BusinessDay 28 Aug 2019 by BusinessDay

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news you can trust I **WEDNESDAY 28 AUGUST 2019 I vol. 19, no 381

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NGUS NOV 27 2019 363.97

As Malami calls contract fraudulent Emefiele says no records of $40m capital import for project

he Federal Government has begun a highpowered probe of the circumstances that led to a major judgment against Nigeria over an aborted

the equivalent of N3.5 trillion, to the British engineering firm, according to Information Minister Lai Mohammed, who addressed journalists at a major press conference in Abuja on Tuesday, alongside Abubakar Malami, minister for justice and Attorney-General of the Federation; Zainab Ahmed,

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FG begins probe of $9bn P&ID judgment, says Nigerian assets safe gas project, even as it said it would not relinquish assets to Process and Industrial Developments Ltd (P&ID), a firm registered in the British Virgin Islands. The Nigerian government is also ready to appeal the recent judgment by a London court which ordered it to pay $9 billion,

g L-R: Imrane Barry, MD of Total Nigeria plc; Mike Sangster, MD/country chair, Total Upstream Companies in Nigeria; Timipre Sylva, minister of state for petroleum, and Folashade Yemi-Esan, permanent secretary, Ministry of Petroleum Resources, during the Total MD’s visit to the minister.

Onyinye Nwachukwu & Godsgift Onyedinefu, Abuja

fgn bonds

Treasury bills

minister of finance, and Godwin Emefiele, Central Bank of Nigeria (CBN) governor. The judge’s decision converted the arbitration award to a legal judgment and the sum rose to around $9 billion with interest

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NGUS SEP 30 2020 365.47

Devaluation worries return as foreign investors press pause on Nigeria LOLADE AKINMURELE

i g e r i a’s l a c k o f structural reforms means deep pocket foreign investors are under no illusion that they have seen the last of another big naira devaluation in the medium term and that is deterring large inflows of funds in an economy that could do with some investment. Foreign concerns over the naira, which suffered a 40 percent devaluation in 2016, have remained despite a twoyear stability, with memories of that devaluation still looming large on foreign direct investors who got their fingers burnt. “Concerns over a devaluation in the mid-term have remained because everyone knows the current currency stability is

Continues on page 38

Inside Nigerian applicants to pay more as US imposes visa reciprocity fee P. 2

Wednesday 28 August 2019

BUSINESS DAY

news Foreign affairs ministry debunks reports of execution of 23 Nigerians in S/Arabia INNOCENT ODOH, Abuja

T L-R: Adeola Ajai, head, correspondent banking and structured finance, Wema Bank; Elizabeth Ogonegbu, acting senior regional operations officer, Shelter Afrique; Ademola Adebise, MD/CEO Wema Bank, and Andrew Chimphondah, MD/CEO Shelter Afrique, during a business visit at the Wema Towers.

Nigerian applicants to pay more as US imposes visa reciprocity fee ...to eliminate cost difference

EMELIKE OBINNA, IFEOMA OKEKE, & INNOCENT ODOH, Abuja

ith effect from August 29, 2 0 1 9 , Ni gerian citizens whose applications for nonimmigrant USA visas in B, F, H1B, I, L, and R visa classifications are approved will be required to pay a visa issuance fee, or reciprocity fee. The United States of America on Tuesday unveiled new visa reciprocity schedule for Nigerian citizens, saying it is meant to eliminate cost difference. This is coming months after suspending the drop-box, a service that offers interview waivers for visa renewals of certain categories. Visa class categories of B1, B2, B1/B2, F1 and F2 will pay reciprocity visa fee of $110; H1B and H4 categories will pay $180, I category will pay $210; L1 and L2 will pay $303, while R1 and R2 categories pay

$80, according to a statement by the Public Affairs Section (PAS) of the US Consulate General in Lagos on Tuesday. T h e re c i p ro c i t y f e e would be charged in addition to the nonimmigrant visa application fee, also known as the MRV fee, which all applicants pay at the time of application. The nonimmigrant visa application fee ranges from $160, $190 and $265 depending on the visa category and is paid at GTBank in Nigeria by the applicant. T h e re c i p ro c i t y f e e would be required for all Nigerian citizens worldwide, regardless of where they are applying for a nonimmigrant visa to the United States. The fee is required for each visa that is issued, which means both adults and minors whose visa applications are approved will be charged the reciprocity fee. The fee can only be paid at the US Embassy or the US Consulate General and not at banks or

any other location. The respite, however, is that the new fees will only be paid by Nigerian citizens who are granted visas, while those whose applications are denied would not be charged. For instance, a Nigerian student applying for an F1 category visa will now be required to pay not only the visa application fee of $160 but also additional reciprocity fee of $110 if the visa is granted. “U.S. law requires U.S. visa fees and validity periods to be based on the treatment afforded to U.S. citizens by foreign governments, insofar as possible. Visa issuance fees are implemented under the principle of reciprocity: when a foreign government imposes additional visa fees on U.S. citizens, the United States will impose reciprocal fees on citizens of that country for similar types of visas,” the statement said on the rationale for the review. “Nationals of a number of countries worldwide are

currently required to pay this type of fee after their nonimmigrant visa application is approved,” the statement said. Currently, it costs more for a US citizen to obtain a visa to Nigeria than it costs a Nigerian to obtain a comparable visa to the US. The new reciprocity fee for Nigerian citizens, therefore, is meant to eliminate that cost difference, according to the statement. Since early 2018, the statement said, the US government has engaged the Nigerian government to change the fees charged to US citizens for certain visa categories. “After 18 months of review and consultations, the government of Nigeria has not changed its fee structure for U.S. citizen visa applicants, requiring the U.S. Department of State to enact new reciprocity fees in accordance with our visa laws,” it said.

•Continues online at www.businessday.ng

NNPC, Total commit to grow production reserves to 40bn barrels HARRISON EDEH, Abuja

he Nigerian National Petroleum Corporation (NNPC) and Total Nigeria have expressed their readiness to work together to grow daily national crude oil and gas production and reserves to meet the national target of 40 billion barrels. Mele Kyari, NNPC group managing director, and Mike Sangster, the country chair/managing director, Total Nigeria, made the

commitment when the Total Nigeria MD led the top management team of his company on a business visit to the NNPC Towers in Abuja on Tuesday. Kyari stated that Total Nigeria was one of the Corporation’s most important partners with visible outcomes, adding that the partnership would further grow national production and reserves going forward. “Total Nigeria in the last five years has very visible outcomes that we have www.businessday.ng

seen and I assure you that we will work together to progress all efforts to grow production and national reserves. I also want to put on record that your downstream company has been very supportive in the supply of gasoline into our country,” Kyari said. He assured the MD of Total Nigeria of more days of very transparent and accountable relationship with frameworks that would be appreciated by all. Earlier, Sangster congratulated the GMD on

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his appointment and expressed Total’s firm belief in the Nigerian oil and gas industry and its readiness to deploy solutions to the challenges facing the industry. “Total Nigeria will build on recent progress in many areas such as cash-call arrears and our long-standing partnership. In partnership with NNPC, the company has developed the last three Floating Production Storage Offloadings (FPSOs) in Nigeria and wants to build on this,” he said.

he Ministr y of Fo re ig n A f f a i r s has refuted media reports that the 23 Nigerians said to have been sentenced to death in Saudi Arabia for drug offences have been executed. The ministry through a statement issue d on Tuesday by its spokesman, Ferdinand Nwonye, urged the public to disregard the remoured execution. He said the ministry was in contact with the Nigerian Mission in Saudi Arabia and that the mission had been confirmed the story is false. Over the weekend, 23 Nigerians were reported to be facing execution in the Kingdom of Saudi Arabia over drug-related offences. They were said to have been arrested between 2016 and 2017 at King Abdul-Aziz International Airport, Jeddah, and Prince Muhammad bin Abdu-Aziz International Airport, Madinah, having conceale d the banne d substances in their rectums, a Saudi document revealed. T h e Ni g e r i a n s w e re said to have been convicted for contravening the narcotic and psychotropic substances control law, which is punishable by death. The names of the convicted persons were given

as Adeniyi Adebayo Zikri, Tunde Ibrahim, Jimoh Idhola Lawal, Lolo Babatunde, Sulaiman Tunde, Idris Adewuumi Adepoju, Abdul Raimi Awela Ajibola, Yusuf Makeen Ajiboye, Ad a m Id r i s Ab u b a k a r, Saka Zakaria, Biola Lawal, and Isa Abubakar Adam. Others were Ibrahim Chiroma, Hafis Amosu, Aliu Muhammad, Funmilayo Omoyemi Bishi, Mistura Yekini, Amina Ajoke Alobi, Kuburat Ibrahim, Alaja Olufunke Alalaoe Abdulqadir, Fawsat Balagun Alabi, Aisha Muhammad Amira, and Adebayo Zakariya. The report came few weeks after the Saudi authorities executed Kudirat Afolabi, a Nigerian, for drug trafficking, and Saheed Sobade, another Nigerian, reportedly nabbed with 1,183 grams of cocaine powder in Jeddah. The ministry, however, said in the statement on Tuesday that it was investigating claims that most of the trials were carried out without adequate legal representation for the accused, in accordance with internationally accepted legal principles. “Furthermore the Nigerian Mission was not informed of the arrests and trials. The Federal Government is therefore engaging the Saudi authorities through diplomatic channels w ith a view to finding a just solution,” the statement said.

CBN stops credit payments for milk imports HOPE MOSES ASHIKE

igeria’s central bank (CBN) has told lenders to stop processing milk imports on a credit basis, bankers said on Tuesday, after the bank last month said it would ban access to foreign currency for the imports to spur local production. Ni g e r i a s p e n d s b e tween $1.2 billion and $1.5 billion annually to import milk, according to the CBN, which said in July it would add milk imports to its restricted list for dollar sales. The bank did not say when the ban comes into force. In a circular by a tier-one lender s e en by BusinessDay, the CBN said milk imports will no longer be eligible under

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payment terms known as “bills for collection” which allowed the importer to buy on credit. Importers would need to fund their naira accounts and open letters of credit, bankers said. Bankers said the central bank wanted to streamline payment modes for milk imports. Industr y groups had been lobbying the government against the bank’s p l a n n e d d o l l a r c u r b, a rgu i ng t hat d o m e st i c milk production was not enough to meet local demand. Nigeria relies on imports for most of what its 180 million population consumes. In 2015, the central bank restricted access to forex for 41 items which it said can be produced in Nigeria.

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Wednesday 28 August 2019

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news VAT rises 7.92% to N312bn in Q2 SEGUN ADAMS

… Fowler says VAT on online transactions to start 2020

fter a decline in the first three months of 2019, Value Added Tax (VAT) generated by Nigeria rose 7.92 percent to N311.94 billion, the most in the last 22 quarters, at least. The National Bureau of Statistics (NBS) in the sectoral distribution of VAT report for the second quarter 2019 published Monday, notes the amount realised in the period represents a 16.95 percent from the same period last year. The N311.94 billion gener-

ated in the second quarter, after some 9 percent jump in VAT two quarters ago, is the biggest quarterly gain since the second quarter of 2017. VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain – from production to the point of sale. It is an indirect tax. In Nigeria, revenue from VAT is distributed among the three tiers of government with 15 percent allocation to the Federal Government, 50

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percent to state governments and 35 percent to local governments. According to the report, while the non-import VAT locally totalled N151.56 billion, 10.58 percent more than N137 billion in the previous quarter, non-import VAT for foreign and NCS-import VAT rose to N94.9 billion and N65.48 billion, respectively. A breakdown of the nonimport VAT shows the manufacturing sector generated the highest amount of VAT with

N34.43 billion, representing a quarterly increase of 9.57 percent and a year-on-year increase of 6.07 percent. As second top contributor, Professional Services generated N29.58 billion while Commercial and Trading, and Breweries, Bottling and Beverages generated N16.27 billion and N11.27 billion, respectively. State Ministries and Parastatals generated N10.45 billion while the Federal counterpart generated N8.11 bil-

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lion to round off the top 6 sectors by VAT generation. Leading the laggards, Mining generated N50.6 million, a 15.51 percent decline from a year ago but an improvement from the last quarter. Nigeria, faced with revenue challenges amid uncertainty in the global oil market, is mulling new ways to boost its earnings. The country’s federal tax agency is seeking to tap opportunities in the country’s booming online businesses

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to raise fund for government. Babatunde Fowler, executive chairman, Federal Inland Revenue Service (FIRS), disclosed Monday that the agency would commence its VAT on online transactions, both domestic and international, effective from January 2020. The FIRS boss, who was at the African Tax Administration Forum (ATAF) Technical Workshop on VAT in Abuja, said the date remained tentative until approval from the government.

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The NDIC: Championing public awareness of collateral registry SMALL BUSINESS HANDBOOK

EMEKA OSUJI

hile the attitude of some public institutions, with regard to poverty reduction, is that of wait-andsee, others go several steps further to make positive contribution to the war against poverty. The federal government has given itself a target of bringing out one hundred million of us back to the good life, over the next ten years. That looks like a very tough challenge, given that the number of people in extreme poverty is increasing by about six people every day. Moreover, the current outlook does not promise much remission. All the factors that promote poverty are at still alive and well. Some are actually getting worse. The need to raise the consciousness of the public to recognise and take advantage of the available poverty reduction opportunities becomes an important nation service. This is why we continue to applaud the Nigerian Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) in their effort to help drive the poverty reduction programme of the federal government. They do this in many different ways, including the provision of on-lending facilities at concessionary rates and risk prevention supervisory activity. r In addition, the NDIC has been highlighting the importance of the collateral registry recently introduced by the CBN. The registry, which is a publicly available noticeboard, gives information on movable collaterals that have been used to secure loans, and registered for public information at the registry.

Although the registry has been properly established and pulling its weight in the informal credit market in Nigeria, the NDIC has not relented in calling attention to the need for lenders to understand the Secured Transactions in Movable Assets Act, 2017, and the regulations issued by the Central Bank in that regard. The Collateral Registry Act, 2017, and its twin brother, the Credit Reporting Act, 2017, constitute two critical pieces of legislation that have not only changed the informal credit landscape but helped to improve the rating of Nigeria on the Ease of Doing Business rankings. Unfortunately, but not surprisingly, these innovative laws were greeted with very low ovation, when they were passed in 2017. Although some institutions in the private sector have held seminars ad discussions on the laws, more still remains to be done. It will be fatal to the informal sector if the gains of these laws are not fully appropriated and internalised. This why the recent and continued sensitisation of operators in the microfinance industry by the NDIC deserves commendation. Perhaps, our attention is still focused on the challenges of insecurity and the many troubles our country has been going through in the last few years. However, the low applause also typifies Nigerian’s non-inclination to much reading -- an already festering malaise in the Nigerian polity: low appetite for technical knowledge and the near absence of volunteer spirit. I consider it a national service on the part of all to take every possible steps to ensure the proper implementation of these twin laws. This will enable us to maximally profit from their proven benefits seen in other climes. My biggest surprise was the apparent non-reaction from some of the core stakeholders and likely beneficiaries of the reforms -- finance companies, mortgage banks, microfinance banks, Nigerian Association of Small and Medium Enterprises (NASME) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). These entities for which I believe the two laws combined are a haymaker and a lifesaver, seemed

to be completely aloof to the laws. To the best of my knowledge, they have not made significant efforts to promote the laws and educate their members. Meanwhile, if we had the collateral registry before now, the mountain of non-performing loans of the lenders among them, and the financial purgatory faced by the MSMEs in search of funds, may have been averted. We need not overemphasise the fact that the microfinance banks were set up to make loans to entities that may not have proper or acceptable collateral. They operate in a trust environment in which trust has long been on vacation, even among the clergy. In short, they were created to make unsecured loans because of the absence of collaterals among their target clients. That is a hard place to be. To find that all of a sudden, there is a law that converts the hitherto unbankable assets of entities that are predominantly, if not exclusively their clients, to bankable assets, and somebody is unexcited is hard to believe. Although the collateral registry is not a magic wand that removes all the credit problems of informal credit market operators, it is a major breakthrough in the search for improved loan books among the lenders. There is need for more work on the part of all stakeholders to further what the NDIC and Central Bank are doing in this regard. We are probably assuming that the MSMEs will gladly use their chattels to borrow money if the opportunity arises. That may not be true because there are some rigidities to be addressed. There are some socio-cultural impediments to pledging private property for loans in some part of the country. In some cultures, people feel ashamed of taking loans to run their businesses. Even worse is to use their personal property to borrow money. We are still largely an illiterate country plagued by traditions and superstition. We may be wrong to think we have done enough for the economically active poor by providing them the legal framework for using their chattels to borrow money.

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Although the collateral registry is not a magic wand that removes all the credit problems of informal credit market operators, it is a major breakthrough in the search for improved loan books among the lenders

There are still many places where it is a taboo to pawn one’s asset or use it to borrow money. This is what the we have to confront and the continuous sensitization of the public is very important. There is a lot to be done. Last week, the NDIC assembled the operators of non-bank financial institutions in the South-south city of Uyo, the Akwa Ibom state capital, for a sensitisation workshop. Specialists in different aspects of the use of movable assets to secure loans were invited at the corporation’s expense to help the operators to understand the legal implications and opportunities the laws have thrown up. The workshop revealed, sadly, that so many people who should be operating and making good returns on the back of the laws are hardly properly appraised of them. Evidently, understanding the regulations guiding the use of movable assets to secure loans has the potential to enhance the fortunes of the operators in the informal credit market, as well as their clients. Many operators have actually not seen the Act, which has long since been gazetted. This problem of not seeking knowledge is an endemic one. How could people who desperately need to properly secure their loans suddenly find it difficult to embrace a system that has answers to their problem? Thankfully it was not all gloom. The operators were not only excited; they were grateful for the opportunity given them by the corporation to build capacity. There was evident enthusiasm on the part of the participants at the workshop to learn and use the registry. Perhaps, what we need do is to continue on the path the NDIC has traded and continue to give support to the operators, especially as they battle with the challenge of recapitalization. We can achieve much together provided we do not bother about who takes the credit for our success. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Development in focus as Sanwo-Olu inaugurates cabinet

hirty-eight persons recently passed the screening of the House of Assembly to form the State Executive Council in Lagos State. Their nomination fulfilled the promise of Governor Babajide Sanwo-Olu to create his cabinet within 100 days. The list shows an administration that is ready to serve, given the pedigrees of nominees. Lagos has grown enormously with a population hitting almost 23 million people and still counting. The growth naturally comes with many challenges in the management of waste, rise in the number of patients at various government hospitals and primary health centres, more pressure on the existing infrastructure-roads, schools and housing. Lagos, therefore, cannot be administered in 2019 using a 1979 template. The state has benefitted from its population growth-more revenue generation; and physical development in different sectors, making it a state on the move. At the last count Lagos hit close to N30 billion mark every month in internally generated revenue (IGR), making it the most economically viable state in Nigeria and the fifth-largest economy in Africa. However, the State government has argued that this feat is still a far cry from what is required to run a megacity such as Lagos. For example, the budgetary allocation of the police department in New York City is $5.6 billion, when compared to the budget of the entire Lagos state, which stands at $2.4

billion. Sanwo-Olu’s campaign premised on the need to address these challenges, to proffer short and long-term solutions to them. He outlined Project T.H.E.M.E.S as an operational framework to solve the problems and sustain the profile of Lagos as the centre of excellence. Sanwo-Olu chose a team of capable homegrown professionals. His words: “We took our time to pick the best hands for the tough job Lagosians have elected us to do. The nominees for the thirty-eight Commissioner and Special Adviser positions include women and men who have made their mark and at the zenith of their professional callings.” Infusion of technocracy and political know-how Analysis of the nominees showed there is a clear departure from the tradition of putting forward only politicians or only technocrats for the state’s Executive Council. A private sector professional himself and having traversed the nook and cranny of the political space in Lagos, Sanwo-Olu understood the arduous task before his government. He went for politicians, professionals in politics and technocrats to drive the critical areas of the public sector for more significant impact. It, therefore, came as no surprise that Mr Tunji Bello, the immediate past Secretary to the State Government, who had served three

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previous administrations, is in Sanwo-Olu’s cabinet. Aside from being an influential figure in Lagos politics, Bello, a lawyer and journalist, possesses vast skill on environmental issues and policies to help the administration have clear direction in this area. Gbolahan Lawal is a seasoned development expert and social entrepreneur from the security background. Lawal has a deep understanding of political economy for integrated development, especially in low and medium-income economies. He has proven his mettle in previous administrations as Commissioner for Housing and in the Ministry of Agriculture and Cooperatives. Wale Ahmed, a medical doctor turned politician, has a firm grounding in the politics of Lagos State. He is to help create the political balancing required in today’s democratic governance. There are other experienced politicians in the new cabinet. Fair representation of women Since the beginning of the Fourth Republic, Lagos has set the pace for gender balance. The state produced the first woman Deputy Governor. Lagos State sustained the tradition of reserving one of the two topmost leadership positions for women. However, the emergence of Dr Obafemi Hamzat as SanwoOlu’s running mate and now deputy raised concern among womenfolk, giving rise to the insinuation that Sanwo-Olu was nursing an agenda to upset the progress made in the

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GBOYEGA AKOSILE State in the area of women representation in governance. He allayed those fears. The Governor surprised the womenfolk with his first appointment, picking Mrs Folashade Jaji, as the Secretary to the State Government. He followed with the nomination of 13 women to the cabinet. Women make up 32 per cent of the Executive Council. Again, Lagos remains the first and till date the only State that has moved closer to the 35 percent affirmative action goal. The Governor gunned for higher service delivery with the selection of seasoned and highly resourceful women. A first-rate engineering project manager, Mrs Aramide Monsurat Adeyoye is a University of Lagostrained Civil Engineer. She cut her professional teeth at Julius Berger Nigeria Plc in 1988 and rose through the ranks to become the multinational engineering firm’s Project Coordinator in the West region. Mrs Adetoke Benson-Awoyinka is a public-spirited legal practitioner with 30 years post-call experience in Nigeria and the United States. Benson-Adeyinka was among the highly skilled team of the Governor’s transition committee. Gboyega Akosile is Deputy Chief Press Secretary to Lagos State Governor, Babajide Sanwo-Olu

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COMMENT Don’t switch it off just yet

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CHARACTER MATTERS WITH DAPS

DAPO AKANDE

any years ago in the UK, The Sun newspaper, a very popular national daily, openly identified as a Conservative Party sympathiser, did something on the day of a general election which looked as good as won for the Labour Party victory; and it nailed the coffin of all predictions. Neil Kinnock, the Labour Partys flagbearer, had spent years knocking on the doors of No.10 Downing Street. It looked like it was finally going to let him in as Prime Minister. The Sun newspaper had other plans. On that fateful day, its publication carried the mischievous headline, “If Neil Kinnock wins today, will the last person to leave Britain please turn out the lights?” Shortly after his defeat at the elections, Kinnock gave a farewell speech to announce his resignation as party leader. He pointedly blamed the headline for this loss. At the rate Nigerians are leaving the country I won’t be surprised at all to see a similar headline soon. The most popular destinations are known to everyone, with Canada being the hot favourite for some time now, due to their inviting immigration laws. Sadly though, even the most unlikely destinations now appear more attractive alternatives to staying put in for many young Nigerians. We’ve lost count of just how many from our most productive age bracket have lost their lives to the unforgiving elements of the desert or the treach-

erous sea in their desperate search for hope. But if one was to run a similar headline here, what would it say? Asking the last person to leave the shores of Nigeria to switch off the light may only confuse the poor fellow. From which power source: the electricity supplier or generator? I can understand if it’s a generator but if it’s the electricity supplier, is there any need? That would simply amount to what accountants call “double entry”. Or maybe the headline will make more sense to ask the person to turn off the water tap. In a country still struggling to provide adequate potable water that too may not make too much sense. If statistics gathered by aid agencies are anything to go by, 60 million Nigerians, or 33 percent of the population, still don’t have access to clean water. Environmental and water experts insist this is a highly conservative figure. Aha! I’ve got it. The last person to leave should be asked to lock the gate. That sounds more appropriate in a nation where the state of insecurity is such that everyone who can afford to lives in fortress-like conditions and moves around ensconced in a battalion of policemen. According to The United Nations Office on Drugs and Crimes, about 64,000 Nigerians are murdered in Nigeria annually with the north east suffering the biggest losses due to rampant terrorist activities there. In its Global Study on Homicide 2019, the agency listed inequality, unemployment, political instability, prevalence of gender stereotypes in the society and organised crime among the drivers of homicide. It was Mike Leavitt who said, “There is a time in the life of every problem

when it is big enough to see, yet small enough to solve.” I sincerely hope we haven’t passed this point. However, a nation sincere about rising from an economically comatose state, a primary cause of the current distressing state of insecurity would neither run away from its obvious challenges, pretend they don’t exist nor bury its head in the proverbial sand and hope that it will go away. Instead it would man up to face its very real and current realities. As if speaking to us directly Abraham Lincoln once warned, “You cannot escape the responsibility of tomorrow by evading it today.” Just as another great leader, Lee Kuan Yew remarked on the futility of looking for an easy way out. “A soft people will vote for those who promised a soft way out, when in truth there is none” he once said. An equally sound advice can be found in the life transforming book of Jim Collins, Good to Great, where he prescribes facing up to the brutal facts. In tandem with what he calls the Stockdale Paradox theory, he says such entity (or individual) must “retain faith that it will prevail in the end, regardless of the difficulties and at the same time confront the most brutal facts of its current reality, whatever they might be.” I cannot with good conscience say our leaders in government see this as necessary to succeed. A nation where we thought we had hit rock bottom in 2007 when we had 8.6 million out of school children, the largest number of globally; but by 2019 we clocked yet another unenviable record by shamefully hitting the 13.5 million mark, according to a survey conducted by UNICEF. With these number of children denied basic education and the nonchalant

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However, a nation sincere about rising from an economically comatose state, a primary cause of the current distressing state of insecurity would neither run away from its obvious challenges, pretend they don’t exist nor bury its head in the proverbial sand and hope that it will go away

attitude by government to reverse it, how do we hope to improve in the poverty index much less building a robust nation? A continent where 40 percent of the population over the age of 15 and 50 percent of women above 25 are illiterate will remain what the oyibos like to call it, the “dark continent”. And there’s little point in raising dust over what oyibos say as we are wont to do. If we don’t like it we should face the issue squarely so we can change our story. The role which a social infrastructure like education plays in nation building cannot be overemphasised. Without it, poverty reduction, economic growth, improved standards of living and an increase in life expectancy will forever remain a pipedream for our dear country. We read for knowledge, we study for understanding but we memorise, meditate and personalise scripture for wisdom. This wisdom becomes self-evident when we value what God values and devalue what God devalues. God made his thoughts on education quite clear when he said, “Study to shew thyself approved unto God”. If we’re indeed sincere in our quest to rebuild the nation then we must as a matter of urgency redesign our education system to impart knowledge, imbue understanding and inspire wisdom. Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Can health tech startups solve Nigeria’s health problems?

n the global healthcare index, Nigeria’s healthcare ranks as one of the five worst in the world. The health industry is in such dire straits that 40,000 of the 75,000 registered Nigerian health practitioners now work overseas. In the last decade alone, Nigeria has witnessed outbreaks of infectious diseases like cholera, meningitis, and monkeypox. In 2018, there were six different outbreaks of communicable diseases, primarily in rural areas. When these outbreaks occur, the country’s medical infrastructure is unable to manage—with the notable exception of the handling of the Ebola crisis in 2014. In June 2017, Madam Rose, a staff of Kaltungo General Hospital, Gombe, told All Africa News that she watched a pregnant woman named Linda die because the hospital did not have any blood. “All she needed to survive was a few pints of blood but there was no blood available in the hospital’s blood bank. So, she was left on the delivery couch just as helpless as the doctor who wanted to help but couldn’t.” Nigeria lacks sufficient blood bank facilities, so accident victims and pregnant women who need transfusions often do not get them. “Linda’s bleeding didn’t stop, and it became rather profuse. The hospital’s blood bank was not functional, and she died of a cardiac arrest following excessive bleeding,” said Madame Rose. Linda’s case is not unique, and Gombe State is not the only afflicted. Nigerians need at least 1.8 million units of blood per year, but only 66,000 units are available. No surprise then that even our president seeks medical help outside the country. But as the sector struggles to cater to the health needs of nearly 200 million people, an innovative technology scene has birthed a cluster of start-ups

focused on combating challenges in Nigeria’s health sector. They are Nigeria’s health-techs, $95 million worth of investment flowed into Nigeria’s tech scene, making it a top destination for investors in Africa. Some of this funding was designated to businesses solving problems across the health value chain. Of these, Helium Health, founded in 2015, raised $2 million, making it the best-funded new generation health-tech. Another area that health-techs have penetrated is telemedicine. There are only about 23,000 hospitals in Nigeria. The World Health Organisation (WHO) recommends that a country has one doctor for every 600 patients; Nigeria has one doctor to 4,000 patients. Doctors are supposed to see at most 20 patients a day, but in Nigeria, they see up to 150. Clearly, doctors are overstretched, and that is why start-ups like Mobidoc and Hudibia are electronically connecting patients to doctors. With Hudibia, users cut the long queues and outdated processes at health institutions and can consult with a doctor on a live stream. User records on the app can also be securely transferred to another healthcare provider if the need for it ever comes up. Telemedicine start-ups like Hudibia are the most popular health tech start-ups in Nigeria, but some problems cannot be solved virtually—like blood. Nigerians do not donate blood regularly, and we don’t have enough blood banks. Temie GiwaTubosun, Founder of LifeBank, connects donors with those that need blood. In a Guardian interview, she explained that her motivation to kick start the start-up came from her personal experience during childbirth. “My son’s birth was a difficult one, and that forced me to look deeper into maternal mortality in Nigeria. I found that blood shortage is a major cause of death for

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mothers.” “Finding blood when available and moving it to where needed is the main thing. So, I built LifeBank to increase the blood available in the country through our app that reminds and schedules donor appointments,” she said. Ezinne Anyanwu, a US-trained nurse and founder of Efferent Services Health, is excited about the current fusion between healthcare and technology in Nigeria. Efferent offers advisory services to healthcare organisations and hospitals. The team helps them understand the impact of technology and the improvement it can have on their practices. “One of the reasons I moved to Nigeria was because I figured that health care was going towards technology. I saw that there were conversations about tech here, I wanted to be a part of those that contribute towards the conversation,” Anyanwu enthuses. She adds that in the next ten years, she expects that innovation and technology would have staged a major takeover in the country’s health sector. At the moment, the Nigerian government does not finance the health sector enough. In 2001, members of the African Union (AU), including Nigeria, signed an agreement to commit at least 15 percent of their annual budget to solve the challenges in their various health sectors. 4 percent of Nigeria’s N8.6 trillion budget was allocated to the health sector in 2018, even lower than in previous years, and much smaller than the AU agreement. Put simply, the money needed in Nigerian healthcare far outstrips the money that is put in. And just as the government struggles with funding, health-techs do too. Olanrewaju Odunowo, Editor and Researcher at Tech Cabal, tells me that these start-ups find it more difficult than others to handle funding and regulation. Odunowo argues that investors don’t under-

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AISHA SALUDEEN stand the health tech sector and don’t find it as attractive as Fintech. “One tech entrepreneur described it this way: She said the only time they get funding is when there’s someone (an investor) that understands the sector in the room.” Anyanwu agrees. “There isn’t a lot of funding because VC’s don’t understand how to monetise health start-ups,” she says. This begs the question of how health-techs can scale without funds. It is also important to note that health start-ups don’t have clear regulations to help them thrive. Unlike Fintechs that have a framework with the Central Bank of Nigeria (CBN), health techs are not within any regulatory environment. No regulation means that there’s no law that establishes a standard or checks the activities of the sector. That may contribute to why investors consider the sector to be riskier. “The federal ministry of health has a document that explains its plans for digital health for the next four years, but fails to address the regulatory pitfalls and gaps that exist in this document,” Odunowo explains. The challenge is unenviable, and the conditions are unwelcoming, but health-techs have already made a mark. A recent TechCabal report suggests there are just over 75 health-tech start-ups. They may be small, but they can make a big difference. Saludeen wrote from Lagos

Wednesday 28 August 2019

BUSINESS DAY

EDITORIAL A new KPI for ministers PUBLISHER/CEO

Frank Aigbogun EDITOR Patrick Atuanya

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

iven the new reality of declining or flat revenues, high unemployment and the prospect of another recession, a paradigm shift is required in the job description of ministers and managers of key sectors of the economy. A significant part of their key performance indicators (KPIs) should be the amount of foreign direct investments (FDI) they are able to attract to their sectors. There is now unanimity among economists that FDI is critical to drive economic growth in developing countries. In addition to focusing on FDIs, the ministers can turn their attention to tapping into the billions Nigerians abroad send home yearly. After FDIs, “remittances are the second-largest and most stable type of inflow into developing countries” according to Economic Associates, a consultancy. The surge in FDIs over five years ago, as investors banked

on the growth in the number of consumers, has trickled but remittances, which surpassed FDIs into developing economies two years ago, have steadily increased. If there was a league table for the amount of FDIs and remittances goverments of developing economies were harnessing Nigeria would be in the “relegation zone” the EA report further notes. Singapore, for example, a poor, inconsequential former British crown colony with a meagre population of 1.6 million in 1960 and with no natural resources, was able to transform itself to one of the richest countries in the world, with the thirdhighest GDP per capita, partly through attracting foreign investment into the country and harnessing them to the their development programmes. One of the keys to this transformation was not just in the appointment of highly educated, focused and efficient ministers, but also in the issuance of an otherwise tough order by Lee Kuan Yew that all ministers

must be able to attract certain levels of FDIs to their sectors. What looked like an impossible task soon became a competition as ministers jostled to attract the highest number of FDIs to the country. Aided by very attractive incentives and a considerable ease of doing business, the country witnessed a huge surge in the inflow of foreign capital and investments, leading to its rating as one of the safest places for foreign investments in 1984 and 85, according to Business Environment Risk Information (BERI) ranking. Thus, despite its unique size and history, other developing countries now look up to Singapore for lessons in how to attract investments and how to make them similarly compatible with their own development needs. Nigeria is in particular need of the Singaporean lesson. Rather than ministerial appointments being mere “job for the boys [and girls]” and a means of elite political settlement, they could be made marketers of the country and

appraised on their abilities to attract both local and foreign direct capital that are now necessary for economic growth and development in any developing society. Then, Nigerians will no longer complain about the large number of ministers because they won’t be drains on the country’s resources but catalysts of economic growth and development. We must join the league of African countries who have positioned themselves as favourable destinations of FDIs. Mozambique, for instance, a country ravaged by war some decades ago, is rapidly transforming its fortunes, posting average economic growth rate of 7 percent for the past decade principally due to increased FDI, which peaked at 26.13 percent of GDP in 2015. Nigeria cannot afford to be left behind. Hence the urgent need for a plan to join the premier league (or champions’ league) of emerging economies that attract the most FDs and remittances, and hence the need for new KPIs for the ministers.

