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19 Experts on 2019

As the 2019 elections approach, BusinessDay brings you ‘19 for 2019’, where 19 experts tackle issues that will shape Nigeria for the next generation. Today, Paul Collier writes on ‘Nigeria’s economy: getting beyond the blame game’. See Page 50

Onnoghen: Nigeria sliding into dictatorship CHRISTOPHER AKOR

L-R: Ernest Azudialu-Obiejesi, chairman/GMD, Nestoil Group; Ibrahim Diaby, director-general, Societe Nationale d’operations Petrolieres d la Cote d’Ivoire; Rabiu Suleiman, senior technical adviser to the minister of state for petroleum resources on refineries and downtream infrastructure, and Rohie Bittaye-Darboe, permanent secretary, Ministry of Petroleum and Energy, The Gambia, during the cutting of the tape to declare open the 3rd West African Int’l Petroleum Exhibition and Conference (WAIPEC) in Lagos.

The curious case of the CBN’s long-standing N306/$ rate T LOLADE AKINMURELE

he Central Bank of Nigeria’s N306 exchange rate is useless to businesses and households, yet it has remained for the third

year running.

Every market player, from commercial banks to investors, uses the more market-reflective N360-N363 per dollar exchange rate. Even the same CBN makes dollar interventions at around N354 per dollar.

The CBN’s spokesperson, Isaac Okorafor, did not immediately respond to an email seeking answers to why the CBN continues to keep the rate.

Until state-owned oil firm, Nigerian National Petroleum Corporation (NNPC), became

the sole importer of petroleum products into Nigeria, the CBN justified its artificial rate by saying it was necessary to keep petrol prices low, meaning dollars were sold at a cheaper rate to Continues on page 54

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n c l e a r d e sp e rat i o n t o achieve certain outcomes ahead of the February poll, and in a move that smacks of total disregard for the rule of law and constitutionalism, Nigeria’s President Muhammadu Buhari on Friday suspended the country’s Chief Justice, Walter Continues on page 54

Inside Nigeria’s IPO market brightens with MTN 2019 target

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How PPP can solve fiscal deficit issues of most Nigerian states ISRAEL ODUBOLA

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igeria’s expenditure continues to outpace revenue, pointing to the fact that it is high time for those at the helm of affairs to implement appropriate policies that would stimulate the country’s quivering revenue base.

The assumptions of the 2019 budget show that government would borrow about N1.8 trillion to finance a projected N1.9 trillion deficit. Worse still, the Federal Government’s borrowing plan, as disclosed by the Debt Management Office, reveals that funds would be borrowed from the local money markets to finance the 2018 budget in Q1 2019.

The government planned N9.12 trillion in the 2018 budget, against an aggregate revenue of N7.16 trillion. Fiscal deficit stood at N1.95 trillion and accounted for 1.73 percent share of the GDP. In 2017, government budget was N7.28 trillion relative to an aggregate revenue of N4.94 trillion, and fiscal deficit stood at N2.36 billion, accounting for 2.18 percent share in GDP. Fiscal deficits have been blamed for the assortment of ills that besets developing economies for a number of years. Of a truth, deficit financing or fiscal deficits within moderate level help to drive aggregate demand.

However, huge fiscal deficits create the problem of indebtedness and also kill investment through crowding out credit from the private sector.

“Deficitisthreatenedbydisappointing revenue, notwithstanding the upsurge in the price of oil which naturally feeds into a wider deficit that will leave government with limited options than to borrow, thus shrinking available credit to private sector,” says Timothy Olawale, director-general, Nigeria Employers Consultative Association.

The World Bank said late last year that over-reliance on ‘small oil sector’ (less than 10 percent of GDP) for revenue and foreign exchange fuels the country’s rising fiscal deficit profile and posited that revenue would continue to trend upwards in subsequent years.

Nigeria practices the Americanstyle presidential democracy. In the

American case, however, allocations are not given to state governments from the central government but state governments as federating units survive on internally generated revenue (IGR) and/or private-sector funding, unlike in Nigeria where most state governments depend on federal allocation as their IGR is of no significance.

Kayode Fadahunsi, chief executive officer, Prosperis Holdings, said of the sources of revenue, the only area that has not been properly harnessed is dividend revenue through state government investment in private projects.

“State governments can collaborate with the private sector by investing in projects/businesses, that is, establishing state corporations or allowing private sector run some of the companies and the states can recoup revenue and capital from these companies,” Fadahunsi posited.

The fact that state governments are yet to generate revenue from dividends is an indication that they are yet to invest robustly in the private sector.

Gombe State, for instance, was created in 1996 with more than N100 billion allocation from the Federal Government. Meanwhile, Guaranty Trust Bank started operations in 1991 with less than N100 billion shareholders’ funds.

Today, Gombe has an IGR of about N7 billion monthly, one of the lowest in Nigeria, whereas GTBank recorded gross earnings and net profit of N111 billion and N46 billion, respectively, in Q3 2018. If Gombe had invested about 60 percent in GTBank in 1996, the state would have been much more financially buoyant than its present situation, just by receiving dividends as a major shareholder.

Lagos State has the highest IGR in Nigeriaandhasremainedtheonlystate thathasbeendevisingvariousstrategies to fund its infrastructural needs. The state’s agreement with Lekki Concession Company (LCC) Limited for construction of the Lekki-Epe Expressway TollRoad,regardedasNigeria’sfirstever Public Private Partnership (PPP) project, loosened public funds that could be dissipated towards other key sectors and equally hastened projects delivery.

Analysis

L-R: Hans Verolme, senior strategic consultant, Climate Advisers Network; Israel Igwe, director, economic research and policy management, Federal Ministry of Finance; Kyari Bukar, former chairman, Nigerian Economic Summit Group (NESG), and Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), at the Climate Finance Accelerator (CFA) closing plenary session organised by Ricardo Energy & Environment, and NESG in Lagos, at the weekend.

Pic by Olawale Amoo

Nigeria’s IPO market brightens with MTN 2019 target ... as Shuter meets NSE CEO in Davos IHEANYI NWACHUKWU

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he prolonged lullinNigeria’s initial public offering (IPO) market will soon see some level of activities following MTN Group’s restatement of its commitment to list the Nigerian unit on Nigerian Stock Exchange (NSE) before the end of 2019.

“We had very good meeting with Oscar Onyema, the CEO Nigerian Stock Exchange, earlier in the week,” said Rob Shuter, MTN Group president and CEO, in an interview on the sidelines of the World Economic Forum (WEF) in Davos.

While listing activity on the NSE remained relatively low in 2018 with one listing against four delistings, the coming to Custom Street market by MTN Nigeria for IPO will open the doors for other telecommunications companies (Telcos) to approach the market for cheaper capital against consortium of bank loans which puts pressure on them.

“We are absolutely committed to listing MTN Nigeria on the NSE. We were very far advanced last year but, of course, as you can imagine some of the difficulties we faced. But we are absolutely intending to complete that listing in 2019,” Shuter said in the video interview seen by BusinessDay.

The listing of Nigerian unit of MTN Group will also help balance the Nigerian bourse and give investors options for sector rotation and reduce volatility associated with a single name dragging down the entire market.

Oscar Onyema, NSE CEO, while reviewing 2018 market performance and giving outlook for 2019 recently, said, “To enhance our listing prospects, we have strengthened our government engagement efforts on privatisation and listing of stateowned enterprises, and we expect to take advantage of opportunities within this space during the year.”

He noted that the market sentiments in the first half (H1) of the year willbedrivenbyuncertaintyinoilprices as well as the 2019 general elections.

“Accordingly, we anticipate volatility in equities markets first half of 2019, with enhanced stability postelections,” Onyema said.

“We also intend to maintain our collaborative efforts with public and private sector stakeholders to advocate for market-friendly policies, and cater to infrastructure financing needs as well as other capital requirements necessary for sustainable economic growth. The Exchange intends to work with the private sector as well, to catalyse the listing of more companies,” he said.

MTN Group successfully completed the listing of MTN Ghana and its plans to list its Nigerian unit were affected by dividend issue raised by the Central Bank of Nigeria (CBN) and the Attorney General of the Federation.

MTN Group engaged extensively with the authorities in Nigeria to deal with the matters they raised. The apex bank has reached an agreement with the telecommunication giant to pay a fine of $53 million as against the initial $8.1 billion.

“MTN is cleared,” the CBN had disclosed.

The NSE will add a third major sector after financial stocks like banks and industrialnameslikeDangoteCement, once MTN Nigeria lists its shares. The Group plans to list its Nigerian unit on the Premium Board of the NSE which hasthelikesofDangoteCementPlc,ZenithBankPlc,FBNHoldingsPlc,Access Bank Plc, Seplat Plc, Lafarge Africa Plc, and United Bank for Africa Plc. MTN aims to list its Nigerian unit worth $5.23 billion in 2019 and raise funds to cut debt. It plans to raise at least $400 million (N140 billion) from the IPO to pay preference shareholders. With Nigeria making up 40 percent of MTN group revenues, combined with the still fast-growing telecommu-

Continues on page 54

Nigeria’s maize grain may come under pressure as drought hits South Africa’s farm JOSEPHINE OKOJIE

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igeria may soon see its maize grain come under pressure as drought hits South Africa’s major growing areas of the crop this season.

South Africa, the largest maize producer on the continent, is predicted to have a decline in its 2019 production as dry conditions hit main growing provinces in the country, its grain association says.

If this happens, Nigeria will experi-

ence a repeat of what happened in the 2016maizeseasonwhenforeigntraders andlocalmillersscrambledforitsmaize due to the havoc caused by armyworm infestation on South Africa’s farms.

Maize prices in Nigeria then rose to an all-time high of N180,000 per metric tonne.

“Lots of traders from neighbouring countries have always come to mop up our grains especially maize. So with the drought in South Africa, we are likely to see more pressure,” Victor Iyama, president, Federation of Agricultural

Commodity of Nigeria (FACAN), said.

“Nigeria should start looking at boosting its own production to meet local and export demand. It takes only three month to grow maize and we have both the resources and the weather condition to do that right now,” Iyama said.

He said Nigeria can avert the pressure on maize by putting measures in place that will ramp up production.

Nigeria, Africa’s second largest

Continues on page 54

Real estate investment slows as election fears take toll CHUKA UROKO

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nvestors and sundry stakeholders in the Nigerian real estate sector have raised concerns over the sapping impact of the upcoming general elections on the sector which has remained in negative growth territory long after the wider economy exited a 15-month economic recession.

Besides present loss of income resulting from weak demand and reduced consumer purchasing power, these investors are also apprehensive of which direction the economy will take in the aftermath of the election.

“Right now there is a slowdown in investment because of the uncertainties in the political system. This slowdown will be there till the end of the second quarter of this year.

Investors are being mindful of the outcome of the election,” Femi Akintunde, GMD, Alpha Mead Group, noted in an interview.

Many political parties are in for the political contest but, apparently, the February/March election is a contest between two major political parties,

the ruling All Progressives Congress (APC) and the main opposition People’s Democratic Party (PDP).

Akintunde reasoned that whichever way the result of the election goes, it will impact on real estate, explaining that if the ruling party wins, settling down might take a long time as it did in its first coming in 2015 when it took the president about six months to set up his cabinet.

“If, on the other hand, the main opposition party or any other party wins, policy reversal will be likely and the business community, including real estate investors, is going to feel the impact of such reversal,” Akintunde said.

Already, in the run-up to the election, property prices have come down further from last year levels, as the market is receiving more assets from politicians seeking quick funds to contest elections.

The property market is perceived to be a haven for politicians for laundering money through proxies. They return to the same market to raise funds for their elections

•Continues online at www.businessday.ng

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8 BUSINESS DAY NEWS World beckons for afro music as African Stage debuts at SXSW 2019 in Texas FRANK ELEANYA

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hirty-five music talents from eight African countries are set to perform at the African Stage debuting for the first time ever in the history of the South by Southwest (SXSW) Festival taking place in Austin, Texas, United States.

From March 8 to 17, hundreds of thousands of music and film lovers, artistes, actors, professionals, experts and regulators will be in the city of Austin, Texas, for one of the world’s largest music and film gathering.

The African Stage, tagged “Africa To The World”, is in collaboration with Nigerianbased entertainment company, Bavent Street Live to attract the best of African music talents performers to the SXSW. SXSW, which began in 1987, is an annual conglomerate of film, interactive media, and music festivals and conferences. Over the years, the scope and size of the festival has continued to exceed expectations of the global music scene.

In 2017, the conference lasted for 10 days with SXSW interactive lasting for five days, music for seven days and film running concurrently for nine days. Comedy and gaming components to the festival are particularly fast growing.

“As we head into our 26th edition, we couldn’t be more excited to once again share a completely fresh SXSW 2019 slate with our uniquely smart and enthusiastic SXSW audience,” says Janet Pierson, director at SXSW. Africa’s representation at the SXSW since it started has been very low compared to other continents. In the past four years however, more attention has been given to inviting more artists with urban African music.

Bavent told BusinessDay that it had lined up 35 of the best music artistes to light up the Africa To The World Stage, making its debut in 2019.

The company is partnering Digiwax Media, OkayAfrica, and Soundcity to put up the show at the SXSW. Hakeem Condotti, CEO of Bavent Street Live, said in an interview that the increase in the number of African artistes only confirmed that the embracing of African artistes by global audiences was continuing to grow.

‘Africa to the World’ spans three days of showcasing the best of African music. The selected artistes cover various genres of music including Reggae, Hip Hop, RnB and Kwaito.

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Petroleum minister denies any irregularities over oil lease renewal OLUSOLA BELLO

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inistry of Petroleum Resources has denied any irregularities associated with the ongoing lease renewal undertaken by it, and particular, the Department of Petroleum Resources (DPR).

It says it would be of essence to note that the early lease renewal programme is a process ingeniously developed to expand and speed up earning potential from the renewal exercise for the Federal Government, and to

also create security of title to leaseholders so as to allow them continue the massive investments needed to improve production from their fields.

According to the ministry, the process starts with an application from a leaseholder, an evaluation from DPR, followed by a review by the minister of State, Petroleum Resources and culminating in a recommendation to the President for final approval.

The ministry, which reacted to the House of Representatives threat to investigate the minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu,

over alleged irregularities in the ongoing oil and gas lease renewal, says based on the report, the minister and the DPR await the advertised invitation from the legislators, and as always, will respond to clarify any misunderstandings the House may have on the renewed leases as part of the normal oversight functions of the Assembly.

“We would like to state that the Minister of State and DPR are proud of the enormous work done on early renewals, the unprecedented revenue raised under the programme, and the effect it has had on investment,” according to the ministry.

The ministry also states that it would also use this opportunity to clarify that the early renewal programme applies only to renewal of existing leases and does not involve issuance of any new licences for oil fields.

The lawmakers had threatened that they would also probe the involvement of the DPR on the allegations.

The threat came following a motion by Chika Adamu at the plenary presided over by the speaker, Yakubu Dogara, in Abuja.

Moving the motion, Adamu said the Federal Ministry of Petroleum Resources and the DPR were allegedly re-

newing leases of companies that had failed to pay royalties to the government from oil and gas lifted.

The lawmaker, who represents Shiroro/Rafi/Munya Federal Constituency, said this was in contravention of extant laws. ’The House noted that the Committee on Petroleum Resources Upstream observed irregularities in the ongoing renewal of oil and gas leases being undertaken by the minister and DPR. It also noted that the minister was allegedly granting illegal discounts and rebates in the process of the ongoing renewal of leases.

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Why we must build a wall around Lagos (and Nigeria must pay for it)

Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

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n celebration of my 75thBirthday on 13th January 2019, I was hosted to a sumptuous dinner at The St. Regis Hotel, Houston, Texas by Lagosians living in the diaspora. Many of them have been living in the United States of America for several decades and were entirely sold on the American dream – if you can dream it, you can achieve it through sheer grit. The American branded slogan: “The land of the free and the home of the brave” as well as the exhortation on the Statue of Liberty: “...Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!” were apparently borrowed from Lagos two hundred and fifty years ago and now it is payback time.

For me, the most agonising part of what was otherwise a truly excellent celebration was the showing of the epic documentary film: “A TASTE OF 1930’s MIDDLE-CLASS LAGOS” (Lagos Has Always Been At The Cusp Of Urbanisation) It captured Lagos in all its majesty, glory and splendour – providing ample evidence that it was a city that firmly connected with civilization.

The streets were clean and everyone appeared to be at peace with each other.

The camera dwelt nostalgically on the leading men and women as well as institutions of that era.

Gregory Kronsten Head, Macroeconomic & Fixed Income Research FBNQuest

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ince voting for the next president is due in little more than two weeks, we will try to disentangle some of the muddled views in circulation about the impact of Nigerian elections on the economy. The consensus is that the impact is unremittingly negative, and that the investor develops a ‘wait-and-see’ stance on auto-pilot.

One theory in circulation is that the government has no time for any business other than the programme of elections. We would say that a government seeking reelection will be pushing hard on its agenda to soften up the electorate.

In the current Nigerian context, this means the FGN looking to accelerate its capital releases. Voters who see a new road/school/hospital built in their neighbourhood are more likely to back the incumbent.

They will also respond positively if the government, federal or state, settles arrears on salaries and pensions due to family or friends.

Included in the array of superlative and captivating catalogue of legends of that time was a snapshot of Chief H.O. Davies; Sir Louis Mbafeno and Ernest Egbunna (1938). The camera was even granted the indulgence of straying beyond Lagos to Yaba which was its immediate suburb – displaying neat row upon row of houses, each with its own pristine garden.

Back to Lagos, the camera zoomed on Lagosians enjoying their well-earned leisure and recreation as well as sports at the Lagos Lawn Tennis Club.

Everything went well until the exotic wines and champagne chose to play havoc. From a corner of the vast hall there was mischievous applause when someone started protesting loudly. Then he delivered his bombshell demand: “We want a wall around our beloved Lagos and Nigeria must pay for it!!”

What had started as a mild applause suddenly acquired fresh momentum and traction.

Thereafter, matters went haywire as the demand for the wall became a crescendo.

It took the intervention of an elderly gentleman who introduced himself as Professor Yusuf Olatunji to calm matters. According to him, he was born in IsaleEko area of Lagos.

He was one of the first set of babies to be delivered at Massey Street Hospital and he had found fame and fortune in the United States of America as an authority on authentic African drumming and choreography. Over the years, he had lectured at several leading American universities – Harvard; Princeton; Yale; Massachusetts Institute of Technology; Stanford; University of Chicago etc.

Professor Olatunji literally turned the table on us when he proceeded to show a short film of his recent visit to Lagos to spend Christmas and the New Year. It was a litany of anguish and woes – rubbish heaps everywhere; traffic gridlock; the uncom-

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... rather than adopt the United States of America’s model which (arguably) has become obsolete and is crumbling under President Donald Trump, Africa would be better served by buying into the political culture of China which is anchored on the concept of “one game at a time

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pleted (abandoned) monorail; restless youths/miscreants wandering all over the city; armed robbery; ritual murders; kidnapping; “419” (Advance Fee Fraud) kingpins; Joblessness, homelessness, hopelessness galore; road rage; suicide with the Third Mainland Bridge as their favourite jumping off pad; the stinking toilets at the Murtala Mohammed International Airport plus leaking roofs and no lights; people sleeping under bridges etc.

To cap it all were the trailers ad tankers that had taken over the roads and bridges causing total chaos in Apapa (which used to be part of an expansive serene and tranquil “GRA” Government Reservation Area) with obvious threats of danger that may trigger the collapse of Carter Bridge as well as the roads linking Apapa, Western Avenue (Funsho Williams Avenue), Abebe Village (no connection with Dr. John Abebe!!) and Ojuelegba Road.

Then the camera shifted to the front page of “Rolling Stone” magazine of

October 24, 2017which featured a little boy in a basin/bowl swimming in the flood waters that had overwhelmed the slum dwellers of Makoko on the shores of Lagos. It was also featured on the front page of “The Punch” newspaper.

The scale of human degradation and abject poverty was beyond belief.

It took one back to the middle ages.

Even more amazing was the huge surprise – former President of the United States of America Barack Obama gate-crashed the party!! There he was in T-Shirt and jeans accompanied by his delectable wife, Michelle whose book:“Becoming”is already a blockbuster.

She was the first to speak: “When they go low we go high.”

The rest of her speech was drowned in the spontaneous standing ovation which erupted.

Barack ever so gently persuaded his wife to surrender the microphone.

Thereafter, he held us spellbound when he launched into his inimitable brand of oratory: “I listened to Professor Olatunji and watched the film. Things are never as good as we think, when they are going well, and never as bad as we think when they aren’t. Let me tell you what I believe. I believe in a vision of equality and justice and freedom and multi-racial democracy, built on the premise that all people are created equal, and they are endowed by our creator with certain inalienable rights.

And I believe that a world governed by such principles is possible and that it can achieve more peace and more co-operation in pursuit of a common good. That’s what I believe.”

He was rewarded with wild applause that went on for over ten minutes.

He was not done yet.

“Too much of politics today seems to reject the very concept of objective truth. We see the utter loss of shame among political leaders where they are caught in a lie and they just double down and they lie some more. When you look at American (Lagos!!) his-

tory, there’s always been a push and pull – between those (like J.K. Randle) who promote the politics of hope and those who exploit the politics of fear.”

The audience went into rapture.

That was the juncture at which the Pulitzer prize winning American Journalist, Thomas Friedman, interrupted proceedings and insisted that rather than adopt the United States of America’s model which (arguably) has become obsolete and is crumbling under President Donald Trump, Africa would be better served by buying into the political culture of China which is anchored on the concept of “one game at a time” reinforced by “the political tradition of selecting able and capable people and governing the country with the support of the people.”

Ironically, it was Alhaji Sani Sanda whose family roots are in Kano (which he has never visited) but he along with his father and grandfather were born in Lagos, who insisted on chipping in what he described as a word or two.He then proceeded to enthral the audience with his voyage into nostalgia– how he grew up in Isalegangan area of Lagos (Agarawu Street) speaking Yoruba as his first language. It was much later that he learnt to speak Hausa, the language of his ancestors.

He could not recall any harassment, tension or conflict in Lagos until the military took over. Since then, whatever fault lines may have existed have been recklessly exploited and cynically exacerbated.

Not to be left out was an Ibo, Obi Ezenwa who was my classmate at Lagos Government School (a primary school). His father was a policeman who had two wives and six children.

All of them lived in one room in the police barracks. Regardless, everything in the barracks was spick and span. How the father was able to juggle his challenging domestic arrangements must have been in the realms of the superhuman.

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Distractions not disruptions from elections Another theory is that existing and potential investors succumb to a state of inertia because they are worried by the “uncertainty” surrounding the elections.

The result is uncertain of course but we can say with confidence that, whatever the result, Nigeria should not fear a radical change of direction. In 2015 we had the “change” agenda, and now we have talk of floating the naira and dismembering the NNPC. Alongside their negative campaigning and finger-pointing, serious challengers everywhere look to capture the attention of voters with striking policies.

There is scope on the margins for new policies that can be introduced without the go-ahead from the National Assembly (the equivalent of President Trump’s executive orders). More broadly, the delivery of change is blunted by bureaucratic torpor across the three tiers of government. This means that we should limit our expectations of the new government in place at the end of the transition period in May. It works both way: no fear of change for

the worse but equally little hope of a strong market rally like those following the election victories of Lula, now disgraced, in Brazil in 2002 and Mauricio Macri in Argentina in 2015.

There were very brief, relief rallies after the Nigerian presidential elections of 2011 and 2015.

The outcome to avoid next month is a very close result that is challenged on the streets and in the courts. The presidential term is four years on the US model and the transition period three months. The time for a president and government to make their mark is already limited without such challenges.

The downside from challenges to an election result was evident in Kenya in August 2017. The Supreme Court nullified the presidential election result from earlier in the month.

The main opposition candidate, who had cried foul, boycotted the re-run in October, and the incumbent (Uhuru Kenyatta) was declared winner with 98 per cent of the vote. We cannot say whether a flawed process has any impact on output beyond the very short term but we can say that the developmental capacity of the Kenyan government was weak-

ened for about three months. The stock market saw a sell-off on the intervention of the SupremeCourt and has not subsequently recovered (although other factors are also clearly at play).

According to a third theory, the macroeconomy is vulnerable to a slowdown in the run-up to the elections. Our findings suggest that this theory is the result of laziness on the part of analysts, some of whom are looking to create a narrative for their forecasts. (We were taught, in contrast, to construct forecasts on the basis of a tested narrative.) So we looked at historical data for the run-up to the Nigerian presidential elections in April 2007, April 2011 and March 2015.

The series we covered were FGN expenditure, inflation, offshore investment on the stock market and domiciliary bank accounts in Nigeria. We did not find any adverse trends other than a pick-up in in FGN spending in the run-up to the 2011 polls, which we can trace to a sizeable increase in the national minimum wage by the Jonathan administration. Eight years on, we may well be seeing a repeat (that

the FGN insists is incorporated in its 2019 budget proposals).

Our findings indicate that investors could profitably move on from the ‘wait-and-see” stance.

They have waited and generally seen little, if anything untoward domestically. Foreign portfolio investors have been exiting local debt markets for several months, but in response to US monetary policy normalization rather than the Nigerian elections. As ever, the domestic events to trigger their exit remain pressure on the naira exchange, public finances and official fx reserves as a result of a steep and sustained decline in oil revenue. This is not our base case expectation.

History does not always repeat itself, and it may be that the lessons we have drawn from 2007, 2011 and 2015, subject to data restrictions, no longer apply. It may also be that the next president is able to push through far-reaching change on taking office in late May. We suggest otherwise.

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Growing stress points on the sovereign balance sheet

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

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ome got hopes and dreams, we got ways and means,” boastedPras, one trio of the famous rap group The Fugees in his smash hit “Ghetto Supastar” released in 1988.

While there is no way to verify Pras’ claims the catchy phrase could certainly be a soundtrack to the Central Bank of Nigeria (CBN) which is increasingly lending directly to the Federal Government through overdrafts largely funded

by Ways and Means Advances or money printing.

The CBN as banker to the FG sometimes finances government in period of temporary budget shortfalls through Ways and Means Advances, however what should be a temporary and small effort has become increasingly permanent and growing fast.

Large expansions of central bank balance sheets have implications both for the real and financial sectors of the economy.

This is because any accumulation of assets implies an increase in corresponding liabilities, also

expanding the CBN balance sheet in order to finance government spending often leads to inflationary outcomes.

The CBN overdraft to the FG was close to N3trillion as at June, 2017, according to CBN and International Monetary Fund (IMF), data (see chart).

The CBN has since discontinued publishing data on overdrafts to the FG, but we suspect it has grown worse since then, following the overall trend of growing FG revenue shortfalls and rising debt.

Higher-than-historical fiscal deficits and a challenging macroeconomic environment pushed up Nigeria’s public debt from 12 percent to 19.6 percent of gross domestic product (GDP)between 2014 and 2016.

The Federal Government interest payments on its outstanding debts as a percentage of expected revenue almost tripled from 27 percent in 2014 to an estimated 71.9 percent of actual revenues received in 2017.

The IMF projects that this will reach 81.7 percent of Federal Government (FG) revenue in 2022, up from 61.7 percent in 2016.

An interest rate shock, would further increase it to 104 percent of FG revenue by 2022, according to IMF forecasts.

In 2018,N2.2 trillion was budgeted for debt servicing and creation of a sinking fund to retire debt, while the nation’s debt keeps growing, moving from N15 trillion in 2015 to N22.4 trillion as at September 2018, according to data from the Debt Management Office (DMO).

Source: IMF Another area of growing strain on the sovereign balance sheet is the asset management corporation of Nigeria AMCON liabilities which are currently being warehoused on the CBN’s balance sheet all backstopped by the Federal Government.

AMCON has liabilities (debt) to the tune of over N5 trillion(4 percent of GDP).

This is a debt pile it continues to pay interest on (albeit to the CBN), even as it has yet to return to profitability.

The Corporation recorded total loss for 2017 of N14.37 billion down from the N64.82 billion loss recorded in 2016.

AMCON is set to sunset by 2022,

just 3 years from now and it is still a mystery how these liabilities will be unwound.

More strains are also showing up in the form of wage pressures for the Federal Government and states.

Partly as a result of the new minimum wage demands the FG has budgeted N4trillion for nondebt recurrent expenditure in 2019, about the same as what was spent on the capital and recurrent budget in 2014 combined.

The last time the minimum wage was increased (in 2010), the Federal Governments recurrent expenditure spiked by 19 percent to N2.5 trillion in 2011 from N2.1 trillion in 2010.

Meanwhile many subnational states cannot afford to pay the previous N18, 000 minimum wage, calling into question how they will manage with the new adjustments.

As is the trend in Nigeria, recurrent expenditure has always exceeded capital expenditure, and an increase in minimum wage across board will further stretch state governments’ debt burden already estimated to be over 150 per cent of their revenue on average, and approximately one fifth of the total government debt.

A good majority of the states are effectively bankrupt and have already been bailed out twice by the current Government, meaning their liabilities are effectively again being backstopped by the FGs sovereign balance sheet.

Throw in the numerous opaque swap arrangements the CBN has signed, its (CBN) numerous development financing interventions, contractor liabilities to the tune of N2 trillion, expenditure on petrol subsidy of over N1 trillion per annum currently borne solely by the sovereign through NNPC, the liquidity crisis/shortfall in the electricity market estimated at over N1 trillion, and a full blown fiscal crises may soon emerge.

In the end these stress points are surely causing damage to the real economy today through numerous channels.

The distortions they are bringing are set to permeate the Nigerian economy, with the negative after effects lasting much longer than Pras’ short-lived career.

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To thrive, Sub-Saharan Africa must leapfrog its energy challenges

Lazarus Angbazo Dr. Angbazo is the President & CEO, General Electric Nigeria & GM, GE Grid Solutions Sub-Saharan Africa. He is also the President of American Business Council in Nigeria.

H

as anyone ever imagined an entire country without power? Probably not.

Another question: would you believe that about 570 million people have no access to electricity?

Plausible. This is the story in SubSaharan Africa where the number of people without power (almost 60% of its population) are more than the entire population of the European Union. While the numbers could be alarming, as they should be, it does not do enough to appreciate the significant levels of progress that has been made in terms of powering the continent. According to the World Bank’s Sustainable Energy for All (SE4ALL) database, only 16% of the population had access to electricity in 1990 compared to about 43% in 2016.

A booming population has ex-

acerbated the energy deficit with a projected 400% increase in demand per capita in about two decades if present growth rates are sustained.

In addition, this demographic trend has impeded the ability of governments to finance large scale infrastructure projects including in the power sector which would require about $14 billion annual investment, a whopping amount of money by any standards and approximately Tanzania’s annual budget, if it must achieve a 70% electrification by 2040.

But it is not impossible.

The ideal scenario would be to focus on low hanging fruits which are up for easy grabs. Doing this would make a significant difference in the energy landscape and provide the much-desired success story and impetus for change. Currently, Africa will be able to increase its electricity output by about 20 to 25% if it Is able to cut out technical and commercial transmission and distribution losses.

In some countries these losses get as high as 50%, compared with the accepted averages of between 7% to 10% in most of the rest of the world.

These losses could be attributed to three major factors: First — ageing transmission and distribution networks which provide inadequate coverage of rural areas, Second — theft and vandalism, and Third — a poor maintenance culture of its existing infrastructure.

Digitisation, Decentralisation

and Decarbonisation Technological advances in the electricity sector including digital and smart grid solutions such as selfhealing grids offer the continent the opportunity to leapfrog and accelerate change. These technologies have addressed some of the most critical issues affecting the sector in the countries — including the lack of real time or accurate data.

Real-time distribution data can be used to detect and isolate faults and to reconfigure networks to minimize customer impact and downtime. Utility companies like ZESCO in Zambia have achieved remarkable results, where they deployed the first digital sub-station in Africa using GE Grid solutions. ZESCO upgraded its Muzuma Air-insulated substation (AIS) to a digital Gas-Insulated substation (GIS) with 330KV transmission lines to solve the problems of increasing maintenance and repair of conventional equipment, costs, limited grid information and visibility among others. This has led to reduced incidences and duration of power outages for the consumers, increased revenue because of cost savings from lower equipment maintenance, and more transaction volume due to improved billing accuracy.

SSA must ensure that it improves grid reliability and efficiency as well as expand the existing grid to the 63% of the region’s population who live in rural areas. This is critical to unlock

its manufacturing and job creation potentials. To make this work, a decentralised and digitalised approach to electricity must be employed. New innovative business models such as virtual power plants (VPPs), demand response, distributed generation, digital sub-stations and microgrids help to improve and stabilise electricity supply and at the same time increase the customers’ control over their energy usage— helping to save money and raise energy efficiency.

Malawi is another significant reference, where funding from the Millennium Challenge Corporation (MCC) ensured that the Electricity Supply Corporation of Malawi (ESCOM) improved its transmission network by installing GE’s latest Energy Management System (EMS) e-terra platform solution and Remote Terminal Units with telecommunication upgrades across 15 substations.

This has resulted in a modernised grid, allowing for real-time remote monitoring, planning and optimization of ESCOM’s transmission systems nationwide, and paving the way toward increased economic growth for the country.

The region must also consider decarbonisation as a matter of priority.

It needs to expand its renewable energy sources to provide cleaner and more accessible energy as it is vital for improved stability and security of its electricity mix but also the safety of its people and environment. Majority

of the regions power supply is from hydro and fossil fuels, but this must change as renewables are becoming more cost effective than they have ever been. The region is also a hotbed of opportunities for large scale clean, renewable energy installations based on its needs and environmental potentials. In West Africa, countries like Nigeria, Ghana and Niger have shown huge solar power prospects while there is significant wind power potential in Cape Verde, Senegal, and the Gambia for investors to explore.

This energy shift is an important area of focus for the West African Power Pool, an interconnected electricity market of about 14 countries in the ECOWAS region that holds a current power capacity of 8GW. Localization – beyond skills transfer For power investments to be sustainable, African countries must develop and implement smart localization strategies for talent, partnerships and supply-chain. The development of local African talent with the most in-demand commercial and technical skills would lead to the creation of the next generation of engineers, technicians and specialists working in the sector.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Send reactions to: comment@businessday.ng

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Monday 28 January 2019

The link between institution and development

O

ne of the enduring tragedies of post-colonies, especially in Africa, is the tendency to destroy or sideline established institutions in the quest for accelerated development. Early independent leaders, who claimed to be so much in a hurry to develop their countries, were impatient with the workings of the institutions bequeathed by the colonialists and in most cases sidelined or altogether destroyed these institutions and personalised power. Over fifty years down the line, none of these countries has developed.

Rather, they have been turned to virtual wastelands, ravaged, as it were, by tyranny, bad governance, impunity, mindless orgies of crime and death, poverty, hunger and diseases. Yes, these countries now have the worst socio-economic indices in the entire world!

One lesson these African countries and leaders ought to have learnt by now is that strong institutions are the best guarantees for sustainable growth and development and not strongmen. Strong institutions are enduring and guarantee societal progress no matter the people inhabiting them. Personal rule, however, is subject to the whims

and caprices of rulers and tends to fizzle out when the ruler departs.

But Nigeria, particularly the government of president Buhari doesn’t seem to have learnt any lesson. The government’s penchant for subtly or even openly interfering with independent state institutions to produce favourable political outcomes is worrying and is setting the country back by decades.

Now, everyone, except those who chose to deceive themselves, know that the CBN – an important state institution that should be independent and insulated from political interferences - is everything but independent. The president openly takes monetary policy decisions reserved for the CBN while the apex bank is left to read the body language of the president and fall in line. Ditto the anti-corruption agencies like the Economic and Financial Crimes Commission (EFCC) that have been virtually turned into an agency of the ruling All Progressives Congress (APC) harassing and persecuting opposition politicians while acting dump to clear cut and credible corruption allegations against the ruling party apparatchiks. Same goes for important state institutions like the police (whose leadership tries to outdo themselves in demonstrating loyalty to the president

and harassing the opposition, the armed forces (whose leaders were commandeered to attend political campaigns in support of the president).

Worse is the government and by extension the President’s open contempt and disrespect for the courts. He has consistently ignored valid court orders and judgements and has carried on as if only he is the most patriotic Nigerian and only he can salvage the country.

The president is effectively setting himself as Nigeria’s messiah, under whom all should bow including other coordinate branches or arms of government whose constitutional duty is to perform oversight functions on the executive and prevent it from abusing its awesome powers.

President Buhari does not appear to have learnt any lessons from sub-Saharan Africa’s misadventure with strongmen.

He was once a strongman himself.

In 1984/85, as military dictator, he attempted to eliminate corruption from Nigeria with military zeal and ruthlessness. But after he was shoved aside by his army chief, he watched helplessly from behind bars as all his efforts or plans were rolled back and the new government continued with ‘business as usual’, as the Nigerian cliché goes.

Institutions, simply defined, are established laws or practices and are a sine qua non for societal progress and sustainable development. In fact, for Francis Fukuyama, the development of a capable state that is accountable and ruled by law is one of the crowning achievements of human civilisation. It is the absence or weakness of institutions or, more appropriately, a capable state that is at the root of corruption. In Nigeria and other developing countries, corruption serves largely to grease the wheels of inefficient bureaucratic government machines leading to efficient outcomes. Common sense therefore dictates that an effective war against corruption must involve the strengthening of state institutions.

This, however, is not the case with Nigeria. Nigeria’s war against corruption necessarily involves the weakening or destruction of state institutions. From Obasanjo to Yar’Adua, to Jonathan and now Buhari, the stories have been the same. But at no time has any government shown absolute contempt for the rule of law and order and state institutions like Buhari is doing now. Like it happened in 1985, he may wake up to realise that all he succeeded in doing was to create the environment for corruption and impunity to thrive in the country.

