BusinessDay 28 Nov 2018 by BusinessDay

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States’ IGR up 27.7% to N579.4bn in first half of 2018 ... as Lagos, Cross River generate 62%, 84% revenue from PAYE ENDURANCE OKAFOR

nternally generated revenue in the 36 states and the Federal Capital Territory rose to N579.49billion in the first half of the year, from N453.83bn recorded in the corresponding half of 2017, the National Bureau of Statistics (NBS) said in a statement released yesterday. Cyril Ede, the President and Chairman of Council of the Chartered Institute of Taxation of Nigeria (CITN) said there is an improvement in Nigeria’s tax payment system, as more Nigerians are beginning to pay their taxes. “There is improvement in tax compliance, because more people are getting to pay their tax and this is increasing the states’ IGR,” he said. Meanwhile, a breakdown of the NBS report shows that the net Federal Account Allocation (FAAC) in the first half of the year stood at N1.23 trillion while the total revenue available to the states was put at N1.74 trillion. Analysis of the half year IGR Continues on page 39

Inside Oyetola sworn in as Osun governor P. 38

L-R: Abolaji Oyebo, head, technology, The Nigerian Stock Exchange (NSE); Tinuade Awe, executive director, regulation, NSE; Bola Adeeko, head, shared services division, NSE; Oscar Onyema, CEO, NSE; Michele Carlsson, managing director, Middle East and Africa, Nasdaq; Meyer Sandy Frucher, vice chairman, Nasdaq, and James Martin, general manager, Europe, Middle East and Africa, market technology, Nasdaq, during the signing of Memorandum of Understanding between the NSE and Nasdaq on technology at ASEA Conference in Lagos, yesterday.

NNPC’s leaking pipelines cost Nigeria $467m in July N

DIPO OLADEHINDE

igeria’s lost a total $467 million in July due to shut-in of production from leaking pipelines carrying crude oil from wells to flow stations in the Niger Delta, where more than 90 percent of the country’s crude are explored.

The loss comes from 6.29 million barrels of crude oil that the Nigerian National Petroleum Corporation (NNPC) said in its August monthly report that it could not take to the market due to shut-in of pipelines in July. Further analysis into previous monthly reports of NNPC showed inconsistency in the records of pipeline vandalism as

there was no detailed records of pipeline vandalism in the month of January, February and March and while the records given in the month of April, February and July given were not well explained. Petroleum and associated products are transported through extensive network of pipelines in Niger Delta. They

are usually susceptible to sabotage from militants who usually break the pipelines to illegally tap crude oil. But sources in the oil and gas industry also admit that most of the pipelines are old and hence easily susceptible to damage and leakages. The August monthly report

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Law school graduates 161 firstclass candidates, 113 are women FELIX OMOHOMHION, Abuja

L-R: Bello Maccido, director, Development Bank of Nigeria; Pascal Dozie, president, Society for Corporate Governance Nigeria; Muhammad K. Ahmad, chairman, Polaris Bank Limited, and Peter Bamkole, director, enterprise development centre, Pan-Atlantic University, after their induction as Fellows of the Society at the Annual President’s Dinner/Induction Ceremony in Lagos.

Investors park funds in fixed income, sour on equities BALA AUGIE

enchmark one year treasury yields have been rising in recent times, from about 12 percent earlier in the year to almost 17 percent this week. The surge accounts for the growing divergence between bond yields and dividend yields of listed equities. The average dividend yields of NSE 30 (the largest and most liquid firms on the exchange) is 6.60 percent, according to Bloomberg data. “Investors expect volatility ahead and they rather hold onto fixed income that doesn’t change than hold on

to stocks. I think everybody is holding back because of the election and that’s the selling we have seen so far this year,” said Wale Okunrinboye, head of research at Sigma Pensions. “Turnover is bad this year. We tend to see supply and nobody is buying, but people are buying treasury bills. The central bank is trying to make Naira yields attractive through its OMO operations. One year Treasury bills is between 16.80 percent, 16.90 percent, which is higher than the 10 year treasury bills of 15 percent. That is an inversion of the yield curve,” Okunrinboye said. Equities closed the second trading session of the week lower yesterday, losing 1.14

percent. Market capitalization shed N133.12 billion to N11.38 trillion while year to Date (YTD) returns sank to -18.49 percent. Market breadth closed negative, recording 14 gainers and 23 losers. Investors are bullish on fixed income assets as they fret over the uncertainties surrounding the forthcoming elections. They see more stock volatility on the back of the trade spat between China and the United Sates (U.S), contagion due to geopolitical risk in Brazil, Turkey, Argentina, and South Africa, and the continuous hike in interest rates by the U.S Feds. Nigeria 10 year yields de-

creased 0 percent or 0.00% to 15.66 on Tuesday November 27 from 15.67 in the previous trading session. Historically, the Nigeria Government Bond 10 year reached an all-time high of 17.31 in February of 2015 and a record low of 5.92 in March of 2010. Kayode Tinuoye, Fund Manager at United Capital Asset Management Ltd said that bond yields are more volatile because it depends on foreign direct investment, inflation and interest rates and that bond yields have always been higher than dividend yields. “Bond yields were at a single digit around 2011 and even at that dividend yields were lower,” said Tinuoye.

Nigeria to have most under-five deaths globally by 2021 – World Bank BUNMI BAILEY & ANTHONIA OBOKOHA

igeria, Africa’s biggest economy, is projected to overtake India by year 2021 as the country with the most under-five deaths in the world, the World Bank has said. Currently, 107 out of 1000 or nearly 11 percent of children born in Nigeria die before they are five years old, according to a report by the Bank. The report titled “Investing in human capital for Nigeria’s future” stated that children dying early is not only a tragic loss for families and societies, but also associated with enormous economic and social cost.

It said that child mortality rate in Nigeria “is among the highest in sub-Saharan Africa thus among the highest in the world.” The rate is also uneven both across states and income groups, the Bank explained, adding that death among children aged between one and five years “is eight times higher among the poor than the rich.” The report added that child mortality decreases with high vaccination coverage rates, but explained that they vary significantly across states and regions and that these have changed little in Nigeria over the last 25 years. “This is in sharp contrast with other countries in West Africa such as Cameroon, Ghana, or Sen-

egal, which have made more rapid progress on immunization even though they started from higher levels of coverage,” the report noted. Health practitioners in Nigeria say they are not surprised by this forecast due to the deteriorating state of the healthcare industry in the country. Doyin Odubanjo, Chairman, Association of Public Health Physicians of Nigeria, Lagos Chapter, blames this on not only inadequate budget for the sector, but also poor implementation of the budgets. “Until the investments that we plan to do begin to materialise, we will still be lacking in improving our health sector,” he said. The report said that In-

dia, the largest country in the South Asia Region, is improving on its target of reducing under-five deaths. Under-five deaths have been historically high in India, but government’s determination to stamp it out has led to a steep decline in the mortality rate. In 2016, India doubled the rate of decline, reducing it for the first time below one million under-five deaths in a year, with as much as 120,000, a government report said. Under the United Nations Sustainable Development Goal, which succeeded the Millennium Development Goals, the third goal aims at reducing under-five mortality to as low as 25 per 1,000 live births.

or the first time in its history, the Nigerian Law School produced 161 first class graduates. But most remarkable was the fact that 113 of the first class graduates were women, a boost in the push to encourage girls to be the very best in whatever they do. The director-general of the Nigerian Law School, Hayatu Ciroma, who is a professor of law and a Senior Advocate of Nigeria (SAN), Tuesday, disclosed that it was the first time in the history of the school that a total of 161 candidates were getting a first class. “At this Call to the Bar ceremony, a total of 4,779 graduates were successful at the August/ September 2018 Bar Final Examinations; as well as 11 candidates from previous Bar Final Examinations.” “A total number of 5,846 students participated in the

examination.” “While 161 candidates were graded in First Class, 694 made Second Class Upper, 1, 275 made Second Class Lower and 2, 649 got a Pass mark,” he said A female, Naomi Uwem, a graduate of Afe Babalola University (Abuad) also emerged as the Best Graduating student, scoring 100 percent pass rate and also bagging 13 awards. Afe Babalola University is also reported to have produced 12 of the 161 first class graduates, another evidence that the country’s private universities are beginning to set new standards in education in the country. In a recent report, graduates from Covenant University, another private tertiary institution were rated as the most employable in the country. Afe Babalola University is founded by a renowned law-

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ASUU strike leaves students vulnerable to politicians as election campaigns start JOSHUA BASSEY

he ongoing strike by the Academic Staff Union of Universities (ASUU) may provide fertile ground for recruitment of frustrated and aggrieved students as political thugs buy desperate politicians as the 2019 general elections draw closer. ASUU began an indefinite strike on November 5 to press home its demand for the Federal Government to implement the Memorandum of Action signed with it in 2009. “This strike will be total, comprehensive and indefinite. Our members shall withdraw their services until government fully implements all outstanding issues as con-

tained in the MOA of 2017, and concludes the renegotiation of the 2009 agreements,” Biodun Ogunyemi, ASUU president had said at the commencement of the strike. Dialogues and meetings between ASUU and the Federal Government to resolve the impasse and get the university lecturers back to work have been unfruitful so far. Consequently, millions of undergraduates from public universities across the country are forced to stay home in a country where politicians are wont to use idle youths to ferment trouble during elections. Adebayo Olulade, a student a federal university in one of the Southwest states,

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comment Small Business handbook

Emeka Osuji Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

he critical role of the Small and Medium Enterprises (SME) Sector in the industrialization of nations came into focus at the 2018 Africa Industrialization conference, held at the new and ultra-modern conference centre of the African Union in Addis Ababa, Ethiopia. The conference, which attracted participants from across Africa and beyond held between 18th and 23rd November, 2018. It provided an opportunity for academics, policy makers, entrepreneurs and investors from all over the world to interact on the important subject of industrialization in Africa. To say that Africa is a land of opportunities is to put it very mildly. The continent is richly endowed with an assortment of natural resources, including oil and solid minerals. According to the African Development Bank (AfDB) in a 2017 report, the continent is sitting on more than US$82 trillion in discovered natural resources with a potential to contribute annually about US$30 billion in government revenues over the next 20 years. The AfDB report also said

Wednesday 28 November 2018

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Africa Industrialization Conference fingers SMEs as the way forward that the value added of the continent’s fisheries and aquaculture alone is estimated to be worth more than US$24 billion. Africa is indeed blessed in many ways, including climate and even human resources. Unfortunately, Africa does not have the capacity to transform its raw produce into industrial manufactures. In the area of agriculture, Africa leads in the export of unprocessed agricultural raw materials. It is responsible for 69 per cent of the world’s export of raw cocoa beans and only 16 per cent of processed or ground cocoa, for example. This instantly undercuts the continent in terms of revenue. It is important to note that ground cocoa typically fetches two or three times more money than raw cocoa. It was therefore a time for soul-searching for African leaders and resource persons that met in Addis Ababa last week to find ways of advancing Africa’s industrialization efforts. Although industrialization in Africa has shown some signs of growth of recent, the continent’s share of global exports is still very low, at less than one per cent, compared to other regions of the world. For example, the share of East Asia in global manufacturing is 16 per cent. Africa indeed, lags behind others in manufacturing. The average manufacturing value-added for Africa is a only 10.2 per cent while it is 13.4 for Latin America and 25 per cent for Asia Pacific. Similarly, while the average world manufacturing

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African governments, like their SMEs, must make themselves bankable, to attract the relevant partnerships and funds needed for the industrialization of the continent

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contribution to GDP is 16 per cent, that of Africa is only 11 per cent, way below even the average for low income countries at over 12 per cent. In view of the foregoing negative report on Africa, its eggheads at Addis Ababa had no difficulty in agreeing that manufacturing is the next real act for Africa because industrialization has the potential to reinforce other sectors through the provision of raw materials, revenue, agricultural chemicals and pesticides, equipment and technology. Africa depends on primary products like cocoa and oil. The problem such countries face is that outsiders tell them what price to sell their produce. They have no input to the price of their own produce except through the manipulation of output. President Trump was quoted recently to be happy with the declining price of oil and even prod-

ded Saudi Arabia to do more to cut oil prices. That is a sign of the future for countries that depend on oil and such commodities. The question that then arises is why is Africa where it is in the area of industrialization? Yours faithfully was privileged to be invited to join other subject matter experts in the field of SME Finance to think through the subject of Financing Industrialization in Africa and make suggestions. I have always maintained that the problem of Africa is simply a leadership problem. Poor leadership is a cancer that begets other problems. Most of the problems that make SME projects unbankable are leadership-induced. Lack of infrastructure, insecurity, uncertainty of the operational environment and such are all leadership-induced, and constitute the reasons why SME loan applications are mostly rejected. This is why an SME project with the same cash flow potentials that is declared unbankable here (because of several uncertainties like power and security) may be very bankable in Europe and America. In my view, the starting point of any effort to industrialize Africa is the SME sector. This is so because it is better to start from the known and go to the unknown. Africa is hardly conversant with the key elements of the First Industrial Revolution. We are still trying to get it all into our system. Therefore it would be wrong to jump into the Nona technology of the Fourth Industrial Revolution. So we must start with the SME sector, which

not only serves as the core of most African economies but provides the bulk of the livelihood of the people. Unfortunately, the sector has been unable to attract finance. At the conference, it was agreed that funding of the sector must involve both local and foreign sources of finance. However, Africans must begin by properly accounting for the revenues they earn from their produce. It is bad enough to depend on primary products like oil and agricultural raw materials, but worse when we cannot effectively utilize the revenues we earn from them. Countries that depend on primary products have accepted the second fiddle in the comity of nations.To be sure, Africa may not be lacking in resources as the picture painted may show. What is strange is that Africa has been unable to understand the art of effective financial management. Solve that problem and we have more than enough resources to fund industrialization in Africa. The need for effective partnerships and cooperation was also conversed. Governments - cannot do anything alone. The world is even awash with funds -Green funds, White funds, and all such funds – looking for good returns. African governments, like their SMEs, must make themselves bankable, to attract the relevant partnerships and funds needed for the industrialization of the continent.