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PMB’s cabinet: An economic team is imperative!

FRANKLIN NGWU

ith the long awaited allocation of portfolios to the ministers last week, it is now very obvious that a competent economic team is urgently needed to complement the ministers if we are serious to rescue Nigeria from current and escalating socio-economic and political crises. Of the 43 members, there is no thoroughbred economist. Only two have basic B.Sc degrees in economics -- Gbemisola Saraki now Minister of state for Transport and Clement Agba, Minister of state for Budget and National Planning. Moreover, based on the qualifications, experiences and previous impacts of the 43 ministers, it is difficult to call them the first class cabinet that Nigeria desperately needs. We are talking of an economy facing multi-faceted socioeconomic and political crises with all key indicators of economic growth heading south- poverty, inequality, unemployment, insecurity, FDI, GDP per capita, ease of doing business, rule of law, regulatory quality and government effectiveness. With such dire socio-economic situation, what is required of President Buhari is to quickly assemble a competent economic team made up of some members of his cabinet and others selected purely on merit. A suggestion will be to include immediate past three CBN governors, six re-

nowned academic economists chosen from one top university from each of the six geo-political zones and three members from the Organized Private Sector (OPS). It can be described as a Council of Economic Advisers and headed by a robustly trained economist with an unconvincing inclination for home-grown solutions. Just as our problems are clear, the solutions are not farfetched. All that is required is a focused, courageous, committed economic team and leadership with proactive, innovative solutions to our problems. Given the current state of our economy, the immediate tasks of the team are clear. First is to comprehensively and critically review the Next Level plan to give it clarity and direction. As earlier cautioned, the Next Level plan is a mere campaign document lacking depth, conviction and synergy to create what can be described as “Associational Economy” that Nigeria immensely needs. With a critical review of the Next Level plan, the second focus of the economic team is to deeply examine if Nigeria is socio-economically better as it is now or in a restructured form. Even if the federal government is reluctant for proper restructuring of the country irrespective of its overwhelming benefits and urgency, the economic team should properly review the items on the exclusive and concurrent lists to ascertain if we are better with more items on the concurrent list or better with more on the exclusive list as it is presently. The third focus of the economic team in collaboration with the heads of all the security agencies is to critically review, craft and quickly implement an effective strategy to address the escalating insecurity situation across the country bearing in mind the negative consequences it is hav-

‘

At any given time, whether early in the morning or in the afternoon we’ll find our people taking their “pick me up” shot. The unemployed who resorts to it to drown his sorrows may be foolish because I don’t see how this can possibly help him to get a job or even think creatively to create a job for himself

ing across all facets of our economy and country. The fourth focus of the economic team is our increasing and unsustainable debt burden. With a debt burden of over $81 billion and more borrowing on the table, the task of the economic team is to critically innovate on how best to reduce our debt burden, avoid a fiscal crisis and sustain economic growth and development. They need to decide whether NNPC should be sustained or fully privatized and whether fuel subsidy should be continued or removed. Fifth is to proactively work with CBN to clearly agree on what constitutes CBN monetary policy functions and the ones that are fiscal policies of the government. A situation as it is the case presently where the CBN seem to be executing both the monetary and fiscal policies of the government is inappropriate and confusing. Also important is to properly rethink if the current CBN foreign exchange management is the best for Nigeria. With a falling foreign reserve and oil price, increasing contingent liabilities, the key question is if the continued protection of the naira through regular dollar injections is the best and sustainable. This is also the case with the current federal revenue sharing approach where dollar receipts are replaced most of the times with freshly printed naira before sharing to the three tiers of government. With over 22 million Nigerians unemployed, the sixth focus of the team is to craft and implement shortterm policies that can create over 20 million jobs in four years. This might look unrealistic but it is very achievable through a deliberate rethinking of abundant job creating opportunities all over Nigeria. These include reforming of our vocational and apprentice system, partnering with the private

sector to change our sports and housing sectors through innovating solutions to reduce our 16 million housing units’ deficit, upgrading our postal system and constructing of artificial lakes to revolutionise agriculture and even address the farmer-herdsmen crisis and support ranching even in very dry regions of Nigeria. Seventh is to think and clearly identify Nigeria’s areas of comparative advantage. As Nigerians in diaspora contributed over $25 billion in 2018 and set to contribute higher in 2019, there is a need for a strategic rethinking of how to effectively harness and expand the opportunities from diaspora especially with the increasing global demand for skills and talents. The eight focus is on AfCFTA. With our unprepared signing, it will be very important for the economic team to critically review our (un)preparedness and clearly map out strategies that will ensure that we are not disadvantaged. With Ghana voted to be the headquarters of AfCFTA and Africa’s aviation hub, it is clear that we are already losing out. However, with issues such as the rules of origin and non-tariff barriers yet to be resolved, the economic team must ensure that our big market size of about 200 million people is not further exploited. As a holistic examination of the above issues and more are beyond the remit of the cabinet and must be urgently addressed to avoid a fiscal crisis, the need and urgency for an effective economic team cannot be over-emphasised.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

The Gokada-ORide turf war: Lessons in non-compete clauses

“J

oel, they don’t know what is going to hit them” said Ayo (a pseudonym). He continued, “When ORide is done with them, Gokada will delve into another kind of business”. Ayo made these statements late June while we were having a conversation on “this new ORide guys”. I was sure he was not mincing words because a very close relative of his worked as an executive at Paycom Nigeria Limited (popularly known as ORide or OPay). Ayo informed me that this person had let him in on the strategy of ORide. In an article, “Is ORide behind Gokada’s shutdown of operations?” Nairametrics, a business news site, observed that about four senior management staff of ORide had worked for Gokada. Nairametrics found that ORide did not only poach Gokada’s staff but, “…That riders of Gokada left the bike-hailing pioneer for ORide after the latter offered them better payment package.” This better payment package involved offering new riders between N35,000 and N36,000 to join ORide. The incentive is reported to have triggered a migration of riders from Gokada to ORide, aiding the company to meet demand during its promotional run in June and July 2019. This move by ORide appears to have identified a loophole in the employment contract of Gokada (especially its management staff ) – the absence of non-compete clauses. The episode considered entirely may also raise issues around confidentiality and non-circumvention, but this article will focus on non-compete clauses. According to Investopedia, non-compete clauses are provisions in an employment

agreement which proscribe an employee from entering competition of any kind with an employer after the employment period is over. The clause can also prohibit the employee from revealing proprietary information or secrets to any other parties during or after the employment term (confidentiality clause). The clause specifies a period of time during which the employee is barred from working with a competitor after he or she ends employment with the employer. Non-compete clauses are specie of restrictive covenants which are used across several business transactions. Non-compete clauses can also be included in contracts with contractors, and consultants. Essentially, a non-compete clause helps a business to retain its business secrets and gives it an edge over competitors. For first movers or companies that are pioneers like Gokada, non-compete clauses are very important and increase the likelihood of their continued dominance and monopoly. Unfortunately, this first mover advantage may also have been Gokada’s flaw as they may have omitted or felt there was no need to include a non-compete clause in their contracts. The troubles of Gokada and Max.ng (even Jumia Food is not left out according to Nairametrics) in dealing with the aggressive actions of OPay is instructive for lawyers advising startups/businesses (especially pioneers). The advice is simple: bind their employees, especially mid-level and senior level employees who may have unfettered access to business secrets and information using non-compete clauses.

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Another point to note is that startups/ businesses may have investors who have the financial muscle to replicate and execute the organisation’s business. To deal with this, shareholders/investors can also be bound by non-compete clauses in the. Kelly Santini, a Canadian law firm, observes that, “Most shareholders of a business will have detailed knowledge of the company’s intellectual property and trade secrets, business plans as well as relationships with key stakeholders and access to customer lists.” They advise that non-compete clauses in shareholders’ agreements protect and benefit all the shareholders by preventing any of them from using insider information to start a rival business or contribute to a direct competitor. They also advise that, “…A majority shareholder looking to grow the business by bringing in new partners should use a non-compete clause to protect the value they have built in the business and its long-term prospects. Likewise, anyone buying out a majority shareholder will want to ensure the former owner cannot set up a competing shop upon their exit.” Finally, what should be the consequence of breaching a non-compete clause? Generally, in cases of breach of contract, a claim can be made for damages in a court. More importantly, Oluwafemi Ojosu, a lawyer, suggests that the penalty for the breach of a non-compete clause should be prohibitive. He advises that in providing for penalties resulting from breach, the respective agreement should provide that the breaching employee or shareholder pay a compensation

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JOEL JOSHUA (to be determined by an independent expert within the relevant industry) to the wronged business which will include all of the wronged business’ investments and reasonably projected profit for the duration the non-compete clause was supposed to subsist as a full and final settlement of all liabilities arising as a result of the breach. Meanwhile, while inserting non-compete clauses in agreements, businesses must be careful not to insert clauses that may be considered punitive and overly prohibitive by the court. The court frowns at restrictive covenants that stretch over a very long period and which impose overly punitive penalties for breach. Meanwhile, I like Gokada’s strategy of stepping back to put their act together and come back stronger (which we expect). If the other part of what Ayo told me is true (which is that the main aim of Paycom/ORide is the adoption of their wallet for everyday financial transactions – a more broad-based end rather than Gokada’s bike-hailing-focused business model, then I believe Gokada can ride out the current wave with perseverance and their planned improvements. I wish them well.

Joshua is the Managing Partner of the law firm Primus Law Partnership. He can be reached via joel@primuslp. com

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Wednesday 28 August 2019

BUSINESS DAY

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How FG’s FX ban on food imports will squeeze Nigerian consumers …will pay more for bread, noodles, semo among others …food inflation to spike JOSEPHINE OKOJIE

n Isawo town of Ikorodu Local Government area of Lagos state is a small shop belonging to Fatima Adegoke a 49 years old widow and a mother of five. Challenged by the harsh economic situation in the country and the sudden death of her husband, Fatima who is a seamstress could barely feed her family as she earns hardly enough income to support them. Her and her children feed twice daily on mostly wheat based food products to survive. “My children feed only twice a day because it’s being really tough for me. I struggled to provide them with bread or noodles they eat daily before going to school,” Fatima says. Nigeria is now the headquarters of poverty as 98 million of its population lives below poverty line, according to the World Poverty Clock recent data. Fatima, like most Nigerians who feed daily on what they can find to satisfy their hunger needs, has been driven by poverty to consume a single staple food-which cannot provide the essential vitamins and minerals for a healthy living especially for her children’s development. Now, they will have to pay more for such food products as the Federal Government has ban FX for importers of food items. Bread, biscuits, noodles, semo and spaghetti among others are all made from wheat and Nigeria imports 90percent of the commodity for the production of other food items.

Traders and buyers at Mile 12 Market in Lagos

With the FX ban, importers will have to source their dollars outside the official window at a higher cost to import ; this translates to higher cost of production which will be transferred to the consumers. Experts say the policy would worsen the countr y’s food insecurity and add more items to the list of things priced out of the reach of millions of Nigerians while accelerating Nigeria’s food inflation rate currently at 13.35percent. “Banning FX to importers of food will translate to increase in food prices and the consumers are the worst hit as we do not currently grow enough food to feed our people and industries,” said an economist who does not want his name mentioned on print. “Most of our agricultural products that manufacturers’

make use of in production are not price competitive as imported ones are cheaper. The manufacturers would have to transfer that extra cost to the consumers of their products” he said. Nigeria is populated by 200 million people who must be fed with staple foods including yams, rice, cassava, beans, plantains and tomatoes. H o w e v e r, t h e r e i s a n increasing demand-supply gap in most of the staple foods, even as the population growth rate stands at 2.6 percent per annum. Nigeria’s population is projected to surpass the 300 million mark by 2050, according to The World Population Prospects 2017. The country imports wheat, rice, tomatoes, mangoes, fish, and pineapples among others to meet up with the short fall. The FX restriction for importers

of some of these food items has fuelled smuggling across the country’s porous borders. Nigeria had in 2016 placed an FX ban on a list of some 43 items of which about half accounts for some food items among which are rice, vegetables, poultry products, turkey, palm oil, tomato paste and palm oil among others. Since the ban on rice imports, the country is still struggling to stabilise local production as the policy has enriched Benin Republic. Foreign variety of rice has continued to gain access into the Nigerian market through smuggling at a higher cost for consumers despite the ban, forcing many small businesses to close shop. “We need to worry about the implications of polic y pronouncements for investors’ confidence and the general

sentiments of investors. We need to worry about the signalling effect,” said Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI) in a statement to BusinessDay. “If policy and regulatory risks continue to escalate as we are currently experiencing, the chances of stimulating investment, whether domestic or foreign, would remain dim,” Yusuf said. He added that the current forex policy conceptualisation and management are adversely impacting investment in the country. Also speaking, Temitope Oshikoya, CEO, Nextnomics Advisory said “the Federal Government efforts should focus should on increasing FX supply by looking at boosting productivity and not focusing on its demand.”

Kwara urges banks to give long-term credit to agribusinesses SIKIRAT SHEHU, Ilorin

he Kwara State government has called on the Chartered Institute of Bankers of Nigeria (CIBN) to provide long term credits to agribusinesses in order to spur growth and development in the country. Kayode Alabi, the state deputy Governor made the call recently in Ilorin during a courtesy visit by a delegation from the institute led Anabe Abdulsalam, chairman of Kwara state chapter of the organisation.

Alabi acknowledge the crucial role financial institutions play in the economy, saying that the CIBN Kwara chapter is interested in the growth and development of the state. He urged the banking institution to provide more long term financing for the agricultural sector which the state has a comparative advantage in its production. “We believe the way out of poverty in Kwara is through farming and we need the banks to be creative and encourage people www.businessday.ng

to bank with their money,” he said. According to him, with adequate long term financing, farmers in the state will boost their productivity and expand their production areas. The deputy governor advised the institute to come up with a single digit loan plan that would enable farmers and other small scale agribusinesses scale. While pleading for support and cooperation with the present administration and the institute, Alabi noted that kwara could also replicate the rice farming system

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in Kebbi State if Banks were ready to give maximum support to farmers. He expressed believe that the state could feed the nation with the right support and encouragement from the financial institutions among others. Alabi charged members of the Institute not to collaborate with fraudsters and penalise Bank officials that help with financial frauds to holistically end corruption in the Country. In response, Anabe @Businessdayng

Abdulsalam, chairman of the Institute, says the visit of the institution was to congratulate and identify with the new administration as well as to pledge willingness to support growth and development in the state. Abdulsalam described the banks as managers of resources and as a custodian of economic development, while saying that the institute would continue to advise the government on policies that would bring the dividend of democracy to the people of the state.

Wednesday 28 August 2019

BUSINESS DAY

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$3bn ginger market creates opportunity for Nigerian growers, processors JOSEPHINE OKOJIE

i g e r i a n farmers can tap into the $3billion global ginger market to earn foreign exchange as the country explores opportunities to grow its non-oil export. G i n g e r, o n e o f t h e most widely used food seasonings in modern diets could play a vital role in earning substantial dollars for the country as local and global demand for the crop continues to rise It is a crop that is largely grown in Kaduna, Nasarawa, Benue, Niger, Gombe and Kano state. It serves as a byproduct to numerous food and beverage industries and used for the production of ginger wine and food seasoning in most Asia countries. “There is a great export oppor tunity in ginger production for the country. Nigeria has one of the best

flavoured varieties globally,” said AfricanFarmer Mogaji, chief executive officer, X Ray Farms Consulting. “The $3billion global market is an opportunity that farmers can tap into, especially now that the country is in need of growing its export,” Mogaji said. He stated that for the country to increase its production of the ginger

c ro p, t h e g ove r n m e nt must support farmers to enable them expand their production areas and boost productivity. Ginger is one of the most widely used food seasonings in modern diets. It is actually part of the plant family that includes turmeric cardamom that has huge health benefits. Ginger can be consumed in different forms which

First Bank to promote opportunities in agric value chain at summit

irst Bank, Nigeria’s premier and leading financial ser vices provider has announced plans to hold its 2019 Agric Expo aimed at promoting opportunities across the various value chains in the sector. The annual expo launched in 2017 provides the leading national discourse on sustainable agriculture value-chain as a substantial source of Nigeria’s economic development, improved contribution to her balance of tradeaswellasforeignexchange. The summit themed ‘Agricultural Value Chain – Spotlighting Opportunities and Managing Risks’ is schedule to hold on Friday 30 August, 2019 at Eko Hotel and Suites in Victoria Island Lagos and would have Professor Benedict Oramah, president, AFREXIM Bank as the keynote speaker. “In the last 125 years, m o re t h a n a n y o t h e r financial institution, we have played a key role in financing

different sectors of not just the Nigerian economy but other economies in subSaharan Africa,” said Adesola Adeduntan, CEO, First Bank of Nigeria Limited, while expressing his delight on First Bank’s leading role at not just promoting Agriculture but diversifying the Nigerian economy, s “As Nigeria expands opportunities in its nonoil sector – especially Agriculture – we remain committed to the growth of the agricultural sector and its contribution to the nation’s Gross Domestic Product,” sAdeduntan said in a statement. He said that the banks consistency in convening the summit is a demonstration of its commitment in building the country’s agribusiness economy that is capable of delivering sustainable income and employment opportunities while meeting food security targets. Besides the plenar y session, the expo will feature www.businessday.ng

three masterclasses with indepth analysis on specific areas of agr ibusiness, facilitated by enterprising Subject Matter Experts (SMEs), the bank said in a statement. The masterclass facilitators include; Leonard Anyanwu, group executive director, Saro International Limited; Segun Ogunwale, team lead, Kominity Digital and Bamidele Ayemibo, managing director, 3T Impex Trade Centre, who will provide insight, as well as, share success stories and experiences. The 2019 edition would host over 600 delegates and over 60 exhibitors to display the latest technology in farm equipment, tools and machineries, as well as, packaged finished a g r i c u l t u r a l p ro d u c e, logistics and supply, thereby keeping the participants and sundry agribusiness practitioners abreast with new opportunities in the Agricultural industry.

include in powder form or in fresh - peeling before consumption. The plant is used as a spice and a major ingredient in a wide array of dishes. Powdered ginger is used in the production of flavour which is utilised in a variety of recipes such as cakes, cookies, bread, crackers, ginger ale, and beer. Its root is used as raw material in manufacturing

health products, drinks and by bakery industry. N i g e r i a’s g i n g e r production is put at 31 million metric tons while demand is put at 65 million MT, leaving a supplydemand gap of 34 million MT, according to data from the Ministry of Agriculture. The country exports majority of its ginger which makes Nigeria the third highest exporter of the crop globally. Despite the potential in the production of the crop, the country is yet to fully harness the economic benefits from growing ginger, on account of low quality seeds and low use of technology, say farmers. “Most ginger farmers are not using tractors and other machines for land preparation. This is hindering our ability to increase our ginger production because farmers cannot increase their farming areas owing to the huge manual labour involved but with tractors we

can farm on a larger scale,” said Zackari Mohammed, a ginger farmer in Kastina. “We are still using local knife to split harvested ginger rhizomes but in China and India there is a machine for that. We lack modern processing machines for washing, peeling, splitting and drying kilns. “Getting quality seeds is also a major issue for us farmers. It is difficult to get quality ginger seeds and most of the seeds in the country are of low quality. These are some of the reason why we are yet to increase our yield per hectare. He stated that the demand for the country’s ginger is increasing yearly but the production to meet up with the huge demand has been stagnant. This shows that there are opportunities for investors who would want to invest in seeds and in the provision of easy fabricated machines in splitting the harvested ginger rhizomes.

Makinde charts way for Oyo agriculture

... as IITA, AfDB hail governors vision on agric REMI FEYISIPO, Ibadan.

overnor Seyi Makinde and state officials as well as experts were at Cotonou, Republic of Benin recently to chart a path for transforming agriculture in Oyo State. At a retreat, the governor led stakeholders across various value chains in the state to design an implementation plan for agribusiness for the pacesetter state. The governor promised officials of the state that his administration will give agriculture the necessary ‘political will’ to play its role in transforming the economic fortunes of the state. “I want to assure all that Oyo State will provide the political will needed to make the state the agribusiness hub of Nigeria,” he said. wHe said the state would ensure agribusiness-friendly policies that would boost investor confidence. Kenton Dashiell, deputy director-general -partnerships for delivery, I I TA c o m m e n d e d t h e governor for demonstrating an uncommon leadership style by participating in all

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the sessions of the three-day retreat. “I have never seen such a commitment from a governor… and I believe the document coming out of this retreat will help the state to achieve the vision of an agribusiness hub for Nigeria,” he added. O n h i s p a r t, Ma r t i n Fregene, director for agriculture and agro-allied division with the African Development Bank (AfDB) said the commitment of the state to agriculture was a step in the right direction. “Let me also commend the governor of Oyo for organizing this very important meeting and participating fully in it to have a vision and an implementation plan for agribusiness in the state,” he said. Fregene urged the state government to adopt the agri@Businessdayng

business approach to unlock the potential of agriculture in the state. “For Oyo state to move forward in agriculture, you must treat agriculture as a business,” he explained. According to him, AfDB would be willing to support the state in its quest to transform agriculture. Adebowale Akande, executive adviser to the Governor on Agriculture gave thumbs up to the retreat, adding that recommendations from the retreat would help the state to achieve its vision of becoming an agribusiness hub The retreat had four sessions comprising: Developing a vision for the state in agriculture, identifying the obstacles to the vision, developing strategic actions to deal with the obstacles to the vision, and developing an implementation plan.

Wednesday 28 August 2019

BUSINESS DAY

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Wednesday 28 August 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

CONSTRUCTION

Construction firms see tough mid-year as margin weakens, cost bites ISRAEL ODUBOLA

igerian publicly-listed companies experienced an awful mid-year 2019 as players reported lower margin largely driven by significant jump in production and operational costs. The construction industry in Africa’s most populous country is one of the most vibrant in the continent. But industry players especially the indigenous ones are struggling to stay afloat in Nigeria’s tough operating environment characterized by intense competition and limited prospects for business growth given the slow pace of economic expansion. The players – Julius Berger (JB) and Arbico posted weaker profitability footing on the heels of higher cost. The combined direct cost of both companies nearly doubled to N104 billion in half-year 2019, representing 87 percent increase over N56 billion recorded a year earlier. “The current state of the economy underscores the unimpressive performance of the sector,” said Emmanuel Noko, senior economist at M&C Research Institute. “The fortunes of the sector are tied to stronger oil prices and faster economic growth. These are what give impetus to fund more capital projects by government.”

Noko added. While Julius Berger, the biggest listed player in the industry by market value, saw net income climb 9 percent higher to N2.8 billion in the six months through June 2019, from N2.6 billion a year ago, Arbico incurred N38 million net losses, after posting N71 million profit

last year. The net margin of Julius Berger slumped to 2.2 percent mid-year 2019 from N3.6 percent last year, while Arbico reported a loss margin of 1.4 percent compared with 3.3 percent in half-year 2018. Meanwhile, direct cost margin of JB and Arbico

trended to 77 percent and 82 percent respectively in halfyear 2019, from 74 percent and 80 percent last year. Industry players say construction companies have been grappling with higher costs since the naira was devalued in 2017 which has led to a spike in the cost of importing building materi-

als to the country. “The cost of construction in Nigeria is one of the highest in Africa. This is even because over 65 percent of materials are sourced abroad,” Damilola Ijalade, a broker at DEE Property Consult said. This implies that a weakening naira translates to a higher burden for construction firms purchasing raw inputs abroad. The Nigerian construction industry is dominated by foreign players like Cappa & D’Albterto, ITB and CCECC, who keep getting bulk of government contracts, leaving the ‘powerless’ indigenous ones with crumbs to feed on. There have been downsides to this as these companies have been known to import resources and even skilled labour as opposed to using local manufactured

resources and promoting local content and promoting local content. Although currency devaluation and economic downturn of 2016 impacted private sector investment, public spending on infrastructure has surged in recent years and expected to rise in short to mediumterm. Cash-strapped Nigeria is financially incapacitated to close the country’s huge infrastructural gap estimated at N3 trillion and this has prompted fiscal authorities to borrow cash from the private sector. In addition to series of bond issuances that should ease budgetary constraints and boost capital spending, fiscal authorities have resorted to private-public partnerships to deliver big-ticket projects, which should keep the industry on the path of positive growth going forward. The construction has been on a positive growth trajectory for three straight quarters through the first three months of 2019 when it grew 3.2 percent outperforming the broader economy that expanded some 2 percent. The implementation of the 2019 fiscal budget coupled with Buhari-led administration’s commitment to fix decrepit infrastructures hurting businesses and investment, these experts expect to help accelerate growth going forward.

TECHNOLOGY

Apple sheds $44billion in value as US-China trade spat heats up OLUFIKAYO OWOEYE

aught in the middle of a trade war between US and China, World’s most valuable company, Apple, shed $44 billion in market value after a couple of Beijing and Washington pronouncements cast a spotlight on its huge Chinese manufacturing base, from which almost all iPhones in the world are produced.

Donald Trump, US president advised American companies to immediately start looking for alternatives to manufacturing in China. In early August, Donald Trump, US President, tweeted that he would impose a 10percent tariffs on Chinese goods worth $300 billion. These included consumer electronic goods like smartphones. Apple stock fell close to 10% in the first three trading days of this month follow-

ing this announcement. Apple shares again fell on August 14 after the yield curve inverted for the first time since 2007, fuelling recession fears. Apple stock has currently lost 4.5% in August 2019. Despite the recent pullback, shares have gained 30% year-to-date. Though Apple shares are trading 12% below its year-long high, the stock is up 20% since the start of 2018, outperforming broader indices.

Apple’s main assembly partner, Foxconn Technology Group, has claimed that it has the capacity to build all of the Cupertino company’s U.S.-bound iPhones outside of China, however, all indications are that to deploy it would require a great deal of time and money. Apple’s stock price took two big hits on Friday in the wake of the latest tariffs announcements. The president’s comments were followed hours

later by tweets declaring that the US would increase the rate of existing and impending tariffs on Chinese goods. Trump’s moves were in response to an earlier announcement that China was planning to impose tariffs on $75 billion of U.S. imports. People familiar with iPhone production said that it is nearly impossible to relocate manufacturing of Apple’s iconic device in a wholesale manner due to

the difficulty of procuring a skilled labor force elsewhere, a point that Apple CEO Tim Cook has hammered away at in public as well. The challenges of replicating the complex production lines and necessary infrastructure are also major hurdles. Since iPhone debuted in 2007, Apple’s sales have jumped 10X. It also became the first public company to ever achieve a trillion-dollar valuation.

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

Wednesday 28 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

MARKETS

Domestic transaction sees biggest fall in 5 years DAVID IBIDAPO & GBEMI FAMINU

ot motivated by economic policies and the need to safe guide investment value as Nigeria equity market continues bearish trend, domestic investors’ transaction records biggest decline year on year in the last five years. Trend analysis over the last 5 years has shown that total domestic transaction in the month of July on the exchange slumped by 49 percent when compared with levels in the corresponding period of 2018. The decline in transaction was fuelled by sell-offs undertaken by retail investors dumping N13.10 billion worth of investments against exposure of N12.34 billion in the stock market for the period. According to the NSE monthly foreign portfolio transaction for the month of July, total domestic transactions decreased significantly by 72.22 percent from N200.51 billion in June to N55.69 billion in July. This is the biggest decline recorded so far in the year 2019. Analysts fear that going

forward we may see history repeat itself as in the case of 2016 when the country entered into a recession and saw domestic involvement in the market dipped 28 percent in value to N49.51 billion in July from N63.36 billion in 2015. “Outlook for the equities market remains subdued as we believe that the on-going trade spat between US and China which has raised concerns of a slowdown in the global economy will continue to inhibit foreign investors’ appetite for risky assets in emerging economies,” a report by CSL stated. Domestic investors’ dampened appetite in the stock market especially that of retail investors is believed to be driven by unimpressive corporate earnings from many consumer goods companies such as Unilever Nigeria, Dangote Sugar, and Dangote Cement. BusinessDay’s observation of Unilever’s H1 financials shows that the company’s turnover declined marginally by 1 percent having N10.5 billion in 2019 from N10.6 billion in 2018 while Dangote cement recorded a 5 percent decline in its revenue from N344 billion to N328 billion, Dangote

sugar recorded a drop in its revenue as well by 4 percent sliding from N84 billion to N80.3 billion This according to CSL report is coupled with weak appetite for risky assets, owing to trade tensions between China and U.S which continues to stoke fears of an impending global recession Specifically for Nigeria, the positive correlation between oil prices and stability in exchange rate makes the country extremely vulnerable to external shocks. Also triggering selloffs amongst foreign investors is the fear of losses when positions are revalue on the back of strengthening dollars against the naira as this has been the case since 1995. On Monday, equities market opened the week on a bearish note as the All Share Index declined 39 basis points to 27,691.85 index points due to sell-offs in Seplat (-10.0%), CCNN (-6.0%) and international breweries (-8.7%). As a result, investors lost N52.7 billion as market capitalisation fell to N13.5 trillion and YTD loss worsened to -11.9 percent.

