. I am personally leading the mentorship charge because as a lawyer, I have experienced firsthand the many opportunities inherent in the application of law to the maritime sector. “We are also doing this because at SIFAX Group, it’s part of our corporate philosophy to positively affect the society,” he said. SIFAX Group is one of Africa’s fastest growing multinational corporations with diverse interests in Maritime, Aviation, Haulage & Logistics, Oil & Gas and Hospitality.

Joseph Maurice Ogu

he Instituted of Chartered Accountants of Nigeria (ICAN) has inaugurated Omolola Funmi Oke as its 17th executive chairman in Lagos. Oke in her acceptance speech pledged to uphold the constitution of ICAN District Societies. While reiterating her support and loyalty to the President and Governing Council of ICAN, Oke promised to carry her executive members along to take part in the activities of the Institute in order to continue to showcase Lagos and District Society as the Premier District. Furthermore, during her chairmanship year, the District Society’s “Catch Them Young Programme” will be strengthened so that the Society can reach out “to the young ones in the society with the aim of guiding them towards actualising their dreams of becoming chartered accountants” Oke said. Climax of the investiture ceremony was the emotional transfer of power from the immediate past chairman, Lydia H. Ajayi, to the current

chairman, Oke. In accordance with the constitution, Oke took the oath of office. The event which took place at Golden Gate Hotel, Ikoyi, Lagos, witnessed members of ICAN both in and outside Lagos, members of ICAN presidency, captains of industries among others, in attendance. The newly inaugurated chairman administered the oath of office to the newly elected executive members. Together with the executive members, which comprise Constance Nwokejiobi (Vice Chairman), Adedeji Olumide (General Secretary), Alesta Wilcox (Treasurer), among others, Oke will pilot the affairs of ICAN, Lagos and District Society for the 2018/2019 chairmanship year. Oke was elected, alongside other executive members, during the District’s Annual General Meeting held on 26th April, 2018. Oke, a graduate of Accountancy from the University of Lagos, is also an Associate Member of the Chartered Institute of Taxation of Nigeria (CITN). The society’s Members Annual Handbook was launched, during the investiture

BUSINESS DAY

C002D5556

EDUCATION

Tuesday 28 August 2018

HUMAN CAPITAL

‘Our education policy must develop the 21st century core learning skills’ Babs Olugbemi, chief responsibility officer, Mentoras Limited and Founder/CEO of the Positive Growth Africa in this interview with KELECHI EWUZIE assesses the performance of the education sector and the need for a policy to drive 21st century core learning skills. Excerpt. Looking at the policy of education in Nigeria, do you think it is working? What is the way forward? he purpose of any education policy is to achieve the set objectives, mostly for growth and development throughout the nation. Any policy that is not achieving the intended result cannot be said to be working. The credibility and potency of any policy are in its outcome. We cannot compare our outcome with a country like Singapore, which was the best in the 2016 programme for International Students Assessment (PISA). Singapore came top out of 70 countries, including the leading firstworld countries in English, Mathematics and Science and that has translated into development in Singapore as well as in her Gross Domestic Product. Our educational policy needs to be revamped. We must first locate the failure points. Is it at the conceptual, implementation or management stage? That something is not working does not mean it is a problem in totality. It is an opportunity for us to review our approach to education and come up with 21st century compliant policy and curriculum. Our current education policy must develop the 21st century core learning skills of critical reasoning and problem solving, creativity and imagination, collaboration and communication, citizenship, digital literacy, student leadership and personal development in our students and also gives options to students before we can consider it effective. The way forward is to ensure we do a holistic review of our education system, the capacity gap we want to address and the state of development we envisage. The current education system is on mass production of graduates, which has never helped. We must determine our growth and capacity gaps, and adopt strength-based and leadership focus education. In the United Kingdom, students go to the colleges before going through the universities, the college is to bring out the strength of the students and prepare them for the university education. We can adopt a similar approach but most importantly are that our education should take cognisance of the interest and strengths of the learners. Learners learn better when

they have the opportunity to choose what to learn. Though, we have exceptional students who excel but creating a learning environment for the majority of the learners to excel is desirable. As a concerned stakeholder, how best do you think Nigerian education system can be managed to achieve productivity and competitiveness? For our education system to be better managed, we must give focus to the implementation and management stages of the policy. The foundation must be strong enough to accommodate the building. The foundation of any education system is the human resources that will manage it. It is not until the recent time that attention is being given to the teachers. Teachers are national assets and must be trained, valued and adequately rewarded. No teacher wants to wait until heaven to get his or her rewards when there are bills to pay. Our leaders should give education a major priority in the budgetary process. It is not enough to allocate money that will not be accounted for or impact the school system. I love what President Jakaya Kikwete did in Tanzania when he was the president. Aside committing 20 percent of the national budget to education, he monitored the implementation and achieved 96 percent in primary school enrolment with over 3,000 new secondary schools and 1,200,000 fresh enrolments. Beyond the investment in infrastructure, is the investment in the capacity of the teachers. I admire his gut, and that was why I dedicated a page to him in my book, “The Teachers’ Fortress with the subtitle, a Simple Guide to Becoming an Efficient Teacher and a School Leader of Impact.” Explain why you authored the book for teachers and how you are impacting the teachers? In 2015, I was worried by the rate of failure of WAEC, NECO, ICAN and the Law School examinations. In an attempt to help in the nationbuilding process, I authored The Students’ Fortress (ten practical rules for passing your exams excellently). The book was approved by the Lagos and Ogun states ministries of education. I was invited by WAEC to review the book on the WAEC Infobox programme for eight weeks on NTA and

Babs Olugbemi

TVC stations. My NGO, The Positive Growth Africa (PGA) organised the Students Fortress Conference, which was the gathering of 4,500 students and 200 school leaders of the Lagos Education District 1 at the Agege stadium. We had Elder Felix Ohiwerei, Fela Durotoye and Maxwell Ubah as major speakers. I was the convener of the event. At the event, we launched the Students’ Fortress Club with the support of the Tutor General of the district, Abiose. The conference was a major success for us at the PGA. I was reflecting on the success of the conference when the idea to write a book for the teachers dropped into me. I am happy I yielded myself to the idea despite my tight workload. I was a banker in one of the top banks when I authored my first five books. The guiding thought behind authoring the book for teachers is simple. If we engaged the students for just five hours of the conference, and it was so impactful, what if we train these teachers who are the custodians of these students to act as the leaders, life coaches, nation builders, emotional intelligence experts? We will witness more transformation than many students’ conferences would ever produce in a short time. One of the major targets of your project PYEE is to support Nigerian students to achieve academic excellence. How successful have you been in this regard, considering the challenges that public education system still

grapples with in the country? One of the programmes of the PYEE is the students’ fortress conference and the establishment of the students’ fortress club in 99 public secondary schools in Agege, Ifako Ijaiye and Alimosho LGs. We must give kudos to the leadership and management of the district 1. Within 12 months of the conference and the establishment of the club supported by many other initiatives of the district, the pass rate of the district in external exams moved from 39 percent to 71 percent. The district was ranked fifth out of sixth when we did the conference and is likely to be ranked 1st or 2nd presently. Aside academic excellence, the district is a model in sports and other extra curriculum activities judging by the number of awards and honours for the students. This can be replicated in other districts and states in Nigeria. That is what Mentoras Limited and the PGA will be focusing on. I will be leading my teams to develop organisations into institutions at Mentoras Limited where I serve as the Chief Responsibility Officer. I will be volunteering my private time to the Positive Growth Africa as its Founder and CEO with responsibility for policy formulation and implementation. What is the difference between organisations and institutions? Organisations are set of people organised to achieve results. There are assumed culture, core values and identity, but they are subjugated for the results or behaviour

that appeared to be producing the results. In institutions, the culture, core values and the environment enables the results. The results achieved in an institution under the platform of culture and value system are more enduring and sustainable. You can achieve results violating other people’s rights, being abusive, and have no respect for the core values and yet be praised. This will not be acceptable in an institution. At Mentoras Limited, we work with businesses to developing enduring culture, core values and positive working environment that simulate top of the range performances. We help the employees and the managers to think and act like the owners of the business. We view all employees as leaders of their respective process, and products. It must be very tough combining coaching, mentoring, business and leadership training in Nigeria. What are the major challenges you have encountered doing all these tasks? The major challenge is viewing what we do as trainings, whereas I only use it as a platform to achieve bigger objectives. I train to coach and always develop a riot period (6090 days post engagement riot) to monitor changes and results from each of my engagements. I have been mentoring people for the last 20years. I do that basically through my blog, telephone calls and few one to one engagements. Another challenge is being able to convince some of the growing business owners with huge potentials to invest in putting in place structure and processes. It is often difficult for prime movers or owners of organisations to let go of control and transform their business into sustainable institutions. Do not confuse size with institutionalisation. Many big organisations will not pass the institution’s culture tests due to various levels of impunity and level of employee engagement. What are some of the achievements you have recorded especially in your interactions with youths and bankers who want to progress to the next level? Bankers are among my new focus. I have coached the youths, spoken to thousands of teachers and students, worked with promising business owners as a Business Coach. I have two decades of financial service experience in banks

across Nigeria and Europe. While in the bank, I did not abandon my latent talent. I authored five books as a banker, coached and mentored many bankers. I volunteered my strengths in writing and speaking for my employers and make the workplace a better place to be. I know bankers face a lot of stress and pressure and often feel unfulfilled. I wrote the book, ‘Take the Lead, with subtitle How to Live, Energise, Activate and Develop Your Strengths’ with the bankers in mind. The book chronicles how I was able to combine my duties with using my talents as well as how to understand the business of your talent and the talent of your business. I developed strong connections with my customers as a banker because I understand the talent of banking business, which is to be in the heart of the customers. I also authored a specialised book for sales people in the bank. It is titled the ‘Value Chain Banking, a Practical Guide to Winning Customers’ Business and Loyalty’ to help bankers. As I coach, I am positioning myself to help bankers to operate and develop their strength zone and be emotionally healthy, secured and fulfilled during and after their banking career. The responses from my messages to the bankers and the number of bankers subscribing to my website are very encouraging. What are the key drivers of the successes you have attained in all the projects you are involved in currently? When people ask me how I could write books and do nation building activities with my duties as a banker. My answer is ‘if I don’t do it, I will regret it’. I have always maintained an employee who find and pursue his or her passion with the private time will have the zeal to perform better on the job than those that waste their spare time. If you use your weekends to sleep without following your passion, you will complain more about the job during the weekdays. My book, Take the Lead is about finding fulfillment and doing what makes you happy. I want to die with memories not with unfulfilled dreams. My driving force is the mindset that I want to look back at 70 years and see many lives touched by my work. When I was an employee, I was chasing my greatness by ensuring the workplace is a better place for all.

Tuesday 28 August 2018

C002D5556

BUSINESS DAY

Energy Report Oil & Gas

Power

Renewables

Environment

India’s oil plans could unsettle Nigeria’s market prospects ISAAC ANYAOGU

ndia’s plan to increase the use of biofuels by cutting oil import bill by 120 billion rupees (£1.36bn) by 2022 hence reducing carbon emissions as well as a recent discovery that it has 42 billion tonnes of oil equivalent (BTOE) reserves, which is 49 percent higher than a 1996 estimate of 28.09 BTOE, could potentially dampen oil imports from Nigeria. The South Asian country imported 20.7 percent of Nigeria’s crude oil which averaged 1.72million barrels per day in 2017. This translates to over 350,000 bpd of oil bought by Indian refiners. “Export to India dominated the group, accounting for 20.7 per cent, followed by Indonesia (4.6%), Singapore (1.1%), China (1.0%), and Malaysia (0.4%),” the Central Bank of Nigeria (CBN) draft 2017 annual report obtained by BusinessDay said. But current plans by India may upset this balance.

The country plans to build 12 bio-refineries costing 100 billion rupees to produce fuel from items including crop stubble, plant waste and municipal solid waste. “Biofuels can help reduce import dependency on crude oil. They can contribute to a cleaner environment, generate additional income for farmers and rural employment,” Narendra

Modi, India’s prime minister said last week. The country is betting that the construction of 12 biofuel refineries would create 150,000 new jobs and significantly cut carbon emissions by increasing ethanol content in its petrol to 10 per cent by 2022 and to 20 per cent by 2030, in line with its Paris Agreement obligations. India could also see itself

Nigeria’s renewable energy industry has success stories to learn from STEPHEN ONYEKWELU

igeria presents as a typical case of a resource cursed nation because it has an abundance of natural resources such as sunlight but fails to harness same to stimulate sustainable economic growth and better the lives of its citizens. Global wind and solar has hit a landmark figure of 1 terrawatt (TW) and a second terawatt will arrive by mid2023 and cost 46 percent less than the first, data from Bloomberg NEF show. This is a success story Nigeria can learn from. New output from the BNEF database shows that there were 1,013GW of wind and solar photovoltaic (PV) generating capacity installed worldwide as of June 30, 2018. The 1TW milestone would have been passed sometime just before this date. The total is finely balanced between wind (54%) and solar (46%). One of the biggest challenges facing Nigeria is its inability to supply reliable electricity through its decay-

ing transmission infrastructure that has collapsed an average of once a month since January, 2018. Of course, there is also the challenge associated with gas supply to generating companies. Solar and wind offer alternatives that can lift the lives of rural dwellers especially amid these challenges. According to the World Bank, nearly 1.5 billion people are estimated to lack electricity supply in the world, half are in Africa. Nigeria alone is estimated to have over 90 million people living without electricity supply. This is potential market for solar or wind powered mini-grid solutions, such as the solar home systems. There are some success stories already in Nigeria. Osoogun, a rural community in Oyo state was recently documented. The community is connected to the national grid, yet never enjoyed electricity. Sadly no light for over one year, but now they are very excited that solar home systems (SHS) will be provided for them. This is according to a video documentary pro-

investments. But more prolific producers are joining the market and those who were once buyers are now big importers including the United States. New light crude grades are also emerging as S&P Global Platts, the company that publishes prices used to settle physical crude trades, is including new light crudes in its basket ramping competition for low sulphur crude. According to the CBN data, Europe constituted 34.9 per cent of the total, with crude oil export of N3,845.72 billion. Within the group, Spain retained its top position, with a share of 8.8 per cent of the total, followed by The Netherlands (7.9%), France (6.0%), the United Kingdom (5.1%), Italy (2.5%) and Sweden (2.1%). Nigeria depends on crude sales to fund its budget and the commodity is responsible for over 80 percent of national income, the threat of potential loss of a huge market share, analysts say should force an overdue reform of the sector.

Nigeria’s oil export to hit four-month high as investor optimism dims STEPHEN ONYEKWELU

duced by Adesoji Adejolu, creative director at Ultrashot, a media production an event streaming company on TweetChat under the aegis of #GridlessAfrica. Adejolu strives to use cinematic experience, #BeyondTheGridMovie to investigate the various ways decentralised renewable energy bridges electricity supply gaps and provides an alternative source of power in Nigeria. Access to finance is one of the major limitations to the rapid development of solar energy in Africa. But while traditional methods of obtaining project capital can be very limiting. Today’s world of micro-investors on platforms such as Kickstarter and Indiegogo has paved the way for new platforms like SunExchange. However, with sustained investment and expansion, in ten years, there would be larger networks of microgrids working together and independent from the grid. Maybe even integrate to the network. It would be like Europe during the 1800s with the industrial revolution and coal fired generation.

Olusola Bello, Team lead, Analysts: Isaac Anyaogu, Stephen Onyekwelu, Graphics: Joel Samson.

awash with oil as a new assessment by its Directorate General of Hydrocarbons (DGH) found that it has 42 billion tonnes of oil equivalent (BTOE) reserves instead of around 28.09 BTOE in 15 sedimentary basins including onshore, shallow water and deep-water areas, it thought it had for the past 22 years. The Mumbai Offshore

and Krishna-Godavari basins will continue to hold the key to the country’s energy future with the maximum reserves, the DGH said. India is also pushing for the creation of an oil buyers club similar to the Organisation of Oil Producing Countries (OPEC). Along with China, the country aims to have a bigger voice in setting oil prices rather than just the role it currently plays - opening the wallet as the third biggest oil importer. The country is also looking to shape the electric car market as it bought over 2,000 units of electric cars sold last year, It is attracting interest from automakers Hyundai Motors Co., Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd., Ashok Leyland Ltd. and BYD Co who are looking to open plants in the country in anticipation of government tenders for bulk orders from fleet operators. Nigeria’s oil sales to the rest of the world continue to plummet due to production uncertainty and lack of new

igeria oil export is forecast to hit a four-month high of 1.73 billion barrels per day (bpd) but investor optimism is waning about the possibility of global oil price increase. Africa’s largest oil producing country’s export plan for October will comprise 57 cargoes which is 7 cargoes lower compared with 48 cargoes in September’s loading schedule as Agbami, Bonga, Escravos, Forcados Okono and Qua Iboe will load the highest in October. These streams will have a combined 33 cargoes while several smaller streams like Amenam, Pennington, Okwori, okwuibome and Antan which have no export cargo in September will add at least one cargo in October while Brass River will add at least 5 cargoes. However, the case for bullish global oil price, which was made amid trade wars between the United States of America and China, world’s two biggest economies is losing its lustre and investors are recalibrating their decisions. “The bull case for oil and liquefied natural gas remains in place” Jeff Currie, head of commodities research at Gold-

man Sachs said, August 9, in an interview with CNBC. A Bloomberg report says hedge funds’ net-bullish position on Brent crude, a measure of how positive money managers are that prices will gain, has plunged 49 percent since early April as trade wars cloud the picture for oil consumption. Despite a good week for the benchmark amid strikes at North Sea fields and declines in U.S. stockpiles, Brent remains about 6 percent down from this year’s peak in May. “When you start to look at the different economies across the globe, Europe, Asia, the emerging markets are definitely starting to hit some headwinds,” said Mark Watkins, who helps oversee $151 billion at U.S. Bank Wealth Management in an interview with Bloomberg. Investors “are potentially getting a little bit more concerned about the rest of 2018 and probably going into 2019, that demand might be a little bit softer than previously had been.” The exchange of tariffs between the U.S. and China is one factor that threatens to weaken global economic growth and hurt energy demand. Technical indicators also pointed to a potential decline in prices: During the period covered by the report,

Brent’s 50-day moving average dropped below its 100-day one, an invitation to sell. An additional factor dampening investor optimism is the stalled Saudi Aramco’s initial public offering (IPO). It has focused on buying a strategic stake in local petrochemical group Sabic for as much as $70 billion. While the Sabic deal will delay the IPO, it doesn’t mean it’s cancelled, people familiar with the matter said, asking not to be identified because the information is private. “I am not a betting man, but I am fairly certain that the Aramco IPO will not happen before the end of 2019. But I’ll bet £50 that there is no domestic stock listing, and another £50 there is no international listing, before the end of 2019,” John Kemp, an international Energy analyst, tweeted despite Riyad’s statement on August 23. Hedge funds’ net-long position, the difference between bets on higher prices and wagers on a drop in Brent was reduced to 324,431 contracts, ICE Futures Europe data show for the week ended August 21. That compares with a high for the year of 632,454 in the week ended April 10. Longs fell to the lowest in more than two years.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378;

BUSINESS DAY

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Tuesday 28 August 2018

Energy Report

Why PIGB may not be signed and its implications OLUSOLA BELLO

he lack of cons i d e rat i o n f o r the yearnings of people which has been the hallmark of this government may cause the country fortunes on account of not signing the Petroleum Industry Governance Bill. Despite a general consensus that the bill should be signed into law no matter the level of its inadequacies so that it would be fine-tuned while in operation, this government has found one excuse after another not pass it. If it is not signed into law there are indications that tempers might rise among the Niger Delta residents or militants that are feeling surcharged that the petroleum industry governance bill that has been passed by the national assembly to the president for assent will not see the light of day after all. This may therefore resort in some aggrieved militants using the issue as the reason to start attacking oil facilities to draw the attention of the government to their displeasure over the matter. If this is allowed to happen in these days that the price of crude is hovering around $70 per barrel and above, the consequences would be colossal. The feeling across the region is that the government is not interested in signing the bill because the present structure in oil and gas industry, especially the Nigerian National Petroleum Corporation (NNPC), which favours the president and his cronies. Some industry operators are citing the recent promotions carried out in the NNPC in which some young men from the president’s region are put in sensitive and juicy

positions to the detriment of their more experienced seniors who are from the southern part of the country. Such exercise they say may not have been possible without it being based on merit if the PIGB that was intended to restructure and reform the NNPC has been signed into law by the president. The recent observation by the NNPC is an indication that the government may not sign the bill. This is because the NNPC must accept the contents of the bill before the president would assent to it. The Nigerian National Petroleum Corporation (NNPC) has picked several holes in the bill. According to the corporation the provision in the PIGB that the NNPC should be split up would be resisted by the oil worker trade unions unless it was communicated properly. Maikanti Baru, group managing director of NNPC highlighted the issues and urged that they should be clarified when he spoke on emerging issues and concerns in respect of PIGB at a conference organised by National Associate of Energy Correspondents of Nigeria in Lagos. Maikanti Baru who was represented by Roland Ewubare, group general manager, National Petroleum Investment and Management Services ( NAPISM) said the issue of divestment of 40 percent of Nigeria Petroleum Company shares to the Nigerian Stock Exchange, needs clarity on the process of divestment and the steps should be clearly provided for in the law. The corporation wants to know if the shares are going to be sold to Nigerian public or foreign portfolio investors. This it says is not stated in

directors and insulate them from changing dynamic of the political context, as far possible. “The issuance of welldefined contract terms to the executive director may address this issue,” he said. He said the newly established commercial entities are expected to be governed in line with the provisions of code of corporate governance by the Security and Exchange Commission. But the bill does not include recommendations to address possible conflicts that may arise between its provisions and those of the SEC code, when such conflict arises. All these observations according to some industry source are tacit indication that president Muhammadu Buhari administration may not sign into law the PIGB. Already, analysts are of the view that Nigeria is about to miss out on another opportunity to put in place some well-defined regulatory laws in the oil sector as time is running out for the passage of the Petroleum Industry