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Realigning the mix between income and consumption taxes

UCHE UWALEKE Uwaleke of Nasarawa State University, Keffi, is Nigeria’s first Professor of Capital Market and the President of the Association of Capital Market Academics of Nigeria

ven with crude oil price selling above the budget benchmark of US$51 per barrel, the greatest risk to the 2018 budget is the significant shortfall in government actual receipts. As disclosed in the recently published CBN Economic report for the month of August 2018, ‘at N745.52 billion, the estimated federally-collected revenue in August 2018 fell short of the monthly budget estimate by 32.7 per cent’. The decline was attributed to a shortfall in both oil and non-oil revenue. While the fall in oil revenue relative to the monthly budget estimate was attributed to the drop in crude oil production arising from repairs and maintenance of oil facilities, the lower non oil revenue was due to shortfalls recorded in most of the components namely company income taxes (CIT), Customs duties and Value Added Tax (VAT). Year after year, CIT dominates government’s expectations of high revenue from non-oil sources, followed by Cus-

toms duties with VAT trailing behind. In 2018 for example, out of the non-oil share of about N1.2 trillion, CIT was meant to generate N659 billion while Customs duties and VAT were meant to rake-in N325 billion and N206 billion respectively. According to the CBN report, ‘at N341.93 billion, non-oil receipt was lower than the monthly budget estimate by 26.8 per cent and constituted 45.9 per cent of the total revenue’. In the light of the volatility in crude oil revenue and the underperformance of the tax revenue in spite of the increased reliance on CIT, the challenge before the fiscal authorities should be how to have an optimal mix between income and consumption taxes that generates substantial revenue to the government without compromising the key principles of equity and fairness. A number of studies on emerging and frontier economies argue that an optimal tax mix that leans more towards consumption tax than income tax would be more efficient and productive. They point to the relative ease of compliance and administration associated with consumption taxes. The application of corporate income tax, for example, requires the use and maintenance of proper books of account and well-developed procedures for the recording and invoicing of transactions. These requirements are often not met by many small companies in Nigeria where the informal sector accounts for a significant proportion of GDP. Another key advantage

of consumption tax such as VAT over income tax such as CIT is the ability of the former to capture economic activities that escape the income tax. Informal sectors by nature have a propensity for weak regulation and low taxation. A well implemented consumption tax ensures that the informal sector is brought into the tax net. Stability of revenues is also a forceful argument in favour of having more of consumption taxes in the tax mix. Compared with the CIT, the VAT could produce more stable government revenues. This is because a period of declining corporate profits, for example, could produce less corporate tax revenue. Another merit of consumption taxes has to do with their inter-temporal efficiency. Taxes are said to be inter-temporally efficient if they do not distort decisions regarding the level of savings and investment. VAT is said to be inter-temporally efficient because it is a tax on current consumption and individual’s savings decisions are not affected unlike the situation with income taxes. International evidence highlights a gradual shift from income to consumption taxes in several reform initiatives by many countries to broaden the tax base. The introduction of VAT in New Zealand was accompanied by a reduction in income tax. It was the same story in Malaysia where the corporate tax rate reached an all time high of 30 per cent in 1997 but was reduced to 24 per cent in 2015 the same year that the VAT in Malaysia also known as the goods and services tax (GST) was introduced. The

country has just reintroduced its sales and service tax (SST) from September 2018 applicable at the standard rate of 10 per cent. In Africa, Madagascar and Egypt provide persuasive examples. Both countries have about the lowest company tax rates in Africa (20 percent in Madagascar and 22.5 percent in Egypt) but their VAT rates are among the highest in the continent (20 percent in Madagascar and 14 percent in Egypt). In Ghana, the relatively high tax to GDP ratio of 17.6 per cent is not unconnected with the mix of income and consumption taxes with CIT at 25 per cent and the VAT at 15 per cent. Overall, these results suggest that Nigeria needs to take a second look at its tax mix. The CIT at 30 per cent that operates alongside a VAT of 5 per cent may be far from optimal especially with respect to revenue generation and economic growth stimulation objectives. The revenue from CIT continues to dwindle due to low compliance and high rate of tax evasion and avoidance schemes by companies that take advantage of loopholes in tax laws. The abuse of the various tax incentives to encourage direct investments such as the pioneer status has not helped matters. Even though there are guidelines on eligibility, the status is prone to widespread abuse with many non-eligible companies enjoying the benefits as revealed by the investigative panel of the House Representatives sometime ago. All these justify a shift towards greater reliance on indirect tax by gradually

increasing the VAT rate in such a way that aggregate consumption is not affected. To shore up VAT revenue, an increase in the rate from the current 5 per cent to say 10 per cent is advocated especially given the fact that Nigeria’s VAT is among the least in Africa and indeed the world. At the same time, there should be a reduction in the company income tax rate from the current 30 per cent to say 25 per cent in order to reduce the tax burden on companies. An increase in the VAT accompanied by a reduction in the CIT will most likely enhance efficiency and result in higher revenue to the government. It also promises to incentivize new investments by firms thereby creating more job opportunities. This is consistent with international evidence. Most studies have identified a low corporate tax rate as key component of an effective tax system and one that is highly attractive to foreign investors. It is a no brainer therefore that a reduction in CIT will rub off positively on the stock market. Any increase in VAT should adhere to the principle of vertical equity so that essential goods and services are VAT exempt or zero rated. Given the disappointing performance of tax revenue over the years, there is the need to tweak the current strategy with a view to ramping up tax receipts in Nigeria. Part of the strategy to accomplish this should include a realignment of the tax mix in favour of consumption tax.

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Wednesday 28 November 2018

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comment Character Matters with Daps

Dapo Akande Graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

oth house prefects and school prefects were powerful as they were the master’s lieutenants and in many ways they ran the school. Character was sacrosanct. And I know many of my compatriots who attended King’s College, St Greg’s, Igbobi, Hussey College, Holy Child, Queen’s College and the Federal Government Colleges of yore will know precisely what I’m talking about. The British don’t and have never had a monopoly on character building. They’ve just fared better than most at enculturating it through their rich sense of history and tradition. Expediency hasn’t persuaded them to abandon their long held values. Values often independent of their

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Education revealed (v) religious or irreligious leanings. It’s no wonder nothing has been added to the Nigerian archives since the British left. Not a jot. We have little sense of history which has rendered us rudderless. As they say, how can you know where best to go when you don’t know where you’re coming from. Hence, why history seems to always repeat itself here. One political Party goes and another comes but you’ll be hard pressed to tell them apart. Interestingly, the “efficos” at school are the ones you usually hear about, falling off the rails when they get to University. Their first experience of total freedom. An exciting period in one’s life but not without its perils for those who never gained the experience of learning where to draw the line earlier in life. Our dear country finds itself in an unfortunate situation, having abandoned the best of nation building exercises inherited from the colonials. In a haste to distance ourselves from everything African, which has for so long been regarded as primitive, backward and unfashionable, we’ve lost the best of our own customs too; which undoubtedly fostered communal peace, guaranteed high moral standards amongst the people and instilled a vital sense of honour. All

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We have little sense of history which has rendered us rudderless. As they say, how can you know where best to go when you don’t know where you’re coming from

’ seems so distant now. Many of these virtues remained highly prized until a few decades ago but things are very different now. With a bourgeoning youth population where more than fifty percent of the country’s population are less than thirty years old,

tales of the good old days sounds increasingly like myths. This is all they’ve known. Much can be said for our lost traditional and informal form of education. So we find ourselves in limbo with no definitive ethos at all, having succeeded in throwing the baby away with the bath water. And as nature abhors a vacuum, crass materialism and other deviant ways of life hitherto alien to our culture have stealthily filled this vacuum. As the debate of which is more critical, infrastructural development or human capacity development rages on, I am inclined to support those who insist human development should take the lead. All these years that we’ve been doing it the other way round, how far has it got us? Decaying and obsolete infrastructure to which relevant authorities deem it necessary turn their attention to only when it’s time to award a preposterously huge contract to replace. Maintenance doesn’t seem to pay, if you know what I mean? For some time now, self centeredness has remained the bane of our society. A careful dissection of our problems will inevitably expose selfishness at its root and selfishness is the antithesis of character. Character concerns itself with “we” rather than “me”. “Right”

rather than “expediency”. And truth remains a constant no matter how well you try to spin the lie. It’s about time we begin to take seriously the issue of an acute character deficit bedevilling our society so we can begin to devise ways of addressing it. Addressing it through the educational system must form a significant part of the solution so by the time our children come of age to step into leadership roles in the real world, they will recognise leadership to be service and not lordship. Our school motto was Exemplum Docet which simply meant “lead by example”. Societal transformation cannot result from mere wishful thinking. Intentional, deliberate and consistent action is required before a noble national ethos can evolve. Lee Kuan Yew, the father of modern day Singapore taught that lesson well. A state Governor who sees nothing wrong with putting 228 employees on the state’s payroll as his aides, while insisting the state lacks the resources to pay civil servant’s salaries, sums up quite succinctly one of Gandhi’s seven social sins that bedevils our society; education without character. Changing the nation...one mind at a time Send reactions to: comment@businessdayonline.com

The Monetary Policy Committee and 2018 capital budget implementation Maxwell Ekor Ekor is Senior Economist and Managing Partner of Ecopol Associates Limited and writes from Abuja

s widely expected, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) left its key policy instruments unchanged in the final meeting of 2018. The structure and tone of the 2,373 worded communique followed similar pattern of past communiques, a prerequisite for entrenching clarity and consistency in monetary policy communication. The average word length of 5.3, average sentence length of 26.9 and average vocabulary level of 5.7 were in the range of the last two communiques. In discussing fiscal policy, the MPC made reference to the 2018 budget five times, with a total

word length of 33 used to talk about the budget. This implies that the committee dedicated 1.39percent of the content of its last communique to fiscal policy. What is however of interest is the context in which the MPC referred to the 2018 capital budget. First, the committee opined that implementation of the 2018 capital budget was one of the reasons why the Manufacturing and Non-Manufacturing Purchasing Managers Indexes (PMI) increased in October 2018. However, the extent to which the execution of the 2018 capital budget impacted the PMI may be negligible given the slow pace of releases to the Ministries, Departments and Agencies (MDAs). Where cash-backings have been done, the procurement process needs to be followed for transparency and accountability. Indeed, there are MDAs that have opened bids for their projects but contracts cannot be awarded because of lack of funds. It is also a common occurrence that some MDAs use part of their released

capital votes to meet recurring obligations, especially funding of local and international travels by their political heads. Second, the committee noted that even though output recovery remains fragile, the effective implementation of the 2018 capital budget is one of the factors that will improve the investment climate and reduce unemployment. Yet, the performance of the budget so far remains an issue given the poor releases to MDAs because of the revenue predicament facing the government. Although some priority sectors like works, power and housing, agriculture and water resources have received reasonable releases of late, they should by now be finalizing their procurement processes and awarding contracts to deserved contractors. Because the effects will not be contemporaneous, most of the projects that will be implemented, when completed, will start having the desired impact months from now. Third, the committee posited that sustaining the implementation of the 2018 budget is one of the

ways to ameliorate the supply side constraints facing the economy. On the contrary however, a drastic improvement in execution of the budget is what is required. This is because the current pace of implementation, if sustained, may result in a very dismal budget performance by the end of the 2018 fiscal year. Already, most of the MDAs were asked to roll-over between 50-60percent of their planned projects for 2018 to their 2019 budget proposal. Fourth, the committee suggested that the effective implementation of the 2018 budget is one of the factors that will redirect the economy on a path of inclusive and sustainable growth. This however may not be the case owing to factors discussed previously. While personnel budget is being implemented 100percent, MDAs have received between five-six months of their overheads, but capital releases have been rather disappointing, especially for the ones not categorized in the toptier. The reality is that the implementation of the 2018 budget is

being impaired by revenue challenges facing the government. Finally, the committee noted that the increased pace of implementation of the 2018 Federal government budget is one of the factors that will impact the outlook for inflation for the rest of the year. This view is in tandem with expectations of some analysts who opine that the government may improve on cash releases to MDAs going into an election year. While this is the dominant view, even among sources in the fiscal environment, it remains to be seen the magnitude that this will happen. Should the MDAs get improved releases in the next two months, the inflationary impact may be felt from February 2019 due to lag effects. In conclusion, the context in which the MPC talked about the 2018 capital budget in its last communique may not be a true reflection of the slow pace of implementation due to paucity of funds to the MDAs. Send reactions to: comment@businessdayonline.com