TELECOMS

AFC approves $230m lifeblood for 9mobile SEGUN ADAMS

$230m loan approved for 9mobile by the African Finance Corporation (AFC) would provide the mobile network with the opportunity to return to winning ways, as efforts of the company’s new management towards a turn-around become promising. The Board and Management of the Emerging Markets Telecommunications Services Limited (EMTS), doing business as 9mobile, announced over the weekend that it would deploy the loan facility to honour existing debts, finance its costs and invest in growth. The loan will be divided into two tranches to repay historic vendor obligations, finance costs and an interest

reserve account and payment towards quick-win capital expenditure initiatives, the company said in a press statement. In addition, management of 9mobile promised to return the company to growth and profitability through cost efficiency, innovative product development and network efficiency. 9mobile, formerly called Etisalat Nigeria, is presently Nigeria’s fourth-largest carrier with a subscriber base of 15.97 million as at June, which is 9.19 percent share of the GSM market. The operator, however, is seeking to regain lost grounds having held up to 14 percent of the market with a subscriber base of 20 million as of July 2017. Under the weight of a $1.2 billion debt two years ago, 9mobile parted ways with its

United Arab Emirate operator, Etisalat, which had to sell its 45 percent stake in the Nigerian business to open the way for new investors in the local mobile network company. The mobile carrier had in 2013 obtained a 7-year US$1.2 billion syndicated facility from 13 lenders including Access, FCMB, Zenith, UBA and Union Bank, to refinance existing obligations and fund network expansion. But luck ran out on thethen Etisalat Nigeria when economic slowdown and a currency devaluation, it said, crippled ability to honour the repayment scheme forcing lenders classified as nonperforming in 2017.

L-R: Destiny Adedeji, head of sections, social mobilisation, Alimosho LGA, Lagos; Oluwabunmi Oteju, director, State Universal Basic Education Board, representing the executive chairman, Lagos State; Elizabeth Ogunmola, head teacher, Abaranje Primary School, Okerube Abaranje,Ikotun , Alimosho LGA; Angela Omo-Dare, head, country legal services, Stanbic IBTC Holdings Plc, and Alamu Mojirade, the education secretary, Alimosho LGA, Lagos State, at the Stanbic IBTC handover of modern toilets, septic tank and borehole built for Abaranje Primary School II, Abaranje, Ikotun, Alimosho LGA, Lagos State. Pic by Pius Okeosisi

L-R: Victoria Onuoha, sectorial executive, pharmaceuticals; Joseph Emoleke, assistant director, fields service; Laura Ainah, personal assistant to president, all of Manufacturers Association of Nigeria; Kunle Oyelana, new managing director, GSK Nigeria; Mansur Ahmed, president, Manufacturers Association of Nigeria; Mabel Michael, personal assistant to director general, MAN, and Omongiade Ehighebolo, director, communications and government affairs, GSK Nigeria, during a courtesy visit by GSK to MAN office in Lagos

R-L: Segun Oni, area sales manager, Friesland Campinawamco; Nwagu Pauline, chairperson, St. Mary Catholic Church Nnodo Abakaliki; Cecilia Nwankwegu, president; Onyibe, Elizabeth secretary, and Jovita Okemini, ward leader, during the Three Crowns August meeting at St.Mary Catholic Church Nnodo Abakaliki, Ebonyi State

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COMPANY RELEASE

Heritage Bank, Ha-Shem Academy partner to sponsor children for summer technology programme IFEOMA OKEKE

eritage bank, a leading financial institution in Nigeria has partnered Ha-Shem Academy to organise Summer Technology Bootcamp Programme, a summer holiday programme for children and teens focused on equipping children. This programme is said to be targeted at children and teens because they are the future with relevant cre-

ative and technological skills needed to excel in this fastgrowing and ever-evolving technology world. To show support to this cause, Heritage Bank Nigeria, set out to sponsor 20 children from Lagos State Government Schools in District One, to attend the 2019 Ha-Shem Academy Summer Technology Bootcamp Programme. In a statement by the academy, it stressed that Heritage Bank Nigeria holds a vision to deliver distinctive

financial services, building on its legacy of innovation and partnership to create, preserve, and transfer wealth across generations, and this vision is highly reflected in its partnership with Ha-Shem Academy to invest in the younger generation ensuring that they have equal opportunity to learn and develop innovative solutions that solve problems and build a better nation.

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L-R Timi Dakolo, singer/songwriter; Bunmi Adeniba, marketing director, Unilever Ghana Nigeria; Onyeka Udokogu and Chinenye Udokogu, parents of the Pears Baby of the year 2019; Kamgharida Harvey Udokogu, wnner Pears baby of the year 2019; Dakore Egbuson-Akande, actor; Adetoun Adegbite, category manager, skin care, Unilever Nigeria Plc. at the Pear baby of the year 2019, Grand finale.

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Wednesday 28 August 2019

BUSINESS DAY

cityfile Edo spends N300m on Libya returnees IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

Commissioner of Police, Oyo State, Mr Shina Olukolu (R), parading suspected criminals for allegedly stealing 410 pieces of new portable generator valued at about 40 Millions a Press conference by Oyo State Police Command headquarters Eleyele in Ibadan on Monday. NAN

Police dismiss 3 officers over theft of AK 47 rifles in Edo IDRIS UMAR MOMOH, Benin

h re e p o l i c e o f f i c e r s a ttached to Edo State security outfit, codenamed “Operation Wabaizigan” has been dismissed from service for alleged conspiracy and stealing of two AK 47 rifles belonging to the Nigeria Police. The officers now remanded in prison custo dy w ere alle g e d to have committed the

offence at Obodo Guest House, Uwasota Road, Ugbowo, Benin city on July 17, 2019. The three officers are Uzor Emmanuel, 34, Akharamen Mic h a e l , 3 1 , a n d Ji m o h Halilu, 27. The officers are facing a three -count charge at the state high court, Benin. Peter Ugbumba, prosecution counsel said the offence of the o f f i c e r s c o n t r av e n e d section 390 (6) (9) of the Criminal Code Act

C a p c 3 8 Vo l . 4 , a n d Section 3 (1) of the Robbery and Firearms (Special Provision) Act C a p R 1 1 L aw s o f t h e Federation of Nigeria 2004. Ugbumba said the three defendants as former police officers attached to Operation Wabaizigan, Edo State Government House, Benin did steal two AK 4 7 r i f l e s w i t h B re a c h N o’s , 1 1 4 7 9 w i t h twenty-five rounds of l i ve a m mu n i t i o n a n d Breach No, 05766 with

nine rounds of live ammunition valued N1.77 million property of the Nig e r i a Po l i c e Fo rc e, Edo State Police Command. He averred that the defendants, with intent to felonious and heinous crimes to wit armed robbery, kidnapping, murder among others did intentionally, knowingly and unlawfully kept in their possession and control the two AK 47 rifles with the live ammunition.

Abia: Man arrested for forging government revenue documents UDOKA AGWU, Umuahia

he police have arrested one Uche Livingst o n Nz u b e c h i of Ohuhu Nsulu in Isiala Ngwa North local g overnment area, for alleged fraud and forger y of Abia state government revenue documents. Ene Okon, the Commissioner of Police

(CP) in charge of Abia command, while parading the suspect in Umuahia, the state capital, said that Nzubechi was arrested for reportedly forging docu m e nt s o f Ab i a St at e Board of Internal Revenue and using same to defraud unsuspecting Abia indigenes residents and companies, including of several millions of naira. The CP said that the suspect’s accomplices www.businessday.ng

have also been arrested and vital ex hibits involved in the crime recovered from them. He assured that the suspects would be arraigned in court as soon as investigation in the case is concluded. Answering questions f ro m j o u r n a l i s t s, t h e principal suspect, Nzubechi, 32, who claimed to be a second year law student of Abia State University, confessed

using the forged documents to defraud people in Aba and its environs against the state government’s policy on revenue collection. Vital exhibits recovered from him include H p l a p t o p, D e l l l a p top, five pr inted fake re c e i p t s, l i s t o f i n d i vidual property owners defrauded, Land Rover car and bank deposit slip.

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d o S t a t e g o vernment says it has so far spent N300 million for the payment of stipends and loan to Libya returnees in the state. Yinka Omorogbe, atto r ne y- g ene ral and commissioner for justice, Edo State, disclosed this to journalists in Benin, on Monday. According to Omorogbe, who is also chairperson of Edo State Taskforce Against Human T ra f f i c k i n g ( E TA H T ) , the amount was spent between 2017 and 2019. Some returnees, he said, received as much as N700,000 per head

in addition to cash also given to them by the International Organisation of Migration (IOM). Sh e s a i d a t o t a l o f 4,943 returnees made up of 3,329 males, 1,400 females and 214 children had since been received in the state just as she decried that over 50 percent of human trafficking originates from Edo. The commissioner disclosed that majority of those trafficked were from Uhumwode, O rh i o n mw o n a n d I kpoba Okha local government areas all in Edo South senatorial district. She her agency is currently handling 12 cases in court while nobody has been convicted so far.

60 disaster cases recorded in S/South in 8 months - NEMA

a t i o n a l Emergency Management Agency (NEMA) says it recorded over 60 disaster incidents from January till date in the South-South zone of the country. Brandon Ibarakumo, N E M A’s S o u t h -S o u t h zonal coordinator, disc l o s u re a t a o n e - d a y re t re a t o r g a n i s e d f o r staff of the agenc y in Yenagoa, Bayelsa State. The coordinator listed some of the disasters in the region as flooding, building collapse, fire and tanker explosion, among others. “Disasters are indeed becoming an issue of concern worldwide. The impacts on the society are on the increase and are a major obstacle to achieving sustainable socio-economic development. Giving a breakdown of the disasters, he said 12 cases of pipeline vandalism, 12 incidents of fire and tanker explosion, 20 incidents of flooding, 30 cases of urban flooding due to none adherence to the city plans among others were recorded. Ibarakumo, however, @Businessdayng

called for more collaboration among communities, stakeholders and individuals for effe ctive and proactive disaster management, especially in the coastal towns. He restated the agency’s resolve to continue to create awareness across communities in the zone and urged the staff to be more dedicated in the course of discharging their duties. Ibomoh Opukeme, a f a c i l i t at o r a n d l e ct u r e r i n t h e D e p a r tment of Psychology, N i g e r- D e l t a U n i v e rsity, Wilberforce Island, Bayelsa, called on staff of the disaster management agency to more in ameliorating the pains suffered by victims of natural disasters. C l e v e r I k i s i k p o, a participant, said the retreat was a welcome development and urged the agency to make it a regular event. The retreat entitled “re-engineering the agency for effective and proactive disaster management” was to chart a way forward for NEMA in the discharge of its duties.

Wednesday 28 August 2019

BUSINESS DAY

Wednesday 28 August 2019

BUSINESS DAY

Photo Splash

2019 BusinessDay CEO Apprentice An Entrepreneurship Program for Teenagers

Emeka Okoye (r), semantic architect/knowledge engineer, Cymantiks Limited, addressing the Participants, Frank Aigbogun, publisher/CEO, BusinessDay Media, giving his remarks during their visit to Rise Labs in Lagos

Oghenevwoke Ighure (l), executive director, strategy, innovation and partnerships, BusinessDay; Linda Group 1 (TUFAFI) Fashion, during their pitching session Ochugbua (r), digital sales manager, BusinessDay; Toyosi Akerele-Ogunsiji (m), founder/CEO, Rise Networks, and others at the participants visit to Rise Labs in Lagos

Group 4 (NUTRIX) Food and Hospitality, during their pitching session

Group 5 (EVERYTHING MEDIA) Media, during their pitching session

Frank Aigbogun (2nd r), publisher/CEO, BusinessDay Media, with other Judges, at the prize presentation to the participants in Group 2 (Modern Green Homes) winner of the 2019 BusinessDay CEO Apprentice.

L-R: Abosede Alimi, director, strategy, fundings and stakeholder management, Lagos State Employment Trust Fund (LSETF); Ireayo Oladunjoye, executive assistant, LSETF; Frank Aigbogun, publisher/CEO, BusinessDay; Toyosi Akerele-Ogunsiji, founder/CEO, Rise Networks; Gbenga Omolokun, chief operating officer, VFD Group; Obi Asika, chairman/co-founder, Social Media Week; Seni Sulyman, vice president, global operations, Andela, and Bilikiss Adebiyi-Abiola, GM, Lagos State Parks and Garden Agency (LASPARK), all Judges at the grand finale of 2019 BusinessDay CEO Apprentice.

Parents of the participants at the pitching session

Rotimi Okungbaye (r), media associate, Andela, addressing the Participants, during their visit to Andela Office in Lagos

Group 2 (MODERN GREEN HOMES) Housing and Real Estate, during their pitching session

Group 6 (GREEN FARM TECH) Agriculture, during their pitching session

L-R: Chinasa Ken-Ugwuh, former senior programmes manager, Africa Initiative for governance; Omowunmi Martins-Onimole, head, marketing and branding, Andersen Tax Nigeria; Ezeji Ebuka, head, digital communications, Signal Alliance; Ayowande Aduwo, business liaison officer, FCMB (UK) Limited, and Thelma Osadebay, CEO, SPAC Initiative, Africa lead, some of the speakers at the 2019 BusinessDay CEO Apprentice- an entrepreneurship program for teenagers in Lagos. Ebere Ukoh (l), marketing intern, Andela, addressing the Participants, during their visit to Andela Group 3 (WHITE PEAR) Education Technology, during their pitching session Office in Lagos www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng

Pictures by David Apara

Group 7 (ONFIT) Technology, during their pitching session www.businessday.ng

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Wednesday 28 August 2019

BUSINESS DAY

MARITIMEBUSINESS SHIPPING

LOGISTICS

MARITIME e-COMMERCE

Nigeria imports more PMS than other products, as volume hits 5.61bn litters in Q2 - NBS AMAKA ANAGOR-EWUZIE

remium motor spirit (PMS) is currently topping the chart on the volume of refined petroleum products imported into the country, as a total of 5.61 billion litres of PMS was brought into the country in the second quarter of this year, the National Bureau of Statistics (NBS) report, has stated. According to the report, automotive gas oil (AGO) followed in volume with 1.38 billion litres; the Liquefied Petroleum Gas (LPG) was the third-highest with 354.70 million litres, and aviation turbine kerosene (ATK) was the fourth highest in volume with 131.36 million litres. Base oil became the fifth-highest product imported with 77.24 million litres. The report further revealed that bitumen is the sixth with the volume of 41.79 million litres; low pour fuel oil (LPFO) took the seventh position in terms of volume with 27.68 million litres while Household

kerosene (HHK) appeared to be the least refined product that was imported into the country in the quarter under review, with 12.22 million litres. In terms of state-wide distribution of truck-out volume, the report showed that 5.18 billion of PMS; 1.28 billion litres of AGO;

131.42 million litres of HHK; 176.14 million litres of aviation turbine kerosene, and 157.29 million of LPG were distributed nationwide during the period under review. Speaking while presenting a separate report tagged the Nigerian Downstream Oil & Gas Industry recently released by Agusto & Co.,

Yomi Akinola, analyst with the rating agency, said the Downstream segment of the Oil & Gas industry had witnessed a lull in recent years due to import constraints and cost-unreflective pump prices- particularly for PMS, which accounts for over two-thirds of white fuel consumption.

Akinola said that the report identified access to credit from financial institutions given the weak financial condition of operators (particularly independent marketers), who are burdened by soaring receivables from the Federal Government of Nigeria under the Petroleum Sup-

port Fund programme, as another major constraint to growth. In terms of distribution and consumption, the Agusto report stated that Lagos leads in PMS, AGO, LPG, Aviation fuel consumption given the strong population in the state as well as the fact that a good number of airlines prefer to refuel in Lagos.“Rivers leads in consumption of household kerosene (HHK). This has seen significant reduction because of the increase in the use of cooking gas by people. Lagos has the largest retail outlet. Research shows that ability for operators to compete is hinged on location, geopolitical zone, city or interstate road. These are some of the things driving consumption,” Agusto report added. Akinola however said that pricing of products remained a top subject, not just in Nigeria, but globally, largely driven by demand pressures vis-à-vis the ability to refine crude oil, supply dynamics of refined products and regulatory peculiarities.

NYK shipping rolls out $255m worth of bonds Work with CRFFN to attract cargo, expert tells bonded terminal operators N ippon Yusen Kaisha (NYK), the Japanese shipping major, has concluded plans to launch bond sale in the amount up to JPY27 billion (USD 255.1 million). According to data provided by the company, the unsecured bonds would be offered in two tranches. The first tranche is for an amount of JPY 13 billion and

has a maturity of five years and it has a closing date of the issue, put at August 29, 2019. The amount of the second tranche is JPY 14 billion with a maturity period of 10 years, or until August 29, 2029. NYK recently released its financial report for the period ended June 30, 2019, in which it noted that the

company returned to the red. Namely, NYK ended the quarter with a profit of JPY 9.14 billion, compared to a loss of JPY 4.59 billion reported a year earlier. However, its revenue for the quarter dropped by 12.6 percent to JPY 406.4 billion from JPY 464.9 billion of revenue recorded in the same three-month period of 2018.

L-R: Ibraheem Olugbade, executive director, SIFAX Off Dock; Hakeem Odumosu, member, Apapa Gridlock Presidential Task Force; Kayode Opeifa, team lead of the taskforce and Celine Ifeora, deputy director, Monitoring & Enforcement, Nigerian Shippers Council, during the meeting between the taskforce and SIFAX Group’s management team, at Ports & Cargo Handling Services Limited Terminal, Apapa. www.businessday.ng

oniface Aniebonam, founder of the National Association of Government Approved Freight Forwarders (NAGAFF), has called on members of the Bonded Terminal Operators of Nigeria (ABTON) to collaborate with the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) and other freight forwarding associations in Nigeria to grow their businesses. According to him, this will ensure that cargoes are attracted to various bonded terminals that are located in Lagos. Speaking at the second annual National Bonded Terminal/Logistics Conference (ANBTLC 2019) held in Lagos recently, Aniebonam, who claimed that the seaport terminal operators starve the bonded terminal operators of cargo, said that many are closing shop due to lack of business. He urged them to leave the comfort of their offices to source for business because seaport terminal operators would not ordinarily stem cargo to bonded terminals when they are struggling on

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their part. “The contract of affreightment is very definitive. It allows the importer to determine where his/her cargo should go to. So, if bonded terminals are lacking cargo, they should enter into synergy with NAGAFF, CRFFN and other licensed Customs agents, who have the opportunity to advise their clients (importers) on the terminal to destined their cargoes,” he added. Meanwhile, Ambrose Obioma Okehi, CEO of Richword Communication and Media Services, the convener of the event, said it was de@Businessdayng

signed to bring the plight of these investors closer to the authorities by creating the needed awareness. Okehi said that as media practitioners, his firm was prompted to bring the problems of this group of investors to limelight by the role of media as watchdog of the society and agenda setter. He frowned at a situation where the government would be collecting annual fees and renewal license fees from bonded terminal owners without giving them the needed enabling environment to operate in.

Wednesday 28 August 2019

BUSINESS DAY

BANKING As Financial Action Task Force visits Nigeria in September Hope Moses-Ashike

he Financial Action Task Force (FATF) would be visiting Nigeria in September. The global body that sets standard for Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) efforts will assess banks and other financial institutions compliance with the AML/CFT measures. Consequently, the Nigerian Bureaux de Change (BDCs) are willing and ready to receive and assist the team make a success of the exercise. The BDCs sector has through long years of training and guidance been strengthened to understand the gains of compliance with the AML/CFT rules. Bureaux De Change (BDC) operators are conversant with the threats and dangers posed by Money Laundering and Terrorist Financing (ML/TF) in Nigeria, Africa and globally. The operators have therefore adopted concerted strategies to tackle the menace. The current level of awareness on the ills of ML/TF followed long years of training and capacity building provided by the Association of Bureaux De Change Operators of Nigeria (ABCON) under the leadership of Aminu Gwadabe. In many other times, the trainings are done by ABCON in collaboration with regulatory agencies and key government parastatals. With over $30.4 billion being ferried out of Africa annually, ABCON is intensifying its commitment to fighting money laundering and terrorist financing by ensuring that its members comply with regulations in doing their business. Gwadabe said the group was already equipping over 4,500 BDCs with the right technology and skills to tackle illicit financial flows within the country. He said the BDCs meet regularly with regulators, government agencies/officials and experts to analyse, monitor and identify strategies for the effective implementation of AntiMoney Laundering/Combating the Financing of Terrorism (AML/CFT) measures. The ABCON president said the BDCs will next month, welcome the FATF Mutual Evaluation team to Nigeria. The FATF assessment, he explained, was designed to evaluate the implementation and effectiveness of the laws, regulations or other measures required to ascertain the effectiveness of the AML/CFT regime. The Mutual Evaluation will equally provide information on the progress made by Nigeria in meeting its obligations towards the FATF Recommendations. ABCON has over the years established itself as a key player in the bureau de change (BDC) industry, and has also made several commitments and sacrifices to ensure that the sector continues to thrive and its members follow global best practices in the retail of foreign exchange to end users. FATF mutual evaluation and BDCs’ preparations Gwadabe disclosed that ahead of the FATF Team visit in September, the ABCON, in collaboration with the Central Bank of Nigeria (CBN) is organising a sensitisation workshop for over 4,500 licenced BDCs in Nigeria. The workshop will hold in the six geopolitical zones. Like other previous evaluations for Nigeria, the FATF team will carry out checks at the branches of selected banks and BDCs across the country, adding that compliance at the airports and land borders may also come under their scrutiny. Gwadabe said Nigeria, which has been one of the regional champions mentoring other member states in the development of their

Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria

AML/CFT systems, has largely addressed its action plan by enacting legislation to criminalise money laundering and terrorist financing. The country is also implementing procedures to identify and freeze terrorist assets and ensuring that customer due diligence requirements apply to all financial instructions. BDCs’ case of compliance, digitisation of operations Gwadabe said BDCs have met a number of compliance requirements specified by FATF and local regulators. The BDCs have conducted enhanced due diligence, a major compliance requirement on some highrisk customers. The collation and reporting of foreign currency transactions and suspicious transactions by BDCs are now fully automated. The ABCON had in February, launched its Live Run Automation Portal in Lagos. The technology automates all BDC Operations with those of Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Financial Intelligence Unit (NFIU) and the Central Bank of Nigeria (CBN) to improve the level of compliance of the BDCs with set regulations. The platform allows BDCs send their reports online real time, thereby removing the challenge of manual rendition of reports that has been confronting operators for decades. The project is also boosting the perception towards BDCs in Nigeria especially in the eyes of international investors. Gwadabe said the world is going digital, and BDC operators under his leadership are committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to customers and ensure compliance. He said the Live Run portal has enhanced BDCs compliance with set regulations and promoted market integrity. According to him, the portal has sustained transparent transactions in the BDC corridor, boost the morale of its members and ensure their continuous operations. The ABCON chief said the group had fully upgraded its Information Communication Technology (ICT) platforms, to achieve full digitisation of BDCs operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies. He added that the ABCON fully aligns with the statutory provisions of the Money Laundering Prohibition Act, 2011 (as amended), the CBN’s AML/CFT Regulations, 2013 and recommendations of the FATF. www.businessday.ng

Why anti-money laundering war must go

Gwadabe said that the sorry state of public institutions within the ECOWAS region was disturbing. In many public schools, students learn sitting on the floors; hospitals lack basic drugs, while the road networks are death traps. These societal ills thrive where corruption and illicit financial flows are rampant. He said that public institutions in ECOWAS region have suffered immensely from the corruption going on in public and private sectors. He said that ABCON was aware of the growing concerns over illicit financial flows (IFFs) from West African economies, and the need to tackle them by key stakeholders within the region. He acknowledged the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA’s) 2016 – 2020 Strategic Plan, which showed that the Global Financial Integrity (GFI), the World Bank, the African Development Bank (AfDB), the Africa Progress Panel and the African Union’s High Level Panel on Illicit Financial Flows from Africa all paint a grim profile of the problem. A joint study conducted by the GFI and the AfDB showed that between 2000 and 2009, about $30.4 billion was illicitly transferred out of Africa each year. Over a longer period of 30 years, calculated from 1980, the resource drain was between $1.2 and $1.3 trillion. Outflows from West and Central Africa stood at (37 per cent), followed by North Africa (31 per cent) and Southern Africa (27 per cent). The IFFs are derived from various predicate offences of money laundering. The ABCON Foreign Exchange Retailers Institute has also been proposed and will soon be floated by the leadership of the association. The institute falls within the constitutional mandate of ABCON and will be focused on bridging the knowledge gap among operators and promoting capacity building for global competitiveness. “We therefore urge the Federal Government to mandate relevant authorities such as the Central Bank of Nigeria (can), Corporate Affairs Commission (CAC), Federal Ministry of Education and Federal Ministry of Justice to grant the institute the necessary approval to enable it commence operation,” Gwadabe said. ABCON, severally, organised trainings for its members, and at other times, partnered NFIU and the EFCC to build capacity for operators. They have educated BDC operators on how

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they can help in tackling money laundering, terrorist financing and the benefits of keeping records of their transactions. The anti-money laundering training that ABCON organised with NFIU and EFCC in Lagos was meant to familiarise the BDCs with the process of money laundering — the criminal business used to disguise the true origin and ownership of illegal cash — and the laws that make it a crime. Speaking during the sensitisation programme against money laundering and terrorism financing campaign at MM2, Lagos, which was attended by many BDC operators, the Acting Chairman, EFCC, Ibrahim Magu, called for continuous sensitisation on issues around AML/CFT reporting to improve transparency in BDCs operations. He said the EFCC would continue to campaign for financial integrity and transparency in BDCs’ operations. Other stakeholders at the event also spoke on the use of BDCs for illicit political transactions, illegal border cash evacuation, reporting of suspicious transactions, fraud accounts transactions and cash dollar deposits on domiciliary accounts. The NFIU/EFCC/ABCON goal is to ensure that BDCs are not used to launder funds by Politically Exposed Persons (PEPs). Their target was also to raise BDCs’ compliance with the AML/CFT for Banks and Other Financial Institutions in Nigeria, Regulations 2013. These capacity-building workshops have helped BDCS to understand how to raise and submit both the Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) to regulators. ABCON has continued to ensure that BDCs file their reports as and at when due. They file reports on all transactions from N10 million for companies and N5 million for individuals. The reports are sent on weekly basis NFIU, CBN and EFCC. The BDCs also do customers’ Know Your Customer (KYC) and due diligence reports. Daily Transaction Returns (DTR) gives details of the total sales made for the day by the BDC and comes in as DTR 202, DTR 217, DTR 305 and DTR 315. The DTR 217 return gives the information of the customers of whom the forex was sold to. Information given includes the name, the international Passport number, Bank Verification Number, address, TIN number, email address among others while DTR 305 provides details of the customers as well their destination and reason for the purchase of forex. The total amount of forex sold to them is also mentioned with the transaction date. The DTR 315 tells BDCs’ opening balance, amount purchased in forex, the equivalent in naira and the rate of purchase, amount sold in forex, the equivalent in naira and the selling rate as well as the closing balance. The Monthly Transaction Returns (MTR) also known as the MTR returns is a compilation of the daily transactions and is sent to the CBN Trade and Exchange Department. It also comes in four parts MTR202, MTR217, MTR 305 and MTR 315. It is pertinent to note that these returns as described above are rendered in soft copies (electronically) and also hardcopies to the CBN. Gwadabe said ABCON’s primary goal was to ensure that its members comply with all regulations and that this would be sustained. We equally have internal mechanisms that are always deployed to punish erring operators. “We want to continually ensure that BDCs provide liquidity at the retail end of the market and also share intelligent information with government, whenever we have such information. We have also come to realise that knowledge of compliance makes the job of security operative easier,” he said.

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Wednesday 28 August 2019

BUSINESS DAY

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Wednesday 28 August 2019

BUSINESS DAY

PENSION today

In Association With

With pension funds we can stimulate productive investment in the economy - Dapo The nation’s pension industry has come to stay, contributing significantly to the economy and with larger portion of the fund presently in the hand of the federal government through bonds. Dapo Akisanya, managing director/ CEO, AXA Mansard Pensions Limited in this interview shares his thought on his career, role of pension industry in the economy, impact of the multi-fund structure on contributors and need for increased financial literacy programmes to stimulate interest and understanding of the Contributory Pension Scheme (CPS). Excerpt:

Let’s meet you formally? y name is Dapo Akisanya, the managing director of AXA Mansard Pensions Limited. I have been the MD since June 2015. Before then I worked for ARM Pension Managers and I also worked as executive director ARM Securities; and previously, I had headed investment management and research at the same ARM Group. It was after then I became executive director at ARM Pensions. Earlier in my career I spent about six to seven years in banking with City Bank, Nigeria as well as Stanbic IBTC Bank. At some point also, I had some consulting experience. That is my professional background in a nutshell. In the pension industry, outside my responsibility as the CEO of Axa Mansard Pensions, I serve at the Pension Fund Operators Association executive committee as head of Technical. Planning for retirement is a language a lot of young people doesn’t like to hear, given your experience in the pension industry all these years, what is the attitude of the average young Nigerian? I must say that the level of appreciation of retirement planning is not where I would like it to be. I don’t think its ideal. Whilst I find some level of understanding about what planning for retirement entails among a number of people, a lot of them have not taken the necessary steps to start proper financial planning towards that time. There is also a challenge in my view around the level of financial literacy and understanding of finance, and investment in general. So, what I find is that a lot of young people will rather prefer to keep and manage their money than giving it to the professionals to manage for them. I think there is a lot of enlightenment that needs to occur around young people, particularly in terms of highlighting the advantages of being part of the Contributory Pension Scheme(CPS) that we manage, given the level of safeguards that has been put in place to protect contributors. When you look at the track record of the CPS thus far since over a decade when it has been in existence, it’s been a strongly positive story in terms of the integrity of the scheme; in terms of the overall investment perfor-

Dapo Akisanya

mance that we have been able to achieve. Also, in terms of ability to serve retirees post working life, so far, we haven’t had any issue in terms of being able to meet our obligations. I think these are strong positive testaments to the role our industry has played in enabling people have a secured future. Yes, I was going to ask you how far the industry has evolved, and what is the future of the industry given the tough economic situation at this time where people are even losing jobs? I think I can understand why you feel that the economic activities needed to create the necessary growths are on the decline. But the numbers show a different thing, since on month to month basis, we keep growing the numbers of subscribers. That is, new subscribers keep joining and contributing. We also continue to grow in terms of overall assets under management, and let us remember that there is a solid base of existing contributors who keep contributing and whose earnings are expected to rise and as those earnings continue to grow their contributions will be growing. Though what we have in Nigeria today is a situation where economic growth is much slower than we expect it to be,

however it is positive. There is growth but it is marginal. But as long as we are growing, we expect that new jobs will be created, perhaps not at the extent we should see. But let us keep in mind that as stakeholders, from government to individuals on the street, people are not just folding their arms and looking at the state of things, there is effort to improve the trajectory in the economy, and hopefully we will also succeed in that line. You will definitely see the positive impacts on the industry. Having said that, the pension industry in my clear view is here to stay. It is going to keep growing, and playing more and more central role in the overall development of the country. As you know today, this industry manages the largest pool of long term funds. Also you have to realise that along with our regulator and various stakeholders, there is a need to channel the capital that we manage and have under custody in a way that it is able to stimulate productive investment in the economy. So, we increasingly engage in a number of conversations with our key stakeholders and investors who are looking for long terms capital for productive purposes. I think more and more we will begin to see pension funds being involved in a safe manner in that kind

of activity. The major concern I have and I think as well that a lot of my colleagues in the industry will share is that increasingly there seems to be the clamour by many groups to exit the CPS. A few state governments seem to face challenges in terms of their ability to execute the scheme. These are the areas of concern I feel we must all join hands and fashion out appropriate solutions so that we can take note of the concerns that those people have, manage them or address them in a way that everyone will be happy at the end of the day. As an industry leader, what role is Axa Mansard Pension playing in contributing to the development of the industry? Remember when I introduced myself, I mentioned some of the roles I play in the in the industry particularly at PenOp. I see it as a way for Axa Mansard to be directly involved in promoting industry issues. So, Axa Mansard through that platform contribute positively towards industry wide initiatives with other operators, as well as when there is need to engage other stakeholders, be it the regulator, be it labour, be it the legislatures, or even government, so we have been involved at different levels. When the multi fund structure was introduced there was a lot of hype on what the benefits are going to be, now it seems its only you the operators that are playing in it, give us an insight on this? I don’t think is entirely accurate to say nothing is happening. The multi fund structure has been implemented and contributors have been placed in the different funds that match their life cycle stage. I think what perhaps you want to say is that you have probably not seen a directly obvious impact on the financial market. But I am not sure if that will be entirely accurate, because as result of the multi fund structure, there is an increasing need for operators to deploy more and more of the assets towards variable income asset classes, Variable asset income classes consist of more types of the instrument beyond what we traditionally talk about, which is equities. So, variable asset classes will include alternatives assets such as private equity funds, infrastructure funds, real estate and a host of others.