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Live @ The Exchanges Stock market gains over N150bn as Fidelity, Caverton, FCMB rally Stories by Iheanyi Nwachukwu

N

igeria’s listed stocks g a i n e d about N157 billion in the trading week ended Friday January 25, 2019 as investors realised the need to buy low priced stocks. The value of listed equities which opened at N11.562 trillion closed the review week at N11.719 trillion. The yearto-date negative return stood at 0.01percent.

Forty (40) equities appreciated in price during the review week, 38 in the preceding week. Twentyfive (25) equities depreciated in price, lower than 29 in the preceding week, while 103 equities remained unchanged higher than 102 equities that remained unchanged in

the preceding week.

Fidelity Bank Plc recorded the highest weekly gain as its share price increased from N2.01 to N2.50, adding 49kobo or 24.38percent.

Caverton Offshore Support Group Plc also gained, from N1.90 to N2.33, adding 43kobo or 22.63percent; while FCMB Group Plc increased from N1.76 to N2.15, adding 39kobo or 22.16percent.

Resort Savings & Loans Plc recorded the highest decline, from 26kobo to 20kobo, losing 6kobo or 23.08percent. Sovereign Trust Insurance Plc followed after its share price decreased from 26kobo to 21kobo, down by 5kobo or 19.23percent; while Medview Airline Plc was also down from N2.05 to N1.85, losing 20kobo or 9.76percent.

The Nigerian Stock Ex-

change (NSE) All-Share Index (ASI) also appreciated by 1.36percent to close the review week at 31,426.63 points as against 31,005.17 points recorded the preceding weekend.

All other indices finished higher with the exception of the NSE ASeM, NSE Consumer Goods, NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods Indices that depreciated by 0.17percent, 0.41percent, 1.32percent, 0.60percent and 2.02percent respectively.

The market recorded total turnover of 1.807 billion shares worth N17.232 billion in 18,332 deals in contrast to a total of 1.270 billion shares valued at N13.463 billion that exchanged hands the preceding week in 16,476 deals.

The Financial Services Industry (measured by volume) led the

activity chart with 1.625 billion shares valued at N14.696 billion traded in 11,778 deals; thus contributing 89.93percent and 85.28percent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 83.560 million shares worth N138.309 million in 951 deals; followed

by Consumer Goods Industry with a turnover of 36.251 million shares worth N1.002 billion in 2,224 deals.

Trading in the Top Three Equities –Diamond Bank Plc, Access Bank Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 871.524 million shares worth N8.488 billion in 3,305 deals, contributing 48.23percent and 49.25percent to the total equity turnover volume and value respectively.

Great Nigeria Insurance voluntarily delists from NSE

T

he Nigerian Stock Exchange (NSE) on Friday January 25, 2019 delisted the entire issued share capital of Great Nigeria Insurance Plc (GNI) from the Daily Official List of The Exchange.

The company secretary said in a December 21, 2018 public notice at the Nigerian Stock Exchange and signed by Olajumoke Bakare of First Almond Attorneys that “Over the last 5 years, there is little or no trading activity on the shares held by the minority shareholders.”

Great Nigeria Insurance Plc said it has not benefitted from listing on the Exchange “as the company’s shares continue to trade at a significant discount to the intrinsic value. Moreover, the Company is bearing unnecessary cost in complying with its listing obligations.”

“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. Shareholders are not benefiting from the continued listing as they are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding,” the company had noted.

The NSE said in a January 25 notice signed

by Godstime Iwenekhai, Head, Listings Regulation Department that delisting of Great Nigeria Insurance follows the NSE market bulletin of December 13, 2018 where it notified Dealing Members of the approval of the application filed by MBC Securities Limited on behalf of Great Nigeria Insurance Plc for the voluntary delisting of the entire share capital of GNI. The Company provided an Exit Opportunity to minority shareholders who did not want to remain in an unlisted company.

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“My own media”

Too many challengers Young Americans

Binyamin Netanyahu’s obsession with the press

The prime minister’s efforts to control the media may lead to his downfall

I

N OCTOBER 2015 a journalist called Amir Tibon was asked by his editors at Walla!, a popular Israeli news website, to analyse Binyamin Netanyahu’s handling of a wave of shooting and stabbing attacks by Palestinians. The resulting piece was balanced, but included some mild criticism of the prime minister. According to Mr Tibon, the next morning he received a phone call from his editor-in-chief, who said, “We can’t publish this. You know what the circumstances are right now.”

Other reporters at Walla! now tell similar stories of being censored when their reports were critical of Mr Netanyahu. The police have offered a possible explanation. In December they recommended that Mr Netanyahu and seven other suspects, including the former chairman of Bezeq, a telecommunications company, be indicted for bribery, fraud and breach of trust. In return for positive coverage on Walla!, Mr Netanyahu is alleged to have intervened in regulatory matters to benefit Bezeq, which owns the website.

Reporters in Israel tend to be secular liberals, but their exposés have brought down politicians of all stripes. Mr Netanyahu, who leads a coalition of nationalist and religious parties, has long believed the press is bent on tarnishing his image, thwarting his plans and removing him from power. He thus set about trying to change the media landscape. He has pushed for laws and rules that would undercut his critics and boost his allies; encouraged his supporters to buy media outlets; and bullied reporters. He may also have broken the law.

Media magnet The investigation into Mr Netanyahu’s dealings with Bezeq, known as Case 4000, is one of three that threaten to bring him down. The police have also recommended indicting Mr Netanyahu in Case 2000, in which he is accused of negotiating illicit deals with a newspaper publisher for more favourable coverage. The third, Case 1000, involves Mr Netanyahu’s acceptance of gifts,

Monday 28 January 2019

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allegedly worth over $200,000, from Israeli tycoons (indictments were also recommended). Mr Netanyahu denies wrongdoing in all three. The attorney-general will decide soon whether to proceed with them.

Early in his career, when he was Israel’s dashing young ambassador to the United Nations, Mr Netanyahu benefited from glowing media coverage. Gushing profiles described how the eloquent diplomat was making Israel’s case on the global stage.

Reporters, presciently, cast him as a future prime minister. The exposure helped him gain the top spot on the Likud party’s list of candidates when he first ran for the Knesset in 1988.

But his relations with the press deteriorated. When the Labour government under Yitzhak Rabin signed the Oslo accords with the Palestinians in 1993, most journalists supported it. Mr Netanyahu, who had become leader of Likud, was the treaty’s chief critic. When, two years later, a Jewish zealot murdered Mr Rabin, much of the press accused Mr Netanyahu of whipping up his supporters against the prime minister.

By the time Likud won at the polls in 1996, Mr Netanyahu’s supporters had begun referring to the “hostile press”. When he lost power in 1999, he blamed reporters for downplaying his accomplishments. Years later, while still in the political wilderness, he told his wealthy patrons, “I need my own media,” and urged them to buy shares in news organisations.

Sheldon Adelson, an American casino mogul, went a step further, founding his own freesheet, called Yisrael Hayom, which quickly became Israel’s most widely read newspaper. It is so pro-Netanyahu that it is often called “Bibiton”—a portmanteau of Mr Netanyahu’s nickname, “Bibi”, and the Hebrew word for newspaper, iton. Avigdor Lieberman, an ultranationalist former defence minister, compared it to Pravda.

The popularity of Yisrael Hayom, which operates at a hefty loss, came at the expense of Israel’s older newspapers, many of which saw their revenues from sales and advertising drop. This, according to the police, led to negotiations between Mr Netanyahu and Arnon Mozes, the publisher of Yedioth Ahronoth, a large newspaper that was critical of the prime minister. The two men were recorded discussing a deal that would have the paper ease up on Mr Netanyahu. “Take down the hostility towards me from 9.5 to 7.5,” he told Mr Mozes. In return, Mr Netanyahu would allow legislation that limited the circulation of popular freesheets, such as Yisrael Hayom. Those discussions form the basis of Case 2000.

When the deal fell through, Mr Netanyahu reverted to opposing the Yisrael Hayom bill, going so far as to dissolve his government in order to block it.

Following his fourth election victory in 2015, Mr Netanyahu appointed himself communications minister and allegedly intervened on Bezeq’s behalf. He also

changed the regulations on private television broadcasters in ways that drove Channel 10, which was critical of the prime minister, to the brink of bankruptcy. On January 14th the channel merged with Reshet, another private channel.

Its main shareholder is now Len Blavatnik, a Soviet-born BritishAmerican businessman who has been questioned by the police over his ties to Mr Netanyahu.

In early 2017, under pressure from the opposition and Israel’s high court, Mr Netanyahu stepped down as communications minister. But he continued to influence the media. Later in the year he sought pre-emptively to muzzle a new public broadcaster by denying it permission to create a news department. Again he threatened to dissolve the government if he did not get his way (he later backed down). Meanwhile, a private station called Channel 20, originally licensed to broadcast religious content, received the government’s blessing to run news programmes. These often cast the prime minister in a positive light. Mr Netanyahu favours it for interviews.

With Yisrael Hayom and Channel 20, Mr Netanyahu has a growing echo-chamber. But claims that Israel is going the way of Hungary, where Viktor Orban, the prime minister, has throttled the press, are overstated. Channel 20, with dismal ratings, is not nearly as influential as Fox News is in America.

Most Israeli journalists remain critical of Mr Netanyahu—and have the backing of their editors and publishers.

For Mr Netanyahu, that might not be a bad thing. He seems to enjoy playing the victim and has become an astute user of social media. As Israel gears up for an election on April 9th, billboards recently appeared featuring the pictures of four journalists who have published damaging revelations about the prime minister. A slogan on top reads, “They won’t decide” (a Facebook page with the same name was opened). After some confusion over who put them up, Likud took responsibility, adding a note to some of the billboards: “Despite them, Netanyahu!”

Republicans and Democrats are taking early education more seriously Alabama and West Virginia are among the pioneers

F

ROM HOT dogs, to automobiles, to diesel fuel, Americans have been touched by plenty of German inventions.

Kindergarten (“children-garden”) is one of them. The programme for educating youngsters through playing and social interaction, meant as a transition from home to formal schooling, was first brought to America in the 1850s and quickly spread. Kindergarten has flourished, becoming so entrenched that it is part of the

formal education system’s name (“K through 12”). Yet the garden of even younger Americans, including preschoolers, has too often gone uncultivated.

The share of three- and fouryear-olds enrolled in pre-school has not changed much in two decades. While the average country in the OECD, a club of rich nations, enrolls 80% of its three- and four-year-old children in school, America enrolls just 54%, lagging behind Chile and Mexico. This is true despite abundant evidence of the benefits of early education, especially for disadvantaged children. High-quality pre-school programmes can have lasting benefits, including improving the odds of graduating from school, earning more and staying away from drugs and out of prison. For parents there are gains, too: when their children are in day care, they can work.

In the shadows of a government shutdown and chaotic governance generally, one achievement of President Donald Trump’s adContinues on page 19

Monday 21 January 2019

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Slowbalisation

The steam has gone out of globalisation

A new pattern of world commerce is becoming clearer—as are its costs

W

HEN AMERICA took a protectionist turn two years ago, it provoked dark warnings about the miseries of the 1930s. Today those ominous predictions look misplaced.

Yes, China is slowing. And, yes, Western firms exposed to China, such as Apple, have been clobbered. But in 2018 global growth was decent, unemployment fell and profits rose. In November President Donald Trump signed a trade pact with Mexico and Canada. If talks over the next month lead to a deal with Xi Jinping, relieved markets will conclude that the trade war is about political theatre and squeezing a few concessions from China, not detonating global commerce.

Such complacency is mistaken.

Today’s trade tensions are compounding a shift that has been under way since the financial crisis in 200809. As we explain, cross-border investment, trade, bank loans and supply chains have all been shrinking or stagnating relative to world GDP (see Briefing). Globalisation has given way to a new era of sluggishness.

Adapting a term coined by a Dutch writer, we call it “slowbalisation”.

The golden age of globalisation, in 1990-2010, was something to behold. Commerce soared as the cost of shifting goods in ships and planes fell, phone calls got cheaper, tariffs were cut and the financial system liberalised. International activity went gangbusters, as firms set up around the world, investors roamed and consumers shopped in supermarkets with enough choice to impress Phileas Fogg.

Globalisation has slowed from light speed to a snail’s pace in the past decade for several reasons. The cost of moving goods has stopped

Continued from page 18

falling. Multinational firms have found that global sprawl burns money and that local rivals often eat them alive. Activity is shifting towards services, which are harder to sell across borders: scissors can be exported in 20ft-containers, hair stylists cannot.

And Chinese manufacturing has become more self-reliant, so needs to import fewer parts.

This is the fragile backdrop to Mr Trump’s trade war. Tariffs tend to get the most attention. If America ratchets up duties on China in March, as it has threatened, the average tariff rate on all American imports will rise to 3.4%, its highest for 40 years. (Most firms plan to pass the cost on to customers.) Less glaring, but just as pernicious, is that rules of commerce are being rewritten around the world. The principle that investors and firms should be treated equally regardless of their nationality is being ditched.

Evidence for this is everywhere.

Geopolitical rivalry is gripping the tech industry, which accounts for about 20% of world stockmarkets.

Rules on privacy, data and espionage are splintering. Tax systems are being bent to patriotic ends—in America to prod firms to repatriate capital, in Europe to target Silicon

Valley. America and the EU have new regimes for vetting foreign investment, while China, despite its bluster, has no intention of giving foreign firms a level playing-field.

America has weaponised the power it gets from running the world’s dollar-payments system, to punish foreigners such as Huawei. Even humdrum areas such as accounting and antitrust are fragmenting.

Trade is suffering as firms use up the inventories they had stocked in anticipation of higher tariffs. Expect more of this in 2019. But what really matters is firms’ long-term investment plans, as they begin to lower their exposure to countries and industries that carry high geopolitical risk or face unstable rules. There are now signs that an adjustment is beginning. Chinese investment into Europe and America fell by 73% in 2018. The global value of cross-border investment by multinational companies sank by about 20% in 2018.

The new world will work differently. Slowbalisation will lead to deeper links within regional blocs.

Supply chains in North America, Europe and Asia are sourcing more from closer to home. In Asia and Europe most trade is already intra-re-

gional, and the share has risen since 2011. Asian firms made more foreign sales within Asia than in America in 2017. As global rules decay, a fluid patchwork of regional deals and spheres of influence is asserting control over trade and investment.

The European Union is stamping its authority on banking, tech and foreign investment, for example. China hopes to agree on a regional trade deal this year, even as its tech firms expand across Asia. Companies have $30trn of cross-border investment in the ground, some of which may need to be shifted, sold or shut.

Fortunately, this need not be a disaster for living standards. Continental-sized markets are large enough to prosper. Some 1.2bn people have been lifted out of extreme poverty since 1990, and there is no reason to think that the proportion of paupers will rise again. Western consumers will continue to reap large net benefits from trade. In some cases, deeper integration will take place at a regional level than could have happened at a global one.

Yet slowbalisation has two big disadvantages. First, it creates new difficulties. In 1990-2010 most emerging countries were able to close some of the gap with developed ones. Now more will struggle to trade their way to riches. And there is a tension between a more regional trading pattern and a global financial system in which Wall Street and the Federal Reserve set the pulse for markets everywhere. Most countries’ interest rates will still be affected by America’s even as their trade patterns become less linked to it, leading to financial turbulence. The Fed is less likely to rescue foreigners by acting as a global lender of last resort, as it did a decade ago.

Fighting fire with firearms

Jair Bolsonaro wants Brazilians to have more guns

More young people will die

T

HE COMMUNITY centre on the outskirts of Fortaleza, the capital of the north-eastern state of Ceará, normally hosts throngs of teenagers, who paint and rehearse plays in its tiny theatre. It has been shut on the orders of drug traffickers, who since early January have been setting fire to buses and businesses to protest against new measures to suppress gangs in prisons. Brazilian teenagers are caught in the middle.

Gangs pay them 1,000 reais ($265) to carry out attacks. Police have arrested hundreds of suspects, a third of them minors, and killed at least six people. “You can’t be neutral in the war,” says Carlos (not his real name), 18, his voice breaking with emotion.

“If you’re sitting on the fence, you get shot by both sides.”

Even in calmer times, violence hits young people hard. Murder is the leading cause of death for Brazilian teenagers. In Ceará killings of adolescents increased from 191 in 2000 to 1,156 in 2017. By one reckoning in Fortaleza in 2014, 11 out of every 1,000 adolescents could expect to be murdered by the

Republicans and Democrats are taking early...

age of 19.

The new populist president, Jair Bolsonaro, says Brazil is at war. During the election campaign last year, he promised to give police carte blanche to shoot suspected criminals and to pass laws to send adolescents to adult prisons, which are already packed. He has spoken of building more jails, but probably lacks the money.

On January 15th he signed a decree that makes it easier for “good citizens” to buy guns. It ends the discretionary

role of the police in granting licences.

People will be able to buy guns freely if they meet conditions such as living in a place where the homicide rate exceeds ten per 100,000 people (most Brazilians do). As before, gun owners must have a job and no criminal record. They have to pass a psychological test and get training. It will remain illegal for most Brazilians to carry arms outside their homes or workplaces.

Evaldo Carvalho, who owns a gun shop four blocks from the beach in For-

taleza, thinks Mr Bolsonaro’s decree is “timid” but a step in the right direction.

In his view, crime rose as a result of a gun-control law in 2003. “Criminals are more audacious when they know citizens can’t defend themselves,” he says.

“More guns equal less crime. Criminals only respect people they are afraid of.”

He stands to profit, too, having doubled the number of shooting classes in the week after the president’s decree.

Yet some of Mr Bolsonaro’s supporters are worried. Violence is “going to explode”, warns Plauto de Lima, a former director of state prisons in Ceará, who managed the successful election campaign of a pro-Bolsonaro senator. He thinks the state should invest more in crime prevention. “We always prepare for battle, but not for the post-war,” he says.

In fact, criminologists and politicians in Ceará have been considering new ways of reducing violence through a mixture of social programmes and data-based policing that proved successful elsewhere. But such ideas are out of sync with Mr Bolsonaro’s belief in the iron fist.

ministration has gone unnoticed.

In 2018 Congress approved more than $5.2bn in “child care and development block grants”, which subsidise child care for low-income families, nearly doubling available funding and indicating a rare example of bipartisan collaboration. Head Start, a federal programme that educates poor children before they enter kindergarten, has also received more funding.

At federal level, pre-school is still perceived as more of a Democratic issue, while Republicans are more likely to support subsidised child care and home visits, says Libby Doggett, who served as the deputy assistant secretary for early learning at the Department of Education under Barack Obama.

Meanwhile, in the various states, pre-K is being championed by both political parties. The fact that cities and states have the ability to implement their own programmes, rather than wait for the national government to act, is an advantage. High schools spread in America between 1910 and 1940 mainly because cities promoted and paid for them, says Steven Barnett of the National Institute for Early Education Research at Rutgers University, which compiles an annual report card on state pre-school programmes.

In the 36 gubernatorial elections held last November, 29 winning candidates either publicly commented on the importance of early childhood education or supported such programmes. This includes not only the usual suspects—Democratic governors in states like Illinois, New Jersey and Michigan—but also Republicans in like-minded states, including Arkansas, Georgia and Idaho.

For example, Mike DeWine, the Republican governor of Ohio, who assumed office this month, promised expanded access to pre-school during his campaign.

In a politically symbolic move, his first staffing announcement was to choose a director of children’s initiatives.

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The man who won the count

Félix Tshisekedi’s presidency of Congo begins inauspiciously It may not get better

A

GAINST ALL the odds, and the laws of arithm etic, Félix Tshisekedi was due to become the Democratic Republic of Congo’s fifth president as The Economist went to press. A few weeks ago he was trailing in the polls. Experts predicted that the election in December would either be won by Martin Fayulu, a popular opposition candidate, or rigged in favour of the ruling-party candidate, Emmanuel Ramazani Shadary.

Somehow, Mr Tshisekedi “won”, although data leaked from the electoral commission and a count by 40,000 Catholic volunteers suggest that in fact Mr Fayulu won 60% of the vote. Many suspect a secret deal between the new president and the old one, Joseph Kabila, whose business interests Mr Fayulu had vowed to investigate.

Mr Fayulu filed a petition before the constitutional court, stacked with Mr Kabila’s appointees. He expected it to fail, and it did. He hoped that street protests would keep up the pressure. “The

Congolese people will not accept the result, there may be an uprising,” he said. But few turned out at what was supposed to be his first big public appearance since the court ruling, perhaps because so many armed police did. A small crowd waved photographs of Mr Fayulu. Two hours later the police were lounging in plastic chairs at a nearby restaurant and most people had gone home. Mr Fayulu decided not to show up.

Mr Tshisekedi’s victory marks the first time an African opposition candidate has been rigged into power, says Nic Cheeseman, an expert on African elections.

(Mr Shadary, the ruling party’s candidate, won so few votes that it would have been exceptionally hard to pretend that he won.)

The new president represents the country’s oldest opposition party. His father, Étienne, challenged corrupt, despotic regimes for decades until his death two years ago. Many hope that his son has inherited his principles.

They yearn for a leader who will halt the looting that has lasted longer than most Congolese can remember, under two President Kabilas (father and son) and the kleptocrat Mobutu Sese Seko. With all its minerals, Congo should be

rich, but annual income per head is a pathetic $400, 42% less than it was in 1990.

Mr Tshisekedi has promised, absurdly, to raise incomes tenfold. He has also vowed to restore stability in the east, where dozens of warring militias have brought misery. To do so, he will need to bring the army to heel and take on the elite that plundered Congo on Mr Kabila’s watch. Optimists hope that he will ditch whatever deal he had with his predecessor and strike out on his own. For a precedent, they point to João Lourenço, who shoved aside his predecessor’s family and allies after taking power in neighbouring Angola in 2017. Mr Tshisekedi’s virtues do not include loyalty; he withdrew from a pact to endorse Mr Fayulu last year only a day after signing up.

Yet Mr Tshisekedi is weak. Few Congolese think him legitimate: leaked electoral commission data suggest that he won less than a fifth of the vote. Because Mr Kabila’s coalition won a big majority in the national assembly (possibly by cheating), Mr Tshisekedi does not have the power to appoint his own cabinet. Nor can he count on

the goodwill of Congo’s most important neighbours. Although the leaders of South Africa and Kenya raced to congratulate him, Paul Kagame, Rwanda’s president, has hung back. He and Mr Lourenço were said to be largely responsible for an African Union statement questioning the election and urging a delay in his inauguration.

Neither Mr Kagame nor Mr Lourenço is likely to help Congo’s new president as long as Mr Kabila—whom they detest—retains influence over him. Yet their acquiescence is vital. Rwanda has invaded Congo in the past. Angola sent troops to save both Mr Kabila (from his own mutinous troops in 2006) and his father (from Rwandan invaders in 1998). Probably neither Kabila would have survived as long without Angolan assistance. But a maritime border dispute and an influx of refugees into Angola from a rebellion in Congo’s Kasai region have soured relations. Rwanda or Angola could easily destabilise Congo again if they wished to. Mr Tshisekedi, an inexperienced and unpopular leader in hock to a crooked and dysfunctional old regime, may not be able to stop them.

AO, let’s go

Republicans may learn to love Alexandria Ocasio-Cortez If Democrats ever embraced socialism, America would probably stay conservative

“T

HE CHOICE isn’t what I’m breathing in, the choice is what I’m exhaling,” said Representative Alexandria OcasioCortez, at a celebration of Martin Luther King Day in the Riverside Church in Manhattan this week.

“And I think that the situation right now, with this administration, with the abdication of responsibility by so many powerful people—even people who abdicate that responsibility by calling themselves liberal or Democratic—I feel a need for all of us to breathe fire.”

The 29-year-old congresswoman’s many critics on the right are more concerned by what they think Ms Ocasio-Cortez may be smoking.

Since her demolition of Joe Crowley, a moderate Democratic leader last year, in a primary bid for his safe Bronx-Queens district, she has become a hate-figure of seemingly limitless interest to conservative media outlets. (“Fox News debuts premium channel for 24-hour coverage of Alexandria Ocasio-Cortez” snarked the Onion, exaggerating only slightly.) Her rare combination of success and hard-left views is the ostensible reason. In the mould of her fellow democratic socialist, Bernie Sanders, on whose presidential campaign she worked, she is for universal Medicare, a federal job guarantee, making tertiary education free and forgiving college debt. Yet a relentless focus on Ms

Ocasio-Cortez’s appearance, person and spirited behaviour suggests the vituperation is fuelled by darker forces than policy disagreement.

This makes the activist left, including many at the Riverside, a stage for civil-rights leaders including Martin Luther King through the ages, love her all the more. They also love the fire-breathing rhetoric she showed off in an on-stage chat with the author Ta-Nehisi Coates. Best of all they love her ability to sock it to her right-wing detractors, typically for the benefit of her 2.5m Twitter followers. “Don’t hate me cause you ain’t me, fellas,” she tweeted to House Republicans, after they booed her vote for Nancy Pelosi as Speaker.

That incident also exemplified the only way that Ms Ocasio-Cortez may actually matter. The right-wing

hate-craze for her is fuelled by a fear that she could be about to turn America socialist. That rather under-rates the fact that freshmen House members have a long way to rise; that most of the new intake of Democrats are moderate (and many have had enough of her attentiongrabbing); and that if their party ever did nominate a democratic socialist for president, she would be much likelier to keep America conservative. By far the biggest threat Ms Ocasio-Cortez represents is to her own party. Republicans ought really to love her for that.

The hard-left activist world she springs from mainly exists to shunt Democrats to the left. There are signs in the emerging Democratic presidential primary that it is succeeding. All three of the senators who have so far declared their

candidacies—Kirsten Gillibrand, Kamala Harris and Elizabeth Warren—support Medicare-for-all, an idea that also sprang from Mr Sanders’s campaign. And Ms Harris and Mrs Warren have endorsed the concept of Ms Ocasio-Cortez’s signature proposal, the Green New Deal, a suite of policies to address both climate change and inequality.

Yet Ms Ocasio-Cortez wants to cause a much bigger shakeup on the left—as her on-stage reference to colleagues ducking their moral responsibility suggested.

She celebrated her election last November by backing a campaign

by Justice Democrats—an activist group founded by her chief-of-staff and fellow Sanders alumnus Saikat Chakrabarti—to unseat Democratic incumbents deemed insufficiently left-wing. She has since tried to make nice with the Democratic leadership, as her vote for Mrs Pelosi illustrated. “I do see my situation evolving—I take my oath of office very seriously,” she said at the Riverside. “I was giving myself a little more permission to be a little more out-of-pocket before my swearing in.” Yet keeping Ms Ocasio-Cortez sweet will be an important task for Mrs Pelosi, who has three decades more congressional experience but half a million fewer Twitter followers.

The veteran Speaker has made a decent start. But given that AOC, as

the congresswoman is known, appears to have no interest in leadership positions or other plums within Mrs Pelosi’s gift, she will have to work harder. Indeed, the real challenge of Ms Ocasio-Cortez’s populist ideas—to both parties, but to the Democrats most urgently—is the way they expose the inadequacy of mainstream policy responses to the big problems, including inequality and global warming, she describes.

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Accion MfB rewards physically challenged in financial inclusion pusha

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C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

CONSUMER GOODS

Weaker than expected returns push UACN to 15-year low OLUWASEGUN OLAKOYENIKAN

S

hares of UAC of Nigeria (UACN) Plc, one of Nigeria’s largest and oldest business conglomerates, are down to their lowest levels in more than 15 years as the company’s unimpressive financial performance continues to weaken investor sentiment.

Despite gaining o.58 percent to close at N8.65 per share Friday, the stock is hovering around its cheapest price since January 9, 2004.

“We have seen investors dumping the stock and moving to other consumer goods company that have been able to deliver impressive results,” said Gbolahan Ologunro, equity research analyst at CSL Stockbrokers.

BusinessDay analysis of UACN’s results for the nine months to September 2018 show revenue of the leading conglomerate dipped 18.33

percent to N55.76 billion from N68.28 billion recorded in the corresponding period of 2017.

Profit before tax fell 84.48 percent to N483 million down from a whooping N3.11 billion recorded a year earlier. Likewise, post-tax profit dropped by 87.22 percent to N252 million as against N1.98 in the same period of 2017.

“Investors are reacting negatively to its weaker-thanexpected performance,” said Ologunro.

The significant depreciation in UACN’s market value largely occasioned by the firm’s weak financial performance coupled with uncertainties ahead next month’s general elections indicates lower returns, which come in form of dividend and capital appreciation, for investors who primarily took positions in the stock to make profit.

“The ability of a company to declare dividend is based on the strength of the company,” Ologunro explained,

adding that the “challenges from its real estimate and animal feed business which are the two major segments that have dampened its earnings in the last six (6) quarters.”

Although UACN jumped

1.18 percent Thursday to close at N8.60 per share, thereby improving its year-todate loss to 11.79 percent, the stock is most likely to maintain the downward trend after the elections until there is a

turnaround in its earnings.

UACN Plc manufactures food products, operates fastfood restaurants, and offers logistic as well as real estate services. The company also produces cereals, oils, paints,

personal care products, and bottled spring water through subsidiaries. UACN further imports, sells, and services Isuzu motor vehicles via its subsidiary GM Nigeria Limited.

BANKING

Diamond, Access bank stocks rally amid early merger news ENDURANCE OKAFOR

T

he stock of Diamond bank jumped 10 percent to a 12-week high of N2.3 per share Friday, as investors digested news that a merger with Access bank would happen sooner than expected.

Access bank also rose by 8.33 percent to N6.50 per share.

The stock performance comes on the heels of a conference call where both managements of Access and Diamond bank revealed the merger is estimated to deliver N150.3 billion in synergy gains and said also that the deal was brought for ward by two months.

Gbolahan O logunro, equity research analyst at Lagos-based C SL Stockbrokers said the stock rally was as a result of the conference call held on

Thursday, as it seems there will be seamless

merger between both banks.

“ The news brought investors comfort and

this increased their sentiment towards the stocks, that is why we saw renewed buying interest in the share the banks,” O logunro explained.

Another stock analyst who responded on the condition of anonymity affirmed this as he said it was an aftermath effect of the news from the conference call.

“Ever ything seems alright for the merger and this fuelled investors appetite for the stocks,” the Lagosbased analyst said.

In the same day

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

under review, Access Bank stocks also rose by 8.33 percent to trade at N6.50 per share. “ This is on the renewed investor interest after it cancelled a rights issue planned for the first half 0f 2019,” O logunro cited.

Other bank stocks that performed well for the week ended Friday 25th Januar y 2019 were FCMB Group +9.7 percent, Wema Bank +7.8 percent, United Bank for Africa +7 percent and Ecobank Transnational+6.4 percent.

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DAY

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COMPANIES & MARKETS AWARDS

International Breweries hands-over multimillion Naira CSI projects to South-Western communities OLUFIKAYO OWOEYE

I

nternational Breweries Plc, a member of one of the world’s largest brewers, ABInBev, has commissioned a number of projects under its corporate social investment initiatives, across several communities in Osun, Ogun and Oyo states.

These multimillion Naira projects, which were completed in the last quarter of 2018, were recently handed over to the communities.

The projects, according to a statement are part of the company’s strategic policy of impacting the communities where it operates, especially in the areas where basic amenities are either lacking or inadequate. The projects include solar-powered boreholes, an adequately equipped primary healthcare centre and a sanitary facility.

A newly renovated primary health centre was donated to Esa-Odo community in Osun state along with critical equipment including weighing scales wheelchairs, mattresses, a generator, among other hospital equipment, to facilitate the efficient running of the facility.

Ilase-Ijesha community in

Ilesha Osun State; ObafemiOwode and Orile-Imo Logbara communities in Sagamu, Ogun State; and Christian Mission School for the Deaf in Onireke, Ibadan, Oyo state, each received a solar-powered borehole. Omi-Asoro Elementary Primary School, also in Osun State, received a newly built sanitary facility.

Speaking on behalf of International Breweries, Legal and Corporate Affairs Director, Otunba Michael Daramola, in the statement said the aim of the donations is to positively impact communities and improve their overall wellbeing “We are here to hand over completed projects as promised. At International Breweries, we strive to impact every community where we operate and make it better than we met it. As a result, our projects are designed to be beneficial to the whole community and this is the essence of our give-back policy as encapsulated in our CleanerWorld and BetterWorld programmes, comprising water, health, culture and economic empowerment.”

“We are glad we are able to play our own little role as a business, and hope it will make a difference in the lives of the people, especially women, chil-

L-R: Shola Adeyemi, director, legal and regulatory affairs; Segun Ogunsanya, MD/CEO; Veronica Onoja, customer service director, and Emeka Oparah, director corporate communication/CSR, all of Airtel Nigeria, during Airtel Touching Lives Season Press Conference at Airtel Headquarters in Lagos.

dren and the vulnerable in the society,” Otunba added.

In their remarks, the royal fathers present commended International Breweries for providing the facilities and always responding positively whenever it was called upon

by the people. They urged the organisation not to relent in supporting the efforts of the government in providing basic amenities for those at the grassroots and promised to continue to maintain peaceful and cordial relationships with

the organisation.

Speaking on behalf of Obokun East Local Community Development Area, Osun State, the chairman, Omole Ishola, said: “It has always been the government’s plan to equip every health centre and hospi-

tal, as well as provide drugs for patients in the state but the plan has always been hampered by lack of funds. The intervention of International Breweries, especially as it caters for pregnant women, is a welcome development. We are indeed grateful.”

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COMPANIES & MARKETS

Monday 28 January 2019

Business Event

MICROFINANCE

Accion MfB rewards physically challenged in financial inclusion pusha HOPE MOSES-ASHIKE

A

ccion Microfinance Bank Limited is promoting financial inclusion in the country, as it last week empowered three physically challenged customers financially and socially.

The bank donated two power generating sets and financial support to these customers to boost their business and improve their living standard.

Taiwo Joda, managing director/ CEO, who spoke at the bank’s annual customer forum in Lagos, said the bank is focused on empowering people and that their social impact aimed at giving back to the society where they operate.

He said part of the things the bank has done include reaching out to schools. “Our social impact is linked on the fact that we need to be able to give back to the society that we operate from”, Joda said.

“Micro finance bank is actually focus on empowering the people and so you can not totally dissociate yourself from the poor and we are

trying to empower the poor, you also know there cannot be effective financial inclusion without social inclusion-if you do not give back to the society and you do not drive social sustainability you cannot be talking about financial sustainability,” he added.

The bank partnered with a lot of Schools in September 2018, where it gave out over 5,000 School bags and exercise books, notebooks to different Schools across the country to empower the indigene children.

“It is so exciting to the children who have never seen a school bag before and we are so excited about that idea.”

The annual customer’s forum, is an opportunity for the bank’s customers to come together to give the bank feedback on areas of its services to them.

Joda explained that it is an opportunity to appraise how well the bank is serving its customers, adding that it is a partnership that the bank has formed with its customers from the inception, in order to improve in much better way.

“Today we are celebrating three

of our customers that are living with disabilities, but who are also economically active doing business and you could see the joy in them. They are not relying in family and friends to be able to feed themselves.

“We felt the least that we could do is to help their business grow and that is why for two of themone who are into laundry business, and the second who is into sales of drinks, we gave them generators.

While for the individual with visual impairment, we felt the way we can impact him is to pay the children school fees.

“When we interviewed them, we realized that the whole school fees have not been paid and the school session has to break, so what we did was to pay the back log of the outstanding school fees. We also paid for the new session and as time progresses; we will review what we can do to further improve the lives of the people.”

However, Joda admitted that the bank would be taking the initiative a step further because of the understanding that there is a lot of abilities in disability.

L-R: Bola Adeeko, divisional head, shared services, Nigerian Stock Exchange (NSE); Gregory Jobome, executive director/chief risk officer, Access Bank Plc; Suleiman Hassan Zama, minister of environment; Kyari Bukar, former chairman, Nigerian Economic Summit Group (NESG), and Chris Dodwell, director, climate change and clean growth, Ricardo Energy and Environment, at the climate finance accelerator Lagos 2019 organised by Ricardo and NESG in Lagos.

Pic by Olawale Amoo

FX

Turtlewax taps digital technology to drive forex trading efficiency OLUWASEGUN OLAKOYENIKAN

T

urtlewax BDC, a foremost Bureau de change operator in Nigeria and KiakiaFXan indigenous fintech FX solutions company have taken giant strides to promote convenience and deepen the foreign exchange market by opening a first of its kind, digital BDC office at the Lekki axis of Lagos State.

The digital office located in Cruise Mall, Emma Abimbola Cole Street according to the promoters will provide Free-Wifi to customers who can perform their FX transactions via channels that promote virtual/digital foreign exchange – whereby no physical cash is handled.

While declaring the office open, the Southwest President of Association of Bureau de Change Operators of Nigeria (ABCON), Taiwo Ebenezer commended the

Management of Turtle Wax BDC and KiaKiaFX for the notable feat. According to him, “Turtle Wax BDC has been unrelenting in its commitment to changing the Bureau De Change operating landscape in Nigeria and Africa as a whole and what we are witnessing today is a further step in that direction and it deserves a lot of commendation for it’ According to Olatubosun Sanyaolu-Oyo, managing director of Turtle Wax BDC, the essence of the Digital Office is to further bring convenience to its customers and reduce to the barest minimum the difficulties and stress involved in foreign exchange transactions.

In his words “at Turtle Wax BDC, we continually think of innovative ways to make the customer journey easier and seamless while also delivering unequalled value to all our stakeholders”.

Turtle Wax BDC is licensed

by the Central bank of Nigeria as a Bureau de Change operator.

The company has been at the forefront of promoting convenience and seamlessness in the foreign exchange business. Its recent partnership with Kiakia FX – an Indigenous Fintech company has enabled hundreds of customers to exchange foreign exchange, conduct transactions in foreign currencies, settle school fees and other bills in foreign currencies from the comfort of their homes and offices by means of their desktops, laptops, tablets and other mobile devices.