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Editorial Publisher/CEO

Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

Wednesday 28 November 2018

Developing Nigeria’s domestic gas market

he Nigerian National Petroleum Corporation (NNPC) has committed to supply 5 billion standard cubic feet (SCf) of gas daily to Nigeria’s domestic gas market to drive willing buyer, willing seller pricing model. This plan, however, might hit a cul-de-sac. This is because investors have stayed away from Nigeria’s domestic gas market due to opacity of fiscal terms, lack of functional gas infrastructure and high entry barriers, which have, in turn, kept the market underdeveloped and has negatively impacted gas utilisation. To ensure there is willing buyer, willing seller model in the domestic gas market, the NNPC decided to supply 5 billion standard cubic feet of gas daily to the market. This will be sufficient to create a viable and sustainable domestic gas market. For incentives, the NNPC has stipulated variable gas prices for different sectors of

the economy to drive investment inflows and competitiveness. There is one gas price for power, one for industries and another for industries that use gas as feedstock to manufacture fertilizers and petrochemicals. In this sense a Nigerian fertilizer manufacturer should be able to compete with other fertilizers makers around the world. However, the economics of natural gas development and utilisation are driven by the high cost of gas production and transport facilities, and the need for economies of scale. Therefore, to drive an increase in privatesector led activities, government has to execute at the least, the gas infrastructure blueprint as contained in the Gas Master Plan. The Nigerian Gas Master Plan (GMP) specified a revised transitional pricing structure for gas to power projects in 2010, and ultimately a price of $2.50 per million British thermal unit (MMBTU) was set in 2014 for contracts that are supplied under the domestic gas supply obligation (DGSO) scheme.

The price by 2010 was $1.99 per MMBTU. The GMP also imposed penalties for non-compliance with the DGSO which includes: payment for volumes not supplied, or a penalty price of $3.50/Mscf, whichever is higher; and disqualification from supply of gas to any export projects. Gas is a big source of economic diversification. It can transform agro based industries and boost food production through the development and manufacturing of fertilizers. But to attract the needed investment, Nigeria needs fiscal terms to motivate investors. Some companies have supplied gas but have not been paid. Africa’s top gas producer also needs fiscal terms that encourage small and medium term projects. To achieve the target of developing Nigeria’s domestic gas market, huge upfront infrastructure spending is needed. The oil and gas sector needs $20 billion to $30 billion annually to maintain production. As long as there are no pipelines to move the gas from where

it is produced to where it is utilised, the domestic gas market will continue to suffer. An initial phase of about 2,500km of gas pipeline infrastructure was planned to be completed by the end of 2018. This target, when achieved, will boost investor’s confidence in natural gas market in the country. Experts say some pipelines that need attention include: expansion of the Escravos-Lagos Pipeline System (ELPS) from 1.1 Bscf/day to 2.2 Bscf/day. The Trans Nigeria Pipeline Project (TNPP) needs to be completed. TNPP aims to connect the gas pipeline systems in Nigeria to create an inter-connected system that will provide flexibility and better management of gas supplies. The framework of this system is an integration of the three gas pipeline systems: ObiafuObrikom-Oben (OB3) system with a flow capacity of 2.0 Bscf/ day, the Calabar-Ajeokuta-Abuja system with flow capacity of 3.0 Bscf/day, and the Abuja-KadunaKano system.

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

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

Enquiries NEWS ROOM 08023165438 08169609331 Lagos 08033160837 Abuja

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Wednesday 28 November 2018

BUSINESS DAY

Wednesday 28 November 2018

BUSINESS

Wednesday 28 November 2018

COMPANIES & MARKETS

DAY

StarTimes upgrades app for OTT service

Pg. 16

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

INDUSTRIAL GOODS

MSCI downgrade pushes Lafarge to 5-yr low LOLADE AKINMURELE

tocks of Lafarge Plc are at their lowest point in five years, as the cement maker’s removal from the Morgan Stanley Capital Index has left investors rushing out the exit door. Since Lafarge was kicked out of the index Nov. 14, its stocks have slumped 15 percent, closing at N13.75 per share Monday. Lafarge is down 69 percent since the start of the year, almost four times more than the broader stock market which has dipped 17.4 percent in the same period as rising interest rates in the US and local election jitters in the build up to 2019 spark foreign exits from Nigeria. Dangote Cement, the largest producer of the building material in Nigeria, is down 15 percent. Business Day had reported that foreign portfolio investors would offload Lafarge stocks in response to its removal from the MSCI index, which tracks the performance of the

large and mid-cap segments of the Nigerian market. MSCI had in its 2018 semi-annual review, kicked out Lafarge and replaced it with tier-one lender, First Bank Holdings, as the fortunes of both companies turned. Since falling to as low as N3 per share in the thick of the oil price decline in 2016, Nigeria’s second largest bank by assets has somewhat recovered as non-per for ming loans improve on the back of higher oil prices. First Bank’s share price is unchanged from the Nov. 14 MSCI inclusion, after closing at N7.50 Monday, in what is likely because foreign portfolio investors already included the lender in their portfolio earlier in the year when it became inevitable it would be recalled to the MSCI index. Lafarge, on the other hand, has struggled of late, posting a loss after tax of N10.4 billion in the first nine months of 2018. The cement maker had made profit of N937.9 million in the corresponding

Lafarge is down 15% since MSCI blow

Source: Bloomberg period of 2017. A 21.4 percent spike in finance costs and higher cost of sales, weighed on profitability in 2018 and subdued any gains from a 4.8 percent increase in revenue to N234 billion. Payment of bank charg-

es and interest on borrowings, which grew by 429 percent and 54 percent from a year ago respectively, pushed the company’s finance costs to N33.5 billion, according to the company’s financial statement. But there might be some

INSURANCE

n a bid to improve insurance penetration in Nigeria through the use of technology, Leadway Assurance has introduced a mobile insurance application that enables customers to transact insurance businesses on all smart devices at their convenience. The application, called Leadway MyLife+, is available on both Google play store and IOS Apple Store. It is thus compatible with a wide range of smartphones and tablets. Odalo Aimufia, Chief Information Officer, Leadway Assurance said that the Leadway MyLife+ app is designed to bring real value to the life experiences of its users by providing a more

plans to convert some of its related-party obligation of about $22.2 (N7.9 billion) to equity. Its struggling South African operations, however, remain at the forefront of our worries for the business.

MARKETS

Leadway Assurance moves to deepen penetration with mobile app feature Jumoke Akiyode-Lawanson

respite for the firm after shareholders approved a rights issue, in which the management guided that the proceeds will be used to pay down some expensive short-term local currency debt. The cement maker also

convenient way to purchase and manage their Leadway Assurance policies. In a statement, Aimudia said the new app has many features that offer the customer greater ease, convenience and opportunities for interaction with the Leadway brand at many levels. “The application has features that enable customers to track and manage their policies; lay complaints; report claims directly; buy Leadway policies directly; renew policies; request for agents; contact the Leadway customer services unit via WhatsApp chat, calls or e-mail; view and find branch locations via Google Map.” He further noted that as a company passionate about using technology to drive insurance service de-

livery, Leadway’s evolving business and product focus placed greater emphasis on delivering satisfaction, happiness and fulfilment to the customer. “The impact of mobile technology on the daily routine of millions of Nigerians is huge. It significantly influences how they receive information and the population of mobile phone users in the country keeps growing. As a customercentric business, we are increasingly working on how to leverage on this trend by creating platforms where consumers manage their product plans on the go” “ To this end, w e are committed to a policy of continuous investment in research and development in the areas of technology, trends and culture as the bedrock of our marketing

strategy, product design and customer engagement. This commitment dictates our response to polic yholders and the desire to continue to improve the way we transact insurance business”. The Leadway mobile app is one of the ways that the insurance company hopes to deliver greater value to its customers. It is in line with the efforts of the National Insurance Commission to deepen insurance penetration in Nigeria so that the majority of the people can embrace insurance as a way of life. The company has assured that the multi feature app is secure, all payment information is strictly confidential and global security standards have been employed to protect users.

Agusto & Co. retains ‘Bbb’ rating on C&I Leasing bond Endurance Okafor

ating agency, Agusto & Co. has affirmed the ‘Bbb’ rating earlier assigned to C&I Leasing Plc’s N600 million fixed rate unsecured bond. A c c o rd i n g t o L a g o s based agency, the rating on C&I Leasing Plc’s bond re f l e c t s t h e c o m p a n y ’s relatively long operating history, good market position in key leasing business segments and good asset quality – upheld by good capacity utilisation. The rating by the agency is scheduled to expire Ju n e 3 0 2 0 1 9 w h i l e t h e C&I Leasing Plc bond will mature in 2020. “ Th e rat i ng i s h ow ever constrained by rising leverage, sub-par profitability and the capital position – which we believe re q u i re s i m p rov e m e n t ,

also Agusto & Co considers the possible impact of the fragile economy and political uncertainties may have on the C&I Leasing’s short-term growth prospects,” the Lagos-based rating agency said. Meanwhile, the 18.25 p e rc e n t o f f e r i n g o f t h e Fixed Rate Bonds by C&I Leasing Plc was made through a book building process wherein 100 percent of the Issue was offered to Qualified Institutional Investors (QIIs) and High Net Worth Investors (HNIs) as defined under Rule 321 of the Rules and Regulations of the Securities and Exchange Commission (SEC). Of which both FSDH Merchant bank and FBN Capital were the lead issuing house/book runner and joint issuing house/ book runner respectively. The bond was earlier Continues on page 16

BUSINESS DAY

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Wednesday 28 November 2018

COMPANIES & MARKETS TECHNOLOGY

StarTimes upgrades app for OTT service Jumoke Akiyode-Lawanson

igital TV o p e r a t o r, S t a r Times has launched a new brand for over the top (OTT) business called StarTime ON, which aims to b e Afr ica’s leading online video streaming service. Over the top (OTT) is a term used to refer to content providers that distribute streaming m e d i a a s a st a n d a l o n e product directly to viewers over the Internet, by p a s s i n g t e l e c o m m u nications, multichannel television, and broadcast television platforms that traditionally act as a controller or distributor of such content. StarTimes has now upgraded its app to StarTimes ON, and now provides Live T V, video on demand (VOD) and short v i de os, c ove r i ng n e ws, s p o r t s, m ov i e s, s e r i e s, music, entertainment, documentar y, kids and

religion. Cu r re nt l y , t h e re a re over 150 channels in over 10 languages availa b l e o n S t a r Ti m e s O N online platform with now over 140 free channels. “More excellent international and local channels will be put online, and diverse and rich contents will always be t h e c o r e o f S t a r Ti m e s ON ser vice,” said Ariel Lin, operation director of StarTimes ON. According to Lin, top international channels, like Fox News, BBC World News, France 24, Bloomberg, AMC Movi e s, Fo x L i f e, Pa s s i o n s T V, Baby T V and NG C , are already included in the online video streaming service of StarTimes ON. StarTimes ON weighs l o c a l c o n t e n t i m p o rtantly and has imported most popular contents dedicated to African users. Some national T V s t a t i o n s, l i k e N TA , ZNBC, T VM, TBC, KTN, RTI and RTs, are avail-

L-R Risi Ogunbor, MD, CCD Superstores; Toni Ogunbor, chairman, Nosak Group receiving the Life Time Achievement Award from Uduimo Itsueli, founder and GMD, Dubril Oil Ltd, on behalf of the Vice Chancellor and Tunde Dabiri, vice chairman, Mutual Benefits Assurance Plc at the Awards/ Night of Honour during the 70th anniversary of the University of Ibadan.

able. A c c o rd i n g t o S t a rTimes, the new app provides over 40 self-owned channels, and upgrades hu n d re d h ou r s o f p ro grams each day.

“ Us ers can enjoy ST Novela Plus, ST Nollywwod Plus, ST Dadin Kowa, ST World Football, ST Sport Premium and so on, with StarTimes ON. StarTimes ON provides

multiple sports matches, i n c l u d i n g Wo r l d C u p, Bundesliga, Ligue 1, UEFA Europa as well as other boxing, rugby, basketball, cricket matches. For example, users now can watch live Bundes-

liga and Ligue 1 football matches with StarTimes O N, a n d t h e y c a n a l s o watch replays and highlights of these excellent matches at anytime and anywhere”, the company said in a statement.

ENVIRONMENT

MARKETS

Matrix says 66% of energy consumers still rely on firewood

Agusto & Co. retains ‘Bbb’ rating on...