IS NOW RC634453

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

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This section is created to increase awareness and deepen knowledge about the Contributory Pension Scheme. If you have enquiries or contributions, send to this e-mail: accesspfcbusday@yahoo.com

Wednesday 28 August 2019

BUSINESS DAY

insurance today

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Insurers await NAICOM clearance on recapitalization action plans …as August 20 deadline for submission expires Modestus Anaesoronye

nderwriting companies are awaiting on the National Insurance Commission (NAICOM) to review their submission on recapitalization action plans following expiration of August 20, 2019 deadline given to the companies to submit their programme of compliance. The Commission according to the recapitalization timetable has till September 17, 2019 to review the submissions, engage the companies and their director’s one-on-on if need be, and direct next steps. NAICOM in a circular dated July 23rd, 2019, sent to the all insurance and reinsurance firms titled: ‘Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies’ signed by Pius Agboola, director, Policy & Regulation Directorate, NAICOM stated that the recapitalisation plan should include among others, capital status of the companies as at the last audited financial statements; board resolution on how to comply with the directives, and detailed action plan

Tope Smart, chairman, Nigerian Insurers Association(NIA) and Oscar Onyema, director general, Nigerian Stock Exchange( NSE) flanked by executive management of NIA when Smart hit the Closing Gong of the market on the floor of the NSE recently.

on how the funds for the recapitalisation are to be sourced with timeline and deliverables.

The circular also directed that companies intending to seek funds from the capital market were required to submit their plan

of action on a file-and-use basis, just as, “companies that intend to merge or acquire another should submit their proposal after which they must comply with Section 30 and 31 of the Insurance Act 2003.” The Commission noted that after the submission is made, it “shall review and provide response on the submitted plans on or before September 17, 2019,” adding that the review may require meeting the board and management of each of the insurance companies on its recapitalisation plan. The Nigerian insurance regulator, NAICOM had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion, to N20 billion. According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Shareholders excited as Cornerstone Saham Unitrust pays 12 kobo dividend to shareholders returns to path of growth Modestus Anaesoronye

…firm plans N10b fresh funding Modestus Anaesoronye

hareholders of Cornerstone Insurance Plc have expressed their excitement over the company’s return to profitability, in spite of the difficult operating environment. They said that moving the company from a loss position in 2017 to strong profitability in 2018 is an indication that a lot of work has been done by board and management. From a N3.43 billion loss before tax in 2017, the company recorded a positive N3.28 billion profit before tax, while the profit after tax also grew by 190 percent, moving from a negative N3.36 billion to positive N3.02 billion at the end of 2018. “The cumulative effects of the strategic focus on your Company’s key growth drivers resulted in a return to profitability, say’s Segun Adebanji, group chairman of Cornerstone Insurance Plc. Adebanji who disclosed the performance of the company at its 27th Annual General Meeting held in Lagos announced a 26 percent increase in gross premium written (GWP) from N9.20 billion in 2017 to N11.57 billion in the review year. Adebanji noted that the largest contributor to the result was the group life portfolio, which contributed N2.01 billion, that is 17 percent of total GWP. “The entire Life Insurance portfolio recorded

a growth of 48 percent from the previous year. This growth was driven by regulatory changes to Group Life Insurance pricing limits and the introduction of a new product targeted at retail segments. The Individual Life Insurance portfolio grew by 370 percent from the previous year’ N132 million to N621 million in 2018.” This is as total assets of the company also grew by 19 percent, moving from N24.089 billion in 2017 to N28.712 billion in 2018, while the shareholders fund stood at N10.4 billion, having appreciated by 42 percent from N7.331 billion in 2017. Meanwhile, the shareholders also gave the board the approval to raise additional capital of up to N10 billion to enable it meet the new minimum capital requirement set for underwriters by the National Insurance Commission (NAICOM). Besides that, they also gave the directors approval to increase the authorized share capital of the company from N7.5 billion to N20 billion, by the creation of additional twenty five billion ordinary shares of 50 kobo each. Adebanji speaking on the new minimum capital requirement said the Board of Directors has met to consider strategic options and a plan is in place to ensure that the company will continue to participate fully and actively in the industry after the June 2020 deadline. www.businessday.ng

nderwriting firm, Saham Unitrust Insurance Nigeria Limited’s group’s gross written premium (GWP) rose by 27 per cent to N3.168 billion at the end of December 2018 from N2.486 billion at the end of December 2017. The increase in the group’s level of activity was mainly as result of strategic partnership and increase in market drive, which also impacted on the bottom line as well as return on investment to shareholders. It’s profit before tax stood at N806.18m at the end of 2018 from N818.04m at the end of 2017, while its profit after tax rose to N759.96m from N427.68m respectively. The group’s underwriting profit stood at N220.25m in the period under review from N303.79m in the corresponding period of 2017. The group’s gross earnings rose to N4.53bn at the end of December 31, 2018 from N3.69bn at the end of December 31, 2017. Saham Unitrust’s net claims expenses rose by 73 per cent to N505.11m in 2018 from N291.94m, attesting to its ability to continue to promptly respond to the claims demands of its’ clients. The group’s total investment income increased marginally by 0.34 per cent to N1.1484b as at December 31, 2018 from N1.144b in December 31, 2017. Saham Unitrust stated that it will continue to intensify its efforts to ensure that investment income remains a key revenue source. The group’s stated that its investment

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is in accordance with its investments policy which is compliant with regulatory requirements. The group recorded operating expenses of N341.83m in the year under review from a figure of N337.64m in the previous year. The board of directors has recommended a dividend of 12kobo per share, resulting to N396m for the year ended 31 December 2018, from N198m paid in the corresponding period of 2017. It stated, “The group’s approach to managing capital involves managing assets, liabilities and risks in a coordinated way, assessing shortfalls between reported and required capital level on a regular basis and taking appropriate actions to influence the capital position of the group in the light of changes in economic conditions and risk characteristics.” The group has a shareholders’ fund of N11.17bn at the end of 2018 financial period. John Ijerheime, managing director of the company, said that despite the challenges in the country’s economy, the company emerged with improved results compared to last year’s figures. While reiterating its passion for excellent service delivery, he said that the company will continue to be prudent in the underwriting business. The company underwrites motor, marine, aviation, engineering, bonds, fire & special perils, burglary, money, goods in transit, personal/group personal accident, employers’ liability, fidelity guarantee, including oil and gas insurance and is a major player in travel

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Wednesday 28 August 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

L-R: Steve Iwenjora, non-executive director; Ekwunife Okoli, non executive- director; Tokunbo Bello, executive director; Ganiyu Musa, group managing director/CEO; Segun Adeniyi, chairman Board of Directors; Chidinma Onwubere of PAC Solicitors, company secretary; Elizabeth Amadiume, non-executive director; and , Chidiebere Nwokeocha, excutive director, all of Cornerstone Insurance Plc during its Annual General Meeting in Lagos.

L-R: Rivers Khumalo, chief technology officer, FBNInsurance Limited; Sanya Aro, account officer, Jakin NGO; Festus Izevbizua, executive director, Finance and Admin, FBNInsurance Limited; Adekunle Adeola, head, Actuarial Services, FBNInsurance Limited, during the cheque presentation in sponsorship of the 2019 Jakin NGO Dress-A-Child project.

Education: Take insurance to secure your children’s future Modestus Anaesoronye

ou have two or more children in school that you regularly pay their school fees. Have you thought of what becomes of these children and the continuity of their education should the unexpected happen. Death is inevitable and has happened to many people we know, even younger than us. Have you taken time to find out, how the children of that man you used to know before he passed on few years back are coping with their education. It will not give any one joy even in that grave that his or her children’s education get aborted midway for because of no money continue. This is the case of Ohaegbuchi’s…take insurance for the education of your children or ward. For the Ohaegbuchi’s (Sarah, Lukeman and Demian), the story is different having lost their father and breadwinner a year ago in a fatal motor accident on his return from work outside his base in Portharcourt. They had managed to finish last session with Park-Voli International School, a highbrow Secondary School which they attended while their father was alive. But as day turned dark for them, their Mother who is only a petty trader could not afford to keep them in that same school because of the cost. So, unhappy Sarah, Lukeman and Demian do not have choice but to continue their education in a public secondary School in their village in Imo State, as they have also been given a quit notice in a rented apartment where they lived in Port Harcourt before he passed on. Their mother who could not help the situation has decided that they relocate to the village where she will not pay house rent or so much for their school. Late Ohaegbuchi could have avoided this situation that his family is having to go through now, if he thought of getting an education insurance policy for the children. Well, this lesson may not be for the Ohaegbuchi’s again, but for anybody who

has children within the education age or dependants to carter for. Insurance Companies have different education products that could help parents and guardians protect their children or ward’s education, in case the unexpected happens. FBNInsurance said every caring parent wants the best for their ward, however, life is full of uncertainties and even the best laid plans can go wrong. “An unfortunate event could make them insecure especially when you are no longer there for them. A careful financial planning can help you fulfill the aspiration that you have for your children. The Company said the FBN Insurance Flexible Education Plan helps you to ensure that your child’s future is secure and prosperous. It also protects your child future educational needs According to the Company, it is designed to meet the twin objectives that concern every parent – savings for your child’s education and securing a bright future despite the uncertainties of life. It also enables your child to achieve your heart desires and what they want when you

‘

This is an education endowment plan that ensures the continuity of the education of a named child (beneficiary) in the event of death or permanent disability of the policyholder up to the maturity date www.businessday.ng

are no longer there for them. Linkage Assurance Plc has the Linkage Citadel Shield Plan. The Linkage Citadel Plus is a Group Personal Accident scheme designed for education establishments, providing their students with financial compensation following an accident throughout the duration of their academic session with the institution. The plan is designed for primary school pupils, as well as secondary and university students, to cover the risk of financial consequences resulting from accidents. This cover can be taken out by individuals as a group or the management of the education institution on behalf of their pupils / students. AIICO Insurance in the other hand said every parent’s joy is ensuring that their Children get quality education and turn out great in future. AIICO Insurance Plc offers two education policies to meet these needs - Children Education Plan (CEP) and Education Legacy Assurance Plan (ELAP). “This is an education endowment plan that ensures the continuity of the education of a named child (beneficiary) in the event of death or permanent disability of the policyholder up to the maturity date. Niger Insurance has the Education Endowment Assurance policy. The policy according to the Company is so designed that the benefits can be used for the education of a named child. The policy may be issued on the life of the father or mother. The maturity date should correspond with the date anticipated that the child will enter into a Secondary School, Teachers College or a University. The maturity benefit is paid instalmentally. Custodian & Allied has Tuition Protection Policy. The policy according to the Company is designed to guarantee the education of students in the event of death or total permanent disability as a result of the parents/guardians/sponsors being involved in an accident whilst they are in a particular school. It also provides financial protection in the event of the parents/guardians/sponsors contracting

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a named critical illness (as defined in the policy). The policy is open to students in Nursery/Primary, Secondary and Tertiary Institutions. AXA Mansard has the EduPlan, which ensures your child does not face uncertainties because the product guarantees the completion of the child’s education upon the demise or accidental permanent physical incapacitation of the fee paying parent. The plan also provides a medical expense cover for the child for injuries sustained whilst engaged in school related activities on the school premises. EduPlan will ensure that your child continues to enjoy qualitative education without any interruption even in the worst possible circumstance, the Company said. Leadway Assurance has the Education Protection Plan, a flexible life insurance product that protects your family against the ongoing cost of a child’s education in the event of your death. “If you choose to pay an additional premium, the plan can be extended to apply if you contract certain illnesses or suffer total permanent disability as a result of an accident. And you can choose to protect the sum insured against the effects of inflation by having it increase by 5 percent or 10 percent each year. Mutual Benefits has the Children Education Plan, which has been structured towards ensuring quality education for your children and wards easily and in a most efficient manner. This policy allows you to conveniently save towards sending your children/wards to any school of your choice whether within the country or abroad. The scheme guarantees the future education of your children/wards at whatever level. It ensures that they have access to the quality of education you desire for them, whether you are there to do it or not. Royal Exchange plc has the Royal Tuition Plan, an educational term assurance policy which ensures that children remain in school even after the parent or guardian is permanently incapacitated as a result of accident, illness or death. The policy is for a minimum term of one year.

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Wednesday 28 August 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The big idea: The trust crisis SANDRA J. SUCHER AND SHALENE GUPTA

usinesses put an awful lot of effort into meeting the diverse needs of their stakeholders. But they’re not paying enough attention to one ingredient that’s crucial to productive relationships with those stakeholders: trust. Trust, as defined by organizational scholars, is our willingness to be vulnerable to the actions of others because we believe they have good intentions. When we decide to interact with a company, we believe it won’t deceive us or abuse its relationship with us. But our willingness to be vulnerable also means our trust can be betrayed. And over and over, businesses have betrayed stakeholders’ trust. Consider Facebook. In April 2018, CEO Mark Zuckerberg went before Congress and was questioned about Facebook’s commitment to data privacy after it came to light that the company had exposed the personal data of 87 million users to the political consultant Cambridge Analytica, which used it to target voters during the 2016 U.S. presidential election. Then, that September, Facebook admitted that hackers had gained access to the login information of 50 million of its users. The year closed out with a New York Times investigation revealing that Facebook had given Netflix, Spotify, Microsoft, Yahoo and Amazon access to its users’ personal data, including in some cases their private messages. Volkswagen is still struggling with the aftermath of the 2015 revelation that it cheated on emissions tests. United Airlines has yet to fully recover from two self-inflicted wounds: getting security to drag a doctor off a plane after he resisted giving up his seat in 2017, and the death of a puppy on a plane in 2018 after a flight attendant insisted its owner put it in an overhead bin. In the spring of 2019 Boeing had to be forced by a presidential order to ground its 737 Max jets in the United States, even though crashes had killed

everyone aboard two planes in five months and some 42 other countries had forbidden the jets to fly. Later the news broke that Boeing had known there was a problem with the jet’s safety features as early as 2017 but failed to disclose it. Betrayals of trust have major financial consequences. In 2018 The Economist studied eight of the largest recent business scandals, comparing the companies involved with their peer groups, and found that they had forfeited significant amounts of value. The median firm was worth 30% less than it would have been valued had it not experienced a scandal. That same year another study, by IBM Security and Ponemon Institute, put the average cost of a data breach at $3.86 million, a 6.4% increase over the year before, and calculated that on average each stolen record cost a company $148. Creating trust, in contrast, lifts performance. In a 1999 study of Holiday Inns, 6,500 employees rated their trust in their managers on a scale of 1 to 5. The researchers found that a one-eighth point improvement in scores could be expected to increase an inn’s annual profits by 2.5% of revenues, or $250,000 more per hotel. No other aspect of managers’ behavior had such a large impact on profits. Trust also has macro-level

benefits. A 1997 study of 29 market economies across one decade by World Bank economists showed that a 10-percentagepoint increase in trust in an environment was correlated with a 0.8-percentage-point bump in per capita income growth. So our need to trust and be trusted has a very real economic impact. More than that, it deeply affects the fabric of society. If we can’t trust other people, we’ll avoid interacting with them, which will make it hard to build anything, solve problems or innovate. Companies can’t build trust unless they understand the fundamental promises they make to stakeholders. Economically, people count on them to provide value. Legally, people expect them to follow not just the letter of the law but also its spirit. Ethically, people want companies to pursue moral ends, through moral means, for moral motives. What this looks like varies with each kind of stakeholder. To customers, economic value means creating products and services that enhance their lives; to employees, it means a livelihood; to investors, it means returns; and to society, it means both fulfilling important needs and providing growth and prosperity. Of course, expectations can vary within a stakeholder group,

leading to ambiguity about what companies need to live up to. Investors are a prime example. Some believe the only duty of a company is to maximize shareholder returns, while others think companies have an obligation to create positive societal effects by employing sound environmental, social and governance practices. To judge the worthiness of companies, stakeholders continually ask four questions: — Is the company competent? — Is the company motivated to serve others’ interests as well as its own? — Does the company use fair means to achieve its goals? — Does the company take responsibility for all its impact? If stakeholders don’t believe a company will produce positive effects, they’ll limit its power. Part of the reason we have trouble forgiving Facebook is that its impact has been so enormous. The company might never have imagined that a hostile government would use its platform to influence an election or that a political consulting firm would harvest its users’ data without their consent, but that’s exactly what happened. And ultimately, what happens on Facebook’s platform is seen as its responsibility. Companies should carefully define the kind of impact they

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desire and then devise ways to measure and foster it. They must also have a plan for handling any unintended impact when it happens. Pinterest, the social media platform, offers a good counterpoint to Facebook. In extensive community guidelines, Pinterest details what it doesn’t allow, explaining that it will “remove hate speech and discrimination, or groups and people that advocate either.” The company trains reviewers to screen the content on its site to enforce its guidelines. Every six months it updates the training and guidelines, even though the process is time consuming and expensive. In fall of 2018, when people in the anti-vaccine movement chose to use the platform to spread their message, Pinterest took a simple yet effective step: It banned vaccination searches. Now if you search for vaccinations on the platform, nothing shows up. A few months later, Pinterest blocked accounts promoting fake cancer treatments and other nonscientifically vetted medical goods. The company continues to work with outside experts to improve its ability to stop disinformation on its site. Pinterest understands that, given its estimated 250 million users, its platform could be both used and abused, and has taken action to ensure that it doesn’t become a vehicle for causing harm. Building trust depends not on good public relations but rather on clear purpose, smart strategy and definitive action. It takes courage and common sense. It requires acknowledging — and, if necessary, remediating — all the impact your company has, whether intended or not. It’s not always possible to make decisions that completely delight each of your stakeholder groups, but it is possible to make decisions that keep faith with and retain the trust they have in your company.

• Sandra J. Sucher is a professor of management practice at Harvard Business School, where Shalene Gupta is a research associate.

Wednesday 28 August 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

To prevent burnout, hire better bosses TOMAS CHAMORRO PREMUZIC

W HAPPINESS

orkplace stress costs the U.S. e c o n o m y around $300 billion per year in absenteeism, diminished productivity, and legal and medical fees. Study after study shows that stress and burnout are major drivers of staff turnover, injuries and substance abuse. It’s a problem even at the most desirable places to work, and it’s generally the consequence of one thing: bad leadership. Leaders are more likely to cause stress than to reduce it. This is particularly true when managers practice abusive behaviors, but at times it’s their sheer incompetence that demoralizes their teams. Lacking technical expertise, having no clue how to give or receive feedback, and failing to understand potential are just some of the common signs of incompetence. If organizations want to improve their employees’ work experience, they should start by improving their leadership. To that end, here are four critical lessons to consider:

— THERE’S NO BETTER CURE THAN PREVENTION: Studies show that leaders’ performance — including their tendency to stress employees out — can often be predicted using science-based assessments and data. There is no excuse for hiring leaders who consistently terrorize or alienate their teams. When scrutinizing candidates for leadership roles, organizations should focus less on their past performance and more on their actual potential. Do they have the right expertise?

Are they curious, smart and fast learners? Above all, do they have empathy and integrity? — IT’S MORE PROFITABLE TO REMOVE TOXIC LEADERS THAN TO HIRE SUPERSTARS: As a 2015 study shows, it’s about twice as profitable for organizations to eliminate toxic leaders than to hire top-performing ones. When bad behavior comes from the very top, it can pollute the company culture like a virus. Organizations can avoid this common trap by focusing

not only on leaders’ “strengths,” but also on their potential flaws. What are their extreme tendencies? Do they display any darkside traits? — RESILIENCE CAN HIDE THE EFFECTS OF BAD LEADERSHIP: Resilience enables employees to put up with bad managers. In a similar vein, incompetent leaders can hide their incompetence by hiring resilient employees with high levels of emotional intelligence, as they will show up as “engaged”

in employee engagement surveys even when they are poorly managed or unfairly treated. If you mostly recruit people who are happy and cheerful by disposition as opposed to analytical and honest, it will be harder for you to detect problems with your leadership. — BORING IS OFTEN BETTER: Uncertainty is one of the most common drivers of stress. This is why boring managers will be far less likely to stress out their teams and subordinates than managers who are flamboyant, eccentric or charismatic — especially if they are explosive and unpredictable. Instead of relying on short-term interactions, such as the job interview, when gauging leadership potential, companies should look into each candidate’s track record and references to learn more about their leadership style and character. To provide a stress-free work environment, companies need to hire competent leaders. Finding the right person may take more time, but the payoff will be worth the investment — for employees and for the organization at large.

• Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup.

A short guide to pricing your services as a consultant or coach progress, and a willing and able client, your chances of success are high. The coaches and consultants who succeed are those whose business lasts long enough to make an impact on their clients’ lives. And you can do that only if you get pricing right. By familiarizing yourself with our strategies, you’re giving yourself the tools necessary to build a successful practice.

DORIE CLARK, ALISA COHN AND MARSHALL GOLDSMITH MONEY

any executives dream about starting an executive coaching or consulting practice, or launching one after they retire. But a touchy subject soon emerges: What should they charge? Too much, and they won’t have any clients. Too little, and they’ll work themselves to the bone — and become resentful in the process. How can you strike a balance that enables you to build a thriving practice where you’re helping people and are fairly compensated for it? Through each of our experiences building successful coaching and consulting practices, we’ve discovered five key pricing strategies. By deploying the right ones at the right time, you can build a robust and lucrative practice. The strategies are: — HOURLY BILLING: This is the simplest way to bill your clients, especially as you get started. There are some drawbacks, such as the intensive recordkeeping required. Additionally, your pay is capped by both the

number of hours you work and clients’ hesitation to pay high hourly rates (many consultants or coaches struggle to get beyond $200-$300 per hour). We suggest moving on from this form of pricing fairly quickly. — RETAINER AGREEMENTS: A better arrangement, once you’ve built trust with a client, is a monthly retainer. Clients pay you a flat fee each month for access to your services (anywhere from $500 a month for newbie coaches to $20,000 a month for elite practitioners). The downside is that unless you’re careful, your client may take advantage of the “all you can eat” pricing by monopolizing your time. www.businessday.ng

— PRODUCTIZED SERVICES: Another possibility is to develop a standard suite of products (because you’re selling professional services, the term of art is “productized services”). If you have popular offerings, you can make life simpler for you and your clients by creating a standard rate sheet. For instance, one of us (Dorie) often conducts half-day strategy sessions with her clients for a flat fee. This prevents “scope creep” and other variables that can affect your time and effort. — VALUE-BASED PRICING: Another approach, popularized by the consultant Alan Weiss, is to use “value-based fees.” Before

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suggesting a price, talk with the prospect to determine the value the engagement would have on the business. Questions like “What impact would it have if you could do XYZ better?” can be a constructive part of the coaching process, because thinking about the value of the engagement gets clients much clearer on their goals. — PAY FOR RESULTS: One of us (Marshall) pioneered the “pay for results” model. It’s high stakes: If your client doesn’t improve, you get nothing. But if you succeed, the payday can be substantial. If you have a coaching or consulting process that you know works, a way to measure @Businessdayng

• Dorie Clark is a marketing strategist who teaches at Duke University’s Fuqua School of Business. Alisa Cohn is an executive coach. Marshall Goldsmith is an executive coach and the author of “What Got You Here Won’t Get You There.”

Wednesday 28 August 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Minister’s success tied to stakeholder engagement - LCCI …As Auto & Allied group sets automotive agenda

Stories by MIKE OCHONMA Transport Editor

he Automotive & Allied sub-sectoral group of the Lagos Chamber of Commerce and Industry (LCCI) has declared that for Nigeria’s automotive industry to make meaningful progress and meet the expectations of the public, the new minister of industries, trade and investment, Adeniyi Adebayo must see and treat the automotive sector in a wholistic manner. Speaking exclusively to BusinessDay shortly before portfolios were assigned to ministerial nominees by President Muhammadu Buhari, Bambo Adebowale, chairman, auto and allied sectoral group of the Lagos Chamber of Commerce and Industry (LCCI), stated that, the group would advise Niyi Adebayo, the newly appointed minister of industries, trade and investment to rank the development of local industries, including the automotive and allied industries as important as the encouragement of Foreign Direct Investments (FDI). The minister he said needs to help the auto industry get support from Central Bank of Nigeria on forex, assist the individual and fleet buying public on vehicle financing from the Bank of Industry (BoI), engage with the Nigeria Customs Service (NCS) and Nigeria Ports Authority (NPA) on easing imports, liaise with the National Board for Technical Edu-

Inside Peugeot Assembly Plant, Kaduna

Bambo Adebowale

cation (NBTE) for technical proficiency and further collaborate with the National Assembly and the Presidency on legislation and from fellow ministers on cohesion. According to Adebowale, the Nigeria auto industry is a trillion naira enterprise if properly harnessed. He declared that, the harnessing takes a lot of determined collaboration with varying and varied interests and interest

groups. The minister he noted will at times find that roles may and will sometimes be reversed. For the automotive to grow and meet the yearnings and aspirations of the populace, the new minister according to the LCCI sectoral leader should see the auto sector as a whole industry - not just vehicle assembly. Some of the critical components that make up the value chain with the auto sector business include other core groups like the clearing agents, dealers in both the new and used vehicles, developing the technicians with or without structured training, spare parts dealers, local manufacturers and entrepreneurs. In terms of actuals and numbers, Bambo Adebowale stated that to get some of the issues

Cars45 unveils premium inspection service

sorted out properly, the federal government through the minister needs to understand that 193 million Nigerians are dependant on road transport in a country that has weak infrastructure and a fragile economy. There are estimated 11 million registered vehicles, 1 million new car market, 500,000 regulated and unregulated technicians, 450,000 vehicle assembly capacity, 400,000 spare part dealers and 250,000 used vehicles imported annually. Stakeholders also expects the minister to be bold in challenging existing policy or regulation on high import duty, on allowing 15 year old vehicles, on a lack of financing options, port delays, on vested interests especially the Nigeria’s membership of AfCFTA.

ars45, one of nigeria’s automotive trading platform, has announced the launch of a new product called premium inspection service (PIS) in line with its avowed commitment to exploring new platforms that create convenience for end-users. This valued-added service allows Cars45 to cater to individuals who are unable to visit any of its inspection centers but would still like to use its service to sell their cars. To enjoy the service, customers would be required to make an upfront payment of N10,000 to book an appointment. Cars45 in turn would visit the seller’s preferred location to inspect, provide a valuation report and purchase the car. Speaking on the launch of the premium inspection service, Vice President, Consumer-to-Business services, Mayokun Fadeyibi noted that “Cars45 as a consumer-first and value-driven business are always seeking new and innovative ways to make the car trading process as seamless as possible for consumers. With this premium inspection service, we are enabling convenience and offering consumers best-inclass experience.” The PIS which is being piloted in Lagos adds to a rich variety of value-added services which Cars45 provides across Nigeria’s automotive industry. Other services include fleet liquidation, vehicle auctions, concierge services and vehicle financing which it does in partnership with financial institutions across the country. Known for bringing transparency to Nigeria’s marketplace for used vehicles, Cars45 has become synonymous with creating delightful consumer experiences by offering people a fast and convenient way to buy, sell or swap their cars.

Gokada relaunches, deploys better TVS bikes, GPS

… upgraded with safer, better customer services

okada, Nigeria’s enterprising motorbike hailing service has relaunched its operations in Lagos with new motorcycles and better-equipped pilots who have been extensively trained in safe driving standards, GPS navigation, and customer service. It would be recalled tha, Gokada halted its existing pilots and bikes from operating and paused access to its App exactly two weeks ago citing the need to improve its safety standards and skills of their pilots. Since that time, Gokada has upskilled its existing and newly engaged GPilots in advanced knowledge of defensive driving behaviours for enhanced safety, GPS navigation, and optimized customer service delivery. In addition to this, the brand has also overhauled its entire

motorbike fleet and acquired first-of-its-kind, super-efficient TVS motorbikes and fitted their pilots with Bluetooth enabled helmets allowing for more seamless communication and navigation experience. www.businessday.ng

According to Fahim Saleh, Founder and Co-CEO of Gokada, “Gokada has always prided itself on setting the standard in the market for safety and service. Hairnets, DOT certified helmets, extensive training - these are all reasons

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safety on our bikes have been so consistent and how we were able to convince so many to give this new age bike taxi a shot’’. As we scale, what we have now would be the template for what all our future pilots will follow. We took the risk to pause for a moment and improve on that template in order to provide our customers with exceptional service at scale’’. Fahim Saleh said. On his part, Ayodeji Adewumni, the Co-CEO of Gokada, stated; “Gokada 2.0 is all about our unflinching commitment to our customers. We believe that it is better to suspend our operations for two weeks so we can retool and revamp for unmatched service delivery and exceptional experience with the Gokada brand for a long time to come’’. Adewumni said, it will be an incredible time to use the Gokada @Businessdayng

services as the operators journey to transform transportation in Nigeria and the rest of Africa. As part of this relaunch Gokada have also made several upgrades to the management team, and I am truly excited about Gokada 2.0”. Kayode Adegbola, Gokada’s director of government relations also noted that, the Gokada team is excited to continue setting the standard in the industry by exceeding all of the regulatory requirements in Nigeria and partnering with the Lagos state government to help move residents through quicker, more comfortable, safer and responsible means”. All the newly trained pilots graduated last on Monday and the pilots resumed operations yesterday. Gokada promises there will be many surprises for customers, including an iPhone X for one lucky passenger.