Bills (PIB). There are three other bills — the Petroleum Industry Administrative Bill (PIAB); the Petroleum Industry Fiscal Bill (PIFB); and the Petroleum Industry Host Community Bill (PIHB) — which have all gone through public hearings in both chambers of the National Assembly. They are currently awaiting their third and final reading before they are sent to President Buhari for assent. At the moment, there is a frosty relationship between the National Assembly and the Presidency. This is likely to make it difficult for the bills to be passed. If they are not before the end of the tenure of the current administration, all the work done on them so far would have been wasted and the next government will have to start afresh on the bills. The proposal for a new legal regulatory framework for the oil sector has been stuck in the Legislative arm of the Federal Government since 2008 and the continued delay in giving Executive life to the bills is said to have cost the country over $20 billion a year in new investments. However, Nigeria is expected to dominate the oil and gas sector in Africa in the next seven years with her Capital Expenditure (CapEx) outlook projected at $17.3 billion. At the current exchange rate, this will amount to some N6.21 trillion. GlobalData, a leading data and analytics company says in sub-Saharan Africa, Nigeria will be leading with 10 planned oil and gas projects expected to start operations between 2018 and 2025. The company’s latest report: ‘H1 2018 Production and Capital Expenditure Outlook for Key Planned Upstream Projects in sub-

Saharan Africa‘ indicates that a total of 64 planned and announced crude and natural gas projects are expected to commence operations in sub-Saharan Africa between 2018 and 2025. GlobalData’s Oil and Gas Analyst, Joseph Gatdula, says the total crude and condensate production from announced and planned projects in sub-Saharan Africa is expected to be around two million barrels per day (mmbd) in 2025 and the total natural gas production in 2025 is about 8.1 billion cubic feet per day (bcfd). A proposed CapEx of $40.7 billion is expected to be spent on development of planned projects in sub-Saharan Africa, and $117.1billion is expected to be spent on key announced projects. Among countries, the top three in terms of highest planned CapEx spending are Nigeria, Mozambique and Angola with around $17.3 billion, $7.7 billion, and $5.1 billion respectively, during 2018–2025. With early-stage projects Indonesia Mozambique with a CapEx of $38.5 billion, followed by Nigeria with $29.4 billion. Among companies, Eni SpA, Royal Dutch Shell Plc, and Total SA have the highest level of spending on planned projects with $7.2 billion, and $5.6 billion and $3.4 billion respectively. The highest level of spending on early-stage announced projects is by Shell, Exxon Mobil, and Eni with $15.5 billion, $12.9 billion, and $6.9 billion spent on CapEx, respectively. This expectation could be stalled if Nigeria’s oil and gas region decides to disrupt production activities in protest against the seeming jig-saw puzzle over the petroleum industry bills.

sanctions back on the table. The report suggests that while the administration is considering the so-called “nuclear option” of banning purchases of Venezuela’s oil, the more likely scenario will be a narrower ban on the export of U.S. diluents to Venezuela. The move would make it harder for PDVSA to process its heavy oil. McClatchy reports that the administration is preparing options to be released within the next three months. Another major development in the course of the week was that Aramco’s initial public offering may never happen, after four industry sources told Reuters that the company had disbanded its financial advisors on the listing. While Oil Minister Khalid al-Falih re-

jected the report, saying the Aramco listing was on track and a lot of the preparation work had been completed, the Reuters report is likely to deepen skepticism, since Falih also said that conditions for the listing had to be optimal, although he did not elaborate. What was initially touted as the biggest IPO in the history of stock exchanges over the last year lost a lot of its spark as doubts began to emerge and then deepen that there will not be an international listing due to a number of challenges with financial transparency and the prospect of litigation in the United States following 9/11 legislation allowing U.S. citizens to sue Saudi ones. Norway’s Petroleum Directorate revised upwards

the estimated reserves of a new oil discovery that state energy major Equinor made recently in the North Sea. While Equinor’s initial estimate was of between 1.8 and 8.8 million barrels of crude, the NPD upgraded this to between 6.9 and 12.5 million barrels. The discovery is important as oil production in Norway is declining and the government is looking for ways to reverse the trend. Crude oil output from the North Slope in Alaska could expand by as much as 40 percent over the next eight years, IHS Markit has forecast, noting the recoverable oil reserves of the area have recently swelled to more than 28 billion barrels of crude and 50 trillion cubic feet of natural gas thanks to new discoveries.

Maikanti Baru

the law. There is no clarity regarding the nature of NNPC liability to be transferred to the Liability Management Company NPLMC, asides the outstanding pension obligations of the Department of Petroleum Resources. The bill, it says does not provide adequate clarity on type and nature of liability to be inherited and the process for the settlement of such liability. He said adequate clarity should be provided on funding of NPAMC and the newly created NPLMC. The NNPC boss advocated that the NPAMC should to be structured in the form of an agency rather than a company with limited role in the administration of production sharing contract assets. He said similar institutions across the world are structured as agencies for example Petition Norway. He said that even though the PIGB has defined tenures for non-executive directors, there are currently no provisions that provides for stable tenures for the executive

Oil price closed with strong gains OLUSOLA BELLO

il bulls returned after several weeks of falling oil prices, with the looming Iran sanctions clearly having an impact on sentiment in the oil market. For instance Oil prices closed out the weekend with strong gains, after several weeks of declines. The EIA data showing a steep decline in crude stocks helped push prices up on mid-week and return a sense of bullishness to the market. “Both crude markers are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages,” Stephen

Brennock analyst at London brokerage PVM Oil Associates, told Reuters. According to OilPrice. com, U.S. sanctions on Iran’s oil takes effect in November, but already countries around the world have been slashing purchases, which are affecting Iran’s exports. “Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations,” investment bank Jefferies said on Friday. “We expect that by Q4 the market will be dealing with undersupply, dwindling spare capacity - or both.” Norwegian panel has advised against dumping fossil

fuel investments. Norway’s $1 trillion sovereign wealth fund had proposed divesting from fossil fuel investments, but a government appointed commission has advised against the move. “This investment strategy is simple, well founded and has served the fund well,” the commission report said. “If energy stocks are excluded from the fund, the composition of the investments will differ from market weights, and the fund will be expected to either achieve lower return or higher risk.” There are also reports the Donald Trump administration which had previously scrapped plans to sanction Venezuela over fears of deepening the economic crisis, have returned the

Tuesday 28 August 2018

C002D5556

BUSINESS DAY

In association with

Where to find good value, high returns on real estate investment Stories by CHUKA UROKO

hatever the economic c ycle, real estate sector remains an investment destination where investors will always get value and relatively high returns on investment, especially if the investment is done in the right place at the right price and for the right reason. Bonds, treasury bills, equities, mutual funds, etc are all good investment asset class but cannot compare favourably with real estate in terms of reliability, flexibility of use and potential for value appreciation over time. A good number of people think, erroneously, that real estate investment is for the ‘big boys’ but investment experts disagree, stressing that investment in real estate takes into consideration the 5Ws consisting of who, what, when, where, why (and how). As for who should invest in real estate, the experts say just “anybody” irrespective of age or gender can invest in real estate. Anybody, no matter how young, could investment and this includes women. At a real estate conference in Abuja recently, participants canvassed women empowerment to enable them invest in real estate, believing that it is one of the surest ways of protecting the future. Bricks and mortar are more stable than stocks or bonds; they have long term growth with income return and this is why people should invest in real estate. The wide housing demand-supply gap offers investment opportunity which value is well over $363billion. The deficit is said to be increasing by 2 million houses per year at the current population growth of 2.6 percent per year. Though it is important to know that the time to invest is now, what matters most in all real estate investment considerations is where to invest and get not just great value, but also good returns. Good yield on any investment is very important because it compensates for the investor’s time, efforts and the sacrifice in terms of forgone alternatives to the investment. This is why where to invest and get good yield is critical.

A couple of years ago, the National Bureau of Statistics (NBS), noted that Lagos State recorded the highest amount of real estate activities at 37 percent followed by Abuja at 22 percent and Rivers state at 6 percent, covering 65 percent of all real estate activities in Nigeria. That statistics has not changed, meaning that Lagos remains a compelling destination for real estate investment. This is quite understandable. Lagos is Nigeria’s commercial nerve centre. It has over 20 million people, meaning that the city is a large real estate market. This island city has over three million housing deficit; about 80 percent of its population lives in rented accommodation which means that homeownership level is very low, thus presenting huge investment opportunity in residential real estate. The Lagos real estate market is distinctively segmented into low, middle and high end. Demand is very weak at the low end market because this is where low income earners look for housing. At the mid-end market, demand is relatively strong, but much stronger at the high end market. Ikoyi, Victoria Island and Lekki, the three island locations in the state, constitute the core of high end submarkets in

Lagos. Though property, land or built up, are very expensive in these locations, analysts say they offer real value and good returns to investors. But to invest wisely and profitably in these locations, experts advise that in-depth analysis of each location’s strengths, weaknesses, opportunities and threats (SWOT) should be done. First and foremost, potential investors have to understand that “real estate investment is not a get- rich quick scheme; understand your investment parameters; be thorough in assessing opportunities; seek professional advice; do due diligence, and if the deal is not right, walk away”, Udo Okonjo, CEO, Fine and Country, advises. As an investment destination, Ikoyi’s strength is in its excellent location, ease of obtaining approvals for development, high rents and return on investments (ROI) based on demand to be in a serene environment; internationally recognized and accepted location increases value perception, and offers highest office rents in Nigeria and second highest in Africa. The weakness of this location is in its high cost of land and approvals, building would be restricted to high rise apartments to maximise land; there is need for an attractive design

and layout of the project based on competing developments within the axis. Opportunities in Ikoyi as an investment desitnation include ease of rental as there is a large pool of prospective home buyers, both local and Nigerians in Diaspora would rather buy out right a finished product that meets their immediate needs in Ikoyi; amendment in Lagos planning legislation is expected to make zoning for commercial use easier. But there are threats too. These come in as construction challenges leading to delayed delivery; lack of financing for projects or mortgages for prospective buyers; presence of competing developments within the same axis and planning challenges to secure permission for commercial office use. The strengths of Victoria Island are its excellent location, ease of obtaining approvals for development based on precedent, high rents and return on investments (ROI) based on demand, and a wide mix of support service companies. The weaknesses include poor parking, traffic congestion, lack of supporting infrastructure, high cost of land and approvals, building would be restricted to high rise apartContinues on page 26

Archers Group expands frontiers, builds $2.5m View Courts in Ghana

n response to clients’ demand and determination to establish footprints in notable real estate destinations in Africa, Archers Group has expanded its investment frontiers with the development of 101-unit View Courts in Accra, Ghana. The Ghana project, which is estimated to cost $2.5 million, and consists of threebedroom and one bedroom fully furnished apartments, is targeted at mid-income buyers. The good news here is that prospective subscribers have option to pay through mortgage or outright payment. Construction work on the estate commenced in 2016 and it is expected that the project which is following the Ayimensah scheme on which work has been completed will be delivered to market in December this year. In keeping with a growing trend in the property market, while some of the units have been sold, others are being utilized as short/ long stays to tourists and visitors from all over the world View Courts boasts topnotch facilities, including automated gate and CCTV surveillance, fitted wardrobes, fitted kitchen cabinets, roads with closed drains, 24-hour power supply and standby support system as well as internet access, treated water and car parking spaces. Ghana is becoming, increasingly, a compelling real estate destination with regional and global investors finding its property market irresistible. Nigerian investors, particularly, have taken the Ghana market by storm and, according to local property buyers, “houses have become very expensive in the highbrow areas because of Nigerians buying for residence and also for investment”. So, while Dubai is claiming the real estate podium with some of its hottest properties, which include Palms

Jumeirah and Burji Dubai, Accra may just be the next place for patrons and connoisseurs of luxury real estate in West Africa. With more than 27 years experience, Archers Group had interest in LPG Cooking Gas before expanding to Archers Gas, Oxygen with industrial plants in Lagos and Ilesa, Osun States, Nigeria. Its vast investments now include tourism and real estate, spanning into hundreds of luxury serviced apartments in Accra, Ghana “We intend to reach out to everyone who desires to own a home and seek to satisfy that need at an affordable rate. Our dream is to turn every area into the next East Legon, airport residential areas, Dubai etc., with requisite facilities and amenities,” Victor Omole, the Group’s CEO, assured. He revealed that the company was taking full advantage of regional economic integration and the attraction Ghana holds, most especially for Nigerians. ‘’We stay with everyone that buys a house from us. Right from purchase of a home to its maintenance and other essentials, Archers is there for the long haul.” Omole who was decorated recently with ‘Developer of the Year’ by Ghana Property Awards, believes that the true beauty of Africa is still uncovered and hugely embedded in tourism and real estate, calling on the new government in Ghana to open up some areas for them in terms of accessibilities of lands, roads and necessary cooperation from related stakeholders to ensure affordable housing and infrastructure projects. He noted that property market in its entirety was more structured, controlled and evolving in Ghana, adding that the mortgage system was more robust as it tended towards the developed world structure giving room for home ownerships.

BUSINESS DAY

Tuesday 21 August 2018

Lack of legal framework, policies, infrastructure drags real estate sector — Analysts Endurance Okafor

eal estate and mortgage industry analysts have linked the setback in the industry to lack of functional legal framework, right policies and inadequate infrastructure which are said to be major growth drivers in the real estate sector. This was disclosed to BusinessDay in a five-analystssurvey aimed at finding solution to the challenging state of the industry in Nigeria, Africa’s largest economy. Meanwhile, negative and weak growth in construction and real estate sector of the country has continued to drag growth in its economy even as it slowed down in the first quarter of 2018 to 1.95 from 2.11 in the previous quarter owing to, among other things, reasons cited by the analysts. The sector has reported nine consecutive quarters of contraction even after the economy of Africa’s largest crude oil producing nation exited recession in the second quarter of 2017. Abiodun Akanbi, Head of Strategy at Infinity Trust Mortgage Bank, said legal frame work in relation to absence of foreclosure law in Nigeria is one of the biggest problems of the industry. “If you lend out money, and the borrower refuses to pay, you are at the mercy of the debtor because you cannot foreclose, as there is no fore-

closure law in Nigeria; that is a major problem, and because people know that there is no foreclosure law, they just go to court, get an injunction and trail for 6 to 7 years,” Akanbi explained. According to Association of Housing Corporation of Nigeria (AHCN), inability of the Nigerian mortgage sector in driving home ownership is worrisome as more than 90 percent of new homes utilise funds from personal savings for increamental construction. Meanwhile, mortgage to GDP ratio in Nigeria is estimated at 0.6 percent, as opposed to 2 percent in Ghana, 31 percent in South Africa, 32 percent in Malaysia, 77 percent in the United States and about 80 percent in the United Kingdom. Africa’s most populous nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 percent for the Federal Mortgage Bank of Nigeria (NHF) and between 15-25 percent for commercial mortgage institutions is considered by industry experts as one of the highest around the world. While with a population of about 55 million, mortgages in South Africa accounts for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about ZAR5.14 trillion ($382 billion) at the end of January, according to central bank data. Bank lending to construc-

tion and real estate sectors in Nigeria has remained dismal when compared to the likes of South Africa, the continent’s most-industrialized economy. According the chairman of BHCI, JD Diabira, the first specialist commercial real estate mortgage provider in Francophone West and Central Africa “the lack of capital for the property industry is not the big issue, it is made out to be. It seems to us the real problem is the willingness (or not) of lenders to lend.” The reason, he says, is that local lenders have little reason to offer mortgages; which has been attributed to high prevalence of government bonds in the market which banks have collected 6-7 percent. Hakeem Sadiq, CEO of Zama, a Lagos-based real estate advisory firm said Diabira is right in the sense that

funding is not the only challenge Nigeria real estate sector has, as there are ways to raise funding for a lot of projects as is already being seen in the sector. “I think aside from just the funding thing, a lot of the issues faced by the sector comes from infrastructure. A large part of being able to develop and redevelop the real estate sector is actively based on the availability of infrastructure, access to good road and electricity. Also adequate data on the sector, which stakeholders can use to plan and make investment decision is another issue,” Hakeem said. Responding to why lenders may not be willing to give out funds to borrowers, Yemi Stephen from Estate Links, a real estate developing company, said in Nigeria, the reason could be as a result of high rate

of mortgage default. “If lenders have alot of bad debts it will be very difficult for them to lend out again, and also with the double interest rate on the mortgage there will not be faithfulness on the part of the borrowers in repaying their debts,” Stephen said. “Another issue could also be for the lenders being able to have some security with the developers, investors and borrowers. In that aspect, the real estate market is not that strong yet and a lot of banks are actually investing in them that is why a lot of housing facilities have high interest rate,” Hakeem told BusinessDay. A lot of lenders do not want to start dishing out credits to developers and refinancing institutions and the projects are executed half way and their funds become stuck; that instability is what makes

investment risky. Meanhwile, Nigeria government has plans to start a mortgage-loan guarantee programme next year in an effort to improve lending to low-income earners and boost home ownership. This was disclosed by Tokunbo Martins, Director of Banking Supervision at CBN that the nation’s government through the apex bank is working on a project that will see the start of a firm this year called Nigeria Mortgage Guarantee Company (NMGC) which will be owned by the government and private investors As to why Africa’s largest producer of crude oil lags other countries in providing housing for its citizens, the state-owned Federal Mortgage Bank of Nigeria (FMBN) linked it to record high interest rates, poverty and a lack of proper land deeds, as home loans total about 50,000 in an economy which vies with South Africa as the continent’s largest. On the way to go in bridging the housing deficit in Nigeria, Hakeem said “it is all about the ability of the government to implement policies. For instance, policies that can actually spur growth, like having an ease of acquisition, like in Lagos, acquiring land can be a very huge problem for a lot of people, even though they may want to acquire it but being able to go through those processes are very difficult and also with the corresponding taxes, it becomes unattractive.”

What Lagos ranking as 3rd worst city to live in means to local property market CHUKA UROKO

report by the National Bureau of Statistics (NBS) says that 65 percent of all real estate activities in Nigeria happen in the three big cities of the country namely, Abuja, Lagos and Port Harcourt. 37 percent of these activities take place in Lagos alone. Abuja and Port Harcourt account for 22 percent and 6 percent respectively. The high percentage of activities in Lagos is understandable because this is the country’s real estate hub where land value is so high that it constitutes a large chunk of the

state government’s internationally generated revenue (IGR). The state has a burgeoning real estate market. But this market is presently under serious threat by the action and inaction of the state government which seems unbothered by the negative impact of the state’s difficult and challenging environment on people sand business. Recently, the World Economic Forum (WEF) said Lagos, which is Nigeria’s commercial capital, is the third worst city in the world to live in, explaining that out of 140 cities of the world surveyed for livability, Lagos was ranked

137th. Unconfirmed reports have it that the parameters considered included ease of doing business, security, infrastructure, health, education, transportation, etc. and after considering all these, WEF concluded that Lagos was like a city under war. This has far-reaching implications for the state’s property market. Both domestic and foreign investors will be looking at Lagos with a third eye in their investment considerations and decisions. “If it is not easy to do busines here, what would you like anybody to come and do? “Except the return on investment is so high that it is irresistible, then high risk takers will come in and what they will do is just to hit it and go back, meaning that whatever is their attraction is not sustainable and ”, said Gbenga Onabanjo, an environmental activist and consultant. Living and doing business in Lagos is extremely difficult and casual visitors wonder aloud how the residents survive the stress and strain imposed on them by terrible and, most times, life-threatening traffic gridlock, suffocating

congestion, domestic and industrial waste littering roads and streets, etc. Another major challenge to business in the state is the state of roads infrastructure which has kept the city, which prides itself as a mega city, permanently on slow motion as against a truly mega city that is fast-paced with both people and commerce on fast lane. As a commercial city and particularly a real estate destination, Lagos needs an environment that is enabling for investors to come in and invest. It needs good infrastructure and adequate security. But all these are lacking, meaning that not many new investors will consider the state for investment. Not too long ago, Lagos was selected as one of the 100 resilient cities in the world by the Rockefeller Foundation. 100RC President, Michael Berkowitz, explained that Lagos was selected because of its leaders’ commitment to resiliencebuilding and the innovative and proactive way they have been thinking about the challenges the city faces. “For us, a resilient city has good emergency response and meets its citizens’ needs,”

Berkowitz continued, adding, “it has diverse economies and takes care of both its built and natural infrastructure. It has effective leadership, empowered stakeholders, and an integrated planning system. All of those things are essential for a resilient city.” Lagos governor, Akinwunmi Ambode, hailed this selection, assuring that the state’s entrance into the 100RC Network will help it fight the resilience challenges of urban planning, transport gridlock, environment, public health and modern infrastructure. But it remains to be seen what the state is doing in this direction. Everything seems to have ended with the euphoria that greeted the selection and the announcement. “Though I am not conversant with the parameters for selecting Lagos a resilient city, I think that for Lagos to be a resilient city, given the way the state is constituted, a lot still needs to be done because everything seems to be disorganized”, said an analyst who did not want to be named. “The city is over-crowded and there is need for decentralization and decongestion of the city centre. The rural-urban migration to Lagos is so high

that government needs to stem the tide and the way to do it is by the state government to start to help the neighbouring states set up cottage industries so that people can as well stay there and find job opportunities”, he analyst advised.

Where to find good value... Continued from page 25

ment to enable maximisation of land, and available land for residential development within this axis is extremely small The opportunities in this location include lack of good quality residential and commercial space and demand for this is high; there is also opportunity for corporate entities and individuals to own properties close to their offices. But the development of the Eko Atlantic in the long term is a major threat to the continued prosperity of Victoria Island. So, potential investors should always bear in mind that this development, which is already evolving with some residential and office developments coming up fast, may throw spanner in the works.