Francis Sadhere, Warri

atrix Energy Limited during the weekend revealed that 66% of domestic and industrial energy consumers in Nigeria still rely on firewood. Matrix said this practice has steadily worsened deforestation and attendant negative climate change in this part of the world. The company’s Chief Marketing Manager, Toyin Sowumi and its Terminal Manager, Engr. Raphael Biu, made this revelation at a ‘Meet Your Customers Forum’, held in Warri, Delta State. They said Matrix investment in the Liquefied Petroleum Gas (LPG) in Nigeria, is part of its social responsibility targeted at ultimately raising awareness of energy consumers to cleaner and cheaper energy and to minimize effect of global warming. They disclosed that

besides assisting the federal government to take more Nigerians away from dirty and dangerous energies sources, the company is also targeting helping Nigeria to beat down the greenhouse gas emission. To achieve the target of taking the LPG consumption rate in Nigeria from about 600 metric tons per annum to around 2 million by the year 2025, the company said it currently supplies 30% of LPG distribution across Nigeria with intent for an increase. They added that Matrix has deployed 65 LPG trucks to deliver to its customers in different parts of the country and planning to procure more for easy distribution of product. “We called the forum, among other things, to encourage those who are into the LPG business and support them as much as possible. Also, we are trying to support the climate change campaign, to ensure that the effect of

the greenhouse emission is reduced. “ You know that LPG is a cleaner source of energy, we want people to be aware of its benefits ; it is cleaner and cheaper and from the records of the Nigerian Bureau of Statistics (NBS), we now know that 66 percent of Nigerian population still uses firewood, which means deforestation, all these increase the greenhouse emission. “We want to make sure that while meeting our present needs, we don’t jeopardize the livelihood of future generations, a way to do that is to promote and encourage the use of LPG. Currently, the consumption rate of LPG in Nigeria is about 600 metric tons per annum and the per capita for Nigeria is about 2KG, which is still very small, compared to other African countries ; Ghana is 4.3 while Sierra Leone is about 9KG per capita. “The federal government projects that by 2025 the Nigerian per

capita moves to 18.8 percent per capita, however, if people are not informed about the benefits ; like the safety and availability aspects, then the target can’t be met. That’s why we called this forum. “Before now, you could only load the product from Lagos, which takes more time and more money from Lagos, but with the coming of our facilities to Warri, we have brought LPG availability and ease of distribution to the whole of the SouthEast, South-West. “We brought it to Warri not because our Board of Directors couldn’t have easily gone to plant this investment in Lagos because it is cheaper to invest in Lagos ; if look at our landing cost, it’s higher here than in Lagos, but the company brought it here because it’s purpose is to impact on the lives of Nigerians, make life easier and ensure that this issue of climate change is tackled.

Continued from page 15

assigned a Bbb- rating by Agusto & Co Limited, and the rating agency has now retained it. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating agency. The N600 million issue is however the second tranche under C&I leasing Plc, considering the comp a ny ha d a c c e ss e d t h e domestic Bond Market on November 20, 2012 to raise funds for the Settlement of bank loans and other commercial debt ; Acquisition of IT Infrastructure and Investment in Working Capital. The transaction represented the Series 1 under the N10Billion Debt Issuance Programme and was secured by a Sinking Fund. The bonds were offered via a book build further to

which a total of N940Million (100% of the required amount) was raised at the conclusion of the book building exercise, as compiled from the prospectus on FMDQ OTC website. “The Bond qualifies as securities in which Pension Fund Assets can be invested under the Pens i o n s Re f o r m s Ac t 2 0 1 4 and s e cur ities in which Trustees may invest under the Trustees Investments Act, Cap T22, LFN, 2004,” FMDQ had said. Meanwhile, Agusto & Co in a statement sent to BusinessDay said growth in business volumes for C&I Leasing Plc is likely to be sustained by the current upswing in the crude oil market, which it said should dr ive significant investments in crude oil & exploration. “In addition to tapping into growing opportunities in Nigeria, the Issuer is nurturing expanding beyond the shores of Nigeria,” Agusto & Co concluded.

BUSINESS DAY

Wednesday 28 November 2018

COMPANIES & MARKETS

Business Event

CONSUMER GOODS

Binatone unveils affordable yuletide products

n continuation of its 60th anniversary celebration, electronics manufacturer, Binatone Industries, has introduced a wide range of affordable and quality products into the Nigerian electronics market to cater for the various needs of its many customers at home and in the kitchen during the festive season. The company’s managing director, Prasun Banerjee who disclosed this in a press release stated that the gesture is due to the fact that it had always strived to identify trends and answer consumer needs with unique, affordable and well-designed products with two year warranty at all times. “Binatone, founded in the UK in 1958, celebrates its Diamond Jubilee this year. That is 60 years of consistently delighting customers with high quality, innovative products at affordable prices. To celebrate this occasion and to say “Thank You” to its customers, Binatone is offering innovative products with attractive prices available at all leading Supermarkets and electronic retailers” he explained. Among the new products introduced included a brand new design of rechargeable fans (in 16 & 18 inches), the 10 KVA centralized stabilizer, suitable for an entire house, multi cookers with a unique sauté function, heavy

weight & high power irons with Binatone’s Magi-cloth (specially designed to absorb the extra heat that would otherwise spoil an expensive, dress, shirt or suit,) and cool touch jug kettles. Banerjee further disclosed that a full range of Air Coolers and a new collection of Ceiling Fans as well as some exciting additions to the famous range of unbreakable jar blenders (now including a free stirring stick) and the ultra-innovative Bluetooth Tower Music Fan. “Other products that would be available from Binatone include a new pressure pot with a transparent lid, an energy saving ceramic cooking plate, table top gas cookers, a premium garment steamer for larger items of clothing and of course, a whole range of other products in the fan, small domestic appliance and power categories.” He added. He explained that apart from innovation, outstanding design and unbeatable value for money, Binatone has continued to offer our two years warranty to all its customers on every Binatone product. The products, according to a statement signed by the Managing Director of Binatone Nigeria, Mr Prasun Banerjee, ranges from Food & Beverage Preparation, like blenders with unbreakable jugs, juicers and kitchen machine, to Healthy

cooking with only a drop of oil in Binatone Air fryers. “You can also do your Cooking with Rice Cookers or on hot plates and table top gas cookers. If you need to clean your apartment or sofa sets and curtains, this can be done with Binatone Vacuum Cleaners. For Personal Care get grooming with hair clippers & hair dryers. As for Garment Care, we have the innovative Garment Steamer along with a whole range of dry & steam irons. We also have a wide variety of fans to choose from” the company stated. To take care of destructive voltage fluctuation, the company pointed out that it has a large stock of quality and durable voltage stabilizers on table top as well as wall mount insertions and a range of uninterrupted power supply solutions. The statement stressed that Binatone has a legacy of being in existence for more than 50 years, and over the years it has become leader in electrical appliances with in depth expertise in a clearly focused range of products. “Binatone has been spreading convenience, ease of use and value across homes internationally. At Binatone we have always strived to identify trends and answer consumer needs with unique, affordable and well-designed products,” it added.

CONSUMER GOODS

L-R: Abimbola Ogunbanjo, president, Nigerian Stock Exchange (NSE); Mary Utuk, acting director-general, Securities and Exchange Commission (SEC); Austin Avuru, CEO, Seplat Petroleum Development Company, overall winner of PEARL award 2018; Faruk Umar, chairman, board of governors, PEARL Awards Nigeria, and Tayo Orekoya, president/CEO, The PEARL Awards Nigeria, at the 2018 Pearl Awards Nite in Lagos. Pic by Olawale Amoo

Lifemate rewards customers

urniture maker, Lifemate Nigeria Ltd, is organizing the 3rd edition of its customer reward party on the 1st of December 2018. As part of the company corporate culture to appreciate customers, associates, business partners, government agencies and friends, in this regards, the company will be organizing a customer appreciation party and also celebrating the grand opening of their newest head office furniture showroom extension at plot one Ikosi road, Oregun, Ikeja, Lagos. The new showroom which is about 6,600 square meters has been updated to offer the latest furniture designs in a wide variety of furniture brands at giveaway prices, the furniture maker said in an email to BusinessDay.

The price slashes is to commemorate customers for their patronage over the furniture maker’s 12 year existence. To reward them, there will be a three day-promotional discount sales. The three-day promotional discount sales, will run from November 29th to 1st of December 2018 at the head office and customers will be given 50 percent discount on home furniture, sanitary wares, outdoor furniture products and 20% discount on royal furniture products. As part of the celebration, Lifemate Furniture customers will be treated to lots of free gifts items, the party will feature a guided tour of the new showroom, food and drinks, live entertainment, grand opening discount sales, special pricing and much more.

L-R: Ifueko Omoigui-Okauru, chairman, board of trustees, Lagos State Employment Trust Fund (LSETF); Akinwunmi Ambode, governor, Lagos State; Sumonu Ismaila Kola, beneficiary LSETF, and Akintunde Oyebode, executive secretary, LSETF, during the LSETF cheque presentation ceremony to the beneficiary in Lagos, yesterday, Pic by Olawale Amoo

To top this all off, there will be a raffle draw, 1st prize will go home with a massage chair, 2nd prize 500,000 vouchers, 3rd prize 300,000 voucher for two people, 4th prize 200,000 voucher for two people and the 5th prize gets a Duvet for ten people. Customers who purchase furniture products worth one hundred thousand naira stand a chance to get N10, 000 cash coupon. “Since the company’s inception in 2006, the mission has always been to be the foremost provider of super quality products and to create higher level of living through tech – enabled innovation and offer an extensive selection of home furnishings with outstanding value,” the company’s spokesperson said. L-R Eniola Sobo, co-founder, FitFamFest 2018, Ugo Ahukannah senior brand manager, Amstel Malta, , Life Coach and Wellness Mentor, Lanre Olusola at the 2018 FitFamFest in Lagos.

AWARDS

FBNQuest recognized for outstanding performance at BAFI Endurance Okafor

BNQuestAssetManagement, a subsidiary of FBN Holdings Plc, was nominated and won in two categories, at the 2018 BusinessDay Banking and Financial Awards (BAFI). The annual event is a gathering of industry leaders from the financial services sector with the aim to celebrate the achievements of those who drive growth, development and financial Inclusion in Nigeria. FBNQuest Asset Management received the awards for ‘Equity Fund of the Year – FBN Nigeria Smart Beta Equity Fund’,and ‘Bond Fund of the Year – FBN Nigeria Eurobond (USD) Fund’. The firm was recognised for its strong mutual funds’ performance

over the last 12 months across all public funds and portfolios, as it remains committed to being one of the leading partner for individual and institutional investors. Commenting on the awards, Ike Onyia, Managing Director of FBNQuest Asset Management said, “these awards are an incredible honor. They are an acknowledgement of the hard work and dedication of the teams, and an affirmation that we are on course as we continue focus on the opportunities to innovate and change the game.” The asset management of the FBN group said the FBN Nigeria Smart Beta Equity Fund was the first of its kind in the Nigeria equity market. “To be recognized for a job well done is proof that we are making

a difference, and our clients are satisfied with the value we deliver.” The two awards received at this year’s BusinessDay BAFI adds to the portfolio of awards FBNQuest Asset Management has won in 2018, as it had earlier in the year been announced as the winner of the EMEA Finance 2018 African Banking Awards for the “Best Asset Manager in Nigeria” and “Best Asset Manager, Pan-Africa”. Meanwhile, FBNQuest Asset Management is one of Nigeria’s leading asset managers for individual and institutional investors. It offers a range of investment products and services, with strategies spanning various asset classes and sectors. It also guides its clients through Africa’s dynamic markets, and identifies the best opportunities that shape their portfolios.

L-R: Ajibade Fashina; Founder/Managing Partner, Pedabo; Tunde Fowler, FIRS Chairman; Godwin Obaseki, Edo State Governor; Albert Folorunsho, Founder/Managing Consultant; Lola Folorunsho, CEO Pepos Ventures and Killian Khanoba, Partner, Pedabo at the 20th anniversary of Pedabo Consulting.