According to Abisoye Coker, managing director of KiaKiaFX, partnering with Turtle wax BDC in creating innovative cash management technology frameworks that promote near cashless processes in the BDC segment will lead to elimination of theft and high insecurity for both operators and customers.

AGRO-ALLIED

Flour Mills restructures to boost efficiency SEGUN ADAMS

F

lour Mills of Nigeria Plc (FMN), one of the market’s leading manufacturers of food and agro-allied products announced on Thursday, 24 January that it has filed a Scheme of Arrangement with the Securities and Exchange Commission (SEC) to transfer its existing assets in one of its divisions, Golden Penny Fertilizer, to its wholly owned Agro Allied Company, Golden Fertilizer Company Limited.

In a statement sent to the Exchange, the food and agro-allied industry giant explained that the move which is well-thought-out and an on-going restructuring process within the FMN is in line with its strategic ends to improve business performance across all fronts. ‘’The move …is expected to improve synergy, increase efficiency and ultimately position FMN for greater operational and financial

flexibility to ensure continued business growth,’’ the notice stated.

The company further explained that upon approval by SEC and the completion of the restructuring process, Golden Fertilizer Company limited will serve as a Holding company for all FMN Group’s agro-allied businesses. ‘’To improve synergy in the business we need to make sure that all of these other small divisions are aligned properly,’’ Samuel Iboroma, Corporate Communications Manager at Flour Mills of Nigeria told Businessday over the telephone ‘’ Golden fertilizer which was a division before is going to be a holding company; a wholly owned subsidiary and a holding company for all the other agro-allied businesses ‘’He said.

Golden Fertilizer Company Limited was established as a wholly owned subsidiary of Flour Mills of Nigeria in 1997 with fertilizer blending, distribution, and supply

as its core business.

In 2006, Golden Fertilizer Company Limited became a division of FMN, thus an internal segment of the company.

At the close of trading same day, Flour Mill closed 0.77 percent higher at N19.60 per share after trading relatively flat at N19.45 per share since the 16th, reflecting a broader trend of relatively low volume trading since the 10th.

Flour Mills recorded a 9.62 percent decline in revenue which fell to N269.74 billion in six months ended 30th September 2018 from N298.44 billion in corresponding period of 2017.

Decline in sales owing to traffic challenges along the Apapa axis as well as tough business environment were identified by the company as key factors which affected the company’s performance.

The board however assured investors that performance for the year would not be affected by the event.

L-R: Vincent Nwani, director of research and advocacy, Lagos Chamber of Commerce and Industry (LCCI); Agnes Shobajo, vice president; Babatunde Ruwase, president; Toki Mabogunje, deputy president, and Michael Olawale-Cole, vice president, during the LCCI Quarterly Press Conference on the State of the Economy on in Lagos.

L-R: Dolapo Ayo-Ojo, demand and supply planning manager, Nestle Nigeria Plc.; Gloria Nwabuike, marketing manager, Nestle Waters; Nestor Finalo, supply chain manager, Nestle Nigeria Plc.; Victoria Uwadoka, corporate communications and public affairs manager, Nestle Nigeria Plc., and Lolia Kienka, corporate communications and public affairs specialist, Nestle Nigeria Plc., during the presentation of award to Nestle as the “Best in Stakeholder Engagement” at the SERAS Awards in Lagos.

L-R: Monday Ubogu, head, installations, Mojec Meter Company; Chantelle Abdul MD/CEO, Mojec International Group; Mojisola Abdul, chairperson, Mojec International Group, and Sheu Olatunji, team lead, Virtuitis Solaris– Mojec’s Business Intelligence Unit, during the presentation of the London Stock Exchange Group (LSEG) ‘Companies To Inspire Africa’ 2019 Award to the Management of Mojec International Group by the CEO in Lagos recently.

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This is M NEY A daily guide to your Personal Finance

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BUSINESS DAY

25

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Money mistakes to avoid in 2019 primary bread-winner of a young family.

Don’t delay long term investing When you are young it is so easy to feel that you have all the time in the world to start investing.

Remember that the great advantage of youth is time and you can’t get it back.

Time is a major ally when it comes to building lasting wealth.

Even if you don’t have much, just get started.

When you imbibe the habit of saving and investing you can take advantage of time and your funds will grow benefiting from compound interest and earnings. The longer you wait, the greater the cost to you. The best time to start investing for the future is now.

Avoid borrowing on behalf of someone else.

A good friend asks you to help them get a loan from their bank. You agree and borrow in your name on their behalf and sign off on the dotted line. Your friend may have had good intentions at the time of borrowing but if they should run into financial difficulty and fail to pay you back, you are liable to pay the loan back in full.

Be very careful in considering such a request if you are approached. Money can destroy friendship so don’t be casual about borrowing and lending.

Not paying back mon-

‘

If you have the habit of not paying borrowed funds back on time or even at all, it will all come back to haunt you, as no one will want to lend you money even if its just to tide you over a difficult patch

ey that you owe This might be a small personal loan from a relative or friend or a large financial loan from an institution. If you have the habit of not paying borrowed funds back on time or even at all, it will all come back to haunt you, as no one will want to lend you money even if its just to tide you over a difficult patch. Your credit score is very important, in your business as well as your personal life. If you are in debt have a plan to pay back what you owe.

Investing in what you don’t understand.

So many people have been badly burnt from MMM, Swiss Gold and numerous scams. Putting your money in vehicles

‘

F

rom time to time, we will make financial mistakes. What is more important than making such mistakes, is learning from them. Here are some financial mistakes to avoid this year.

No plan Even if you didn’t start out with any goals or financial resolutions before now, you can still get a handle on your finances.

Financial success rarely happens overnight. Don’t just sit back and expect things to fall into place.

The adage “if you fail to plan, you plan to fail” is true. A financial plan helps you to give some attention to what is important to you and your family to be able to achieve your goals. So much lies ahead that we must be prepared for. Don’t wander through 2019 without a plan. Even though you can’t predict the future, you can be better prepared for it, if you plan ahead.

No emergency savings We watch the news from the United States each day about the implications for thousands of families following the partial government “shut down.” Many will not receive their due paycheck next week. The importance of an Emergency Fund to tide you over periods with little or no income is glaring. We don’t need to look far to see that all around us millions of Nigerians struggle to live from paycheck to paycheck; that’s if they have a job. For how long can you manage and fulfill short-term obligations if your salary or other income were to stop suddenly?

As your family and responsibilities increase, plan for unexpected emergencies. The size of your Emergency Fund will depend on your family needs and your obligations.

Ideally you should set aside about six to twelve months of living expenses in a secure money market vehicle that you wont be tempted to break into unless absolutely necessary.

If you fail to set aside some rainy day funds, you will be forced to resort to debt should you lose your job, fall ill, or have a major unexpected expense. Set up an automatic withdrawal as soon as your salary is credited to start building up your emergency fund.

Make this one of your primary goals for 2019.

Dont ignore your insurance Who wants to start the year thinking about accident, job loss, fire, illness or death; clearly no one does; but you do need to protect your assets and those you love including yourself. Not having adequate insurance in place can have a devastating effect on your finances when there is a mishap such as flood damage or fire. Yet the simple payment of the annual premium could help one avoid this.

Accidents do happen.

Nobody wants to be left paying expensive hospital bills or witnessing a family unable to make ends meet because of the untimely death of its primary breadwinner. Make sure your health insurance is up to date and that you have adequate life insurance particularly if you are the

that you do not understand can have devastating consequences. Invest only in what you understand and try to make financial decisions based on adequate research and advice from experienced and tested professionals.

Even if you were one of the thousands of people that got burnt during the stock market crash, it is a big mistake to ignore it completely. There is no “best” time to invest; invest regularly. You might consider buying into a mutual fund; this way your portfolio would be professionally managed and diversified which reduces risk. Always consider your risk appetite, your time horizon and your goals before investing.

Don’t borrow to buy an asset that you cannot afford.

Remember that by borrowing to buy a car, you are paying interest on an asset that starts to lose value from the moment you drive out of the car showroom. If you must borrow to buy a car, consider buying one that is fuel-efficient and with reasonable maintenance costs that you can afford.

It is great to have a sprawling expensive house but be careful in ensuring that you can actually afford to make the mortgage payments. Instead, identify a property that is less than what the bank says you can afford.

That way your payments will be manageable and you can continue to build

your savings and financial security.

Not having an estate plan.

If you have dependents, particular minor children you ought to have a vehicle in place that can support them in the event of your demise. In your will you can name a guardian for minor children. Why leave it to the state to decide.

Overspending If you are regularly spending more than you earn, the prospects for future financial security will be a challenge. Create a budget and stick to it. Don’t look over your shoulder or on social media to see what everyone else “appears” to be doing.

Focus on your own goals.

There is no magic formula for creating and sustaining wealth. It comes from careful planning, focus and discipline over the long term.

Nimi Akinkugbe has extensive experience in private wealth management.

She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

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CITYFile

Kano lifts amputees with 190 artificial limbs

K

ano State government has donated 190 prosthetics to amputees in the state.

Governor Abdullahi Ganduje made the donation at Muhammadu Buhari Hospital in collaboration with JIBWIS and Tolaram Foundation.

He said the gesture would help the recipients to live normal lives.

He advised the recipients against street begging, pointing out that they are as normal as other human beings, with the artificial arms and limbs.

Ganduje, who was represented by his deputy, Nasiru Gawuna, thanked the partners for their support and urged them to redouble efforts in providing succor to the less privileged.

The state commissioner for health, Kabir Getso , commended the governor for his support to the needy.

He expressed the ministry’s readiness to support efforts toward at ensuring better life for the less privileged.

Getso also commended the governor for his strides in the health sector.

Usman Funtua, the coordinator of the foundation, said the limbs cost hundreds of thousands of naira. He said that in the last five years 3,791upper and lower limbs had been donated to various people in Nigeria.

Ali Sabo, one of the recipients, thanked the governor for the gesture, saying that he was feeling good and looking normal.

NDDC delivers 3.7km road project in Uyo

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he Niger Delta Development Commission (NDDC) says it has inaugurated a 3.7-kilometre dual carriageway,fitted with solar powered lights, in Uyo, Akwa Ibom.

Nsima Ekere, managing director of NDDC, speaking through commission’s director of corporate affairs, Ibitoye Abosede, in Port Harcourt, said that the road connected Uyo town with the main campus of the University of Uyo. Ekere said: “The commission is satisfied with the quality of work done by the NDDC contractor. The solid drainage work will enable the road to last long.

“The era of poor quality work and abandoned project is gone. This is due to control measure put in place by the current NDDC board and management.”

Ekere said that the commission had completed about 90 per cent of over 300 projects it awarded in Akwa Ibom in the last two years.

“All I can assure the entire Akwa Ibom people is that, NDDC will continue to live up to its responsibilities and recognises the state as the leading oil producing state in the country.

“NDDC is delivering quality work across the Niger Delta.”

The vice-chancellor of the university, Enefiok Essien, a professor, commended NDDC for listing the university among beneficiaries of projects in the region.

Essien, represented by Inyang Udofot, also a professor, and deputy vice chancellor (academics) of the university, said the road had been impassable before the commission’s intervention.

“The approach road into the campus was an embarrassing feature of our university and as such, the commission has saved us from this embarrassment.

“The university will not forget this gesture.” NAN

A little rain caused many troubles for commuters plying the Oshodi-Apapa Express Way . However, it is a pointer to the urgent rehabilitation work on the dual carriage road before the rainy season begins.

Pic by Pius Okeosisi

I wear ACP rank to survive, fake police officer confesses ANIEFIOK UDONQUAK, Uyo

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ingsley Udoyen, a 56-year fake police officer arrested in Uyo, Akwa Ibom State has confessed that the reason he impersonated the police and paraded himself as an Assistant Commissioner of Police (ACP) was to fend for his family of five after his dismissal from the Nigeria Police Force (NPF).

Udoyen, a father of four, told newsmen that with the police uniforms, he was able to operate freely including movement of cars from Cotonou in Benin Republic into Nigeria. He further confessed to receiving support in his illegal exploits from a girl friend he claimed is serving personnel in the police force.

He was paraded alongside 212 other

suspected criminals by the Commissioner of Police (CP) in charge of Akwa Ibom, Musa Kimo. The CP said Udoyen had used the fake ACP rank to defraud unsuspecting members of the public.

According to Kimo, one English pistol without magazine and ammunition, portraits of Chief Superintendent of Police (CSP) and Assistant Commissioner of Police (ACP) and other implicating items were recovered from the fake ACP’s residence.

“Other items found include three pairs of uniform, police belt, fake police ID card and other documents,” Kumo said.

Speaking with reporters, the fake senior police officer claimed that he served as a police officer in Lagos State before he was dismissed.

“I started when I lost my job. I was with

the Police Force at Alagbon as a Superintendent of Police (SP). I was dismissed in 2007 because of an illegal job I went for.

“I left Lagos in 2008 and went to Calabar, where I met Glory Etim, my girlfriend. She is the one who bought all these police uniforms for me. She is a serving officer and works with the Police Secondary School.

“I am a car dealer and I go to Cotonou.

Since I was dismissed, I don’t have a job.

“I am 56 years old from Mbiaobong Ikot Etefia in Ikono and I am married with four children. I know what I am doing is against the law,” confessed Udoyen.

Other suspects paraded by the command include alleged kidnappers, suspected murderers, a man who allegedly defiled a four-year girl and those who robbed passengers inside a tricycle in Uyo, the state capital.

Sokoto attack: FG distributes relief materials to victims

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he National Commission for Refugees, Migrants and Internally Displaced Persons has commenced the distribution of relief materials to victims of bandits’ attacks in Sokoto State.

The attack occurred on Januaryy 13, in Kursa, Dursi and surrounding villages in Gandi district of Rabah local government area.

No fewer than 26 persons were killed by the armed bandits while those displaced have been taking shelter at a camp in Gandi.

Sadiya Farouk, a commissioner with the refugees agency said: “We are here on the directive of President Muham-

mad Buhari to assist and commiserate with you on the attack as well as condole with the families of those that lost their loved ones.

“We have brought with us foodstuffs, drugs, confectioneries and clothing materials in order to assist and ease the suffering of the victims,” she said.

Farouk added that the commission has since assigned officials to assess the situation for government to arrange more materials and interventions for the victims.

“This is in order to assist the victims to engage in various vocational trades to become self reliant.” She added.

The commissioner further assured the

victims of President Buhari’s commitment toward ensuring more security in the area to ensure lasting peace.

The sole administrator of Rabah local government, Abubakar Bala, commended the federal government for the relief materials, noting that the state government had also assisted the victims.

The district heads of Rabah and Gandi, Bello Abubakar and Muhammad Maccido, respectively appreciated the government for the support.

The materials distributed include; 630 bags of grains, 221 gallon of oil, 233 mosquito nets, 233 wrappers, children clothes, drugs and wheal chairs for elderly persons among others.

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Why $1bn approved for Ajaokuta Steel makes no sense Stories by ODINAKA ANUDU

I

n December 2018, the Senate passed a bill seeking to allot $1 billion from the federal government’s share of Excess Crude revenue for the completion of Ajaokuta Steel Company.

The Senate resolution followed the adoption of the ‘Ajaokuta Steel Company Completion Fund Bill, 2018’, which was a bill presented by Senate Leader, Ahmed Lawan.

Many senators were happy about the bill, as they felt it would rejuvenate the behemoth. However, a critical analysis shows that allotting $1 billion to Ajaokuta makes no sense.

It is on record that Ajaokuta was established in 1971 to develop Nigeria’s steel sector and stimulate the exploration of Godgiven natural resources, especially iron ore. Luckily for the country, large iron ore deposits were found in Itakpe, Ajabanoko and Oshokoshoko all in Kogi State. The Ajaokuta Steel Complex and Delta Steel Company were sub-

Ernest Azudialu-Obiejesi (m), group managing director of Nestoil Limited flanked by Obinna Ufudo, Nestoil executive director (operations) and Lawrence Ogudu, country manager DQS Limited at the presentation of ISO Certification on Quality Management Systems to Nestoil and its affiliates.

sequently incorporated in 1979 as limited liability companies.

Between 1980 and 1983, the then federal government stated that it had achieved 84 percent completion of Ajaokuta steel plant, having completed the light mill section and the wire rod mill.

It was also widely re-

ported that erection work on equipment reached 98 percent completion around 1994. Ever since then, Nigerians have been made to believe that Ajaokuta is 98 percent completed.

But here lies the biggest puzzle: Why is a company that is 98 percent completed still failing to produce a sheet of steel over 35 years

after its establishment?

Despite being unproductive, government after government has continued to pump billions into the complex. Government records show that successive administrations have pumped $8bn so far into the complex since 1979.

The current government of Muhammadu Buhari has

joined the party of spenders on a government facility that needs to be in private hands.

In a move that shocked economists and finance experts, the federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund Ajaokuta Steel Company, despite an earlier business case in the last administration showing that the complex could only work if properly privatised. There was also a humongous budget on it in 2018.

“So why would anyone continue to pump money into an enterprise that is unproductive,” Ike Ibeabuchi, a manufacturer, said.

“The government says new investors are interested in taking over the complex, so why would Nigeria spend that huge fund on it?” he asked.

Eleven private investors have expressed interests in the concessioning of Ajaokuta Steel Company, Abubakar Bawa Bwari, minister of mines and steel development, said in the nation’s capital on January 15.

Bwari said it would be concessioned to a firm

with the financial muzzle, technical know-how and genuinely committed to the nation’s steel sector development.

“But then, why have they not found investors since Kayode Fayemi’s days? We don’t know whether this so-called Ajaokuta is meant for siphoning public funds,” a private sector player in the steel sector, who does not want his name in print, said.

Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others, but it is yet to produce a sheet. It has a managing director and staff members who are paid from tax payers’ funds.

“Currently, I am not sure those technologies at Ajaokuta are competitive in steel making. The world has moved on. What is required now is for the private sector to get more and more involved in the downstream and the upstream segments in the steel business,” Raj Gupta, chairman, African Industries Group, a consortium of 12 companies, including six steel plants, told BusinessDay recently.

thereby putting the delivery of capital projects at risk, urging revenue generating agencies of the government to do better than their current level of performance and remittance.

“It is imperative to ensure improved independent revenue performance in 2019,” he said.

Ruwase stated that the creation of better investment environment would also attract more private capital and investment, which would invariably impact positively on government revenue and employment generation.

The president of the chamber said delays in budget implementation was having adverse effects on the economy.

“We have witnessed the

adverse impact of delayed budget passage on the national output and real economic activities,” he said.

“Such delays put budget implementation at risk.”

He said it affected the capacity of government to deliver infrastructure projects, payment to contractors, among others.

“We acknowledge the fact that the 2019 budget has been presented to the National Assembly. We appeal to the National Assembly to consider and approve the budget expeditiously to ensure optimal implementation. We also urge the government to encourage private capital in the delivery of infrastructure projects, through enabling reforms and public-private partnership.”

Insecurity reduces local inputs for agro-allied industries—LCCI … chamber canvasses completion of infrastructure projects

T

he Lagos Chamber of Commerce and Industry (LCCI) says high level of insecurity across the country is cutting down locally available inputs for agroallied industries.

Babatude Paul Ruwase, president of the LCCI, said at the quarterly press briefing in Lagos last Thursday that governments at all levels must curb insecurity to enable manufacturers raise local input preference.

“Incidence of criminality such as terrorist activities of Boko Haram in the North East, herdsmen killings and destruction of farms, kidnapping, armed robbery, cult related violence, religious and ethnic conflicts are prevalent across the country,” he said.

“These impact food se-

curity and food inflation, affecting shortage of local raw materials for agro-allied businesses.”

Agro-allied manufacturers source inputs such as maize, sorghum, cassava, millet, soya, cassava starch, cocoa powder, and palm olein, among others, locally from different parts of Nigeria.

Boko Haram insurgents ravage states such as Yobe and Borno where some of these crops come from. Fulani herdsmen and their cows have also destroyed farms in central part of Nigeria, notably Benue, which is the food basket of the country.

Data from the Manufacturers Association of Nigeria (MAN) show that local sourcing declined from 60.72 percent in the first half of 2017

to 56.6 percent in the second half of 2018.

Ruwase said the situation was hurting investor confidence, fuelling adverse global perception for the country.

“We implore the Federal Government to prioritise safety of lives and properties and provide adequate security across the country,” he said. “It is important to consider and review current security strategy to ensure safety of lives and property.”

He urged the federal government to complete ongoing infrastructure projects across the country to enable them have the desired impact on the economy.

“Government should expedite actions to complete infrastructure projects nationwide such as the Lagos-

Ibadan expressway, LagosIbadan rail project, Power Projects, the Second Niger Bridge, East-West Road, among others,” Nig er ia must spend three to five percent of its Gross Domestic Product on infrastructure, according to the Economic Recovery and Growth Plan.

The spending is targeted at fixing major infrastructure that requires $3 trillion in the next 26 years.

“These projects would have significant positive impact on commercial activities and businesses as they reduce cost of doing business and boost productivity,” Ruwase said.

He said government revenue could barely fund the recurrent expenditure and debt service commitments,

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real sector watch

Output of Dangote, Flour Mills, others hits N4.76 trillion in H1 2018 …represents 2% rise from H1 2017 Stories by ODINAKA ANUDU

O

utput of members of the Manufacturers Association of Nigeria (MAN), including large enterprises such as Dangote Group, Flour Mills of Nigeria and PZ Cussons, hit N4.76 trillion in the first (H1) of 2018.

According to a recent survey by MAN, output stood at N4.76 trillion, representing N0.90 trillion (1.9 percent) increase from N4.67 trillion recorded in the corresponding half of 2017.

However, this represents a decline of N0.27 trillion (5.4 percent) when compared with N5.03 trillion reported in the preceding half.

“The production performance of the sector in the half was largely due to the general sluggishness of the Nigerian macro economy in the period,” MAN says.

Production in food, beverage & tobacco sector, which always accounts for largest production in the sector,

L-R: Oliver Gierlichs, senior Bayer rep. & chief financial officer - West & Central Africa; Ademola Abass, special adviser to governor of Lagos State on overseas affairs and investment; Mohammed Jimoh, managing director, Bayer Middle Africa Ltd and head of marketing & sales PH/CH- Nigeria; Stefan Traumann, German consul general, Lagos, at the official launch of Bayer office in Lagos recently

slowed to N1.55 trillion in the first half of 2018, representing N0.13 trillion (7.7 percent) from N1.68 trillion in the corresponding half of 2017.

Production in pulp, paper & paper products, printing, publishing & packaging (6Ps) group stood at N63.38 billion in first half of 2018,

representing N3.49 billion (5.8 percent) increase from N57.89 billion recorded in the corresponding half of 2017. It however, declined

by N2.07 billion (3.2 percent) from N65.45 billion recorded in the preceding half.

Production in chemical & pharmaceutical group stood at N336.61 billion in the first half of 2018, down by N15.64 billion (4.4 percent) and N20.92 billion (5.9 percent) from N352.25 billion and N357.53 recorded in the corresponding half of 2017 and the preceding half ( H2 2017) respectively.

Domestic & industrial plastic group stood at N166.21 billion in the first half of 2018, down by N2.38 billion (1.4 percent) and N13.88 billion (7.7 percent) from N168.59 billion and N180.09 billion recorded in the corresponding half of 2017 and the preceding half respectively.

Production in basic metal, iron & steel group stood at N187.42 billion in the period under review, representing N13.91 billion (6.9 percent) and N17.7 billion (8.5 percent) slowdown from N201.33 billion and 207.12 billion in the corresponding period of 2017 and the

preceding half respectively.

“Production performance across industrial zones was a mixed-bag as it increased in some branches and decreased in the others,” MAN says.

P ro d u c t i o n i n O g u n branch stood at N2.11 trillion in the first half of 2018, representing N0.63 trillion (42.6 percent) rise in the corresponding half in 2017.

Production in Apapa zone stood at N386.79 billion in the review period, representing N82.14 billion (27.0 percent) increase from N304.65 billion recorded in the corresponding half of 2017. Production in the zone, however, declined by N36.0 billion (8.7 percent) when compared with N423.59 billion in the preceding half.

MAN is made up companies Dangote Group, PZ Cussons, Flour Mills of Nigeria, Honeywell, Aarti Steel, Nigeria Foundries, African Paints, Cabdury and Nigerian Breweries, among many others.

The firms all together invested N4.43 trillion between January 2013 and June 2018.

Bayer strengthens presence in Nigeria

Why Nigeria needs industrial strategy

ayer has launched a new ultra-modern office in the Ikeja, Lagos. The investment demonstrates Bayer’s long-term commitment to Nigeria, its clients and the industries that it operates in, the company said.

Bayer is a multinational pharmaceutical, chemical, health and life sciences company.

The new office reflects the expansion of its business in Nigeria while meeting the occupancy needs of the company.

“The new office design is an epitome of modern architecture and an embodiment of global and local workplace standards,” the company said.

“It was constructed to the Bayer Group’s specifications in terms of quality, functionality and resilience. Staff have a variety of workplaces to support different types of work activities and styles.”

Thes e, the company

ver the years, Nigeria’s industrial strategy has been obfuscating as it is difficult to determine whether the country is trending towards import- substitution or export- orientation.

Import-substitution is a strategy in which local industries are established with a view to producing goods that replace imported ones.

Export- oriented or substitution industrialisation, on the other hand, is a strategy of exporting goods for which a country has a comparative advantage. This strategy has worked miracles for the Asian Tigers.

Nigeria has adopted what is called ‘resource-based industrialisation’, whereby firms use locally available resources, such as raw materials, man power and natural resources, to grow domestic production.

This has seen some success with local input sourcing reaching 57 percent in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN). Despite adopting this strategy,

B

said, range from collaboration spaces, team desks to more private focus desks, which staff can select for their most appropr iate needs during the day, providing the flexibility to balance their professional and personal lives. Modern meeting rooms and facilities create conducive environment for the customer focused discussions with clients and partners, the company said.

In 2014, as part of the company’s Africa strategy, Bayer decided to strengthen its presence in Nigeria. This strategy saw the company expand its operations in West Africa to include offices in Accra/ Ghana, Lagos/Nigeria and Abidjan/Ivory Coast, (regional headquarters). Beyond these offices, Bayer now also has representatives in West Africa countries. Bayer Middle Africa (Nig) Ltd, the legal entity and a subsidiary of Bayer AG (Germany), operates

with Lagos as its hub but also have representatives across all regions of the country.

All three divisions of Bayer Pharmaceuticals, Consumer Health and CropScience are present in Nigeria.

Bayer is a global enterprise with core competencies in the life science fields of health care and agriculture. Its products and services are designed to benefit people and improve their quality of life.

The Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and to its social and ethical responsibilities as a corporate citizen. In fiscal 2017, the Group employed around 99,800 people and ha d sa l e s o f € 3 5 . 0 b i l lion. Capital expenditures amounted to €2.4 billion, while R&D expenses were €4.5 billion.

O

local manufacturers remain the heaviest importers of inputs, machines and packaging materials. This is why any scarcity of dollars hurts the industrial sector most.

Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), pointed out recently that the country needs a new industrial strategy targeted at shoring up non-oil export.

He, however, explained that import- substitution and export promotion could go together, adding that resource-based industrial is more competitive because local resources are utilised, citing an example with the bright performance of food and beverage sub-sector which gets most of its inputs locally as a case study.

Nevertheless, facts on ground show that the country’s industrial strategy is not clear.

In 2013, for instance, the National Automotive Policy imposed 35 percent levy and 35 percent duty on imported vehicles, amounting to a total of 70 percent. This was meant to protect local vehicle as-

semblers.

At the same time, importers of damaged or ‘accidented’ vehicles officially enjoy a rebate of 30 percent. What this has done is to encourage the importation of rickety vehicles, which make up 70 percent of imported cars today.

“If you want to develop a market for 54 companies that have got licenses with 410,000 capacity plants and you import a huge number of used vehicles, how are you going to support vehicles being assembled, since the ones assembled locally will be more expensive?” Bambo Adebowale, chairman, Auto and Allied Sector group of the LCCI, asked in a recent interview with BusinessDay. Speaking at last year’s Manufacturing & Equipment Expo organised by MAN and Clarion Event West Africa, Aliyu Suleiman of the Dangote Group, said that an industrial strategy has become important for Nigeria as new governments spend half of their tenures devising plans, with little room for implementation.

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SPECIALREPORT on

33

Mergers&Acquisitions: A case study of the Access Bank/Diamond Bank Merger

Definition of Merger and Acquisition

M

erger and Acquisition (M&A) basically refers to the consolidation of companies to create better value compared to being on an individual stand.

Since acquisition are mostly viewed in a derogatory light, mergers and acquisitions are increasingly being fused and used in contemporary corporate finance world as having the same meaning.

To this effect, the real-world differences between the two terms are

gradually being wiped out by the new definition of M&A deals.

For a merger to take place, two or more separate companies or assets have to combine to become one new entity, while an acquisition requires a company being taken over by another which in most cases

is bigger than the acquired firm.

Unlike a merger deal where a new entity emerges, the acquired company in an acquisition deal is often consumed, causing it to cease operation and its assets become that of the acquiring company.

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SPECIALREPORT on

Mergers&Acquisitions: A case study of the Access Bank/Diamond Bank Merger

Brief History and some examples of successful and unsuccessful Mergers & Acquisitions in Nigeria

T

he Nigerian banking industry has undergone several changes in the past, particularly prior to 2004 during the tenure of Professor Charles Soludo as the Governor of the Central Bank of Nigeria (CBN).

During this period, the regulator announced an upward review of a minimum capital requirement of banks operating in the country from two (2) billion naira to twenty-five (25) billion naira as a result of the failure of banks recorded in the previous decade. Unfortunately, as at the December 2005 deadline given for the consolidation, only a few Nigerian lenders had the minimum capital requirement. As a result, several merger and acquisition transactions took place, causing 89 banks to shrink into 25 banks including some new entities that emerged.

Access Bank Plc acquired Marina International Bank and Capital Bank International; Afribank Nigeria Plc emerged from the combination of Afribank and Afribank International (Merchant Bank); Platinum Bank Limited merged with Habib Bank Nigeria Limited to form Bank PHB Plc. Diamond Bank emanated from the merger of Diamond Bank and Lion Bank; Fidelity Bank acquired FSB International Bank and Manny Bank; First Bank of Nigeria Plc took over MBC International Bank Plc and FSB Merchant Bankers Limited; Equitorial Trust Bank Limited merged with Devcom Merchant Bank Limited; First City Monument Bank Plc acquired Co-operative Development Bank, Midas Bank and Nigerian American Bank (former Nigerian a subsidiary of Bank of Boston).

Also, First Atlantic Bank, Inland Bank, IMB international Bank Plc and NUB International Bank Ltd merged to form First Inland Bank Plc; Investment Banking and Trust Company (IBTC), Chartered Bank Plc and Regent Bank Plc came together as IBTC Chartered Bank Plc; Gateway Bank, Global Bank, and Equity Bank merged with Intercontinental Bank Plc; while Oceanic Bank acquired International Trust Bank.

Likewise, Prudent Bank, Bond Bank, Reliance Bank, Co-operative Bank, and EIB International Bank Limited joined to form Skye Bank; Magnum Trust Bank Limited was consolidated into Sterling Bank Plc. which comprised NAL Bank Plc, Trust Bank of Africa Plc, NBM Bank Plc and Indo-Nigeria Bank Limited; Standard Trust Bank acquired United Bank for Africa Plc and Continental Trust Bank; Union Bank took over Union Merchant Bank, Broad Bank and Universal Trust Bank.

Intercity Bank, First Interstate Bank, Tropical Commercial Bank, Centre-Point Bank, Bank of the North, New Africa Bank, Societe Generale, Pacific Bank and New Nigerian Bank formed Unity Bank; and Wema Bank acquired National Bank of Nigeria. Ecobank, Stanbic, Standard Chartered, Nigeria International Bank (Citibank Limited) and Guaranty Trust Bank and Zenith Bank, however, survived the storm.

But after the 2005 deadline, some banks became dis-

tressed, signalling the failure of some M&A transactions.

This caused some stronger banks to acquire them and in a few instances CBN taking them over by converting them into ‘Bridge Banks’. Afribank, for example, was taken over by CBN and converted into a ‘Bridge Bank’ and re-named Mainstreet Bank; Sterling Bank acquired Equatorial Trust Bank; First Inland merged with First City Monument Bank; Intercontinental Bank was acquired

by Access Bank; Oceanic ceased to exist after Ecobank acquired the lender; Spring Bank and Bank PHB were taken over by CBN and converted into ‘Bridge banks’ and re-named Enterprise Bank and Keystone Bank respectively. Union Bank Plc was acquired by African Capital Alliance Consortium.

Also in 2014, Skye Bank Plc acquired Mainstreet Bank the bridge bank that acquired Afribank under Asset Management Company of Nigeria (AMCON). Thereafter, Skye Bank started showing symptoms of failure two years after the transaction, the apex bank took over the operations of the bank and appointed a new board to manage its operations.

Sadly, the new management could only achieve little as the apex bank formed a new Bridge Bank, Polaris Bank under the supervision of the Assets Management Company of Nigeria (AMCOM) In all of this, Access Bank, Ecobank, Stanbic, Standard Chartered, GT Bank Plc, First Bank,Sterling Bank, Unity Bank, Union Bank, Wema Bank, Zenith Bank, and Fidelity Bank still remain operational, indicating successful mergers and acquisitions as at January 2019.

Until recently when Access Bank and Diamond Bank announced a proposed merger and acquisition deal aimed to be completed by end-June 2019, there has been a merger and acquisition ‘drought’ in Nigeria since the defunct Skye Bank Plc acquired Mainstreet Bank.

The potential merger between the two lenders is aimed at creating Nigeria and Africa’s largest retail bank by customers. As a result, Nigeria’s banking industry will be amplified and the five largest banks will have more than 60% market share by assets, according to Fitch Ratings, a global credit rating agency.

Why the Merger?

The merger between the two financial institutions became necessary following Diamond Bank’s high impairments, especially with respect to loans to the mid-stream oil and gas sector. Added to this is the bank’s high level of NPLs which implies current reported capital ratios stand to be significantly eroded. The bank’s foreign currency liquidity position also appeared precarious considering that a high percentage of the bank’s USD loans are nonperforming.

Despite all these challenges, Diamond bank has consistently grown deposits even in the face of the paucity of deposits and has a relatively robust digital platform which

as at end of June 2018 had over 10million customers on its Diamond Mobile App. Buoyed by the prospect of creating Nigeria and Africa’s largest retail bank by customer base, the management of the two banks agreed on a scheme of the merger process.

Also, the Managing Director/Chief Executive Officer of Diamond Bank, Uzoma Dozie, agreed that giving up the bank’s independence now for a merger was in the best interest of all stakeholders - employees, customers, depositors, and shareholders.

Diamond Bank will benefit from Access Bank’s strong culture of risk and capital management expertise and a clear strategy for sustainable growth. Access Bank will take advantage of Diamond Bank’s unparalleled retail banking expertise and strong digital offering. Together, the two companies would create one of Nigeria’s leading banks, with 29 million customers, including more than 13 million mobile customers, as well as 3,100 ATMs and around 32,000 PoS terminals.

Diamond Bank and Access Bank share many of the same areas of focus, including women, youth, entrepreneurs and the financially excluded and will be able to further develop their positioning and market leadership in these growth sectors. Diamond Bank’s corporate customers will also be able to benefit directly from Access Bank’s corporate expertise in trade finance, cash management, treasury, and corporate finance.

Diamond Bank currently has 19 million customers, including 10 million mobile users. The combined operation will have relationships with both MTN and Airtel, ensuring that customers of the merged bank will continue to access a strong mobile banking proposition. Access Bank and Diamond Bank also operate from the same technology platform, which the Boards of both banks believe will enable them to complete the integration with minimal disruption or impact on customers, in addition to generating significant synergies.

Details of the Merger The proposed merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank through the Scheme of Merger.

Diamond Bank shares will be valued at NGN3.13 per share, implying a total valuation of NGN72.5bn or US$200mn. Diamond Bank shareholders will receive NGN1.00 in cash for each share held in Diamond Bank and 2 Access Bank shares for every 7 shares held in Diamond Bank. A total of 6.62bn ordinary shares of Access Bank are to be issued to Diamond Bank shareholders post-merger.

The offer represents a premium of 260% to the closing price of N0.87 per share of Diamond Bank on the floor of the Exchange as of December 12, 2018, the date of the final bidding offer.