Tuesday 28 August 2018

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BUSINESS DAY

FEATURE

JTF surmounting security challenges in Niger Delta region Since the name change from Operation Pulo Shield to Operation Delta Safe, the Joint Task Force (JTF) has recorded several feats under the new Commander, Apochi Suleiman, a Rear Admiral, who incidentally is of the Nigerian Navy since he has the requisite knowledge and experience in ensuring security in aquatic areas, writes Samuel Ese from Yenagoa.

he Niger Delta region has remained Nigeria’s golden goose due to the abundance of crude oil and gas deposits which has been the justification for various strategies adopted by the military to protect oil infrastructure in the wake of pipeline vandalism, illegal refining and crude oil theft among other violent crimes. The Joint Task Force (JTF) deployed by the Federal Government to ensure security in the Niger Delta christened Operation Pulo Shield was terminated in June 2016 and renamed Operation Delta Safe; hitherto headed by an Army officer, it was assigned to an officer of the Nigerian Navy. Stakeholders have hailed the change as a strategic move as the region is predominantly riverine and having a naval officer as head would invariably make for better policing of the many rivers and streams due to his superior knowledge of aquatic environments. In his maiden press briefing in Yenagoa at the Joint Force Headquarters, Pioneer Commander of Operation Delta Safe, Joseph Okojie, a Rear Admiral, said Operation Pulo Shield whose mandate was to shield oil installations was restructured to provide security for the entire region and the expanded mandate across nine coastal states required maritime expertise. When on November 18, 2016, then Acting Director, Defence Information, Rabe Abubakar announced the appointment of Apochi Suleiman, a Rear Admiral as Okojie’s replacement, he explained that the change became necessary to “inject new capability to contain the prevailing security threats and provide the much needed stability in the region.” This was at a time of renewed agitation and insurgency occasioned by incessant attacks by militants resulting in declining oil production output which fell as low as 0.9b million barrels per day (bpd) from nearly 2.6 million bpd. It is however debatable if the reduced crude oil production coupled with dwindling crude oil prices at the international market triggered the recent recession and associated foreign exchange shortages. Shortly after assumption of office, on December 10, 2016, Suleiman disclosed that new strategies were being introduced to improve operations to contain attacks on oil facilities and troops asserting that the military were in the region to protect oil facilities and check criminality. On the new strategies, Suleiman

JTF Commander, Apochi Suleiman (front row, 2nd left) leading troops to inspect an underground storage pit at one of the illegal refinery sites in Warri South LGA, Delta State during a raid.

stated: “In my short time of assumption of duty on November 16, 2016, I have tried to sustain and improve on the pace which has yielded some successes. Just a few days ago, troops in Cross River encountered militants in a gun duel around Ikang axis and arrested one of the militants and recovered a large cache of arms and ammunition. “I must commend the efforts of my predecessor Rear Admiral Joseph Okojie, and will fall back on my experiences as Flag Officer Commanding (FOC) at the Central Naval Command in Yenagoa.” He warned that he would not condone unprovoked attack on the military by communities in its area of responsibility saying, “The last attack on the military men on duty killing some in cold blood is regrettable and condemnable and when our men went after their killers there was public outcry. “This is a note of warning that any community that attacks our soldiers should be ready for the consequences, we shall not tolerate any community that habours criminals, we are not here to invade any community, but we are after criminals. “Any community that habours criminals has lost its immunity, any further unprovoked attack shall be resisted with every resource at our disposal and we shall remain within our mandate,” Suleiman said In time, as part of wider operations to safeguard the region, Operation Delta Safe extended its activities beyond protecting oil facilities to the nooks and crannies of the region and on July 3, 2017 raided a local firearms manufacturing workshop at Arhawarien community in Ughelli South Local Government Area, Delta State where various types of light firearms discovered.

Al-Hassan Grema, Commander of Sector 1 of JTF told newsmen that three suspects were arrested after a shootout and items recovered included 13 short barreled, five double barreled and 10 locally pistols all locally made as well as three live cartridges, an empty cartridge and two rounds of 7.62 mm special ammunition. Looking back, John Agim, Acting Director, Defence Information recently said that oil production, according to the Nigerian National Petroleum Corporation (NNPC) has risen to an average of 2.5 million bpd and attributed the rise in oil output to the strategic approach of the JTF. Agim recalled that prior to the establishment of the outfit on June 24, 2016, oil production had dropped to 900,000 bpd while stressing that force had pursued its mandate in line with the strategic directive of Chief of Defence Staff, Gabriel Olonisakin and made modest achievements in restoring peace to the hitherto restive region. He enumerated some of the

Any community that habours criminals has lost its immunity, any further unprovoked attack shall be resisted with every resource at our disposal and we shall remain within our mandate

achievements as enhanced safety of lives, rise in crude oil production, recovery of arms and ammunition, seizure of stolen crude, destruction of illegal refineries and arrest of oil thieves while others were successes in prosecution, profiling of suspects and persons of interest and conduct of in-theatre operations. Agim explained that JTF had cleared the Niger Delta region of identified militants’ camps, whose activities threatened national security while the threats have been effectively neutralised. Giving statistics of of its operations, JTF spokesman, Ibrahim Abdullahi, disclosed that from activation of Operation Delta Safe in June 2016 till July 2018 it, has conducted 16,807 patrols, recovered 1,477 arms of various calibres and 23,483 ammunition, seized 24 ocean going vessels, 1,601 boats, 198 barges, 258 outboard engines, 133 tanker trucks, 349 vehicles, 95 generating sets and some 6,958 sundry items facilitating illegal activities. Abdullahi further disclosed that a total 1,819 illegal refineries, 6,027 storage tanks, 13,663 drums and 17,300 jerrycans were destroyed during the period under review while ‘metallic operation’ which is essentially the use of swamp buggy equipment to destroy illegal refineries was introduced. In his words: “The JTF has been carrying out massive metallic operations using swamp buggies against illegal refineries all over the joint operation area. This new strategy was recently deployed by Commander of Operation Delta Safe, Rear Admiral Apochi Suleiman, in our operations in April 2018 and it makes it difficult for them to reassemble and resume operation after raids.” Speaking on the effect of the repositioned military, a communitybased group, Niger Delta Peace and Development, in June 2018, applauded the JTF for ensuring stability and addressing restiveness in the area. Chairman of the group, James Julius said enhanced security in the region was responsible for a rebound in oil production noting that the effective operations of the JTF have checked renewed agitations that reduced oil output before 2016. Julius stated: “The present Commander of JTF, Rear Admiral Apochi Suleiman, has been achieving results and has proved to be a round peg in a round hole; his deployment at a time there was renewed restiveness was apt and strategic. For the past eight months for instance, there has been no reported incident in the region.”

Julius said though the Federal Government has repositioned the region in terms of security, there was urgent need to change the perception of international investors that fled the region as a result of militancy and sustain the interest of investors coming back in droves due to the prevailing peace and security. Marco Rondo, outgone General Manager, District, Nigeria Agip Oil Company (NAOC) during a visit to JTF, on May 12, 2018 had commended the Joint Force for curbing restiveness and providing a peaceful atmosphere for uninterrupted oil production. Rondo said that the operations of troops against militancy and oil theft, had stabilised the operations of the oil firm and reduced incidents of oil theft across its operations in Rivers and Bayelsa. NAOC had on March 22, 2013 shut its activities at oil fields in Bayelsa, from which it produced about 40,000 barrels of crude oil daily, over high incidence of oil theft and disclosed it was losing about 7,000 barrels of its crude production daily to oil thieves, a development it described as not sustainable. An indigene of Southern Ijaw Local Government Area of Bayelsa State, David Ebiya told newsmen that after two years of its activation, Operation Delta Safe is making residents feel safer and urged the military to sustain the existing peace in the Niger Delta region. Recently, African University Students on July 25 under the auspices of League of African Development Students (LEADS Africa) bestowed its African Patriotic Personalities Award on Suleiman and commended the JTF leadership for providing security for increased oil production. Speaking at the investiture ceremony in Yenagoa, leader of the group, Morgan Gabriel noted that JTF were crucial to the economic growth and development of Nigeria and the African continent and that the economy exiting recession was due to the conducive operational environment occasioned by Suleiman’s leadership. In his response, Suleiman noted that the award coming less than two months when the JTF received a similar honour was a morale booster to him and the troops saying “This is a call for greater commitment to duty and the results of our operations are being noticed even though we work behind the scenes. We shall remain dedicated and resolute in our fight against oil theft and criminality in our area of responsibility.”

BUSINESS DAY

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Tuesday 28 August 2018

Markets + Finance ‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

The Leadway Accounts: Inside Nigeria’s most profitable insurer ance Industry by profit and market Share. The company said it seek to maintain profitable volumes across business lines, leverage digital tools to deepen market penetration and customer engagements. It also plans to strengthen its relationships with its brokers as well as developing and expanding on cross industry partnerships and strategic alliances and investments to drive brand penetration. While rising claims expenses, acquisition and maintenance costs hindered most firms from translating top line impressive performance into bottom line growth, Leadway Assurance was able to use its robust investment income-which comprise of bonds, real estate and short term securities- to jerk up profit and magnify shareholders’ returns. The largest insurer by assets, revenue, and capital base, took advantage of the high yield environment in 2017 to augment revenue. For instance, the company realized N17.38 billion in investment income, this compares with Aiico Insurance’s N8.63 billion, FBN Insurance’s N3.68 billion, and Zenith Insurance’s N3.63 billion in the period under review. It will be recalled there was record bond issuances by government in 2017 as it raised funds to finance capital projects and reduce the budget deficit. L e a d w ay A s s u ra n c e also attributes the stellar performance to a gradual economic recovery as the country existed its recession in 25 years in the first and second quarters of 2017. “The main driver of the market yield contractions were im improving macro-economic environment as Nigeria’s economy emerged from 5 consecutive quarters of negative GDP growth in addition to stated fiscal policy of reducing cost of funds of the federal

BALA AUGIE

t’s been a tough ride for insurers in the past three years, as they operate in an environment fraught with weak consumer spending, volatile currency, and double digit inflation rate. Yet in those periods, Leadway Assurance Company Limited have been flourishing, thanks to a talented workforce, an excellent assets allocation strategy, efficient underwriting capacity, a solid working capital position, and the lauch of innovative and market penetrating products. Now, a first glimpse of the state of the insurer’s finances shows Leadway Assurance churned out N13.83 billion net income for the year ended December 2017, easily outstripping peer rival companies like ; FirstBank Nigeria Insurance Limited; Zenith Insuance Limited; NEM Insurance Plc, and AXA Mansard Insurance Plc. Among the eye catching facts: Leadway’s revenues are more than that of 10 firms put together, the figures show. Its N84.46 billion gross premium income (GPI) are three times the GPIs of Mansard’s N26.19 billion, FBN Insurance; (N22.74 billion), and Aiico Insurance Plc’s, (21.20 billion). The account prepared to an IFRS standard, also show Leaway has a solid capital base, which means it has the financial strength to take on more risk and grow revenue. Its N55.30 billion shareholders’ fund eclipse Zenith Insurance’s N23.27 billion, Mansard’s N20.28 billion, Wapic Insurance Plc’s N17.95 billion, and FBN Insurance’s N10.57 billion as at December 2017, based on data gathered by BusinessDay’s Markets and Finance. Leadway Assurance said its overall strategic aspiration is to maintain its number 1 position in the Insur-

BD MARKETS + FINANCE Analysts: BALA AUGIE

government through issuance of more Eurobonds than local papers to fund government activities,” the company said in notes to the financial statement. L e a d w ay A s s u ra n c e earns more in premium than it pays out in claims as its combined ratio of 53.15 percent is lower than 100 percent bench mark. Despite the lingering apathy for Insurance by the Nigerian populace, driven largely by cultural & religious beliefs, analysts say the sector’s low penetration rate- as only one percent of 200 million have a cover- is a blessing in disguise. This is because there is a growing need for people to insure their businesses and properties. The gradual economic recovery buoyed by relative liquidity in the foreign exchange market and a rebound crude oil price is positive prognosis for the sector as companies will make money and take more cover. The International Monetary Fund (IMF) has upgraded its growth rate forecast for Nigeria’s Gross Domestic Product (GDP) in 2019 to 2.3 percent, while retaining 2.1 percent for 2018, citing improved crude oil prices. Nigeria Insurance Commission (NAICOM) is intensifying its strategy to ensure that players in the industry have a solid capital base that will enable them take on more risk. The commission has introduced a 3-tier based recapitalisation for the insurance industry. That means composite insurance companies that are now interested to play in the Tier 1 category are expected to increase their capitalisation from N5 billion to N15 billion, while those interested in the same tier but operating life business are required to recapitalize from N2 billion to N6 billion. Nonlife insurers planning to play in this tier are expected to improve capitalisation from N3 billion to N9 billion.

Tuesday 28 August 2018

C002D5556

BUSINESS DAY

Tips & Talking Points

Harvard Business Review

No time for a vacation? Take a minibreak.

TALKING POINTS First Day of Work 19%: According to a study by Leadership IQ, only 19% of newly hired employees turn out to be successful in their roles. + Failure to Launch $4 billion: While Kodak invested more than $4 billion to develop the digital camera, the company failed to develop a business model that translated the innovation into success. + Head of the Class 72%: According to a recent report, Amazon.com leads the smart personal assistant market with a 72% share. + The Fight Against Sexual Harassment 25%: Research published by the U.S. Equal Employment Opportunity Commission indicates that 25% of female employees who experience sexual harassment file a complaint through internal company procedures or with the EEOC. + Who’s the Boss? 17 million: Worker-owned companies employ about 17 million workers — about 12% of the American workforce.

When You Give Feedback, Do You Listen, Too?

lanning for a vacation can be exhausting, which is why shorter minibreaks are so useful. For example, taking a short trip, two to three days long, to somewhere local can help you relax without requiring a lot of planning or logistics. (A minibreak is also useful if a longer trip just isn’t practical for you right now.) To make the time as refreshing as possible, leave town early on Friday so that you have an extra day to explore the area. Or you might take a single vacation day and use it to reconnect with friends,

meeting some for lunch and getting together with others after they finish their workday. These short breaks may not have all the benefits of a big vacation, when you can completely disconnect for a week or two, but they still give you the feeling of having “room to breathe” — and you can take them a lot more often.

(Adapted from “How to Get the Most Out of a Day Off,” by Elizabeth Grace Saunders.)

s a manager, your job is to give feedback. But if you want your employees to really hear what you’re saying, you need to listen, too. Research suggests a manager’s attentive, nonjudgmental listening makes an employee more relaxed, more self-aware and less defensive. The next time you’re coaching someone, listen carefully and thoughtfully to everything they say. Don’t jump to conclusions or interrupt. Give the person space to express themselves, and ask good questions to encourage them to keep talking. When people sense that others are truly hearing them, they’re much more likely to open up. Use eye contact and body language to signal that you’re focused on your employee and want to hear their thoughts. And refrain from suggesting solutions to problems. Even with feedback, your role should be to help the employee discover solutions themselves. (Adapted from “The Power of Listening in Helping People Change,” by Guy Itzchakov and Avraham N. Kluger.)

When presenting, speak slowly and use simple words To finally start that big project, start small

Use tough feedback as an opportunity for self-reflection

ou might have a great idea or exciting results to share, but if you don’t deliver your message with confidence, it will fall flat. To look confident when you’re speaking to an audience, pace your talking speed. Speak a little slower than you think you need to. Pay particular attention to speed if your presentation isn’t live (maybe you’re talking on the phone or in a webinar), since the audience can’t watch your mouth and facial expressions. And no matter the format, use simple words. Long, convoluted sentences and jargon don’t make you sound smart. You gain credibility and respect by articulating complex ideas in simple

egative feedback is tough to hear, but it doesn’t have to be soulcrushing. When your manager or a colleague points out something you need to improve on, think before you react. Even if the input is upsetting or surprising, remind yourself that it’s useful information to have. One simple, effective way to consider what you’ve heard is to put your feelings into words. For example, after a critical performance review, you might say to yourself, “I feel blindsided and a little scared.” Naming your emotions can keep them from overwhelming your ability to act on the feedback. Then ask a few trustworthy sources whether they agree with what your manager

language. To remember to go slow and speak plainly, make yourself rehearse under stress. Practicing the presentation in front of people, even if it’s in your office or your living room, will keep you from cracking under pressure when delivering the real deal.

(Adapted from “5 Ways to Project Confidence in Front of an Audience,” by Carmine Gallo.)

ften the biggest challenge with a project is just getting started. To push yourself over the threshold, think about a small first step you can take. It might be picking up the phone and calling someone whose input you need, or sitting down in a chair and writing the first sentence of a report. Then plan a time and place to do it: “At 9 a.m. on Tuesday, I’ll sit at my desk, open a blank document and write.” Starting something hard can bring up feelings of discomfort; you might experience insecurity (“I can’t do this”) or an impulse to procrastinate (“I should probably check email”).

But stay disciplined: You can’t control whether you feel these things, but you can control whether you act on them. And remember, no matter how big the project is, the transition to beginning it can be a small, easy step. Once you get started, you’ll feel a lot better.

(Adapted from “How to Actually Start the Task You’ve Been Avoiding,” by Peter Bregman.)

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

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or colleague said. It can be hard to know how others see us, so getting multiple points of view will help you understand the impression you create. It will also prevent you from overcorrecting based on one person’s opinion — which, after all, is what feedback sometimes is.

(Adapted from “The Right Way to Respond to Negative Feedback,” by Tasha Eurich.)

30 BUSINESS DAY NEWS

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Ghana’s new terminal, policies point way for Nigeria’s aviation sector IFEOMA OKEKE

he new Ghana airport terminal, aviation infrastructure and deliberate policies implemented to drive the sector are pointers to Nigeria, with the population and geographical location, to become a regional aviation hub. The new Ghana third passenger terminal, to be launched next month, has the capacity to handle 1,250 passengers an hour. It is equipped with six boarding bridges, a large commercial and retail area, three business lounges and purpose-built transit facilities. Experts say these developments will make it more attractive for airlines to take off and land from Ghana, which is just an hour flight from Nigeria. This will also imply more earnings from landing and parking fees, aviation fuel and other taxes for the Ghanaian government. Femi Olaoye, an engineer-

ing consultant and aviation expert, says obviously, the tide is shifting in favour of Ghana becoming the regional hub for everything ranging from mining, oil and gas to aviation, and the steps taken to make this happen are clear and results are showing up. “With The ASEAN–China Free Trade Area (ACFTA), I see Ghana becoming the regional player, if Nigeria does not step it up. Aviation doesn’t stand-alone; it is directly responsible for business travel. Thus, Ghana showing more seriousness and working towards it, seem the early birds. “Their facility compared to what is available in Nigeria far outclasses ours. They are more organised, safety is assured and the customer overall travel experience is quite good. So, it is no brainer for the rest of Africa to go there for regional business meetings and deals,” Olaoye says. He stresses that if Ghana continues on this path, coupled with their economic reforms, in the future, Nigeria’s

plot to become the regional air travel hub may be thwarted. The Kotoka International Airport has been the beneficiary of several infrastructural expansion and upgrade projects, but the most ambitious and indeed most important one is the construction of a third passenger terminal. Its construction has been presented by the Ghana Airports Company Limited as its flagship project, and this is for good reason. Despite about N800 billion spent to bring Nigeria’s airports, especially the Murtala Muhammed International Airport (MMIA), to international standards through remodelling seven years ago, the airport has been unable to attain a hub status. Ranked as the fifth busiest airport in Africa, with an average of 10, 383,452-passenger traffic achieved in 2017, experts believe that the MMIA, strategically located in Lagos, has all it takes to create an air transportation hub for Nigeria.

Pharmacists alert Nigerians on counterfeit drugs in circulation YOMI AYELESO, Akure

ssociation of Community Pharmacists of Nigeria (ACPN) has raised an alarm over high rate of fake drugs in circulation in the country. The group pledges to partner the National Agency for Food Drugs Administration and Control (NAFDAC) to checkmate and tackle the menace, which is one of the leading causes of death among Nigerians. Samuel Adekola, the new chairman of the Association, made this known in Akure, the Ondo State capital, at the weekend, when he led members of his new national executive for

a victory thanksgiving at All Christian Fellowship Ministry, FUTA Assembly, after they were elected in Benin City, Edo State, recently. According to Adekola, such partnership between NAFDAC and community pharmacists nationwide will help government stamp out uncertified drugs dealers and end activities of unqualified pharmacists who usually sell counterfeit drugs in the country. “We are going to cooperate and support NAFDAC, which is the agent of government that has the primary responsibility to fight fake and counterfeit drugs. We are going to all the states of the federation to mobilise support from the govern-

ment of each state to fight fake drugs. “The ACPN will work with NAFDAC and Pharmaceutical Council of Nigeria to ensure that the taskforce on fake and counterfeit drugs is fortified and supported to be more functional. “I am happy we are starting from Ondo State, which is my state, we have taken the campaign against fake drugs to the government of Ondo State. We appreciate them because Ondo State is taking a lead in the fight against fake drugs through the use of scanning machine. Ondo is the only state in Nigeria that has the machine which can detect fake drugs on the spot,” he said.

Police Service Commission recognises Enugu’s huge investment in security DANIEL OBI

hairman of the Police Service Commission (PSC) and retired Inspector General of Police, Musiliu Smith, says the sustained investment in security by the government of Enugu State under the headship of Governor Ifeanyi Ugwuanyi is one of the reasons the state has become one of the most peaceful states in Nigeria. Smith, who was represented by member representing the South-South region in the PSC, Austine Braimoh, says no government that desires to leave a lasting legacy in the lives and businesses of its people can afford to take the issue of security for granted. He says what Governor Ug-

wuanyi has achieved in Enugu through seamless cooperation and support to the police and other security operatives is an example worthy of replicating by leaders across the country. “Your investments in security are not in vain. It is evident that these investments have led to what have noted as the significant drop in criminal activities in Enugu State. We have been to a few places around the state and have seen the commendable signposts of achievement that are credited to your leadership,” he states. While stating that the newly inaugurated PSC was determined to work towards a refocused and reinvigorated Nigeria Police, he also said the commission has concluded plans to establish regional

operational offices across the country to improves connectivity between the public and the Commission while also facilitating public complaints and speeding up the resolution of issues resulting relating to the promotion of officers. He also pleads with the governor to continue to provide support to the security operatives, especially in the provision and discipline of officers and men. In his response, Governor Ugwuanyi thanks President Muhammadu Buhari for inaugurating the new board of the Commission, saying it is a demonstration of the commitment of the Nigerian government under his watch, to make the security of life and property, a major national priority.