BUSINESS DAY

C002D5556

Wednesday 28 November 2018

In association with

a g @ bu s ines s dayo nl ine. co m

Low value addition responsible for Nigeria’s poor cocoa output, says expert Josephine Okojie

o ku n Th o mp s o n , the Olooni of Eti-Oni and an international cocoa trader says that the country’s inability to maintain a steady growth in its cocoa output is as a result of low processing of the commodity and lack of adequate research. According Thompson, despite the potential of the Nigeria’s cocoa industry to change the fortunes of the country’s economy, with attendant exponential gains by way of earnings, employment and other spin-offs, the Federal Government’s lack of sincere approach to the subsector has consistently deterred its growth. “We are not getting involved in research to develop cocoa seedlings that are pests and flood resistant and this is as a result of poor funding. The research institutes are not adequately funded to develop these improved seedlings for farmers,” Thompson says. “The only thing that can drive our economy is manufacturing through value addition. This is what will sustain the cocoa industry and also drive production.” Thompson states that the continuous destruction of cocoa

From left: Innocent Azih, member, British American Tobacco Nigeria Foundation’s Executive Working Group; Aloefuna Ekenechukwu, an agricultural specialist; Nike Akande, Chairman, NEPAD Business Group Nigeria; Tajudeen Akinwande, communication and event manager, BAT Nigeria Foundation and Oluwole Dosumu, executive secretary, NEPAD Business Group at the fourth NEPAD Rice Investment Summit held recently in Abuja.

trees across major growing states by pests is as a result of farmers’ inability to access pest resistant seedlings. He says this is responsible for the country’s inability to get full economic benefits from growing the crop. He urges the government to lay more emphasis on value addition rather than production, saying that processing will drive increase in production. Nigeria once had 27 cocoa processing factories in the 1970’s,

but the number fell to eight in the 2000s, with a combined installed capacity of 150,000MT. Today, Africa’s Nigeria has only five functional factories with a combined utilisation capacity of less than 30,000MT per annum, BusinessDay gathered. Currently, Nigeria’s cocoa processing industry is operating at less than 20 percent, owing to a combination of many factors, BusinessDay finds. High operating cost, along with higher import duty in European

ActionAid, PIBCID want more funding for agric extension service in Kogi Victoria Nnakiaike, Lokoja

c t i o n A i d Ni g e r i a, i n collaboration with Participation Initiative for Behavioural Change in Development (PIBCID) has called for more funding of agricultural extension services i n Ko g i s t a t e t o b o o s t c ro p productivity. Both organisations made the call during a meeting of community p a r t i c i p at o r y a s s e s s m e nt o f g ov e r n m e nt e x p e n d i t u re o n agriculture and community score cards on smallholder farmers’ access to extension services. Hamza Aliyu, a member of the Public Financing of Agriculture (PFA) project of ActionAid in Kogi State, said that the state ranks ver y low in providing funds for extension agents to give technical support to farmers while presenting a report done across eight targeted states which Bauchi, Delta, Ebonyi, Gombe, Kogi, Kwara, Ondo and FCT on

extension service. Aliyu stated that the state was particularly rated poor in the aspects of inputs facilitation, land preparation ser vices, market information ser vices, post-harvest management, onfarm demonstrations, radio and television programmes, training and workshops, amongst others. She called for enactment of an agricultural extension policy to guide and regulate the practice of agricultural extension and advisory services in Nigeria for assured and sustainable funding mechanism and quality control. According to her, the report of Agricultural Development Programmes (ADP) in all the states shows that analogue method in extension services were still being deployed and therefore called for urgent use of technological t o o l s f o r e xt e n s i o n s e r v i c e s efficiency especially now that youths are encouraged to embrace agriculture. The repor t equally called

for a synergy between donorassisted projects located within the ministry of agriculture and ADP’s to avoid duplication, wastage and unhealthy rivalry. It a l s o r e c o m m e n d t h a t provisions of adequate 432 mobility for extension workers; recruitment of adequate and qualified extension workers; building of capacity of extension workers and ensuring better condition of service for extension workers to enhance better extension and advisory services in the country. Speaking earlier, Inikpi Ali, programme officer of Public Financing of Agriculture in the state, expressed worry that the rating of Kogi in extension technical support services was very poor. Ali said that the dissemination programme was designed to keep officials from the state ministry of agr iculture, the ADP and other stakeholders abreast of the findings with a view to finding a better way to solve the problem on ground.

markets and farmers’ preference to sell to merchants— who offer premium price over processors—, has made it unattractive for Nigeria’s remaining five cocoa processing factories to tap export demand for butter, cake and powder. Thompson says that Ivory Coast was able to improve its production from 800,000 tons to 1.2 million tons today because the government focused more on value addition. He notes that Ivory Coast now has become the largest processors and producer of cocoa globally

because the government focused more on processing. He says that Nigeria can replicate the Ivory Coast model by paying more attention to value addition and promoting local consumption of cocoa. “Our export drive initiative of encouraging export raw cocoa beans rather than intermediary product through value addition which adds much more unto the price and also create jobs in multiple folds would not help to increase output,” he explains. “If the main crux of our recent 10 year cocoa development plan is not focus value addition then it is bound to fail,” he further says. He notes that to promote value addition in the crop and drive local consumption, the Eti-Oni community in Osun State would be holding its third edition of the annual cocoa festival. “The cocoa festival will help us build a cocoa culture that would imbibe certain habits of cocoa in us and help us move up in the chain in cocoa production. It will also help create sustainability in the production of the crop.” The cocoa festival is scheduled to hold at Gureje Square, Eti-Oni, Osun State from 2nd to 9th of December, 2018.

Kogi produces 4mn tons of cassava yearly, says Bello Victoria Nnakiaike, Lokoja

overnor Yahaya Bello of Kogi state says that the state is producing over four million metric tonnes of cassava annually, accounting for seven percent Nigeria’s annual production. The governor disclosed this at the inauguration ceremony of the ‘Cassava City Day’ in Lokoja, with theme: ‘Exploring the Treasures of Cassava Crop’, organised by Kogi Agriculture Development Project (ADP). Represented by Kehinde Oloruntoba, the state commissioner of Agriculture, the governor states that he is committed to transforming agriculture in the state and he is starting with the cassava crop. He says that Nigeria provides 58.8 percent of global production of the crop, while he adds that the sole aim of cassava city project is to create job to the teaming youths. “Kogi is the leading cassava producing state in Nigeria with production of four million metric tonnes per annum of the nation’s total of 58 million metric tonnes per annum,” Oloruntoba says.

“Many treasures abound in cassava crop and nothing is wasted from the leaves, stems and roots. Cassava products abound such as flour, chips, sweeteners, ethanol, starch, fufu, tapioca, abacha, garri and other industrial products.” Also, Oyisi Okatahi, managing director of ADP said the Cassava City had become a reality and the concept would be replicated across the three senatorial districts in the state with maize and rice in other cities, saying investors such as Contec Global, Geron Oil, Gas and Jil Farms, have all commenced work at the city site in Osara, Adavi LGA. Okatahi enjoined all stakeholders to remain committed as the investors had ‘proof of capital’, saying government and the community’s equity in the investment would primarily be land. “Cassava city is aimed at explor ing oppor tunities and prospects of cassava production; it is the gateway to employment and prosperity in Kogi.” He equally commended G o v e r n o r Ya h a y a B e l l o f o r his commitment and vision for agricultural sector in the state.

Wednesday 28 November 2018

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BUSINESS DAY

ag@businessdayonline.com

TechnoServe increases support for food fortification with SAPFF initiative Josephine Okojie

n a bid to tackle issues of malnutrition, TechnoServe is providing support to processors in Nigeria through the Strengthen African Processors of Fortified Foods (SAPFF) initiative to drive food fortification in the country. The main objective of the SAPFF initiative is to increase the fortification of food products towards increasing consumption of nutritious food, improving cognitive development and averting deaths resulting from malnutrition in the country. TechnoServe through SAPFF initiative is doing this by increasing the compliance of food processors to meet national food fortification standards. Ayodele Tella, program manager, SAPFF, said in a statement made available to BusinessDay that to drive food fortification in the country, TechnoServe will continue to work with food processors in a sustainable fashion to enable them commit to fortifying processed food with essential vitamins and minerals. Tella said that nutrition is an essential building block for growth and development, while adding that fortified food products will help reach millions with more nutritious food and help the country tackle the malnutrition challenge. Tella noted that food fortification alone cannot tackle the problem of malnutrition in the country despite it

Victor Ajieroh of Bill and Melinda Gates Foundation; Ayodele Tella, program manager, SAPFF and Sola Sowunmi food technologist SAPFF at the sectorial training organised for food processors in Nigeria held in Lagos recently.

is critical to micronutrient deficiency prevention and control. According to the United Nations International Children’s Emergency Fund (UNICEF) about 2.5 million children under five are malnourished and have stunted growth in Nigeria. Under the initiative, SAPFF is working with some select food vehicles, adopting a holistic approach to addressing the technical challenges faced by processors and supporting

them to be more competitive and effective in production of fortified foods. In Nigeria, the select food vehicles are wheat flour, sugar, edible oil and salt, with processors of these fortified foods getting customised assistance in various technical and business operations capacities through the initiative. To close knowledge gaps, under the SAPFF initiative, a two-day

‘Farmers, investors need management skills to run successful agribusinesses’ Josephine Okojie

rancis Toromade, a renowned agribusiness consultant and director of marketing, Rome Business School -Nigeria, has revealed that sound knowledge of agribusiness management is the key for farmers, investors to run a successful, profitable agribusiness venture in the country. He made this known while speaking with our correspondent during the just concluded Master’s degree student’s welcome party organised by Rome Business School recently.

Toromade who during the event was honoured by Antonio Ragusa, a professor and founder of Rome Business School, said that the reason most agribusinesses fail in Nigeria is that farm owners and investors focus mainly on the technical aspect of the business without paying much attention to acquiring the cognitive managerial skills needed for sustaining the venture. He e x p l a i n e d t hat, s o u n d knowledge of agribusiness management will help the owners to lower costs of production, boost profits and ensure that food products are grown and distributed effectively. Toromade further explained

L-R: Humphrey Akanazu, country manager; Toromade Francis, director of marketing and head of faculty, MBA Programme, and Antonio Ragusa, founder, all of Rome Business School, during a welcome party organised for Masters degree students by Rome Business School, Nigeria which was held in Lagos recently.

that, the mistake most farmers in Nigeria make is venturing into agribusiness believing that the technical knowledge they have is enough to run the business. He pointed out that, many owners do not possess management skills such as human resource management, supply chain management, marketing and sales of agric products, agribusiness financing and management amongst others before venturing into agribusiness while adding that, all these are what make the venture sensible and profitable. “I have discovered that many people just go to school to study agricultural science; they learn about how to rare chicken, cattle and grow crops, but not the business management aspect of agriculture,” he said. “On the other hand, many farmers have managerial skills but lack technical skills. This call for training that will make the farming business sustainable and profitable. “While the culture in agric can keep you in motion, the business in it will keep you moving.” Toromade revealed that, he is presently working on establishing a world class Agribusiness Ma n a g e m e n t S c h o o l , w h e r e agribusiness owners can acquire the skills needed to achieve a successful and profitable agribusiness venture as is obtainable all over the world.

seminar on the fundamental and sustainable approaches to new product development in the Nigerian food processing sector was held recently in Lagos. The knowledge gap is being closed through periodic sectorial trainings which are designed to improve existing knowledge gaps, validating residual knowledge, as well as provide information on global industry changes and standards.

The trainings provided a comprehensive introduction to the development of new food products, as an avenue for maintaining and increasing a company’s market share. The different stages in the design of a new product were highlighted using the staged or gated approach model as a case study for participants at the seminar. Yetunde Soile, lead consultant - Signal Business Support Services Limited, who led one of the workshops during the seminal said “the training will help every member of an organisation to be involved in protecting the profit margin of their work areas.” “The core of manufacturing cost analysis requires that the consumer remains the primary focus in whatever savings that is done without compromising quality and availability, ensuring that everybody makes an input across the business.’’ Also, Anna Zhenchuk, managing director, BioAnalyt, one of the collaborators of the market place segment of the SAPFF SWT, said her organisation is working in tight collaboration with many organizations in the fight against malnutrition through fortified foods which are delivered in the right qualities to the households especially in low-income populations such as Nigeria where malnutrition level is very high. The program is currently implemented in Nigeria, Kenya and Tanzania.

How tree-planting can create healthy environment Ifeoma Okeke

lusola Adekoya, an advocate and expert in tree planting has said that tree planting, if properly practiced in Nigeria, will enhance healthy environment and preserve nature. Adekoya is the visionary landscaper and revolutionist who singlehandedly without any self-imposed skepticism in his capability transformed a loop hitherto used as hide outs by hoodlums, social miscreants and hemp smokers into a very beautiful garden that is now a toast of all. In a plant exhibition programme held recently at Shodex complex popularly referred to ‘Shodex Garden’ tagged “The language of the plants”, Olusola Adekoya said, someone who has passion and determination and has a long-term value or projection for his nation will never be discouraged in tree-planting as a way of nation building. Adekoya, the founder of Shodex Garden, 20years ago, decided to venture into the tree-planting enterprise. But the incurable optimist, allowed his love for nature and healthy environment to be his driving motive and that has emerged into the limited liability landscape company known as Shodex Beautification Landmark Limited. At the plant exhibition in conjunction with Natures Protection and Environmental Improvement

Initiative (NAPEIIN), he said that “the inspiration behind Shodex Beautification Landmark Limited is passion for beautiful environment and also to showcase how Nigeria can move in to a statically set up city for the nation.” Adekoya who is also the founder of an NGO company; Natures Protection and Environmental Improvement Initiative (NAPEIIN), set up to run along with Shodex said to our correspondent that the attitude of both staff and clients including that of Nigerians towards nature is very bad. Concurring to this, Yemi Shyllon, one of the guest speakers said that “the dirty nature of Nigeria and Nigerians is one of the major challenges organisations like Shodex faces daily.” People tend to dispose dirt anyhow-anywhere without minding their environment. You see those throwing things from their cars into drainages which is very bad. “One of the essences of this exhibition is to sensitise people the importance of keeping a clean and healthy environment and how it can be achieved”, she said. However, the landscape which has been in existence for over two decades in Lagos State is said to have gained lots of recognition from the present-day government of the state including the previous administration and have benefited lot of supports from the government among which is contract awards.