Wednesday 28 August 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

NAMA financially trapped, membership drops For many years, stakeholders in the automotive sector have criticised the Nigeria Automobile Manufacturers Association (NAMA), unlike its National Association of Automobile Manufacturers of South Africa (NAAMSA) counterpart for not being proactive and upbeat in contributing its quota towards the growth of the nation’s auto industry. On the sidelines of a recent conference, REMI OLAOFE, executive director, Nigeria Automobile Manufacturers Association was cornered by MIKE OCHONMA, BusinessDay’s transport editor where he spoke on a number of issues within the association and the nation’s auto industry.

hy is Nigeria Automobile Manufacturers Association (NAMA) not effective as a very strategic stakeholder like NAAMSA of South Africa I want to believe that the Nigeria Automobile Manufacturers Association (NAMA) is still at a teething stage with all the problems associated with that phase of an Association. This is worsened by the delay in securing the final sign off of the automotive policy that supposed to define the modus operandi of the industry. What is the cause of the high level of apathy being exhibited by NAMA members I see it as a silent war that derived from the large number of players trying to attract the declining number of clients with effective demand. This is purely a case of negative competition which is very destructive. Why have NAMA members failed in the past years to influence government policies towards the development of the automotive industry like in any other part of the world Honestly, NAMA as a very critical player in the automotive industry need to speak with “one voice” which is missing. I also believe there are strong cartels working against the realisation of the Auto Policy because of their selfish interests. For instance, do we expect distributors of fully built vehicles to be excited about the birth of the Auto Policy? There are rumours of high level of indebtedness by members for many years. How true is this

Remi Olaofe

The diminishing zeal in the industry is bound to take its toll on the Association. We are experiencing a downward trend in members’ financial commitment to the Association. What are the loopholes in the auto policy that was rejected by federal government The truth is that, we don’t know what the loopholes are. The only explanation we got came from the former chairman, Senate Committee on Industries in the last National Assembly when he said President Muhammadu Bu-

hari wants the automotive policy passed as a law rather than a Bill to give it adequate legal backing. How can you describe the role and impact of National Automotive Design & Development Council (NADDC) versus the auto assembly rebirth in Nigeria I know that, the National Automotive Development & Design Council (NADDC) has good intentions but I want to believe the auto assembly Rebirth was hastily carried out without an indepth stakeholders’ consultation. There

are inter-ministerial issues that have remained difficult to resolve because of conflicting short term versus long term interests and objectives among the affected Ministries. Is the Nigeria Automobile Manufacturers Association broke NAMA depends solely on subscriptions paid by its members. With the declining loss of interest in the industry that is taking its toll on the Association, coupled with the downward trend in members’ financial commitment, the probability that, the association is financially constrained is expected. Why is the NAMA secretariat located within the premisesof a competing auto assembler and also a member of the association Paucity of funds is largely responsible for NAMA office still being where it is. We are currently housed free of charge by a member that owns the property for which we forever remain most grateful as an Association. What are the expectations of NAMA following the appointment of the new Industries minister, and what are reactions of industry stakeholders We expect speed in addressing all the lingering issues affecting the smooth running of our Assembly Plants. These issues must be quickly resolved to avert another round of collapse of the industry in the face of competition. This is even more pertinent with the recent signing of Nigeria’s membership of the African Continental Free Trade Agreement (AfCFTA).

VW, Nissan to get 10-year tax breaks for Ghana plants

n what serves as a big leson and wake-up call to Nigeria, Ghana will offer tax breaks of up to ten years to automakers that set up local manufacturing plants, as the government seeks to attract international companies such as Volkswagen and Nissan. Volkswagen and Nissan both agreed last year to set up autoassembly plants if Ghana signed off on an official incentive plan, while Renault SA said in January it would consider a similar move. In March, Toyota Motor Corporation (TMC) and Suzuki Motor Corp. announced a joint venture

to produce vehicles in the nation. Ghana’s move to lure carmak-

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ers follows South Africa, which has attracted seven manufactur-

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ers including Renault, Nissan and Toyota with tax incentives. That’s produced one of the bright spots of an otherwise moribund economy, accounting for about 7% of GDP. The full 10-year tax break will only apply to companies building whole vehicles in Ghana, though a five year holiday will be available for partial manufacturing, Trade Minister Alan Kyerematen said in a presentation. Import duties on new and used vehicles will be increased to 35% from 5%-20% to encourage the purchase of locally built cars, he said. @Businessdayng

Port Harcourt-Makurdi passenger train in 4 years limbo

he Nigerian Railway Corpoartion (NRC) is loosing huge revenue in passenger and freight train services from Port Harcourt to Makaurdi and its environs in the past four years because of bad rail infrastructure along the Eastern rail district with headquarters in Enugu. BusinessDay investigation reveals that many parts of rail lines have gone bad and some bridges along the railway line are also weak that train cannot pass through them comfortably, The contract to rehabilitate the Railway line from Port Harcourt to markudi was during the last administration awarded to Eser West African by the administration of former President GoodLuck Johnathan. This company was said to have completed the contract in 2014 and train operations began from Port Harcourt passing Enugu to Markudi. The train stopped operations along the axis after the former Goodluck Jonathan administration left office and since then, no single train has ever passed through Enugu to Markudi, or even Enugu to Ehamufu as it used to. When BusinessDay visited the NRC district office in Enugu,Olusoji Osidipe , the Eastern district manager said that suspension of operations in the past four years was due to the vandalization of the rail lines by the villagers. He regretted that, the people do not appreciate how important the railway infrastructure is to them and called on the villagers to stop the vandalization, The district manager also appealed to the federal government to make laws that would prohibit against buying and sailing of rail materials from iron smelting companies without clearing from Nigeria Railway as a measure to stopping vandalization. The NRC official also lamented the negative impact of erosion and landslide which he said affected many areas of the rail in the Eastern district and the weakness of some bridges because of many years of its construction like the Emene Bridge. He however expressed satisfaction that, the Aba- Port Harcourt passenger train service is working because the rail tracks are still in better condition, though not perfect . “There are many places that requires attention on the track and to get them cleared, we need headquarters assistance “he said.

Wednesday 28 August 2019

BUSINESS DAY

Feature Micro Pension plan and grassroots campaigns lift Pension Assets to N9.33trn The rising acceptance of micro pension scheme being driven by the National Pension Commission (PenCom) has led to steady rise in pension assets. Segun Adams writes that the pension funds have grown from N9.12 trillion in April to N9.33 trillion in June 2019, indicating a N21 billion increase.

he current PenCom team led by Aisha Dahir-Umar, its acting director-general, is enlightening the public on the gains of the Contributory Pension Scheme (CPS) to the Micro Small and Medium Enterprises (MSME) operators, employees and the economy. For PenCom, the success of the CPS implementation lies in the commission’s people-oriented policies and support from contributors. For many people, the future remains largely uncertain. But for those who have planned for it through the right investment and savings, it is always bright. Securing one’s future requires taking advantage of the opportunities that abound in the pension industry, which many people have seen as the last hope for retirees. The pension industry, tipped as one of the largest investment sector in the world, is gaining the attention of all - employees, employers and the self-employed. At the end of 2018, it was reported that the Global Pension Industry had an estimated asset under management (AuM) of $41.4 trillion, which represents 53.9 percent of global assets under management. This significant asset size reflects the growing institutionalisation of retirement planning across the world. For Nigeria, the pension industry has in past few years been dominated by high investment returns, a marked departure from previous trends where net inflows accounted for the majority of the industry’s growth. The National Pension Commission (PenCom) exists for the effective regulation and supervision of the Nigerian pension industry to ensure that retirement benefits are paid as and when due. In the first quarter 2019, the growth of Retirement Savings Accounts (RSAs) holders under the CPS led to a N29 billion increase in pension assets. This has been attributed to salient policies being implemented by the acting director-general of PenCom. For instance, data obtained from the Commission show again that AuM in the second quarter of 2019 increased by N21 billion. According to the monthly report on summary of pension fund assets and RSA registration published on its website, pension fund assets rose from N9.12 trillion in April 2019 to N9.33 trillion in June 2019, indicating a N21 billion inflow. A breakdown shows a rise of N18 billion in total RSA fund as it moved from N6.94 in April to N7.12 in June, whilst investment in federal government securities fell by N6 billion, falling from N6.55 trillion in April to N6.49 in June and RSA Fund 11, which has continued to attract more invested moved from N4.02 trillion to N4.10 trillion, increasing by N8 billion. The PenCom regulates and supervises the licensed pension fund

Aisha Dahir-Umar, acting director-general, National Pension Commission

operators while Pension Fund Administrators (PFAs) manage and invest the fund for contributors and retirees under the CPS. Thus, the fund had grown to N8.74 trillion in January; N8.91trillion in February; N9.03 trillion in March; N9.12 trillion in April, N9.22 trillion in May and N9.33 trillion in June, which translates to N686 billion growth in six months. The report further showed that a major chunk of N7.21 trillion out of the N9.33 trillion recorded in June is from RSA holders. A further breakdown of the June report under review showed that out of the RSAs’ fund of N7.21 trillion, retirees fund, categorised under Fund IV is N751.73 billion while contributors, categorised under Fund I, Fund II and Fund III, own N6.51 trillion. Other contributions to the fund include N958.2 billion from existing schemes and N1.24 trillion from Closed Pension Fund Administrators (CPFAs). The PFAs, the report added, invested a major chunk of the fund, totaling of N6.48 trillion into Federal Government Securities out of the N9.33 trillion in the period under review. Out of the N6.48 trillion invested by the PFAs, N4.43 trillion was invested in Federal Government Bonds; N1.93 trillion in Treasury Bills; N11 billion in Agency Bonds (NMRC and FMBN); N86 billion in Sukuk Bonds; N12 billion in Green Bonds and N129 billion in state government Securities. The PFAs, however, invested N505.82 billion in corporate debt, while N1.04 trillion was invested in Local Money Market Securities and N23 billion in Mutual Funds. Dahir-Umar attributed the accumulation successes achieved since the inception of implementation of the CPS to the Commission’s esteemed contributors. “The achievements recorded by the Commission in the last 15 years would not have been possible www.businessday.ng

without the support and understanding of all stakeholders, especially you, our esteemed contributors who are about to retiree. “I, therefore, urge you to contribute positively towards the success of the Pension Reform Programme,” she said. Financial analysts expect the Industry’s growth to exceed 14 per cent in 2019 supported by an improved macroeconomic environment that would drive increased contribution. Also, investment returns are likely to improve in 2019, largely driven by higher interest rates, which we expect to spike in the second half of 2019. Analysts also view positively the commencement of the Micro Pension Scheme (MPS), which is expected to increase the industry coverage ratio and help ramp up AuM. PenCom sustains enlightenment campaigns Currently, PenCom is carrying out massive campaigns to enlighten the people at all cadres of the society even at the grassroots, to embrace CPS at all stages of their business growth. The campaigns are going on televisions, radio, social media, online publications and other media platforms to get more people into the pension scheme and bring them to the financial services net. The campaigns are ongoing in the markets, shopping malls, private and public sectors, motor parks to ensure that all Nigerians within pensionable age embrace the CPS and secure their future, financially. The scheme covers farmers, teachers, hair dressing saloon owners, petty traders, musician, actors/actresses, shoe shiners, bricklayers, among others. It says once a person reaches the age of 18, such person qualifies and can contribute based on his income. The contributions can be daily, weekly, monthly, and contributions can be made through the mobile phones.

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Besides, should anything happen to a contributor’s business, such person can get 40 percent of the total contributions back to begin a new life. Also, in case of death, the contributor’s next of kin will be paid the total balance left in the account of the contributor. The Commission also said that PFAs are registering people that want to join the scheme at zero cost. Drivers of growth The Commission so far has achieved visible milestones as seen in the geometric growth in pension contributions, which is projected to hit N10 trillion by year-end and N15.1 trillion by 2023. PenCom introduced an Enhanced Contributor Registration System (ECRS) meant to solve the challenges faced with the existing Contributor Registration System (CRS). Aside helping to lift contributors’ confidence in the industry and bring in more people into the financial system, the enhanced application is expected to open up transfer window for RSA holders to switch PFAs. “Electronic submission of employer code requests by PFAs on employers and the full automation of the process of issuing employer codes. Updates and edits of contributors’ information on the National Databank maintained by the National Pension Commission by the PFAs. The deployment of the ECRS is a major step towards the introduction of the transfer widow, which will enable contributors change to the PFAs of their choice, in line with Section 13 of the Pension Reform Act (PRA) 2014,” it said. Aside the ECRS, PenCom under Dahir-Umar unveiled the Micro Pension Plan (MPP) that allows the informal sector contributors under the CPS to withdraw at least 40 per cent of the contributions in their RSA. The extension of the CPS to the informal sector and the flexibility of its operation is one of the incentives expected to encourage participation and growth of the pension industry. According to her, Section 2(3) of the Pension Reform Act, 2014 (PRA 2014) provides that employees of organizations with less than three employees as well as the self-employed persons shall be entitled to participate in the CPS in accordance with guidelines issued by the Commission. Majority of these categories of persons are found in the informal sector and have generally low and irregular incomes. The MPP has enabled artisans such as photographers, caterers, hairdressers, motorcycle service operators, tailors, fashion designers, carpenters, painters among others to embrace CPS and protect their future and businesses. “As you are aware, the informal sector workers constitute the larger percentage of the working population in the country, there is therefore no doubt that robust participation would @Businessdayng

result to exponential growth of the Pension funds which would consequently, provide funding for allowable and relevant investments that would impact positively on the economy. The MPP would contribute immensely to archiving the Pension Industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024,” the PenCom boss said. She explained that in order to sustain the tempo and momentum achieved from the MPP launch, the Commission was embarking on sensitisation events in the six geo-political zones of the country. “The low-income earners, the high income earners and the SMEs. Each of these categories is going to be targeted with appropriate MPP products and sensitisation programmes that meet their peculiarities. As earlier mentioned, the Commission is engaging relevant Unions and Associations in its enlightenment drive. Some of these Unions and Associations cover the artisans and grassroots operators. The Commission is aware that public enlightenment and pension education are key success factors and as such is working assiduously with the Pension Operators Association (PENOP) to ensure effective coverage,” she said. Analysts said achieving the Central Bank of Nigeria’s (CBN) financial inclusion mandate of having 80 per cent of adult population into the financial system by 2020 requires the backing of key stakeholders like PenCom. The PenCom is, through the RSA remittances, helping to deepen the pension industry, financial system and economy. CPS gains general acceptance PenCom says it has enrolled more than 8.5 million people into the CPS since its inception 15 years ago. Peter Aghahowa, head of Communication Department of PenCom, said the scheme introduced in 2004 by the Federal Government was a process where certain percentage of enrollees’ salaries was saved on monthly basis in a pool with the employers also contributing. The scheme had PenCom as the regulatory body with PFAs working in their behest. According to Aghahowa, the scheme has made the life of retirees much easier, unlike the defined benefits scheme, which it replaced. He said the Commission would continue to protect contributors’ funds and drive compliance by private sector employers through public awareness campaigns and engagement. This initiative, he added, is aimed at educating employees/employers and expanding the coverage of the CPS. According to him, the Commission also monitors compliance through onsite inspections to ensure that employees of private sector organisations open RSAs and pension contributions are remitted as and when due.

Wednesday 28 August 2019

BUSINESS DAY

2019 NBA ANNUAL GENERAL CONFERENCE No hiding place for tax defaulters in Nigeria – FIRS … as regulator eyes higher indirect taxes MICHAEL ANI & OLUWASEGUN OLAKOYENIKAN

n a bid to widen the tax net and upscale Nigeria’s revenue, the Federal Inland Revenue Service (FIRS) has come up with policies that would aid in fishing out companies and individuals that have over time defaulted in paying taxes. That was after the tax authority on Tuesday disclosed it has developed a common tax identity and it’s working closely with banks operating in the country in line with its statutory powers to ensure that tax evaders comply. “We are working in synergy with the banks at the moment and at present, we have access to everybody’s account, so there is no hiding place for tax evaders in the country. All we need to do is request information about any individual or company and we will get it,” said Ikechukwu Odume, FIRS General Counsel. Odume, who made this disclosure at the sideline of the ongoing 2019 Annual Conference organized by the Nigerian Bar Association (NBA) in Lagos, also noted that in other to drive full compliance, the FIRS developed and launched the Common National Tax Identity. “With the click of a button, we can have the tax number of every person so if you say you pay taxes we would know,” Ndume to told BusinessDay. Africa’s largest economy, with a gross domestic product of $380.85 billion, has Tax-to-GDP ratio of 5.6 percent, one of the lowest in the continent, according to data from World Bank. Tax-to-GDP ratio in Algeria, South Africa, Morocco, Angola, Kenya and Egypt currently stands at 34.75; 26.80; 21.35; 19.25; 18 and 15.20 percent, respectively. In a show of dire need for revenue to fund the budget, the federal government through the Chief of Staff, Abba Kyari, queried the FIRS Boss, Babatunde Fowler, to provide explanation on the widening variance between actual revenue and budgeted from 2015 to 2018. In 2015, actual revenue collection by the agency was N3.7 trillion, compared with a budgeted target of N4.5 trillion, set by the federal government for the tax regulator. A similar shortfall occurred in 2016, when actual collection was N3.307 trillion, less than the N4.95 trillion targeted in the budget. Also, in 2017, the FIRS collected a total of N4.027 trillion, less than the set target of N4.89 trillion and in 2018, actual collection was N5.3 trillion, while the budgeted target was N6,7 trillion In response to the query, Fowler blamed the shortfall in actual revenue to dwindling economic activities from the fall out of a global collapse in crude oil prices that submerged the country’s economy into five quarters of negative contraction. To shore up revenue, the tax regulatory agency embarked on several aggressive strategies within is purview including placing a “lien”

L-R: Gbenga Oyebode, chairman, technical committee on conference planning; Konyin Ajayi, SAN, managing partner, Olaniwun Ajayi LP; Asue Ighodalo, founding partner, Banwo and Ighodalo; Miannaya Essien, SAN, managing partner, Principles Law Partnership; Ibrahim Tanko Mohammed, chief justice of Nigeria (CJN); Paul Usoro, SAN, president, Nigerian Bar Association (NBA), and Horacio Bernardes Neto, president, International Bar Association (IBA), at the ongoing 2019 Nigerian Bar Association annual general conference, with the theme “Facing the Future” in Lagos, yesterday. Pic Olawale Amoo

in the form of suspension on the bank account of defaulting tax payers. The FIRS released a public memo naming over 20,000 businesses that are yet to remit taxes into its coffers. It has also announced plans of taking a 5 percent Value Added Taxes (VAT) on all purchases done online from 1st January 2020. In response to controversy on how the tax regulator plans on axing online savvy customers, Nudume affirmed that the 5 percent would be collected directly from the bank accounts of the users differently from the VAT already charged by the ecommerce firm. “What we are trying to achieve for the online transaction is equity in tax. So, whether you buy goods online or physically, you will pay VAT,” Udeme said in an exclusive interview with BusinessDay. He noted that the FIRS was building a network of collaboration with the various tax authorities at the state level so there could be some kind of interchange of information on people paying tax so as to eliminate he issues of multiplicity of taxes. The collaboration between both arms have also resulted in the establishment of a Joint Tax Audit (JTA), where the federal and the state government tax authority, come together to audit companies, Udeme noted “We can know what is happening in states across the federation. For example, a company in Lagos may have employees in Ogun state and should pay tax in Ogun state but they work in Lagos. With the JTA, we should be able to ascertain how many of these companies’ tax should go to Ogun state, Lagos state and those that should go to the FIRS,” he said. According to Udeme, the FIRS has also come up with a National Tax Policy, that would help in driving he vision of the agency and remove every bottleneck hindering effective tax payment by taxpayers. For the agency, the National Tax Policy www.businessday.ng

is the spirit that drives tax laws and reforms as it helps in detecting where tax is going, the things that the agency want in the tax, avoiding multiple taxation, efficiency in tax administration so that each government looks at it as a guide towards the laws that they are making. At the conference, Udeme urged lawyers on the need to buy into tax laws as they should be the ones driving tax reforms in the country. The FIRS representative expressed dissatisfaction, noting that over time, judges have a major impediment to the agency’s efforts in tax collection in the country as many of them fail to intensively study tax laws. He explained that the FIRS has shown enough empathy in tax collection if the powers given to the agency is anything to consider. “The law has given us the mandate to go against the directors of any company that defaults in paying taxes. It also gave us the powers to place a lien on accounts of defaulters, but over the years we have been lenient considering the fact that we as an agency understands that things are really no easy,” he noted. He explained that Nigeria is financially struggling and oil revenue cannot save the country any more, however, the only way the country could generate enough money to fund its ballooning expenditure, is making sure people pay taxes. On explaining how the agency has performed, Udeme pointed that the FIRS under Babatunde Fowler has since 2015 rolled out far-reaching strategies that have helped in widening the nation’s tax net and contributed to the increase in collection of revenue over the years Among these strategies, he said, includes, VAT automation; the 2016 amnesty program, which involved a waiver of interest and penalty of three years (2013-2015), in

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order to assist defaulting tax payers. This strategy alone according to him, brought in about 2,735 taxpayers before it was closed. Furthermore, the Voluntary Asset and Income Declaration Scheme (VAIDS), launched by federal government, on the 29th of June 2017, aided in encouraging defaulting taxpayers to voluntarily declare their hitherto undisclosed income and assets, by paying the applicable tax liabilities over a defined period. The FIRS also in 2015, embarked upon nationwide tax registration drive which brought in additional 814,000 corporate taxpayers into the tax net. “this was achieved through nationwide taxpayer engagement, enlightenment and registration”. Udeme noted that the outlook for the FIRS is on moving gradually away from direct taxes to indirect taxes as that is what is obtainable in other countries of the world. The 2019 annual general conference of the NBA graced the presence of about 12,000 lawyers as well as stakeholders in the public and private sector. Stakeholders present in the conference urged the government to be more sensitive and intervene on behalf of the Small and Medium Enterprises (SMEs) by bringing the effective tax rate to about 20 percent. They also called on the need to imbibe taxation in the school curriculum of primary and secondary schools so that citizens from their early age would begin to see the importance of paying their taxes. Bidemi Olumide, a partner and CEO at Taxaide said the Nigerian tax system does not seem to favour taxpayers. Olumide explained that the language of Nigeria’s tax system is not simple. He outlined seven process challenges faced with taxation which includes tax inclusion, ambiguous computation, laborious process of payments, delay in remittances, poor auditing and low returns.

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Wednesday 28 August 2019

BUSINESS DAY

2019 NBA ANNUAL GENERAL CONFERENCE

L-R: Ibrahim Tanko Mohammed, chief justice of Nigeria (CJN); Bamigbose Oluyemisi, and Sodipo Mojisola Iyabode

L-R: Chinyere Okorocha; Ibojiemenmen Ayodele Toyin, and Obianuju Otudor

L-R: Konyi Ajayi; Akaraiwe Ikeazor Ajovi; Echeonwu Alozie, and Gbenga Oyebode

L-R: Ekokotu Justina Akinbola; Foluke Dad; Anyawu Juliet Ifeyinwa, and Mfoma Usoro

L-R: Onug Afiong; Egba Juliet Peter, and Alamu Olusola

L-R: Umar Bilikis Ibrahim; Karen Chukwu; Ekanem Nnamonso, and Elizabeth Udosen

L-R: Ekpenyong Akon Etim; Ekpo Daniel Emmanuel, and Makopson Cornelius

Cross section of the participant at the conference. www.businessday.ng

Pictures by Olawale Amoo

L-R: Aduba Uche Esther; Enwere Uzoh, and Ihezuoh Nkeiruka

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Wednesay 28 August 2019

BUSINESS DAY

Live @ The Exchanges Seplat, Total, Dangote Cement, 20 others drag NSE further south Stories by Iheanyi Nwachukwu

igerian stock market moved further into the negative region on Tuesday August 27, 2019 as investors moved to sell value counters like Seplat Petroleum Development Company Plc, Total Nigeria Plc, Dangote Cement Plc and others. Other stocks that occupied brokers sell order by investors include that of GTBank Plc and International Breweries Plc. The stock market still lost 0.32percent to remain in the red despite a late minute bargain in stocks like Nestle Nigeria Plc and MTNN. As sell offs on other counters drove the index south, week-todate (WtD) it has decreased

by 0.71percent; while yearto-date (YtD) the market has lost 12.18percent of its value. The market recorded 13 gainers as against 23 losers. Investors lost N43.34billion after the market cap dropped to N13.428trillion from preceding day high of N13.471trillion. Seplat Plc stock price moved down from N441 to N397.7, losing N43.3 or 9.82percent. Total Nigeria Plc followed after dipping from N105.8 to N96.5, losing N9.3 or 8.79percent. Dangote Cement Plc declined from N167 to N165, down by N2 or 1.20percent, GTBank Plc dipped from N28 to N27.15, losing 85kobo or 3.04percent, while International Breweries Plc was down from N10.5 to N9.75, losing 75kobo or 7.14percent.

Analysts advise investors not to overlook the possibility of position taking on some of the fundamentally sound stocks that now trade at discounts to their fair value. On the gainers table, Nestle Nigeria Plc increased from N1232 to N1240, adding N8 or 0.65percent, MTNN advanced from N138 to N140.05, adding N2.05 or 1.49percent, while CCNN went up from N14 to N14.5, adding 50kobo or 3.57percent. The NSE All Share Index (ASI) decreased to 27,602.77 points on Tuesday. Investors in 3,558 deals exchanged 183,647,978 units of companies’ equities. Transcorp, GTBank, Access Bank, MTNN, FBN Holdings were actively traded stocks.

Shares of Great Nigeria Insurance admitted to trade on NASD OTC market Iheanyi Nwachukwu

he shares of Great Nigeria Insurance Plc (GNI) have been admitted to trade on the NASD OTC Securities Exchange. They were on Tuesday August 27, 2019 admitted to trade on this Over-The-Counter (OTC) market for unlisted securities. The shares of the Company which offers a full range of insurance services were introduced on the platform of the NASD OTC market by Greenwich Trust Limited. The shareholders in the company can commence dematerialisation through Greenwich Registrars and Data Solutions, according to the NASD

OTC Securities Exchange. “We welcome the shares of Great Nigeria Insurance to trade on NASD OTC Securities Exchange”, it added. The company’s securities details show it has 3,827,484,380 tradable securities in issue. Great Nigeria Insurance Plc incorporated in Nigeria on September 28, 1960 as a Private Limited Company and subsequently became a Public Limited Company. Recall that in August 2018, the Nigerian Stock Exchange (NSE) was notified that the shareholders of Great Nigeria Insurance Plc (GNI) at its Extra-Ordinary General Meeting (EGM) held on Wednesday July 25, 2018 approved for the company to voluntarily delist its shares from the Nigerian Stock

Exchange (NSE). The reason being that Great Nigeria Insurance Plc has continued to struggle over the past years to meet up with NSE post-listing requirements which included not submitting its financial reports as required and inability to meet the free float requirement. “Over the last five years, there is little or no trading activity on the shares of the company held by the minority shareholders. “There has also been a considerable fall in trading volumes over the last twelve 12 months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018,” the Company had given the NSE as reason to delist.

UACN’s Imperial Logistics raises equity stake in MDS logistics to 57%

AC of Nigeria Plc has informed the Nigerian Stock Exchange (NSE) that the Company has entered into an agreement with Imperial Logistics Limited under which Imperial Logistics proposes to increase its shareholding in MDS Logistics Limited from 49percent to 57percent, by acquiring an additional 8percent shareholding from UAC. The Transaction is subject to relevant regulatory approvals. Under the terms of the Transaction, Imperial Logistics will transfer selected profitable contracts to MDS and pay $2.4 million in cash. The transaction is based on a $40 million equity value for MDS. MDS is Nigeria’s lead-

ing integrated logistics services provider. Through its network of warehousing and distributions assets, MDS links manufacturers with customers in more than 400 cities and villages across Nigeria. MDS is a critical supply chain and distribution partner to some of Nigeria’s leading corporates. Imperial Logistics is mainly an African and Eurozone logistics provider of outsourced, integrated freight management, contract logistics and distributorship - customised to ensure the relevance and competitiveness of its clients. The group is listed on the Johannesburg Stock Exchange in South Africa and employs over 25,000 people in 32 countries. UAC is a holding com-

pany that owns businesses with some of Nigeria’s strongest brands and widest distribution. UAC’s businesses are engaged in the following sectors packaged food and beverages, paints, logistics, animal feeds and edible oils, quick service restaurants and real estate. Johan Truter, Chief Executive of African Regions for Imperial Logistics explains, “Core to Imperial Logistics’ strategy is working with strong partners as we seek to expand our businesses across Africa. We consider Nigeria to be a strategically important market and are excited to continue our partnership with UAC to grow MDS and expand its service offering to clients.”

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Wednesday 28 August 2019

BUSINESS DAY

news

Elumelu to deliver keynote address at TICAD Africa Development Conference in Japan

ounder of Tony Elumelu Foundation and chairman of United Bank for Africa (UBA), Tony Elumelu, will speak at the seventh Tokyo International Conference on African Development (TICAD), taking place in Yokohama, Japan from August 28 – 30, 2019. As a leading champion of entrepreneurship in Africa, Elumelu will ensure that the voice of a new generation of African entrepreneurs, capable of transforming the continent, is heard at the highest level. Elumelu will speak alongside global and African political and business leaders, including Prime Minister Shinzō Abe of Japan; Muhammadu Buhari, president of Nigeria; AbdelFattah el-Sisi, President of Egypt and chair of the African Union (AU); Cyril Ramaphosa, President of South Africa, and Paul Kigame, President of Rwanda. Elumelu will deliver a keynote speech at the Plenary Public-Private Business Dialogue, the core session that brings together Japanese and African public and private sector leaders at TICAD. At this event, Elumelu will promote his philosophy, Africapitalism, which posits entrepreneurship being the key to unlocking economic transformation in Africa

as he highlights the urgent need to empower young entrepreneurs and how critical it is for governments and other policy makers to create the enabling environment that ensures entrepreneurial led growth. Following a welcome address by the Japanese Prime Minister, Shinzo Abe, Elumelu will deliver the keynote address at the official Business Forum, hosted by the Japan External Trade Organisation (JETRO). The Conference provides a unique platform for key decision makers from Japan and Africa, both in business and politics, to identify opportunities for investment and knowledge exchange. Elumelu will be accompanied by a delegation from the United Bank for Africa and the Tony Elumelu Foundation, including Ifeyinwa Ugochukwu, CEO, Tony Elumelu Foundation; Dupe Olusola, Group Head, Marketing, UBA, and Muyiwa Akinyemi, Group Head Corporate Banking, UBA. Organised by the Japanese Government, TICAD is a three yearly forum for advancing Africa’s development through people, technology and innovation, bringing together government, business leaders, companies and other stakeholders.

Congestion, cargo diversion, expansion of Eastern ports slow business in H1 2019 … as stakeholders seek linkage of Tin-Can by rail to ease evacuation AMAKA ANAGOR-EWUZIE

oad congestion, which made it near impossible for cargo owners to take delivery of their consignments, and diversion of transit cargoes owned by importers from landlocked countries to more efficient ports in the West African region, have been blamed for the slight dropped in the volume of business activities recorded at the nation’s seaports in the first half of 2019. According to terminal operators, expansion of other ports, especially those in the Eastern parts of country, was also responsible for some importers’ refusal to route their consignment through ports in Lagos, thus, the drop in volume. Speaking with newsmen in Lagos on Tuesday, during the SIFAX Group mid-year press parley, Adekunle Oyinloye, group general manager of SIFAX Group, said their terminal recorded a slower number of volumes in the period under review due to expansion of other ports and diversion of transit cargo to more efficient ports by cargo owners from landlocked countries. He identified the bad state of the access roads to the TinCan Island Port, especially Apapa-Oshodi Expressway,

as a major challenge as consignment spend more days at the port than necessary. “The bad state of the port access roads has played a major role in slowing down activities at port, and that the port industry also experienced three-day strike by dockworkers within the period under review,” Oyinloye said. Oyinloye called on the government to consider linking Tin-Can Port by rail to make evacuation of cargo a lot easier, saying, “It has become saddening that some ports in West Africa have taken the shine off Nigeria despite the size of Nigerian economy in the region. For instance, Lome Port has now become a hub.” John Jenkins, managing director of Ports and Cargo Handling Services Limited, who confirmed the slight drop in number of volumes, said the terminal handled about 130,000 Twenty-foot Equivalent Units of containers (TEUs), which is 275 TEUS less than 130,275 TEUs of volume handled in 2018. “We are on track to do better than we did in 2018, but as at the first half of the year the volume of business on our terminal dropped slightly due to the congestion Nigerian ports had earlier in the year,” he said. www.businessday.ng

L-R: Ibidapo Martins, chief marketing officer; Yeni Odubiyi, executive director, corporate and investment banking, and Bukola Awosanya, group head, agriculture finance and export , all of Sterling Bank plc at a press conference on Africa agriculture sumPic by Pius Okeosisi mit hosted by the bank in Lagos, yesterday.