SWOT analysis of the new entity STRENGHT • The new entity will consolidate on the individual strengths of both banks and create a competitive edge in terms of total assets, loan book and total deposit • Combination of both banks means the new entity would dominate the market with 14.8% of total deposit • A combined customer base of 29 million accounts

WEAKNESSES • Despite promises of cost-saving synergies,, it is likely that the combined cost base of the new entity with 675 branches would be rather high OPPORTUNITIES • Nigeria’s large unbanked population and the increasing call

for financial inclusion offers banks with a robust digital and mobile platform the opportunity to expand frontiers and break new grounds THREATS • The entry of Payment Service Banks • Many Fintech companies now offer products and services that are attractive to our youthful population

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SPECIALREPORT on

Mergers&Acquisitions: A case study of the Access Bank/Diamond Bank Merger

17,943

14,115

32,058

Number of POS

(NGN'Bn)

4,555 Total Assets

THE NUMBERS as at

(NGN'Bn)

1,555

6,110

1,976 Net loans

Numbers of customer

29

(NGN'Bn)

730

2,706

Customer deposits

(millions)

(millions)

10

30-sept-18

19

3 Mobile customers

13

2,475

1,068

3,543

(000)

10

6,400 Digital/ďŹ nancial inclusion customers

7,000

13,400

(000)

400 Number of branches

277

677

1,881 Number of ATMs

1,218

3,099

ATM

Cards in issue

5,7

10,2

15,9

36 BUSINESS DAY

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SPECIALREPORT on

Mergers&Acquisitions: A case study of the Access Bank/Diamond Bank Merger

PF: Pro Forma

The value proposition to key stakeholders CUSTOMERS • Enhanced product offerings • Investment in the digital platform to spur financial inclusion • Commitment to set new standards for customer service harnessing the best talent across both institutions STAFF • Creation of an enlarged Tier 1 banking franchise to establish an exciting workplace with growth opportunities • Focus on innovation, financial inclusion, and sustainability REGULATORS • A stronger safer institution with an enlarged balance sheet

enhanced liquidity profile and capital base • Scale economies and synergies conducive to the strong organic capital generation SHAREHOLDERS • Balance sheet, branch and customer scale will allow the enlarged entity to earn greater margins and invest further in customer acquisition and the digital banking platform The newly merged entity which would most likely retain the name ‘Access Bank Plc’ will be positioned as Africa’s Global bank and create the largest retail bank in Africa with a customer base spanning 3 continents, 12 countries and 29

million client accounts.

No doubt the merger between these two financial institutions will bring higher returns on investment for shareholders, however, the management of the new entity must ensure that ‘early teething problems’ are quickly identified and resolved to ensure a smooth transition to the new entity.

Access Bank already has a track record of successful mergers in the banking industry. Hence this new merger with Diamond Bank should be a smooth and seamless transition. Also, the regulators in the industry must continue to supervise and provide all the necessary support needed for the post-merger process.

BusinessDay SPECIAL REPORT Editor (OLUDOLAPO ASHIRU) - Others Olufikayo Owoeye, Oluwasegun Olakoyenikan, Endurance Okafor, Segun Adams... Graphics: Ogar Daivd Ojie )

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Access Bank Rateswatch Market Analysis and Outlook: January 25th – February 1st, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.81

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion)

22.72

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018

Currency in Circulation (N’ trillion)

23.29

Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

Inflation rate (%) (y-o-y)

11.44

Increased to 11.44% in December 2018 from 11.28% in November 2018

Monetary Policy Rate (%)

14

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

43.12

January 23, 2018 figure — a increase of 0.10% from January start

Oil Price (US$/Barrel)

61.94

January 25, 2019 figure— an increase of 6.23% from the prior week

Oil Production mbpd (OPEC)

1.75

December 2018 figure — a decrease of 0.63% from November 2018

figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Change(%)

25/01/19

18/01/19

31,426.63

31,005.17

1.36

11.72

11.56

1.36

Volume (bn)

0.42

0.30

38.69

Value (N’bn)

3.14

3.76

(16.49)

NSE ASI Market Cap(N’tr)

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

Change

(%)

(%)

(Basis Point)

25/01/19

18/01/19

OBB

12.08

15.33

(325.0)

O/N

13.00

16.17

(317)

CALL

12.79

13.97

(118.6)

30 Days

12.79

15.19

(240)

90 Days

13.28

13.62

(34.8)

FOREIGN EXCHANGE MARKET Market

Indicators

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

1-week Change

YTD Change

(%)

(%)

61.94 3.13

6.23 (5.44)

(3.91) 2.42

2259.00 105.65 73.51 12.83 520.00

(3.59) 1.88 (1.38) (0.70) (0.29)

16.68 (18.86) (5.15) (16.31) 19.95

1283.43 15.37 264.70

(0.15) (0.65) (2.54)

(2.59) (10.59) (19.25)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Friday

Friday

Change

(%)

(%)

(Basis Point)

25/01/19

18/01/19

1 Mnth

12.57

14.24

3 Mnths

11.87

11.76

(167) 11

6 Mnths

14.29

13.88

41

Friday

Friday

1 Month

9 Mnths

16.65

16.59

6

(N/$)

(N/$)

Rate (N/$)

12 Mnths

17.10

17.17

(7)

24/12/18

25/01/19

18/01/19

Official (N)

306.80

306.85

306.95

Inter-Bank (N)

362.43

362.79

359.03

BDC (N)

362.50

363.50

0.00

Parallel (N)

364.00

362.00

364.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

25/01/19

18/01/19

2730.70

2725.39

0.19

Mkt Cap Gross (N'tr)

8.57

8.55

0.19

5.30

5.30

0.02

11.16

10.95

0.21

-44.90

-44.90

0.00

BOND MARKET AVERAGE YIELDS Tenor

25/01/19

Friday

Friday

Change

(%)

(%)

(Basis Point)

25/01/19

18/01/19

3-Year

0.00

0.00

0.0

Mkt Cap Net (N'tr)

5-Year

15.47

15.41

5.9

YTD return (%)

7-Year

15.35

15.36

(0.9)

10-Year

15.22

15.23

(0.8)

20-Year

15.35

15.34

0.9

Index

YTD return (%)(US $)

TREASURY BILLS (MATURITIES) Tenor

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

91 Day 182 Day 364 Day

Amount (N' million) 5,849.03 26,600 119,549.45

Rate (%) 11.3102 14.0155 17.6385

Date 16-Jan-2019 16-Jan-2019 16-Jan-2019

Global Economy In China, Gross Domestic Product (GDP) expanded by 6.4% year-on-year in the fourth quarter of 2018, slightly lower than the 6.5% posted the previous period. It was the lowest growth rate since the global financial crisis, amid intense trade dispute with the US, weakening domestic demand and alarming off-balancesheet borrowings by local governments. In a separate development, the European Central Bank left its benchmark refinancing rate at 0% in its most recent meeting held on the 24th of January 2019. It maintained its expectations of the key interest rates to remain at record low levels for the year 2019. The central bank brought to an end its €2.6 trillion bond purchase scheme in December 2018, but said it will keep reinvesting cash from maturing bonds for an extended period of time. Elsewhere in Japan, the Bank of Japan held its key short-term interest rate unchanged at 0.1% at its January meeting and kept the target for the 10-year government bond yield at around zero percent. The central bank also revised down inflation forecast for fiscal 2019 to average 1.1% from an earlier projection of 1.6%, mainly due to worries over global economic outlook.

as coupons from federal government bond were paid. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 12.08% and 13% from 15.33% and 16.17% respectively the previous week. In the same light, Longer-tenured interbank rates, such as the 30day and 90-day NIBOR decreased to 12.79% and 13.28% respectively from 15.19% and 13.62% the prior week. This week, the rates are expected to trend lower as Federation Account Allocation Committee (FAAC) hits the system.

Local Economy The Central Bank of Nigeria (CBN) concluded its 2day Monetary Policy Committee (MPC) meeting on January 22. The apex bank decided to maintain the Monetary Policy Rate (MPR) at 14%, while the MPC also retained the cash reserve requirement (CRR) ratio at 22.5%, the liquidity ratio at 30% and the asymmetric corridor around the MPR at +200 bps/-500 bps. The MPC observed recent high foreign capital inflow into the Nigerian economy despite the perception of election risk which is evidence of the confidence of the international community and therefore awaits clarity on macroeconomic performance after the general elections in February and March 2019. In a separate development, the International Monetary Fund (IMF) has dropped Nigeria's Gross Domestic Product (GDP) projection for this year to 2%, down from the 2.3% it had predicted for the country previously. The fund stated this in its World Economic Outlook (WEO) update titled, “A Weakening Global Expansion,” released yesterday. The multilateral institution attributed its decision to lower the country's growth projection by 0.3 percentage point to softening crude oil prices. The benchmark Brent crude price fell yesterday to $62.35 a barrel, while US crude futures were down 23 cents at $53.57 a barrel. The IMF downgraded its estimates for global growth for 2019 and 2020 to 3.5% and 3.6% respectively from 3.7% each as previously predicted, warning that the expansion seen in recent years was losing momentum.

Bond Market Last week, bond yields recorded mix performance as average yields on the 5 and 20 year bond closed higher, while 7 and 10 year bond settled lower due to lower demand whilst investors' interest focused on the 2028 bond. Yields on the 5- and 20year debt papers closed higher at 15.47% and 15.35% from 15.4% and 15.34% while 7- and 10year debt papers dipped to 15.35% and 15.22% from 15.36% and 15.23% respectively the previous week. The Access Bank Bond index increased marginally by 5.31 points or 0.19% to close at 2,730.70 points from 2, 75.39 points the previous week. This week, we expect the buying sentiment to persist as we anticipate additional coupon payment next week.

Stock Market The local bourse was bullish last week as the market was supported by high buying pressure despite the relative low traded volume. The All share Index (ASI) expanded by 1.36% to 31,426.63 points from 31,005.17 points the preceding week.

Similarly, Market Capitalization increased by a similar rate at 1.36% to N11.72 trillion from N11.56 trillion the prior week. The upward trend was boosted by performance in the industrial goods, banking and oil & gas sectors. This week, we expect market to tick up slightly as investors continue to reposition for 2019 dividend declaration season that will shape market performance after the elections.

Money Market Cost of borrowing at the money trended downwards for the week ended January 25th 2019 as both short-dated placements and longer dated tenors declined. Market was awash with liquidity

Foreign Exchange Market The local unit settled in differing directional performances in various segments. At the Investors' and Exporters window, it lost 36 kobo to settle at N362.43/$ from N362.79/$ the previous week. Similarly, at the parallel market the local unit weakened N2 to close at N364/$. Meanwhile, at the official window, the currency appreciated by 5 kobo to settle at N305.80/$ from N305.85/$. The weakening seen in the interbank markets comes amidst sustained intervention in the FX market by the monetary regulator. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX.

Commodities Market Oil prices climbed higher last week as turmoil in Venezuela triggered concerns that its oil exports could soon be disrupted. The Trump administration was considering sanctions against Venezuelan oil. The sanctions aim to punish President Nicolas Maduro's government for rescinding diplomatic ties with Washington amid a leadership crisis in the South American country.

Bonny light, Nigerian benchmark crude gained $3.63 to settle at $61.94 a barrel, 6.2% up from the prior week. In contrast, precious metals prices declined for the second week in a row. The strong US labour market data has likely contributed to the dip in gold prices, as unemployment rate hit a 49 year low. Gold prices dipped 0.15% to $1,283.43 per ounce last week, while silver prices settled lower by 10 cents, or 0.6%, to $15.37 per ounce.

This week, talks of an inventory build-up by U.S. Energy Information Administration might sink price of oil. Precious metals prices are expected to trend higher as concerns that a prolonged US government shutdown could exacerbate an already slowing global growth and therefore renew interest in bullions.

MONTHLY MACRO ECONOMIC FORECASTS Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Feb’19

Mar’19

Apr’19

364

364

365

11.5

11.61

11.7

57

58.00

62.00

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

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Leadway, Aiico, Custodian and Allied top 10 insurance firms BALA AUGIE

L

ead Assurance Limited, Aiico Insurance Plc and Custodian and Allied have the largest gross premium income and total assets. They both operate in the Life and Non-Life Business.

The ranking is based on the 2017 audited financial statement of 25 firms as gleaned from the website of National Insurance Commission (NAICOM).

Out of the 23 companies tracked by BusinessDay, Leadway emerged as number one with the largest gross premium income of N84.46 billion and a total asset of 283.37 billion while profit after tax stood at N13.83 billion.

Aiico Insurance Plc recorded gross premium income of N21.29 billion and N92.413 billion in total assets while net income stood at N1.28 billion.

Custodian and Allied Insurance Plc has gross premium income of N32 billion and total assets of N80.90 billion while net income stood at N7.31 billion.

AXA Mansard Insurance Plc recorded premium income of N26.19 billion and N66.56 billion in total assets while net income stood at N2.67 billion.

FBN Insurance Plc recorded N22.74 billion in gross premium incomes and N50.34 billion in total asset while net income stood at N3.67 billion.

Mutual benefit Assurance Plc recorded gross premium income of N13.35 billion and has N57.69 billion in total assets while the insurer realized 1.33 billion in net income.

NEM Insurance realized N13.03 billion in gross pre-

D

ividend yield for Nigerian firms has grown on the back of low stock price as global geopolitical events and political uncertainties have continued to bedevil the economy.

With election around the corner amid heightened economic risks and sociopolitical tensions, analysts opined that the Nigerian eq-

P.E

SHORT TAKES 14% All the eleven members of the Monetary Policy Committee unanimously agreed to retain the monetary policy rate at 14% for the fifteenth consecutive time. Asymmetric corridor remained unchanged at +200/-500 basis points around the policy rate.

N812.76 billion

mium incomes and N17.56 billion in total assets while net income stood at N2.77 billion.

Royal Exchange Plc recorded gross premium income of N12.82 billion as it recorded a loss of N682.12 million while total asset stood at N33.27 billion.

Zenith Bank Assurance Limited recorded gross premium income of N12.80 billion as it recorded N37.02 billion in total asset while net income stood at N3.63 billion.

Insurers in Africa’s largest economy are operating

in a tough and unpredictable macroeconomic environment as penetration rate is one of the lowest in the world.

Despite the country population of 200 million, insurance penetration is 0.30 percent- one of the lowest figures in the world-, this compares with South Africa (14.7%), Kenya (2.8%), Angola (0.8%) and Egypt (0.6%).

Similarly, the sector’s insurance density (a measure of industry gross premium per capita) is still one of the lowest when compared to peers

– South Africa (US$762.5), Egypt (US$22.8), Kenya (US$40.5) Angola (US$30.5) and Nigeria (US$6.2).

The National Insurance Commission (NAICOM) is unable to formulate policies that will unlock the opportunities in industry.

For instance, the regulator capitulated to the tumultuous uproar by operators under the aegis of Independent Shareholders Association of Nigeria (ISAN) as it jettisoned the three tier recapitalization.

The aim of the policy was to ensure that insurers undertake risk commensurate with their capital bases.

Foreign companies have insisted that only firms with capital base not less than $9 billion can underwrite their risks.

L e a d w ay A s s u ra n c e Limited, the largest insurer by revenue and asset, has a shareholders’ fund of N55.03 billion as at December 2017, this compares with N1.02 trillion total equity of tier 2 lender Sterling Bank as lenders are liquid enough to take advantage of a high yield

environment.

Similarly, AXA Mansard, the most capitalized insurance firm in the country, has a market capitalization of N19.3 billion, this compares with N59.39 billion market cap of Tier two lenders- Fidelity Bank.

Ekerete Ola Gam-Ikon a Consultant on insurance matters noted that weak corporate governance was significantly evident in 2018 despite efforts by NAICOM to improve governance discipline by operators.

Of course insurers are operating in an environment where the vast majority are illiterate, while religious beliefs have hindered many from taking up a cover. In some part of the country, taking a Life cover is taboo because people see the policy as a premonition of their own death.

The National Commission for Mass Literacy, Adult and Non-Formal Education, about 70 million citizens of Nigeria who cannot read and write or who lack basic skills for modern living.

Zenith Bank, Lafarge, Rakunity best performing dividend yielding stocks Israel Odubola

39

uity market might not record any tangible improvement in the first quarter of 2019.

However, optimism abounds that the local bourse would rebound starting from the second quarter.

BusinessDay investigated the best performing stocks in each sector with respect to dividend yield as this might probably serve as an opportunity which investors can leverage on.

The dividend yield is the

financial ratio that measures the quantum of cash dividends paid out to shareholders relative to the share price.

This metric is computed by dividing the dividend per share by the market price per share.

A company with a high dividend yields pays a substantial share of its profits in form of dividends. On the assumption that all other factors remain the same, investors wishing to utilize his or her portfolio to supplement income would likely prefer Continues on page 40

The Nigeria Bureau of Statistics reported that about N812.76 billion was disbursed by the Federal Account Allocation Committee (FAAC) across the Federal, State and Local Governments in December 2018 from revenue generated in November 2018.

1, 725, 234, 886 shares Following the listing of additional 745, 234, 866 ordinary shares of May & Baker Nigeria Plc on the Daily Official List of the Nigerian Stock Exchange (NSE) on Thursday January 24 2019, its issued and fully paid up shares of grew by 76.04 percent to 1, 725, 234, 886 ordinary shares.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: samuel iduh )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Markets Intelligence growth and trade Insurers’ board of directors’ pay hits N3.66bn in 2017 Global worries weigh on stocks DAVID IBIDAPO

E

molument and salaries for directors of Nigerian insurers have hit N3.66 billion in 2017, a 1.12 percent decline from N3.71 billion recorded the previous year.

That’s despite most firms recording an increase in net income amid after rising claims and underwriting expenses and weak investment income.

Net profit after tax of firms under our coverage increased by 18.36 percent to N45.50 billion from N38.53 billion recorded in 2016.

Companies such as ARM life, Law Union Rock, Prestige Assurance, FBHN insurance and AIICO led the chart as the firms with the highest growth in director’s emoluments for the period.

Meanwhile, Linkage Assurance, ARM life, Mutual Benefits, Prestige Assurance and Standard Assurance outperformed peers in income growth for the period.

BusinessDay analysis revealed that while some insurance companies recorded significant decline in their profit positions, however, compensation realised by directors improved significantly during the period.

Of 13 insurance companies analysed, four companies namely Continental reinsurance, AIICO insurance, Lasaco assurance and Niger Insurance recorded the worst performance as profit for the period declined by 21%, 87%, 30% and 457% respectively.

While Niger insurance led the chart as the worst performer during the period, director’s emolument during the period remained same at N59 million as no form of compensation was extended to directors.

Continental Reinsurance and Lasaco grew slightly emoluments

Sterling reclaims $1.29 after reassuring UK jobs data

P

to directors by 3.42 percent and 1.33 percent respectively.

However, AIICO insurance on the other hand despite an 87 percent decline in profit recorded the third highest growth in emoluments at 34.48 percent but lagging prestige assurance plc (71.24%).

Emoluments for the period accounted for 15 percent of total profit of N1.28 billion.

Prestige Assurance recorded an impressive growth in profit after tax during the period after it its loss zone of N137 million to make a profit of N53.8 million in 2017.

BusinessDay analysis revealed that director’s emolument for 2017 accounted for a whopping 78 percent of its profit declared.

Amongst companies that recorded impressive growth in their earnings however saw their director’s emoluments decline are Custodian & Allied insurance, Axa Mansard insurance and Standard Alliance insurance.

Custodian and Axa Mansard recorded a 37 percent and 2 percent growth in their profits respectively but director’s emolument declined by 2.68 percent and 58.41 percent respectively.

Meanwhile, directors at Standard Alliance saw their emoluments cut by 7.37 percent despite an impressive effort to pull the company from a loss of N1.34 billion in 2016 to a profit of N65.56 million in 2017.

S&P 500 pares early gain as earnings boost fades Sterling bolstered by mounting expectations for Brexit delay Overview strong early rise for the S&P 500 largely evaporated as well-received earnings from a number of big-name companies only partially offset persistent uncertainty on global growth and the outlook for trade talks between Beijing and Washington.

Sterling remained in focus as expectations mounted that the UK’s exit from the EU might be delayed, with the pound breaking above the $1.30 level for the first time since mid-November and the euro briefly slipping below £0.87.

“The gains reflect a modest unwinding in the pound’s Brexit-related premium after the [opposition] Labour party said that it is ‘highly likely’ to back a cross-party motion that would take the possibility of a ‘no-deal’ Brexit scenario off the table,” said Action Economics.

“We hear that writers of buy options have been in the mix of demand for pounds in the spot market.”

Sterling’s strength left the FTSE 100 share index lagging behind its continental European peers.

On Wall Street, robust earnings from IBM, Procter & Gamble and United Technologies provided an early lift to the main stock indices, although the mood

A

Overview essimism on the outlook for global growth, along with lingering uncertainty over the prospects for US-China trade talks, helped drag down equities and oil prices while offering support to Treasuries, the yen and gold.

The IMF lowered its forecasts for GDP growth this year and next in both advanced and emerging economies, citing risks including trade tensions, Brexit and the budgetary position of Italy.

The downgrades came hard on the heels of data showing that China’s economy had expanded in 2018 at the slowest pace for almost three decades.

And there was little comfort for growth bulls from data released on Tuesday showing that US existing home sales dropped 6.4 per cent last month to the lowest level since November 2015.

The Zew index of German investor confidence improved slightly this month, although this was “not a sign of rebound”, said Action Economics.

“The expectations reading remains far below the long-term average and the improvement at the start of the year seems more a sign of a new equilibrium at low levels as investors priced in excessive risks towards the end of last year.”

Meanwhile, hopes for a breakthrough in US-Sino trade negotiations suffered a blow as the Trump administration rejected an offer by two Chinese officials to travel to the US this week for preparatory trade talks to pave the way for higher-level meetings at the end of the month.

As US markets reopened after Monday’s holiday, the S&P 500 equity index gave back all of Friday’s advance, while Brent oil retreated after hitting a six-week high above $63 a barrel in the previous session.

The 10-year Treasury yield fell from a three-week high reached at the end of last week.

Sterling continued to outperform most of its rivals — nearing

subsequently turned more cautious.

Analysts noted that the S&P 500 was still up more than 12 per cent since Christmas.

Elia Lattuga, a strategist at UniCredit, said the near-term outlook for risk assets remained positive but urged investors to enjoy the rally while it lasted.

“A fine balance of friendly monetary policy, decent growth, modest inflationary pressure and a lack of material external risks would be required to sustain the rally for the months to come,” he said, “Risks of an earlier slowdown in the US or of more significant market deceleration in China or the euro area would likely turn sentiment around swiftly.”

Meanwhile, the yen retreated — with the dollar rising as high as ¥109.99 — after the Bank of Japan substantially cut its inflation forecast at Wednesday’s policy meeting, helping to confirm the institution’s position as “one of the most dovish central banks in the G10”, according to Jane Foley at Rabobank.

Adam Cole at RBC Capital Markets said: “The potential for additional BoJ easing is starting to creep into market thinking.”

Equities In New York, the S&P 500 ended 0.2 per cent higher at 2,638 — off an earlier high of 2,653.19 — while the Nasdaq

Composite finished little changed but the Dow Jones Industrial Average gained 0.7 per cent.

The 30-share Dow outperformed as IBM shares rose as much as 10.2 per cent, while P&G gained nearly 3 per cent and United Technologies added more than 5 per cent.

Across the Atlantic, the Stoxx Europe 600 slipped 0.1 per cent, with the Xetra Dax in Frankfurt ending 0.2 per cent lower and the FTSE 100 shedding 0.9 per cent.

Forex and fixed income Sterling rose above $1.30 for the first time in more than two months — rising as high as $1.3080 before easing back to $1.3068, up 0.9 per cent on the day. The euro was down 0.7 per cent at £0.8708, off a low of £0.8699.

The single currency edged up 0.2 per cent against the dollar to $1.1384, while the dollar index was 0.2 per cent lower at 96.12.

The greenback pared its early rise versus the yen to stand 0.2 per cent higher at ¥109.57. The euro was up 0.4 per cent against the Japanese currency at ¥124.71.

In the fixed income arena, the yield on the 10-year US Treasury was up 2 basis points at 2.75 per cent, with the two-year yield up 1bp at 2.59 per cent.

$1.30 against the dollar and hovering around a two-month high versus the euro.

Robust UK labour market data helped support the currency, as the markets awaited further developments on the Brexit front.

Equities In New York, the S&P 500 fell 1.4 per cent to 2,633 — following a 1.3 per cent advance on Friday — having been down as much as 2 per cent at one stage. It was the first fall for the index in five sessions.

The Dow Jones Industrial Average fell 1.2 per cent and the Nasdaq Composite ended 1.9 per cent lower.

In Europe, the pan-regional Stoxx 600 index ended 0.4 per cent lower, as London’s FTSE 100 fell 1 per cent and the Xetra Dax in Frankfurt shed 0.4 per cent.

The CSI 300 index of mainland China’s stocks fell 1.3 per cent, while Hong Kong’s Hang Seng index finished 0.7 per cent softer.

Japan’s Topix shed 0.6 per cent.

Forex and fixed income The pound climbed back above the $1.29 mark after data showed that UK workers’ total pay grew at the fastest pace for a decade in the three months to November.

Employment reached its highest level on record Sterling was up 0.5 per cent against the dollar at $1.2953, while the euro was down 0.5 per cent at £0.8767.

The dollar index was barely changed at 96.33, with the euro down 0.1 per cent at $1.1355. The greenback was down 0.3 per cent against the yen at ¥109.35.

The yield on the 10-year US Treasury was down 4 basis points at 2.74 per cent, while that for the 10-year German Bund fell 2bp to 0.24 per cent.

Commodities Brent crude finally settled at $61.50 a barrel, down 2 per cent, after touching $60.57 earlier in the day. US West Texas Intermediate was 1.9 per cent lower in late trade at $52.77.

Gold was up $4 at $1,284 an ounce.

Zenith Bank, Lafarge, Rakunity...

Continued from page 39

companies with higher yields.

Zenith Bank has the highest dividend yield in the financial services industry at 12.42 percent.

In the industrial goods sector, Lafarge Africa Plc, despite recording a whopping loss over a thousand percent tops its peers by having a yield of 11.65 percent.

In the health sector, GlaxoKlinesmith is the top performing stock with a yield of 62.5 percent.

In the oil & gas sector, Rakunity Petroleum Plc with a yield of 25 percent led its counterparts.

In the agriculture sector, Okomu Oil Palm Plc with a yield of 3.66 percent outpaces its peers to become the best dividend yield performing stock as at present.

For conglomerates, United Africa Company of Nigeria outperforms its peers to record 7.65 percent yield on dividends.

UPDC Real Estate Investment Trust, currently, tops the construction/real estate sector in dividend yield at 9.09 percent.

In the consumer goods industry, Dangote Sugar Refinery Plc had the highest dividend yield at 12.07 percent.

High dividend yield stocks are good investment options during volatile times, as these companies offer good payoff options. They are suitable for risk-averse investors.

The caveat however is that investors need to check the valuation as well as the dividend paying track record of the company before taking decision.

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In association with

Latifat Muhammed: Creative head gear designer and fabrics dealer Gbemi Faminu

I

nnovative Nigerian youths are no longer placing all the blame on government’s table. They are rather taking the bulls by the horns, exploiting opportunities in the economy amid challenges. They are taking up entrepreneurship and bulldozing into places that angels fear to tread.

One of such entrepreneurs is Latifat Adenike Muhammed, a native of Kwara State. A graduate of Accounting with master’s degree in view, Latifat is the chief executive officer (CEO) of Teephafabrics Asooke. She sells different fabrics and embellishes head gears, known as ‘Gele’ in the South-West part of Nigeria.

Though she started her business in 2018, she had attended different trainings and made lots of research that equipped her with necessary experience and knowledge before going into business.

Her start-up capital was N 70,000, which she got from personal savings and as loan. She was inspired to start the business owing to her love for fashion and partly because she was unable to

Latifat Muhammed

get a job at that time. She had the opportunity to attend trainings on head gear embellishment, which interested her, and after the trainings, she started the business and later added fabrics to have a wider scope.

She operates in Lagos and gets

her materials from major markets in the state, and even outside of it, especially for the head gear. With the aid of social media, Latifat is able to advertise her products and get more customers. This has helped her business to grow as it now has a good clientele base with

good customer relationship.

When she started, she did not have important tools like stoning machine, but she has been able to purchase one along with other necessary equipment. “It hasn’t been easy so far, but with persistence, consistency and prayer I can say I’ve been growing gradually,” she tells Start-Up Digest.

Although she is yet to have permanent employees, she has ad-hoc staff members who help her in logistics and delivery. She also tries to get affordable quality materials and promptly delivers to her customers. This, to her, is why they keep coming back while also recommending others.

Latifat is still hunting for more training to gain knowledge, expertise and certification that will help her business to grow further.

Speaking about her business expansion plan, she says, “I intend to employ people, incorporate fabrics importation and exportation, and build a fashion empire that will be all-encompassing. I wish to go from fabrics shopping to sewing, to designing, and I am sure I will achieve all these in due time.”

She adds that although it will require extra funds and resources, she hopes to achieve it through fi-

nancial support from government or financial/entrepreneurship institutions.

In spite of the progressive business performance, she still encounters some challenges such as getting affordable quality materials, expensive/ dishonest logistics services, exorbitant data charges and ridiculous haggling, which at times could be discouraging.

Although she has managed to work her way around these, she still calls on the federal government and capable organisations to lend helping hands to micro, small and medium enterprises (MSMEs) through grants, low-interest loans, workshops, and trainings, among others, while putting up necessary infrastructure to aid mobility and reduce cost of production.

Latifat’s role models are her parents and business moguls that started small but managed to grow big. She tries to emulate them while working with her life values which include hard work, commitment and consistency, with high level of patience and tolerance.

On advice to other entrepreneurs, she says, “Remain hardworking, make a conscious effort to develop yourself regularly and always believe in yourself.”

Business opportunity

Setting up yam flour plant for export

I

t is estimated that 30 percent of harvested tubers yam are lost to waste due to poor processing and preservation mechanisms in Nigeria. One of the more acceptable means of preserving yam is to convert it to yam flour.

The traditional processing method is out-modelled and laborious and grossly inefficient for mass production to satisfy the teeming population and local demand and make room for the export market to earn foreign exchange.

Yam flour is a cherished delicacy among Africans and other parts of the world.

Its processing increases its shelf life, adds value to the tuber (from where it is processed) before being exported to enhance its economic value, reduce waste and cut down the cost of transporting the product to longer distances compared with the heavy wet tubers that are unprocessed.

The fact that this can be preserved helps to stabilise prices during off harvest season. The setting up of this project is seen to be feasible, considering the following: Technical Considerations The plant here will be able produce and package quality finished products for export. Its rated capacity is 5,000 metric tons of well packaged yam flour per year (8hours per day of 250 days in a year after allowing about 2.5 percent waste). This implies capacity of about 20 tons per day. The conversion ratio of raw

yam tubers to yam flour is 3:1. This means that about 1,500MT of raw yam tubers will be needed per day, working at full capacity.

The machinery and equipment needed to process yam flour are (a) Yam Peeler (could be done manually) (b) Boiler (c) Dryer (d) International Standard Scale (e) Automatic Sealing Machine (g) Packaging Machine All the above machines and processing technology can be obtained locally. The machines can as well be imported. The addresses of where to obtain both locally made machines and imported ones will be given to prospective investors on reaching to the writer.

expenses would be reduced if the project is located in areas where the tubers are grown in abundance.

Hence it can be sited in any part of the country. Other factors to consider include (a) Availability of labour and raw materials in commercial quantity. (b) Availability of infrastructural facilities (water, power, access road ). Export processing zones will be most ideal for setting up this project, if it is basically for export. (c) Ease or otherwise of the accessibility of the plant site to urban areas/ markets both for local consumption and export.

To accommodate the plant, one needs a large building with an area of about 1,500M2.

Raw Materials The raw materials needed are yam tubers. These are obtainable from farms cultivated by plantations, small holders and co-operative farmers. There is abundant yam grown in this country. Nigeria is the world’s largest producer of yams with over six million metric tons per annum of this output.

Only about five percent is put into industrial use by way of chips and flour. Almost all states of federation grows yam.

Market for yam flour The market is both local and international. The later should be targeted where there is preponderance of inhabitants of Africans in Europe, America and Asian countries. Based on research, some marketing points internationally have been established and would be given to prospective investors.

The factors that have positively affected the demand for this product include: prevalence of foreign exchange crunch, habit/culture, and increase in population of the country. The fact is that its consumption cuts across demographic classes, income levels and religious boundaries.

Location The best place to locate this project is the area where yam tubers are obtained in abundance. Yam tubers are heavy and so transport

Production Process Briefly, the processes involved in yam flour production are: (1) Procurement of good quality tubers, weighing and washing of them.

(2) Peeling the washed tubers (3) Grinding of the peeled tubers into pulp.

(4) Drying of the ground yam pulp (5) Milling of the dried pulp (6) Sieving to avoid having lumps when being prepared for eating (7) Bagging and Packaging (2kg, 5kg, 10kg, 25kg and 50kg).

Details of the standard required in the international market will be given to prospective investors.

Cost and funding The project can be set up with minimum of N18 million, using locally made machines. It will be more if imported machines are to be applied for higher capacities.

Funding The Federal Government just released some investment funds for injection into small and medium scale industries development in Nigeria. Anybody with good business plan will benefit from the funds. There are also financial institutions and special project funding organisations that would be recommended to prospective investors on contacting the writer.

Details will be given to prospective investors

Investment analysis The project is very profitable. With aggressive marketing strategies, good management and export orientation, the payback period would be less than two years.

The return on investment is very encouraging at over 58 percent.

Details will be given to prospective investors. For detailed information on export market, comprehensive and bankable feasibility studies/ report, sourcing of the required funds, please contact the writer Uba Godwin Global Trust Consulting, 56, Ishaga Road, (1st floor), Surulere, Lagos Tel: 08023664368, 08034494437 Email: ubagodwin@yahoo.com

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

How David Udenna makes money from film-making Jonathan Aderoju

D

avid Udenna is the chief executive officer of Cliq Studios Films. The Anambra State-born 24 year-old entrepreneur is in the business of professional filmmaking. David started his business by making simple videos for friends with his phone and using editing phone apps. He attempted to make his first film in 2011 but failed. Thereafter, he decided to improve his craft by taking online classes and went further to acquire his first DSLR camera with N60, 000.

The cinematographer got his first client in 2015 to edit a simple job, which he did perfectly, making way to other jobs. Today, he has numerous music videos and movie shots edited by him.

The young entrepreneur was motivated by the work of Clarence Peters, a renowned music video

David Udenna

director, filmmaker and cinematographer.

“Whenever I watch a video shot

by Clarence, I always say to myself

I am proud to be a photographer— Funmi James Gbemi Faminu

F

unmi James is one of Nigeria’s hardworking and upcoming photographers, rapidly working her way to popularity.

She is the official photographer for Aww storeNg, an online fashion store, and she is the chief executive officer of Moe Studios.

Although a graduate of Agric Economics from Ladoke Akintola University (LAUTECH), she followed her passion— photography— because she has always been immersed in taking pictures and creating memories. She decided to extend her passion to other people and help them document their best moments into beautiful memories.

Funmi James

She is happy to be a photographer and to thrive in a business dominated by men.

She started her business with N200, 000 in 2016 while serving as a National Youth Corps Service (NYSC) member. It was a loan and she utilised it by purchasing important instruments necessary for setting up of her business.

“Starting a business in Nigeria is not easy, but because I was passionate about it and I was encouraged by my family and friends, I did not give up” she says.

Since Funmi started her business, she has worked on improving herself and building her clientele.

This, she has been able to achieve to a reasonable extent. The entrepreneur has been able to record progressive growth in her skills

and profits, which she attributes to the kind of friendly relationship established with the clients. She has also successfully registered her business with the Corporate Affairs Commission (CAC) Major challenges she encounters include: getting the necessary but very expensive instruments, securing clients, and unstable electricity. The entrepreneur wants the government to implement policies that will aid startups, especially access to cheap funds. She likewise also wants more training, workshops, seminars that will help the players to improve.

Speaking on her business expansion plans, Funmi says she plans to get a studio that will serve as a training institute for prospective photographers, partner with event mangers in order to have consistent clientele and also incorporate video coverage, which she can employ someone for.

She attends trainings and works with top- notch photographers, which gives her necessary experience and knowledge. She has acquired certifications from various institutes, including Red Media Africa Funmi looks up to and follows Bayo Omoboriowo, Buhari’s official photographer whom she hopes to meet. Her life’s values are hard work, dedication, learning and prayer, which have worked for her over the years, even before she became a photographer.

Advising other entrepreneurs, she says, “It is not easy but with hard work and determination, it will be worth it.”

that one day I will be where this man is,” the young entrepreneur says.

His friends are patronising him today and he always delivers conformably. In fact, it was such patronage in the past that motivated him to take cinematography as a profession. And he is living his dream today.

Over the years, his business has grown incredibly bigger. “I have grown from one client into several clients a week,” he confirms. “I moved from editing very simple videos to shooting, directing and editing professional music videos, films, TV commercials and events videos.”

“Basically, finance is the major challenge,” he says. “Our working equipment are very expensive and limit our creativity totally,” he explains.

Speaking on the challenges he faces, the young entrepreneur says he needs more funds and stateof-the-art studios for video shots.

“Those of us in my field need

access to state- of-the-art studios.

In order to access very professional big video studio that can contain a large number of people, you might need to travel out of the country,” he says.

He urges the government to look in the direction of providing large studios such as the ones in Hollywood.

“It will make our jobs better, and also if we have access to loans and grants, we will do much better.”

On his long term goals, David says, “I plan to get a bigger work space, own bigger camera gears, and also extend our customer reach across Africa. I also work with more celebrities all over the world.”

David has two employees and they are being paid according to the number of projects they work on.

Advising other entrepreneurs and youths, he says “The best way to start is to start. So start now with what you have and never stop practising. Never give up.”

SMEs cannot grow without basic infrastructure — Wabara GODFREY OFURUM, Aba

S

mall and medium enterprises cannot grow to a desired level if government fails to provide basic infrastructure such as constant electricity, roads and water, Marc Wabara, All Progressives Congress’ Abia South senatorial candidate in the forthcoming general elections, said.

This is as the organised private sector in Aba, represented by the Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA) has vowed to vote for candidates who will support commerce in the area.

Wabara, a professional banker, while presenting his manifesto to the Aba business community, Thursday at ACCIMA secretariat, observed that small and medium scale entrepreneurs in the area are still faced with infrastructural challenges that hinder commerce and promised to change the narratives, if elected into the Senate.

“Commerce and industry will grow if these basic infrastructures are provided and I am happy that the APC-led federal government is already addressing these issues,” he said.

He explained that the APC-led administration in the centre has increased power generation from 3,000 megawatts, which it inherited in 2015, to 7,000 megawatts, an increase he acknowledged is still not adequate, but a significant increase from what it inherited.