BUSINESS DAY

Wednesday 28 November 2018

INTERVIEW ‘Synergy between stakeholders and the regulator key to successful reforms of the insurance sector’ Sabiu Bello Abubakar is quite conversant with evolution and operational dynamics of Nigeria’s insurance industry, having worked in various insurance companies and the National Insurance Commission (NAICOM) where he rose to the directorate position before he resigned and join Jaiz Takaful Insurance Plc, where he currently serves as the Executive Director, Operations and Training. In this interview with Bala Augie, Abubakar said professionalism and mutual trust among the insurance operators and the regulator, NAICOM, is fundamental to the survival of the insurance sector. Excerpt: Do you see Takaful insurance making any difference in the insurance industry vis-à-vis meeting market needs and deepening insurance penetration? akaful, being an all-inclusive financial service is seriously making significant positive impact on the insurance industry in Nigeria. Takaful insurance is a laudable breakthrough reform of the National Insurance Commission (NAICOM) under the leadership of Mohammed Kari as the Commissioner. So, Takaful will remain one of the remarkable legacies of the Commissioner for insurance. Takaful is a product of regulatory development function of NAICOM aimed at addressing serious consumer dissatisfaction and abysmal insurance penetration in the country of over a hundred million people. For the reasons ranging from religion to socioeconomic deficiencies, a whole region of Nigeria was once excluded from insurance services. That was worrisome and therefore, the stakeholders could not doubt the urgent need for bringing Takaful into an existence to serve as an alternative in the market in order to capture the insurable uninsured segment of the society. It was an onerous duty for the stakeholders to bring Takaful to the reality in Nigeria’s insurance market because Takaful insurance is also fundamental to the achievement of the National Objective which was targeting year 2020 to achieve 70 per cent national financial inclusion, therefore, NAICOM and other stakeholders had to be thorough and meticulous on the Guidelines. Also, introduction of Takaful to the insurance sector was expected to change some of the industry’s narratives about insurance, as such, Takaful being a new innovation, the market was expecting to radically change insurance market for better.

How was Jaiz Takaful Insurance Plc 2017 financial year? When the two full-fledged Takaful Companies were licensed and they commenced operation in year 2016, all the stakeholders were optimistic given the huge and large untapped insurance market ready for them to harness without difficulties. The operators’ and promoters were over ambitious as they were eyeing billions of naira as Premium Income but sooner, the financials of the companies made the shareholders realized that all that glitters was not gold as actual initial result was far from the illusion they created. You do not need to consult oracles to understand the reasons behind their disappointment: first, when you start a new company, you have to create a niche for it to grow gradually before breakeven and profitability. Second, the Takaful companies are

Sabiu Bello Abubakar

not operating in isolation; they are in an insurance business environment where Premium Rates are ridiculously discounted with consumers and distributers as kings. Third, insurance awareness is very low among the people. Fourth, compliance to insurance laws by members of the public is very inadequate. Fifth, enforcement of the extant laws and regulation is virtually lacking. Sixth, market domination by certain players is overwhelming and detrimental to the new entrants. Seventh, dented image and lack of consumers’ confidence is a cause for alarm to the operators. Eighth, there is rampant fake insurance in Nigeria. Ninth, government agencies, ministries and departments (MDAs) behaviours toward insurance as many do not comply with insurance provisions and directives. These are just highlights, I don’t have to discuss them laboriously vis-a-vis your question; you can write a book on each of the highlights. Takaful insurance is promising given that client who do not suffer any loss would stand to share in profit at the end of the financial year; have you shared any profit after 2017 financial year? Jaiz Takaful Insurance Plc like conventional insurer has the same concept of risks pooling. However, in Takaful, such pooled fund belongs to the participants (insured) and it is used to pay claims of the participants. After deduction of claims and other expenses such as wakala fee, and reinsurance cost from the fund whatever remains is distributed back to the participants who did not receive claims benefit in proportion to each participant’s contribution to the fund. Thus, participants are the owners of the fund, unlike the

conventional insurance where after settling losses, the remaining fund (surplus) is retained by the Insurance Company as shareholders money. Underwriting surplus/profit sharing principle is one of the value prepositions of our Takaful company. However, you should know that historically or in line with the global business or market phenomenon, Takaful companies do not make surplus/profit in the first to about third year of operation because of the obvious reasons that at initial year of operation, the operator will not have large portfolio of businesses and operational expenses will normally outweigh the income. Furthermore, the operator needs to build enough reserves to take care of subsequent liabilities. Despite these factors, I am pleased to inform you that we at Jaiz Takaful have surplus result in engineering Takaful and General Accident Takaful portfolios but the surplus amount is not voluminous enough such that we can share it out conveniently. Hence, we decide to roll it over to the next financial year account when, by the will of God, the result will improve significantly. A universal believe is that some economies are buoyant because they have robust insurance industry backing other businesses, do you see Nigerian insurance sector strengthening the economy and contributing to the GDP? It is a fact proved beyond reasonable doubt that insurance is bedrock of nations’ economy. So, it should not be seen otherwise in Nigeria. For instance, it was recently reported that twenty Nigerian insurance firms which are listed on the Capital Market paid at least N77 billion claims just within the third quarter (Q3) of

this year. If insurance do not back these businesses, they might have gone moribund or extinct. Once we are guided by the sense of doing the ‘right thing’ and doing ‘things right’, our economy should not expect different results from what is obtainable from the global spheres where compliance to insurance culture and laws are divine commandment unlike in Nigeria. We have six compulsory insurances and compliance; which is enough to sustain our economy considering our population density, enormous private and public assets. Count how many vehicles are on our roads all over the federation, how many have genuine insurance? How many public buildings do we have all over the federation and how many are insured? Repeat same questions on building under construction, group life, professional indemnity, marine imports and employers’ liabilities insurances you will discover that with only enforcement of compulsory insurances the contribution of insurance sector to GDP would have been equated to banking sector’s contribution or more. Nigeria is losing a lot from insurance sector. Sequel to the Federal High Court order, your regulator, NAICOM, suspended the Tier-based Minimum Solvency Capital which was to take effect from October 1, 2018. Don’t you consider it ridiculous that stakeholders are questioning the regulator’s capacity to issue guidelines; this is not common to the CBN and commercial banks in this country? No, it is not ridiculous rather it shows extent of democratic freedom in Nigeria. However, it was an indication that may be the regulator did not carry the stakeholders along in developing and implementing the Tier-Based Minimum Solvency Capital. People tend to support a course they help built thus regulatory reforms are successful whenever the stakeholders are part of the reform process. There are a number of reform initiatives by NAICOM that are still pending; some have been started but not concluded. A few have been implemented such as Premium Remittance, Takaful Insurance Operation Guideline etc. These reforms have been successful because of the synergy between the stakeholders and the regulator. However, NAICOM reforms on public sector insurance, enforcement of compulsory insurances and many other initiatives are still being awaited. NAICOM has enough legislative powers more than many other insurance regulators in other African countries, yet the commission is seen struggling to enforce the extant laws and regulations unlike other financial regulators in the country. The long-aged provisions of Insurance Act 2003 have been there since and

due for review in order to catch up with the modern development but they are yet to be reviewed by the legislators despite NAICOM’s series of requests demanding for the review. It is believed that if it were CBN’s request it would have been granted. How do you measure regulatory efficiency and effectiveness of the insurance industry within the last twenty years? Measuring the regulatory efficiency and effectiveness depend on the context one is looking at. The scope of this question is too wide. However, we can narrow the discussion to the roles and functions of the NAICOM. You can refer to various provisions of the NAICOM Act 1997 and Insurance Act 2003 to see the roles and the functions of the regulator. In view of the above, NAICOM has been efficient in discharging its functions over the years by developing insurance companies in Nigeria from mere agency outlets of European nations’ companies to independent companies with capital base to underwrite our enormous risks, from few numbers of companies to 59 companies with ability to retain all domestic insurance products and significant percentage of special risk businesses reducing the capital outflow drastically. However, NAICOM need to do more in terms of the companies’ financial capacity and local content law, insurance penetration and compliance with compulsory insurance. Thus, local market insurance capacity is still low; large uninsured populace, gross inadequate insurance compliance. Consequently, regulatory effectiveness is still needed to bridge these gaps. In terms of regulatory supervision and development functions, the regulator seem to focus more on macro-insurance operators with heavy regulatory requirements and pay less attention to micro-insurance operators with less regulatory activities. Moreover, despite the enormous need for Nigerian insurance market capitalization, the reinsurance operators in Nigeria are less or not regulated at all. The regulator needs to come up with regulatory initiatives to promote more reinsurance companies in Nigerian market and recapitalize the existing reinsurance companies to boost the Nigerian market’s capacity to underwrite large risks and attract foreign businesses and investment instead of overburdening the local insurance companies to recapitalize, considering the Nigerian business environment where the demand will not compensate additional capital. Hence recapitalization of insurance companies may be in futility and may put too much pressure in their operations with negative consequences.

Wednesday 28 November 2018

C002D5556

BUSINESS DAY

INTERVIEW With OBOR, Standard Chartered Bank links Africa to global trade Leveraging its long history and connectivity, Standard Chartered Bank has shown strength to enable its clients take advantage of the benefits presented by China-led One Belt One Road (OBOR) initiative - the biggest support to globalisation in the world today. OBOR aims to boost trade and investment growth across Asia, the Middle East, Africa and Europe and is also bringing more cooperation opportunities for Nigeria and China. Carmen Ling, Managing Director, Global Head, Internationalisation /Belt and Road for Corporate and Institutional Banking of Standard Chartered Bank, explains why this initiative is central to their core business. Ling spoke to Onyinye Nwachukwu, BusinessDay’s Abuja Bureau Chief. Excerpts…. What is the One Belt, One Road initiative all about? will call it a global development strategy that is led by China announced by the China government in 2013. Initially it covers 65 countries. It is a global inclusive initiative to drive growth in a more sustainable way and it later expanded to now more than 65 markets. For Africa, it initially it covered only east Africa because of the maritime route but over time, it has included the whole of Africa and also some parts of the Latin America as well. So I will call it a global development strategy aiming to be inclusive and to drive a sustainable growth for the world economy. Originally it included in that 65 countries including Egypt for Africa and subsequently in 2015, presidency also included the entire Africa across UK into the picture, so finally they also included some parts of the Latin America countries so almost globally other than the United States. And I think the belt and roads initiative has five themes, one is really for infrastructure because if you want to drive growth, first of all I need to connect with you so that I can do more, it is connectivity by building infrastructure so I can get to you more easily, goods and people that is infrastructure. And then the second is policy, because even though we build the infrastructure if you have a policy that does not allow my goods to go into your country or your goods go into my country,that does not work, so the second is policy. The third is trade, what we call an imputed trade, meaning that I will not extort tariff to you and you will not extort tariff to me. So we trade on a fair basis. The fourth is people, so there are five pillars of the belt and road initiative, so financial connectivity, of course you need funding to pull through all of these.

What does this mean for Africa and especially Nigeria? I think we are seeing first of all a lot of infrastructure investment in the infrastructure of Africa. As I said, the first phase started with East Africa because of the geographical location, but over time it has expanded into the whole of Africa. So infrastructural investment is definitely the first gain, and in terms of infrastructure, I think the first thing is to build roads and power, so transport and energy would be the first sector because without roads, without railway, without ports, I can’t reach you and the next thing is energy, you need electricity to create more commercial activities. In this new phase of the program, are there opportunities for international investors to come in? Of course, that is why I keep saying that it is a global initiative and it is very inclusive, eventually if you have the roads and the electricity, it does not only attract the Chinese investors but you can have other international investors that will come to the market. I was in Europe and I was asked by many of our European clients about the countries that have the most in-