‘Rebuild Imo Agenda’ on track to stabilise, strengthen governance structures STEPHEN ONYEKWELU

he new captains of the ship of government in Imo State are resetting the sail to steer the Eastern Heartland towards sustainable economic growth by rebuilding governance structures to ensure transparency and accountability in government affairs. Imo is strategically located, given its proximity to other states in the South-East as well as those in the South-South geopolitical zone, in addition to the many tertiary institutions resident in the state. The new governor of Imo State, Emeka Ihedioha, is counting on this strategic location to bet on making the state a transport and logistics as well as Information Communication Technology (ICT) hub. Thanks to the transport and logistics drive, the Imo Transport Corporation (IT) for the first time in many years

...state says ready for business

remitted N30 million to the government coffers recently. The ‘Rebuild Imo Agenda’ is a raft of government policy initiatives designed to promote inclusive economic growth. Some strands of this governance thrust are seen in the introduction of a Treasury Single Account (TSA) into the state by the Ihedioha-led administration. This seeks to curb fraudulent practices. Local government areas in the state may experience this in terms of receipt of all funds accruing from the Federal Government allocation going directly into LGAs coffers, which will, in turn, drive grassroots development and politics. Upon assumption of office, Ihedioha set up various committees of inquiry to look into land allocation, disbursement of contracts and judicial inquiries all aimed at building inclusivity.

Anthony Abili, liaison officer, Imo State Liaison Office in Lagos, said the state is burdened with collapsing bridges and closed flyovers because of questions surrounding the integrity of these structures. The new administration has, however, invited the Nigerian Society of Engineers to review the infrastructure stock of the state. Flooding has been prevalent in some parts of the state, such as Ideato South and North Local Government Areas, due largely to failures to adhere to drainage designs and building on drainage canals. “In the last couple of months after the swearing-in of the new governor, we have had a daunting challenge in stabilising the ship of government and this is clearly due to the way the state was run in the last eight years. We met a situation where there were no structures of governance,

they had virtually collapsed,” Abili said. “We are, however, going to spend less time playing the blame game. We have rolled our sleeves up and are ready to start rebuilding the whole system of governance in Imo State. Imo State is ready for business,” he said. In the last two years, Owerri, the capital city of Imo State, received intense attention from Nigerians because Rochas Okorocha, the immediate past governor of the state, resorted to building statues of prominent African leaders at the Freedom Square for tourist attraction, Okorocha had said. It earned Owerri the reputation of a ‘City of Statues’. A new reputation is being built, and time will tell what it turns out to be. But the hope of Imo citizens and their friends across the land is that it turns out better.

‘Sports festival, NAFEST, FIFA World Cup will boost tourism profile of Edo’

do State Governor Godwin Obaseki says the state is set to boost its inbound tourism figures with the planned hosting of the National Festival for Arts and Culture (NAFEST) in October this year and the 2020 edition of the National Sports Festival. Special adviser to the Governor on Media and Communication Strategy, Crusoe Osagie, says the state is also optimistic about hosting the FIFA U-20 Female Football tournament also billed for next year, following the endorsement of sports facilities in the state by the world football governing body, FIFA. Osagie notes: “Tourism is one of the priority sectors

currently receiving attention of the Obaseki-led administration. We have huge tourism assets that the state government is committed to developing and NAFEST will offer us the opportunity to parade these assets to investors and tourists. “ The National Sports Festival is yet another fiesta that will attract sportsmen, women, sports enthusiasts and investors to the state. What is instructive is that Edo State is fast-becoming a highly sought-after destination for national and international events.” He explains, “The preference for Edo State is predicated on the several reforms

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that the Obaseki-led administration is executing across several sectors which have repositioned the state for sustainable development.” According to Osagie, “Intracity transportation within the state is now seamless with key players like Uber, Bolt and other local actors leveraging the massive road infrastructure being developed in all the senatorial districts of the state.” He said: “We are rated highly in the ease of doing business index and our high sense of hospitality has been referenced by the millions of people that have been to our state. “The governor appreciates the power of the tourism sec@Businessdayng

tor in creating employment, attracting investment from other climes no matter how far flung, and guaranteeing quality life for everyone that taps into any aspect of the tourism value chain. “The reconstruction of the Dr. Samuel Ogbemudia Stadium is nearing completion and we are committed to constructing 20 new ministadia across the state to serve as training grounds for our youths who need such facilities to hone their sporting talent.” Urging residents to brace up for an eventful season in the state’s tourism calendar, he says all sectors of the state will benefit from these events.

Wednesday 28 August 2019

BUSINESS DAY

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Tuesday 27 August 2019

BUSINESS DAY

news Devaluation worries return as foreign... Continued from page 1

not down to structural reforms, instead it’s as a result of higher oil prices and the CBN ’s dogged commitment to defend the naira against all odds,” an investment banker, whose firm has over 200 foreign clients said. “Petrodollars still account for a good chunk of dollar inflows, non-oil exports have stalled on the back of unfavourable policies and we still haven’t gotten our act together to tap our diaspora strength, which means we haven’t tackled our dollar supply constraints. “Deep pocket investors will not bring billions of dollars into the country when they know a devaluation is never far away, the best Nigeria can get while these issues are pending are trickles,” the investment banker who spoke on condition of anonymity as he isn’t authorised to speak on behalf of his firm said. The National Bureau of Statistics (NBS) reported that Foreign Direct Investment in Nigeria fell 50 percent to $243 million in the first quarter of 2019, from $490 million in the same period of 2014. While there has been some improvement in FDI compared to 2016 when oil prices bottomed, the country is not back to the pre-oil price crash levels, compounding the woes of an economy stuck in a low-growth cycle and could do with increased foreign investments. A law firm which advises foreign investors said a prominent question that comes up in its interactions with clients is what happens if oil prices fall sharply, which has become an even bigger possibility as the trade spat between the US and China heats up. “ The renew ed pressure on the naira in the past two weeks on the back of falling oil prices and foreign portfolio outflows, has only served as a worthy reminder that the currency remains very susceptible to another big devaluation,” a managing partner at the law firm told BusinessDay. Brent crude, Nigeria’s benchmark oil grade, has traded below the $60 budget peg for more than two weeks now. A barrel sold for $59 Tuesday, according to Bloomberg data. The naira has flashed signals of weakness since the oil price slide, depre-

ciating marginally at the Investors and Exporters window. To stop the naira from d e cl ining sha rp ly, th e CBN has intervened in the market, pushing external reserves lower. It has also had to dig out its playbook from 2016 where it resorted to dollar demand management by banning importers of some 42 items from buying dollars from banks. This time, it plans to add milk and food items. The CBN’s bid to fight off the possibility of another naira devaluation has only fanned the worry of FDIs who are unsure of how sustainable the CBN’s approach to managing the naira is. “FDIs are not going to take any chances on an economy that can’t guarantee long term stability and has shown a penchant for policy inconsistencies,” said Muda Yusuf, the director-general of a private sector advocacy group, the Lagos Chamber of Commerce and Industry (LCCI). “It’s easier when you are a portfolio investor who can take his money out in the blink of an eye at the slightest sign that the naira is under pressure, but for an FDI it’s more complicated, which is why we must take structural reforms more seriously,” Yusuf added. T h e C B N g o v e r n o r, G o d w i n Em e f i e l e, ha s been quite vocal about his commitment to exchange rate stability but he can’t make promises about what happens next after his tenure expires by 2023, according to some economists. The CBN’s dollar intervention is a more of a piece-meal approach to the problem. T h e Ni g e r i a n n a i r a shed 81 percent between 2015 and 2019, the most compared to peer African currencies, save for Egypt. The South African rand declined 28 percent in that period while the Kenyan Shilling fell 14 percent. The Egyptian pound however tumbled more than 90 percent to 16.5 Egyptian pound from 7.1. “ Eg ypt is endear ing itself to investors with its structural reforms and is in a better place to ward off another devaluation in the next four years than Nigeria,” Wale Okunrionboye, the head of investment research at Lagosbased pension fund manager, Sigma Pensions said. www.businessday.ng

Vice President Yemi Osinbajo at Keffi main market to assess Tradermoni progress. He gets a gift of orange from an old orange seller, one of the over 28,000 Tradermoni beneficiaries, in Nasarawa State, yesterday. Pic by Tunde Adeniyi

FG begins probe of $9bn P&ID judgment, says Nigerian... Continued from page1

accrued since 2013. Already, President Muhammadu Buhari has directed the Attorney-General of the Federation to mandate the Economic and Financial Crimes Commission (EFCC), National Intelligence Agency (NIA) and the Inspector General of Police (IGP) to conduct a thorough investigation into the company and the circumstances surrounding the agreement, which includes commencing a fullscale criminal investigation. Speaking at the press conference in Abuja, Information and Culture Minister Mohammed also gave assurances that the country would not lose any of its assets to P&ID as being reported. “Despite the recent recognition of the award by a UK court, and contrary to some reports, Nigeria is not about to lose any of its assets to P&ID. There is no imminent threat to Nigeria’s assets,” he said. The judgment delivered on Friday, August 16, 2019 is a fallout of the 20-year Gas Supply Processing Agreement (GSPA) purportedly entered into in 2010 between the Federal Ministry of Petroleum Resources and P&ID, which the Nigerian government insists the company never performed as agreed. Explaining government’s position, Mohammed said in challenging the award, the Federal Government relied upon an expert report analysing the damages given to P&ID, which concluded that the damages were clearly

unreasonable and manifestly excessive and exorbitant; went far beyond any legitimate protection of the commercial interest of P&ID; were completely wrong and obviously unjustifiable; and that the damages overcompensated P&ID on a frankly gargantuan scale and imposed a punitive award on Nigeria. He said it was on this ground and others that the Federal Government took all available steps to resist enforcement before the UK courts unfortunately recognised the award and gave the company the authorisation to seize Nigeria’s assets. “Nigerians should be assured that the Federal Government is taking all necessary steps to appeal the decision of the UK court, to seek for a stay of execution of the decision, to defend its rights and to protect the assets of the people of the Federal Republic of Nigeria,” Mohammed said. He reassured that the Federal Government would strongly avail itself of all defences customarily afforded to sovereign states under the United Kingdom Sovereign Immunity Act to stave off any enforcement of the award. He said government was seriously concerned over the “underhanded manner” in which the contract was negotiated and signed, stressing that indications were that the whole process was carried out by some vested interests, which apparently colluded with their local and international conspirators to inflict grave economic injury on Nigeria and its people. Malami, while explaining

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inherent element of breaches, drew attention to the fact that by the composition of the parties in the agreement, there were two parties – P&ID and Ministry of Petroleum Resources. He explained that the Ministry of Petroleum Resources is not a producer of gas, but the international oil companies (IOCs) and perhaps NNPC which were not even carried along in the deal. “So when you concede, sign and execute a contract to supply gas products without involving IOCs, NNPC as a party in that agreement, how do you intend to execute?” Malami asked. He said these among others gave rise to insinuations of certain criminal conspiracies right from the conception of the agreement. “The fact remains that you cannot sign an agreement to provide a product that you do not have. The Federal Ministry of Petroleum Resources does not have oil wells or gas products, so how can the ministry sign an agreement without bringing on board those who are the custodians and producers of the gas products for the purpose of supply?” he asked. “We feel there is need for a comprehensive investigation for the purpose of identifying what undertones are indeed criminal.” Finance Minister Ahmed noted that considering the huge impact the said judgment debt would have on the economy, the government would do everything possible to ensure it is set aside. “This matter is a very weighty one. An award of @Businessdayng

$9.6 billion is equivalent to N3.5 trillion. This amount in our national budget will be covering for us personnel cost, which is about N3.2trn,” Ahmed said. “This is an award that is unreasonable, excessive and exorbitant, and is also unfair and an assault to every Nigerian. It’s beyond trying to compensate for commercial interest; it’s an assault to each and every Nigerian,” she said. Ahmed said the Ministry of Finance takes comfort from the efforts so far put in place by the AttorneyGeneral and the Ministry of Justice to ensure that the judgment is set aside because the consequences would be unpleasant for each and every Nigerian. Also speaking, Emefiele confirmed that P&ID did not at any time import any capital for the oil contract contrary to its claims of investing some $40 million already in the job. “We have checked our records and we don’t have evidence to show that this company brought in one cent,” he emphasised. “If they (P&ID) have proof of their investment, we are calling on them to please come forward and provide us evidence of how they invested in this country.” Corroborating Malami’s position that the contract was designed to fail from the beginning, Emefiele stated “this is a time for us Nigerians to be patriotic and rise”. “If you find a fault with what any governor or minister or any Nigerian has said, you should say it and not to collaborate with people who want to defraud the country,” he said.

Wednesday 28 August 2019

BUSINESS DAY

news Joint border security: Customs arrests 33 illegal immigrants, makes seizures Cynthia EGBOBOH, Abuja

he joint border security exercise of the of Nigerian security agencies has started yielding positive results as the Nigeria Customs

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L-R: John Jenkins, managing director, Ports and Cargo Handling Services Limited; Ibraheem Olugbade, executive director, Sifax OffDock; Adekunle Oyinloye, group managing director, Sifax Group, and Tobi Afolabi, executive director, Ports and Cargo Handling Pic by Olawale Amoo Services Limited, at the Sifax Group mid-year press briefing in Lagos, yesterday.

TraderMoni: FG empowers over 28,000 beneficiaries so far - Osinbajo Tony Ailemen, Abuja

ederal Government on Tuesday said over 28,000 petty traders had so far received the first level of the N10,000 Federal Government loans, known as “TraderMoni.” This is just as another 4,000 Nigerian traders have been empowered under the Market Moni loans, where higher amounts are disbursed to traders, agropreneures and artisans. The loan is being disbursed under Government Enterprise

and Empowerment Programme (GEEP), set up by the government to create financial empowerment for co-operative societies, traders and artisans within the country. The Federal Government had set up the Market Moni loans with an initial N140 billion, to be disbursed through Bank of Industry (BoI), a financial institution saddled with the responsibility of managing the funds for on-lending. The Trader Moni, on the other hand, is part of the Federal Government social intervention aimed at funding micro business

NECO releases 2019 SSCE results Godsgift Onyedinefu, Abuja

ational Examinations Council (NECO) has released the 2019 June/July Senior School Certificate Examination (SSCE) barely a month after the exercise was conducted. A breakdown of the results indicates that 829,787 representing 71.5 percent of the total number of students who sat for the examination made five credits and above in English and Mathematics. According to the ciuncil, a total of 1, 163,194 registered for the examination while 1,151016 sat for the exercise including 161 blind candidates. Acting Registrar and Chief Executive of the NECO, Abubakar Gana explained that 984,152 (984152) candidates representing 85.50 (8550) percent made credit and above in English while 954,399 candidates made credit and above in Mathematics. The added that a total of 1,041,986 representing 89.90 <8990> per cent made five credits and above irrespective of English and Mathematics,

adding that the number increased by 0.5 per cent. He however noted that the number of candidates involved in various forms of malpractice in 2019 increased with 40,630 cases recorded as against 20,181 cases recorded in 2018. Gana explained that the reason for increase in detection of malpractice was not unconnected with the deployment of biometric verification devices during the 2019 SSCE exercise. The Registrar slammed sanctions on three schools in Kebbi, Oyo and Katsina over various infractions committed during the examination “Arising from the above, three schools one each in Katsina, Kebbi and Oyo states were recommended for derecognition for two years for their involvement in Mass cheating/whole centre cases”, he said. He also said a total of eighteen supervisors were blacklisted for variousoffences ranging from poor supervision, aiding and abetting, connivance with non-candidates and so on. www.businessday.ng

in the country through soft loans beginning from N10, 000. Vice President Yemi Osinbajo, who also commenced its disbursements in Osun State on September 3, 2018, few months to the Osun State governorship election, flagged off the fund in August 2018. Osinbajo, who had previously visited other states in the country to disburse the funds to trader, was at a market in Keffi, Nasarawa State, where enthusiastic beneficiaries trooped out to receive the money from the Vice President. Osinbajo, while speaking

at the disbursement, said the money was part of the efforts to enhance financial inclusion policy, targeted at lifting 10 million Nigerians out of poverty. The Vice President explained the loan had no political strings attached as beneficiaries are drawn from suitably qualified traders who are expected to pay back based on the conditions set by the BOI, which is serving as the disbursing agency. “This is part of President Buhari’s plans to take 10 million Nigerians out of poverty and it is open to all genuine traders” he said

Africa Initiative for Governance names recipients of AIG Scholarship Iheanyi Nwachukwu

frica Initiative for Governance (AIG) on Tuesday, August 27, announced the recipients of the third round of the AIG Scholarships. The 2019/2020 AIG Scholarship recipients are Babafemi Adebola (Nigeria), Onyekachukwu Erobu (Nigeria), Nasir Mohammed (Nigeria) Kwame Sarpong (Ghana) and Hakeem Onasanya (Nigeria). “I am very impressed with our third cohort of AIG Scholars”, said Aigboje Aig-Imoukhuede, Founder and Chairman of Africa Initiative for Governance. “All five of them represent West Africans of great potential. Three qualities are common to all of them - strong intellectual ability, leadership and a passion for public service. It takes a strong value-system to want to serve the public good and these five individuals have demonstrated a compelling desire to do so”, he said. In June 2016, AIG signed a five-year partnership with the Blavatnik School of Government at the University of Oxford, based

on a shared vision of improving the world through good governance and public leadership. Every year since 2017, AIG has awarded fully funded Scholarships to young, outstanding West Africans from all backgrounds who are passionate about the public sector, to pursue the Master of Public Policy at the Blavatnik School of Government, University of Oxford. After their study at Oxford, AIG Scholars are expected to return to their home country and apply their learning experience as change agents in their country’s public sector. In each year of the partnership, AIG makes available five full Scholarships for graduate study at the University of Oxford. “AIG Scholars are selected through a rigorous, transparent and merit-based process”, said Chienye Ogwo, CEO of AIG. “Through this process, AIG seeks to encourage the same values in the next generation of public service leaders. With a third round of Scholars, we are honoured to contribute to the development of talent critical to support Africa’s future”.

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Service (NCS) reports the arrest of 33 illegal migrants and seizures, which include 3,560 of 50kg bags of parboiled foreign rice; 59 bags of NPK fertilizer; 15 vehicles; 12 drums filled with PMS; 3 engine boats, among others.

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I, formerly known and addressed as Miss Oneya Oghenetega Augusta now wish to be known and addressed as Mrs Oguntimehin Oghenetega Augusta. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Aboyo Esther now wish to be known and addressed as Mrs Wadahi-Patrick Esther. All former documents remain valid. General Public please take note.

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Wednesday 28 August 2019

BUSINESS DAY

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Wednesday 28 August 2019

BUSINESS DAY

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Wednesday 28 August 2019

BUSINESS DAY

news More trouble for Ambode as LAHA probes ex-governor JOSHUA BASSEY

mmediate past governor of Lagos St a t e, A k i n w u n m i Ambode, could be f a c i n g m o re t ro u b l e, a s t h e L a g o s S t a t e House of Assembly, Tuesday, set up a committee to probe his administration’s purchase of hundreds o f bu s e s u n d e r t h e Bu s R e f o r m In i t i at i v e ( B R I ) project. The lawmakers, it was gathered, are accusing the Ambode of buying the buses not only without their approval, but also at inflated prices. This is happening at a time the ex-g overnor is also being investigated by

the Economic and Financial Crimes Commission (EFCC) over alleged accounts traced to the office of chief of staff under the A m b o d e ’s a d m i n i s t r a tion in which N9.9 billion was said to have passed through from late 2018 to mid 2019, when Ambode left office. L a s t w e e k , t h e o p e ratives of the ant-graft a g e n c y s t o r m t h e I k oy i and Epe residences of the e-governor where they conducted a search. Ambode has said that the EFCC was yet to establish c o nt a c t w i t h h i m s i n c e opening its investigation into his administration’s activities. Speaker of the House

of Assembly, Mudashiru Obasa, constituted the investigative committee after listening to a motion moved Gbolahan Yishaw regarding purchase of the 820 buses in defiance to lawmakers’ refusal to approve the purchase in 2017, 2018 and 2019 budget proposals. Members of the committee include Fatai Mojeed-chairman, Rasheed Makinde, Temitope Adewale, Bisi Yusuf, Oluyinka O g u n d i m u Ho n L a y o d e Joseph, Olanrewaju Afini, Mojisola Miranda and Kehinde Joseph. The ad-hoc committee is expected to invite all pr incipal pr incipals involved in the transactions,

incl u ding A mb o de, former accountant general, former commissioner for finance as well as former c o m m i s s i o n e r o f t ra n s port and procurement. The committee, acc o rd i n g t o Yi s h aw , w i l l investigate and determine the extent of financial burden on the state and proffer solutions O n e o f t h e l a w m a ke r s, R o t i m i O l o w o s a i d that the purchase of the buses contradicted what the former governor told the house that the bus project would commence with Ikeja earmarked for the pilot scheme, insisting that those found culpable should be brought to book.

Stakeholders strategise to develop national policy on business, human rights SEYI JOHN SALAU & DESMOND OKON

oncerned with the state of human rights abuses, especially within the business community in Nigeria, the International Network for Corporate Social Responsibility (IN-CSR), in partnership with National Human Rights Commission (NHRC), recently held a stakeholder consultative forum in Lagos with a special focus on business, to address issues related to business and human rights in Nigeria. The forum, tagged ‘Business meets Human rights’ with stakeholders from the Organised Private Sector (OPS), sought ways on how businesses operating in Nigeria could incorporate human rights issues and community relations in dealings with their host communities. Eustace Onuegbu, president of IN-CSR, said the reason for the stakeholders’ engagement was to make a policy document in the area

of business and human rights in line with United Nations Guiding Principles (UNGP) of Business and Human Rights. “What we’re trying to draft is the National Action Plan (NAP) on Business and Human Rights for Nigeria. So, we are consulting with the private sector operatives, especially with the listed businesses, to get their inputs on the document,” he said. Highlighting the significance of the NAP, Onuegbu said there were a number of businesses with issues of understanding their responsibilities with respecting individual rights of people; hence, it was important to “educate them.” According to Onuegbu, businesses need to know that they have a responsibility, which transcends just paying of wages, to respect the rights of stakeholders and not just their employees; but also the host communities and all those involved in the operation of the business.

Eni makes big natural gas find onshore Niger Delta STEPHEN ONYEKWELU

L-R: Folashade Olorunyomi, associate group head, Connect Knowledge; Raheemi Olabode, executive director, financial communication services, CMC Connect Limited; Tolulope Odulawa, business director, iOctane Digital Experience Angency; Patrick Atuanya, editor, BusinessDay, and Yomi Badejo-Okusanya, group managing director, CMC Connect Limited, at a courtesy visit of CMC Connect management team to BuisnessDay head office in Lagos. Pic by David Apara

Dangote gives four new cars to cement customers HARRISON EDEH, Abuja

angote Cement has in a ‘consumer promo’ on Monday rewarded its cement customers with four new cars in Abuja and Onitsha, respectively. Esan Sunday, general manager, corporate affairs of the firm, confirmed the development while he informed that three customers, Olatunji Victor Junaid, Bayo Fabiyi Joseph and Ahmed Muhammad won the cars in Abuja, Iwuafor Blessing Chidiebere won in Onitsha, Anambra State. Esan noted in a statement issued that tricycles, refrigerators, TV sets and other gift items were also presented to various winners at the two locations on Monday. Also, Joseph Makoju, group managing director, Dangote Cement plc, who

made the presentations, described the giving as ‘Special and spectacular” for both the winners and the company as a corporate body. The Makoju affirmed in the statement that the presentations confirmed the fact that the promo was real, while urging Nigerians to key into it, as the winning cards were in over 72 million promotional bags of cement. According to Makoju: “I am pleased that I am presenting four cars in a day. This is the first of its kind since the promo began last month.” He said Dangote was not only leading in the cement sector but was leading in quality, as it was the only cement company in Nigeria using automatic robotic engineering to deliver quality to end users. He assured that the company’s management

would do all within their power to always give back to the highly esteemed customers who have stayed loyal to the brand for over the years. Funmi Sanni, marketing director, Dangote Cement, said over 21 million winners of various items were expected to emerge at the end of the promotion in September. According to Sanni, over N100 million has so far been given out to winners across the country. Sanni explained that the consumer promo was in line with the mission of the company, which is to touch the lives of the people by providing their basic needs, and pointed out that the promotion was another huge investment to help the customers improve their rate of sales and make more profit while at the same time improve the

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consumers’ quality of life. “We are doing this for the sake of our consumers who have not really benefitted much from our previous promo,” Sanni said. The Dangote Cement ‘Bag of Goodies’ promo, which began nationwide in July and is to run till September ending, has so far yielded numerous winners of prizes in various categories. Among other unique gifts, a total of 43 brand new cars, cash prizes of N200 million, 24 tricycles, 500 refrigerators, 24 motorcycles, 400 TV sets, generators, goodies packs, are available for winners in the promo, which has generated so much excitement among Nigeria, with over 21 million lucky winners targeted

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talian oil major, Eni, says it has made new hydrocarbon deposits find onshore Niger Delta and plans to strategically sync it with its other operations. The company says the new find amounts to about 1 trillion cubic feet of gas and 60 million barrels of associated condensate. The Obiafu-41 deep well, located on Nigeria’s Oil Mining Lease (OML) 61 bloc, reached a total depth of 4, 374 metres and hit more than 130 metres of high quality hydrocarbonbearing sands. This occurred in the deeper sequences of the Obiafu-Obrikom fields, onshore Niger Delta. “The find amounts to about 1 trillion cubic feet of gas and 60 million barrels of associated condensate in the deep drilled

sequences,” Eni said, noting, “The discovery has more potential that will be assessed with the next appraisal campaign.” People familiar with the operations say the well can deliver in excess of 100 million standard cubic feet per day of gas and 3000 barrels per day of associated condensates, and will be immediately put on-stream to increase gas production at the Nigerian Agip Oil Company (NAOC), Eni’s affiliate in Nigeria. The discovery is part of a drilling campaign planned by NAOC and aimed at exploring near-field and deep pool opportunities as immediate time to market opportunities. NAOC is operated by Eni with a 20 percent interest, together with Nigerian National Petroleum Corporation (60%) and Nigerian independent (20%).

Cloudenly, Nigeria’s unified commerce platform, set to launch TELIAT SULE

igeria is about to witness a revolution in business operations with the coming launch of Cloudenly, the country’s first and most extensive commerce-driven platform. This innovation is a product of many years of diverse experiences and extensive research on the challenges of business owners who over the years have desired a solution that addresses issues around retail and service operations, accounting, partner and human relationship management. Cloudenly is geared to change the entire business landscape in Nigeria and beyond with its end-to-end solutions dealing with challenges of managing @Businessdayng

business growth, simplifying operations, enhancing productivity, minimizing waste and fraud, protecting revenue and unlocking business insights needed to grow businesses by making it adaptable to the times. Ahead of the official launch of Cloudenly, Oluyemisi Fajinmi, a spokesperson of Scelloo Limited, the technology company behind the new innovation, confirmed that Cloudenly, its flagship product, would avail ushers a whole new and unified commerce experience. It will offer businesses integrated cloud business process automation, finance facilitation options, support communities and the knowledge to do much more. It is designed for entrepreneurs, small and large enterprises, and scales seamlessly as the business grows.

Wednesday 28 August 2019

BUSINESS DAY

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BUSINESS DAY

news

Abia has no N7.2bn that I can steal - Kalu A

former Abia State governor, Orji Uzor Kalu, has denied allegations that he stole N7.2 billion while at the helm between 1999 and 2007. He said the Abia State under him had no such fund. Kalu made the denial while continuing his testimony before Justice Mohammed Idris of a Federal High Court in Lagos to prove his innocence of the allegation levelled against him by the Economic and Financial Crimes Commission (EFCC). The former governor while responding to a question from his lawyer, Awa Kalu, over the allegation, disclosed that there was no way he could steal what was not in existence. “Abia State doesn’t have such amount. Even the day I was leaving, we borrowed money to pay salaries. Abia State doesn’t have even a billion naira in any account at the time I was governor,” he said. To back up his denial of the allegations, the former governor who is currently the Chief Whip of the Senate also spoke about the difficulties he

encountered in running the State with allocations from federal government. He said: The monthly allocation of Abia State when I took over in June 1999 was N168 million. It was hovering between N168 million and N172 million monthly. The first month that I came in, there was even no money to buy diesel. I spent my own money to run the state for six months. “In the year 2000, monthly allocation was between N170 million and N189 million. In 2001, it came to about N302 million to about N380 million. I can recollect in 2002, it was almost the same and in 2003 when the revenue allocation was changed, we were having about N400 million. “The highest money I got as governor came from 2004 when we have about N1 billion and from that time up till May 2007 before I left, what we had was N1.6 billion. “Throughout my stay in office, I never owed workers and pensioners. When I took over as governor and before I left, we moved it up to N500 million. It was from this that

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we were able to do a lot of things.” Kalu had earlier in his evidence told the court that he has been a successful businessman before venturing into politics. Speaking on his line of businesses before he began his political journey, he said: “I was running a group of companies under Slok Nigeria Ltd and I have a big furniture factory in Maiduguri. I was also trading in cows. The cows were coming from Chad to Umuahia. I also had a veritable oil factory in Aba supplying to people in Kano and Maiduguri. “I was also into shipping activities with major oil companies. We also have a very big corn farm in the East and Bauchi. “We were a major shareholder before another shareholder bought off First Bank. In 1994, the then Hallmark Bank had a problem and I later bought majority stake in the bank. We also had major interests in banks in DRC, Gambia, Sieria Leone, Liberia and the then Sudan before crisis set in.”

Anchor Borrowers Programme to attract single digit loan, provide inputs, service support - Abiodun Iniobong Iwok

gun State Governor Dapo Abiodun has disclosed that the state Anchor Borrowers Programme (ABP) will provide inputs, service support and training required for farmers through a single digit loan and a guaranteed off taker, adding that his administration is fully committed to providing an environment that will ensure a better life for the people. Abiodun, who made this known in his office at Oke Mosan, Abeokuta, the state capital, at the inauguration of a steering committee to oversee the Ogun State Anchor Borrowers Programme, said the state government under his leadership was committed to the development of all sectors of the state economy, adding that the state government appreciated the immense potential of the agricultural sector. The governor noted that the target of his administration was to produce enough food to attain self-sufficiency in food security, adding that providence had blessed the state with favourable climate, fertile soil of over 16,000 square meters, of which 80 percent was arable. “The target of our administration is to produce enough food to attain self sufficiency in food security in the short term

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and over the long term, produce enough food for other states and for export. “Providence have blessed us with favourable climate and fertile soil for agriculture, we sit on a land mass that is over 16,000sqm, 80% of which is arable, that is we have over 12,800sqm of arable land,” he said. The governor, who further noted that government and the people should come together to chart a way forward for the development of agriculture in the state, added that it was disheartening to note that the state had never accessed the Central Bank ABP. “While we have seen the success of the anchor borrowers scheme in other states, it is disheartening that Ogun State has never accessed the CBN anchor borrowers program through the public window,” he said. He opined that the inauguration of the committee was a practical demonstration of his administrations commitment towards the development of the agricultural sector in the state, adding that the program would be targeting over 40,000 farmers, of which 10,000 would be attended to in the first instance. “This programme, we are targeting the empowerment of over 40,000 farmers, we are

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going to be starting in the first instance with an initial 10,000 farmers to which we are going to allocate 10,000 hectares of land to them,” he said. The terms of reference for the steering committee are, to play a supervising role in the implementation of the Ogun State Anchor Borrowers Scheme, design overarching methodology for the implementation of the anchor programme in Ogun, communicate decisions taken on the project to the governor and other stakeholders, coordinate all relevant stakeholders, set up and supervision of project management teams and local government committees, review of submitted cost of production/ economics of production for all value chains, approve identified input supplies and identify, negotiate with and enter into agreement with credible anchors. The committee has Adebola Okuneye as chairman, other members are, Adetunji Oredipe, Abosede Ogunleye, Angel Kuye, Abiodun Niyi, Taiwo Ayansanwo, Segun Dasaolu, Okanlawon Suraj, Oyinlola Oyenuga, David Olawale, Kayode Abiodun, Oluyemi Kuforiji, Oluwafunmilayo Oyewole, Ejalonibu Adebayo, Abdulazeez Abolore, Lateef Sanni, Bakai Okedara, while Taiwo Ayansanwo, will serve as secretary.