Tuesday 28 August 2018

C002D5556

Cholera: 209 deaths, 12,881 suspected cases in 22 states ANTHONIA OBOKOH

he Nigeria Centre for Disease Control (NCDC) has confirmed 209 deaths and 12,881 suspected cholera cases in 22 states in Nigeria, within 31 weeks. Nigeria is currently the most impacted country with some 90 percent of cholera cases, says the United Nations Children’s Fund (UNICEF). Cholera is a serious bacterial infection that causes severe watery diarrhoea and stomach cramps, which can lead to dehydration and even death. According to latest update of situation report by the agency, since the beginning of 2018, a total of 12,881 suspected cholera

cases with 359 laboratory confirmed and 209 deaths have been reported from 22 states from 112 local government areas compared with 1,068 suspected cases and 29 deaths from 36 local government areas in 15 state during the same period in 2017. The current outbreak has already reached a number of major states following weekly epidemiological report, week 31 (August 5, 2018), identifies the highest burden from Zamfara with about 228 cases, Katsina -122, Kano - 119, Abia - 4, Adamawa - 4, Borno - 9, Ebonyi - 9, Ekiti - 1, FCT – 20, Kaduna – 24, and Yobe - 3. “A total of 595 suspected cases have been reported with 10 laboratory confirmed cases and 20 deaths

were reported from 38 local government areas in 11 states,” says the report. Chikwe Ihekweazu, CEO, NCDC, said, “Cholera cases are being treated at designated treatment centres in affected states. We have ramped up our risk communications campaign so that people are better aware of the risk factors and ways to prevent cholera outbreaks. “We are also strengthening the disease surveillance and laboratory systems so that cases are reported early, detected in time and response measures initiated.” “Unsafe water sources and dirty environment contributed to the spread of the disease and yearly outbreaks in many states in Nigeria,” says the agency while

calling for better hygienic conditions. “States are encouraged to prevent cholera outbreaks by improving access to water, sanitation and hygiene (WaSH); this remains the best way to prevent cholera,” says a report by the organisation. The agency further says the Rapid Response Team continues to engage in extensive risk communications and social mobilisation activities in order to support surveillance, case management and laboratory capacities. Meanwhile, NCDC, the Federal Ministry of Water Resources, state governments and partners are strengthening water, sanitation hygiene activities in the affected states.

31 NEWS

BUSINESS DAY

Warri seaport to be fully functional in months - governor MERCY ENOCH, Asaba

elta State Governor Ifeanyi Okowa says Warri seaport would be fully functional in the next few months, and called for support for the companies that would be engaged in the dredging of the river. Okowa, who made the disclosure at the weekend in Asaba at a thanksgiving service to mark the 27th anniversary of the state’s existence, said a lot of politics had been played in the past concerning the seaport. The governor however thanked God that the contract for the first phase of the dredging had been awarded, and prayed that the youths and the people of the state should not disrupt the work, saying, “We as a government, the traditional rulers and the security agencies will not allow that.” He expressed confidence that with the signing of the Delta State Public and Private Properties Bill 2018 into law, property developers and investors would see the state as a safe haven for their investments. “Let our youths know that there is a law that will take them to prison for dis-

turbing property developers. We pray for those who will be the first set of people to flout the law,” he said. The governor, who said Deltans were celebrating unity and peaceful co-existence as a people, went down memory lane and thanked traditional rulers, religious leaders and all for agreeing to live together as one and in peace. “There is a lot of reasons to thank God. If you can recall when the state was created, you knew how the state was, but the peace that we witness today is more than enough reason to thank God,” he said. Continuing, he said, “The peace that we witness in the state today does not just indicate peace alone, but proof that we are united, our traditional rulers are united and they are speaking with one voice; it was not so in 1991, but we thank God for where we are today, you can feel the impact of that unity and peace in the state. “We have come to realise that we are one people and that we have to work, grow and think together and that whatever development will come to this state has to be one in which involves everyone and I give God all the Glory.”

FG partners UN, others to reintegrate Boko Haram victims in Lake Chad region CYNTHIA EGBOBOH, Abuja

L-R: Uche Obiofume, group head, division management, SystemSpecs Limited; Henry Ikediashi, CEO, Camsiii Limited; Iyinola Ayoola, executive secretary, Nigerian Computer Society (NCS); Mahammed Onawo, chairman, House Committee on ICT, House of Representatives Abuja, and Adeoye Rogba, chairman, education and manpower development, Nigerian Computer Society, during a courtesy visit of the chairman House Committee on ICT to the office of NCS in Lagos, yesterday. Pic by Olawale Amoo

‘Only human development will revive Nigerian economy’ Edo abolishes advance payment of 10% economy to develop. administration of estate fee with Executive Order YOMI AYELESO, Akure His words: “Our country

overnor Godwin Obaseki of Edo State has issued an Executive Order altering the provision of Order 53, Rule 11, Paragraph 21 of the Second Schedule of the Edo State High Court (Civil Procedure) Rules 2012, that made it mandatory for persons applying for letters of Administration to pay 10 percent of the total value of the property in advance, as a condition for the issuance of Letters of Administration. The new Executive Order No: 1 of 2018, with August 1 commencement date, is a response to the plights of many beneficiaries and next-of-kin of deceased and retired government workers who cannot collect their entitlements due to their inability to pay in advance, the required 10 percent of the value of their entitlements, as condition for the issuance of Letters of Administration,

Obaseki said. The governor stated in the Executive Order: “Whereas, Order 53 Rule 11 and paragraph 21 of the Second Schedule of the Edo State High Court (Civil Procedure) Rules 2012 made it mandatory for persons applying for Letters of Administration to pay 10 percent of the total value of the Property as a condition for the issuance of Letters of Administration. “Whereas my attention has been drawn to the plight of many applicants who as beneficiaries and or next-ofkin of deceased Government Workers/Pensioners are unable to process and obtain Letters of Administration to collect their entitlements. “Now therefore, I Godwin Nogheghase Obaseki, Governor of Edo State, in exercise of the authority vested by the Constitution and other laws enabling me in that behalf, do hereby order and direct as follows”.

professor of History, Banji Akintoye, says Nigeria will continue to be poor as a country if it fails to invest in human capital development. Akintoye says most of the country’s youths were roaming the streets and doing nothing while the best of Nigerian citizens had left for other countries to seek greener pasture. He spoke at the weekend while delivering a lecture entitled ‘Nigeria: Signs of Our Time,’ organised to mark the 10th anniversary of the establishment of Adaba FM, a private radio station in Akure, the Ondo State capital. The chairman of Afenifere Renewal Group, Wale Oshun, chaired the lecture. The former university lecturer said from all accounts and tendencies, it would take a long time for the Nigerian

is going to get poorer. Why? because it is human beings that build an economy. It is not capital or machinery. “The human beings who are supposed to be preparing to build the economy of Nigeria are being allowed to roam around the streets and do nothing. Many of them are running away from the poverty and hopelessness. We are losing those that should build our economy. Young people are living in droves to other countries. “The American Census Bureau said in 2013 that Nigerians are the most educated group of immigrants that have ever come to the United States. “We are losing the people who should be here to be building our economy. I see a country that has the capabilities to be a great country. But I also see that country steadily declining and, perhaps, ultimately breaking.

he Federal Government of Nigeria on Monday collaborated with the United Nations, Africa Union Commission and others to promote integration and rehabilitation for the victims and areas affected by Boko Haram insurgence in the Lake Chad region. Musa Ibrahim, permanent secretary, Ministry of Water Resources, said the adoption of the regional stabilisation strategy was a necessary step towards restoring hope and creating a better living condition for the Boko Haram affected persons in the region. Ibrahim, speaking at the committee of experts meeting for the validation and adoption of the stabilisation strategy, said, “The region over the years has suffered loss of lives and properties through the insurgence, and the stabilisation strategy aims to bring lasting peace to the affected areas.” The adoption of the strategy is critical to the region as it covers several areas such as political cooperation, security and Human Rights, Rehabilitation and reintegration of Boko Haram affected persons, humanitarian assistance, he said. Other areas, according to Ibrahim, include socioeconomic recovery and en-

vironmental sustainability, education and human development and peace building. Samuel Bwalya, country director, UNDP Nigeria, said the adoption of the stabilisation strategy was a critical step towards the resolution of the crisis around the Lake Chad region. Bwalya said, “For decades, the Lake Chad Basin has been plagued by underdevelopment, weak governance, low levels of education, and exclusion of women and youth in decision-making structures, and a myriad of environmental challenges that have been exacerbated by drastic climate change in recent times. “The Lake Chad water levels, which have historically provided a lifeline to millions in the sub-region have diminished and become increasingly unpredictable. The prospects of supporting an ever increasing population and demographic pressures have become even more challenging and the root causes underpin the general cycle of violence seen in the sub-region.” The transnational nature of the crisis demands a regional response that contributes to a holistic and integrated approach for partners to collectively work together to address the complex set of challenges that have resulted from decades of underdevelopment and violence, he said.

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Success stories Nigeria’s renewable energy industry can learn from STEPHEN ONYEKWELU

igeria can go for a typical case of a resource cursed nation because it has an abundance of natural resources such as sunlight but fails to harness same to stimulate sustainable economic growth and better the lives of its citizens. Global wind and solar has hit a landmark figure of 1 terawatt (TW) and a second terawatt will arrive by mid-2023 and cost 46 percent less than the first, data from Bloomberg NEF show. This is a success story Nigeria can learn from. New output from the BNEF database shows that there were 1,013GW of wind and solar photovoltaic (PV) generating capacity installed worldwide as of June 30, 2018. The 1TW milestone would have been passed sometime just before this date. The total

is finely balanced between wind (54%) and solar (46%). One of the biggest challenges facing Nigeria is its inability to supply reliable electricity through its decaying transmission infrastructure that has collapsed an average of once a month since January 2018. Of course, there is also the challenge associated with gas supply to generating companies. Solar and wind offer alternatives that can lift the lives of rural dwellers, especially amid these challenges. According to the World Bank, nearly 1.5 billion people are estimated to lack electricity supply in the world, half are in Africa. Nigeria alone is estimated to have over 90 million people living without electricity supply. This is potential market for solar or wind powered mini-grid solutions, such as the solar home systems. There are some success stories already in Nigeria. Osoogun, a rural com-

munity in Oyo State, was recently documented. The community is connected to the national grid, yet never enjoyed electricity. Sadly, no light for over one year, but now they are very excited that solar home systems (SHS) will be provided for them. This is according to a video documentary produced by Adesoji Adejolu, creative director at Ultrashot, a media production of an event streaming company on TweetChat under the aegis of #GridlessAfrica. Adejolu strives to use cinematic experience, #BeyondTheGridMovie to investigate the various ways decentralised renewable energy bridges electricity supply gaps and provides an alternative source of power in Nigeria. Access to finance is one of the major limitations to the rapid development of solar energy in Africa. But while traditional methods

of obtaining project capital can be very limiting. Today’s world of micro-investors on platforms such as Kickstarter, and Indiegogo has paved the way for new platforms like SunExchange. However, with sustained investment and expansion, in ten years, there would be larger networks of microgrids working together and independent from the grid. Maybe even integrate to the network. It would be like Europe during the 1800s with the industrial revolution and coal fired generation. One example of where mini-grids are providing electricity and making lives better is Burundi, Rwanda’s neighbour. There, solar powered ovens are providing business opportunities for women. Not only economically with a bakery business, but also with no longer requiring firewood, quality of life/health increases due to no smoke inhalation.

L-R: Mohammed Babakobi, director of rail transport, Federal Ministry of Transport; Chibuike Amaechi, minister of transport, and Fidet Okhiria, managing director, Nigeria Railway Corporation, during a facility tour of the corporation in Lagos, yesterday. NAN

Youth Initiative unveils ‘Rate Your State’ report

report recently unveiled by 67 Million Youth Initiative – represented by delegates including three commissioners from different political parties at the official launch of the group Ebonyi and Akwa Ibom states emerged as top-ranking states to elect the highest number of representatives and senators under 45 years. Launching the initiative in Abuja recently, with several student leaders across the country in attendance, the initiative said with the report drawn from the 2015 elections, Ebonyi came first with 108 young legislators in the state and federal house of assembly, followed closely by Akwa Ibom with 70 state and federal legislators, including 33 senators. The new ‘Rate

Your State’ report will be released soon. With over 7,000 members in three weeks, the initiative is building on its main goal to promote more young people into politics and governance across all states and political lines. The report shows the performances of the states and Federal Government regarding the percentage of young people in elected positions. “We are hoping that due to pressure from 67 Million Youth, we shall see a positive trend across board. We intend to focus on getting many young people appointed into various positions in their states and on the national level. “While we are not endorsing any candidate for the 2019 presidential elections, we shall support the emergence

and success of young candidates at the local, state and national levels – irrespective of their party lines,” Asuquo Ekpenyong, a member of the board of trustees, said. The initiative was initially started by members such as Maryam Laushi (Modern Democratic Party and a founding member of NotTo-Young-To-Run), Asuquo Ekpenyong (PDP; commissioner of finance, Cross River), Mohammad Sani Abdullahi (APC; commissioner of budget and planning, Kaduna State), Mark Okoye (APGA; commissioner of budget and planning, Anambra State), Moji Rhodes (first female deputy chief of staff, Lagos State), Luqman Edu (Dan Masanin Sarkin Musulmi), and Adebola Williams (cofounder of RED).

Tuesday 28 August 2018

Education reform: Edo Poly floats Nigeria’s first open distance flexible learning plan

n furtherance of the Governor Godwin Obasekiled administration’s focus on capacity-building and continuous education, the management of the Edo State Polytechnic, Usen, (formerly Edo State Institute of Technology and Management), has concluded plans to commence its Open Distance and Flexible Learning (ODFL) programme in the next six months, the first in a Nigerian polytechnic. The course to be featured for now in the programme is Public Administration. Other courses to be included in the first phase of implementation include Accountancy, Business Administration and Computer Science. The National Board for Technical Education (NBTE) recently gave the nod for 29 polytechnics to pioneer the ODFL system, in a move to increase access to Technical and Vocational Education (TVET) through the schools, and Edo Poly will be the first to float the programme. Rector of the institution, Abiodun Falodun, a professor, who disclosed this in an interview with journalists, said the objective of setting up the programme was to increase access to TVET for residents in the state and environs, improve visibility of the polytechnic globally, allows for the internationalisation of learning opportunities and access to global resources and experts via internet communication and resources. He noted that in preparation for the smooth take off of the programme, a mandatory three-day training for all academic and some non-academic staff has been organised to hold from August 27 - 29, at the ICT Centre of Edo State Polytechnic. “At the conclusion of the training, the Polytechnic intends to mount its online

distance and flexible learning programme within the next six months,” he said. According to Falodun, “We are going to be the first polytechnic in Nigeria to run the ODFL programme. In the University system, University of Ibadan, Ladoke Akintola University of Technology (LAUTECH) and Ahmadu Bello University (ABU), already run such programmes. The University of Benin (UNIBEN) is about to start, with Accountancy. So, we are the first polytechnic.” He said three renowned ODL experts in the field of Online Distance and Flexible Learning will anchor the training, led by Bayo Okunade, a professor from the University of Ibadan, and explained that the decision to run the proposed ODFL programmes became expedient with the increasing adoption of technology for teaching and learning. “The training programme is expected to cover the basic requirements to commence the running of the programme. “Also speaking, the Director of the Edo Poly Distance Learning School (EP-DLS), Dr. Kess Aisikhia, revealed that the training for staff will cover a wide range of issues in ODFL, which, according to him, include “legal policies to guide staff on aspects such as intellectual property, plagiarism, liability, educational technology, and labour relations. Student policies to regulate aspects such as registration, resources, training and tutoring, assessment, and student support services.” The other areas are: “Technical policies, including ICT issues, internet and contractual agreements. Functions of Webmaster, instructional designers, course administrators, e-tutors, and computer assistants.

Forging trade ties for post-Brexit Britain brings May to SSA BUNMI BAILEY

K Prime Minister Theresa May will lead an ambitious trip to subSaharan Africa (SSA) with a visit to Nigeria, South Africa and Kenya for the first time with senior ministers and a wide-ranging trade delegation this week, according to a press release issued from the Prime Minister’s office. This visit comes at a time of enormous change across Africa with a unique opportunity, as the UK moves towards Brexit, for a truly Global Britain to invest in and work alongside African nations, with mutual benefits. “Africa stands right on the cusp of playing a transform-

ative role in the global economy, and as longstanding partners this trip is a unique opportunity at a unique time for the UK to set out our ambition to work even closer together,” May said “A more prosperous, growing and trading Africa is in all of our interests and its incredible potential will only be realised through a concerted partnership between governments, global institutions and business. “As we prepare to leave the European Union, now is the time for the UK to deepen and strengthen its global partnerships. This week, I am looking forward to discussing how we can do that alongside Africa to help deliver important investment and jobs as well as continue to work togeth-

er to maintain stability and security,” the Prime Minister said. Her central message will be focused on a renewed partnership between the UK and Africa, which will seek to maximise shared opportunities and tackle common challenges in a continent that is growing at a rapid pace from the Sahara to South Africa. She will begin her trip in Cape Town, South Africa, where she will see President Cyril Ramaphosa, and meet young people and business leaders. In Nigeria, she will meet with President Muhammadu Buhari in Abuja and spend time in Lagos meeting victims of modern slavery, a cause she has worked passionately to tackle.

Tuesday 28 August 2018

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BUSINESS DAY

OPINION

The potential of this politics to damage the economy

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

rdinarily there should be so much going for Nigeria’s economy. Production of crude oil at about 2 million barrels per day at a good price of about $70 per barrel is yielding good foreign exchange for the nation, helping to boost foreign reserves which today stand at about $47.25 billion. Inflation has continued to decline steadily over several months coming to the current level of 11.4% as the CBN and its MPC retain monetary policy index at a tight stance. Also some great effort is being made at the economic management level to pursue the Nigeria Economic Recovery and Growth plan (NERGP). Additionally, some improved liquidity has been noticed in terms of funding Nigeria’s infrastructure projects, combining oil revenue, tax heist with a large dose of debt from sundry sources. Though the trickledown effect of the budgetary expenditure and policy choices are yet to appropriately reflect on the quality of lives

of most Nigerians or on the overall Human development index (HDI) as unemployment and underemployment still hover around 40% in the general population, with worse statistics in the youth population. In the last Global HDI ranking we are around the 150 mark against 188 countries, with a GDP per capita of $1995 (as against $3082 in 2013). Yet there was hope that the sustained effort at better economic management and much more determination to improve our operating environment, improve the ease of doing business and competitiveness index, the trajectory of economic improvement would be sustained and may be the long expected relief would be attained. But recent events in the nation are threatening to undermine or stultify much of the efforts made in the management of the economy. Talking to investors and business men at both local and international fora recently, I find there is a great deal of apprehension about what one American investor described as “high dose of political uncertainty, weak business environment and scary security concern”. They point to all the issues that Nigeria is confronting and accept that there is some evidence that the Nigerian economic managers are making reasonable efforts to make the economy attractive for investments. But they point that the problem lies with our politics and governance. They feel that

News Equity crowdfunding: An idea whose time has come Continued from back page

The Act was amended in April 2014 to facilitate the development of crowdfunding. In Canada, the rule regulating crowdfunding is the ‘’Multilateral Instrument Crowdfunding’’ which was published in 2016 by the Ontario Securities Commission. According to the Nikkei Asian Review, equity crowdfunding was legalized in Japan in May 2015 permitting companies to raise not more than 100 million yen a year, with individual contributions capped at 500,000 yen. Italy was one of the first European countries to issue a bespoke crowdfunding regulation in 2012. Subsequently, new rules mandating crowdfunding platforms to adopt indemnity schemes or obtain insurance provided stronger legal protection for investors. According to CrowdfundingBuzz, an Italian crowdfunding-focused internet site, Italian equity crowdfunding platforms raised 5 million euros for 23 companies in 2016. It is instructive to note that in many of these jurisdictions, the regulation of equity-based crowdfunding normally takes into consideration the benefits and risks inherent in such funding options.

These include an unconventional funding mechanism which provides an opportunity for the ‘crowd’ to invest in securities while at the same time incorporating high chances of failure and information asymmetry. It is for this reason that certain commonalities are observed in the framework for equity crowdfunding with respect to Platform registration requirements, Disclosure requirements, Investments caps (both for the fundraiser and the investor), Consumer protection (especially of the small, uninformed investor) and Statutory allowance of crowdfunding activities (as long as they fall within required standards of engagement). These should serve as good guides for the regulatory authority in Nigeria for dealing with the flipsides of crowdfunding. All said and done, the Securities and Exchange Commission will have to adopt rules and propose amendments to the CAMA and the ISA that will permit companies raise funds through crowdfunding. In this regard, the challenge for the capital market regulator is to design an appropriate equity crowdfunding structure for Nigeria by benchmarking global best practices. The setting up of a

our political institutions are being weakened by the day, pointing to what has been happening between the executive and the legislature. They seemed terribly alarmed by the recent security siege on the National Assembly and expressed a fear that a weakened or ineffective legislature would result in a denatured democracy, resulting in a high level of executive impunity. For them, impunity is a precursor of self help and lawlessness. They fear greatly that law and order may break down in Nigeria if things are allowed to remain as they are with no punishment for those who take laws into their hands. They tell of warnings by many of their country embassies in Nigeria that Nigeria is becoming a very high risk country. They are alarmed by the regular killings of Nigerians by all kinds of non-state actors who seem to have a free reign, facing little or no consequence. They point to the regular alarms raised by opposition governors of threats to their lives. Governors Wike and Fayose had raised alarms in the past and last week Ortom raised similar alarm. They wander that if state governors are so terrified as to raise alarms over their safety and then other Nigerian nationals are killed without much consequence, what would be the fate of non-Nigerians? Many say they are under tremendous pressure by their families not to visit Nigeria, and if they must, then they should restrict themselves to Lagos and

Abuja only. In fact, many said they have been asked not to go anywhere in Nigeria by road except within Lagos and Abuja metropolis and even here, it must be with security escort. Some efforts I made to explain to them that things may be bad but not really as bad as they seemed to perceive was rebuffed. Well some of the fears may be over stretched, but we cannot deny that the political shenanigans going on in Nigeria right now are beginning to take a toll on Nigerians psychologically and in real terms. In terms of economic output, it is doubtful if the economy recovery will not be slowed down by these worries and uncertainties especially in the months leading to the 2019 elections. Q1 2018 GDP at 1.9% growth declined by 13.4% over Q4 2017. Hope was that Q2 growth should be stronger than this but that hope is being challenged and yet we are still about 6-months to the elections. Some analysts project a Q2 GDP growth that will be below Q1 growth. Well we should know shortly, but they point to the stagnation or sluggishness of the Purchasing Managers Index (PMI) since April when it reached 56. 9% but declined to 56. 5% in May, went up to 57% in June before moving back to 56.8% in July. They project this to indicate a drop in the momentum of productive activities. There is potential that the economy could take a big hit if efforts are not made to reduce the political uncertainties and improve gov-

ernance. We therefore appeal to our political class to consider the poor and suffering masses of this country and try and calm down and do what will keep Nigeria in peace and promote investment and economic well being. The party in power particularly has a critical role to play in lowering the political temperature. They should know that it is their responsibility to ensure that Nigeria does not derail any further, because they are the party in power and will take much of the blame should things get really awry. Chairman Oshiomhole must temper his rhetoric and work to engender peace across the lines. Critically the party should discontinue with its effort to remove Saraki from the Senate Presidency by all means. This desperation has become a major destabilizing factor in the political environment and it is helping create much of the political uncertainties in Nigeria. It has been a three-year battle that must cease now, before it boils over and cause irreparable damage to Nigeria. It is only six months to elections and that should give the country a peaceful opportunity to change leadership of all arms and tiers of the government without destroying the economy. Equally important is that we must shield the economic ministers and managers from politics. Let the politicians do their partisan manipulations and gerrymandering, but let the economic managers keep their eyes on the ball, if at all possible.