Carmen Ling

frastructure projects so that this can become a new market for them to come or a new production place for them to set up their manufacturing. Similarly, I think for some of the corporates of the countries like Europe, the US, are participating, joining in some of these projects, so it is not just about Chinese companies, it also includes the Europeans, the Americans are also participating. So it is not as if it is a single China- driven initiative, but as we move on, it gets more and more global. And on financing as well, if you solely rely on the development bank from China, you won’t be able, because the investment is so massive, so Standard Chattered also plays a role to bring in private sector capital into this investment as well. Can you share some expected outcomes from the OBOR Strategy? I think the outcome like I said is to generate more economic activities, and that will be after the infrastructure, after roads, after energy, you will see there will be industrial parks, there will be free trade zones, and then you will see real estate projects, you will see hotel projects, hospital projects, courtesy of the roads and the electricity, so you see a lot of real economic activities will be created and when you have real economic activities, you create jobs and then the growth. Can you talk us through some of the projects that you have commenced or finished in Africa/Nigeria under this initiative? I think some of the projects, the first phase will be in the East Africa, because like I said the first phase started with the East Africa, and then we are seeing more Chinese investors coming in to the West Africa only in the most recent years. I think a lot of the projects that the bank is involved in is not just about the financing, but we are also involved in the initial stages where we do the big bond issuance, so as it moves on to become a project, we also help them look at financing and options on how to finance the projects, and subsequently as the client moves on to start the projects, they also need basic banking services, advise on collections and repatriation of money,

so that is how we were also involved with supporting our clients and then eventually when the clients get into the multiple market we also help with overseeing some of these accounts but to answer a few of your questions, actually we have been involved in quite a few of these projects here in Nigeria, such as the road projects. So we are involved in some of these projects, but not necessarily purely financing, some of these projects we are involved in here in Nigeria, like the Lekki road projects that the Chinese are involved in. How would you assess impact of this project so far? I think we are seeing the trade flow, the trade flow between China and Africa is increasing, we can give you the number of the growth, this is one of the immediate, we also see the number of Chinese investments coming into Africa increasing and I think one of the signature project in Africa is the Nairobi Mumbasa rail. It started to operate this year and then we were seeing more, other types of projects and investments will come along once you have the roads being built and operated. We don’t have specific numbers for Nigeria but when you look at the growth of trade in Africa, the number that I saw earlier was 52% increase over the last three to four years. It means that technically, looking from a year-on-year basis, there has been a 52% increase in trade, which is significant. Are you planning more projects in the country? For the bank, we are definitely involving in more and more projects in Nigeria, like I said earlier. It is also important that we don’t just get involved in the projects but we also want to facilitate the flow, the international trade flow between Africa, Nigeria and other parts of the world including China and this is more needed because we need the trade flow to happen. Is the OBOR strategy primarily focused on trade and overlooking other equally important sectors like agriculture and human capacity development? Well definitely, agriculture is more

like a local business, so I’m sure given we are the largest international bank in Nigeria, so that is why we are also playing a role to facilitate this kind of growth. But for human capacity, none specifically within the bank, but when you look at one of the results of the sort of the benefits that have come along with the bank, there have been more than 250,000 jobs generated as part of this. I think it is a gradual process and it is something that is going to increase and I’m sure we will see that happening as they time goes by. The technology transfer is not what the bank would do, but many of these Chinese companies will like to not just have any banks that you can find that have that kind of connectivities. So that is why when a client wants to go to Africa or Nigeria, they can leverage on the relationship in China and then use us as banking partner and follow the same advisory for them in Nigeria because if they go to a new market to operate they need to understand the local regulations, so they need to find someone with deep presence there that can provide them with the solutions that can provide them with advisory but at the same time having a close relationship with the head office. So that is why we play a role in that. The other thing I also want to highlight is that we are an international bank, and we have operated for over 160 years of history, so we maintain very high international standards in terms of social governance, making sure that these are also built in projects that we love, I think that is the role that standard chartered bank play. So it is about financing? Not just financing, there is advisory and also some very basic banking products, like cash management, like trade. A lot of the clients tell us it is about the depth of our knowledge and understanding of those market and not just the presence in those markets, the depth knowledge of those markets is key, especially for the emerging market where regulations are sometimes changing, and because of the number of years we have been there, the relationship we have helps us to understand and we help the clients understand as well. So this quite key for us. As much as the OBOR initiative has been lauded, China has also been accused of using this strategy to expand its influence and develop international clout, is this a concern and how do you respond? We will come in as politics as a bank, but one of the things I will is, if you build infrastructure, if you go, you won’t be able to take it away. So I think it is as simple as that. What has been built like infrastructure is for the use of the local community. So I guess that is what we see in the sustainable development of the initiative. We don’t participate in every single project because we do have a very high standard of screening these projects, we have been in existence for 160 years and we have such a long history, because the project which we involved we need to make sure that they are sustainable

and will provide sustainable benefits for the local economy and for the local communities, if we don’t, it is going to hurt us because we have a big franchise, and we also want Nigeria to develop because we also have franchise here. So our part that we play is that we facilitate and allow the project to happen and at the same time before our participation, we would have a very stringent criteria to look at the projects and make sure that they are meeting our very high standards in terms of environment, in terms of social risks and we do decline projects that do not meet up that requirement. What is really the interest of the bank in all of this? We operate in this market not for any other reason, so operating in this market is an opportunity for us and also an opportunity to meet our clients’ needs. The reason is because if you look at our footprint we operate in this market. And it is also helping us expand our franchise. We didn’t start in 2013, we don’t just have the Chinese clients, there have Japanese clients, there are Korean clients, there are French clients, they may do the same thing, and they are building infrastructural projects. So the key in for us is that we have to make sure that it is environmentally friendly, with social gargets in place and feasible for us to get across in those projects. Can you speak to the fact that the bank just in 2017 has been involved in more 50 projects worth over $10 billion across a range of products and services? Yes, the 50 projects that we have done, half are from Africa actually, so as we mentioned at the beginning, it is not as if we finance all the projects, there are a lot of projects that we are involved in, even the big bond performance, and then financing as well, then you have project account, we support them in the different aspects of the project not just in finance. Across the globe over 50 of our transactions is in Africa, I can’t remember the number in Nigeria, but Nigeria is actually amongst the countries that we are supporting for projects like this. Again we support projects from the initiation, from the unset of the project all the way to the end, and when they have projects in multiple countries, we help them to monitor the cash flows across the multiple countries. For 2018, we already finished 50 projects across the globe, or if I remember correctly it’s actually 50 percent for Africa, but I can’t remember the exact projects in Nigeria specifically. And the reason is also because of our foot print, because we are connected to other international banks, our foot print is deep and then we become a very reliable partner for the investors who come to this part of the world. Are there other projects that you are discussing? Yes, many of them will be in infrastructure like oil refinery, in roads, in hydro, in ports as well for Nigeria. We are already in the process, it is being discussed with the customers.

BUSINESS DAY

Shipping

C002D5556

Logistics

Wednesday 28 November 2018

Maritime e-Commerce

EU acquires scanners for Nigeria, Togolese Customs ... Scanners to ease cargo inspection Stories by Uzoamaka Anagor-Ewuzie

s part of its efforts to enhance seamless cargo inspection as w e l l a s t ra d e across borders, the European Union has perfected arrangements to handover newly acquired cargo scanning machines to the Nigeria Customs Service (NCS) and Togolese Customs, before the end of this year (2018). BusinessDay understands that the scanners, which had already been stacked at the Cotonou port, are expected to aid trade facilitation along the West African trade corridors, and may be deployed any moment from now. It will be allocated to the Togo, and Nigeria-Benin Republic border posts. Recall that the newly built Seme-Krake Joint Border Post, which was funded by the EU for the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA), was handed over to the governments of Nigeria and Benin on Tuesday, 23 October, 2018. President Muhammadu Buhari and his Benin counterpart, Patrice Talon, inaugurated the facility in the presence of Ketil Karlsen, head of the EU delegation to Nigeria and ECOWAS, and his colleague in Benin.

The Joint Border Post (JBP) of Sèmè-Kraké between the Federal Republic of Nigeria and Republic of Benin was built in the framework of the ECOWAS Road Transport and Transit Facilitation Programme, an integral part of the regional strategy for implementing a comprehensive action programme on infrastructure and road transport. It is a modern border, built according to international standards to meet the expectations of the ECOWAS people. The border is one of the busiest boundary lines in both West African region and Africa as a whole, due to the huge movement of persons, goods and services daily. Speaking with newsmen in Seme last Wednesday, Mohammed Garba, area controller of Customs, Seme Border Command, said that the scanners are already imported and currently at Cotonou port. According to Garba, the modern border post would boost international trade across borders and strengthen trade relationship between Nigeria and neighbouring countries. “The new border post will improve on our revenue generation by way of exchange of information and sensitisation of importers. We will be working together with the Benin counterpart. I can assure you that illegal trade will be minimised to the barest minimum,” he said.

L-R: Kunle Mide-Akinlaja, executive producer, The Next Titan; Olumuyiwa Akande, corporate affairs manager, SIFAX Group; Ogechukwu Obah, winner, Next Titan Season 5 and Adewale Adetayo, general manager, SIFAX Haulage & Logistics Company Limited presenting a cheque to the Next Titan winner at the grand finale held at Lagos, recently.

Garba, who was optimistic that the scanners would enhance their operations, disclosed that every facility in the new border post was provided by the EU, including the chairs. “The scanners and other electronics will also be provided by them. Already, two scanners have arrived. They are in Cotonou port.” He further said that NCS still operates its existing scanners at the border, but noted that goods can be subjected to 100 percent examination at any point in time, as the Customs deemed fit, especially as regards the nature of such goods. The officers, Garba add-

Customs to sign MoU with Indian govt on illegal importation of tramadol

he Federal Government said that it is making plans to sign a Memorandum of Understanding (MoU) with the government of India, aimed at reducing the rate of illegal importation of tramadol and other controlled drugs into the Nigeria. Hameed Ali, comptroller-general of Customs, who disclosed this while responding to questions from journalists on the importation of 40 containers of tramadol intercepted at the Apapa port on Thursday in Lagos, said that the signing of the agreement will enable Nigeria Customs to receive

intelligence information on all export emanating from India, before the arrival of the consignments. “We are talking with the ambassador of India. We are talking about fast tracking the MoU for the Customs mutual agreement which if we sign, will enable us to have timely information on all export from India to Nigeria. Once the agreement is signed, it will become mandatory on the Customs administration of India to upload all information of the export that is meant for Nigeria,” Ali disclosed. He further said: “As at today, we have not gotten the agreement signed, so we

cannot insist on anything except what they oblige. Until we get there, we are working hard and hope that very soon, we will get that instrument signed. But for now, we have to rely on our intelligence.” Ali, who expressed concern that the 40 containers of tramadol valued at over N7.3 billion were imported from India, said the trend has become a source of concern to the Nigeria Customs Service. The MoU has become essential as Customs in the last one week has disclosed the seizure of over 53 containers of illegally imported tramadol and other prohibited drugs.

ed, are yet to fully move to the new border facility, as some facilities relevant to Customs operations, such as the Information Communication Technology (ICT) are yet to be fixed. Recall that President Buhari said during the commissioning that the border post, which sits on 17 hectares of land, would enhance trade by combining border clearance activities in a single location, increase cooperation and coordination of controls, in addition to fostering data and intelligence sharing between Nigeria and Benin Republic. “The Border Post is strategically important and it

lies on the Lagos-CotonouLome-Accra-Abidjan trade corridor, which accounts for about 70 percent of the entire transit traffic in the sub-region.” The importance of scanning machines to cargo clearance cannot be overemphasised as businesses in Nigeria including importers that depend on the seaport and borders for the importation of raw materials and other critical production inputs are currently under cost-driven pressure, following the delay and high cost associated with the manual cargo inspection procedure used by the Customs. This procedure is charac-

terised with long and cumbersome processes, which results to delay that keeps imported cargos in the terminals for a minimum of 14 to 21 days, and has also made Nigeria to rank poorly in the World Bank Ease of Doing Business list. BusinessDay understands that barely four years after the Destination Inspection (DI) service providers handed over some set of fixed and mobile scanning machines worth over $120 million, built and situated in different port locations and border stations to the management of Customs, the Customs has failed to fully make use of these machines in clearing cargo. Currently, over 90 percent of all the containers and general cargos imported through the nation’s seaports and borders undergo manual inspection process popularly known as 100 percent physical examination. Tony Anakebe, managing director of Gold-Link Investments Limited, a clearing and forwarding company, said in Lagos that the process of clearing imported cargo at the Nigerian ports is currently the longest compared to clearing from other seaports in neigbouring West African ports. The scanners in most ports and border stations, Anakebe said, are not in good shape, making it difficult, if not impossible, for the NCS to discharge its duty of container inspection, effectively.

Kitack Lim may return as IMO secretary-general in 2020

he International Maritime Organisation (IMO) Council has agreed to renew Kitack Lim’s appointment as the secretarygeneral of the IMO from January 2020 by giving him a second four-year term.

Kitack Lim

The decision will however need to be ratified by the IMO General Assembly meeting scheduled to hold in December. Kitack Lim is the eighth elected Secretary-General of the IMO, who has helped to guide the international

maritime industry to commit to delivering environmental sustainable initiatives such as ballast water management, the Polar Code, the 2020 sulphur cap and 2050 decarbonisation strategy. In April this year, the IMO member states adopted the Initial Strategy for the reduction of greenhouse gas emissions from international shipping, in line with the global initiative to combat climate change and its impact under the Paris Agreement. This is the first time that the international shipping community committed to a complete phase out of GHG emissions from ships, targeting at least a 50 percent cut in emissions from the sector by 2050.