Wednesday 28 August 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

ARASH MASSOUDI IN LONDON, JAMES FONTANELLA-KHAN, ERIC PLATT AND ANDREW EDGECLIFFE-JOHNSON IN NEW YORK

hilip Morris International is in talks with Altria to reunite the US and international makers of Marlboro, in a merger to create a tobacco giant with a market value of more than $210bn. PMI said it was considering an all-stock merger of equals. “There can be no assurance that any agreement or transaction will result from these discussions,” it said. A deal would recombine companies that split in 2008 when Altria’s exposure to the US market and increasing threat of litigation and regulation became a liability for its international business. The talks come just over two years since rival British American Tobacco agreed to buy Reynolds American in a $49.4bn deal. At the time, analysts expected PMI to recombine with Altria, given that fears over US litigation of cigarette groups had dissipated. Tobacco groups are increasing their presence in electronic cigarettes and heated tobacco technology as sales of traditional tobacco products decline. Altria last year agreed to take a 35 per cent stake in ecigarette group Juul Labs for $13bn. The two companies are investing in e-cigarettes despite intense opposition from regulators in Washington, which have warned that teenage vaping

Philip Morris in talks with Altria to create $210bn tobacco group

Move to recombine comes a decade after companies split into US and international arms

Tobacco groups are increasing their presence in electronic cigarettes and heated tobacco technology as sales of traditional tobacco products decline © Reuters

has become an “epidemic”. According to one federally funded study last year, one in five high school seniors said they had vaped nicotine in the previous month. Shares in Altria climbed 9.6 per cent to $51.64, giving it a

Bill Dudley suggests Fed reconsider apolitical stance over damage wrought by trade war

key former Federal Reserve policymaker has stirred debate with a c o n t rov e r s i a l e s s a y about how the US central bank should respond to a worsening economic outlook brought about by the Trump administration’s trade war with China. Bill Dudley, the former president of the Federal Reserve Bank of New York, said the central bank, in order to achieve the goal of a healthy economy, should “refuse” to dole out stimulus to cushion the damaging effects of the trade war and urged officials to consider how their decisions could even affect the outcome of next year’s presidential election. The comments from Mr Dudley, who was also the previous vice-chairman of the interest rate setting Federal Open Market Committee, come in the wake of last week’s annual central banker powwow at Jackson Hole, Wyoming, where Fed chairman Jay Powell similarly raised concerns about how the Fed responds to

uncertainty around the trade war. “Trump’s re-election arguably presents a threat to the US and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives,” Mr Dudley wrote in an op-ed for Bloomberg. “If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020,” he concluded. Mr Dudley said conventional wisdom suggests that if the trade war with China harms the US economic outlook, the Fed should respond by easing monetary policy. Such a response may prove ineffectual, or may make matters worse, “if the Fed’s accommodation encourages the president to escalate the trade war further, increasing the risk of a recession”. Mr Powell said at Jackson Hole that positioning trade uncertainty into the central bank’s policy framework was a “new challenge”, acknowledging the Fed’s hands are tied in its ability to influence international trade negotiations. www.businessday.ng

ecigarette [and] vapour market and international ambitions,” said Bonnie Herzog, an analyst at Wells Fargo. Uniting the two companies would also allow PMI to capture the full value of its IQOS heated tobacco technology, which Altria

Iran’s president Rouhani rules out talks with Donald Trump

Ex-NY Fed president urges central bank to buck Trump PETER WELLS AND COLBY SMITH IN NEW YORK

market value of $96.4bn. PMI shares fell 4.9 per cent to $73.91 to put its market value at $115bn. “Altria [is] more attractive with [its] stake in Juul and Philip Morris could be the ideal international partner for Juul, given Juul’s clear dominance of the US

is preparing to launch under licence in the US, Ms Herzog noted. Altria’s strong US free cash flow would also allow PMI to “catapult the growth” of IQOS around the world, she said. Both companies were long shunned by socially conscious investors, but have become unlikely champions of sustainability in recent years, arguing that their investments can help smokers switch to less harmful products and that their longterm goal is to end the market for cigarettes altogether. “It’s like stopping coal — you can sell your coal plants to another investor or fix the problem yourself,” Huub Savelkouls, chief sustainability officer of PMI, told the Financial Times earlier this year. “The purpose of the company is now to use this product [IQOS] to make cigarettes obsolete.” Pamela Kaufman, analyst at Morgan Stanley, noted this week that Altria had materially underperformed the S&P 500 recently, saying that its 48 per cent discount to the consumer staples sector indicated that risks to the US cigarette business appeared to be “increasingly priced in”.

Meeting between Iranian and US leaders had been mooted at the G7 summit in France MONAVAR KHALAJ IN TEHRAN, MICHAEL PEEL IN BRUSSELS AND ANDREW ENGLAND IN LONDON

ran’s president Hassan Rouhani has ruled out holding talks with Donald Trump until the US has agreed to lift all its sanctions on the Islamic republic, warning that he would not take part in a photo opportunity. Mr Rouhani made the comments on Tuesday in a speech on state television, a day after French president Emmanuel Macron suggested at the G7 summit that he could broker a meeting between the Iranian and US leaders. Mr Trump said at the summit in Biarritz that “if the circumstances were correct I would certainly agree” to meet Mr Rouhani. But Iran, which accuses the Trump administration of waging an economic war against the country, played down the prospects of negotiations. Mr Rouhani said there would be no “positive development” until the US removed sanctions.

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“Iran is seeking a resolution to the problems through reasonable means rather than taking photos,” Mr Rouhani said. “If [Mr Trump] just wants to take photo with Hassan Rouhani that would not be possible.” Mohammad Javad Zarif, Iran’s foreign minister who met Mr Macron on the sidelines of the G7 summit, said he had told French officials that any meeting between Mr Rouhani and Mr Trump was “unimaginable”. Washington and Tehran have been locked in a stand-off since Mr Trump unilaterally withdrew the US from the 2015 nuclear accord Iran signed with world powers and imposed crippling sanctions. Iran has responded by increasing its nuclear activity and exceeding the limits on key elements of the accord. France has been working with the UK and Germany — the European signatories to the agreement — to try to save the deal and de-escalate tensions in the Gulf. At the G7 summit, Mr Macron, who had spoken by phone with Mr @Businessdayng

Rouhani, suggested there could be a meeting between the Iranian and US leaders within weeks. “I prefer to talk of a concerted initiative rather than mediation,” Mr Macron said. “Nothing is done. Things are very fragile,” he said. An EU spokesperson said on Tuesday that the bloc would “support and welcome any diplomatic efforts to find the way out of the crisis, de-escalate the situation in the region and preserve the [nuclear deal]”. One senior European diplomat said the Macron initiative appeared to reflect a variety of motives, including to save the accord, defuse the Gulf crisis, further his growing authority in the EU, and road-test a way of working with Mr Trump. But the official warned that it was not clear what Iran was being offered to come to the negotiating table. “I think Macron is very keen to get movement on this for a number of reasons. But without concrete action I do not see any reason why it would provide Iran the incentive to sign up,” the diplomat said.

Wednesday 28 August 2019

BUSINESS DAY

NATIONAL NEWS

Trudeau muddles his message in Huawei spat with China Canada prime minister accused of not standing up to Beijing ‘bullying’ JASON KIRBY IN TORONTO

hen Justin Trudeau vowed that Canada would “not escalate but . . . not back down” in its diplomatic spat with China last week, Beijing dismissed the comments as “loudness”. Yet to many onlookers the prime minister’s response to China’s nine-month campaign of insults and snubs, the detention of two Canadians and an onslaught of trade blockades was anything but loud or forceful. While Mr Trudeau gingerly noted China has become “increasingly assertive” on the world stage, he also p aid homage to the “deep people-to-people ties” between Canada and China and touted the “real economic opportunities” China offers Canadians. It was a muddled message that reflects a government “having difficulty accepting that its previous assumptions about China were wrong”, said Charles Burton, a senior fellow with the MacdonaldLaurier Institute. Those assumptions, he said, centred on the belief that if Canada tolerated China’s behaviour it would generate goodwill in Beijing and lead to Canadian prosperity through trade and investment. “That’s all turned to dust now,” said Mr Burton. The dispute began in December when Canada arrested Huawei Technologies chief financial officer Meng Wanzhou on a US warrant after the Department of Justice accused her and the tech company of doing business in Iran in violation of sanctions. China retaliated by arresting Canadians Michael Spavor and Michael Kovrig on accusations of spying. It imposed bans on imports of Canadian agricultural commodities, including canola seed, soy and all pork and beef products. With less than two months to go before a federal election, Mr Trudeau’s handling of the diplomatic rift is being closely watched. One poll this summer showed that three-quarters of Canadians feel China is trying to “bully” Canada. Conservative leader Andrew Scheer, whose party is tied with the governing Liberals ahead of the October 21 vote, has accused Mr Trudeau of doing “nothing to stand up for Canada in response”. A spokesperson for Chrystia Freeland, Canada’s foreign minister, said the government’s priority was the welfare of the two men “arbitrarily detained” by China and that it had “rallied an unprecedented number of partners around the world in support of Canada’s position”. Last week the US secretary of state Mike Pompeo joined their ranks, pledging to pressure China to free them “until such time as they are home and returned to their families”. The approach is necessary to

show that Canada “still has friends who are powerful and willing to go to bat for us”, said Stephanie Carvin, an associate professor at Carleton University and a former national security analyst. She added that Mr Pompeo’s “strong and forceful” statement was exactly what Canada needed from a US administration that was no longer seen as having Canada’s back. “With China it’s all about a long game,” she said. Even so, Mr Trudeau’s party has repeatedly found itself on the defensive over Ms Meng’s case as rifts emerged within the Liberal party over how to manage China. In January Mr Trudeau fired John McCallum, Canada’s ambassador to Beijing and a former longtime Liberal MP, after he echoed China’s claim that the US charges were politically motivated. Canada’s position was also undermined by reports of a proposal being floated by former Liberal prime minister Jean Chrétien this summer that Canada should cancel the extradition process in order to curry favour with Beijing. Ms Freeland rejected the capitulation strategy, saying it set a “dangerous precedent”. Mr McCallum further complicated things for Mr Trudeau last month when he warned China that further retaliatory actions could result in a Conservative government which would, he said, be “much less friendly to China than the Liberals”. It has all put Mr Trudeau’s own views on China under a microscope. Like his father, former prime minister Pierre Trudeau, who was one of the first world leaders to recognise the Communist Party of China in 1970, Mr Trudeau has long had a soft spot for China’s regime. In 2013 he infamously professed his admiration for the country’s “basic dictatorship” which, he said, allowed Beijing to turn the country’s economy around “on a dime”. “It turns out dictatorships aren’t so great. Who would have thought,” Ms Carvin said. In recent weeks the Trudeau government has faced pressure to take a tougher stance with China. Mr Scheer said if elected he would rescind Canada’s five-year, $250m commitment to the China-led Asian Infrastructure Investment Bank and consider retaliatory tariffs. Mr Burton said Canada had several other options. It could step up inspections of all Chinese shipments into Canada on the grounds that China had failed to stem the flow of fentanyl. He said Canada should also adopt foreign influence transparency legislation similar to what Australia implemented last year. The situation is deteriorating, said Mr Burton, “and there’s no perceivable basis for thinking that if we carry on the same way things will get better”. www.businessday.ng

Jair Bolsonaro: ‘We cannot accept that a president, Macron, unleashes unreasonable and gratuitous attacks on the Amazon . . . as if we were a colony or a no man’s land’ © Reuters

Bolsonaro may accept Amazon aid if Macron retracts ‘insults’

Brazil’s president weighs up fate of G7 package for fires amid war of words with French counterpart

ANDRES SCHIPANI IN BRASILÉIA

razil’s president, Jair Bolsonaro, said he would only consider accepting an aid package to help put out fires raging across the Amazon rainforest if his French counterpart, Emmanuel Macron, takes back his “insults”. Mr Bolsonaro’s senior aides had said earlier that he would snub the plan in an escalation of his war of words with Mr Macron, who launched the initiative. “First of all, Mr Macron must retract the insults he gave me. First, he called me a liar. Then, the information I had is that our sovereignty is up for grabs in the Amazon,” Mr Bolsonaro told reporters on Tuesday. “So, before talking or accepting anything that comes out of France’s best possible intentions, he will have to take those words out and then we can talk”. On Monday, at the G7 summit in France, Mr Macron announced a two-stage plan for the Amazon — first to extinguish fires raging in the rainforest with $20m in aid from G7 nations, and then to reforest and protect what he called “the

planet’s lungs”. “The Amazon forest is a subject for the whole planet,” Mr Macron said. “We can help you reforest, but we cannot allow you to destroy everything.” Mr Bolsonaro said on Twitter the same day: “We cannot accept that a president, Macron, unleashes unreasonable and gratuitous attacks on the Amazon, while disguising his intentions behind the idea of an ‘alliance’ of G7 countries to ‘save’ the Amazon, as if we were a colony or a no man’s land.” “After all, respect for the sovereignty of any country is the least that can be expected in a civilised world,” he added. Mr Bolsonaro made it clear that the crisis in the Amazon was an issue of national sovereignty for Brazil and that he was wary of foreign interests in the world’s largest tropical rainforest. “What do they want there?” he asked. Onyx Lorenzoni, Mr Bolsonaro’s chief of staff, told the popular Brazilian G1 news website that his government “appreciates” the offer, “but maybe those resources are more relevant to reforest Europe? Macron cannot even avoid a foreseeable fire in a church that

is a world heritage site,” he said, referring to the fire that ravaged Notre-Dame Cathedral in Paris in April. The bitter dispute between the French and Brazilian leaders erupted last week when Mr Macron said that Mr Bolsonaro had “lied” to him about his environmental promises. As the Amazon burnt, some European countries, including France, threatened not to ratify the EU-Mercosur trade agreement, of which Brazil is the most important South American participant. Deforestation has also accelerated since Mr Bolsonaro took office. On Monday, Mr Macron responded angrily to insults aimed at his wife Brigitte in a Facebook post by Mr Bolsonaro. “It’s sad, but it’s sad first of all for him and for all Brazilians . . . I hope very soon they will have a president who behaves in a way that measures up,” the French president said. Last week, Mr Bolsonaro said that Brazil lacked the resources to fight the fires and later thanked his political ally, US president Donald Trump, for offering him help. During the weekend, the former army captain sent the armed forces to fight the fires.

Thai owner seeks to raise $60m to rescue Dean & DeLuca Pace Development’s mounting losses on grocery chain mark rare failed Thai overseas foray JOHN REED IN BANGKOK

he Thai owner of the gourmet grocery and café brand Dean & DeLuca plans to issue $60m of long-term debt in a bid to revive the US fortunes of a chain that was a pioneer in selling pricey curated cheeses, olive oils and cakes. Sorapoj Techakraisri, chief executive of parent company Pace Development, told the Financial Times it had no plans to sell Dean & DeLuca, which it acquired in 2014 but has since been laid low by high costs and online competition. He said Pace would use proceeds from the sale of the debentures to

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pay back some of the money owed to banks, artisanal patissiers and other suppliers left with unpaid bills because of a cash crunch at the Bangkok-based property group. “The first priority in the US is to bring in new money to pay off those creditors that we owe money to and then slowly start rebuilding the brand,” Mr Sorapoj said ahead of his first trip to the US since Dean & DeLuca’s crisis deepened over the summer. Dean & DeLuca has already closed most of its stores in the US and faces lawsuits from angry suppliers. The US chain’s mounting losses mark a rare high-profile failure of an overseas acquisition @Businessdayng

for Thailand, whose Sino-Thai family conglomerates are big investors abroad, but typically attract little publicity. Pace reported a secondquarter net loss of Bt726m ($24m). “Our plan now is to raise money at the Pace level, and also to continue with two real-estate projects that we have,” Mr Sorapoj said, adding that because of its losses in the US, Pace had frozen work on nearly completed high-rise condominium developments in Bangkok and Hua Hin. “More money will come out at completion, and hopefully by then the US is more stable, and we can start thinking about growing again,” Mr Sorapoj said.

Wednesday 28 August 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Japanification: investors fear malaise is spreading globally Rise in negative-yielding debt accelerates over summer ROBIN WIGGLESWORTH

ears over recession are once again stalking markets, but many investors and analysts are more worried about a deeper, more structural shift: that the world economy is succumbing to a phenomenon dubbed “Japanification”. Japanification, or Japanisation, is the term economists use to describe the country’s nearly 30year battle against deflation and anaemic growth, characterised by extraordinary but ineffective monetary stimulus propelling bond yields lower even as debt burdens balloon. Analysts have long been concerned that Europe is succumbing to a similar malaise, but were hopeful that the US — with its better demographics, more dynamic economy and stronger post-crisis recovery — would avoid that fate. But with US inflation stubbornly low, the tax-cut stimulus fading and the Federal Reserve now having cut interest rates for the first time since the financial crisis, even America is starting to look a little Japanese. Throw in the debilitating effect of ongoing trade tensions and some fear that Japanification could go global. “You can get addicted to low or negative rates,” said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management in New York. “It’s very scary.

Japan still hasn’t gotten away from it . . . The world is in a very precarious spot.” The primar y symptom of spreading Japanification: the rise of negative-yielding debt, which has accelerated over the summer. There is now more than $16tn worth of bonds trading with sub-zero yields, or more than 30 per cent of the global total. Japan is the biggest contributor to that pool, accounting for nearly half the total, according to Deutsche Bank. But the entire German and Dutch government bond markets now have negative yields. Even Ireland, Portugal and Spain — which just a few years ago were battling rising borrowing costs triggered by fears they might fall out of the eurozone — have seen big parts of their bond markets submerged below zero. As a result, the US bond market is no longer the best house in a bad neighbourhood: it is pretty much the only house still standing. US debt accounts for 95 per cent of the world’s available investment-grade yield, according to Bank of America. The US economy continues to expand at a decent pace, with strong consumption offsetting a weaker manufacturing sector. Even inflation has ticked up a little. But some economists fret that a manufacturing contraction will inevitably affect spending, so forecasts have been slashed for this year and next. Some even fear a recession may be looming.

Mexico reaches deal to settle gas dispute Agreement over contracts resolves biggest dispute of nine-month old administration JUDE WEBBER IN MEXICO CITY

exico has reached a deal with gas transportation companies to settle a dispute that had raised fears that the government of President Andrés Manuel López Obrador would not respect previously agreed contracts, threatening fragile business confidence. The deal reached on Monday night resolves the biggest dispute of his nine month-old government and will yield savings of $4.5bn for state electricity company CFE, the president told his morning news conference. The dispute was triggered in July by the leftist nationalist government’s rejection of what it termed “exorbitant” contracts negotiated with US, Canadian and Mexican companies before Mr López Obrador took office that had spooked investors and raised the prospect of supply shortages. Manuel Bartlett, head of the CFE who had threatened legal action over the contracts, said “reasonable and fair” terms had

been agreed. He said the initial contracts had implied costs of $12bn for the CFE and the new deal would save $4.5bn. “It will guarantee healthy finances for the CFE,” he added. Carlos Salazar Lomelín, head of Mexico’s biggest business lobby CCE, who helped broker the deal, called it a “win-win” for both sides. Mr López Obrador singled out Carlos Slim, whose Carso Energy group was one of the companies involved, for praise, saying he had been the first to sign on to the agreement. Mr Slim, a media mogul who is Mexico’s richest man, said the deal would allow businesses to finance more projects. The renegotiated contracts impact a number of pipelines including the subsea South Texas to Tuxpan pipeline beneath the Gulf of Mexico built by Canada’s TC Energy and IEnova, a unit of US group Sempra Energy. This pipeline will be the first to start operations, delivering 2.6m cubic feet a day of gas, Mr Bartlett said, although he did not say when deliveries would begin. www.businessday.ng

Tech start-ups drive change for Nigerian truckers Uber-style apps are transforming industry rife with inefficiency and corruption NEIL MUNSHI IN TIN CAN ISLAND

Africa’s most populous country, and also Togo, Ghana and Kenya, as it attempts to bring a cashless, app-based paperless system to an industry mired in reams of paperwork and handshake relationships. Where many drivers might get 30 per cent of their pay upfront in cash from traditional trucking companies — for food and fuel en route — Kobo pays them 70 per cent on starting the trip, directly to their bank account. Drivers can then use payment apps on their phones to pay for food, or use a Kobo service to buy discounted fuel at petrol stations via their phones. Its operations became all the more relevant last month on the signing of a landmark continentwide free trade deal aimed at bolstering intra-African trade, which sorely lags that of the rest of the world. Mr Ighodaro signed up with Kobo a year ago, and has not had to hustle for business in the crowded truck depots of Lagos since. He and his fellow drivers — Kobo said it has signed up more than 10,000 — have also not had to wait in the notorious, winding line that leads to Lagos’s main ports. Kobo provides

its drivers with a lift via barge to its customers located inside the port. “Tin Can [in Lagos’ port] is the hardest place to move goods in the world — the hold-up for days, the soldiers extorting money from drivers in line,” said Goni Gombe, whose family fleet of 60 trucks has seen business triple in the year since it signed up with Kobo. “But now we can go in and out.” Rail system unchanged since colonial times Shoddy infrastructure is one of many challenges — along with insecurity, inefficiency, corruption, poor-quality trucks and high fees — that make logistics among the biggest obstacles for businesses trying to make it in Africa’s largest economy and across the continent. Most African countries rank near the bottom of the World Bank’s annual logistics performance index because the system is rife with inefficiencies. Shipping a container from China to Lagos is sometimes cheaper than moving one from the Lagos port to the other side of the city, said Obiora Madu, head of the Nigeria-based African Centre for Supply Chain.

Slash European stock holdings, Norway’s $1tn oil fund advised

Norges Bank recommends shifting toward greater North American weighting

RICHARD MILNE IN OSLO

he world’s largest sovereign wealth fund should slash its investments in Europe and increase them sharply in North America, according to a recommendation from the managers of Norway’s $1tn oil fund. Norway’s central bank, which handles the management of the fund, said that the investor should move away from its current position of being overweight in European equities and underweight in US shares relative to global stock indices and more towards the

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norm, without naming a specific target. The $1tn oil fund, which is one of the world’s largest equity investors, on average owns the equivalent of 1.5 per cent of every listed company globally. Europe represents 34 per cent of its equity benchmark today against 40 per cent for North America. The fund, whose decisions are closely scrutinised by other shareholders, recommended moving towards a market weight adjusted for the amount of shares available to be bought, known as the free float, which currently gives Europe a share of 19 per cent and North America 57 per cent. @Businessdayng

“We are of the opinion, however, that the geographical distribution should be adjusted further towards float-adjusted market weights by increasing the weight of equities in North America and reducing the weight of equities in European developed markets. The gap to market weights will then be smaller than today,” the bank said. The Scandinavian country’s government will now decide whether to follow the central bank’s advice and is likely to announce its response in the spring, when it publishes an annual white paper on the fund, which is then voted on by parliament.

Wednesday 28 August 2019

BUSINESS DAY

ANALYSIS

Creative summer: working in a café Can deserting your desk for a public location with better coffee spark fresh insights? AMY BORRETT

he FT Work & Careers team recently took a class in how to become more creative at work and learnt that getting away from your desk is key. In this weekly summer series, our writers try different outof-office activities to see whether they help develop creativity. It is easy to feel uninspired by the monotony of working every day at the same desk. So, struggling with motivation for an article I had been working on for over a week, I decided to spend an afternoon in a café — to see if working in a new place and surrounding myself with different people would make me more creative. Research has found that moderate levels of “ambient noise” — around 70 decibels, or about the level of conversation in a café — improves performance on creative tasks. Emboldened by this promise of a productive afternoon, I left my desk and found a table in The Wren, only a minute’s walk from the Financial Times. Even for an independent coffee shop, The Wren boasts an unusual location. Nestled inside St Nicholas Cole Abbey on Queen Victoria Street, customers sip their coffee at tables located inside the nave. Although “St Nick’s” is thought to have been built in the 12th century, the building that exists today is a reconstruction — originally rebuilt by Sir Christopher Wren after the Great Fire of London, it was again severely damaged in the Blitz and reopened in 1962. The beamed ceiling and airy space was certainly a change from the modern, industrial surroundings of my desk in Bracken House.

With research suggesting that low ceilings prompt feelings of confinement, while high ceilings can encourage concepts of freedom and so stimulate creative thinking, it seemed a promising location for a fruitful afternoon’s work. The Wren is located in the City of London and so it was no surprise that the tables around me were busy with business meetings and catch-ups over coffee. Unfortunately, this provided the perfect distraction from my work, and I succumbed to the temptation of eavesdropping on the conversations happening around me. Heading towards the end of August, for the most part this meant the usual remarks on the capriciousness of British weather and an exchange of holiday pleasantries. But when a chat escalated into an impassioned lovers’ quarrel at the table next to me it became challenging to focus on my laptop screen. Their back-and-forth gave me plenty to ponder, but unfortunately no creative thoughts. When the couple eventually departed, I could settle back into work. And although there was an animated business meeting being conducted in French, my rudimentary language skills meant that I could not elicit anything interesting enough to distract me from the task in hand. When I returned to the office a few hours later I had managed to get some work done, although a lot less than I had intended. But, had working in a café increased my creativity? While the constant chatter and opportunity to earwig offered more distraction than I had anticipated, the change of environment left me feeling refreshed.

Ferdinand Piëch, former Volkswagen chief, dies at 82 Brilliant but ruthless engineer transformed struggling car group into global empire PATRICK MCGEE

erdinand Karl Piëch, the gifted but ruthless engineer who built Volkswagen into a 12-brand empire that overtook GM and Toyota by sales, has died aged 82. Mr Piëch, grandson of Beetle designer Ferdinand Porsche, was in 1999 named car executive of the century for his numerous exploits, which included leading motor racing competition at Porsche in the 1960s, developing luxury cars at Audi in the 1970s, and then turning the VW Group from a lossmaking carmaker in the 1990s to being the world’s largest in 2016. His death, first reported by Bild in Germany, was confirmed by his widow Ursula, who told the DPA news agency that he died “suddenly and unexpectedly”. Volkswagen declined to comment. Bob Lutz, former vice-chairman

of GM, told the Financial Times that Mr Piëch was “one of the greats in the automotive industry,” alongside Sergio Marchionne, the Fiat-Chrysler CEO who died last year, and Lee Iacocca, the former head of Chrysler who died in July. “There’s no question Ferdinand was a brilliant person, a brilliant engineer, and a great leader,” he said. “I didn’t always agree with his dictatorial style of leadership, but he was certainly results-driven and accepted no excuses for failure.” Richard A Johnston, in his 2005 book Six Men Who Built the Modern Auto Industry, said that Mr Piëch “more than any single individual, promoted and maintained Europe’s technical advantage over the rest of the automotive world in the second half of the 20th century”. But the culture of fear Mr Piëch generated was well known. The German weekly Der Spiegel once described worklife at VW as “North Korea without the labour camps”. www.businessday.ng

Flight shame: can airlines ever reduce their emissions? Facing a potential consumer backlash, the industry has few technological solutions JANINA CONBOYE AND LESLIE HOOK IN LONDON

hen cyclist Anna Hughes stopped flying 10 years ago, it seemed like a radical idea. But now the founder of Flight Free UK has convinced thousands of people to join her in her bid to mitigate the climate impact of air travel. Her campaign is just one part of a no-fly movement that is spreading rapidly across Europe and has given birth to a new phrase: flygskam, or Swedish for flight-shame, which means feeling guilty about jetting off on vacation. “It has become a social norm that you think holiday, you think flight,” says Ms Hughes, who no longer goes anywhere that cannot be reached by bike, train or boat. “Most people are unaware of how flying affects the environment.” That awareness is growing fast though, as climate concerns have sparked a public backlash against flying that would have been almost unthinkable even a year ago. One of its most prominent advocates is Greta Thunberg, the 16-year-old Swedish activist, who is sailing to New York to attend a climate summit next month because she has forsworn air travel. She is set to complete the journey tomorrow. For airlines, the sudden takeoff of this movement presents a potentially dangerous challenge. Airline passenger growth shows signs of weakening in countries where flygskam is catching on. There was a 3 per cent fall last year in the number of passengers for domestic flights going through 10 of Sweden’s state-owned airports, compared with the year before. The movement has not only taken aim at summer holiday flights, but also at airport expansion plans including Heathrow in London. “This is an existential question for us,” says Rickard Gustafson, chief executive of Scandinavian Airlines (SAS), which is based near Stockholm. “If we don’t

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clearly articulate a path to a sustainable aviation industry, it will be a problem.” He says the issue of passengers’ attitudes to emissions was not considered a priority when he brought it up at the board of the International Air Transport Association, on which he sits. But that has now changed. “Six months later this was a hot topic,” says Mr Gustafson. Even if it is not yet hitting the bottom line, airline executives have begun to take the impact of emissions and climate risks more seriously. “Aviation needs to reinvent itself,” admits Johan Lundgren, chief executive of easyJet, the European low-cost carrier. The problem for the aviation industry is there are few technological solutions available that will help it reduce emissions and address the potential consumer backlash. “The basic trouble is that humankind has not worked out how to put a passenger jet on a long-distance flight yet without burning through something on the order of 100 tonnes of fossil fuels,” says Mike Berners-Lee, a carbon footprint specialist and professor at Lancaster University. “We have to bite the bullet on aviation, because we just don’t know how to do it in a low-carbon way.” Airlines account for about 2 per cent of carbon dioxide emissions globally. But the headline figures obscure the broader impact of air travel. When planes fly through the sky they also emit other substances that have a significant warming effect — such as nitrogen oxide and contrails, the long thin clouds of frozen vapour that are visible from the ground. A growing body of research shows the climate impact of aeroplanes is about twice as much as their CO2 emissions alone would suggest — closer to 5 per cent of human-caused warming. Volker Grewe, professor of atmospheric physics at the German Aerospace Centre (DLR), says these “non-CO2 effects”, such @Businessdayng

as particle emissions, nitrogen dioxide and contrails, are a major contributor to the warming impact of planes. “Aircraft are flying at higher altitude of 10-12km and whatever emissions they produce at that altitude remains longer in the atmosphere,” he says. “That is the big difference between aviation and surface transportation, which doesn’t have these additional effects.” The threat of a consumer backlash over emissions is not a complete surprise for the industry. Some executives have been trying to focus attention on emissions for at least a decade. Iata, the aviation industry body, made a commitment in 2009 that the entire industry would halve emissions by 2050, relative to 2005 levels. “It’s very ambitious,” says Chris Goater, an Iata spokesman. “We have a big responsibility and it is a huge challenge to deal with this.” Some airlines, especially in European countries with particularly environmentally-engaged customers, have made their own specific pledges. SAS has said it will cut emissions by 25 per cent by 2030 and is aiming to run domestic flights on biofuels. IAG, which owns British Airways and Spain’s Iberia, has pledged to invest $400m on developing alternative fuels over a 20-year period, while United Airlines has said it will spend up to $2bn annually on fuel-efficient aircraft and is working with biofuel producers. Dutch carrier KLM even launched a campaign urging passengers to fly less. It includes tips such as “consider making video calls instead of meeting face to face” and “explore other travel options” like the train for shorter trips. With the rise of flight shame, airlines are racing to find an answer for how to decarbonise and reduce their climate impact. But the challenge is that there are no easy ways to reduce emissions meaningfully — at least not in the near term.