“We are not saying that 7,000 megawatts of electricity generation is adequate, but it is a significant increase in what we inherited. And we have a sustained programme as

a party, under the Economic Recovery and Growth Plan, to target infrastructure—building of roads—, which has already manifested in power generation, among other things.

“The whole idea is that in the next five years, Nigeria will be generating not less than 20,000 megawatts of electricity and our party is committed to it”.

Asked on his chances at the polls, Wabara, who is depending on the wishes of the people to win, said “The beauty of democracy is that it is the people that decides who wins.

I believe that in my several years in the banking industry, I’ve had the opportunity of interacting and really serving my people professionally and I know that my people in Abia State and Abia South senatorial zone know me and I know that the goodwill has been established.

“And I believe that having been able to serve them when I was in the private sector, they believe that I will replicate the same in the public sector.

“Frankly, politics is about people, using political platform to seek positions of authority, but those who have been there before should have the responsibility of telling the people what they have achieved. So, I leave that to the people to decide”.

He described himself as a professional in politics and not a professional politician, noting that being a professional in politics makes it easier for people not to play what he termed ‘politics of do or die’.

“One of the challenges that we are facing in our political process is that a lot of people, who do not have what I will call a ‘second address’ dominate the scene.

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Start-Up Digest

Our Enterprise Zone will empower 1,000 MSMEs in next 5yrs— Oyedepo Micro, small and medium enterprises (SME) remain the key to unlocking the potential of the Nigerian economy. Recently, there has been renewed focus on creating a supportive ecosystem for this critical sector. JOSEPHINE OKOJIE and ANGEL JAMES spoke with Iyiola Oyedepo (II), managing partner of IOC Law and initiator of the Enterprise Zone, who discussed how the zone would impact small businesses.

What is your assessment of the Nigerian business environment? espite the limitless opportunities that are in abundance in Nigeria, the business climate remains very harsh and unwelcoming, especially for the small-and medium-scale sector. Most of the challenges faced by businesses are not unique to Nigeria, but it is more difficult here because some of these problems have remained with us for a long time and now seem insurmountable. Take for instance the issue of power supply, which affects almost every business in Nigeria and ultimately increases cost of production. Billions of dollars have been spent over the years but with no real increment. The question then is, where and what were those funds expended on? We have seen some of our African neighbours achieve 24/7 power supply by developing and following a strategic power plan. Why is it that same cannot be said of Nigeria despite the humongous resources at our disposal?

This is just one angle of some of the challenges, among others. There is, however, hope because I see some concerted efforts by the government of the day to improve on infrastructure and they have also developed initiatives that have improved the ease of doing business in Nigeria.

age taxes, register their business, type of partnerships they should be involved and how to protect themselves from contracts with partners, how to handle suppliers, vendors and people involved in their business, among others.

Those are the things we have been blogging about over past four years.

We realise that we have developed a lot of materials over those years and that blog was becoming bigger as we reach thousands of people on the internet and we were seeing people’s response to it and how it has helped them make decisions that are crucial to their businesses.

It was as a result of this that I was inspired to put all this knowledge in the form of a book that will be like a toolkit for entrepreneurs.

Business owners would gain a lot from reading the book. It is a necessary tool for entrepreneurs for all entrepreneurs in Nigeria.

D

In your opinion, what are the factors that hinder the growth of Nigerian MSMEs? Poor infrastructure and lack of credit are the usual suspects when it comes to limitations being experienced by MSMEs. You can also add the knowledge gap, which has also stifled growth. For example, most entrepreneurs complain of lack of credit but it would surprise you that there are several local and international growth funds dedicated to SMEs and start-ups which are accessible without someone being bribed. But because most business owners are not even aware of this, they cannot position their business to gain access to these funds. It is on record that African start-ups collectively raised almost $200m

Iyiola Oyedepo

from venture capitalists and private equity firms in 2018 and Nigerian start-ups accounted for about 60 percent of these funds. That is to tell you that there are opportunities out there but it must start with you becoming aware of such opportunities and then positioning your business or idea accordingly.

You recently launched a book ‘Essays on Nigerian Business Law’.

Can you explain briefly what this book is about and bow it helps business owners?

In 2014, having seen the knowledge deficit, we launched a weekly business blog dedicated to improving enterprise literacy and, over the years, we have seen testimonials of how the knowledge imparted by this blog has helped business owners achieve success. In 2018, we decided to compile our thoughts over the years into a book and this was launched on December 19th 2018 in celebration of the birthday of our illustrious founder - Akogun Iyiola Oyedepo. In the book, you

will find chapters on protecting your idea, how to structure your business, how to raise finance for your business, how to manage taxes and other regulatory requirements, as well as how to handle your suppliers, contractors, and service providers, among others.

It also has chapters dedicated to advising foreigners on market entry into the Nigerian business space and, finally, it explains the various dispute resolution processes in Nigeria. It is a handbook every business owner should have and read regularly as it keeps you abreast of the challenges and how you can handle them effectively.

What inspired you to write the ‘Essays on Nigerian Business Law’ for MSMEs? The process to writing the book started in 2014. As a firm, we took the decision to start a blog to share information to entrepreneurs on things that affect them on a daily basis from the legal perspective. So we educate them on how to man-

At the launch of the book, you spoke about the Enterprise Zone.

What does this mean and how is it of benefit to SMEs, especially start-ups?

The articles we were churning out over these years were basically limited to the legal perspective but due to our interaction with entrepreneurs, we discovered that the problems were not only legal but also related to personnel, finance, marketing and ICT. Every business, no matter what sector, requires these support systems and unfortunately a lot of business owners do not pay adequate attention to these and it ultimately leads to the business becoming a failure. Having seen this trend over and over again, we decided to form a coalition of like-minded professionals across the key business support areas and this is essentially what Enterprise Zone is about. Together, we aim to offer tailor made and cost-effective business solution to SMEs along the key support centres of HR, legal, finance, marketing and ICT. Another critical part of the Enterprise Zone is our Business Incubation and Acceleration Centre which has the ambition to mentor 1000 business champions

by the year 2023 and develop 200 business champions per year.

A critical point for a lot of entrepreneurs is lack of finance. How does your initiative aim to support start-ups with finance?

The funding gap for SMEs is not limited to Nigeria but common in a lot of developing countries, and it’s mostly due to the risk threshold associated with businesses operating in this sector. Our initiative will be positioning businesses to attract the necessary funding by helping them put structure, processes and corporate governance in place that will make investors and financiers comfortable. Once they are comfortable, you will be shocked at the funds available and accessible to this sector.

There are a lot of incubators with similar objectives to the Enterprise Zone. What makes your initiative different?

As long as enterprise thrives, you cannot have too much business incubation hubs, but to answer your question, most incubation hubs out there are primarily focused on the tech space and I do not blame them as it’s easier to hedge your risks in that space. However, amongst other sectors, we intend to accommodate the manufacturers, traders, and service providers, among others. We would also be rolling out innovative products that are customised for the Nigerian business space, and eventually it’s our hope to expand to other African nations because we share the view that the continent is waking up to take its space in the world economy.

What is your motivation for starting the Enterprise Zone?

Economic wealth all over the world is created through enterprises and the expansion of their output greatly enhances economic growth.

SMEs contribute to the economy by creating value through the production of goods and services and by creating much-needed jobs. We see this initiative as our own little contribution to achieving social balance.

Over 8,000 MSMEs benefit from FG’s Marketmoni in Ekiti

…as 20,000 get ‘Tradermoni support’

T

he Bank of Industry (BoI), has said that more than 8,000 Micro, Small & Medium Enterprises in Ekiti State have so far benefitted from the Federal Government’s ‘Marketmoni’ empowerment scheme.

The bank put the number of beneficiaries of ‘Tradermoni’ in the

state at over 20,000.

Both schemes are the two components of the Government Enterprise and Empowerment Programme (GEEP) that geared towards provision of access to finance to enable small business owners grow their businesses.

While the GEEP is domiciled

in the office of the vice president, Yemi Osinbajo, and is supervised by him, the Bank of Industry implements it across the 36 states of the country, including the Federal Capital Territory, Abuja.

Speaking on the sidelines of the MSMEs clinic in Ado Ekiti on Monday, Toyin Adeniji, the

bank’s executive director, Micro Enterprise, said that the scheme had helped to boost commercial activities in the state.

Giving a breakdown of the beneficiaries of both empowerment schemes in the state, she said while over 8,000 MSMEs had benefitted from ‘MarketMoni’, over

20,000 petty traders had captured by ‘Trademoni’ She said, “In terms number, we have reached over 8,000 MSMEs in Ekiti State. If you want to go further down to the micro level, the petty traders, we have reached over 20,000 and we are still doing more. Our target is to reach up-to 30,000 in every state.’’

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Opening up credit space will unlock growth of insurance industry …sector capable of supporting SMEs for growth Modestus Anaesoronye

A

vailability of credit and access to funding for Small and Medium Scale Enterprises (SMEs) are strong catalysts and veritable opportunities for economic growth, which supports the growth of insurance industry.

Most developed economies, which have witnessed the growth of insurance industry has been noticed to have a strong credit system that allow citizens to acquire assets and pay later, which of course requires insurance to become successful.

Insurance is major component of access to credit, such that people or business are only granted credit or funding when there is insurance guarantee, that is, in the event of default, insurance comes to their rescue.

In this vein, finance institutions like micro finance banks are easily given out monies to SMEs, while car companies, equipment firms, electronics and home appliances establishments are also at peace, giving out credit which will be repayed over a period of time.

In Nigeria, access to credit was up after the banking industry consolidation in 2005, but has

L-R: Mohammed Kari, commissioner for Insurance/CEO, National Insurance Commission (NAICOM); Eddie Efekoha, president, Chartered Insurance Institute of Nigeria; Segun Balogun, managing director/ CEO, LASACO Assurance Plc; and Fatai K. Lawal, managing director/CEO, Sterling Assurance Ltd, during a recent insurance event in Lagos

gradually disappeared as the economic situations worsened, indicated by the collapse of the middle class, increasing loss of job, closure of factories and industries, among others.

Ebelechukwu, Nwachukwu, managing director/CEO, NSIA Insurance Limited said credit is the engine of insurance business growth. Until we begin to have access to credit as citizens, growth of insurance will take longer time to come.

Jerome Gotcsche, a retail marketing expert said the SMSE industry in Nigerian is hugely untapped and its growth requires the

support of insurance.

He noted that players in the insurance industry should deploy resources, form partnerships with loan companies to tap from opportunities in SME sector, particularly across the markets.

He believes that these sectors are the growth base of the economy, and needs financing to grow to be able to enhance its contribution to the GDP. According to him, a location of daily expanding growing businesses, small business owners, industries, business districts, real estates and viable land mass for investors present a huge opportu-

nity for growth of insurance business. “the opportunities for insurance engagement is huge when you consider the number of SMSEs, the volume of money exchanging hands in the industry particularly among the market women and men whose activities need a lot of insurance protection for risk management.

In a recently published journal of Microinsurance Network, experts stated that micro, small and medium enterprises (MSMEs) are often overlooked - too small for large banks and insurers to bother with, but too big for microfinance

institutions who tend to be more concerned with covering individuals and families. Yet MSMEs account for more than half of all employment worldwide, and the jobs and wealth they generate are vital for achieving the Sustainable Development Goals - especially SDG 8: decent work and economic growth. Insurance is increasingly recognised as a valuable risk management tool for MSMEs in developing countries, which are vulnerable to risks and have a high incidence of business failure.

However, treating MSMEs as if they have the same insurance needs can undermine the potential value of insurance to contribute to their sustainability and growth.

As Cenfri’s Jeremy Gray and David Saunders write in State of Microinsurance in 2018, “MSMEs are not a homogenous group and their insurance needs differ significantly.

They range, for example, from a sole-proprietor car mechanic to a tyre manufacturer with up to 249 employees.” Microenterprises - those with fewer than nine employees - tend to be better served by inclusive insurance products because “The line between proprietor and business is likely to be blurred, with the result that micro-businesses often have insurance needs

similar to individuals.” On the other hand, SMEs with between 10 and 250 staff - are poorly served in comparison, with only five out of the top 10 insurers worldwide offering products specifically aimed at this size of business.

The relatively poor uptake of insurance among SMEs - especially in emerging markets - is worrying because employment and economic growth relies on their ability to thrive - and as a business grows, the financial losses from an adverse event are likely to exceed what it can cover with informal risk mitigation. Formal insurance can help a business to become more resilient and as a result, encourage investment. There is a clear business case for insurance providers to target SMEs yet they seem reluctant to do so. Perceived barriers include the need to tailor products to individual business needs and the relatively small risk pool compared to that of individuals and microbusinesses.

If inclusive insurance is to live up to its name, SMEs must not be left behind as insurers seek to roll out products in emerging markets. Better use of data and digital ecosystems, coupled with new business models and improved risk management, could all help SMEs become more resilient and grow.

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In association with E-mail: insurancetoday@businessdayonline.com

Re/insurers exposure to higher claims inflation rising BALA AUGIE

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nalysts have highlighted that the risk of insurers and reinsurers being exposed to higher claims inflation is on the rise, with companies focused on longer business and those with lower reserve buffers being the most at risk.

Experts explain that an increasingly inflationary environment could mean that consumer lose appetite for a cover since their wallets are squeezed while combined ratios could spike on the back of rising claims and operating expenses as cost of replacement of assets would go up.

“Your premium incomes are not coming and the claims are growing more than expected. It will affect combined ratios and profitability,” said Moronfola Monsuru - Actuarial Analyst - Wapic Insurance Plc. “We are in the business of paying claims. Imagine you had insured a car few years ago when inflation was low. If inflation starts to rise, it then means the cost of replacing a door will also increase,” said Monsuru.

The cumulative average combined ratio for the 19 largest quoted insurers that have released third quarter 2018 results stood at 83.30 percent, representing an improvement from the 86.80 percent in the corresponding period of 2017, despite persistent market pressures challenging the profitability of insurers, according to data compiled by Markets and Intelligence.

The combined ratio measures costs and claims as a percentage of premiums, so the further it is below 100 the more profitable underwriting has been.

Inflation for the month of November has inched to 11.44 from 11.28 percent in October, the first increase in seven months.

Analysts at CSL Stock Brokers Ltd have projected inflation to hit 15 percent and 20 percent in 2019.

D a t a c o m p i l e d by Markets and Intelligence shows that in Q3 2018 the quoted companies claims expenses grew 15.29 percent to N62.98 billion,

while underwriting expenses grew 12.83 percent to N36.84 billion, and management expenses climbed 9.54 percent to N39.0 billion.

As a result of improved combined ratio, quoted insurers recorded a cumulative underwriting profit of N30.60 billion in September 2018, representing a 32.51 percent increase from previous year’s figure.

“Operating costs are, of course, affected by inflation, organizations will have to sell more and be creative at driving cost efficiencies,’’ said Fola Lawal, Chief Financial Officer at Old Mutual Jide Orimolade, former managing director and CEO of Law Union and Rocks said rising inflation if not factored into rates applicable on policies for non-life will have negative effects on their efficiency ratio.

“As for the Life policies the insured will be worse hit because of time value of money. Hence for Life people may not be interested in buying investment linked products from Life companies,” Orimolade said.

It is generally accepted that Life insurance is impacted by inflation more than any other product line due to the long term nature of the policies and the dependence on interest rates, as well as investment trends.

2017 audited financial statement of Leadway Assurance limited shows combined ratios fell to 53.60 percent from N77.61 percent the previous year, but a N49.31 billion increase in annuity fund resulted in an underwriting loss of N10.41 billion.

ARM Life Insurance Limited’s combined ratio improved to 47.42 percent December 2017 as against 57.58 percent the previous year.

First Bank Insurance Limited’s combined ratio fell to 44 percent in December 2017 from 49.54 percent the previous year, but a 255 percent surge in changes in long term contract insurance resulted in a 31.92 percent reduction in underwriting income.

“In a period of high inflation firms will not get premium from customers to invest,” said Monsuru.

NAICOM names Interim Board for Goldlink, as Funke Moor completes appointment

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oldlink Insurance Plc has announced a recent change in its Board and Management as a result of the restructuring of the Interim Management Board by National Insurance Commission.

According to the report released by the Corporate Communications Unit of the underwriting firm, the Management headed by the acting managing director, Funke Moore has successfully completed its mission of repositioning the company for capital raise; hence the restructuring and has ceased to be at the helm of affairs.

This necessitated the appointment of Edore Kenneth Egbaranas as the new managing director / CEO; Nahim Abe Ibraheem as the Chairman of the Board; While Olanrewaju Sulaimon, Adeyinka Olutungase, Farouk Lawal Yola and Tonbofa Ashimias are other members of the board.

Edore Kenneth Egbaranas

Aiico graduates students in Internship Skill Programme

A

iico Insurance Plc has conducted the graduation ceremony for the first set of graduates from its Aiico’s Internship Skill Acquisition Programme.

Aiico Insurance Plc aims at developing undergraduates of schools by initiating them into the corporate world. It is a platform for undergraduates of schools to gain experience of activities and the workings of the organization, something to corroborate and make clear, the theoretical knowledge in terms of its applicability in the corporate sphere.

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Appointment of electoral chairman: A lesson from Ghana

JOSEPH MAURICE OGU

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ppointed by the then president of Ghana, Jerry John Rawlings, in 1992, during the build-up to Ghana’s return to civil rule in 1993, Dr. Kwadwo Afari-Gyan was the chair of the Electoral Commission (EC) of Ghana until his retirement in 2015.

In an interview published in Punch, June 15, 2017, Abayomi Arabambi, Chairman, Labour Party, Ogun State, advocated the appointment of the electoral umpire chief that is totally independent of the president. His argument is simple; it is morally wrong to have an umpire appointed in a game by a player who will be part of the game.

From the human angle, there is every tendency that the umpire will dance to the tune of the player who had appointed him.

To ensure that the Independent National Electoral Commission is truly “independent”, Arabambi suggested that the power to appoint the INEC Chairman should be relieved from the president and vested in the National Assembly who will, preferably, appoint any of the credible retired Supreme Court justices with track records of integrity as the chair of the commission.

To a large extent, this will eliminate the executive interference in the electoral system and likewise put to rest insinuations bordering on unconstitutional ethnic considerations in the appointment of INEC Chairman.

At the moment, the appointment of the electoral umpire chief is a sole prerogative power of the president. The commission, which was established under section 153 of the 1999 constitution (as amended), was clear on the appointment of the electoral chairman and commissioners.

Section 154(1) gives the president powers to appoint the electoral chairman, but instructs

Monday 28 January 2019

that such appointment “shall be subject to confirmation by the Senate.” Section 154(3) further gives directives to the president: “In exercising his powers to appoint a person as chairman or member of the Independent National Electoral Commission, … the president shall consult the Council of State.” Section 155 (1c) states that the chairman of INEC can remain in office “for a period of five years from the date of his appointment.”

However, section 157(1) recognises the conditions on which the chairman of INEC could be removed before the expiration of his five years tenure. The chairman could only be “removed from that office by the President, acting on an address supported by two-thirds majority of the Senate praying that he be so removed for inability to discharge the functions of the office (whether arising from infirmity of mind or body or any other cause) or for misconduct.”

The five-year tenure in office of the electoral chairman is fashioned such that he conducts one national election before he leaves the stage, paving way for his successor. In a rare occasion will the chairman have the opportunity of conducting more than one national elections during his tenure, as in the case of Attahiru Jega.

“The way the INEC chairman is appointed and his tenure of office is a serious shortcoming on the side of the constitution.

The INEC chairman is not independent because he could

be under pressure to deliver the presidency to the president that appointed him,” said Akeem Ajibade, an Ibadan based public analyst. The makers of our constitution may not have envisaged this shortcoming, but Ajibade insists that such shortcoming gives both the president and INEC chairman the impression that “the chairman is appointed to come and deliver a job for the ruling party through the sitting president, after which he is replaced by another president for the same purpose. The circle continues. Remember there were rumours that [former President Goodluck] Jonathan was advised to remove Jega if he wanted to win a second term.”

Is having an electoral chair whose appointment is totally independent of the executive and whose stay in office is not tied to a fixed number of years but stays in office until he clocks the retirement age a good option?

Although, in Ghana, the appointment of the electoral chairman and his removal from office is similar to the Nigeria’s system, Ghana’s system, however, does not have a fixed number of years in office.

Why did Afari-Gyan spend all of 23 years in office as the chair of EC? Did he have a clique in the successive government that always kept him in power or was it because of his good work that made all governments to keep him in power? BusinessDay put these questions to Ibrahim Mohammed, a Kumasi-based

(Ghana) legal practitioner.

“No, it’s our constitutional provision. The constitution of Ghana allows the electoral chairman to be in office up until he or she attains the retirement age of 60 years. In the case of Afari-Gyan, he retired when he clocked 60 years”, Mohammed said.

Relevant sections of Ghana’s 1992 constitution make provision for the appointment and removal of the EC’s chairman.

Article 44(1) states the caliber of persons that are qualified to be members of the commission. It states, “A person is not qualified to be appointed a member of the Electoral Commission unless he is qualified to be elected a member of parliament.” Article 44(2) specifically addresses the chairman, “The chairman of the Electoral Commission shall have the same terms and conditions of service as a Justice of the Court of Appeal.”

On the independence of the electoral commission, article 46 of the constitution says “Except as provided in this constitution or in any other law not inconsistent with this constitution, in the performance of its functions, the Electoral Commission, shall not be subject to the direction or control of any person or authority.” On the appointment, the constitution says in article 70(2) that “The president shall, acting on the advice of the Council of State, appoint the chairman, deputy chairmen, and other members of the Electoral Com-

mission.”

On the removal or otherwise of the chairman, article 44(2) already states that the chairman has the same working conditions as a justice of higher courts. So, articles 146(1) and 150(1) address such conditions of service.

It reads: “A Justice of the Superior Court or a Chairman of the Regional Tribunal shall not be removed from office except for stated misbehaviour or incompetence or on ground of inability to perform the functions of his office arising from infirmity of body or mind…. A judicial officer shall vacate his office on attaining the age of sixty years.”

Since her return to democracy in 1993, Ghana has recorded a lot of successes in conducting elections and peaceful transitions of power. Mohammed says this success has a lot to do with the stable electoral chief. This success has earned Ghana the accolades of being seen as the mother of West African democracy. Since Ghana’s return to democracy in 1993, Afari-Gyan conducted every single election up to the present Nana AkufoAddo led administration that came to power in 2015. During his tenure in office, the fearless Afari-Gyan declared opposition candidates winners on three occasions.

So, how does having an electoral chairman who sees himself as a career officer impact on Nigeria’s democracy? “The commission must be independent to ensure fairness and credibility, which is why electoral chairpersons stay in office until they retire,” said Korsi Asiseh, a Kumasi-based broadcaster and public affairs analyst.

“If you have an electoral chairman that stays in power till his retirement age, it is a wonderful thing to do. He will be sure and confident of the full independence of the commission. He will discharge his duties diligently without fear or favour because he’s sure of job security.

He won’t dance to the tune of any politician who tries to manipulate him because he knows he is not at the mercy of the politicians”, Mohammed said.

Shortly after she was appointed as a successor to Afari-Gyan in 2015 to head EC, Charlotte Osei was found guilty of financial misconduct and was subsequently removed from office.

Despite having attained democratic status before Nigeria, Nigeria has paraded more electoral umpire chiefs than Ghana.

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Insurance

Reviving under-performing insurance industry Bala Augie

T

he Insurance industry is a catalyst for economic growth in developed and emerging market economies. In those climes, it contributes substantially to GDP. Insurers are so liquid that they buy banks to underpin their profits and maximise shareholders’ earnings.

But the reversal is the case in Nigeria where a myriad of challenges such as apathy towards insurance, poor regulations, poor corporate governance, and macroeconomic uncertainties continue to undermine the growth of the industry.

Despite the country’s population of 200 million, insurance penetration is 0.30 percent— one of the lowest figures in the world.

This compares with South Africa’s 14.7 percent; Kenya’s 2.8 percent, Angola’s 0.8 percent and Egypt’s 0.6 percent.

Similarly, the sector’s insurance density (a measure of industry gross premium per capita) is still one of the lowest when compared to peers – South Africa ($762.5), Egypt ($22.8), Kenya ($40.5) Angola ($30.5) and Nigeria ($6.2).

The National Insurance Commission (NAICOM) is yet to for-

mulate policies that will unlock the opportunities in industry.

For instance, the issue of three tier recapitalisation has not been resolved. The aim of the policy was to ensure that insurers undertake risks commensurate with their capital bases.

Foreign companies have insisted that only firms with capital base not less than $9 billion can underwrite their risks.

Leadway Assurance Limited, the largest insurer by revenue and asset, has a shareholders’ fund of N55.03 billion as of December 2017. This compares with N1.02

trillion total equity of tier 2 lender Sterling Bank, as lenders are liquid enough to take advantage of a highyield environment.

Similarly, AXA Mansard, the most capitalised insurance firm in the country, has a market capitalisation of N19.3 billion, comparing with N59.39 billion market cap of tier two lenders- Fidelity Bank.

Ekerete Ola Gam-Ikon, consultant on insurance matters, noted that weak corporate governance was significantly evident in 2018 despite efforts by NAICOM to improve governance discipline by operators.

Of course, insurers are operating

in an environment where the vast majority are illiterate, while religious beliefs have hindered many from taking up cover. In some part of the country, taking a life cover is taboo because people see the policy as a premonition of their own death.

The National Commission for Mass Literacy, Adult and NonFormal Education says about 70 million citizens of Nigeria cannot read and write or lack basic skills for modern living.

To further exacerbate the already anaemic position of insurers, consumers have refused to open their wallets, as Nigerians are getting poorer by the minute, while unemployment rates are rising amid growing population.

According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti.

Nigeria, with a population of 180 million people, has 87 million people, nearly half its population, in extreme poverty. High inflation environment continues to erode discretionary income.

Nigeria’s unemployment rate rose to 23.1 percent of the workforce by the end of September 2018, up from 18.1 percent in the same

quarter in 2017.

This could be more challenging for insurers as the economy is expected to be whipsawed by global geopolitical and the uncertainties surrounding the elections.

The country’s GDP is struggling to exceed 2.0 percent with Q3 2018 figure of 1.8 percent.

As at the third quarter of 2018, the current account moved into deficit as the parallel market exchange rate started to rise.

Inflation for the month of November has inched to 11.44 from 11.28 percent in October, the first increase in seven months.

Whoever is voted president after the elections should pay attention to the insurance sector as it lags among sub-Saharan African peers. Radical reforms include a scheme of consolidation that will help shore up firms’ capital base so that they can take on more risks and invest in finance assets such as equities, bonds, and real estate.

It will be recalled that former CBN’s governor- Chukwuma Soludo’s recapitalisation of 2005 transformed the banking industry.

Politicians jostling for political positions should beam their searchlight on the sector if the country is to attain the desired economic growth and development.

approved by the National Council on Health in 2007. Subsequently, a Human Resource for Health Strategic Plan 2008-2012 was drawn up to guide implementation of the policy at all levels.

The ultimate aim was to ensure that adequate numbers of skilled and well-motivated health workers were available and equitably distributed through the nation in order to ensure provision of quality health services.

The situation appears set to get worse. As the era of Sustainable Development Goals is commenced and the target of 2030 begins to come into focus, the statistics are far from providing reassurance.

One of the facts that will have to be accepted in the Nigerian situation is that what is required to get round the problem of inadequate numbers of health workers of all categories, which itself is due to inadequate training capacity, brain drain, inadequate numbers of employment positions, is the uneven spread of workers not only between urban and rural areas, but also between southern and northern states.

It is appropriate that such a

complex and diverse assignment as ensuring that every citizen of a country lives a reasonably healthy life and has access to good health care, both preventive and curative, be guided by clearly defined policies that set out goals to be achieved and pathways towards the attainment of those goals.

Nigeria has had a succession of well-articulated policies both in the broad area of health and in specific areas such as mental health, HIV/ AIDS, and Integrated Disease and Surveillance and Response.

A National Health Policy was formulated in 1988. It was subsequently reviewed in 1996, 2004 and as recently as 2016. Though the terminology employed in the different documents has evolved, the central objective remains the same that Nigerian citizens should enjoy a level of health that would enable them to lead fully productive lives, attaining their own personal development goals and contributing meaningfully to national development.

Health Examining Nigeria’s healthcare challenges ANTHONIA OBOKOH

H

ealthcare delivery in Nigeria has experienced progressive deterioration due largely to weakened political will on the part of successive governments to effectively solve a number of problems that have accumulated in the sector over many years. This directly impacts the productivity of citizens and by extension Nigeria’s economic growth.

More than half of Nigerians population live on less than $1.90 a day (‘Poverty Head-count’), making them one of the poorest populations in the world. As of February 2018, the country was ranked 187 out of 191 countries in the world in assessing the level of compliance with the Universal Health Coverage (UHC), as very few of the populace are health insured, whereas even government provision for health is almost insignificant.

Out-of-pocket payments for health causes households to incur catastrophic expenditure. Private expenditure on health as a percentage of total health expenditure is 74.85 percent.

The implication of this is that government expenditure for health is only 25.15 percent of all the money spent on health all across the nation. Of the percentage spent on health by the citizens (74.85 percent), about seventy percent is spent as out-of-pocket expenditure to pay for access to health services in government and private facilities. Most of the remaining money spent by citizens on their health is spent on procuring ‘alternative’ remedies of dubious value.

Nigeria is better provisioned with health personnel than most other African countries. However, given its size and population, there are fewer health workers per unit population than are required to provide effective health services to the nation.

Sadly, the most commonly advertised reason is the ‘brain drain’ of health professionals to other countries, especially in Europe and America.

Survey shows looming brain drain in the Nigeria’s health sector in the rising trend of emigration of healthcare practitioners – physicians, nurses, pharmacists, and laboratory scientists, physiothera-

pists amongst others have difficulty getting into paid employment.

Many doctors, fresh out of medical schools, find it difficult to get housemanship positions. The situation occurs every year in finding placement for Pharmacy interns, Physiotherapists and Laboratory Scientists. The problem persists beyond the period of internship, when it comes to finding jobs.

There are generally not enough job positions to go around.

The challenge of this is clear. The problem of skewed distribution, with the few available personnel being mostly concentrated in the cities, where most of the large facilities such as General Hospitals and Teaching Hospitals tend to be located.

The underneath issues for this may include the political dimension, with some states unwilling to recruit large numbers of workers from other parts of the country as an act of deliberate policy, preferring to employ their own indigenes, or, where there is a short-fall, preferring to employ foreigners mostly from North Africa on short-term contracts.

A National Human Resources for Health Policy was formulated by the Federal Ministry of Health and

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng

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The Innovations Closing Africa’s Electric Power Gap John Baldoni, Acha Leke and Georges Desvaux

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frica’s shortage of electric power is one of the world’s great challenges, and the push to electrify the continent provides inspiring examples of entrepreneurial solutions.

Some see these challenges as reason to avoid Africa. But many are doing the opposite. A case in point: the “company to country” agreements between GE and several African governments.

These represent a new frontier in the company’s approach to public-sector clients. For example, GE’s agreement with Nigeria supports the financing, design, and building of

vital infrastructure, with projects including the development of 10,000 megawatts of power-generation capacity, as well as upgrades to airports and the construction of public hospitals and diagnostic centers.

Several governmentbacked initiatives are broadening opportunities for private-sector investors. One is the Power Africa program launched by President Barack Obama in 2013. As of 2017, it had leveraged more than $40 billion in commitments from the private sector to add nearly 7,000 megawatts in generating capacity across the continent. The African Development Bank is driving a campaign to “light up and power Africa.” It has committed $12 billion to

energy projects between 2017 and 2022, and aims to attract a further $50 billion in private-sector investment.

Although expanding Af-

rica’s power grid is essential, it’s not the only part of the solution. A new breed of African innovators is harnessing mobile money, along with advances in

solar power and battery storage, to leapfrog the continent’s gaps in electric-power generation. One example is Kenyabased M-Kopa, which provides s o l a r- p o w e r e d electricity generation and storage solutions to households that lack access to the grid — and finances payment over a 12-month period via mobile money accounts.

Such companies have struck upon a business model that enables even households with low incomes to get electricity for the first time. That matters, as around 70% of African

households earn less than $5,000 a year. As M-Kopa’s CEO, Jesse Moore, told us, “Ours is a displacement proposition. African households already spend a lot of money on crappy energy sources like kerosene and batteries. We enable them to stop that wasteful expenditure and switch to something cheaper and better. It turns out that solar energy is a secret freer of cash.”

(Acha Leke is the chair of McKinsey & Company’s Africa practice. Mutsa Chironga is an executive at Nedbank, a South African banking group.

Georges Desvaux is a senior partner at McKinsey

Surveys are no substitute for talking to customers Graham Kenny

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or many organizations, surveys qualify as “talking to the customer.” But do they really qualify as customer consultation? What can be done instead?

At the beginning of my public workshops on strategic planning I choose a convenience store as my business example, since everyone has been a customer of one, and ask what seems like a benign question: “How do you decide to shop at one convenience store versus another?” The responses come quickly, and they always yield the same six criteria: location, hours of operation, range of goods

sold, store presentation, customer service and prices.

What my audience does not appreciate at the start is that it took a group of people to come up with all six factors. No one in-

dividual would have articulated the complete set.

But how does this translate into gaining insights from customer interviews instead of surveys?

Consider a company I worked with recently that

provides a range of civil engineering and planning services to clients nationwide. I’ll call it Command.

In preparation for a strategic-planning exercise, which I was to facilitate, the CEO at Command

asked me to interview a dozen of its key clients.

If you’re like a lot of people, your initial response might be: “Twelve clients?

The sample is too small.

It’s not enough to tell you anything useful.”

But in conversationswith clients, you’re after quality, not quantity. You want to get inside their minds.

You want to get a feel for their needs, wants and pains. You can’t get that from a questionnaire.

The company’s management and board believed that Command would obtain a competitive edge through broadening its range of services. But this was not borne out by the customer interviews.

Command was in the pro-

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

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cess of being restructured based on its false premise.

Clearly, there’s no way that traditional surveys could deliver this kind of deep strategic analysis.

But what about the expense of conducting interviews with a large sample of customers? To get meaningful customer input, would you not need to conduct a great many?

The short answer is: You need enough interviews to get to the point at which you hear nothing new and material is being repeated. You can, it turns out, reach this point surprisingly quickly.

(Graham Kenny is managing director of Strategic Factors, a consultancy.)

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50 BUSINESS DAY 19 EXPERTS ON 2019

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Nigeria’s economy: Getting beyond the blame game

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igerians are rightly infuriated that such an enterprising people have been mired in poverty for so long, while other societies with so much less, have soared past you. The forthcoming elections will be a time of ‘pass-the-blame’.

Many scapegoats will be paraded before you, and I could join in. But instead, I am going to suggest something that will unite almost everyone – but it will do so, only because you will all disagree with what I have to say.

I am going to suggest that the bitter divisions that will be all too visible during the election campaign are the essence of the problem that you continue to face. Nigeria lacks a sense of common purpose around a forward-looking agenda. That sense of common purpose would not, primarily, be a matter of specific policy choices, (although there are, of course, many that would improve the situation). It would begin from a commitment that the adult lives of your children would be decisively better than your own. Around that base of shared purpose, you would recognize the shared identity that binds your fates together, and devise a practical agenda for going forward, step-by-step.

We see the power of common purpose in both China and Rwanda, remarkable societies from which you should not be too proud to learn. Under Mao, China was an ideologicallydriven train wreck, but his successor, Deng, galvanized people around an agenda of building a strong China that would end the humiliation of a proud people at the hands of the West.

This produced a unity of purpose between government and people, and each side had visibly to keep its part in the bargain. The government had to deliver the policies that kept the economy growing fast; citizens had to comply with what government wanted them to do. It was far from perfect but it delivered spectacular success.

Nigeria has lacked a sense of common purpose: each has been for himself or his group.

Those in power have abused their office; ordinary citizens have supported their ethnic group rather than their country.

Nigerian governments have done too little to

build up citizen trust in government. Nigeria is by no means alone in that, but it matters more because in Nigeria the government is the custodian of oil wealth. Without citizen trust no government can be effective: it needs the willing compliance of citizens to pay tax and to obey the law: Nigeria achieves neither. To restore trust, the government needs to promise only what it visibly delivers, and do that time-after-time.

Deng’s proposed method of getting China to grow was far more genuinely revolutionary that Mao. It was ‘It doesn’t matter whether the cat is black or white as long as it catches the mice’. In other words, it was pragmatism: ‘we’re going to do whatever we find works best’.

Whatever has guided Nigeria’s governments, it has seldom been learning from what works best: on the contrary, Nigeria seems currently to be repeating the mistakes of 1984-86.

China uses its decentralized region structure systematically to try different approaches out in different places and then learn from what works.

Nigeria has the same decentralized structure, but where is the spirit of learning from experiment? Lagos State has been demonstrating for two decades that with good leadership it is possible for ethnically diverse people to build common purpose – financing improving public services through taxes on citizens rather than relying on oil. Which other states have followed its path?

Instead, every politician claims that they have the answer, and none have the humility to say that that will learn from others.

The election campaign will generate noisy claims for ‘My group wants more!’, matched by political promises of ‘More for everyone!’ that have never been kept, because they cannot possibly be kept. Yet the most elementary aspect of common purpose for a better future is willingness to share a phase of sacrifice.

Shared sacrifice should, of course, start at the top, but everyone should play their part. For an entire generation, the Chinese people restrained their consumption to achieve an astounding savings and investment rate of around 50 percent: no wonder the economy grew so fast that their children now have dramatically better lives.