Manufacturing is key to economic growth, development - Dangote Committee to draw up a Fintech roadmap for Nigeria during the last Capital Market Committee meeting in Lagos is a step in the right direction. Following the example of the Securities and Exchange Board of India which issued a consultation paper in 2014, the next step is for SEC Nigeria to invite proposals and suggestions from stakeholders regarding the framework for equity-based crowdfunding to be forwarded to the Committee for consideration as part of its terms of reference. This would pave the way for a comprehensive regulatory regime in equity crowdfunding. No doubt, the potential for crowdfunding in Nigeria is huge considering the country’s working population and the increasing number of her citizens in Diaspora, especially in the United States and Britain, expected to play a major role in the growth of equity crowdfunding in Nigeria. According to World Bank’s estimates, the market potential in Africa for crowdfunding would reach USD2.5 billion by the year 2025. With proper framework in place, crowdfunding in Nigeria will be a significant part of this prospect. Indeed, for the Nigerian capital market, equity crowdfunding is an idea whose time has come.

xecutive director of the Dangote Group, Halima AlikoDangote, has urged millennials in Nigeria and across Africa to diversify from service-oriented enterprises to manufacturing and agriculture in a bid to fast track the development of the continent and better life for its nationals. Halima Dangote said the economic realities around the world had shown that the way to go was agriculture and that the youths must take the lead more when most African countries were still grappling with low economic growth. Addressing the 58th conference of the Nigerian Bar Association (NBA) in Abuja Monday, Halima Dangote said African countries had groped in the dark for too long and it was high time the millennials stand up to be counted as the future of the continent. In her paper titled “Roles of Millennials in Transition and Institution Building,” she explained that the youths had the potentials to turn around the fortune of the African continent. She stated, “Millennials are young ones born between 1980 and the mid-2000s, who account for 27% of the global population (about 2 billion people) and Sub-Saharan Africa alone is home to 13% of the entire millennial population, ranking second to Asia.” According to Dangote, “Available

statistics have also revealed that by 2025, 75% of the global workforce will be millennials, large enough to influence consumer spending patterns; change consumer business models and impact the global economy. Most members of this generation are at the beginning of their careers and so will be an important engine for economic growth in the decades to come.” Amid intermittent applause from the lawyers, Halima Dangote stated that the theme of the conference which is “Transition, Transformation, and Sustainable Institutions” could not have come at a better time than now and therefore lauded the Association for coming up with a subject that Nigeria and Africa needed to discuss. She congratulated the outgoing President of the NBA, A. B. Mahmoud, the incoming President, Mr. Paul Usoro SAN, and “all my learned friends here for successfully continuing with the vision handed down by the fathers and founders of the Association.” The executive director also urged millennials and other relevant stakeholders to exercise restraint in the face common desperation for wealth by their contemporaries adding that, “Success in entrepreneurship takes time, dedication and hard work. There is a need to disabuse our mind from the concept of overnight success. Industrialisation requires patience and perseverance.”

34 BUSINESS DAY NEWS Dear PMB, the rule of law is sacrosanct in our... Continued from page 1

President Buhari’s declaration pushes this narrative by hinging it on a judgement of the Supreme Court. Buhari declared, “Our apex court has had cause to adopt a position on this issue in this regard and it is now a matter of judicial recognition that where national security and public interest are threatened, or there is a likelihood of their be-

ing threatened, the individual rights of those allegedly responsible must take second place in favour of the greater good of the society.” The speechwriters of Mr President have made him take latitude with the interpretation of the Supreme Court’s decision in the matter of the application for bail by defence lawyers for Asari Dokubo in his tussle with the government. The Federal Government charged Dokubo with a treasonable felony. In Asari Dokubo versus Federal Republic of Nigeria (S.C. 208/2006), the court declined a request for bail given the nature of the case. It is suspicious to now cite it or use it as a decoy or justification for infringing on the rights of citizens or going on to disregard the observance of the rule of law. Nigerians of all professions and persuasion must rise up to decry this presidential kite flown to set an unfolding agenda of disregard for laws. Democracy in Nigeria is now in its 19th year in this incarnation essentially because of the observance of the rule of law. The present gov-

ernment is a significant beneficiary. However, this government inclines to push against the progress the nation has made on this path. It prefers the route of the rule of man where the government can declare white as black or change the gender of citizens. Across the land, officials of the state, at federal and state levels but mainly in the ruling party, have worked hard at turning back the clock of progress. There is growing impunity and observance of the law in the breach rather than in compliance. The Federal Government has carried out these wrong actions under cover of state security, deploying the Department of State Security, or in the name of anti-corruption, using the Economic and Financial Crimes Commission. While Nigerians sympathise with a president who in earlier times was used to command and control and the rule of force, it is imperative that he abides by his promise to observe due process and the rule of law. The rule of law is foundational to democracy. It is the pillar that holds this system of government in place and ensures that systems and processes work together for the common good. Across Africa and even in our history, “national interest” and “national security” have served as cover for egregious violations of the rights of citizens. The courts only recently freed Mr Jones Abiri from two years incarceration by the DSS in the name of national security and national interest. There was no trial. Nobody presented a case against him. DSS just locked him in underground cells

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for a whole two years. Just like that. Mr President now says such arbitrariness is justified. No, Sir! Under the military, national interest was a catch-all used to justify all manner of irrelevancies, fancies, and peccadilloes. Nigerians remember vividly how a governor ordered the caning of a journalist for reporting a strike by teachers and the publication of the story coinciding with the birthday of the said governor. The defence? The interest of the state! As we approach an election year positioned as must-win by the ruling party, all attempts to enforce the rule of man under any guise are repugnant and unacceptable. Nigeria must not relapse to the state of a banana republic, even as our economy is suffering. We must hold on to the convention in the community of the civilised that upholds the rule of law no matter what. The conventions of the United Nations to which Nigeria is a signatory emphasise adherence to the rule of law. There are no exceptions. The rule of law means that all persons, instititons and entities remain accountable to laws that are open, enforced equally and subject to independent adjudication. Most importantly, such laws would be subject to and consistent with international human rights norms and standards. It means our country must work to ensure adherence to the principles of the supremacy of law, equality before the law and avoidance of arbitrariness. Dear PMB, the rule of law must remain sacrosanct in our democracy. It pays all of us to observe it and not to make exceptions under any cover. - Chido Nwakanma

President Muhammadu Buhari presenting a souvenir to Torben Gettermann, outgoing ambassador of Denmark to Nigeria, during a farewell visit of the Ambassador to the Presidential Villa in Abuja, yesterday. NAN

Analysis: Aramco’s difficult listing shows... Continued from page 1

indifference if not derision from global investors doubtful that an

IPO would benefit them, has made the once in a generation deal seem a long way off. After a Reuters report on August 22nd that listing plans had been called off, the kingdom issued a statement saying the “speculation” was untrue, and that it remained committed to the IPO “at a time of its own choosing when conditions are optimum”. But beneath the disciplined message put forward in Riyadh lies a more uncertain reality, the 2018 deadline looks tight. Ademola Henry team leader at FOSTER said the problem of poor predetermined valuation combined with lack of political will and clarity on how the process should be done have made the Saudi Aramco IPO a fiction which may never happen. “When they arrived at a valuation of $2trillionthemarketwasshockedasking how they arrived at that,” Henry, team leader at FOSTER told BusinessDay. The team leader at FOSTER said

investors can manage many things but one thing investors cannot manage is uncertainty which is everything the Saudi Aramco project is all about. Jubril Kareem an energy analyst at Ecobank said the Saudi Aramco project is not a question of “when” it will happen but a question of “if” it will ever happen as the chances looks slimmer today. “There have always being controversy about the $2 trillion valuation whichisdoubtful.Alsothe concernthat thegovernmentwillhavetodiscloselots ofinformationwhichtheywouldrather keepprivate,”Kareemanenergyanalyst at Ecobank told BusinessDay. The IPO process started in January 2016, when Crown prince Mohammed Bin Salman told the Economist that Riyadh was considering selling shares in Aramco, which the kingdom nationalised in 1976 when it took over the stake of its American owners. “Personally, I’m enthusiastic about this step,” he said. “I believe it is in the interest of the Saudi market, and it is in the interest of Aramco.” Potentially the biggest equity sale in

history,theIPOplannedfor2018issupposed to be the deal of all deals, as it was proposed to seed a $2 trillion sovereign wealth fund to carry the Middle East’s biggest economy through the end of the oil age and also funnel hundreds of millions of dollars in fees to Wall Street’s elite banks such as JPMorgan Chase & Co. and Morgan Stanley. “I am not a betting man, but I am fairly certain that the Aramco IPO will not happen before the end of 2019. But I’ll bet £50 that there is no domestic stock listing, and another £50 there is no international listing, before the end of 2019,” John Kemp, a renowned international Energy analyst, tweeted despite Riyadh’s statement on Thursday. While current U.S. president Donald Trump has said he’s enthusiastic about the idea of Aramco listing on the New York stock exchange, however keeping the price of gasoline under control seems far more important. With Republicans facing tough midterm elections in November, he’s pressured Saudi Arabia to pump more oil, and cheaper crude means a lower valuation for the company. Also Saudi Aramco house seems not to be in order as important key

Tuesday 28 August 2018

Trump stirs controversy with ‘lifeless’ view of... Continued from page 1

madu Buhari in April ended with the US President telling aides he

never wanted to meet someone so lifeless again,” three people familiar with the matter told the Financial Times. Both presidents had earlier met in April this year at the White House where they discussed on issues around terrorism and economic growth. Trump had told Buhari that he should protect Nigerians especially Christians against a spate of killings by the Islamist sect Boko haram, and herdsmen. “We are deeply concerned by the religious violence in Nigeria, including the burning of churches and killing of Christians. We encourage Nigeria and the federal, local, and state governments to do everything to immediately secure the communities and protect innocent civilians, including Muslims and Christians,” Trump said then. Trump was set to welcome Kenyan President Uhuru Kenyatta of Kenya on Monday, for only the second one-on-one meeting the US president has held with a subSaharan African leader since he took office last year. Advocates of closer US-Africa ties hope his encounter with the younger, more urbane Kenyatta, 56, will breathe fresh life into a relationship with a region that Washington is seen to have neglected as other countries, notably China, develop ever-closer trade and investment ties with the continent. Fears that Nigerian President Buhari may be lacking a grasp on issues regarding governance and the economy, has given rise to speculations that he may not actually be in charge of his government, with powerful cabals exercising power on his behalf. Buhari spent a greater part of last year in a hospital in the United Kingdom treating an unknown ailment and frequently returns to the United Kingdom for follow-up medical check-ups usually presenting such visits as vacations at best or “routine medical check-ups” at worst. Added to that is the president’s often anti-intellectual bend, usually deriding professionals as “the so-called experts” and describing himself as “a very slow reader”. Junaid Mohammed, a second republic lawmaker and a former ally of the president recently revealed Buhari’s disdain for reading and seeking knowledge.

officials working on the project have left or moved. For instance, Abdullah bin Ibrahim al-Saadan, a 30-year veteran who as chief financial officer was the most senior executive working on the IPO’s day-to-day preparations, left in June to become the chairman of the Royal Commission for Jubail and Yanbu. Saudi Aramco is yet to announce a permanent replacement for al-Saadan; another key official Motassim al-Maashouq, who is vice president of IPO development, has been asked to take on new responsibilities. Fund managers are also worried that the value of oil fields could dwindle as governments ramp up their efforts to reduce fossil fuel consumption to fight climate change. The spread of electric vehicles, for example, will reduce demand growth over the next two decades. In May a group of investors including Standard Life Aberdeen, Fidelity Investments, and Legal and General Group warned oil companies about the risk of global warming. “As long-term investors, representing more than $10.4tn in assets,” they said in an open letter, they believed “the case for action on climate

He said he recommended a book on economics for the president in 2015 and two years later, the president hadn’t read two pages of it. Reacting to the characterisation of Buhari by Trump, Rafiq Raji, Chief Economist at Macroafricaintel said investors are not likely to take Trump seriously and such characterisation may not affect investment decisions in Nigeria. “I think investors will probably just have a good laugh about it. I do not think people take trump seriously when it comes to such characterization. He is however sure that the opposition will make a good meal out of Trump’s statement. “The people I feel will take the comment very useful are those competing with Buhari,” Raji said. Expectedly, the Peoples Democratic Party (PDP) took the matter a notch higher by accusing President Muhammadu Buhari and his handlers of opening up Nigeria to international ridicule. The party said such embarrassment is a backlash a nation gets when incompetent leaders, out of inferiority complex, resort to jumping around the world, desperately shopping for endorsement from world leaders. The party says President Buhari has been seeking international recognitions that are not predicated on any achievements from his three years in office. In a statement on Monday by the party’s National Publicity Secretary, Kola Ologbondiyan, the party charged the President to take a cue from the comments ascribed to President Trump by settling down at home and discharge his responsibilities to Nigerians or humbly accept his failings. “While the PDP has strong reservations on the reported comment by President Trump, for which we demand a response from the Buhari Presidency and the US White House, the party further holds that had our dear President not cheapened the exalted office of the President of the Federal Republic of Nigeria by his woeful outing during his visit to the United States, President Trump would not have had the opportunity to assess his level of incompetence and make such an embarrassing statement about our President.

•Continues online at www.businessdayonline.com change is clear.” Last month, Saudi Aramco confirmed that it was in talks with the Saudi government’s sovereign wealth fund, which owns a 70 percent stake in Sabic, to buy a “strategic interest” in the chemical company. Buying part of Sabic, a giant in its own right, could make Saudi Aramco a more valuable company while the petrochemical industry is growing around the world. That, in turn, could help the oil company draw even more interest in a public offering. Sabic, which earned a net profit of nearly $5 billion in 2017, produced more than 70 million tons of petrochemicals and five million tons of steel last year, according to Middle East Petroleum and Economic Publications, which tracks the industry. But skeptics of a Sabic transaction worry that Saudi Aramco would be taking on a financial burden by paying tens of billions of dollars for a stake in the chemical company. And adding on a big petrochemical business might reduce the overall profitability of Aramco, which is believed to enjoy among the world’s lowest costs for extracting the oil it produces.

Tuesday 28 August 2018

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35 NEWS

BUSINESS DAY

Investors sell first, ask questions later as... Continued from page 1

August 8th, the day their result

was released to N37.5. Similar to this is Nascon Allied Plc which increased earnings by 12.4 percent, but experienced a drop in its share price by 4.33 percent from N20.8 on July 23rd to N19.9. First Bank Holdings Plc posted an earnings growth of 13.7 percent and a 3.5 percent decrease in its share Price from N10 on July 27th to N9.65. So also Eco Bank Transnational and Total Plc which had a 36.6 and 23.17 percent increase in profit but a drop in their share prices of 2.91 and 2.95 percent from N20.6 and N183 on July 19th and July 30th to N20 and N177.6 respectively. The NSE All share index has returned negative 7.65 percent year to date. This therefore means that the relationship between a company’s earnings and its stock price can be complicated. High profits don’t necessarily mean a high stock price, and big losses don’t always lead to a low stock price. There are a lot of factors that affects the price of shares which includes; Liquidity in the market, Market sentiment, political stability, positive or negative news about the sector in which the company is in, government policy which could impact the sector, change in technology as well as new entrant in the market but that of Nigeria is more of market sentiment than earnings according to analyst. Henry Ogbuaku, Group head at GDL Investment told business day that; one the reason for this deviation

is that earnings cannot be treated in isolation. “There has been a lot of exit from the market. Nigerian market is fully dominated by foreign investors. If foreign investors move in, prices go up and if they pull out, prices go down. Data showed that there has been a decline in foreign portfolio investment,” Ogbuaku said. “Foreign investors are sceptical because of the security issues in the country as well as political tension due to the forthcoming election. All of that affected their perception of the economy,” Ogbuaku added. On the other hand, two companies which are 11 Plc and BetaGlass Plc had their share prices unchanged after reporting a growth in their earnings of 120.25 and 66.84 percent. Whereas, Dangote Cement reported a positive but insignificant reaction as its share price increased by 0.1 percent from N234.7 on July 20th to N235 following a marginal growth in earnings of 3.15 percent. “The market is bearish now not because investors don’t think the numbers are not solid, investors are aware that the numbers are good and in some cases, the numbers are better than expected but the reality is that market sentiment is negative as a result of political tension,” said Christian Orajekwe, investment analyst at Codros Capital. “Therefore, the better than expected earnings helped to reduce the magnitude of sell-off that would have ensued as a result of foreign investors pulling out of emerging markets,” Orajekwe added.

LPG demand up 55% in three months... Continued from page 2

ment priorities. It was also meant to create a development model for domestic LPG market with a view to successfully ensuring the transformation of the LPG sector. The strategies that would drive the policy according to the Federal Government were to make the product available by ramping local production, affordable by cutting taxes, accessible by leveraging on existing distribution chains of other industries, and acceptable by identifying and engaging with key influencers including traditional leaders and religious groups to promote usage. The government has recorded progress in driving accessibility with campaigns and affordability by removing Value Added Tax (VAT) on domestic LPG, but it is yet to move the needle on a funding plan for the sector. “As a medium term strategy, a blend of 40% import content of cylinders and 60% local manufacturing content is expected by the 3rd to 4th year of the policy while a target of 100% manufacturing of local cylinders is expected to be achieved within 5 years. “To support the goal of improving

the development of LPG infrastructure such as cylinder manufacturing plants, mini - gas plants/skid plants, gas plants and trucks, an LPG Availability Gas Intervention Fund of Sixty Billion Naira (N60,000,000,000) will be established by the Government,” it said in the policy document. The government is yet to implement this. The Federal Government plans to encourage increased LPG usage in power, generation, autogas, and industrial applications towards the attainment of Five Million (5,000,000) MT utilisation in 5 years. NBS data indicates that acceptance is growing nationally. “State-wide distribution of truck-out volume for Q2 2018 showed that 105.49mln of Liquefied Petroleum Gas (LPG) was distributed nationwide during the period under review with Lagos recording the highest quantityof8.7millionlitresintheperiod. Olufola Wusu, an energy lawyer has called on the government to develop LNGforlocalmarkettousegasasdriver for the economy. “The domestic marketforgasisexperiencing severe energy shortage with power plants often going offlineduetogassupplyconstraints,this is why actions are required,” Wusu told BusinessDay in a previous comment.

Apapa gridlock: Cocoa exporters count cost... Continued from page 2

governments over the years. In a very significant way, the congestion in and out of the ports has pushed up transportation cost for importers, a development an importer who has his business within Apapa described as worrisome. The importer who did not want to be named told BusinessDay that, before now, he spent between N180,000 and N190,000 on transportation of his consignment from Sifax Group depot in Apapa to his office, but today, it costs him between N295,000 and N300,000 to move the same 40-footer

container to the same location, representing almost 150 percent increase in transportation cost. Tony Anakebe, a port operator and member of freight forwarders association of Nigeria, confirmed this increase in a telephone interview, noting, “it is a big problem these days and the experience in getting to Apapa has become a nightmare; businesses continue to slide to their lowest level; it takes us almost two weeks to get our containers loaded after finishing with the customs.”

•Continues online at www.businessdayonline.com

L-R: Udukheli Izebuno, business director, government, CWG plc; Emmanuel Atama, executive secretary, National Cooperative Financing Agency of Nigeria (CFAN) and President, Abuja Cooperative Financing Agency (ACFA); Adaku Okoroafor, project manager, government, CWG plc; Emmanuel Iyazi, executive secretary, Abuja Cooperative Financing Agency (ACFA), and Charles Ibonye, business director, emerging business, CWG plc, during a courtesy visit in Abuja.