Wednesday 28 August 2019

BUSINESS DAY

tax issues FIRS notice on taxability of certain compensation payments: AndersenTax sees implications Iheanyi Nwachukwu

n d e r s e n Ta x , a r e nowned tax advisory and regulatory services firm has noted some implications of the recent notice issued by Federal Inland Revenue Service (FIRS) on taxability of certain compensation payments. On 14 August 2019, the FIRS issued a Public Notice on deduction of tax at source from compensations paid to agents by principal companies. The notice directs companies to deduct and remit Withholding Tax (WHT) and Value Added Tax (VAT) on compensations such as commissions and rebates, which are due to their distributors and customers. According to, AndersenTax, “This notice implies that companies are to subject all forms of compensation payments including commissions and rebates granted to dealers, agents, distributors and general customers to WHT and VAT and remit same to the FIRS. The notice has some far-reaching implications especially for companies in the FMCG sector.” “The FIRS’ directive to companies to deduct VAT at source is not

in line with the express provisions of the VAT Act. Except for transactions with non-resident companies or transactions with companies in the oil and gas sector, companies are not ordinarily required to deduct VAT at source under the existing VAT Act,” it added. AndersenTax further stated that, “The applicability of VAT on rebates and discounts issued to distributors and customers re-

mains a contentious issue given that they do not necessarily constitute income/revenue in the hands of the companies that enjoy it. Thus, the requirement to account for VAT and WHT on compensation payments and sales-incentives is unclear because giving a blanket directive without specifics as to the practical application of VAT and WHT on such category of transaction

simply creates more ambiguities.” Based on the above, they expect the FIRS to issue further guidance to provide additional clarity on the public notice. According to the FIRS, the issuance of the PN is aimed at providing guidance to the public and in particular, taxpayers and advisers on WHT and VAT, which is deductible from the compensations or commissions due to distributors, agents

and customers. In the notice, the FIRS stated that compensations and commissions earned by distributors/ dealers are to be subjected to VAT and WHT. According to the PN, its position is based on its Information Circular No. 2006/02 issued in February, 2006 and the Companies Income Tax Act (Rates, Etc. Deduction at Source (Withholding Tax) Regulations. The FIRS, however, stated that a number of companies have failed to deduct WHT and VAT from such compensations and commissions. The notice further requires companies (specifically those in the Fast Moving Consumer Goods (FMCG) Sector) to apply WHT and VAT on any compensation due to their distributors and customers. The FIRS stated that the duty to deduct and remit WHT or VAT will not be affected by the mode of payment (i.e. cash, credit notes, goods-in-trade or any other means payable). Based on the PN, such WHT/VAT must be charged at the appropriate rate and remitted to the FIRS on or before the 21st of every month. The FIRS further stated that it will commence the monitoring of compliance on relevant companies/transactions.

How a growing procurement footprint can increase your tax footprint EY Global

rocurement functions are more connected to the business than ever before and impact almost every aspect of the organization. These connected procurement functions have already gained a voice in areas such as managing group demand, maintaining supplier relationships, overseeing raw material quality, and strategically sourcing goods and services. In recent years, there has been an observed marked increase in the involvement of procurement functions in specification optimization, new product development and innovation, often empowering them to promote supplier integration throughout an increasingly connected supply chain. In the eye of the storm This evolution of the procurement function has not gone unnoticed by tax authorities, nor by the Organisation for Economic Co-operation and Development (OECD). It should therefore, come as no surprise that tax authorities are also increasingly

challenging the appropriateness of the compensation models (transfer pricing) applied for multinational enterprise (MNE) procurement functions. Tax authorities are particularly interested in understanding the nature of their activities and the value they deliver. However, and more significantly, the OECD has recently recommended countries expand their permanent establishment (PE) concepts and definitions, and tighten existing PE exemptions. The adoption by countries of these recommendations into their local tax law may result in the creation of new PEs for some existing MNE procurement functions, and the related tax implications will need to be identified, understood and managed. From corporation tax and value added tax (VAT) registrations and returns, transfer pricing reports, country-by-country reports (CbCR) and master file obligations, to new tax liabilities, individual income tax compliance and social security obligations for business travelers, the compliance and financial burden of these PE developments could be significant for some MNEs. www.businessday.ng

Tax authorities are adapting beyond the “bricks and mortar” definition, identifying PEs caused by overseas contractors, short-term business travelers, warehouse space, digital activity and more. For those thinking that this is more about being caught in a “storm in a teacup” than being caught in “the eye of the storm,” it is worth noting that the CbCR that MNEs are now obliged to file requires that MNEs specify which of their entities are involved in performing procurement functions. The master file has a special section

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for the MNE to disclose its supply chain and to provide an overview of the various functions performed across that supply chain, creating increased visibility for tax authorities into the procurement functions of MNEs. With increased visibility into the function and changes to PE concepts, definitions and exemptions, MNE procurement functions are likely to encounter a heightened level of scrutiny from tax authorities across the world, with consequential increased levels of tax controversy risk.

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Ignore the storm at your peril – navigate the winds of change From a risk perspective, where tax authorities successfully identify PEs that taxpayers have not, this could lead to a significant increase in tax costs, reducing the value delivered by procurement teams. This is arguably a direct consequence of the MNE procurement function’s operating model, including where its people are located, performing their activities and making their decisions. However, when MNEs proactively consider these new PE developments in the design of their procurement function, the potential exists to sustain the procurement operating model’s effectiveness. It is possible to even enhance the value the procurement function delivers and the tax optimisation outcomes the operating model seeks to secure. Ignoring the new normal may come at a cost: a missed opportunity to increase value and manage risk. MNEs need to evaluate the implications of these changes to ensure their procurement operating models remain operationally effective and tax compliant. Is now the time to review yours?.

Wednesay 28 August 2019

BUSINESS DAY

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Wednesday 28 August 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 27 August 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 241,707.53 6.80 3.03 202 19,200,791 UNITED BANK FOR AFRICA PLC 201,776.59 5.90 -1.67 208 8,515,096 ZENITH BANK PLC 596,533.38 19.00 1.60 403 11,881,334 813 39,597,221 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 177,681.70 4.95 -1.98 263 15,628,197 263 15,628,197 1,076 55,225,418 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,850,649.55 140.05 1.49 155 17,018,010 155 17,018,010 155 17,018,010 BUILDING MATERIALS DANGOTE CEMENT PLC 2,811,683.72 165.00 -1.20 68 2,071,051 LAFARGE AFRICA PLC. 225,509.14 14.00 3.57 56 5,535,608 124 7,606,659 124 7,606,659 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 234,024.40 397.70 -9.82 11 58,375 11 58,375 11 58,375 1,366 79,908,462 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 38,299.49 40.15 - 3 737 PRESCO PLC 44,800.00 44.80 - 8 8,733 11 9,470 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,200.00 0.40 - 7 76,928 7 76,928 18 86,398 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 6 1,483 JOHN HOLT PLC. 194.58 0.50 - 3 22,102 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 42,680.39 1.05 1.94 99 29,667,031 U A C N PLC. 14,406.48 5.00 -2.91 126 8,047,994 234 37,738,610 234 37,738,610 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 18 58,468 ROADS NIG PLC. 165.00 6.60 - 0 0 18 58,468 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,416.51 0.93 -7.00 5 128,279 5 128,279 23 186,747 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,979.13 1.53 - 5 80,200 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 90,681.85 41.40 - 33 34,468 INTERNATIONAL BREWERIES PLC. 83,809.65 9.75 -7.14 11 105,008 NIGERIAN BREW. PLC. 405,442.93 50.70 0.40 43 310,505 92 530,181 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 104,000.00 20.80 - 42 237,223 DANGOTE SUGAR REFINERY PLC 114,000.00 9.50 - 40 146,947 FLOUR MILLS NIG. PLC. 58,635.43 14.30 - 49 464,638 HONEYWELL FLOUR MILL PLC 8,564.61 1.08 - 25 402,600 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 33,117.98 12.50 - 6 4,671 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 162 1,256,079 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,467.28 9.30 - 30 467,719 NESTLE NIGERIA PLC. 982,893.75 1,240.00 0.65 70 212,388 100 680,107 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 14 119,506 14 119,506 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 24,815.48 6.25 5.93 47 1,001,060 UNILEVER NIGERIA PLC. 166,605.16 29.00 -1.69 44 1,346,863 91 2,347,923 459 4,933,796 BANKING ECOBANK TRANSNATIONAL INCORPORATED 127,529.38 6.95 -9.15 93 3,774,889 FIDELITY BANK PLC 48,967.41 1.69 -0.59 70 2,736,798 GUARANTY TRUST BANK PLC. 799,056.52 27.15 -3.04 310 25,174,074 JAIZ BANK PLC 11,785.70 0.40 - 8 636,790 STERLING BANK PLC. 65,930.06 2.29 -0.43 52 7,022,472 UNION BANK NIG.PLC. 199,477.16 6.85 - 45 661,509 UNITY BANK PLC 7,013.60 0.60 -4.76 22 448,002 WEMA BANK PLC. 23,144.68 0.60 3.45 24 894,687 624 41,349,221 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,712.54 0.68 - 16 122,935 AXAMANSARD INSURANCE PLC 19,530.00 1.86 - 7 31,356 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 1 100 CONTINENTAL REINSURANCE PLC 13,484.57 1.30 -0.76 29 1,773,818 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 7 77,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,050.56 0.28 - 6 125,342 LAW UNION AND ROCK INS. PLC. 1,675.57 0.39 - 4 11,142 3,840.00 0.48 - 4 3,000 LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 7 352,553 NEM INSURANCE PLC 10,191.37 1.93 -3.98 10 180,100 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 2 53,163 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 100 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 -9.09 8 2,043,600 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 60,100 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 200 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 50 WAPIC INSURANCE PLC 4,951.61 0.37 - 29 485,627 136 5,320,186 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,606.77 1.14 -9.52 4 102,050 4 102,050

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 2 300 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 1 100 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 3 400 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,000.00 3.50 -6.67 41 507,725 CUSTODIAN INVESTMENT PLC 35,879.37 6.10 1.67 17 448,717 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 31,882.36 1.61 - 33 1,247,595 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 358,419.35 35.00 - 27 32,347 UNITED CAPITAL PLC 12,300.00 2.05 - 62 946,232 180 3,182,616 947 49,954,473 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 500 817.22 0.23 -4.17 2 262,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 3 262,500 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 4 8,783 4 8,783 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 9,388.62 4.50 - 6 5,225 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,925.77 8.30 - 1 2,500 MAY & BAKER NIGERIA PLC. 3,622.99 2.10 - 9 93,870 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 892.60 0.47 -9.62 18 2,067,600 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 2 2,605 PHARMA-DEKO PLC. 36 2,171,800 43 2,443,083 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 745.92 0.21 5.00 10 662,394 10 662,394 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 250 NCR (NIGERIA) PLC. 534.60 4.95 - 1 2,000 TRIPPLE GEE AND COMPANY PLC. 336.57 0.68 - 13 9,920 15 12,170 PROCESSING SYSTEMS CHAMS PLC 1,361.86 0.29 3.57 17 1,218,225 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 500 18 1,218,725 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 34 37,117 34 37,117 77 1,930,406 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 8 9,779 CAP PLC 17,325.00 24.75 - 8 10,202 CEMENT CO. OF NORTH.NIG. PLC 190,580.76 14.50 3.57 21 273,387 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 37 293,368 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 - 14 115,843 14 115,843 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 3 38 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 38 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 54 409,249 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 12 621,863 12 621,863 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 4 7,500 4 7,500 16 629,363 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 2 152,500 2 152,500 INTEGRATED OIL AND GAS SERVICES OANDO PLC 46,617.80 3.75 - 48 290,937 48 290,937 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 6 15,002 CONOIL PLC 11,658.40 16.80 - 21 30,896 ETERNA PLC. 3,651.61 2.80 - 14 89,699 FORTE OIL PLC. 19,016.22 14.60 1.39 68 907,472 MRS OIL NIGERIA PLC. 5,729.98 18.80 - 7 5,535 TOTAL NIGERIA PLC. 32,763.86 96.50 -8.79 42 48,917 158 1,097,521 208 1,540,958 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,499.47 4.24 - 12 123,514 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 -9.09 4 102,493 16 226,007 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 5,000 IKEJA HOTEL PLC 2,972.68 1.43 - 2 2,400 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 50 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 4 7,450 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 1 100 LEARN AFRICA PLC 1,072.32 1.39 - 14 31,455 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 2 1,600 UNIVERSITY PRESS PLC. 625.54 1.45 - 12 116,321 29 149,476 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 530.46 0.32 -3.03 4 1,232,626 4 1,232,626 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 1 2,793

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Wednesday 28 August 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

First Bank in collaboration process as Telcos await PSB licence According to the apex bank, subsidiaries of mobile network operators (Telcos), mobile money operators, retail chains (supermarkets) and banking agents are welcome to apply for the PSB license, provided they can meet certain requirements of the CBN. “But we are fully equipped to also compete,” Adeduntan said adding that “there is enough space” to accommodate everyone. In January 2019, the central bank unveiled a revised version of the National Financial Inclusion Strategy (NFIS) in which the lender said it is optimistic about achieving the set 80 percent inclusion target of 2020. Nigeria currently has 36.8 percent of its adult population excluded from the financial cycle; this translates to a population of 36.6 million adult Nigerians, who at the moment are not included in the financial net. Less than 5 months to the 20 percent exclusion deadline, the regulator has about 16.8 percent gap to close if it is going to achieve its target.

ENDURANCE OKAFOR

n its quest to spur financial inclusion, Nigeria’s premier and leading financial institution, First Bank of Nigeria said its in talk with a telecommunication company for collaboration as industry players await the Central Bank of Nigeria (CBN) for the mobile money licence. According to Adesola Adeduntan, Managing Director/Chief Executive Officer, First Bank of Nigeria Ltd., the tier-one bank sees opportunity for collaboration. “As we speak there are ongoing conversations for collaboration and that is going to be the models this institution will pursue,” Adeduntan told BusinessDay at the lender’s head office in Lagos. On the 5th of October 2018, the central bank released exposure draft guideline in which it proposed Payment Service Banks (PSB) aimed at deepening access to financial products and services in a country that is lagging its African peers in inclusion rate.

Adesola Adeduntan

Nigeria’s bank-led financial inclusion model has been argued by industry players as one of the reasons for the lag in the country’s inclusion rate. No wonder the proposed PSB has been seen as a welcomed development considering it will avail other businesses, especially the Telcos opportunity to partake in providing financial services. At least 30 business names have since applied for registration to obtain the payment service bank licence but it’s been almost one and the regulator is yet to give license to any of the applicants. “The space left is so huge and if the country as a whole is to achieve those objectives, it would need a number of other players, and given what we have done, we believe we are the institution to beat in that space,” Adeduntan said. According to the MD, the commercial bank has the highest banking agent network in Nigeria with about 31, 000 agents operating with the name- Firstmonie.

ReadyCash urges CBN to include roadside agents to grow network, spur inclusion ENDURANCE OKAFOR

ccording to Emeka Onwuka, CEO, Parkway Project, a Lagos-based Fintech company known for its popular ReadyCash product, the Central Bank of Nigeria (CBN) should include the non-regulated roadside agents providing agency banking services into the formal cycle to increase the network and spur inclusion. “When it comes to financial inclusion, we believe that the distribution is really where we have the problem,” Onwuka told BusinessDay adding that it is not about wallet rather it is “about the touch point where people can actually go and have access.” In January 2019, the central bank unveiled a revised version of the National Financial Inclusion Strategy (NFIS) in which it projected that it will enrol

about 500,000 mobile money/bank agents available to serve about 105 million adult Nigerians by the year 2020. The figure translates to about 476 agents per 100,000 adults. Less than five months to the projected deadline, Nigeria’s financial institutions have however enrolled a joint 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed. This is 86.85 percent less than the 500,000 mobile agents which are going to serve about 105 million adult Nigerians. If the industry regulator is to meet the target by 2020, it would have to enrol about 434,247 agents in five months. “What I also know is that you have a lot of this mobile money agents out there but not necessarily regulated and are providing similar agency banking services, one thing that I will advise is for CBN to make sure that

everyone who is operating one form of agency banking or the other is properly identified either by issuing them some ID number,” Onwuka said. The Cofounder added that if the apex bank implements the idea, he “will not be surprised that the number of agents already operating maybe up to 50percent of the target projected.” The apex bank also has a target to ensure it drive the current 36.8 percent exclusion rate to 20 percent by 2020, a projection many have argued is too ambitious especially as the country is now referred as the poverty capital of the world. “We do have poverty problem, first and foremost people need to have finances before they can be included into the financial services net,” Onwuka said. The CEO also linked the country’s exclusion rate to CBN’s policy flip-flop.

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“We’ve had a lot of policy flip-flop from the CBN; we started with mobile money and for years we were not sure whether Telcos were going to play in the financial service industry.” As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system. Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and may not be visible to the regulatory authorities. As such it was clear that a better balance between the market and the regulatory

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structures was required. Since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system. “When loans and credits are given to individuals who have basic bank accounts especially those in the informal sector, (as they contribute to the larger population of the country), they will be encouraged to operate formally in the financial circle other than their normal traditional way of carrying out financial transactions,” Wale Okunrinboye, head of Research at Lagos-based Sigma Pensions said. According to the World Bank report, mobile money drove financial inclusion in Sub-Saharan Africa, as only eight countries in Africa @Businessdayng

which included Burkina faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe recorded 20 percent or more adult using only a mobile money account. Although the World Bank also noted there are immense opportunities in the region as about 95 million unbanked adults in the region receive cash payments for agricultural products, and roughly 65 million save using semiformal methods. Between 2014 and 2017, the World Bank noted that there has been significant increase in the use of mobile phones and the Internet to conduct financial transactions which contributed to a rise in the share of account owners sending or receiving payments digitally from 67 per cent to 76 per cent globally, while developing countries recorded 57 percent to 70 per cent.

Wednesday 28 August 2019

BUSINESS DAY

POLITICS & POLICY Lagos moves to prevent constant crisis in land matters as Assembly begins survey law review INIOBONG IWOK

h e L a g o s St at e House of Assembly has set-up a committee to review the State’s Survey Law and advise the House on how to prevent constant crisis in land matters arising from issues involving surveying in the state. The House submitted that the process would bring the Survey Law of the state to emerging realities. This followed a motion moved by some lawmakers in the Assembly led by the Majority Leader of the House, Sanai Agunbiade during plenary on Monday. The Speaker of the House, Mudashiru Obasa, who announced the committee members, revealed that it would be headed by Abiodun Tobun. Members of the committee included, Victor Akande, Noheem Adams, Rasheed Makinde, Tunde Braimoh, AbdulSobur Olayiwola, Fatai Oluwa and others. According to him, “To curb the nefarious activities of surveyors in the state the state has the smallest land in the country, yet the ownership and control of land usually leads to crisis the level of impunity is becoming so high based on the activities of some

Governor Sowolu

surveyors in the state. “We have laws that regulate the activities of surveyors in the state. Section 16 (1) of the state’s survey law in the state gives the house powers to control the activities of surveyors in the state,” he said. The Majority Leader added that non-composition of disciplinary committee on survey matters, as provided by the law, has led to a lot of issues in the survey. “This House has dealt with some crises on issues concerning lands and these arose from improper information in the survey plan.

“We have seen cases where surveyors collect money from people and say the land is not under acquisition whereas it is under acquisition. They give wrong information to land owners and cause disputes among people. “Many people who own land lose the land due to misinformation in the area of survey. That was why we searched for the law so that this could be corrected. The House is concerned with the Land Protection Bill.” In supporting the motion, Rasheed Makinde (Ifako-Ijaiye 2) said that the issue of land

was very important, adding that it has been a recurrent one. Makinde stated that they had not been doing digital survey in the Surveyor General’s Office, and that some of the instruments they are using for survey in the state were obsolete. “Incompetence of the technicians is another issue; the surveyors use intuitions to determine the land that is free. We need to overhaul the Office of the Surveyor General,” he said. In his contribution, the Deputy Majority Leader of the House, Olumuyiwa Jimoh (Apapa 2) stated that the Surveyor Registration Council should be up and doing in disciplining their erring members. He added that surveyors should stop the habit of sitting in the office and sending draftsmen to the field. This was corroborated by Abiodun Tobun (Epe 2), who said that land is to Lagos State what crude oil is to some other states of the federation. Rotimi Olowo (Shomolu 1) said that there was a law passed by the House to deal with erring surveyors. Olowo advised that the state should look at the issue of equipment for surveyors, adding that the state had been having problem with allocation of lands and that there was no good record keeping in the Office of the Surveyor General of the state.

Ogun governor pledges to reposition public service for effectiveness

gun State governm e nt say s i t i s working towards repositioning the civil and public service for efficient service delivery for the people. Dapo Abiodun, the state governor, stated this while inaugurating the Committee on the Review of Appointmentd and Promotions in the State Civil Service and Enterprises between February 1 and May 29, 2019, in his office at Oke-Mosan, Abeokuta. The governor noted that the State Public Service, renowned for its professionalism, commitment and dedication, be provided with the right type of leadership to enable it perform optimally. “Ogun State public service is renowned for its professionalism, commitment and dedication and it occupies an important position in the comity of state in the nation. “This is the state of Simeon Adebo and A. K. Degun.

Dapo Abiodun

The state has produced giants who laid the foundation of public service in Nigeria,” he said. According to him, the feedback received by his administration on the appointment of some people into positions of responsibility was unsatisfactory, hence, the setting up of the committee. The governor, who said his administration was determined to build a solid manpower base, made up of qualified people, added www.businessday.ng

that the committee was to examine and review all appointments and employments into the public service, MDAs and other related matters connected between February 1 and May 29, 2019. He also noted that the committee was to ascertain whether there are establishment vacancies for all posts and grade levels, to review and establish the procedures for appointment in line with Public Service Regulations and Extant Rules

The committee, according to him, is to recommend to government appropriate course of action on the appointments. The governor also said that the committee was to make any recommendation that may forestall recurrence of such appointments, and that it had four weeks to submit its report. Responding, Dipo Odulate, chairman of the committee and former Head of Service, lauded the governor for being meticulous and not rushing to take action on any issue. He said the committee would leave no stone unturned in discharging its assignment as it was poised to work assiduously, transparently and be fair to all. Other members of the committee are Sola Adeyemi, Kehinde Ogunfowodu, Jide Oyeti, Ambali Isola, Moyosore Olowonmi, Olufunmilayo Stanley, and Nurudeen Oyedele, who serves as the secretary.

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Kwara APC chairman urged to resign over political crisis SIKIRAT SHEHU, Ilorin

he Kwara Youths Congress (KYC), an umbrella body of youth associations across the state, has issued a quit notice to Bashiru Bolarinwa, the chairman of the All Progressives Congress (APC), with a call on him to resign his appointment with immediate effect. Speaking to journalists shortly after an emergency meeting held in Ilorin on Tuesday, the spokesperson of the group, Ibrahim Abdullahi, who read the resolutions of the group, gave the party seven days ultimatum to remove Bolarinwa from office. Ibrahim, who is also the coordinator of Ilorin Emirate Youths Assembly, says: “We have carefully watched the trend of political happenings in the state in the last few days and we hereby lend our voice to corroborate the position of other stakeholders in the state who have earlier called for the party chairman’s removal. “Bolarinwa’s greed, dis-

loyalty attitude to Governor Abdulrahman Abdulrazaq doesn’t portray that of a true party helmsman who is expected to foster prudence, peace, unity and prosperity among members. “He has demonstrated high level of greed, indiscipline, arrogance and insubordination against the highest ruling class in the state.” He further said: “We are urging him to retrace his steps. Apologise unreservedly immediately to our governor and plead his loyalty to him so that the governor can continue to achieve his Godgiven aim of repositioning the state without any unnecessary distraction for within. “It won’t be out of place to state that there is urgent need for the review of the current political arrangement in the state vis-a-vis across party structure.” The group therefore, pledged its unalloyed loyalty and support to the peaceful co-existence of Kwarans especially youths towards national consciousness and democratic advancement.

Governorship election petition tribunal adjourns till September 10 for adoption of briefs ANIEFIOK UDONQUAK, Uyo

he Governorship Election Petition Tribunal sitting in Uyo has fixed September 10 for adoption of written addresses in the petition brought by Nsima Ekere of the All Progressives Congress (APC). After calling 11 witnesses, Counsel to the People’s Democratic Party, Tayo Oyetibo (SAN) announced that he had closed his case for the 2nd respondent. Similarly, the third respondent, Independent National Electoral Commission (INEC) informed the tribunal that having examined the case before the tribunal from the beginning; they no longer saw a need for an additional witness. “Based on the facts before tribunal, we have come to conclusion that there is nothing whatsoever to prove again by calling additional witnesses. “We have decided to align with the evidences made by the first and second respondents in this @Businessdayng

tribunal.” Sylva Ogwemoh (SAN) said their decision was also taken in view of the lifespan of the tribunal which has its deadline for September 25, 2019. A total of 20 witnesses were called upon by the 1st respondent, while the 2nd respondent called 11 witnesses. The Tribunal Chairman, A. M. Yakubu noted that the three-man Panel enjoyed the cooperation of Counsel, adding that the Tribunal is not surprised by the cooperation because of the capacity of the senior counsel involved. Yakubu noted that the position taken by the counsel on final written address is good but for lack of time, he announced five days for filing of written addresses for both Petitioners and Respondents. He also said they have three days to file reply on point of law. The Tribunal adjourned to September 10, 2019 for adoption of written address.

Thebigread Tech start-ups drive change for Nigerian truckers

BUSINESS DAY

Wednesday 28 August 2019 www.businessday.ng

Uber-style apps are transforming industry rife with inefficiency and corruption Neil Mushin, FT

ntil a year ago, F r i d a y Ig h o d a ro spent three or four nights a month getting pulled out of his 30-tonne Steyr truck on the unlit highways of rural Nigeria by armed robbers. They know that long-haul truckers carry cash advances for provisions along the way, he said. “Nowadays in Nigeria when you carry money, it’s very dangerous,” he said. Bandits prowl the roads across the country, “but now when they stop you on the road, when they see the Honeywell sign, they know we don’t carry cash.” Mr Ighodaro is an owneroperator who hauls grain to every corner of Nigeria for Honeywell Flour Mills and other clients of Kobo360, a 20-month-old start-up which announced earlier this month that it had raised $30m in debt and equity in a funding round led by Goldman Sachs. The company uses an “Uber for logistics” model to connect drivers and fleet operators to companies bringing goods into and around Africa’s most populous country, and also Togo, Ghana and Kenya, as it attempts to bring a cashless, app-bas e d pap erless system to an industry mired in reams of paperwork and handshake relationships. Where many drivers might get 30 per cent of their pay upfront in cash from traditional trucking companies — for food and fuel en route — Kobo pays them 70 per cent on starting the trip, directly to their bank account. Drivers can then use payment apps on their phones to pay for food, or use a Kobo service to buy discounted fuel at petrol stations via their phones. Its operations became all the more relevant last month on the signing of a landmark continent-wide free trade deal aimed at bolstering intra-African trade, which sorely lags that of the rest of the world. Mr Ighodaro signed up with Kobo a year ago, and has not had to hustle for business in the crowded truck depots of Lagos since. He and his fellow drivers — Kobo said it has signed up more than 10,000 — have also not had to wait in the notorious, winding line that leads to Lagos’s main ports. Ko b o p rov i d e s i t s d r i vers with a lift via barge to its

customers located inside the port. “Tin Can [in Lagos’ port] is the hardest place to move goods in the w orld — the hold-up for days, the soldiers extorting money from drivers in line,” said Goni Gombe, whose family fleet of 60 trucks has seen business triple in the year since it signed up with Kobo. “But now we can go in and out.” Rail system unchanged since colonial times Shoddy infrastructure is one of many challenges — along with insecurity, inefficiency, corruption, poor-quality trucks and high fees — that make logistics among the biggest obstacles for businesses trying to make it in Africa’s largest economy and across the continent.

Mo s t A f r i c a n c o u n t r i e s rank near the bottom of the World Bank’s annual logistics performance index because the system is rife with inefficiencies. Shipping a container from China to Lagos is sometimes cheap e r than moving o ne from the Lagos port to the other side of the city, said Obiora Madu, head of the Nigeria-based African Centre for Supply Chain. “If you are shipping coffee from Kenya, you actually have to go to Europe first before it comes to Nigeria [as there are no roads connecting the two countries],” he said. “And by that single act, you have destroyed any cost advantage you were supposed t o h av e h a d .” C o m p a n i e s like Kobo360 and its main

competitor, Kenya’s Lori, are trying to revolutionise the logistics systems that will be key to the success of the recently signe d Afr ica Continental Free Trade Area agreement. The accord aims to boost economic growth on a continent with a combined gross domestic product of over $3tn and a young, fast-growing population. “Logistics is at the heart of the [agreement] — that’s the only thing that will make it work, because it’s not like we have rail,” said Obi Ozor, founder of Kobo360. Africa’s limited rail syste m ha s re ma i n e d la rg e ly unchanged since it was built by colonial powers. “And do I think any of the countries will have full rail in the next 25 years?

That’s not possible. [We a re ] a l re a d y m ov i n g s t u f f from Nigeria to Ghana, and it’s taking us 16 days to [move 460km].” Gig economy gives freelance workers a lifeline In the west, the unstable a n d d e ma n d i ng natu re o f work under the gig economy has generated a significant backlash from workers and commentators alike. But in Nigeria, where nearly a quarter of the population is unemployed, platforms that connect freelance workers to jobs can be a lifeline. “They would be my second god if they [could] give me even more business,” said Kobo driver James Okoruwa. “That’s what we’re praying for.” Kobo offers truck financing, discounts on diesel, healthcare and school fees assistance, per-trip insurance and upfront payments, for pay-cheque to pay-cheque truckers used to waiting two or three weeks to get paid. It offers customers — like Unilever, Dangote Sugar and steel manufacturer African Industries — the ability to track their deliveries in real time. If a truck breaks down — a frequent occurrence on highways with potholes big enough to swallow cars — Kobo said it can dispatch a team to fix it, secure the payload from bandits and move the load to a new truck for delivery. Kobo plans to use the $20m in equity from Goldman, Y C o m b i n a t o r, t h e In t e r n a tional Finance Corporation and others to push further into Nigeria, expand into 10 other countries and launch a blockchain-enabled logistics platform that brings together all of its services. The additional $10m in debt it raised from Nigerian banks will be used to offer financing to drivers and fleet operators. Mr Ozor, 30, had brief stints as a JPMorgan investment banker and as operations manager for Uber in Nigeria before launching Kobo in 2017. He said he plans to visit China later this month to start the process of designing “a truck that works for Africa” to cut costs for Nigerian truckers in half. “There is no truck driver in Africa who uses AC, so why do we have $11,000 more additional costs for that? We have this digital dashboard — we don’t need that, take that $7,000 out and spend $4,000 on new suspension — that’s what we need in Africa.”

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