Nigerians should have

Paul Collier found it easier to save and invest – you have been depleting the massive asset of oil. Instead, you have used your vast natural asset for consumption, which is why you have precious little to show for it. There is still a lot of oil left and so an absolute priority for the future is that all further depletion of oil should no longer be used for consumption, such as financing the vast government wages bill. You should be paying that out of nonoil taxation. Oil revenues should be used only for investment. It is the least you owe your children – otherwise what will they say of you? Is any politician proposing that? I dare not even suggest that you learn from the new decision of Ghana to establish an independent Fiscal Council. It is composed of highly respected nonpolitical people who have the power to pronounce publicly on whether policy is prudent. Nigeria is not short of such people, and you most surely need the equivalent, but I am not holding my breath.

And finally, all successful futures depend upon the success of firms in the private sector. The Rwandan government recognized that and has systematically cleaned up its business environment, rising up the Doing Business ratings like a rocket.

President Kagame oversees the process of making public policy effective, holding the top 200 public officials to account annually for their performance at a three-day retreat in an army camp. Virtually all your presidents have been familiar with army camps, but have they used them for this purpose?

Paul Collier is Professor of Economics and Public Policy at the Blavatnik School of Government, Oxford University.

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51

Odunayo Oyasiji

Case Review

Thomas Chukwuma Makwe V. Chief Obanua Nwukor & Anor (2001) Lpelr-Sc.100/1996

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What to note: his is a matter that was concluded at the Supreme Court. The matter deals extensively with the issue of privity of contract- i.e. the relationship between parties in a contract which gives them the right to sue each other but precludes a third party from suing. It operates on the basis that a contract cannot confer right or impose an obligation on someone who is not a party to it.

Facts The 1st defendant (borrower) applied to the 2nd defendant (bank) for a loan of N200,000. The plaintiff guaranteed the loan with his property covered by Statutory Certificate of Occupancy No. BDSR 5273 registered at No. 9 at page 9 in volume B.69 at the Lands Registry in the office at Benin City.

The Certificate of Occupancy was deposited with the bank. It must be noted that the 1st defendant also deposited his Customary Certificate of Occupancy No. BDCR 54 registered as No. 54 at Page 54 in Volume 3 at Oshimili Local Government Council, Asaba and now converted into a Statutory Certificate of Occupancy No. BDSR 8493 registered as No. 40 at Page 40 in Volume B.115 at the Lands Registry in the office at Benin City as security for the same loan.

The bank drafted a tripartite deed of legal mortgage and same was executed by the parties. The plaintiff also signed a guarantee form which the bank gave to him to sign. The plaintiff and the first defendant also entered into an agreement on how the 1st defendant will operate the account with the bank. The said agreement was deposited with the bank. The bank allowed the 1st defendant to have access to the loan after all the necessary documentations have been concluded. The 1st defendant defaulted in the repayment of the loan facility and the bank made several demands on both the plaintiff and the 1st defendant for them to repay the loan and the interest. The plaintiff instead of taking steps to repay the loan instituted an action against both the bank (2nddefendant) and the 1st defendant (borrower/the person he guaranteed).

The trial court entered judgement in favour of the plaintiff in October, 1989. The court stated that the bank is bound by the agreement that was made between the plaintiff and the 1st defendant stating how he is to run his account with the bank. The basis for this is because the said agreement was deposited with the bank.

The bank being dissatisfied with the decision of the lower court lodged an appeal at the Court of Appeal, Benin Division.

The Court of Appeal in 1994 held that the decision of the lower court was an error in law as the bank was not a party to the agreement that was lodged with it. Therefore, it cannot be bound by the terms of the agreement. The court pronounced on the effect of deposit of the agreement with the bank that “the mere fact of the appellant receiving an agreement entered into by the plaintiff/respondent and the 1st defendant does not ipso facto discharge the plaintiff/ respondent from the obligations he entered into with the appellant Bank in Exhibits D and E.” The plaintiff (the guarantor) filed an appeal at the Supreme Court to challenge the decision of the Court of Appeal.

Issues for determination The plaintiff/appellant identified one issue for determination. The sole issue identified is “Were the learned Justices right in holding that the bank was not bound to comply with the conditions for disbursement of the loan as stated in Exhibit A or, put in another way, having accepted Exhibit A from two of the parties to the mortgage in the loan transaction, can the bank deny its duty to disburse the loan as provided in Exhibit A on the ground that it is not a party to Exh. A?” The respondent submitted that the sole issue for determination is “Whether the learned Justices of the Court of Appeal were right to

hold that the bank was not bound by the contents of Exhibit A, an agreement between the appellant and the 1st defendant because the bank was not a party to the said agreement.”

The court adopted the issue formulated by the respondent as same is more direct and straight.

Submissions/Arguments The plaintiff/appellant’s counsel submitted that the Court of Appeal was wrong to have based its judgement on the doctrine of privity of contract i.e. on whether or not the bank was bound by the agreement between the plaintiff and 1st defendant that was deposited with it. The learned counsel stated that the case is more of breach of duty of care owed by the bank to the appellant by reason of the agreement that was deposited with the bank along with the appellant’s title documents.

Therefore, there is negligence on the part of the bank.

The counsel to the bank argued that the claims of the appellant were based on contract. He stated that the contract in question is the agreement between the plaintiff/ appellant and the 1st defendant (borrower) which was deposited with the bank. He noted that the said contract was made after the loan transaction/agreement was sealed. He explained that based on the loan agreement the only ground for release of title documents is after the full repayment of the loan. Also, the agreement deposited with the bank was only aimed at ensuring that the 1st defendant uses the loan for the

right purpose. He stated that for negligence to arise there must be evidence of corresponding damage and that nothing of such was proved by the appellant.

The bank’s counsel further argued that “it is trite law that as a general rule, a contract affects only the parties thereto and cannot be enforced by or against a person who is not a party to it. In other words, only the parties to a contract can sue or be sued on the contract and, generally, a stranger to a contract can neither sue nor be sued on the contract even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. In the same vein, the fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue or to be sued upon the contract.”

Judgment/Decision of Court The court held that the appellant’s action against the respondent cannot be that of negligence because the appellant never pleaded that it suffered any form of damage. The Supreme Court agreed with the Court of Appeal that the appellant’s claim was grounded on breach of contract.

The Supreme Court held with regards to whether the bank is bound by the terms of the agreement deposited with it that “it is indisputable from the pleadings that the respondent was not a party to Exhibit A which is a con-

tract between the appellant and the 1st respondent. This is clearly pleaded in paragraphs 9 and 10 of the appellant’s amended Statement of Claim set out earlier on in this judgment. The appellant also testified to that effect. Similarly, the respondent bank, both in its pleadings and evidence stated that it was not a party to Exhibit A and could not therefore be bound by it. It is thus clear, having regard to the facts that as a general rule, a contract affects only the parties thereto and cannot be enforced by or against strangers and that the circumstances and facts of this case do not fit into any of the recognised exceptions to the said general rule, that the respondent bank, not being a party to Exhibit A, cannot be bound by it. The Court of Appeal was therefore right to hold that the respondent bank could not be bound by Exhibit A to which it was not a party.”

The Supreme Court found the appeal to be without substance and therefore dismissed the appeal.

Conclusion For a party to be bound by terms of a written contract he must be made a party to it. Without this, such a party is precluded from claiming under the contract and cannot be under any form of obligations with regards to the contract. A clear exception to this principle of privity of contract is where a contract is made by an agent on behalf of an undisclosed principal, who as a general rule is entitled to sue and can be sued on such a contract. The present case does not fall within this category.

52 BUSINESS DAY

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Monday 28 January 2019

Interview Diamond Bank now prioritises access to funds for health, education entrepreneurs – Olojede Diamond Bank is diversifying and expanding its product base to cover non-financial sectors that impact people and communities. In this interview with ODINAKA ANUDU, Ayo Olojede, head, emerging businesses at Diamond Bank Plc, speaks on the bank’s new focus on key human development sectors such as health and education.

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hy do you now focus on nontrade and health sectors?

Health is a foundation for human development, a basic human need. It is difficult to hold onto a job/business or care for your family if you are sick.

Therefore, expanding access to health services is central to eliminating poverty and reducing inequality.

Our healthcare systems still face challenges. There is still persistent deficit of hospital equipment nationwide. Although there is primary healthcare, the public sector still does not have financial resources to provide high quality services for a population of about nearly 200 million people.

With a rising population, the demand for hospital services continues to grow. However, lack of scale makes it difficult for many hospitals to control costs, which limit investment in standard medical equipment. Our focus in this sector is to contribute to improved access to high quality care for people in Nigeria.

We are partnering with JNCI to make the latest standard care to health practitioners affordable. Affordable medical equipment means we are enabling medical practitioners to have good hospitals and to be able to provide specialised care and advanced medical technology to hospitals in underserved areas which will better serve the needs of Nigerians.

Apart from this initiative, we have dedicated products to support the health industry and can provide loan facilities up to N350m, which is facilitated by a partnership with MCF/ PharmAccess. PharmAccess provides additional support in the form of technical assistance to owners of health facilities. Also, in partnership with the Enterprise Development Centre (EDC) of Lagos Business School, we support some customers in this sector to get capacity-building on how to run hospitals as a business.

In 2019, not only is the health sector a prioritised one, we are also prioritising access to finance for the education

traoral X-ray bundle; Intraoral Xray CS 2200 + Intraoral Sensor RVG 5200, and Intraoral X ray CS 2200 + Intraoral Sensor RVG 142, among others.

How long will the promo last?

It is for three months— from December 2018 to February 2019.

Is it available for everyone in this sector?

The promo is available to existing and new bank customers referred by JNCI or MCF. New bank customers are expected to open a Diamond Bank account and provide last 12 months other bank’s statement.

It is also open to hospitals and clinics, diagnostic centres, mother & child hospitals, missionary hospitals, general dentistry and oral and maxillofacial dentists.

Apart from the loan, are there any other benefits derivable from it?

Yes, there are, including equipment installation, after-purchase maintenance, and training at no additional costs.

Anoka Njan

sector, another sector central to human development. You cannot get a job or run a successful business if you do not have relevant skills and knowledge, and this is a critical element for poverty reduction. Demand for education is soaring as population continues to grow and employers still report difficulty in finding workers with the right skills. So, our support for private education is expected to increase employability. Our focus is to support the educational value chain.

Technology is also not left out. Technology makes doing business easier in smarter, more efficient ways. It expands opportunities and creates expanded markets for businesses.

It also makes access to services and resources for consumers.

We have created partnerships that facilitate the provision of affordable and heavily discounted e-commerce platform for business owners. If you are not online in today’s

market, your business does not exist. We have invested in digital platform to pro- business management trainings from the comfort of your home or office. Business management is important because it gives your business direction and creates cohesiveness for success, which is key for growth.

Our mobile app is second to none in the industry for business owners. It is convenient, easy and safe. You can make direct foreign currency transfers from your phone and pay your suppliers on time. The single most important thing a business can do to maintain good supplier relationships is to pay your bill on time. Our mobile app facilitates business relationship. Technology is at the heart of our value promise to our customers.

Agriculture, the real sector (manufacturing) and womenowned businesses continue to be focused business areas for us. Health, education, agricul-

ture, real sector and technology (H.E.A.R.T) are at the heart of our growing access to finance initiatives in 2019.

What exactly do you offer in this sector?

We offer a loan of up to N350 million; up to N3 million clean lending; periodic self-care assessment; business/ quality training, as well as quality improvement plan.

What does ‘5 for life’ mean?

The ‘5 for life’ is a promo initiative run via a partnership between Diamond Bank, JNCI and Medical Credit Fund, offering five select fast-moving medical equipment to existing and new bank customers in the health sector.

What medical equipment are available under the promo?

They are Vitaflex CR bundle for radiography digitisation; In-

What is the loan application process?

Loan application can be done from the nearest Diamond bank branch and it requires applicants to be issued a proforma invoice of the equipment and providing business validation document as required by Diamond Bank. In addition, for non-account holders, it would require 12 months’ bank statement from current bankers, signed post-dated cheques and loan account with Diamond Bank. No application fee is required.

How does this partnership directly impact Diamond Bank?

It helps Diamond Bank to better cater for its customers in the health sector, thereby increasing customer satisfaction and loyalty. It is also an avenue for onboarding new customers as the promo is available to newto-bank customers.

Again, it lends credence to our assertion that Diamond Bank is an SME-friendly bank interested in supporting the growth of the Nigerian health sector.

Monday 28 January 2019

BUSINESS DAY

53

54 BUSINESS DAY NEWS The curious case of the CBN’s long-standing...

Continued from page 1 independent importers.

Now that the independent petrol importers have downed tools and left the responsibility to the NNPC, the rationale for keeping the rate is fast fading.

The N306 rate is also the preferred one for the government’s budget and it hasbeenthiswaysince2017.Thebiggest losers are Nigeria’s cash-strapped states.

The dollar portion of federal allocations to the states is converted at the N306 rate instead of the prevailing N360 market rate.

That implies that for every dollar of federal allocations due to the state, N54 is lost. State governors had complained about the practice but have since grown quiet.

BusinessDay calculations show that the states could have earned 17 percent more if the N360 exchange rate were applied.

The Federation Account Allocation Committee (FAAC) disbursed the sum of N2.57 trillion to the states in 2018, according to the National Bureau of Statistics (NBS).

Federal allocations are largely made up of crude oil export sales and Petroleum Profits Tax (PPT) as well as revenues from Value Added Tax (VAT), Import and Excise Duties, Royalties and Companies Income Tax (CIT).

Crude export sales and PPTs account for nearly 70 percent of total allocations, which would equate to N1.79 trillion of allocations to states in 2018 ($5.8 billion at N306).

If converted at N360 per dollar, state allocations would be N2.1 trillion, 17 percent more than the 2018 value.

There is a long list of expenditure items that the states could address with the extra cash from FX revaluation gains, from investments in infrastructure to payment of workers’ salaries.

That case has been strengthened by a likely minimum wage hike to N30,000, which is sure to put a strain on the finances of the states, most of which are barely able to generate enough income to meet their costs.

“The paradox here is that the states allow the federal government to shortchange them and then go back to the government to borrow money to pay salaries,” a senior accountant told BusinessDay on condition of anonymity.

One senior government worker said the state governors “are probably distracted by the upcoming elections”.

The N306 rate also deters investment, according to Atiku Abubakar, the main opposition candidate in next month’s presidential election.

Abubakar, a businessman and former vice president, said he would float the currency if he wins the Feb. 16 vote and replace the Central bank governor, Godwin Emefiele, in June, when his first term ends.

Emefiele responded to Atiku’s criticism of the CBN’s policies by saying a free float of the naira would cause capital flight and a “massive devaluation”.

The nation’s current system of multiple exchange rates had produced the “most optimal results when compared with other emerging markets in recent times”,Emefiele told reporters Tuesday after a meeting of the Monetary Policy Committee.

Under Emefiele, who was appointed in 2014, Nigeria has tightened

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capital controls and closely managed the naira’s value. The governor has consistently said this is the best way to curb inflation and boost manufacturing by discouraging imports.

Several foreign investors have faulted the policy and said it exacerbated an economic downturn triggered by the 2014 crash in oil prices.

The MPC held its main interest rate at its first meeting of the year, last Tuesday, at a record high of 14 percent and warned of rising inflationary pressures.

Prices rose 11.4 percent year-onyear in December, the highest rate in seven months.

Emefiele, 57, also said the central bank would increase restrictions on companies buying foreign exchange for imports.

That would include putting more food items on a list of foreign goods for which purchases of dollars from banks are banned, he said.

“We will get even more aggressive,” he said. “This is because we think the initiative the central bank has to cut imports and diversify the economy is yielding results,” Emefiele said.

Shortages of foreign exchange have eased in the past 18 months thanks to higher crude prices and the central bank opening a currency-trading window for portfolio investors that allowed them to buy the naira at a weaker level.

The rate in that window of N363 per dollar has almost converged with the black-market rate, which means the naira is fairly valued around that level.

In their 2018 outlook, Nigerian banks expected a broader rate convergence in 2018, but it hasn’t completely happened. Not with the CBN still quoting N306.

L-R: Ademola Aofolaju, managing director, Investment One Capital Management Limited; Kemi Alabi, group chief operating officer; Nicholas Nyamali, general managing director; Tope Omojokun, managing director, Investment One Fund Management Limited, and Ezekiel Oluyori, managing director, Investment One Stockbrokers Int’l Limited, during the Ziing App launch in Lagos, at weekend.

Pic by Pius Okeosisi

Onnoghen: Nigeria sliding into...

Continued from page 1

Onnoghen, on the advice of the

Code of Conduct Tribunal (CCT), and swiftly swore in Justice Ibrahim Tanko Mohammed as Acting Chief Justice.

The swiftness and “illegality” of the Buhari government’s approach to the Onnoghen case rekindle old memories of the former military head of state, who was ousted from office in 1985 on accusations of “intransigent and dictatorial tendencies”.

Analysts and legal experts fear that Nigeria is back to the dark days of dictatorship as Africa’s largest economy continues to demonstrate its challenges with entrenching democratic norms.

Mike Ozekhome, a Senior Advocate of Nigeria, in a note to journalists on Friday, described Buhari’s action as a rape on democracy and abuse of

the constitution.

“The alleged suspension from office of the CJN is the vilest, thieving, most despicable, ultra-vires, undemocratic and brazenly unconstitutional act ever carried out by any government in Nigeria, civilian or military, since 1st January, 1914, when the contraption called Nigeria was forcibly contrived through the amalgamation of Northern and Southern Protectorates,” Ozekhome said.

The outspoken senior lawyer and activist called on Nigerians to brace up and take to the streets to “protest against this illegality” and the dictatorial tendencies of the Buhari regime.

He also called on all Nigerian lawyers and the Nigerian Bar Association to “shut down all courts in Nigeria until the CJN is returned to his seat”.

Also addressing an emergency press conference on Friday, the Coali-

tion of United Political Parties (CUPP) described Buhari’s suspension of Onnoghen as a judicial coup and overthrow of constitutional governance.

The opposition political parties asked the Senate to immediately reconvene and commence impeachment proceedings against the president.

A fortnight ago the government, purportedly acting on the strength of a petition by the Anti-corruption and Research-based Data Initiative, whose head, Dennis Aganya, was Buhari’s spokesperson, hurriedly filed charges against the Chief Justice at the CCT for allegations bordering on non-declaration of assets. Besides just charging the CJN, the government requested, via a motion, that the nation’s number-one judicial officer recuse himself and stand down from office until the case against him at the CCT is determined.

Expectedly, the Chief Justice refused and has mounted a fierce legal

Monday 28 January 2019

Nigeria’s IPO market brightens with MTN...

Continued from page 2

nications sector, MTN Nigerian unit could potentially fetch a $6.8 billion (N2.4 trillion) valuation when it lists, according to Lagos-based analysts.

Extensive local marketing to target Nigerian investors is planned as part of a retail offer and institutional book-build, which may also involve selected international institutions.

In show of commitment to move ahead with the IPO target, the group had appointed Chapel Hill Denham as lead manager for the initial public offering (IPO).

Other appointed advisers are South Africa’s Rand Merchant Bank, Renaissance Capital and Vetiva Capital. The telecoms firm also works with Stanbic IBTC Capital, Standard Bank of South Africa, Standard Advisory London and Citigroup Global Markets, as joint advisors and global coordinators, with Stanbic acting as lead issuer.

In the third-quarter (Q3) to September 30, 2018, MTN recorded improved operational performance in many markets. Group service revenue grew by 10percent year-on-year (YoY), ahead of the group’s medium-term target of upper-single-digit growth, supported by continued strong growth in voice and data revenue.

MTN Nigeria had an excellent quarter, increasing service revenue by

17.4 percent YoY, towards the upper end of its medium-term target for Nigeria of double-digit growth. This was led by a 52.5 percent increase in data revenue and 21.5 percent increase in outgoing voice revenue. Data revenue growth was supported by an increase in active data subscribers as well as more smartphones on the network, the result of various CVM and OEMpartnership initiatives.

Digital revenue declined by 28.5 percent following the continued optimisation of our value-added services (VAS) business. MTN Nigeria completed the final element of this optimisation, suspending auto-renewal of subscriptions, in mid-September which means that digital revenue will continue to be impacted by lower VAS revenue in the fourth quarter, after which we expect it to stabilise.

MTN Nigeria reported 17.2 million active data subscribers, up 15.1 percent quarter-on-quarter (QoQ), and 2.5 million MoMo customers, up 12.4 percent QoQ. The EBITDA margin expanded to 43.2 percent in the first nine months of the year, up 4.7 percentage points from end September 2017, driven by the strong growth in revenue, mix of revenue and further cost optimisation efforts.

Nigeria’s maize grain may come under...

Continued from page 2

maize producer after South Africa, is churning out 10.5 million metric tonnes of maize per annum with a demand of 15 million metric tonnes, leaving a supply-demand gap of 4.5 million MT annually, data from the Federal Ministry of Agriculture show.

Maize is the leading cereal grown in Nigeria, closely followed by sorghum and rice.

Bello Abubakar Annur, national president of Maize Association of Nigeria (MAN), said that traders from neighbouring countries have always purchased from Nigeria to fill their demand-supply deficits.

However, he noted that if the drought in South Africa persists, there is likely going to be more pressure on the Nigerian grain and prices will rise.

“It would be good news for farmers if the Nigerian maize grains come under some pressure as prices will definitely increase. The prices right now are low at N80,000 per metric tonne,” Annur said.

As a result, poultry farmers, producers of feeds, flour, noodles, biscuits, brewers, starch, confectioners, among others, who use maize as a raw material at factories, would be the worst-hit as it will shut up their challenge against the move. The suspension, therefore, is the Presidency’s latest move in the fierce battle to determine the headship of the judiciary ahead of the 2019 elections.

“A short while ago, I was served with an Order of the Code of Conduct Tribunal issued on Wednesday, 23rd January, 2019, directing the suspension of the Chief Justice of Nigeria, Honourable Justice Walter Nkanu Samuel Onnoghen from office pending final determination of the cases against him at the Code of Conduct Tribunal and several other fora relating to his alleged breach of the Code of Conduct for Public Officers,” President Buhari said in a speech suspending the Chief Justice.

It is doubtful what order the president was relying on as there was no reported order directing the suspension of the Chief Justice by the Code of Conduct Tribunal. Many legal experts and analysts are of the opinion the CCT

production cost, experts say.

“Nigerian maize farmers will be incentivised to grow more maize,” Annur said.

Speaking on the country’s maize projection for the 2019 season, Annur said that the Nigerian maize association anticipated the country’s maize production to reach about 25,000MT to meet local demand and also fill the gaps in neighbouring African countries.

Extreme weather conditions such as drought, storms, intense rainfall are affecting the ecosystem on which farmers depend. This is affecting production and reducing yields per hectare of most grains.

“Climate change is become a critical issue for farmers and the impact on agriculture is becoming intense,” AfricaFarmer Mogaji, chief executive officer, X-Ray Consulting Limited, said.

“It will be a major determinant of food production this year and Africa’s vulnerability to climate change is closely linked to the continent’s low adaptive capacity and increasing dependence on resources sensitive to changes in the climate,” Mogaji said.

As at the time of writing, a metric tonne of maize sold for N100,000, according to Novus Agro, a commodity tracker. does not have the powers to order the suspension of the Chief Justice.

In fact, the only definitive order of the court was one given by the Court of Appeal, Abuja division, on Thursday, ordering the Code of Conduct Tribunal to stay further proceedings in the trial of the Chief Justice of Nigeria pending its ruling on Wednesday, January 30, 2019.

However,thepresidentpurportedto relyontheorderoftheCodeofConduct TribunaltosuspendJusticeOnnoghen.

“In further compliance with the same Order of the Code of Conduct Tribunal, I hereby invite Honourable Justice Ibrahim Tanko Mohammed JSC, being the next most Senior Justice in the Supreme Court, to come forward to take the Judicial Oath as Chief Justice of Nigeria in an Acting Capacity,” Buhari said.

•Continues online at www.businessday.ng

Monday 28 January 2019

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COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Smuggling is a killer to Nigerian economy - Lokpobiri CYNTHIA EGBOBOH, Abuja

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eineken Lokpobiri, Minister of State for Agriculture and Rural Development has reaffirmed that smuggling activities in Nigeria remains a killer to the nation’s economy.

Lokpobiri who spoke at the campaign against “Illegal importation of foods and indiscriminate use of chemicals on food items” in Abuja, said there is need to discourage traders from buying and selling smuggled goods as a way of controlling further use of smuggled goods.

He said, “it is either we kill smuggling or smuggling will kill this nation, it is a challenge to our economy hence we must dis-

courage farmers and traders from purchasing smuggled products”.

The Minister noted that there is need to promote and ensure sustainability of the campaign, as most of the imported food items poses threat to the human health and promised to encourage and promote the campaign against consumption of imported items which are poisonous to health.

Ruth Agbo, Women wing leader, National Association of Nigeria Traders said there is need for the government and every citizen to rise up against illegal importation of food items into the country, stressing that it is has reduced the value of local made products in the market.

Agbo added that the campaign aims at promoting Nigeria farmers and processors, to make Nigeria a net exporter of grains, growth

for the local market and growth for the Nigeria economy, and discourage the use of chemicals on food items as well as discourage illegal importation of food items.

Don Pedro, Director General, Standard Organisation of Nigeria said that the organization is working to ensure the production of quality items from the local producers, adding that patronizing local products is an active way of promoting the Nigerian economy.

He observed that patronage of local product has a direct effect on the employment rate of the nation hence, “we should all encourage local production as way of boosting our economy, as it influence the rise fall of our nation employment rate, if we have more goods produced and purchased, it creates bigger room for employment”.

Housing: Hall 7 Commissions the Bridge Peridot OYIN AMINU, Abuja

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s part of its continued effort to provide affordable and qualitative housing for Nigerians and reducing the housing deficit in the country, Hall 7 Real Estate Limited has commissioned its ultra-modern apartments and townhouses in Abuja.

The facility which is named “The Bridge Peridot” by the real estate company is a display of innovative thinking and precision as well as paying extra attention to details with customer’s need in mind.

Olayinka Braimoh, Chief Executive Officer (CEO), Hall 7 while speaking at the commissioning of the Real Estate in Abuja said the rationale behind the development of the apartments was borne out of the company’s desire to provide qualitative housing for Nigerians.

He said, “What drives Hall 7 Real Estate as a brand is our desire to deliver quality housing to and for Nigerians. For us, it’s about the value we deliver to our customers and stakeholders, and we are also very committed

to bridging the housing deficit in Nigeria”.

“Hall 7 Real Estate, over the years has been a dependable provider of value and state of the art housing facility. One of such is the ‘Brook Shore residence’ with about 230 units consisting of basketball courts, a mini golf course, a swimming pool, and a skate park.

“It is as a result of the company’s desire to remit value and quality that the Nigerian National Petroleum Corporation decided to work with Hall 7 real estate to deliver a 216 unit apartment for its staff and investors in Abuja. The Imperial Visita designed for the NNPC is a smart city with a mini water park and complete automation.

“We want to do things differently, that is why we decided on developing the Bridge Peridot which took more than two years to complete because we wanted it to be of world standard and we are pleased that we achieved that. We are excited about commissioning this, and we look to doing more for the Nigerian real estate sector in the near future”, he noted.

Absence of forensic investigative auditing portends danger to Nigeria financial system – CIFIAN CYNTHIA EGBOBOH, Abuja

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L-R: Moses Arigu, commissioner, consumer affairs, Nigerian Electricity Regulatory Commission (NERC); Ahmed Abdu, representing the minister of Power, Works and Housing; James Momoh, chairman, NERC, and Ibiam Oguejiofo, representing the minister of Science and Technology, during a workshop on Minimum Specification of Nigerian Content and Requirement for Labor in the Power Sector and exhibition of Local Products for Nigerian Electricity Supply Industry in Abuja.

Pic by Tunde Adeniyi

Nimet forecasts below normal rainfall in 2019 ... as Bello urges Abuja farmers to plan with data STELLA ENENCHE & JAMES KWEN, Abuja

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he Nigerian Meteorological Agency (NiMet) has predicted that most parts of the country would experience below normal rainfall in 2019.

NiMet 2019 Seasonal Rainfall Prediction (SRP) forecast indicates that, the rains are expected to start late, especially in the northern parts of the country while the south-eastern zone as well as the coastal areas will experience normal onset of the rains.

According to the Agency, while most of the Northern States will experience earlier than normal end growing season, shorter length of the growing season is predicted for most parts of the country.

Hadi Sirika, Minister of Aviation while unveiling the 2019

Seasonal Rainfall Prediction in Abuja said agricultural yields would increase by 30 percent if the information contained in the SRP is taken seriously, and disasters recorded by the country could reduce by 10 percent if relevant agencies take full advantage of the prediction.

“The rains are expected to start late especially in the northern parts of the country while the southeastern zone as well as the Coastal areas will experience normal onset of the rains. While most of the Northern States will experience earlier than normal end growing season. Shorter length of the growing season is predicted for most parts of the country”, Sirika said.

He warned that, “dry spells during the rainy season will be more frequent and severe (10-18 days) in some parts of the extreme

North around June and July, while the ‘Little Dry Season’ or (August break) in parts of the South is expected to be pronounced.

“These are risk factors for farmers in the affected areas and has to be carefully and scientifically managed. It is necessary to state that the expected below normal- normal rainfall in parts of the Country does not rule out the possibility of isolated flash floods due to high intensity rainfall at the peak of the season, especially in places that are naturally prone to flooding.

“It is also important to note that in every season, dry spells occur and in certain cases, it leads to crop losses. In this regard, i wish to urge our farmers and other stakeholders to get in touch with NiMet to access Meteorological advisories and updates within the growing season”, Sirika advised.

he Chartered institute of Forensic and investigative auditors of Nigeria (CIFIAN) has stated that the absence of forensic investigative auditing portends great danger to Nigeria financial system.

Victoria Enape, President CIFIAN who disclosed this in Abuja noted that criminal offences in Nigeria now involve the use of digital technologies which calls for the need for a forensic and investigative auditing which has to do with the use of science and technology for fraud prevention and detection.

She said “the absence of the appropriate legal framework for the regulation of forensic and investigative auditing practice in Nigeria portends great danger to the integrity and safety of the Nigerian system, the first noticeable consequence of such a lacuna is that Nigeria current spends hundreds f million of her scarce foreign exchange to hire forensic experts to investigate corporate fraud” Enape explained that the CIFIAN as well as other professions to entrench excellence, proficiency, discipline and specialization and ensure best practice among practitioners as against the proliferation as alleged by opponents of the bill.

According to her, the proposed CIFIAN bill are forensic analysis of financial statements to eliminate material misstatement, whether

caused by error or fraud and preventing assets misapplication scam; cyber crimes, global antifraud and corruption compliance and enforcement.

“CIFIAN is coming to fill a huge vacuum in its proposed area of operation, the absence of which Nigeria will continue to spend her scarce foreign exchange to hire expatriate to do forensic auditing in Nigeria, this is an era of technology and we must key into it in order to compete in the global market”.

“We wish to state that the primary domain of forensic and investigative auditing is to work within the investigative processed form the scene of fraud to the curt, providing information and evidence for administration of justice and to ensure that the courts are presented with the best evidence and reliable witnesses”, she added.

She further added that CIFIAN bill is necessary to provide the legal framework for the registration, training, regulation and certification of practitioners in the field of forensic and investigative auditing in line with global best practices.

Andrew Gandu, member of CIFIAN Pro-tem council, said that the absence of the legal framework for the regulation of forensic and investigative auditing practice in Nigeria portends great danger to the integrity and safety of the Nigeria financial system adding that it is worth noting that Nigeria spends hundreds of millions to hire forensic expert to investigate corporate fraud.

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Monday 28 January 2019

Live @ the Stock exchange Prices for Securities Traded as of Friday 25 January 2019 Company

Symbol

Deals

Current Price

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 188,031.82 6.50 8.33 429 60,506,128 UNITED BANK FOR AFRICA PLC 263,335.54 7.70 6.21 181 6,993,193 ZENITH BANK PLC 722,119.36 23.00 3.84 402 35,708,155 1,012 103,207,476 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 274,598.99 7.65 0.66 235 64,621,009 235 64,621,009 1,247 167,828,485 BUILDING MATERIALS DANGOTE CEMENT PLC 3,305,858.44 194.00 1.04 57 421,671 LAFARGE AFRICA PLC. 108,417.85 12.50 - 56 744,491 113 1,166,162 113 1,166,162 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 317,760.06 540.00 - 10 4,035 10 4,035 10 4,035 1,370 168,998,682 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 15,876.20 5.95 - 3 7,500 3 7,500 3 7,500 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 3 7,500 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 450 78,220.62 82.00 - 4 6,400 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 8 32,213 13 39,063 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,590.00 0.53 6.00 11 251,135 11 251,135 24 290,198 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 0 0 186.79 0.48 - 2 1,120 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 52,842.39 1.30 3.17 269 36,620,498 24,923.22 8.65 0.58 53 630,446 U A C N PLC. 324 37,252,064 324 37,252,064 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,960.00 28.00 - 18 106,065 ROADS NIG PLC. 165.00 6.60 - 0 0 18 106,065 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,131.45 1.59 -3.64 14 180,164 14 180,164 32 286,229 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,310.14 1.70 6.92 4 108,984 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 155,517.18 71.00 - 54 226,974 INTERNATIONAL BREWERIES PLC. 260,024.82 30.25 - 12 74,520 NIGERIAN BREW. PLC. 638,952.47 79.90 - 40 225,278 110 635,756 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 32,500.00 6.50 -1.54 46 1,061,741 DANGOTE SUGAR REFINERY PLC 174,000.00 14.50 - 29 99,191 FLOUR MILLS NIG. PLC. 79,957.40 19.50 -0.51 106 3,084,475 HONEYWELL FLOUR MILL PLC 10,467.86 1.32 2.33 38 2,445,320 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 703.89 3.95 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,689.89 18.00 - 19 48,067 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 238 6,738,794 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 - 10 184,816 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 29 36,305 39 221,121 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,680.24 4.49 - 18 180,567 18 180,567 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 44,866.39 11.30 -4.64 36 289,892 UNILEVER NIGERIA PLC. 209,979.95 36.55 -1.22 62 1,178,035 98 1,467,927 503 9,244,165 BANKING DIAMOND BANK PLC 53,500.50 2.31 10.00 230 89,759,268 ECOBANK TRANSNATIONAL INCORPORATED 275,243.27 15.00 6.38 28 544,343 FIDELITY BANK PLC 72,436.99 2.50 9.17 181 19,470,772 GUARANTY TRUST BANK PLC. 1,015,375.68 34.50 2.68 197 18,746,049 JAIZ BANK PLC 15,910.69 0.54 1.89 27 3,813,379 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 65,066.34 2.26 4.63 26 1,725,204 UNION BANK NIG.PLC. 179,092.63 6.15 - 14 34,241 UNITY BANK PLC 10,871.08 0.93 3.33 9 665,126 WEMA BANK PLC. 27,002.13 0.70 9.38 74 12,181,314 786 146,939,696 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,920.45 0.71 7.58 19 1,375,750 AXAMANSARD INSURANCE PLC 20,475.00 1.95 -2.50 10 195,508 CONSOLIDATED HALLMARK INSURANCE PLC 2,450.00 0.35 -7.89 3 109,020 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,093.20 0.21 - 1 9,000 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GUINEA INSURANCE PLC. 1,412.20 0.23 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,270.26 0.31 - 6 697,450 LAW UNION AND ROCK INS. PLC. 2,148.17 0.50 - 2 60,000 LINKAGE ASSURANCE PLC 5,040.00 0.63 1.61 8 239,155 MUTUAL BENEFITS ASSURANCE PLC. 1,600.00 0.20 - 7 156,100 NEM INSURANCE PLC 12,620.40 2.39 - 20 324,016 NIGER INSURANCE PLC 2,012.26 0.26 8.33 3 105,225 PRESTIGE ASSURANCE PLC 2,798.93 0.52 - 2 50,000 REGENCY ASSURANCE PLC 1,467.13 0.22 4.76 9 1,115,498 SOVEREIGN TRUST INSURANCE PLC 1,751.57 0.21 5.00 11 1,588,945 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 5,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 516.46 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,328.00 0.24 - 3 501,000 WAPIC INSURANCE PLC 5,353.10 0.40 - 19 54,524 124 6,586,191 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,338.49 1.46 -7.59 11 204,455 11 204,455 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,116.00 0.98 - 1 4,800 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 3 5,050,000 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0

Company

Symbol

Deals

Current Price

Trades

Volume

4 5,054,800 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,400.00 4.20 - 38 675,669 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 - 18 263,777 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 42,575.83 2.15 9.69 164 29,824,872 ROYAL EXCHANGE PLC. 1,595.06 0.31 - 15 500,612 481,305.99 47.00 - 19 38,229 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 19,560.00 3.26 4.15 87 2,840,575 341 34,143,734 1,266 192,928,876 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 959.35 0.27 - 2 24,542 2 24,542 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,050.00 4.70 - 4 1,870 GLAXO SMITHKLINE CONSUMER NIG. PLC. 14,350.52 12.00 - 20 201,137 4,226.83 2.45 2.51 14 199,074 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,329.41 0.70 - 5 95,000 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 43 497,081 45 521,623 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 381.11 0.77 - 0 0 TRIPPLE GEE AND COMPANY PLC. 0 0 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 3 60,100 E-TRANZACT INTERNATIONAL PLC 13,650.00 3.25 - 0 0 3 60,100 3 60,100 BUILDING MATERIALS BERGER PAINTS PLC 2,246.13 7.75 - 3 1,849 CAP PLC 22,050.00 31.50 - 2 6,389 315,444.02 24.00 - 33 177,279 CEMENT CO. OF NORTH.NIG. PLC FIRST ALUMINIUM NIGERIA PLC 738.63 0.35 - 0 0 MEYER PLC. 313.43 0.59 - 1 250 1,999.41 2.52 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 39 185,767 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 3,170.38 1.80 - 1 25,652 CUTIX PLC. 1 25,652 PACKAGING/CONTAINERS BETA GLASS PLC. 27,498.46 55.00 - 21 203,601 GREIF NIGERIA PLC 388.02 9.10 - 0 0 21 203,601 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 61 415,020 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 100 1 100 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 1 100 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 11 1,616,474 11 1,616,474 INTEGRATED OIL AND GAS SERVICES OANDO PLC 60,292.35 4.85 2.11 97 1,552,335 97 1,552,335 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 30 12,589 CONOIL PLC 16,134.39 23.25 - 23 48,121 ETERNA PLC. 5,803.44 4.45 1.14 36 746,411 FORTE OIL PLC. 38,423.19 29.50 - 40 135,066 MRS OIL NIGERIA PLC. 7,055.81 23.15 - 0 0 TOTAL NIGERIA PLC. 72,827.43 214.50 10.00 12 14,354 141 956,541 249 4,125,350

ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,038.70 1.85 - 1 100 1 100 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 1 2,150 1 2,150 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,947.48 5.00 4.17 8 229,144 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 1 2,750 9 231,894 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,492.38 1.68 0.60 5 199,400 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 46,362.46 6.10 - 0 0 5 199,400 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0 LEARN AFRICA PLC 1,026.03 1.33 - 6 140,028 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 862.82 2.00 - 0 0 6 140,028 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 480.73 0.29 - 3 61,000 3 61,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 852.12 3.60 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0 TRANSPORT-RELATED SERVICES GLOBAL SPECTRUM ENERGY SERVICES PLC 4,600.00 5.75 - 0 0 4,533.10 7.15 - 1 200 NEWREST ASL NIGERIA PLC NIGERIAN AVIATION HANDLING COMPANY PLC 5,603.55 3.45 - 17 589,364 18 589,564 SUPPORT AND LOGISTICS C & I LEASING PLC. 3,654.44 9.04 - 16 151,475 CAVERTON OFFSHORE SUPPORT GRP PLC 7,806.69 2.33 9.91 33 1,674,401 49 1,825,876 92 3,050,012 2,600 248,173,737

Monday 28 January 2019

BUSINESS DAY

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BUSINESS DAY

Monday 28 January 2019

Monday 28 January 2019

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Absa’s chief denies plans to acquire Nigerian banks, outlines plan to enter slowly SEGUN ADAMS

M

aria Ramos, CEO of Absa Bank, South Afr ica’s third-biggest lender, has denied plans to acquire any Nigerian bank.