Buhari’s economic results fall short three... Continued from page 1

performance could pull the c ountry closer to negative terri-

tory, a terrain which it only recently emerged from just one year ago. In the second quarter of this year, Nigeria’s economy expanded by on 1.5 percent, down from 1.95 percent in Q1 2018 and 2.11 percent achieved in Q4 2018. Since Buharinomics came into play in 2015, economic growth has been caged under the 3 percent barrier as the country was only able to manage growth of 2.79 percent in 2015, -1.58 percent in 2016 and an average growth of 1.73 percent so far in 2018 compared to an economic growth of 6.22 percent Nigeria achieved in 2014 before this current administration according to data obtained from NBS. Speaking on the GDP report released yesterday, Faith Ogedengbe, research analyst, GDL Asset Management told BusinessDay that “the second quarter of this year was quite tumultuous for the national economy as several economic headwinds kept economic growth at bay. On the fiscal side, delay in the passage of the budget along with increased political tensions hurt business confidence and slowed the decision making process in companies. On the other hand, the monetary policymakers took the decision to hold rates at its last meeting premised on factors such as retaining Foreign Direct Investments (FDI) even though a drop in rates may be the much needed catalyst to jumpstart economic growth.” Despite a record fiscal spending stimulus of almost N22 trillion between 2015 and H1 2018, national output has failed to return to previous long term economic growth trajectory of the country which averaged 7.4 percent real growth between 1999 and 2014 far above the 0.61 percent growth averaged between 2015 and 2017. The crude oil price rally by over 162 percent from its low point in January 2016 has not brought about the economic rebound Nigerians expected after the oil price crash precipitated the first economic recession in the country in 25 years. The international monetary fund (IMF) forecasted Nigeria’s economic growth in 2018 to be 2.1 percent, World Bank forecasted 2.5 percent and Nigerian government forecasted 3.5 percent but for the second consecutive quarter, actual economic growth continues to remain far below economist expectation. The snail pace economic growth is slowly becoming the “new normal” in Nigeria as output growth forecasts above 3 percent are starting to look like wishful thinking in Nigeria after

14 consecutive quarters of undershooting this short benchmark. After the country rebased the economy in 2014, which shot up the gross domestic product from $270 billion to $510 billion in 2013, economic growth since then has been tepid along the path of pedestrian growth of 1 or 2 percent as if the size of the economy had caused the pace of growth to drop. However, bigger emerging economies like China and India who boast a combined GDP of $16.61 trillion expect economic growth of around 6.5 percent and 7.3 percent in 2018 respectively. Neighbouring Ghana experienced economic growth of 6.8 percent in Q1 2018, continuing on their trend-line growth of 6.95 percent between 2000 and 2018 thanks largely to economic reforms, political stability and recovering commodity prices. Actual economic growth in the country of 1.5 percent this quarter is way behind potential economic growth of 7+ percent thereby causing the economy to accumulate losses of over N17 trillion or 25 percent of current GDP in lost economic output since 2015. Lost output is the difference between the potential output of a nation and the actual output. If this trend continues, the country may well be at the beginning of what could come to be known as the “lost decade for Nigeria.” “Most of the policies implemented in recent years have not been geared towards pushing actual output growth to its full potential. This has led to the slow expansion of the GDP in recent quarters. There is the need for policies to be targeted directly at improving infrastructure, transportation, agriculture and industry as this sectors are vital in spurring development in the productive sectors of the economy and encouraging investment in the country,” said Phillip Alege, professor of economics at Covenant University. The oil sector which was largely responsible for the economic recovery in the last four quarters was unable to push the economy beyond the 2 percent barrier in Q2 despite a price rally that saw crude oil prices climb 13 percent during the second quarter. Data showed that growth in Q2 2018 was driven by developments in the non-oil sector as Services sector, which recorded its strongest positive growth since 2016. However, the relatively slower growth when compared to Q1 2018 and Q2 2017 could be attributed to developments in both the oil and non-oil sectors. The oil sector contracted by –3.95 percent (year-on-year) in Q2 2018 due to a slump in average daily oil production to 1.84million barrels per day (mbpd) from 2.0mbpd achieved

in Q1 and 1.87mbpd recorded Q2 2017. Production declined after the force majeure declared by Shell Petroleum in May which was later lifted in July but not before it had hurt output growth in the key sector. The non-oil sector grew by 2.05 percent in real terms during the second quarter of 2018. The non-oil sector was mainly driven by Information and communication services. Other notable drivers included Construction, Agriculture, Transportation and Storage and Other Services. In real terms, the Non-Oil sector contributed 91.45 percent to the nation’s GDP, compared to 90.96 percent recorded in Q2 2017 and 90.39 percent recorded in the preceding quarter. The agricultural sector in the second quarter of 2018 grew by 1.19 percent (year-on-year) in real terms, a decrease by –1.82 percentage points from the corresponding period of 2017, also a decrease by -1.81 percentage points from the preceding quarter. The sector in the current quarter contributed 22.86 percent to overall GDP in real terms, lower than the contribution in the second quarter of 2017 and higher than the first quarter of 2018 which stood at 22.93 percent and 21.65 percent respectively. The decline in the growth of the agriculture sector could be attributed to the herdsmen-farmer clashes in the agriculture hub of the country. This is the first time agricultural sector expanded by less than 3 percent in years. Real GDP growth in the manufacturing sector in the current quarter of 2018 was 0.68% (year on year), marginally higher than the same quarter of 2017 but lower than the preceding quarter by 0.04 percentage points and –2.71 percentage points respectively. Growth rate in the sector on a quarter-on-quarter basis stood at –3.51 percent. Real contribution to GDP in 2018 second quarter was 9.29 percent. In real terms, Trade’s year on year growth stood at –2.14 percent, which is -0.53 percentage points lower than the rate recorded one year previous, and 0.43 percentage points higher than in the preceding quarter. Quarter on quarter growth stood at –0.69 percent. In real terms, Trade’s contribution to GDP was 16.45 percent, lower than the 17.07 percent it represented in the previous year, and the 17.06 percent recorded in 2018 first quarter. This is the eight decline in trade sector in the last 9 quarters. Trade returned into a recession this quarter after two consecutive quarters of negative growth. Despite stable exchange rate and FX supply, it appears the Apapa gridlock situation and weak consumer demand may be holding back Trade growth in Nigeria.

•Continues online at www.businessdayonline.com

Tuesday 28 August 2018

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BUSINESS DAY

FINANCIAL TIMES Uber plans shift from cars to bikes for shorter trips

Wall Street’s S&P 500 extends record-breaking run

Page A2

Page A7

World Business Newspaper

Africa looks for something new out of Donald Trump

Hopes Kenyatta meeting will signal end to US neglect of continent Katrina Manson and David Pilling

onald Trump will welcome Kenya’s Uhuru Kenyatta to the White House on Monday for what will be only the second one-on-one meeting the US president has held with a subSaharan African leader since he took office last year. The first meeting, with Nigeria’s ailing 75-year-old Muhammadu Buhari in April, ended with the US president telling aides he never wanted to meet someone so lifeless again, according to three people familiar with the matter. Advocates of closer US-Africa ties hope his encounter with the younger, more urbane Mr Kenyatta, 56, will breathe fresh life into a relationship with a region that Washington is seen to have neglected as other countries, notably China, develop ever-closer trade and investment ties with the continent. Under Emmanuel Macron, France is also trying to reset its relationship with its former colonies in Africa and deepen commercial ties with bigger economies in the Anglo sphere, such as Nigeria and South Africa. “Trump likes chemistry,” said a person in touch both with senior US administration officials and the Kenya delegation preparing for Monday’s meeting. “Africa has never been high on his radar but if the big guy likes you he’ll find a way to make things work.” Joshua Meservey, senior policy analyst for Africa at the Heritage Foundation, said: “Presidents Trump and Kenyatta have a pretty warm relationship which can hopefully pave the way for more e ngag em e nt w i th Ke nya a n d the rest of Africa.” The Kenyan president, he suspected, might try to “carry the torch” for the whole continent. After his meeting with Mr Trump, Mr Kenyatta will meet Theresa May, the UK prime minister, in Nairobi next week before flying to Beijing in early September for the Forum on China-Africa Co-operation summit to be presided over by Xi Jinping, China’s president.

“A lot of the influence that America used to wield not too long ago is pretty much diminished,” said Patrick Gathara, a political commentator in Kenya. The increasing interest of other countries in Africa — including Turkey, India and the Gulf States, as well as China — gave African countries more diplomatic options he said. Washington and Nairobi are expected to sign a series of commercial agreements that could “create hundreds of American and Kenyan jobs”, a White House official told the Financial Times. Many expect Mr Trump will try to seal a deal over the plan by Bechtel, the US engineering group, to build a $4.5bn four-lane motorway between the port city of Mombasa and Nairobi for which financing has not yet been fully secured. Aubrey Hruby, co-founder of the Africa Expert Network, said Washington was not focused enough on backing US commercial interests in Africa. “France, China and other countries do direct commercial diplomacy,” she said. “We get too bogged down in conflict of interest,” she said, adding that Washington officials were reluctant to be seen backing one US company over another. While many in the administration are keen to develop relations with the continent along business lines, in place of a traditional focus on aid and security, Mr Trump’s repeated gaffes have hampered efforts to push the continent higher up the agenda. The US president appalled leaders on the continent by including African nations among those he allegedly disparaged as “shithole” countries in January. Last year, he mistakenly referred to Namibia as “Nambia” during a public address. Even last week, Mr Trump waded into a debate over land ownership in South Africa, alleging “the large-scale killing of farmers”. The incidents of such killings have fallen sharply. “Trump is widely criticised for not having an Africa policy,” said Grant Harris, former Africa director at the National Security Council. “So it’s in his interest to have something from Monday he can present as a win,” he said, adding that the US was considering a reciprocal trade deal with Kenya.

Deutsche-Commerzbank deal seen as a question of when, not if Bankers point out that any merger would have to be radical to be successful Olaf Storbeck

o many observers in Frankfurt a tie-up between Deutsche Bank and Commerzbank is not seen as a question of if, but when. The prevailing view among the banking cognoscenti in Germany’s financial capital is that the country’s two largest listed lenders are very

likely to merge eventually. The common opinion, backed by large investors in Deutsche, is that the bank first has to successfully integrate Postbank and restructure its ailing investment bank division before it can do a deal with Commerzbank. “Lumping together two sick men doesn’t create a healthy one,” said a Continues on page A2

Saudi Aramco loses its ‘in perpetuity’ oil and gas rights

Kingdom’s switch to a 40-year contract reveals power struggle with state energy group Anjli Raval

audi Arabia has cut the length of time that its state energy company has exclusive rights to the kingdom’s vast oil and gasfields, raising questions about Saudi Aramco’s long-term production and revealing a power struggle between the company and the government. Saudi Aramco’s concession agreement with the state has limited the amount of time in which the group can explore and develop resources to 40 years — from a previous contract that gave it access in perpetuity. There will be an option to renew the contract. The move, three people briefed on the matter said, came as part of the kingdom’s preparations for a stock market flotation of Saudi Aramco, which has been indefinitely delayed.

Energy minister Khalid al Falih, chairman of Saudi Aramco and former chief executive of the company, has insisted the kingdom is committed to a listing, despite mounting signs that the country is unable or unwilling to execute the flotation. Mr Falih said last week that a new concession contract had been agreed as part of the initial public offering process, which also included overhauling Saudi Aramco’s financial reporting and undertaking an independent audit of its energy reserves, without disclosing terms. The Saudi energy ministry on Monday said the new contract was “one of several important steps undertaken to prepare Saudi Aramco for being listed”, adding that the government was committed to “proceeding with the IPO, when conditions are optimum, at a time of its choosing”.

The legal change sought to formalise the relationship between Saudi Aramco and the state, ahead of opening up the company to potential foreign investors, the three people said. It also suggested that the ambitions for a listing were for a sale of more than 5 per cent of the company. With the listing halted, those close to the company said it had been a pointless exercise that had only served to exert ministerial control over Saudi Aramco, which had fought to keep its rare evergreen contract. The government initially pushed for an even shorter contract — more in line with international oil companies that have 20year agreements. But this would have had ramifications for what the company could declare as its reserves, long-term development plans and its valuation.

UN calls for genocide charges against Myanmar military Report on treatment of Rohingya minority adds to pressure on leader Aung San Suu Kyi Ben Bland and Adam Samson

UN body has called for the leadership of Myanmar’s armed forces to be prosecuted for genocide over attacks against the country’s Rohingya minority in a damning report that also blamed Aung San Suu Kyi, Myanmar’s civilian leader, for failing to halt the violence. A fact-finding mission appointed by the UN Human Rights Council concluded on Monday that Myanmar’s top generals must be held responsible for crimes against humanity including murder, torture, rape and extermination in Rakhine and other states in the south-east Asian nation. “There is sufficient information to warrant the investigation and prosecution of senior officials in the Tatmadaw [Myanmar military] chain of command, so that a competent court can determine their liability for genocide,” the mission concluded.

The UN body also intensified the pressure on Aung San Suu Kyi by saying that her government had “contributed to the commission of atrocity crimes” through “their acts and omissions”. “Aung San Suu Kyi has not used her de facto position as head of government, nor her moral authority, to stem or prevent the unfolding events in Rakhine state,” the fact-finding mission said. The UN body also criticised Facebook, which it argued had been a “useful instrument for those seeking to spread hate” in a country where the social media platform is a dominant form of communication. “Although improved in recent months, Facebook’s response has been slow and ineffective,” it said. Facebook said in a statement that it was “now making progress” in tackling the problem. The company said it was removing Min Aung Hlaing, the

commander-in-chief of the Myanmar armed forces, and 19 other Myanmar individuals or organisations, from its platform to prevent them from using it to “further inflame ethnic and religious tensions”. The UN fact-finding mission called on the UN Security Council to refer the situation in Myanmar to the International Criminal Court or create an ad hoc international criminal tribunal. It also called for an arms embargo on Myanmar and for targeted sanctions against those responsible for the crimes against humanity. The UNSC will be briefed on Myanmar in New York on Tuesday but it is unlikely to refer the Myanmar case to the ICC. Analysts said that China, which has been supportive of the Myanmar government, was unlikely to back such a move, while Russia and the US were also not supporting ICC referrals at the moment for their own reasons.

BUSINESS DAY

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Tuesday 28 August 2018

NATIONAL NEWS

FT Deutsche-Commerzbank deal...

Vanguard nips at BlackRock’s heels for fund crown

Continued from page A1

Money manager attracted $112bn of net new flows in first half while bigger rival brought in $77bn

person familiar with the thoughts of an influential Deutsche shareholder. There are two scenarios that could accelerate the potential merger. One is that Deutsche realises that it is unable to turn itself round under its own steam; the other is that a foreign peer tables a bid for Commerzbank, forcing Deutsche’s chief executive Christian Sewing to make a counter offer. Assuming a 35 per cent premium on Commerzbank’s current market capitalisation, Deutsche would have to pay €14bn for its smaller rival. “There are different ways to structure this deal but it surely would not be in cash,” said a Frankfurt-based investment banker. The fact that US private equity group Cerberus has taken minority stakes in both Deutsche and Commerzbank and has been hired as an adviser by Mr Sewing has also fuelled merger speculation. Behind closed doors, some deal-hungry investment bankers in Frankfurt are even encouraging Mr Sewing to act quickly. “The merger should be done sooner rather than later,” said a senior banker who works for a global bank, arguing that both lenders need the cost synergies created by a merger to earn their cost of capital. With €1900bn in total assets, a merged Deutsche-Commerzbank would be the third-largest European bank after HSBC and BNP Paribas. Another high-level Frankfurtbased banker working for a different global lender acknowledged that “there is no structural or technical reason why the deal could not be done within three to six months”, adding that he does not think that is a very likely scenario, because both convincing shareholders and executing a deal were significant tasks. Based on the experience from previous banking mergers, Amit Goel, analyst at Barclays, estimates that both lenders can squeeze just under €2bn in annual costs, or 27 per cent of Commerzbank’s cost base. By 2020, this would push the enlarged bank’s return on tangible equity to about 9 per cent. On a standalone basis, Mr Goel expects that Deutsche will eke out less than 2 per cent in the same year. Discounted at 10 per cent, and after tax, the cost synergies alone would be worth north of €13bn, or about a third of the current combined market cap, in today’s money, according to a Financial Times calculation. Making the synergies happen will require closing hundreds of branches and sacking thousands of bankers. “You’d really have to be radical here, otherwise such a deal would not work,” said a Frankfurtbased M&A banker. While the woes of Germany’s listed lenders are partly due to poor management, they have structural roots. “German retail and commercial banking is the most competitive market in Europe, if not the world,” wrote Andrew Coombs, Citi analyst, in a recent note to clients. Small regional lenders — municipally owned Sparkassen and co-operative banks — control large chunks of the retail market as well as lending to local businesses and are not run for profitmaximisation.

Owen Walker

Uber first added e-bikes to its app in February, and acquired the bike-sharing company Jump for about $200m in April

Uber plans shift from cars to bikes for shorter trips Chief executive Khosrowshahi concedes strategy will bring short-term hit to revenues Shannon Bond

ber is planning a shift in emphasis from cars to electric bicycles and scooters for shorter journeys as part of its long-term strategy, according to the ride-hailing app’s chief executive. Dara Khosrowshahi said more individual modes of transport were better suited to inner-city travel, despite snatching revenues away from Uber’s drivers. He admitted that, in the short term, the move would mean a further financial hit for a company that had losses of $4.5bn last year. Ahead of Uber’s highly anticipated flotation, Mr Khosrowshahi said investors had to be aware that short-term losses were necessary to achieve longer-term goals — and part of that was a focus away from cars in inner cities. “During rush hour, it is very inefficient for a one-tonne hulk of metal to take one person 10 blocks,” he told the Financial Times in an interview. “We’re able to shape behaviour in a way that’s a win for the user. It’s a win for the

city. Short-term financially, maybe it’s not a win for us, but strategically long term we think that is exactly where we want to head.” Uber first added e-bikes to its app in February, and acquired the bike-sharing company Jump for about $200m in April. Jump bikes are available in eight US cities, including New York, Washington and Denver, and are soon launching in Berlin. Mr Khosrowshahi, who joined Uber a year ago, has also struck deals with Lime, an electric scooter company, and Masabi, a London-based app that provides mobile ticketing for public transport, with the aim of building what he calls an “urban mobility platform”. Besides transport, Uber has diversified into other business areas from food delivery to freight brokerage. Mr Khosrowshahi said no single product would serve the $6tn global mobility market and that the “ultimate competition” for Uber was car ownership, which it would try to disrupt in any way possible. He admitted that Uber makes

less money from a bike ride than from the same journey in a car, but said he expected that impact to be offset if customers used the app for more journeys more regularly, an effect the company has already seen with cyclists in San Francisco. “We are willing to trade off short-term per-unit economics for long-term higher engagement,” said Mr Khosrowshahi. “I’ve found in my career that engagement over the long term wins wars and sometimes it’s worth it to lose battles in order to win wars.” Mr Khosrowshahi acknowledged that Uber drivers would feel the pinch from potential passengers opting for bikes, but said that over the longer term, drivers would benefit from a higher proportion of more lucrative longer rides — and less congested roads. “When I’ve spoken to our driver partners about it, the first impression was, why are you bringing in a bike to compete against me?” he said. “The second impression after the conversation is, oh, I get a longer ride where I can make more money? Sign me up.”

Sibur close to making decision on IPO Russia’s largest petrochemical group will indicate in next 4 weeks whether it is to list Henry Foy

ussia’s largest petrochemical company Sibur will decide by the end of next month whether to proceed with a public listing this year that could be the country’s biggest for more than a decade. Sibur is in talks with banks about an initial public offering worth about $2bn-$2.5bn, two people briefed on the discussions told the Financial Times, valuing the company at more than $20bn. Talks on the potential Moscow listing come despite the threat of new US sanctions and a difficult summer for Russia’s financial markets, which have suffered from worsening relations with Washington, domestic tax proposals and global emerging market jitters. “It may happen this year. The proposal is being internally studied in the next few weeks. And then they will decide what to do,” one of the people told the FT. Sibur executives will meet in-

vestors next week to hear feedback on the proposal, another one of the people said. If it surpasses the $2.24bn raised by Rusal in 2010, Sibur would be Russia’s largest IPO since VTB’s $8bn listing in 2007. The company said in a filing this month it was exploring “the possibility of an equity capital markets transaction, subject to market conditions”. Its chief executive told the FT that a potential listing has been considered for some time. “Listing would give a fair market price and stop arguments over whether the management is doing a good job or not,” Dmitry Konov said. “We can do the transaction this year, we can do no transaction at all, or we can do it next year,” Mr Konov said in an interview. “All options are open.” Discussions involve floating 1015 per cent of the company with the vast majority of shares being sold by its largest shareholder, gas tycoon Leonid Mikhelson, the two people said. Mr Konov declined to comment on specifics of the

proposal. Sibur is talking to banks including JPMorgan, Citi, Goldman Sachs and Russia’s Gazprombank regarding a role in the listing, three market sources said, adding that the company was keen to also involve a bank with a large Asian presence. The four banks declined to comment. While Sibur itself is not subject to US sanctions, they have had an impact. Gennady Timchenko and Kirill Shamalov, who between them own 20.9 per cent of the company, are subject to the sanctions. Mr Mikhelson owns a 48.5 per cent stake, while China’s Sinopec and Silk Road Fund each own 10 per cent. The FT understands that banks in discussions with Sibur have been assured that Mr Timchenko and Mr Shamalov will not be involved in formal IPO talks, sell shares or profit from any transaction. Mr Konov said that while sanctions were a factor, they were not the overriding question in discussions about strategic decisions.

anguard is fast catching up on BlackRock as the world’s biggest money manager as the two titans of the global asset management industry, who collectively manage $11.5tn, battle for even greater market share. Pennsylvania-based Vanguard attracted $112bn of net new flows in the first half of the year, compared to BlackRock’s haul of $77bn. Vanguard picked up a further $23bn in July, while BlackRock had outflows from its retail products. One analysis predicts Vanguard could overtake its New York competitor by 2021. The two fund giants, whose combined assets are worth more than a third of the US stock market, have engaged in an aggressive battle for growth in recent years, leaving smaller competitors in their wake and sending shockwaves through the wider investment industry. BlackRock has held the crown of world’s biggest fund manager since its acquisition of Barclays Global Investors in 2009. Daniel Wiener, editor of the Independent Adviser for Vanguard Investors, a newsletter that monitors the group, said there was little difference between the two companies. “I don’t think they’re doing anything very different,” he said. “It’s just that the low-cost train has picked up steam. More investors are aware of the benefits of low cost and Vanguard has the reputation as the leader in that regard.” Vanguard’s asset growth has outpaced its fierce rival’s in recent years, with both managers competing neck and neck in 2017 and attracting just over $1bn a day. But each has since struggled to reach the heights of last year’s record inflows. The slower pace of growth this year reflects a challenging period for global asset managers, as market volatility, concerns over global trade and rising interest rates have hit returns and dented investor risk appetite. Total assets under management for Vanguard stood at $5.2tn at the end of July, compared to $6.3tn for BlackRock. As recently as 2009 Vanguard’s assets were equivalent to just 45 per cent of BlackRock’s. In the eight years to the end of 2017, Vanguard’s assets grew at a compound growth annual rate of 16 per cent compared to 8 per cent for BlackRock. Pensions & Investments, the US specialist publication, has pointed out that at that rate Vanguard would overtake BlackRock by the end of 2021 and reach $20tn of assets under management by 2027. Vanguard’s growth has, however, dropped off this year, though it is still outpacing BlackRock. Vanguard’s first half sales were down 43 per cent compared to the same period last year, while BlackRock was down 54 per cent. BlackRock bled $4.4bn from its retail products in June and July, according to Morningstar, the data provider. Both fund houses are known primarily for their multitrillion-dollar books of cheap passive funds, but each has sizeable active ranges that generate strong revenue streams.