The South African bank, which had hitherto allowed speculations follow news of its proposed entry into the Nigerian banking space, laid the matter to rest on Thursday at the World Economic Forum in Davos, Switzerland.

“For us to be in the top three or four would mean us going out and acquiring a Nigerian business,” Ramos told Reuters. “The Nigerian banks are big and expensive and we wouldn’t be looking to do that.”

Despite describing Nigeria’s banking industry as “big and exciting,’’ the CEO explained that organic growth was its choice strategy for entering Nigeria as it doesn’t plan

on becoming a top lender.

Given Nigeria’s large unbanked population of about 60 million, according to the World Bank, the country’s banking industry has attracted newer competitions, most recently South Africa’s MTN which plans to enter in 2019 as a Payment System Bank.

Although the Nigerian market has proven a bit challenging for foreign firms in recent times, with MTN’s vs.

CBN $8.13 billion capital repatriation brouhaha as a case in point, Nigeria’s banking sector has remained attractive to foreign investors.

Absa’s interest in Nigeria is part of its strategy to double its share of banking revenue across Africa as the Group made known its on-going campaign to participate in another African economy with equally promising investments opportunity.

Concerning the unnamed African market which the group plans on

entering alongside Nigeria, Ramos also emphasised a similar growth strategy.

“To go and acquire something has to make a huge amount of sense, it has to be value-accretive,” she said.

Absa’s presence across the continent has grown in recent times; following the takeover of Barclay Africa group in 2018 which had presence in a good number of African countries, including a representative office in Nigeria.

Barclay’s decision to leave Africa which was informed by the changes in international regulations in the aftermath of the 2008 global financial crisis presented Absa Group the opportunity to extend its reach beyond South Africa, and indeed Africa as it also launched an office in the United Kingdom late last year.

Following the take-over of Barclay group, Marie Jamieson, head of marketing and communications Africa regions, briefed jour-

nalists across Africa on the Group’s ambition over the coming years. ‘’Our new brand is an expression of the new identity we are creating as an entrepreneurial, digitally led bank with deep knowledge of African markets and with global scalability.’’

Currently, the Group is set to complete roll-out of new Absa brand design in SA in 2019 while it plans to complete rebranding of Barclays subsidiaries in Africa in 2020.

Absa Group Limited is one of Africa’s largest diversified financial services groups with a presence in 12 countries across the continent. The group owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, the Seychelles, South Africa (Absa Bank), Tanzania (Barclays Bank in Tanzania and National Bank of Commerce), Uganda and Zambia as well as representative offices in Namibia and Nigeria.

L-R: Toye Adegboye, operator of Ilupeju Vitafoam Comfort Centre; Bamidele Makanjuola, chairman, Vitafoam Nigeria plc; Feyisayo Abiru, managing director, Home and You.; Taiwo Adeniyi, group managing director/CEO, Vitafoam Nigeria plc, and Sola Owoade, commercial director, at the launch of Vitafoam’s Eight Innovative Products in Lagos.

CBN fresh capital rules to mount pressure on banks threatened with bad debts ENDURANCE OKAFOR & DAVID IBIDAPO

N

igeria deposit money banks (DMBs) with higher levels of bad debts are set to experience “heap coals of fire” as the Central Bank of Nigeria revealed earlier yesterday plans to introduced fresh capital rules in the country’s banking sector.

According to information retrieved from the Bloomberg terminals, the CBN plans to introduce fresh capital rules in the second quarter of 2019. It is believed this will heap pressure on lenders already weighed down by bad loans.

In a mail response to Bloomberg the CBN explained that: “The new requirements will be stricter in

terms of what funding qualifies as capital and will also require lenders to create “capital conservation” and “counter-cyclical” buffers.”

The CBN in 2016 delayed the enactment of new capital rules on the banking sector in the bid to avoid the possibility of a recession.

According to a report by the National Bureau of statistics (NBS) for the third quarter of 2018, non-performing loans to total gross loans (NPL/TGL) in the banking industry stood at 14.16 percent, 0.64 percent lower than 14.8 percent recorded in December 2017.

Nevertheless, compared to other African countries, aggregate NPL/TGL of Nigerian banks is the second highest in Nigeria, lagging Malawi. Despite economic

woes experienced in Argentina, non-performing loan accounts for only 2 percent of total gross loans.

The move by the CBN is in a bid to shield the Nigeria banks “against shocks emanating locally and from abroad” by increasing the level of regulatory capital and the quality of the assets, as expatiated by the mail.

The merger between Access Bank and Diamond Bank gives an indication of the struggling nature of Tier 2 and Tier 3 banks to raise capital.

According to Bloomberg, “The regulator is aligning itself with a global accord known as Basel III three years after a contraction in Nigeria’s economy spurred authorities to delay the implementation of tougher capital rules.”

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BUSINESS DAY

Strategic Investment of subsidy funds in infrastructure, social transfer will develop Nigeria, NESA BUNMI BAILEY

D

evelopment of a country is a painstaking process that can only be achieved with strategic investment in critical infrastructure and social security, members of the National Economics Students Association (NESA) said.

While the students all agreed that investment in fuel subsidy amounts to wastage and unbalanced distribution of wealth in the country, they disagree on the avenues for reinvestment of the subsidy funds.

The Fuel Subsidy Debate themed Reinvesting Nigeria’s Fuel Subsidy: Pro-poor Growth Versus Social Protection Programmes was organized by The Peter Bauer Foundation (aka The Liberal Forum) at the Freedom Park, Lagos Island.

NESA Unilag, represented by Padonu Lois and Ibrahim Lasisi maintained that the subsidy fund would find better use if it was invested in developing infrastructure across the country.

“Removal of subsidy would reduce Nigeria’s debts profile. Infrastructure, health and education are key indicators for development in a country, so investing in these sectors would only make for development in the country,” Padonu said.

Lasisi, who won the best speaker at the event linked investment in infrastructure to poverty eradication and prevention of accidents on the country’s roads.

He said: “By diverting subsidy funds into road and other infrastructure repairs, accidents would be reduced on the road.”

Linking his points to the mass exodus of health care workers in the country, Lasisi added, “Also, Nigerian doctors want to stay. If the

subsidy fund is used to improve the health sector, the 1500 doctors graduating annually will stay in the country.” He further asked, “Tell me just one country that has escaped poverty by priotising social transfers over investment in infrastructure!”

Advancing their points, NESA Unilorin, represented

by Adefowope Iyabo Rahmat and Iortsor Ternenge Nicholas held that social transfers to the poorest members of the population would stimulate the economy in a very positive direction.

“Malawi invested on social transfers to rural women practicing agriculture and reaped about 58% growth,” Rahmat said.

“Social transfer also positively influences happiness index of a country,” Iortsor added.

Announcing Unilag as the winner of the debate, Founder of Joy, inc and one of the Judges at the event, Chude Jidenowo, thanked the The Liberal Forum aka The Peter Bauer Foundation for organising the debate with a timely topic. He applauded all the speakers for being passionate in advancing their points.

Also speaking at the event, Director of Research and Advocacy, Lagos Chambers of Commerce and Industry, Vincent Nwani, commended the speakers and organisers of the event, promising the best debater, an automatic employment in LCCI in addition to the sixweek internship in a Policy Consulting Firm awarded to the winning team. Nwanni also promised LCCI’s support for subsequent debates

by The Liberal Forum.

Others present at the competition were Suraj Oyewale, Senior Tax Accountant, Seven Energy and Kunle Ajiboye, International compliance lawyer.

I-invest excites retail investors, hits 70,000+ downloads

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frica’s first-ever investment mobile application (app), which allows users to purchase Treasury Bills (T-Bills) directly from their smartphones has recorded a combined figure of more than 70,000 downloads on Apple App Store and Google Play Store in less than 10 months of its entry into the market.

The app, known as i-Invest, was swiftly embraced by investors who had been yearning for a fast and convenient means to access investment products in a secure manner using technology.

The fast pace of innovation in the FinTech space is indeed helping to make life easy for the customer. Today, millions of customers

are able to perform most of their banking transactions from the comfort of their homes.

A 36 years old teacher, Remi Oduntan, who could not hide his excitement at the discovery of the i-invest app last month said, “I have been conducting most, if not all, of my banking transactions through the app that I downloaded on my android phone many years ago. The only reason why I still visit the banking hall occasionally is in respect of my investments in treasury bills.

“You can, therefore, imagine my surprise upon learning that I can also engage in my favourite form of investment in treasury bills from the convenience of my home or from anywhere else as soon as the app is

downloaded on my smartphone.

So, with the i-invest app, I guess visits to the banking hall by me will now be nearly non-existent except for the purpose of renewing debit cards.”

The i-invest app, which is supported on both Android and iOS platforms, aims to encourage users to build a savings and investment culture. It provides access to an array of T-bill investments that assists investors to match their investment maturities to their need.

Developed by Parthian Partners, a pan-African inter-brokerage services firm, in partnership with Sterling Bank plc, the i-invest app provides a level playing ground for investors regardless of status or category.

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Monday 28 January 2019

Nigeria to embark on another major yam export

Nigeria oil production to ... partners Connect Rail Logistics to forestall further rejection grow by 6.3% in 2019 - Fitch CYNTHIA EGBOBOH, Abuja

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igeria is about to embark on another major yam export and there are now plans to partner a wholly indigenous rail haulage and logistics company - Connecy Rail Services Limited - for the shipment of product to forestall further rejection.

The government had hoped to earn as much as $8 billion from exportation of 5,760 tons of yams annually over the next four years.

However, the 72 tons of yam that left the shores of Nigeria through Apapa Port to United States in June 2017 were rejected as they were found to be rotten upon arrival in the US. BusinessDay learns that plans are being finalised for a second flag off of the yam export by this January end, and efforts are being made to ensure a smoother expor-

tation process contrary to the negative outcomes of the June 2017 flag off.

Simon Irtwange, president, National Association of Yam Farmers, Processors and Marketers, confirmed the ongoing arrangements and the decision of the stakeholders and the Federal Government to seek partnership with the Connect Rail Logistic Company to ensure faster transportation of the yams to other countries.

He also mentioned that the plan was to make the Ikorodu the hub for agricultural trade, where traders bring their produce, package and transport to their various destinations without delay.

“The Connect Rail will transport the yams from Apapa to avoid the Apapa gridlock, which often make our produce get rotten on the way as a result of the delays on the road,” he said.

The new strategy is in line

with the government ease of doing business, and reduces the cost and losses made in the past export, Irtwange explained.

He however stressed the urgent need to repeal the 1989 Export Prohibition Act, stressing that it affected the responsiveness and patronage from the target market.

As contained in the Export Prohibition Act, “Prohibition of exportation of certain goods, notwithstanding anything contained in the Customs Excise Tariff, (Consolidation) Act or in any Act or other enactment (including any statutory instrument or order), the goods specified in the Schedule to this Act shall be absolutely prohibited from being exported out of Nigeria.

“The exportation of which is absolutely prohibited, absolute prohibition (Trade) include Beans, Cassava tuber, Maize, Rice, Yam tuber, All products or derivatives of mentioned items, All import-

ed food items”.

According to the Act, any person who takes, causes to be taken, induces any other person to take or attempts to take out of Nigeria any of the goods specified in the Schedule to this Act shall be guilty of an offence and liable on conviction to imprisonment for life.

In addition to the penalty specified in subsection (1) of this section, the goods, as well as any vehicle, vessel, aircraft or other thing whatsoever used in connection with the exportation; and all the assets, movable or immovable, including motor vehicles, of any person convicted of the offence shall be forfeited to the Federal Government.

“The 1989 prohibition act has to be repealed urgently, we are doing this export for now because there is a policy that supports it but it is not supposed to be so, it is contradictory, it places the government against itself”.

L-R: Professor Ehiedu Iweriebor, Hunters College, City University, New York (panellist); Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (guest speaker); Abubakar Lawal, group managing director, GTI Capital Group; Emmanuel Moore Abolo, chief executive thinker, The Economic Thinktank Centre Limited (panellist), and Olu Abayomi Sanya, managing director, Goldbanc Management Associates Limited (panellist), at the 10th monthly edition of business a.m.GTI Finance and Investment Dialogue (FID) in Lagos.

DIPO OLADEHINDE

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lobal rating agency, Fitch Ratings, has forecasted that Nigeria’s crude oil output will grow by 6.3 percent in 2019, thanks to increasing oil production from Total’s Egina, while gas production is expected to rise by 7.6 percent.

Fitch Solutions research note explains that Nigeria oil production growth is expected to be “limited” after 2019 due to lack of new projects.

“Production growth in 2022 and 2023 is contingent on the sanction of investment in the Bonga southwest field due this year,” Fitch says.

Recall, Shell is currently operating on Bonga Southwest and Aparo deepwater development project, which was scheduled to start producing 225,000 barrels of oil and 15 million standard cubic feet of gas per day by 2020 but is yet to scale through Final Investment Decision (FID).

Also, the New Yorkbased agency forecasted that “Utilisation rate among the four refineries will be just 18 percent this year,” despite incurring huge maintenance cost and failing to address the lingering issue of refined importation of petroleum products.

Nigeria has four refineries, two in Port Harcourt with a combined installed capacity of 210,000 barrels per stream day (bpsd), and one each in Kaduna (KRPC), with an installed capacity of 110,000 bpsd and Warri (WRPC), with an installed capacity of 125,000 bpsd, making a total of 445,000 barrels per day (bpd). Despite the huge resources budgeted for Turn Around Maintenance, none of Nigeria’s four refineries

work up to 50 percent of their capacity.

Concerning next month’s general election, Fitch is predicting a likely win by presidential candidate of Peoples Democratic Party (PDP) former Vice president Atiku Abubakar, which is expected to bring a “wave of positive sentiment” in oil industry.

“We expect key legislation blocked by the current president to pass into law, including the petroleum industry bills in their multiple forms,” Fitch said.”

“The plan will face headwinds from existing beneficiaries and lack of a clear economic upside.”

Throughout his campaign journey round the country, Atiku Abubakar had reiterated his commitment to privatise the Nigerian National Petroleum Corporation (NNPC) even if vested interests in the opaque state-owned oil company try to take his life.

“I swear, I will privatise NNPC even if they kill me,” Atiku said at a meeting with business leaders in Lagos.

Some 73 candidates are vying for a chance to lead the country for the next four years, although it could be a fierce battle between two dominant candidates- incumbent President Muhamadu Buhari of the All Progressives Congress (APC) and former vicepresident, Atiku Abubakar.

Buhari, 75, says he will continue to fight corruption and expand his socialist intervention programmes, if re-elected.

Atiku, 72, says he will focus on key economic reforms from ending a system of multiple exchange rates to selling part of opaque state oil company, NNPC, in a bid to revive an economy still reeling from the 2014 crash in crude prices.

Guinness Nigeria unveils scheme to empower small-holder farmers NIMASA to unveil Nigeria maritime industry forecast for 2019 ONYINYE NWACHUKWU, Abuja

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uinness Nigeria plc has launched its agriculture scheme tagged “Grow with Nigeria” aims at empowering the country’s very many small-holder famers and also help the Federal government’s effort to drive agricultural development and economic diversification.

Baker Magunda, managing director, Guinness Nigeria, said the scheme was to further demonstrate commitment to the Federal Government’s policy on diversification and local content, the growth of the agricultural value chain as well as that of the small-holder

farmers who form an integral part of our business.

Magunda said over the last 20 years, Guinness Nigeria had consistently sourced all its core ingredients such as sorghum and malt extract locally through the various local raw material chains, but the launch was to further take the patronage to a higher dimension.

“Currently, our local content sourcing is 75 percent,” Magunda said, “and we plan to increase this significantly within the next couple of years.”

He said these partnerships had enabled them to develop an ecosystem of private sector players creating value that impact small-

holder farmers directly.

He said in 2018, Guinness Nigeria partnered 5,121 smallholder farmers across eight states of Nigeria. These farmers were provided access to finance, certified seeds, unadulterated inputs, mechanisation, training on good agronomic practice and basic book keeping, supplier credit process, extension support and access to market.

He said with this intervention, Guinness Nigeria was able to leverage on the collaboration as provided by the respective partners in the ecosystem to improve the livelihoods of these farmers by moving them from subsistence level to full economic inclusion.

AMAKA ANAGOR-EWUZIE

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etermined to boost investor confidence in Nigeria’s maritime sector, the Nigerian Maritime Administration and Safety Agency (NIMASA) has perfected plans to unveil the 2019-2020 Nigerian Maritime Industry Forecast.

Dakuku Peterside, directorgeneral of NIMASA, who said the Federal Government was determined to diversify the economy, added that the maritime sector remained a viable alternative to achieving this.

Peterside said the forecast, which is the second in the series, helped to keep stakeholders and investors abreast of trends in the nation’s maritime industry to

serve as a guide.

“The maritime industry is a focal part of Nigerian economy, and the Federal Government is determined to explore all opportunities in the sector for economic growth and benefits. To achieve this, there is need to collaborate with our stakeholders and make them aware of global trends in the maritime sector in order to assist them in making informed decisions on business and investment opportunities in the sector,” Peterside said.

He assured stakeholders of NIMASA’s commitment towards its mandate of promoting and regulating shipping in the industry, and urged them to join hands with NIMASA in the effort to realise a robust

maritime sector that could compete favourably with its counterparts in other maritime climes.

“The ultimate goal is enable the utilisation of the opportunities that abound in the maritime sector in line with the concept of the blue economy, an emerging global concept that emphasises better exploitation of the ocean resources for the preservation of the marine environment,” he said.

Recall that at the first edition of the forecast, the Nigerian maritime industry was projected to grow by 2.5 – 5 percent within the period 2018-2019, with a projected increase in demand for maritime services in Nigeria during the period.

Monday 28 January 2019

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Entrepreneurs’ group positive about growth opportunities in Nigeria … as members investment cross $3m mark MODESTUS ANAESORONYE

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agos chapter of E n t r e p r e n e u r s’ Organisation (EO), a platform of business owners with a net worth of at least $1 million globally, and no fewer than 45 members in Lagos and Abuja is positive about growth opportunities in the Nigerian economy.

EO members’ investments is on the rise as some of the 45 members have done up to $3 million and above in key sectors of the economy, including telecoms, information and communications technology (ICT), oil and gas, agriculture, real estate and retails.

The EO is a global, peerto-peer network of more than 13,000 influential business owners with 185 chapters in 58 countries. Founded in 1987, EO is the catalyst that enables leading entrepreneurs to learn and grow, leading to greater success in business and beyond.

The disclosure was made when the Lagos chapter held a reception in honour of its global executives who vis-

ited Nigeria.

Catherine Buckingham, manager, Global Membership Development of EO, said at the event that it had been very rewarding networking with entrepreneur members in Africa and other parts of the world, as they learn a lot from one another.

The organisation hopes to reach 18,000 members by the year 2020 from its 13,000 membership as of the end of 2018, she said.

She stated that the group also had a Global Students Entrepreneur Award, which helps to nurture and build enterprises of students whose ideas are marketable, stressing that the global body pegged the age limit of members at 50 years but had now lifted the age restriction to accommodate people of all ages, provided such members had businesses worth at least $1 million.

Also speaking at the event, Sunday Gbenjo, Lagos president of EO, said the organisation was eyeing expansion in other cities of Nigeria like Kano, Enugu, Port Harcourt, and other major commercial hubs.

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Nigerian Situation Room asks President Buhari to reverse Onnoghen’s suspension VINCENT NWANMA

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igeria Civil Society Situation Room has asked President Muhammadu Buhari to reverse the suspension of the Chief Justice of Nigeria, Walter Onnoghen, and his replacement with an acting Chief Justice.

Noting that the action represented a “major threat to Nigeria’s democracy and a descent into Constitutional anarchy,” the organisation in a statement on its website and issued by its Convener, Clement Nwankwo, said the President’s action was in violation of the Constitutional procedures for the removal of the Chief Justice of Nigeria as specified in section 292 of the Nigerian Constitution.

“The Constitution of Nigeria is explicit in stating that the Chief Justice of Nigeria may only be removed from Office upon a motion supported by two-thirds of members of the Nigeria Senate on specified grounds,” it said.

It noted that in claiming to remove the Chief Justice of Nigeria from Office, the president breached the Constitution and therefore acted with “impunity and disdain

NFIU tasks ABCON on engagement of BDCs on anti-money laundering reporting HOPE MOSES-ASHIKE

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igeria Financial Intelligence Unit (NFIU) has challenged the Association of Bureaux De Change Operators of Nigeria (ABCON) on continuous training of members on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reporting.

This is coming as NFIU in collaboration with ABCON has concluded a four-day joint nation-wide training/sensitisation programme on AML/CFT for Bureaux de Change (BDC) operators.

The training, which has been ongoing since December 11, 2018, focused on the obligation of registering and filling reports on the NFIU

goAML -Anti-Money Laundering portal. A session was held January 5, 2019, in Kano and another session held on January 22, 2019 in Abuja among others.

As part of the NFIU/ ABCON partnership, ABCON has taken the trainthe-trainers training of the NFIU to the six geopolitical zones of the country in order to strengthen capacity for over 4,000 BDC operators nationwide.

Speaking with financial journalists at the end of the training, Aminu Gwadabe, ABCON president, said the anti-money laundering training was intended to familiarise BDC operators with the process of money laundering — the criminal business used to disguise the true origin and owner-

ship of illegal cash — and the laws that make it a crime.

He said money laundering and terrorist financing pose not only a threat, but were enormous threats and challenges to the economy, security, and social life in Nigeria, the region and globally.

In a statement by NFIU commending ABCON for the training, Ibrahim Pindar, said: “We wish to congratulate the ABCON on the attendance recorded on the concluded training of BDC operators on the key AntiMoney Laundering (AML) and Countering the Financing of Terrorism (CFT) obligation of registering and filling reports on the goAML -Anti-Money Laundering portal.”

Arms proliferation: Ag IGP calls for voluntary surrender of weapons INNOCENT ODOH, Abuja

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cting Inspector General of Police, Mohammed Adamu, has called for voluntary surrender of illicit weapons ahead of the 2019 general elections.

Force Public Relations Officer, Frank Mba, said in a statement on Sunday that the IGP made the call consequent upon intelligence indicating the presence of huge quantity of arms in unlawful possession of some Nigerians, the

desperation of some citizens to acquire more arms as well as the continued proliferation of illicit weapons in the polity, with the attendant negative and security implications.

“The IGP has called on all Nigerians currently in unlawful possession of such weapons to immediately ensure a voluntary return of the weapons to Police Station or Public Armoury nearest to them.

“The Inspector General of Police has also, with immediate effect, placed an embargo on the issuance of New Licences for designated arms

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throughout the country,” the statement said.

The IGP also advised Nigerians to take advantage of the “voluntary arms return window” and do the right thing, as there will be dire consequences for defaulters and those who fail to heed the call.

Meanwhile, the Force has perfected plans to embark on a massive, nationwide Joint Arms Mopping up Operations. The operation, which will be intelligent driven and target oriented, is designed to retrieve all illicit weapons in circulation.

for the rule of law, due process and constitutionality.”

Besides reversing the suspension of Onneghen, the Situation Room asked the president to “refrain from interfering with the independence of the judiciary as clearly recognized by the Nigerian Constitution, especially with the general elections scheduled to hold in about three weeks.”

It also called on the National Assembly to urgently reconvene in an emergency session and provide needed legislative response to this what it described as “blatant challenge to our Constitution and democracy.”

It would be recalled that the Senate has adjourned plenary to February 19, three days after the President Election.

The Situation Room is made up of Civil Society Organisations (CSOs) working in support of credible and transparent elections in Nigeria and includes such groups as Policy and Legal Advocacy Centre (PLAC), CLEEN Foundation, Action Aid Nigeria, Centre for Democracy and Development (CDD), Enough is Enough Nigeria, WANGONET, CITAD, and Partners for Electoral Reform.

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CIPM, Rome Business School partner on human capital development in Nigeria SEYI JOHN SALAU

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ome Business School (RBS) and Chartered Institute of Personnel Management of Nigeria (CIPM) recently signed a memorandum of understanding (MoU) to deepen human capital and resource development, and to further the course of Human Resources (HR) practice in Nigeria.

The agreement will streamline the degree qualification of RBS and CIPM certification into one, a move seen at bridging the knowledge gap in HR practice in Nigeria.

Akanazu Humphrey, the country manager, RBS in Nigeria, says the MoU is strategic and significant in the growth of RBS in Nigeria, based on both organisations mandate to build capacity.

Humphrey says RBS’s Masters in International Human Resources Management (IHRM) and its MBA need certification, saying it is best to partner the CIPM as a regulatory body for HR practice in Nigeria.

RBS currently runs a modular MBA, which allows student to specialise in one of the modules; for instance,

there is a specialisation in Human Resources Management (HRM). With these, those doing MBA specialise in HRM while those doing Masters will specialise in IHRM. “With the collaboration, RBS issues a degree while CIPM on the other hand will issue its certification; so they are coming out as rounded professionals,” Humphrey says.

According to Humphrey, the human resources space in Nigeria is still developing, hence the need for the partnership. “We are not just bringing the international aspect of human resources; we are bringing local content into it through CIPM. We understand the culture of employees and benchmark best practices with our international curriculum and the local content,” he states.

Ajibola Ponnle, registrar/CEO, CIPM, says RBS is recognised based on its aspiration, quality learning it provide coupled with its international ranking in business schools.

According to Ponnle, it is important for CIPM to ensure that it partners with the right institution that will promote its curriculum.

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BDCs seek CBN approval to be agents of IMTOs HOPE MOSES-ASHIKE

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L-R: Vice President Yemi Osinbajo; AbdulRahman AbdulRazaq, Kwara State APC gubernatorial candidate; President Mohammadu Buhari; Babajide Olusola Sanwo-Olu, APC gubernatorial candidate in Lagos State, and his counterparts in Ogun State, Dapo Abiodun, during a dinner for the APC gubernatorial candidates, at Aso Rock Villa, Abuja.......Friday

Merge Arik, Aero to establish national carrier, stakeholders advise FG IFEOMA OKEKE

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takeholders in the Nigerian aviation industry have advised the Federal Government to merge Arik Air and Aero Contractors to establish the impending national carrier.

This is so as it may cost the Assets Management Corporation of Nigeria (AMCON) about 30 years to recoup its debts, the stakeholders say.

Speaking over the weekend, John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, insisted that it would be difficult for AMCON to get investors to buy into Arik Air in its present state, saying government should rather merge the air-

line with Aero Contractors to form a national carrier.

It would be recalled that Arik Air was taken over from its original investors, led by Joseph Arumemi-Ikhide in February 2017, after alleged debts to financial institutions and other partners.

Ojikutu said for AMCON to offset the N300 billion debt from the airline, it should be making a net profit of N10 billion annually for 30 years, stressing that this would be difficult for the corporation to achieve, especially when the current management suspended its entire long-haul routes.

According to Ojikutu “I did say that if they need to offset the N300 billion debt from the airline, you must be making a net profit of N10bn annually in 30 years. It is going to be difficult.

“AMCON does not have the resources to run that airline especially when it suspended its international routes. With domestic operations alone, there is no way the airline can make that profit annually. The only way they can make headway is for the government to merge Aero and Arik and turn them to either national or flag carrier, then bring in foreign technical partners.

“You can’t run any airline at the moment in the country without foreign technical partners. Let the foreign technical partners buy about 30 to 40 percent of the shares, credible Nigerians to buy 20 percent and sell 30 percent to the public.

“The Federal and the State governments should not have anything to do with the airline, but if they must

have, they must have nothing more than 10 percent of shares because we want to have a national carrier.”

Ojikutu insisted that lack of financial discipline on the part of airline operators in the country would make it difficult for them to run an airline successfully.

Lukeman Animaseun, Industry expert and the former director of Engineering, Medview Airline, said that the major reason why AMCON took over Arik Air was to recover its money from the company, noting that because of the airline’s debt burden, no investor would be interested in the airline and if AMCON decided to manage the carrier, it would take it about 30 years to recover the money it invested in the airline, considering the airline’s turnover.

Buhari inaugurates CBN project at UNEC Enugu HOPE MOSES-ASHIKE

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resident Muhammadu Buhari on Thursday inaugurated a world-class Post-Graduate Centre of Excellence at the University of Nigeria, Enugu Campus (UNEC), constructed and donated by the Central Bank of Nigeria (CBN), which he lauded for making huge investments for the overall development of the country.

The Post-Graduate School project comprises a Faculty building and a 133room hostel, as well as a 500-seater auditorium, four lecture and four tutorial rooms, traditional and e-libraries, and a tele-presence room.

Speaking shortly before he unveiled the commemorative plaque and cut the

ceremonial tape to formally inaugurate the building, President Buhari said the construction of the project by the CBN had also underscored the Federal Government’s commitment to provide a conducive environment for learning at all levels of education.

The President said his administration placed premium on education to ensure, among other things, its affordability, stressing that education remained the bedrock of societal progress.

While stressing that the Federal Government would not rest on its oars in boosting the quality of education, he urged the CBN to go beyond providing physical infrastructure to the university to increasing partnership with the institution in terms of funding support.

Earlier in his welcome remarks, the Governor of the CBN, Godwin Emefiele disclosed that the aim of the Bank, being a knowledgebased and visionary institution, was to build human capacity for the financial system in particular and the economy in general.

He said the project was mainly to ensure that students at post-graduate levels in Economics, Accounting, Banking and Finance, Business Administration and Statistics study in a serene environment that would stimulate effective learning with a view to building human capacity for the financial services sub-sector.

He disclosed that the project, which was the product of a N10 billion Endowment Fund instituted in 2006 that has grown to over N23 bil-

lion, also aimed at checking brain drain as well a strain on the country’s foreign reserve used for funding educational pursuits abroad.

ureaux De Change (BDC) operators have called on the Central Bank of Nigeria (CBN) to implement provisions of its circular in 2014, by making BDCs direct agents of international money transfer operators (IMTOs) as obtained in other countries.

They also call for the restoration of its status as a selfregulatory organisation (SRO) in order to ensure effective coordination of the over 4,5000 BDCs across Nigeria.

The Association of Bureau De Change Operators of Nigeria (ABCON) led by Aminu Gwadabe as president, made this call in its Economic Review for the fourth quarter of 2018 (Q1’18) released last week, saying: “In as much as the regulatory bodies in Nigeria have realized the indispensable role that the BDC sub sector occupies in the stabilisation of the currency in Nigeria, the sector should be further strengthened and developed to achieve greater systemic efficiency.

“To this end, the professional training institute for dealers and operators being promoted by ABCON should be given appropriate support by the regulators and members to key into the project.

“The CBN should implement its circular of 2014 for making BDCs direct agents of international money transfer operators as obtained in other climes. “The CBN should revisit the suspension of ABCON as a self regulatory organisation for result oriented coordination of the over 4500 CBN licensed BDCs. “CBN should support ABCON to increase public awareness and public visit to naijabdcs.com, the Association’s live exchange rate platform, which contributed immensely to the price discovery, transparency in the foreign exchange market and has become reference point for source of credible exchange rate information.”

ABCON also calls on BDCs to embrace the cloud base au-

tomation of their operations initiated by the Association for internal reorganisation, efficiency, global competitiveness and volumes driven transactions.

It also charges BDCs to explore more sophisticated and dynamic marketing techniques in 2019 to track billions of foreign currencies floating within the economy and flowing into the “Black Market” thereby incubating capital flight and money laundering.

The ABCON also stresses the need to stabilise the exchange rate regime, noting: “The current structure encourages the economy comparatively to export and derive robust foreign reserve which is one of the major prerequisite for economic growth.”

Calling on the Federal Government to promote strong railway networks across the country to leverage regional connections and coordination to enhance Nigeria’s competitiveness, the ABCON notes: “Nigeria’s home market suffers from spatial fragmentation according to the analysis.

The domestic market is constrained by limited connective infrastructure thereby reducing producers and firms’ ability to reach wider markets.

“This lack of connectivity also dampens economic collaboration and cooperation among the country’s regions further hampering the prospects for poverty reduction. Thus during 2019 and beyond every effort must be marshalled to promote Strong Railway Networks to reduce pressure on the land road network in the nation.”

ABCON also calls on the Federal Government to address the incidences of insecurity nationwide and greater diversification of the economy, noting, “Solid minerals are currently being mismanaged and smuggled out the country denying the economy of its much needed support. Currently the growth projections were expected to come from the oil and gas sector given the increase in the price of crude oil which by projections is not expected to be stable in 2019.”

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Kamala Harris’s justice record in spotlight as she launches 2020 bid Democrat forced to defend record as California prosecutor in the face of attacks from left Courtney Weaver

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hen Kamala Harris announced her candidacy for US president this week, the senator from California was quick to highlight her long career in the justice system, which had propelled her to become the state’s first African-American and female attorney-general.

“I am a career prosecutor,” Ms Harris told ABC television. “My entire career has been focused on keeping people safe.” But as she shifts into full-on campaign mode, her record as California attorney-general and San Francisco district attorney is drawing new scrutiny.

Some progressive Democrats argue she did not go far enough in pushing for criminal justice reform, highlighting a challenge facing every Democratic presidential hopeful from the moderate wing of the party.

Debate is raging over how Democrats should run against President Donald Trump, but it is the party’s progressives who are in the ascendancy.

In the criminal justice community, Ms Harris has been praised for opposing the death penalty, as well as the Back On Track initiative she pioneered as San Francisco district attorney, which allowed first-time, non-violent offenders to purge their records.

Yet she also faced controversies during her tenure. In 2012, Ms Harris’s district attorney’s office was criticised for failing to tell defence attorneys that a police laboratory technician had allegedly been tampering with drug samples, resulting in hundreds of cases being dismissed.

She has also attracted scrutiny for

her decision not to prosecute Steven Mnuchin’s OneWest Bank for alleged foreclosure violations in 2013.

Mr Mnuchin, currently Mr Trump’s Treasury secretary, was among a group of investors who purchased the bank in 2009, and served as its chief executive and chairman.

Ms Harris is not the only Democratic presidential candidate to face questions over criminal justice. Joe Biden, the former vice-president who is also considering a White House bid, has attracted criticism for his support for tough-on-crime legislation passed under Bill Clinton in the 1990s, which was found to disproportionately affect African Americans.

Mr Biden recently declared he now “regrets” supporting the legislation.

The increased scrutiny points to the underlying dynamics of the 2020 race, as centrist candidates veer to the left to keep up with progressives such as Bernie Sanders and Elizabeth Warren and win over an increasingly left-leaning base of Democratic voters.

Thad Kousser, a political-science professor at the University of California San Diego, said the criticism of Ms Harris’s record from some corners of the party was a sign of how members were now judging candidates by a near-impossible standard.

“What she’s been criticised for is not disassembling the carceral state . . . The Democratic party is so far to the left they are asking people to have done things that would have put them on the far-left of politics [more than a decade ago],” Mr Kousser said.

He noted that Ms Harris’s portrayal of herself as a “law and order Democrat” could help her win over moderates and independents — a

Canada fires ambassador to China over Huawei comments Diplomat made a series of remarks that appeared sympathetic to detained Huawei CFO

Yuan Yang

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anada has fired its ambassador to China after he made a series of public remarks that appeared sympathetic to an executive from Chinese telecom giant Huawei who is currently detained in Canada.

Canadian Prime Minister Justin Trudeau said on Saturday he had asked ambassador John McCallum to resign, a day after the diplomat said it would be “great for Canada” if Washington dropped its request for the extradition of detained executive Meng Wanzhou, Huawei’s chief financial officer.

Mr McCallum made that comment after he had already been forced to apologise for several remarks on the case of Ms Meng. Ms Meng, the daughter of Huawei founder and former People’s Liberation Army officer Ren Zhengfei, is currently under house arrest in one of her Vancouver mansions, pending hearings that could see her sent to the US to face charges of financial fraud.

Ms Meng’s arrest in early December triggered a diplomatic crisis between China and Canada and added another dimension to negotiations in the US-China trade war. Following Ms Meng’s arrest, Beijing threatened Canada with “serious consequences” and, in apparent retaliation, detained two Canadians, including a former diplomat, on vague charges of “harming national security.”

In a hasty one-day retrial this

month, a Chinese court also sentenced a Canadian drug smuggler to death, revoking his earlier sentence of 15 years in prison.

“I asked for and accepted John McCallum’s resignation as Canada’s Ambassador to China,” Mr Trudeau said in a statement. Jim Nickel, the deputy head of mission at the Canadian embassy in Beijing, will take over immediately.

Mr McCallum’s dismissal appears to be a response to comments he made on Friday to a Canadian newspaper. He told StarMetro Vancouver that “if [the US] drops the extradition request, that would be great for Canada”. A day earlier, Mr McCallum was forced to admit he “misspoke”, after telling media that Ms Meng had strong arguments to fight her extradition. “There has been no political involvement in this process,” Mr McCallum said.

Ottawa has faced accusations from Chinese officials and commentators that Ms Meng’s arrest is part of a US plot to contain the rise of Chinese technology. Huawei is the world’s largest telecom equipment maker and is rolling out its 5G equipment worldwide this year.

Huawei has said it has “every confidence that the Canadian and US legal systems will reach a just conclusion” on Ms Meng’s case. The company could face being blocked from Canada’s 5G market pending a review of the country’s rollout of 5G technology. China’s ambassador to Canada has warned of “repercussions” if Ottawa does block Huawei.

Some progressive Democrats argue Kamala Harris did not go far enough in pushing for criminal justice reform © AP

key voting demographic in the November 2020 race against President Donald Trump. “This was a winning strategy in California a decade ago.

And it is a winning strategy in a general election.”

As she begins her campaign, Ms Harris has begun to address the criticism head on. She has pushed back against the idea that it was somehow contradictory to be both an advocate for criminal justice reform and a prosecutor whose job it was to maintain a high conviction rate, or that by being a prosecutor she was not a true progressive.

“It is a false choice to suggest that communities don’t want law enforcement. Most communities do.

They don’t want excessive force,” she

told ABC’s Good Morning America.

Venus Johnson, a longtime mentee of Ms Harris who worked for her when she was California attorneygeneral, suggested that the senator was being judged by unfair standards.

“I would encourage folks to look at the historical context of the time she took office,” she said. “Every time you get someone who shares those progressive values and wants to advance justice, we chip away at the wall little by little. She is also bound by the office that she holds.”

“It’s just remarkably difficult to make progress quickly as you like in a system with all different power bases,” said Jim Stearns, who worked as a campaign consultant on Ms

Harris’s successful 2003 race for San Francisco district attorney.

He noted that Ms Harris had not been unafraid to buck her party, such as her insistence, as district attorney, that she would not seek the death penalty for the killer of San Francisco police officer Isaac Espinoza in 2004, fulfilling one of her core campaign promises to not seek the death penalty under any circumstances.

That decision drew criticism at the time from Dianne Feinstein, a Democrat who is California’s other US Senator and was also senator at the time. Ms Feinstein has already said that she will back former US vicepresident Joe Biden, if he decides to get into the 2020 race, not Ms Harris.

Juan Guaidó urges military to turn against Venezuela regime € Self-proclaimed interim president offers amnesty to soldiers who abandon Nicolás Maduro € Gideon Long

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pponents of Venezuelan President Nicolás Maduro appealed to the military on Sunday to abandon the government, printing off copies of an amnesty law and handing them out around the country to encourage disgruntled soldiers to defect.

The campaign came a day after Venezuela’s top military envoy to Washington switched allegiances in what is rapidly becoming the biggest challenge to Mr Maduro’s rule since he came to power in 2013.

On Sunday, Mr Maduro once again accused “the empire” — a reference to the US — of “trying to launch a coup d’état in Venezuela . . . to install a puppet government”.

Speaking at an army barracks south of Caracas flanked by soldiers in olive-green fatigues and red berets, he said Venezuela would stage “the most important military exercises in Venezuela’s history next month” to show the world it was ready to repel any foreign invasion.

The crisis was sparked last Wednesday when Juan Guaidó, head of the country’s Congress, proclaimed himself interim president, branding Mr Maduro illegitimate.

Mr Maduro took office for a second term on January 10 on the basis of

what was widely condemned as a fraudulent election last May. The US has recognised Mr Guaidó’s presidential claim alongside almost a dozen countries in the Americas, including Brazil, Argentina, Colombia and Canada.

But Russia, China, Turkey and Cuba have said Mr Maduro is still the country’s rightful leader and — crucially — the armed forces have largely backed him.

The EU has given Mr Maduro eight days to call new elections and has said it will recognise Mr Guaidó if he does not comply. In a furious response on Sunday, Venezuela’s foreign minister Jorge Arreaza accused the union of joining the US in plotting a coup in Venezuela “in the style of the old colonial powers it represents”.

Speaking in nearby Panama, Pope Francis urged “a just and peaceful solution” to the Venezuelan crisis. The country’s archbishops have condemned Mr Maduro’s bid to extend his rule for another six years as “a sin that cries out to heaven”.

The opposition campaign to win over the military claimed its biggest victory to date on Saturday when Colonel José Luis Silva, Venezuela’s top military envoy to the US, switched sides.

“Today I speak to the people of Venezuela, and especially to my brothers in the armed forces of the nation, to recognise President Juan Guaidó as the only legitimate president,” Mr Silva said in a video, apparently recorded in Washington.

The Venezuelan military police branded Mr Silva “a traitor” while Mr Guaidó welcomed him to the opposition cause.

US secretary of state Mike Pompeo told a weekend meeting of the UN Security Council that they had to pick a side on Venezuela.

“Either you stand with the forces of freedom, or you’re in league with Maduro and his mayhem,” he said.

He added that he hoped countries “will ensure that they disconnect their financial systems from the Maduro regime” without giving details. The US is the largest market for Venezuelan oil, which brings in virtually all the country’s export revenue.

Mr Maduro has backed down on his demand for all US diplomats to leave the country. The foreign ministry in Caracas said it had opened a 30-day window to negotiate the establishment of a “US interests office” in Venezuela and a reciprocal office in the US. The president had earlier ordered US embassy staff to leave within 72 hours.

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Monday 28 January 2019

NATIONAL NEWS

FT Italian populist attacks weigh on ties with France

Fears rise of another dam failure after dozens die in Brazil

Paris shocked by increasing stream of criticism from Rome’s coalition leadership

Second mining disaster in three years raises questions for Vale

Miles Johnson and Victor Mallet

Andres Schipani

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taly’s relationship with France has always combined intimate economic and historical ties with an inevitable neighbourly rivalry, as well as the occasional furious row.

Now, after months of attacks directed towards Paris by the leaders of Italy’s populist coalition government, the two countries are experiencing what diplomats describe as one of the most serious crises of the past fifty years.

In recent weeks Luigi Di Maio, leader of Italy’s anti-establishment Five Star Movement, part of its ruling coalition, has infuriated Paris by making direct overtures to the “gilets jaunes” protesters, and blaming French colonial rule in Africa for Europe’s migrant crisis.

His coalition partner Matteo Salvini, leader of the anti-immigration League, has repeatedly attacked French president Emmanuel Macron over his migration policy since taking office. This week he accused France of “stealing wealth” from African countries.

Mr Macron meanwhile has positioned himself as a bulwark in Europe against populism of the type seen today in Rome, comparing the rise of populist politics across Europe last year to “leprosy”.

Marc Lazar, history professor at Sciences Po university in Paris, sees it as the “gravest political crisis between France and Italy since World War Two”.

“What’s striking is that from the Italian side, it’s not just the government, there’s also fairly widespread anti-French feeling in Italy,” says Mr Lazar, pointing out that many supported Croatia in last year’s football World Cup final because they wanted France to lose.

A recent poll by IPSOS found that 38 per cent of Italians said France was the most hostile country towards their own in Europe, a large increase from the 13 per cent holding this view in 2017.

The number who said France was Italy’s most important ally in Europe fell from 25 per cent of respondents to 14 per cent today.

Seasoned diplomats say the two countries have long had a natural rivalry while enjoying close economic ties and co-operation, and point to numerous frosty moments in the Franco-Italian relationship.

In the 1960s Charles de Gaulle fell out with Italy’s Christian Democrats over their views on the direction of Europe, while in 1995 Italy voted against France at the UN when President Jacques Chirac resumed nuclear testing.

Mr Chirac had a poor relationship with former Italian prime minister Silvio Berlusconi.

What has changed is the social media-fuelled intensity of attacks on France from Mr Salvini and Mr Di Maio.

Both Italian leaders, who are running against each other in May’s European elections, can use attacks against France to appeal to their political bases.

Mr Salvini can blame France for illegal migration into Italy, while Mr Di Maio can castigate France for austerity policies in Europe.

Nigeria warns over ‘foreign interference’ ahead of election Government hits out after US and EU condemn sudden suspension of chief justice Neil Munshi

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he Nigerian government has said it will not accept “foreign interference” in February’s presidential elections after the EU, UK and US spoke out against the sudden suspension of the country’s chief justice.

The three western powers issued statements at the weekend voicing concern over how President Muhammadu Buhari’s decision to suspend the judge might affect the conduct of elections in Africa’s most populous country.

As Nigeria’s senior judge, Walter Onnoghen would have played a key role in deciding any legal challenges to the results of the presidential race between Mr Buhari and former vicepresident Atiku Abubakar.

In a statement on Saturday night, Mr Buhari’s spokesman Garba Shehu warned that the government “will fiercely and assiduously promote the will and the right of Nigerians to choose and elect their leaders without pressure or assistance from persons or entities that are not constitutionally empowered to participate in the process”.

He added the security forces were ready to confront any at-

tempt to interfere with the process “whether by elements within or from outside the country” and reiterated the government’s “insistence on free and fair elections”.

Mr Buhari suspended Mr Onnoghen on Friday night, two weeks after corruption allegations first surfaced against the judge. In a statement, Mr Buhari said investigators had since discovered “millions of dollars” in “other suspicious transactions” to Mr Onnoghen’s personal accounts.

Lawyers for Mr Onnoghen have challenged the jurisdiction of the court hearing. He has not responded to the charges.

The president’s move prompted a swift response from the EU, US and UK, which said in statements that they were deeply concerned about how the judge’s suspension would affect perceptions of the credibility of the elections.

“We note widespread Nigerian criticism that this decision is unconstitutional and that it undermines the independence of the judicial branch,” said the US embassy in Abuja. “That undercuts the stated determination of government, candidates, and political party leaders to ensure that the elections proceed in a way that is free, fair, transparent,

and peaceful — leading to a credible result.”

Mr Abubakar, the opposition challenger, condemned the suspension of the chief justice as an act of dictatorship and halted his presidential cMampaign for three days in response to the move.

“It is our hope that President Buhari will listen to the voice of all lovers of democracy the world over and restore democracy in Nigeria immediately and without qualifications,” Mr Abubakar’s party said in a statement.

With opposition politicians questioning the legality of Mr Buhari’s decision, a senior foreign diplomat described the situation as a constitutional crisis. “[We are] trying to figure out what comes next,” the official said. “This is a bad idea.”

Cheta Nwanze, analyst at Lagosbased consultancy SBM Intelligence, slammed the move as an attempt to tip the scales in February’s election.

“The timing, and all the effort being put, indicates that the [president’s party] is really scared of losing the elections, and will stop at nothing to ensure that they have all the arsenal of state at their beck and call,” he said.

The Presidents Club investigation: one year on What has changed since the FT’s sexual harassment exposé?

Madison Marriage and Poppy Wood

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“

t was a catastrophe. You shouldn’t have done it. You really should not have done it,” declared one of Britain’s better known property investors this month before he slammed down the phone.

He was responding to a request for an anonymous comment on the demise of the annual Presidents Club Charity Dinner — he had attended the final occasion at the London’s Dorchester Hotel in January last year.

Some 12 months have elapsed since the Financial Times first revealed the groping and abuse of a number of the 130 women hired as hostesses at this secretive all-male dinner, attended by 360 of Britain’s leading businessmen and financiers.

The FT has since learned that a group of prostitutes were operating around the event, using rooms and suites upstairs at the Dorchester — although there is no suggestion the organisers were aware of such activity.

The ensuing publicity about the dinner triggered two official inquiries and caused the Presidents

Club charity to close after 33 years.

But in assessing whether it has led to a change in attitudes and behaviour across business sectors such as property, advertising and investment banking, the FT has received some defiant feedback.

“Essentially, this was a networking event, and it’s been overblown,” declared one regular attendee. “Business is all about networking, none of this MeToo crap . . . We were there for the kids, we were there for the charities.

“People were paying £3,000 a ticket — they didn’t need to go there to pick up girls, they could pick them up anywhere . . . There was nothing sexual except temptation. It was a bunch of 45 to 75-year-old men living the dream of ‘Can I get you?’

“OK, I accept there was an upstairs suite at the Dorchester [on the night of] the Presidents Club, and yes, there were hookers, but those weren’t the hostesses.” He said only a small minority of attendees moved to suites and rooms upstairs after the main event. “It happens everywhere,” he added.

Those attending the dinner who spoke to the FT would only do so

anonymously; most did not respond to requests for comment. Some of their views highlighted how little attitudes have changed in certain quarters of the business elite.

“Theresa May apparently said the dinner was wrong because women don’t want to be objectified,” the regular attendee added. “That’s rubbish. Of course women want to be objectified. That’s why there’s a whole make-up industry and why women wear nice clothes. We [men] want to objectify women and the girls want to be objectified. So what? It was just part of the job. Girls love being wolf whistled at . . . ” The charity, which each year typically donated thousands to causes, such as Great Ormond Street Hospital, while spending about £2,000 per head for the annual dinner, announced it was closing last January.

Its trustees, led by Bruce Ritchie, of upscale lettings group Residential Land and luxury goods specialist David Meller, have said they had no knowledge that sex workers had attended the event and had no awareness of any abuse of the women hired to attend dining tables and assist with the charity auction.

he search for hundreds of people still missing in Brazil following the collapse of a tailings dam owned by Vale was partially suspended on Sunday amid fears that another dam was at risk of failing.

Authorities were evacuating communities in the area of Brumadinho in the southeastern state of Minas Gerais after a surge of mud and waste from the mine released a sea of sludge that killed 37 people.

Friday’s disaster was the second involving the company, the world’s largest iron ore producer, in just over three years.

“This was not supposed to happen again,” said Luciene Lourdes, who was awaiting news of her missing husband at a nearby compound for victims and their families.

“I don’t know if he is dead, if he is alive, where he is,” she said, showing pictures of the smiling couple on her smartphone.

Vale said a dam collapsed at its Córrego do Feijão iron ore mine and caused a second dam to overflow. This released a torrent of sludge into its administrative facilities, including the restaurant where Ms Lourdes’s husband and others were having lunch, and the nearby community of Vila Ferteco.

A busload of mine workers were also killed.

Vale chief executive Fabio Schvartzman described the human cost of the disaster as “terrible”.

People were evacuated and the search for survivors partially suspended on Sunday due to the risk of more dam’s failing, authorities said.

Heavy rain has hampered rescue efforts. State authorities on Saturday said that about 366 people had been rescued with an estimated 250 still missing.

“We know the chances of finding survivors are slim, but we are hopeful,” state governor Romeu Zema told reporters on Saturday afternoon, after flying over the area with Brazil’s President Jair Bolsonaro.

Many in the rescue compound were demanding answers from the company, which had been preparing to resume operations at the Samarco iron ore mine, the site of Brazil’s biggest environmental catastrophe, also in Minas Gerais.

In November 2015, 19 people were killed when a dam holding waste material at the iron ore mine broke, submerging the local town of Mariana and spewing millions of tonnes of mud into a local river system.

“Cases like this are not accidents but environmental crimes that must be investigated, punished and repaired,” said Nilo D’Ávila, campaigns director for Greenpeace Brazil, adding that people were still fighting in court to be compensated for the Samarco disaster.

Vale and Anglo-Australian miner BHP have committed hundreds of millions of dollars to a foundation charged with managing reparations and repairs at Samarco, and last year, the companies reached a framework agreement with Brazilian federal and state prosecutors to settle a lawsuit worth more than $5bn.

Monday 28 January 2019

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COMPANIES & MARKETS

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Investors cool on Metro’s old-school business model Nine-year-old UK bank has an expensive branch network and favours low-risk lending Nicholas Megaw

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t Metro Bank’s flagship central London branch on Friday morning, there were few signs of a company in trouble. A pair of smiling employees stood ready to greet customers, and more than two dozen passed through the doors before rival TSB across the road had even opened.

Earlier opening times, along with features such as instant debit cards for new account holders and pet-friendly branches, are part of the focus on customer service that Metro has pushed since it became Britain’s first new high street bank for a century in 2010. These services have helped it become one of the country’s most popular banks with customers, according to an official ranking organised by competition regulators. But it is becoming increasingly unpopular with investors.

A profit warning and the discovery of an error in the way it had been accounting for risk for some of its loans prompted a near 40 per cent drop in its share price on Wednesday — the biggest one-day fall for a British bank since the bailout of Royal Bank of Scotland during the financial crisis. Metro’s management insisted that the news did not change its underlying prospects, but it has left growing numbers of observers questioning the sustainability of its business model.

Metro’s focus on its network of branches, which are relatively expensive to run, and its preference for lowerrisk and, therefore, lower-margin loans mean it has had to expand its lending quickly to allow it to compete.

Its loan book has grown from nothing to more than £14bn over the past nine years. It recorded its first annual profit in 2017 but its costs that year were equal to 90 per cent of revenues, and the ratio is forecast to remain higher than its established rivals for the foreseeable future.

Wednesday’s update revealed bad news on two important fronts: intense competition and a weak economy have led to a slowdown in loan growth.

Meanwhile, the misclassification of the

riskiness of some of its loans means it does not have enough capital against them, according to the rules.

John Cronin, an analyst at Goodbody who has long been sceptical about the bank’s prospects, said: “Challenges in keeping up the growth momentum this early, given that Metro has just £16bn of deposits now, are deeply concerning and raise serious doubts regarding its ability to achieve its deposit and lending growth ambitions. I don’t believe the share price reaction is overdone and I would be surprised if the stock price did not fall materially further from here.”

Competitive pressures and Brexit uncertainty have hit shares across the sector over the past year, but Metro has been particularly badly affected.

Its shares nearly doubled in the two years following its initial public offering in March 2016, but this week’s drop brought them below their IPO price.

One investor who has shorted the shares — betting the price will fall — said the bank had “hardly been able to make any money” even in relatively benign conditions with non-performingloans at only 0.15 per cent. “We know long-term they should be at [0.5 per cent],” he said. “There’d be no bank at all at that level.”

The weaker capital level that Metro revealed on Wednesday led to speculation it would have to raise fresh funds as early as this year. Its high share price has previously helped Metro raise cash through undiscounted share issues, but at a lower price it would have to place significantly more to raise the same amount of capital, making it harder to hit return on equity targets that were already considered ambitious.

While the shares picked up slightly toward the end of the week, the price of its bonds continued to fall, implying that raising debt would also be expensive.

“The market is now saying to Metro ‘you can’t keep growing in the way that you’re wanting to with those margins,” the short seller said. “The cost structure only works if you can grow the loan book, and you can’t at this point.”

No let up in UK energy supplier failures as Our Power crashes out Company is second to fail in 2019, continuing last year’s trend Myles McCormick

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he recent spate of failures among UK small energy providers showed no sign of abating as not-for-profit supplier Our Power on Friday became the second to stop trading this year.

The Edinburgh-based group, which supplied electricity and gas to 38,000 customers, failed after less than three years of being in business, continuing a trend which saw eight companies go bust in 2018 and a further four exit through deals with rivals.

“It is with great regret that Our Power Energy Supply Ltd has ceased to trade,” the group said on its website on Friday.

Our Power’s customers will be protected via a safety net procedure put in place by Ofgem, the UK energy regulator, which will see them transferred to another provider in the coming days.

“We have seen a number of supplier failures over the past year and our safety net procedures are working as they should to protect customers,” said Philippa Pickford, Ofgem’s director for future retail markets.

Our Power was set up with backing

from the Scottish government in 2016 as a not-for-profit energy supplier, offering cheap energy tariffs with the aim of helping disadvantaged communities at risk of fuel poverty.

Its failure on Friday shows “just how poorly smaller companies are coping with a rise in wholesale prices”, said Peter Earl, head of energy at price comparison site Compare the Market.

“The volume and regularity of recent energy company collapses is concerning but the majority of companies should have the financial stability to weather the storm,” he added.

The high level of exits among UK energy providers over the past year has led to criticism from incumbents, who have argued it is too easy for new suppliers to open up shop, with risky business models leading many to fail when market conditions deteriorate.

Ofgem plans to tighten entry requirements for new entrants in the coming months, requiring would be suppliers to have enough funds to support themselves for at least a year.

Our Power’s exit from the market follows that of Economy Energy, which failed earlier this month.

Vernon Hill, chairman of Metro Bank. Despite criticism from some advisory groups, shareholders backed the lender’s leadership almost unanimously at last year’s AGM © Anna Gordon

Stocks to watch: Vodafone, Intel, Fevertree, Hammerson, Intu, ITV Commercial property stocks are heading for a fall, says Citigroup Bryce Elder

V

odafone retreated after posting a sharper than expected fall in quarterly revenue due largely to problems in South Africa reported yesterday. Full-year guidance was reiterated.

On an adjusted basis, Vodafone’s service revenue for the fiscal third quarter was down 0.8 per cent versus a 0.7 per cent decline expected by the consensus. The figure would have been worse had it not been for currency effects, which included inflation in Turkey that turned a revenue decline in euro terms of around 18 per cent into 14.8 per cent growth.

On the conference call, Vodafone management was confident that revenue would pick up from the start of its next financial year in April as commercial performance improves, competition lessens and price cuts in Italy and Spain fall out of year-on-year comparisons.

Intel plunged in US pre-market trading after missing expectations with its fourth-quarter results and cutting first-quarter guidance. The company highlighted weakening demand for datacentres, a sales shortfall for modems and pricing pressure on flash memory chips as problem areas.

“Management’s expectations for 2019 point to a modest 1 per cent revenue growth rate and a contraction in

operating margin, which we view as a significant change in tempo following circa two years of meaningful expansion under CFO and interim CEO Bob Swan.”

Goldman Sachs Repeating “sell” advice, Goldman argued that “the bar is particularly high” for Intel in 2019 because competition was increasing and its previous growth drivers, most notably datacentres, were going into reverse.

Sellside stories Jefferies downgraded Fevertree Drinks, the tonic water maker, to “hold” from “buy”.

“Fevertree [is] one of the most attractive growth stories in European beverages given the potential for premium mixers internationally.

However, near-term there is risk of a hiatus . . . as growth in the UK core business moderates before the future growth engine, the US, accelerates.”

Jefferies A 5 per cent deceleration in the UK would require 20 per cent acceleration in the US to maintain Fevertree’s group growth, Jefferies said, adding: “Whilst we do not rule out faster than expected growth given the company’s historical track record of under-promising and over-delivering, UK Nielsen data will likely continue to point to normalisation of demand in the UK.” Nielsen data for December published today showed Fevertree’s UK sales growth slowing to 26.2 per cent,

from 27.3 per cent and 31.8 per cent in the previous two reports. That implied growth in Fevertree’s key market had slowed from 97 per cent in the first quarter 2018 to 28.4 per cent in the fourth, said Jefferies.

Goldman Sachs and Citigroup both turned cautious on European real estate investment trusts. Citi cut recommendations on 14 stocks including British Land, Hammerson and Land Securities, while Goldman’s downgrades included Intu and Klépierre.

Expect an end to the current European office market cycle, said Citi, as rents “are at or near cyclical peaks”. Supply and demand have been favourable but to make investible returns at current book values, yields need to rise in anticipation of declining rents, it said. “The 20 to 30 per cent capital value decline we forecast is not priced into European real estate stocks [including in the UK],” added Citi.

On shopping centres, Citi said that the shift “from brick to clicks is in its infancy meaning the outlook for shopping centre rents and values is increasingly risky”. It forecast valuation downgrades to come of between 20 per cent and 40 per cent.

“Once the negativity of a downturn in real estate markets has begun, historically stocks fall further than what was ultimately born out in direct fundamentals. Stock, and real estate, markets rarely stay flat.”

European stocks rally on trade talks and earnings optimism

Sterling stays above $1.30 as fears of no-deal Brexit wane Michael Hunter and Alice Woodhouse

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orld stock markets are continuing to rally, as investors remain optimistic on the prospects on improved trade relations between the US and China at talks next week. Well-received earnings also helped, as did deepening hope that the UK would avoid a no-deal Brexit, which supported the pound over $1.30.

Well-received earnings news from the telecommunications sector helped the Europe-wide Stoxx 600 to its highest level in seven weeks, while investors continued to anticipate progress on trade relations between the US and China.

Ericsson made one of the biggest gains on the international index after the Swedish company reported a narrower fourth-quarter operating loss than expected. Its shares rose

more than 3 per cent. A trend on Wall Streer for robust earnings deepened with news of forecast-beating fourth-quarter sales at Starbucks.

Overall, the Stoxx 600 rose a further 0.7 per cent, taking it to levels last touched in early December.

Frankfurt’s Xetra Dax 30 added 1.5 per cent. London’s FTSE 100 ticked up 0.2 per cent, with the rebounding pound holding it back.

US futures trade expected the S&P 500 to rise 0.8 per cent.

The moves came as investors continued to anticipate an improvement in trade relations between China and the US. Liu He, China’s vice-premier, will visit Washington next week for a meeting with Robert Lighthizer, the US trade representative. Wilbur Ross, US commerce secretary said there was a “fair chance” a deal would be reached between the countries, although he did concede

they remained “ miles and miles” away from a resolution.

European sectors exposed to the trade war made some of the best gains. The Stoxx index tracking industrial metals makers was up more than 2 per cent, as was the equivalent benchmark for miners.

Gains for chipmakers helped support stock markets in Asia, taking its rally worldwide after forecastbeating results from chipmaker STMicro on Thursday.

Hong Kong’s Hang Seng added 1.7 per cent. Mainland China’s CSI 300 was 0.8 per cent stronger, while Japan’s Topix added 0.9 per cent.

Forex Sterling traded over $1.31 for the first time since November, as investors continued to expect that the threat of a disorderly departure from the EU would be ruled out as the UK’s turbulent Brexit politics rumbled on.

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Insight Atiku, PDP and the burden of the past GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

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t is now becoming clear that next month’s presidential election will be decided on a single issue: corruption.

The outcome of the poll won’t be determined by who has the right economic vision or the best political and institutional reform agenda. Rather, it would come down to who is less perceived to be weak on corruption, and less likely to tolerate it, if elected.

President Buhari has deliberately upped the ante on corruption in this campaign because he wants the election to be about fighting graft. The main message of Buhari and his party, All Progressives Congress (APC), is: “Don’t let the treasury looters come back”. That message is designed to upend Buhari’s main opponent, Atiku Abubakar, and his party, People’s Democratic Party (PDP), and it’s resonating with a lot of people.

Elections are determined by a mix of different factors, but three are critical in electing the leadership of any country.

The first is vision; second is competence and third,values.

A leader must have the right vision – economic, political, social, institutional – for the country.He or she must have the

competence, that is, the ability to provide competent and knowledgeable leadership and to assemble the best team with the right set of skills, to achieve the vision. Then, thirdly, he or she must have the right values, the right moral or ethical standards.

Now, when it comes to vision, my view, previously expressed in this column, is that Atiku has a better vision for Nigeria than Buhari. His bold market-based, private sectorcentred economic reform plan and his far-reaching political and institutional reform agenda are what Nigeria needs to make real progress. The intellectual effort that went into crafting Atiku’s manifesto and the depth and breadth of his analyses and policy prescriptions on a wide range of issues are unmatched

by Buhari’s shallow plan, which centres on corruption, security and poverty, and ignores the fact that these are symptoms of underlying structural economic, political and institutional problems. So, on the vision test, Atiku beats Buhari handsdown!

What about competence?

Well, the consensus around the world is that Atiku would be far more effectual than Buhari. As a business-friendly and liberal-minded person with a technocratic inclination, Atiku would assemble a far stronger technocratic cabinet and a more robust economic team, as well as brighter aides, than Buhari has done and can ever do. He would also be a more informed and knowledgeable leader, an intelligent consumer of complex information, who won’t struggle to read and understand technical documents, such as the AfCFTA agreement! So, on the competence test, again, Atiku floors Buhari!

Now, let’s turn to the third

leadership quality: values. How is Atiku perceived, compared with Buhari? Well, here, I must confess that I am surprised at how low Atiku scores in public

‘

Sadly, apart from his own negative perception, Atiku also inherits the toxic legacy of the PDP, whose 16 years in power, despite some achievements on the economy, is widely associated with corruption

,

estimation. For someone who has not actually been convicted of any corruption offence, let alone a grievous one, it is shocking that Atiku has a widespread negative image on this issue.

If likeability is a factor that determines the winner of a presidential race, the truth is that Buhari is more liked, despite his fatal weaknesses, because of the perception that he has the right values: strict, no-nonsense discipline, intolerance of corruption, asceticism and frugality. In contrast, Atiku is much like Donald Trump, a brash, aggressive money-making businessman, who is largely amoral, which, of course, must not be confused with immoral!

In today’s world, with poverty and equality rising, voters tend to prefer the non-ostentatious populists, usually left-

wing or socialist, who present themselves as friends of the poor. Donald Trump, though a billionaire, won in America because he played the populist game, with his anti-immigration and anti-globalisation rhetoric, which chimed with the poor. In Britain, the young and the poor, who are angry about capitalism and globalisation, are also turning to Jeremy Corbyn, the Labour leader, who, like Buhari, is ascetic and frugal, with a socialist worldview. Tony Blair, the former British prime minister, is widely loathed in Britain not only because of his controversial role in the Iraq war but also because of public distaste for his “aggressive” money-making activities after leaving office, even though the sources of his wealth – advisory roles for multinational corporations and lucrative lectures and public speaking – are transparent and legitimate.

So, there is a backlash around the world against wealthy politicians seeking political offices without a populist agenda. But the situation gets worse when a politician is stupendously rich, and the sources of this wealth are not transparent, or the nature of his business activities is controversial. That, fairly or unfairly, is the burden that Atiku carries. The view is that, yes, he has the right vision, yes, he is likely to be more effectual than Buhari, but he is also likely to be less serious and determined than Buhari about tackling corruption, if elected, despite setting an elaborate anti-graft strategy in this manifesto. Interestingly, this is a view widely shared internationally. For instance, recently, Eurasia, the international consulting group, said in its 2019 Top Risk Report that, as president, Atiku“would

focus on enriching himself and his cronies”.

Unfortunately, Atiku has done nothing to confront these negative perceptions; rather, he and his allies are feeding them.

In a recent Channels Television interview, Atiku said that, if elected, “I am going to enrich my friends”, adding: “Are my friends not entitled to be enriched?” This is a terrible owngoal by someone struggling with a negative perception on graft.

Surely, enriching friends is not something that good leaders do; it’s called cronyism. In a similarly shocking comment, an Atiku ally, Buba Galadima, said in a newspaper interview that: “Even if Atiku breaks into CBN, we will make him president.” Really? I couldn’t help tweeting that “With friends like this, does Atiku need enemies?”.

It is very sad that Atiku’s bold economic, political and institutional reforms plans are being overshadowed by questions about his character and values, which are mercilessly exploited

by Buhari and his party, APC. Sadly, apart from his own negative perception, Atiku also inherits the toxic legacy of the PDP, whose 16 years in power, despite some achievements on the economy, is widely associated with corruption. In 2017, former President Jonathan said that “PDP will regain power in 2019”, adding that “PDP’s achievements while in power would rekindle the confidence of the electorate to vote it to power in 2019”. Well, but less than three weeks to the election, there doesn’t seem to be a groundswell of support for the PDP, despite Buhari’s appalling performance. Why? Well, as I said earlier, the election is likely to be decided on the issue of corruption, and APC’s catchphrase

“Don’t let the treasury looters come back” is resonating with many people, who still associate its 16 years in power with massive corruption, what with the stories about missing oil revenues and the arms-purchase scandal!

Indeed, anyone who has read the former finance minister Dr Ngozi Okonjo-Iweala’s two recent books, “Reforming the Unreformable” and “Fighting Corruption is Dangerous”, can only conclude that there was massive corruption under the PDP government. The grand, political and administrative corruption that she describes in granular detail in those books happened under the PDP administration. She writes about how vested interests perpetrated corruption with impunity, largely unchecked. In one story, she narrated how, because of an anti-corruption measure she introduced, a senior Jonathan aide instructed the gatekeeper to stop her from entering Aso Rock villa to attend early morning prayer meeting with the president. Indeed, during a visit by the managing director of the IMF, Christine Largarde, both Largarde and Okonjo-Iweala were prevented from entering through the VIP gates.They had to use the common gate and walk to meet Jonathan.

Shocking!

Of course, similar things may be happening under Buhari’s caballed government, but on this issue, it is Atiku and the PDP that lack any reservoir of goodwill. Thus, if Atiku loses next month, it won’t be because of a lack of vision or of competence, but because Nigerians don’t believe that he and his party, PDP, has the right values. They would have suffered from burdens of the past! Fingers crossed!

Should we still care about the Monetary Policy Committee?

ECONOMIST

NONSO OBIKILI Dr. Nonso Obikili is Chief Economist at Business Day.

T

he monetary policy committee (MPC) had its first meeting for the year just under a week ago. Unsurprisingly, they decided to hold all monetary variables fixed with the monetary policy rate (MPR) held at 14 percent. This means that despite the dynamics of the domestic economy and the upheavals in the global economy, the MPR has remained fixed for almost two years. It makes me wonder, should we really still care about the MPC? First a bit of background to why I ask that question. The

primary goal of monetary policy is to keep inflation in check. Inflation unfortunately is a tricky customer. One part of the inflation story depends on real factors like the money supply and costs and all that. A second part however depends on people’s expectations. Because people making decisions on prices and interest rates and so on have to guess what the future environment will look like, inflation also depends on people expectations. If people expect inflation to be lower in the future then inflation tends to be lower, because people act today like inflation will be lower.

On the other hand, if people expect inflation to be higher then it tends to be higher. It is therefore in the interest of the monetary authorities to do what needs to be done to convince people that future inflation will be lower, if it wants lower inflation.

One of the ways the monetary authorities do this is to convince people that they are actually focused on fighting inflation and keeping it within its set target. Since the interest rate

is the traditional tool for fighting inflation, they announce their interest rate targets in advance

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In the 28 months since the CBN fixed the MPR at 14 percent, data from other securities suggest that it has actually gone from a tightening cycle (raising rates) to an easing cycle (lowering rates) and more recently back to a tightening cycle again

,

so that it is clear that they are acting to fight inflation. For instance, if inflation starts to rise

and they announce that they will raise interest rates then people believe that they areactually going to do what it takes to prevent inflation from rising, so they lower their expectations about inflation, which actually leads to lower future inflation.

In most credible countries, when the monetary authorities say they will target a certain rate they usually try to hit their target.

In the United states for instance, when the federal reserve bank says they will target a rate of two percent, it usually results in the federal funds rate being two percent and similar securities like short term treasury bills also being two percent. In South Africa, when the reserve bank sets a benchmark repo rate of six percent, you actually observe the rates for similar securities hover around six percent. In general, credible monetary authorities actually implement their announcements. They never raise or lower rates significantly without actually announcing it. Consequently, they never do something different from what they announce.

Which brings us to the Central Bank of Nigeria. The MPC is the monetary authority that sets and announces the target rate, but the central bank actually has to implement it in the market.

If the MPC sets a target rate of 14 percent for instance, then if the CBN is implementing what it announces, its actual benchmark rate and similar securities should be around 14 percent.

Ergoo, if the CBN is credible with its announcements, it should never systematically raise or lower rates without announcing it first.

Unfortunately, the data suggests that the CBN does not actually implement its interest rate announcements via the MPC. In the 28 months since the CBN fixed the MPR at 14 percent, data from other securities suggest that it has actually gone from a tightening cycle (raising rates) to an easing cycle (lowering rates) and more recently back to a tightening cycle again. For instance, between August 2016 and May 2018, rates for 91-day treasury bills dropped from 14.93 percent to 10 percent,

indicating an easing cycle even though the CBN continually announced a MPR of 14 percent throughout the period. The same patterns are observed even with the CBNs own OMO securities. On the flip side and judging by the rates for treasury bills and OMO securities since last July, the CBN appears to have gone back to a tightening cycle even though its announcements via the MPC have indicated no change.

In general, the data suggests that the announcements of the MPC are really just announcements and the CBN does not actually implement them. So, should we actually take the announcements by the MPC seriously? The answer at this moment is no. It appears to be nothing more than a fulfilled obligation at this point in time.

The cost of course is that people have to find an alternative way to judge if the CBN is credible and is really focused on its core mandate of fighting inflation.As has been demonstrated time again, the cost of a lack of credibility is higher inflation.

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