BUSINESS DAY

Tuesday 28 August 2018

2 Q GDP 2018 Report

Financial and insurance sector growth nosedive to 1.28 percent in Q2 - NBS HOPE MOSES-ASHIKE

he financial and insurance sectors of the economy recorded significant drop in growth rate to 1.28 percent in second quarter of 2018 from a rapid growth of 13.30 percent in the first quarter of 2018 as yield contraction in Treasury bills, lending slowdown and delay in the passage of the budget pegged back sector expansion. Data from the National Bureau of Statistics (NBS) released on Monday show that the sector slowed weightily by -9.17 percentage point when compared with second quarter of 2017 numbers which stood at 10.45 percent. Johnson Chukwu, managing director/CEO Cowry Asset Management limited said there was slow down in lending activities of the banks which account for about 84 percent of the entire financial sector. The sector showed no expansion during the period under review, which Chukwu attributed largely to political risks. NBS numbers tracked by BusinessDay revealed that the finan-

cial and insurance sector entered into recession in second quarter of 2016 as it contracted by -10.82 percent from a growth rate of 6.41 percent in second quarter of 2015. A breakdown of the sector indicated that financial institutions grew at 0.81 percent in second quarter of 2018, slower than 12.58 percent recorded in the preceding quarter and 11.78 percent in the corresponding quarter of 2017. Insurance sector recorded 3.81 percent growth in second quarter of 2018, which show a significant

drop compared to 18.07 percent recorded in the first quarter of the same year but slightly higher than 3.79 percent in second quarter of 2017. Responding to the development, Uche Joe Uwaleke, professor of finance and capital markets/chair, banking and finance department, Nasarawa State University, Keffi, said “Financial Institutions’ gross output is measured as both implicit and explicit service charges while intermediate consumption comprises administrative and

other expenses.” “In the case of the Insurance sub-sector, gross output consists of net premium earned while intermediate consumption refers to operating expenses. Therefore, the significant drop in this sector can be attributed to the drastic drop in the volume of business for banks and Insurance companies resulting in lower revenue.” “The major cause of this could be the delay in the 2018 budget as well as the exit of foreign investors as corroborated by the NBS capital importation report and the cautious approach of domestic investors owing to economic uncertainties. It is equally possible that the financial sector may have reduced lending activities during the period given the high non-performing loans already in their books especially against the backdrop of the CBN directive that banks with non-performing loans in excess of 10 percent should not pay dividend,” Uwaleke added. Banking sector credit to the private sector declined by 1.69 percent to N15.34 trillion in the second quarter (Q2) of 2018 from N15.60 trillion in Q2 2017, according to the NBS.

The credit allocation to key sectors of the economy including Agriculture, Industry, and Services showed that the Oil and Gas sector with 30.57 percent of the total credit had the highest allocation of N4.69 trillion inclusive of both service and industry bound credit. Manufacturing sector got the second highest allocation of N2.02 trillion, or 13.16 percent of the total lending by deposit money banks. Agricultural sector received 3.41 percent which is N523.08 billion of the total credit allocated by banks, a slight increase of 0.22 percent from its Q2 2017 sectoral share of 3.19 percent. Agriculture which contributed about 21.65 percent of the GDP in Nigeria in Q1 2018, attracted about three percent of the total credit in Q2 2018. Banks’ outstanding consumer credit declined by 15.1 per cent to N647.27 billion at the end of December 2017, from N762.07 billion recorded at the end of December 2016. The development reflected reduced demand for consumer credit, according to the Central Bank of Nigeria (CBN) draft annual report for 2017.

A4 BUSINESS DAY

Tuesday 28 August 2018

2 Q GDP 2018 Report Force Majeure causes oil sector to decline

Non oil sector growth in Q2, benefit of Ergp policies – Udoma Conrad Omodiagbe

Dipo Oladehinde

he oil price rally which helped pivot Nigeria out of economic recession last year was not enough to prevent the oil sector from contracting in Q2 after oil production shortfall caused the first oil sector decline in since Q1 2017. The oil sector, which now contributes about 8.5 percent to Nigeria GDP, contracted by -3.95 percent year-on-year in the second quarter, growth also decreased by –18.72 percent points when compared to 14.77 percent in Q1 2018, statefunded data agency, National Bureau of Statistics (NBS) said Monday, after publishing a full report that showed overall GDP expanded 1.5 percent in the period. In the second quarter of 2018, average daily oil production dropped to 1.84million barrels per day (mbpd) from 2.0mbpd achieved in Q1 and 1.87mbpd recorded Q2 2017 as the effect of the force majeure declared by Shell Petroleum in May which was later lifted in July, hurt the country’s oil production levels. Jubril Kareem, energy analyst at Ecobank said the major reason for oil sector contraction was because of the decline in production as Forcados and Nembe Creek Pipeline were

briefly taken offline. “Nigeria’s oil production declined due to temporal shutdown of two major pipeline at forcados and Nembe Creek Pipeline, however both the of them are back online so we should see an increase in q3 2018,” Kareem told BusinessDay. The energy analyst at Ecobank also noted that Shell has taken a portion of forcados offline which has a production capacity of about 100,000 bpd.” When it comes back we should see stability and improvement in oil revenue,” Kareem said. Ayo Akinwumi, head of research at FSDH said he have seen lots of report that showed Nigeria has not being able to sell some majority of what its producing which is one of the reason responsible for the contraction we recorded in this quarter . With supply of several larger grades coming back online following series of pipeline outages in the last couple of months, Nigeria’s oil exports are expected to rise to their highest in four months in October of 1.73 million barrels per day (bpd), from September’s 1.41 million bpd, Reuters reported last week. The export plan for October will comprised 57 cargoes which is 7 cargoes lower compared with 48 cargoes in September’s loading schedule as Agbami, Bonga, Escravos, Forcados Okono and Qua Iboe

will load the highest in October with a combine 33 cargoes while several smaller streams like Amenam, Pennington, Okwori, okwuibome and Antan who have no export cargo in September will add at least one cargo in October while Brass River will add at least 5 cargoes. The oil sector which was largely responsible for the economic recovery in the last four quarters was unable to push the economy beyond the 2 percent barrier in Q2 despite a price rally that saw crude oil prices climb 13 percent during the second quarter. Data showed that the country relied on improved expansion in the non-oil sector to avoid posting an even worse economic performance. Oil export earnings improved to $27 billion in the first six months of 2018 according to data obtained from the Organisation of Petroleum Exporting Countries (OPEC). Economists expect oil export earnings to surpass the $34 billion recorded for the entire 2017. This projection is made based on concensus view that oil prices will remain around $70 till year end and production levels does not suffer any further hiccup. Crude oil production is still below both 2017 and 2018 budget estimates which could explain why the 13 percent price rally in Q2 did not translate to growth in the sector.

he Minister of Budget and National Planning, Udoma Udo Udoma said on Monday that the government was encouraged by the recent 2.05 percent growth in the non-oil sector for Q2 2018, attributing this growth to the implementation of policies and programmes under the Economic Recovery and Growth Plan (ERGP). Reacting to a report published by the National Bureau of Statistics (NBS) on the nations GDP for the second quarter of 2018, the Minister said government was impressed with the constant positive growth the Nigerian economy has experienced in its first and second quarter in spite of the varying challenges the nation faces. In a statement signed by the Special Adviser to the Minister, James Akpandem, he reiterated the focus of the ERGP on effective diversification of the economy, also noting that the plan is to reduce the economy’s dependency on the Oil sector which is yielding positive results. Further analysis of the NBS report revealed that growth in the non-oil sector, which is the largest to be recorded since 2015, can be attributed to the performance of various subsectors such as transportation (21.76%), construction (7.66%) and electricity (7.59%) which are key sectors of concern to the ERGP. Other relevant subsectors driving the growth of the non-oil sector are services, water and sewage and broadcasting. Still reacting to the report, Udoma further explained that the contraction in the oil sector by -3.95% in Q2 a massive drop from 14.77% recorded in Q1 2018, is a result of production issues

which the NNPC is currently addressing. These issues are also evidenced by the drop in quantity to 1.84 million barrels per day as opposed to 2.00 million barrels recorded in Q1 of 2018. Udoma also explained that for the ERGP targets to be achieved, it is necessary for both the oil sector and non-oil sector to thrive. Also experiencing a drop in value is the Agricultural sector. The sector recorded a 1.19% growth level in Q2 2018, a massive decline from the 3.00% growth rate attained in Q1 2018. He also noted that this decline is as a result of the insecurity issues facing the Northern parts of the country, but he also remained positive that the measures taken by the government will rectify this issue. The Minister impressed by the GDP growth also mentioned its consistency with inflation, capital importation and others, with inflation having a steady decline from January to July 2018. The year-on-year disinflation recorded this year, is the eighteenth in a row showing the lowest inflation value since June 2016. Speaking on capital importation which was valued at $5.5billion for Q2 2018, a 207.62% increase from the value recorded in Q2 2017, the Minister expressed an increased confidence in the Nigerian market. Acknowledging the miles yet to be covered by the ERGP, the Minister maintained the commitment of the Buhari led administration to revamping the economy. Stating the government’s target of a achieving a level of sustainability, where we depend on ourselves for products, creating job opportunities for the general populace.

BUSINESS DAY

Tuesday 28 August 2018

2 Q GDP 2018 Report

Herdsmen-farmer crisis takes shine off agriculture BUNMI BAILEY

he agricultural sector expanded by only 1.19 percent in the second quarter this year, marking its slowest expansion in years. The agricultural sector emerged unhurt through the economic recession in 2016 as one of the only 2 sectors which did not enter a recession has started to cave to insecurity crisis in the major food producing states of the country according to analysts. Johnson Chukwu, CEO, Cowry Asset Management Limited said, “We have seen an expansion of conflicts to the northern region of Nigeria. It started with Boko haram conflict in the northeast region and then we now had the herdsmen-farmers conflict in the north central region and now we are also dealing with arms conflict in the north west,” “And we know that the entire northern belts are where food production is majorly carried out in the country. Crop pro-

duction which accounts for more than 90 percent of the agriculture sectors is basically more from northern activity,” “So we have seen a lot of displacements of farmers in Benue, Pleauteu, Zamfara, Katsina, Sokoto, Adamawa and Bornu state. So these factors have led to the material decline in the

agriculture sector contributing 1.19 percent compared to those quarters,”Chukwu concluded. This is the first time the agricultural sector expanded by less than 3 percent in years .In q2 2015, it recorded 3.49 percent, in q2 2016 it was 4.53 percent, in q2 2017 it was 3.01 percent and in q2 2018 it was 1.19 percent

“This is a result of the herdsmen crisis in the middle belt area which accounts for major part of food production. And that is why government needs to do something to avoid food insecurity in the country.” Ayodeji Ebo ,MD, Afrinvest Securities Limited said on phone The sector in the current

quarter contributed 22.86 percent to overall GDP in real terms, lower than the contribution in the second quarter of 2017 and higher than the first quarter of 2018 which stood at 22.93 percent and 21.65 percent respectively. Violence between Fulani herdsmen and farmers is one of Nigeria’s most persistent security problems and has left thousands of people dead in recent decades. According to the 2017 NBS’s report on conflict in Nigeria and food insecurity in conflict affected areas, the northeast region had the highest percentage of food insecurity of 79 percent followed by North Central having 71 percent of households who are food insecure and South South which has74 percent of households which are food insecure Also since 2015 till date, both the agriculture sector and Water supply, sewerage, waste management, remediation did not record any contraction as government policies around boosting food production in the country bore fruits.

Trade back in recession BUNMI BAILEY

onsecutive negative growth in the Trade sector in both the first and second quarters of the year has officially put the key sector back into recession after brief exit in Q4 2017. The trade sector contracted by -2.14 percent in Q2 2018 which was a slight improvement by 0.43 percentage points from the -2.57 percent recorded in Q1 2018. However, despite the slight improvement, this is the eight contraction in the trade sector in the last nine quarters making it one of the worst performing sectors of the economy since 2016. The continuous underperformance of the trade sector has been attributed to rapidly eroding purchasing power of households and weakening consumer confidence in the economy. The effect of this has prompted a reduction in

trade activities in the country. “Consumer confidence has not been restored and purchasing power is will very weak. Over the last three years, consumer purchasing power has been eroded by 44 percent. So in effect there has not been any material increase in salaries across the broads” Johnson Chukwu, CEO, Cowry Asset Management Limited said on phone “So in effect, consumers cannot afford to purchase the same volume of goods and services they used to consume at the same level of income so that is affecting the trade sector and also demand for consumer goods is still very weak,” Chukwu said Consumer confidence was low in Q2 according to CBN consumer expectations survey and the purchasing manager’s index was flattish for the three months in the second quarter of the year which makes the

weak economic growth quite expected. In Q2 2018, Trade’s contribution to GDP was 16.45 percent, lower than the 17.07 percent it represented in the previous year, and the 17.06 percent recorded in q1 2018.

Chukwu suggested ways to improve consumer demand and purchasing power which will exit the trade sector from recession “If the currency strengthens and if there is an increase in wages and salaries across

broads it will increase demand and purchasing power of consumers. They are also reviewing the minimum wage which will have a positive impact on consumers by improving the standard of living and income,” Chukwu added.

A6 BUSINESS DAY

Tuesday 28 August 2018

2 Q GDP 2018 Report

Real estate still in contraction mode but shows signs of rebound

Endurance Okafor

he real estate sector contracted in Q2 2018, in what is the 10th consecutive quarter in negative trajectory since the first quarter of 2016, figures available for the sector on the National Bureau of Statistics (NBS) website showed on Monday, 27 August 2018. At the end of the first six month of 2018, the real estate sector reported Gross Domestic Product (GDP) growth of -3.88 percent compared to the -9.40 percent rate recorded for Q1 2018. Ayo Akinwumi, Head of Re-

search at FSDH Merchant Bank said the Q2 figures that seem like an improvement in the sector is not actual good for the country in real term. “If the population of the country is increasing and the output is contradicting, it means it is getting worse. Our population is growing so the need for the resource for housing should be increasing also but while there is increase in the population rate and decline in their purchasing power, the housing deficit is on increasing and of which also the poverty rate is increasing,” Akinwunmi said. Although, the Q2 figure released by NBS is 5.52 percent points better than the contrac-

tion report for the sector in the previous quarter. Abiodun Akanbi head of Strategy at Infinity Trust Mortgage Bank said it is not surprising that the sectors performed badly in Q2 2018 but cited that the decline in the sector is now starting to slow down due to fresh capital injection in the sector this year. Meanwhile the -3.88 percent contraction figures reported in the quarter under review is the third lowest negative growth of the real estate sector after the Q1 and Q2 numbers of 2017, as they reported -3.10 percent and -3.53 percent respectively. “It is always going to be a laggard because the sector is

capital intensive coupled with the fact that it also takes a lot of time to execute a project. Unlike in manufacturing where it can take like a week to produce and get the final products to the consumers, the real estate sector takes up to 18 months to build, construct and finish up with a particular project. So when the economy exits recession, the sector will still remain because of the capital intensive nature,” Akanbi told BusinessDay in a phone response. BusinessDay analysis of the real estate sector revealed that the contraction recorded for the first quarter of 2018 was so far the worst the property market have reported since Business-

Day started tracking it in Q1 of 2016. The worst quarter contraction of the sector that follows after the Q1 2018 figures was in the Fourth quarter of 2017 when the property industry in Nigeria expanded by -9.27. Although the rate was 0.13 percent points better than the 2018 Q1 figures. Meanwhile, the Nigeria economy slowed down further in the second quarter of 2018, the second consecutive quarter decline in the pace of economic growth of Nigeria. The figures released by the National Bureau of Statistics (NBS) revealed that Nigeria GDP expanded by 1.50 percent year-on-years in real terms to N16.58trillion in the second quarter of 2018. This is –0.45 percent points slower than 1.95 percent recorded in the first quarter of 2018. “The relatively slower growth when compared to Q1 2018 and Q2 2017 could be attributed to developments in both the oil and non-oil sectors,” NBS said in its report. Although the GDP growth by 1.50 percent in Q2 2018 was 0.79 percent points higher when compared to the second quarter of 2017 which recorded a growth of 0.72 percent, while on a quarter on quarter basis, real GDP growth was 2.94 percent.

5 sectors that moved from recession to growth DIPO OLADEHINDE

vailable data gathered from Nigeria Bureau of Statistics (NBS) showed five sector have moved from contraction in 2016 to growth in q2 2018. The five sectors are manufacturing, Construction, Accommodation and Food Services, Financial and Insurance, Professional, Scientific and Technical Services. The construction sector recorded a growth of 7.66 percent in q2 2018 from -1.54 percent in q1 2018. A further breakdown of 2017 showed the sector recorded 4.14 percent in q4 2017 from 0.46 percent in q3, 0.13 percent in q2 2017 and 0.15

percent in q1 2017. In 2016, the sector recorded contraction all through 2016 in q1 by 5.37%, q2 by -6.28%, q3 by -6.13% and q4 by -6.03%. The financial and insurance sector recorded a weak growth of 1.28 percent in q2 2018 from 13.30 percent recorded in q1 2018. In 2017, the sector recorded growth of 0.67% in q1, 10.45% expansion in q2, -5.96% contraction in q3 and 0.22% growth in q4. In 2016, the sector recorded -11.28% in q1,-10.82% in q2, 2.64% in q3, 2.68% in q4 2016. “We are only riding on luck, apart from making pronouncement, we have not seen any deliberate policies and actions by the government in power,” Ayo

Akinwummi Head of research at FSDH limited said. Akinwummi said the Federal government has a role to play to drive economic growth in some major sectors like construction sector and real estate sector which will have a multiplier effect across all major sectors of the economy. In 2016, manufacturing sector contracted all through from the quarters in 2016 to end the year down -4.54 percent. The first quarter of 2016 initially grew by 7.00% before turning negative in q2 by -3.30% and continuing on that downward trajectory for subsequent quarters as q3 showed decline of -4.38% and q4 fell by -2.54%. Afterwards, the sector record-

ed two consecutive growth of 1.36 percent and 0.64 percent in q1 and q2 2017 respectively. Thereafter, the manufacturing sector recorded a contraction in q3 by -2.85 percent. The sector recorded a relative positive growth of 0.14 percent in q4 2017 while in q1 2018, the sector suffered yet another contraction of -1.54 percent in q1 2018 before recording a growth of 7.66 percent in q2 2018. The accommodation and food and services sector recoded a positive growth of 2.43 percent in q2 2018 compared to 0.29 percent in q1 2018. In 2017, the sector began the year on a contractionary direction but ended the year on a positive note. Q1 and q2 contracted by

-3.96 percent and -4.05 percent respectively but the sector expanded in q3 by 0.18% and q4 by 0.78% respectively. In 2016 the sector recorded contraction all through the year to end at full year -5.95 percent. The Professional, Scientific and Technical Services recorded growth of 2.07 percent in q2 2018 from -2.35 in q1 2017. A further breakdown of the 2017 figures showed that the oil sector recorded a growth of 10.64% in q4 2017 (from –1.38% in Q32017, -1.72 % in Q2-2017, 1.48% in q1 2017). Also, a breakdown of 2016 figures showed in q1 2016 the sector recorded -0.93 percent in q1 2016 to 1.07 in q2 2016, 1.40 in q3 2016, 1.45 in q4 2016.

Tuesday 28 August 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Wall Street’s S&P 500 extends record-breaking run Mexico’s peso rallies on Nafta agreement with US Billy Nauman, Michael Hunter and Hudson Lockett

all Street’s sustained recordbreaking run is setting an upbeat tone to trade across stock markets, while Mexico’s peso is rallying as hopes for a trade deal with the US deepen. Mexico’s currency is stronger by 1.4 per cent at 18.67 pesos per dollar after President Donald Trump used Twitter to say “A big deal [is] looking good with Mexico!” The S&P 500 rose 0.4 per cent to 2,887.04 in opening trade, extending the record close it reached on Friday after a dovish speech to central bankers by Federal Reserve chairman Jay Powell. The Nasdaq Composite is also at a fresh record, and over the 8,000-point mark for the first time. In Europe, the region-wide Stoxx 600 is up 0.4 per cent, with gains of 0.7 per cent for Frankfurt’s Xetra Dax. The CAC 40 in Paris is also up 0.7 per cent, while London’s FTSE 100 is closed for the late summer public holiday. Hopes that the international trade dispute has calmed are leaving some of the sectors most exposed to it in demand. The Stoxx index tracking carmakers is up more than 1.5 per cent. The equivalent benchmark for the

region’s technology stocks is up 0.9 per cent. The gains in Asia were stronger. Hong Kong’s Hang Seng index rose 2.2 per cent. On China’s mainland, the CSI 300 added 2.4 per cent, with gains coming across the board. Seoul’s Kospi Composite index underperformed, up just 0.3 per cent. Among the biggest losers were stocks seen as having exposure to a potential opening up of the North Korean economy, after Donald Trump on Friday cancelled US secretary of state Mike Pompeo’s planned trip to North Korea. Tokyo’s Topix rose 1.2 per cent. In Sydney the S&P/ASX 200 added 0.4 per cent, helped by miners and financials. Forex The dollar index is down 0.2 per cent, with the euro gaining 0.2 per cent to $1.1648 and the pound up by the same margin to $1.12873. . Commodities After an initial dip, crude oil prices are extending gains sparked late last week when official data showed a larger than expected drop in US crude inventories. Brent crude is up 0.3 per cent at $75.79 a barrel, while US marker West Texas Intermediate is up 0.2 per cent at $68.90. Gold is up 0.2 per cent at $1,208.11 per ounce.

TSB delays ‘big bang’ customer migration to new debit card Transfer from Visa to Mastercard postponed after massive IT failure earlier this year Nicholas Megaw

SB has been forced to delay a long-planned shift of customers to new debit cards while the troubled UK bank struggles to recover from a crippling IT failure earlier in the year. The bank had planned to transfer millions of customers from Visa debit cards on to Mastercard in a “big bang” migration later this year, but the move has been pushed back until 2019. TSB ran into problems in April when it moved all its customer data to an IT system designed by its new Spanish owner Sabadell. Hundreds of thousands of customers were locked out of online banking services for weeks, while staff were unable to complete many basic services in branches. The company had been hoping to return to normality in recent weeks but the aftermath of the IT outage continues to throw up problems, even in previously unaffected areas. Earlier this month, TSB said it had finally restored remortgaging services for existing mortgageholders, which had been disabled since before the IT outage. However, customers renewed criticism of the bank after it emerged that waiting times for remortgaging

advice appointments were up to six weeks and it was still unable to carry out “execution-only” switches that do not require such advice. Jonathan Holdcroft, a TSB customer whose fixed-rate mortgage deal ends this month, said: “The only [available] service is an ‘advice service’ which is meaningless as we know the product we want. Because TSB have been promising a fix for months, I’ve not been able to search the market for alternative products.” TSB’s problems cost it £176m in the first half of the year. This dragged into a loss and there may also be regulatory penalties to come. Last week it emerged that three of the company’s most senior executives are leaving in the coming months. TSB and Mastercard declined to comment on their commercial arrangements, but one person close to Mastercard said the debit card delay was likely to have costs for TSB. Mastercard is pushing hard to expand its debit card business in the UK, where Visa dominates. More than 95 per cent of debit cards in the UK use Visa Europe, which used to be owned by a group of regional banks. However, Mastercard has signed up several new customers, including Monzo and Santander, since Visa Europe was bought out by its US parent Visa Inc in 2016.

Traders on the floor of the New York Stock Exchange. US stocks hit a fresh high on Friday following a dovish keynote speech by Fed chairman Jay Powell © AP

Investors build bearish bets against the pound Futures traders take largest short position since mid-2017 Adam Samson

nvestor sentiment on the British pound darkened further last week, according to new data that underscore the political challenges facing the UK. Non-commercial traders, or firms that speculate on the exchange rate, increased their net short position on sterling by $1bn to $5.8bn in the week to August 21, according to a Goldman Sachs analysis of data from the US Commodity Futures Trading Commission. The bearish bet taken in the futures market, which has primarily been driven by hedge funds, is the largest since May 2017, the New York investment bank said. Futures trading makes up only a small slice of the $5tn-a-day foreign exchange market, but it still provides an important proxy of investor sentiment. Sterling has dropped 1.9 per cent this month alone and is down 10.4 per cent since reaching the year’s high of $1.4376 in mid-

April. It has also begun pulling back against the euro, which has left sterling at the weakest level against the common currency since the second half of 2017. The pound is getting hit on two fronts. On the domestic side, investors are more concerned about the prospect of a “no deal” Brexit when the UK parts ways with the EU in March 2019. This spectre was brought to life last week when Dominic Raab, Brexit secretary, laid out several technical notes on the consequences of a no-deal scenario. “The UK parliament is set to resume activity on September 4, but, last week, the publication of the first series of the UK government’s contingency plans in case of a no-deal Brexit did not help sentiment towards the British currency,” said Tullia Bucco, economist at UniCredit. Chris Turner, head of currencies strategy at ING, said he reckons “the inherent willingness of both sides to find a withdrawal deal solution should serve as a bit of a backstop to the degree of

no-deal Brexit risks priced into the currency. “But when it comes to GBP and political risks, it is far too early to signal the all clear,” he said. Mr Turner said that the “biggest test” will be when parliament returns from holiday recess. “A murky UK political backdrop may continue to put a dampener on the pound in the nearterm — but as we noted last week, risk-reward may no longer favour chasing the pound much lower from these levels,” he said. On the other side of the spectrum, the pound is also under pressure from a dollar that is rising against many of its peers. The dollar index, which measures the buck against six developed market currencies including sterling, has risen close to 3 per cent this year. At the same time, investors have been building an increasingly large bullish bet in the dollar. Sentiment has been bolstered by rapid growth in the US economy along with persistent signs of strength from corporate America.

The dollar won’t capitulate to presidential jawboning Colby Smith

before rebounding:

ne of President Trump’s favourite past-times is bemoaning the strength of the US dollar. A few weeks after his inauguration, he complained to a group of pharmaceutical executives that China and Japan “play the devaluation market and we sit there like a bunch of dummies”. He has used some variation of this rhetoric ever since. In recent weeks, President Trump has stepped up the frequency and intensity of his dollar talk. While the greenback did weaken about 1 per cent last week, over the long-term, it is not that susceptible to jawboning. Credit Suisse’s Shahab Jalinoos and Alvise Marino tracked exactly how the dollar has moved in the aftermath of specific comments from Trump. Following his tweet on July 20 that the US was losing its competitive edge because of currency manipulators, rising interest rates and a stronger dollar, the greenback fell immediately. Its losses extended for about a week,

Since Trump’s most recent salvo occurred just last Monday, it’s too soon to say if the initial weakness will sustain. But Jalinoos anticipates a similarly muted reaction. The dollar has not capitulated because the US’s mix of loose fiscal policy and tight monetary policy all but ensures it (or any currency for that matter) will strengthen. The Peterson Institute for International Economics estimates that the tax cuts enacted at the end of 2017 and February’s spending package will add $276bn in fiscal stimulus to the US economy this year. That’s about 1.4 per cent of GDP. And to keep a lid on inflation, the Fed is raising interest rates. A hike in September—despite the dovish tone of Chairman Jay Powell’s speech at the annual Fed symposium in Jackson Hole, Wyoming on Friday—appears sewn up. Then there’s the dollar’s safety premium. As the world’s reserve currency, during periods of economic, financial or political uncertainty, investors buy greenbacks.

This month, substantial volatility has rippled through emerging markets, sparked by Turkey’s currency crisis. Of course, there’s also the escalating trade war. Last week, the US imposed 25 per cent tariffs on an additional $16bn worth of Chinese goods, to which China retaliated with its own. Viraj Patel of ING sees it as a trap: The trade war is not too riskoff for stock markets to be down massively, but equally it is not too benign to ignore. So you’re not going to put your money into risk currencies because you’re one US policy move away from markets actually selling off. You’ll default to dollars. Were it not for this political backdrop, Patel says the dollar may have already depreciated. Various leading economic indicators (ISM, Philly Fed Index and Michigan consumer confidence) are starting to run out of steam, capping further dollar strength. Of course, neither the emerging markets rout nor the trade war appear anywhere close to a resolution, so the dollar’s safety bid appears alive and well.

Politics & Policy

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Salvador dumps PDP for APC ....He can leave, say Bode George INIOBONG IWOK

he crisis rocking the People’s Democratic party(PDP) in Lagos state deepened yesterday, as the chairman of the party in the state Moshood Salvador, announced his defection to the ruling All Progressives Congress (APC). Speaking in a press conference at his residence in Surulere, Salvador, said he decided to leave the party because it was obvious that he was not needed, stressing that his effort to build the party had been frustrated by the Leader of the party in the state, Olabode George. Salvador has been having a running battle with George, who is presumed to be his political godfather, after assuming the position last year over sharing of positions in the state executive. “l am sad am abandoning the work I started. I am leaving the PDP with my fellowers, since I became the Chairman of the PDP in Lagos state I have tried to unite the party; put in structure that would make us win the state, but unfortunately some

Chima Anyaso and members of his campaign committee shortly after inauguration

people have continuously frustrated my effort. I can not continue to be in a place where my effort is not appreciated. “I am going to where my fellowers would get dividends of democracy, since two weeks ago I have handed over to the vice chairman of the party. You would see over 15,000 members with me next Monday at the Agege stadium,” Salvador said.

Uduaghan’s defection signals PDP is dead in Delta - Ojougboh INIOBONG IWOK

chieftain of the All Progressives Congress (APC) in D elta State, Karo Ojougboh, has said that the recent defection of a former governor of the state, Emmanuel Uduaghan, from the People’s Democratic Party (PDP) to the APC was an indication that the PDP was dead in the state. Uduagban last week controversially defected to the ruling party after complaining of being side-lined in the affairs of the party both at the state and national level. He ruled Delta state from 20072015, and was a close ally of former President, Goodluck Ebele Jonathan. But speaking in an interview yesterday with BusinessDay, Ojougboh, who was a former deputy national

chairman of the party, under the controversial tenure of Modu Sheriff, stated that PDP in the state had lose a strategies, which would work against it in the 2019 general election. “The PDP is dead in Delta with the defection of Uduaghan, his input to the party would be missed; I can tell you that he was a strategist; it is gain to us in APC. “I personally made Uduaghan to come to APC; he was in communication with me in the past six months. I knew he had the experience and the people so that if he came on board it will strengthen the party. “He is a gentleman with impeccable records. He has not been treated fairly by the government of Delta State after all his contributions and the goodwill he left behind,” alleging that the government of Delta is not people-oriented.

But speaking earlier yesterday, while reacting to report of impending defection of Salvador to the ruling All progressives Congress (APC) at a press conference at his residence in Ikoyi Lagos, George noted that the defection of Salvador from the party at this critical period when the party was mourning the death of the Apapa Local Government chairman of the party was suspicious and had

more meaning. George who was a former deputy national chairman of the party, said PDP in Lagos state would remain strong, while accusing Salvador of instigating the crisis which had engulfed the party in the state in recent times. “He is is free to leave, he started the crisis by abandoning the agreed quota, and was putting his people into positions. I was surprised and I called him, we warned him and he refused. Now everybody started saying the minority group are the ones in charge in Lagos PDP,” George said. George, however, berated the authority of the Nigeria Police over the suspicious manner Salvador and other accused were acquitted in the Apapa chairman’s murder, stressing that the party in the state was ready to fight the case to a logical conclusion. Speaking further, George said that the party had petitioned the United Nations (U.N) and the Inspector General of Police over the killing. He announced that he was launching a Trust Fund towards the upkeep of the family of the slain chairman, while appealing to the In-

spector General of Police to urgently investigate the killing. “What has happened in this killing is unacceptable; the killing was carried out in broad day light, the police did not carry out thorough investigation into this murder. It is dangerous for our democracy. “This killing took place, on the 12th year of the anniversary of the killing of Funsho William, up till now no one has been held responsible for the killing. But we would fight this; we would petition the UN and the Inspector General of Police over this killing,” George said. In his reaction to Salvador’s defection from the PDP to the APC, Deputy Publicity Secretary of the APC in Lagos State, Biodun Salami, said that the development was a bad omen for the PDP and a sign of more good things to come for the APC, stressing that the defection of Salvador had further signified that PDP was dead in Lagos State. “His defection is a bad omen for PDP and sign that APC is waxing stronger in Lagos State. We welcome him and his people to the APC”.

Field candidate that will overwhelm APC candidate – Turaki urges PDP leadership IDRIS UMAR MOMOH, Benin

abiru Tanimu Turaki, a People’s Democratic Party (PDP) presidential aspirant, on Monday urged the leadership and delegates of the party to nominate a candidate that would overwhelm the APC presidential candidate in the 2019 presidential election. Turaki, who made the call in Benin-City during his consultation with the leadership of the Edo State chapter of the party, also allayed the fears of Nigerians and members of the party that the growing number of aspirants vying for the party’s ticket would not undermine its chances of winning the election. The two-time minister of the Federal Republic of Nigeria assured that he would support whoever emerged the party flag bearer. According to him, “If we must

rescue Nigeria let us keep our pride to ourselves, and look at the bigger picture, which is that PDP should get a candidate that should overwhelm that of the ruling APC

Turaki

in 2019. While noting that power comes from God, he added that the growing number of aspirants was not a threat to the party’s chances of winning the presidential election. “Even though, we have a lot of aspirants in PDP today, and a lot of people are saying that with all these gladiators there will be problem in the party, and they will reap from where they did not invest. I laugh at them. “I have been able to visit and talk to each and every one of the aspirants. We have been speaking to ourselves and we clearly understood that it is not about us, none even about our party. If Nigeria people will say they have agreed, and about 39 political parties will also ask the party to be in the front, we must be very careful. We must subordinate our selfish interest to national interest,” he said.

2019: House of Reps aspirant assures Ikpeazu of Abia North support …Inaugurates campaign committee

House of Representatives aspirant on the platform of the People’s Democratic Party (PDP) from Bende, Abia North and founder of New Nigeria Movement 2019 (NN19), Chima Anyaso, has assured that his campaign team under the Chima Anyaso Foundation would work hard to deliver on the re-election of Governor Okezie Ikpeazu as governor of Abia State in 2019 to enable him continue his laudable programmes in the state. Anyaso, who is an ardent supporter of the Ikpeazu gave the

assurance when he inaugurated a seven-man campaign committee in Igbere, saying that having done so much for Abia State, Ikpeazu deserves a fresh mandate to continue his laudable projects. He also assured that youth groups in Bende LGA would work tirelessly for the re-election of the governor whom he described as a brilliant achiever and tireless leader. According to the politician, the campaign committee will receive adequate logistics and material supports that it requires to enable it effectively cover all the

towns and villages in Abia North, especially all the 13 wards within Bende LGA. As part of provisions for logistics, 25 Toyota Sienna Van’s, 15 mini busses, 5 big buses, 150 new motorcycles and other materials will be deployed to empower the committee and youths in Abia North. “Our governor, Okezie Ikpeazu deserves a second term in office in view of his many laudable projects, some have been completed while some are ongoing. We want him to complete these projects that he has started while he is

still busy initiating new ones. The youths of Bende and Abia North have agreed to work for the reelection of Governor Ikpeazu and I am here to provide needed logistics and support materials to ensure that the governor gets the fresh mandate that he truly deserves.” Members of the committee include Ikerionwu Okarimia as DG; Chuzi Iboko, Sunday Ugwa, Silas Eke, Joy Odochi Philips, Bernard Okoro and feanyi Iboko. After the inauguration, members of the board of the committee embarked on a courtesy call on the

wife of a former military head of state, General Aguiyi-Ironsi. The team informed her on the reelection bid of Governor Ikpeazu and the desire of Chima Anyaso to represent Bende in the Federal House of Representatives in 2019. The octogenarian prayed for the team and urged Chima Anyaso to replicate the Ahuoma Anyaso Educational Foundation initiative in all of Abia North as she has heard so many good things that the schools have done and would wish that more indigent children can benefit also.

BUSINESS DAY

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NEWS YOU CAN TRUST I TUESDAY 28 AUGUST 2018

INSIGHT/INNOVATION Is Nigeria laughing at Venezuela and Turkey?

OGHO OKITI Dr. Okiti is the president, Time Economics Ltd @ Dr_Okiti 081.7153.0058

head of the 10-year anniversary of the 2008 global economic crisis, the embattled Venezuelan government, led by Nicholas Maduro, has just released new economic measures it believes will lead the country out of its economic crisis, the worst in it country’s history. Last week, the government released new bills, called “Sovereign Bolivar” in order to tackle the worst rate of inflation in history. The new currency will replace the old “bolivar”, with the plan that a staggering 100,000 Bolivar note will be replaced by 1 Sovereign Bolivar. At the time of replacing the currency, hyperinflation had reach above 500,000%. Though the International Monetary Fund (IMF) expected inflation to reach 1 million percent this year, the Central Bank of the South American country had stopped measuring inflation since 2015. The plan ahead of the launch the new currency, which had initially plan to cut three zeros, before eventually settling of five zeros, highlight both the uncertainty the economy face, and the

dynamic nature of the change in prices in the country. In one of the reports I read, there was a supermarket changing prices three times in a week, and since the start of this year, had seized to put price labels on its products. A New York Times report by Nicholas Casey also highlighted the case of a coffee seller that now sells a cup of coffee for 2 million bolivars, and the dollar trading for about 6 million bolivars, about 20 thousand times the Nigerian value. The rising and rising rate of hyperinflation masks the desperate, despair, despondency, and hopelessness of poor Venezuelans. Every report from the country shows a grim reality. A once rich country, currently with the largest oil reserves in the world, has been shattered and decimated by poor economic choices. The economic conditions and outcomes that we see today are results of poor and weak economic choices in the past, starting at the time of President Hugo Chavez. The three categories of economic policies include subsidizing food and shelter for the poor, incurring excessive debt and pledging oil resources in exchange, and providing fixed and subsidized petroleum and gas prices. The details of these measures are not important for our lessons. What is important is that they are underlined by the quest for the expansion of the State and the State’s desire to allocate resources, rather than rely on market prices. In the ongoing crisis, Venezuela now produces 1.2 million barrels of oil, comparable to the level of production in 1947, repaying the debts incurred with China and Russia with oil resources, and continues to print money in order to meet government’s bill, which is essentially a tax on the public. But Venezuela is not the only country facing economic crisis, though the country is surely in a league of its own. Turkey, with a plunging Lira, rising inflation, borrowing costs, and loan defaults is at the start of a characteristic

emerging economic crisis. Venezuela has longed degenerated beyond this point, and if Turkey do not make the necessary adjustments now, provide strong economic policy response, it may also degenerate further. For almost a decade, Turkey has relied on current account deficits, which is international borrowing in layman terms, for its consumption and construction boom. With international borrowing, you must be able to repay from rising productivity or continue to borrow. Nonetheless, there comes a point that international borrowing dry up. In Venezuela and Turkey, the leaders have described their situation as economic wars. According to their leaders, Nicholas Maduro and Recep Erdogan, respectively, the countries are suffering from deliberate economic policies of other countries, usually the United States. The Turkish president especially vents his anger at the increase in tariffs by the US

For Nigeria, there are two lessons and messages, and that is the purpose of this piece. First is that economic policies and the conditions that follow are so dynamic that the consequences are usually slow and never immediate

on steel imports from the country, which he sees in retaliation for non-release of the US Pastor Andrew Brunson, whom the Turkish authorities arrested in October 2016, following the country’s aborted coup same year. But before all these, the country has not only relied on current account deficits and foreign currency debt, but determined to keep interest rates low, even at odds with the cost of money and the necessity for the country to keep international capital flowing. For Nigeria, there are two lessons and messages, and that is the purpose of this piece. First is that economic policies and the conditions that follow are so dynamic that the consequences are usually slow and never immediate. It thus means that the consequences of today’s economic policies will be felt, sometimes much after those that operated the policies have left government. Second, foreign economic policies are never the problem, but that they only amplify already bad domestic policies. Today, our government is engaging in foreign borrowing, almost doubling the size of the national debt in just three years. They are expanding the State and its subsidies on credit, petroleum products, and power. They are giving bail out to State within the federation with “resources” from the Central Bank of Nigeria (CBN), and they are determined to continue to rely on expanding the State and its allocation of resources, rather than embark on extensive reforms across important sectors that will ensure the flow of the much needed investments in the country. Yes, they are not sufficient to trigger any serious economic crisis today, but its trends like these that deliver expected consequences in years down the line. Do you remember the 1980s and 1990s, and the subsequent relief in 2005? I thank you.

Equity crowdfunding: An idea whose time has come

UCHE UWALEKE Uche Uwaleke is a Professor of Finance & Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

ust a few days ago, the global financial community woke up to the cheering news that the World Bank has launched the first bond instrument built on a blockchain with the Commonwealth Bank of Australia. By this development, the USD87 million bond becomes the first to be created by the World Bank using distributed ledger technology. According to a statement by the World Bank, it is one of many experiments that the global financial organization would be conducting in blockchain research. The import of this giant leap for blockchains around the world

is that technology has come to be recognized as the cornerstone for innovation in capital markets. It is against this backdrop that the present collaboration between the Securities and Exchange Commission and the Fintech Association of Nigeria with a view to developing a roadmap for Fintech adoption in the capital market in Nigeria is welcome. This is where crowdfunding comes in. The Oxford dictionary defines crowdfunding (also known as crowdsourcing) as “the practice of funding a project or venture from a large number of people, typically via the Internet”. The crowdfunding model is usually based on three actors: the project initiator who proposes the idea, individuals or groups (backers) who support the idea

...the challenge for the capital market regulator is to design an appropriate equity crowdfunding structure for Nigeria by benchmarking global best practices

and the platform that brings the parties together. Crowdfunding models include donation-based crowdfunding (usually for charitable causes), rewards-based crowdfunding (in which backers contribute funds in exchange for some reward--in many cases the item produced by the campaign), debt-based crowdfunding also known as “peer to peer” or “crowdlending” (in which investors provide money and expect their loan to be paid back with interest) and equity crowdfunding (in which backers contribute funds to a company in exchange for equity stake in the company). Equitybased crowdfunding allows companies to raise money without giving up control to investors. In Nigeria, the necessity for equity-based crowdfunding is growing. Poor access to finance constitutes a major constraint for Small and Medium Enterprises. The high borrowing rates discourage SMEs from accessing bank loans. Loans from commercial banks especially to sectors considered as high-risk are usually collateral-linked, involving in most cases a charge over assets of the firm. Such conditions are often too stringent for many start-ups particularly if the payback period for the project to be financed is long. Equity crowdfunding addresses this challenge by introducing a model that is more inclusive and offers increased control to Entrepreneurs. It provides a cheaper alternative source of financing which obviates the need to provide collateral security. Unfortunately, under extant laws in Nigeria,

equity crowdfunding finds no accommodation. For example, Section 22 of CAMA 2004 places a restriction on the transferability of shares of private companies as well as on invitation by private companies to the public to subscribe for its shares or deposit monies. By the same token sections 67 and 71 of the Investment and Securities Act 2007 present bottlenecks to private companies regarding “invitations” to the public with a requirement for companies wishing to raise capital from the public to file a Prospectus. Section 161(1) prohibits dealings in units or securities of schemes without due registration with the Securities and Exchange Commission. However, many jurisdictions around the world have found a way around the legal hurdles by enacting specific legislations to govern the practice of equity crowdfunding. In April 2012, the United States enacted the Jumpstart Our Business Startups Act (“JOBS Act”) to support start-ups, followed by implementation of the final rules on equity crowdfunding under Title III of the JOBS Act with effect from May 2016. This ‘’Regulation Crowdfunding’’ allows private companies to raise up to USD1.07 million from retail investors. In the UK, the Financial Conduct Authority (FCA) is the regulatory body governing crowdfunding activities involving financial return while the Financial Services and Markets Act 2000 (FSM Act) is the legislation regulating all kinds of securities activities including crowdfunding. Continues on page 33

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