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BUSINESS DAY

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How to protect your children’s education … what the Chinedu’s did differently Stories by Modestus Anaesoronye

loma Chinedu, a 39 years old mother of 5 children, who works in a bank is married to a Stock Broker. They both have huge families to look after and staying in the husband’s family house in Asaba has not been an easy task because of the huge responsibilities the husband has to shoulder. In view of the economic recession and not being able to generate enough money to shoulder the responsibility of their large family, Uloma always had this concern of whether they will be able to give proper education to their children and make them succeed in Life. Lack of planning for the raining days Amid all this sad feelings Uloma has been having, the Bank she works with made a huge loss and was left with no option than to downsize. Fortunately, Uloma was not affected but most of her friends were laid off with nothing to fall back on. The thought of losing her job has been troubling her a lot since the downsizing, but no one could understand her

concern and suggest a proper outcome. Benefit of Children Education Fund Uloma’s concern was hidden from everyone but one day she was discussing the state of the economy with her friend, Mary Ebuna. She lamented to Mary that if she or her husband were to

lose their jobs it was evident that their children’s education will be compromised. She further asked Mary how she and her husband have been coping with sending their son to a private University in view of economic situation. A friend who gives advice, is a friend that cares Mary laughed…and stated

that with adequate Financial Planning, one’s children’s education will never be compromised, that she and her husband have been contributing towards each of their children’s education with Cornerstone Insurance Plc. She further stated that being a parent is a matter of great joy

and pleasure, but one should also realize that it also brings along with it a lot of responsibilities, which can never be overlooked, and the truth is that successful parenting is a major challenge. Meeting the present requirements of your family can be a challenge if proper financial planning is not put in place. It becomes the prime responsibility of every parent to secure the future of their children and take care of the unexpected. With adequate financial planning, the future is assured. Mary stated that planning for your child’s future should be the priority of every parent, as she explained to Uloma the numerous benefits that Cornerstone Children Education Fund offers including maturity benefit and guaranteed death benefit. After the discussion with Mary, Uloma was so happy and eager to start saving with Cornerstone Insurance Plc. She discussed the benefits of CHEF, as related to her by Mary, with her husband, who was also in tune with the concept of policy. They both signed-up for CHEF after going through the policy benefits and features Uloma now has the assurance that, in the event of any unforeseen circumstance, the future education of her children is guaranteed.

Actuaries see organisations, society benefit more from robust data deployment

ctuaries under the umbrella of Nigerian Actuarial Society says that corporate organisations and the nation’s economy as a whole stand to gain tremendous advantages from a more robust deployment of actuarial data in their management decision processes. At the inaugural annual conference of the Society which held in Lagos the Society noted that actuaries must embrace emerging global trends to help NAS gain a step forward in achieving its vision of bridging the Actuarial gap in Nigeria. It added that this would be made possible if actuaries could go beyond producing numbers to helping their managements make quality decisions from the numbers. The conference with the theme “Actuaries: Delivering value beyond numbers” focussed on current topical issues in the Nigerian economic landscape including the Introduction of Risk-based capital, IFRS 17 – the reporting standard and actuaries’ contribution to a defined contribution fund. IFRS 17 is the new accounting standard on insurance which would be coming into effect in

2022. The aim of the new standard is to introduce uniformity in the approach in which insurance companies present their reports. This would enable increased comparability between firms. The conference which had in attendance actuaries, actuarial students and other industry professionals from Nigeria, Kenya and other African countries as well as a representative of the Institute and Faculty of Actuaries, UK (IFoA) was sponsored by Africa Re, Leadway Assurance, AIICO, Continental Re Plc, Custodian and Allied Insurance and Alexander Forbes Consulting Actuaries and the IFoA.

In her opening remarks, Yeside Kazeem, the Society’s president, stated that the value of the data that the professional has access to and interprets lies in the ability of management to draw inference and make decisions from such data, thus adding value to and propelling the growth of the organisation. Citing a specific example in the nation’s pension industry, Kazeem said the pension industry in Nigeria is growing and with the introduction of multifunds choice to RSA holders, there is an increased need to consistently test whether or not that investments are fit for purpose.

“The multifunds are designed to match a range of risk appetite and the actuaries should be able to offer guidance on the projections of not just the funds being accumulated but the likely pension that is payable during retirement”, she submitted. The main session of the NSA Inaugural Conference covered a risk-based supervision approach which assessed the probability and severity of the material risks to which insurers are subjected to. It also assessed the effectiveness of the controls put in place by insurers in reducing the probability of risk events occurring or the severity if they do occur.

Earlier, there was a CEOs breakfast session with CEOs of insurance companies, some representatives of the National Insurance Commission (NAICOM), Federal Reporting Council, Nigerian Insurers Association and NAS council members preceded the main conference. The session shared the results of a survey conducted by NAS and how insurance companies could maximise value from their actuarial resources. It noted that employers could do more to support their actuarial students and elicited their commitment to work with NAS to improve on the numbers and quality of actuaries in the market. Other highlights of the event included the award of excellence to pioneer president of NAS Ajibola Ogunsola and other founding trustees. The Nigeria Actuarial Society was established in 1986 to rally qualified actuaries and professional students. In October 2018, the Society was admitted as the 74th Full Member of the prestigious International Actuarial Association (IAA), thereby joining other international bodies such as the Institute and Faculty of Actuaries (UK) and the Society of Actuaries (US).

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What a wonderful gift for Christmas

At last Nigeria keys into African Trade Insurance $7bn growing portfolio Stories by Modestus Anaesoronye

iger ia is set to conclude the documentation and signing of Memorandum of Understanding (MOU) with the African Trade Insurance (ATI) agency to be part of the continental insurance investment protection deal. African Trade Insurance expects its annual insured trade and investment portfolio to double to $7 billion within five years (2023), driven by new members including Ghana and Nigeria, which are about finalizing their registrations. This is expected to happen this week in Nigeria, as ATI holds its Investment & Trade Forum in Abuja with key government officials in attendance. The Forum with the theme “De Risking Trade and Investments in Nigeria” will mark formal registration of Nigeria in the continental body. Mohammed Kari, commis-

sioner for Insurance and CEO of the National Insurance Commission (NAICOM) disclosed at the 2018 Educational Conference of the Chartered Insurance Institute of Nigeria (CIIN) that the Federal Government has given approval for Nigeria’s enrolment into membership of ATI, stating that it is a healthy development for the nation’s insurance industry. According to Kari, that will

further boost the contribution of insurance to economic growth as investments coming into Nigeria will have domestic protection, and that will impact positively on investor confidence.

African Trade Insurance Agency was meant to provide risk guarantee for investments coming into Nigeria as well as export from the country. The continental insurance agency was set up with the support of the World Bank, owned by African government and is registered under the United Nations treaty to provide insurance and promote economic growth in member countries The investment risk insurer is owned by 14 African nations and other organisations such as the African Development Bank. It was formed in 2001 with World Bank support to offer insurance for large investment and financing projects against risks such as sovereign default, war and insolvency, to spur investment by companies and private equity into Africa. Major insurance projects on the continent insured by ATI include electricity generation projects in Kenya and a $200 million mining project in the Democratic Republic of the Congo.

of their needs when you will not be there, and certainly they will not forget you. Now, ask yourself this question? “Would my death leave anyone in a financial burden?” If you answer is “yes”, it may be time to get serious about shopping for life insurance. It can offer peace of mind, ensuring that your debts or loved ones would be taken care of in the event of your death. One life insurance product you can take for this purpose is term life insurance. Term life insurance is very straight forward. When you choose this type of coverage, you pay for a specific duration of time. During that period, your chosen beneficiary receives the benefits of your policy in the event of your death. You should know that there are subcategories that fall under the category of term life insurance. Whole life insurance is another type of coverage to consider. This type of policy covers you for your entire life rather than a specific term.

Premium Pension profiles employer compliance after 12 years of driving CPS

fter 12 years of operation as a Pension Fund Administrator, Premium Pensions Limited has profiled its customer base, rewarding trust, compliance, remittance and confidence in the country’s Contributory Pension Scheme (CPS) The company in a recent award celebrated its corporate clients that have patronized her since its inception in 2005. Umar Mairami, managing director/ CEO of the firm said the award recognize companies that trusted Premium Pension for 12 years; Companies with highest monthly pension remittance; Companies with highest percentage work force that signed with Premium Pension and organization with highest Additional Voluntary Contribution (AVC). Some of the companies that received awards at the event include First Bank Nigeria Plc; Ecobank; Dangote Grou; Dantata Construction Company among others Giving a brief insight into the company operations, Mairami said as at end of August 2018, pension

assets under management (AUM) has grown to N590 billion, while Retirement Saving Account (RSA) increased to 660,000. The MD/CEO said presently the company’s staff strength is over 11,000 with 46 service centres across the country. Meanwhile, in a recent press parley maintained that the firm accounts for over 10 per cent of total industry retirees on Programmed Withdrawal and have paid out over N86 billion in lump sum and programmed withdrawal benefits, since inception, representing 18 per cent of total amount paid by the industry. He posited that the company determined to ensure payment process is as seamless as possible, for customers, stressing that with necessary risk controls, the firm will continue to ensure the standard already attained is sustained. He identified the firm’s customers as the centre of all it does, adding that the management appreciates customer’s consistent feedback and support, which has served as input into all the improvement projects currently being implemented.

2015

Biyi Mobolaji, executive director, Operations, Mutual Benefits Assurance Plc in picture with winners of Mutual Benefits National Badminton Championship held in Lagos

he frenzy of Christmas and New Year celebration is beginning to creep in, and in few days people will start buying gifts for friends and loved once. This is also a time to show love with gifts to friends and families as part of the festivities and cementing existing relationships. What many people think and ponder on this time, is the kind of gift they will present to friends and well wishers that would be appreciated. So, looking for the kind of gift that will remain indelible in the minds of your family or dependants, that will sustain them when you may not be there to provide again, get insurance. We believe that no amount of love you show your families today with material gifts will last forever, except a kind of gift that gives them many years of Christmas, even when you are gone. Take a life insurance that provides for your family and take care

Wednesday 28 November 2018

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Pension Today

BUSINESS DAY

In Association with

CPS: What are you negotiating with your employer?

L-R: Umar Mairami, managing director/CEO; Haruna Saeed, director of the company; Kemi Oluwashina, executive director, Business Development South & Strategy; Bode Adeshina, non executive director, and Kabir Tijani, executive director, North and Investment at the event held in Lagos recently

have started remitting your pension deductions.This is what should bring more excitement because that is what guarantees your future and happy life when you leave employment or retire from active job. Pension is your right, so compel on your employer to get you off the track by starting a pension contribution with any of the PFA’s. Start to plan for your future now with your employer, but if you fail to contribute to your pension plan, you will not be happy when your retirement comes. This is the truth and those who failed to plan have always regretted. So, retirement is a very important period in once life that must be prepared for. It’s a period during which a person is

no longer able to work, meaning that income from paid employment ceases to come. So, the person would have to depend on his or herpension plan made during active work life to continue the rest of his life. Given the importance of retirement, it becomes important that steps are taken with every sense of commitment towards ensuring that nothing affects the preparations because that very important period is ahead waiting. Therefore, if there is anything that should beof great concern to you as an employee, not bonus for Christmas or Thirteenth month, it should be your pension plan because that determines how well you will live in your retirement.

RC634453

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

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Therefore, if there is anything that should beof great concern to you as an employee, not bonus for Christmas or Thirteenth month, it should be your pension plan because that determines how well you will live in your retirement

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y the end of this week, November 2018 would have come to an end, and every one will be talking about preparations for Christmas and the New Year festivities. Organisations during this time of the year reward staff for hard work and sometimes distribute a percentage of their profit to enable employees have more money in their hands. This is usually called end of the year bonus or thirteenth month. So, employees look out for it particularly in thriving organisations as part of the end of year income depending on the terms of suchemployment contract. But this brings excitement and increasescommitment of employees to their job, and love for their employers. When this happens, employees most a times tend to forget their worries, ride on the frenzy of the season and only to realise that the joy was for the short time as soon as work resumes in the New Year. Yes. Bonus is good but Pension is better. If your employer has not opened for you a Retirement Savings Account (RSA) with your chosen Pension Fund Administrator (PFA) and/ or is deducting from your salaries and is not remitting to the Pension Fund Custodian (PFC) after deductions, and is rewarding you with Christmas bonus, know that you are just being deceived. Do not be excited for what will not take you beyond the New Year, in the name of bonus, but be excited that your employer has resolved to contribute to your pension pursebeginning from the New Year, or

The Pension Reform Act 2014 has placed the future of workers in their hands by empowering them to report employers who fail to comply with the laws.The employees must come together and pressure the employer to pay their pensions. When your self help fails, then you can approach the National Pension Commission (PenCom), the regulator for all pension matters in Nigeria. They have offices in the six geopolitical zones of the country and have the powers to enforce compliance. They are open for complaints, so people could go and report employees who fail to comply with the law. Given the importance, it is most advisable that you take active part in knowing how your pension is man-

aged, right from your employers table to the mangers of the fund. If you already have an RSA PIN, let your employer have it through the human Resource Department or Accounts Department for remittance of your contributions. This is the beauty of the Contributory Pension Scheme (CPS) as provided in the Pension Reform Act 2004 and amended in 2014. Being therefore a part responsibility of the employee to make contributions to the pension purse, he or she must always and keenly monitor developments in his retirement savings account being managed by his Pension Fund Administrator (PFA). The whole essence of the pension scheme being to ensure that every person who worked in either the public service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due, gives the employee contributor rest of mind to continue his working career. The Contributory Pension Scheme, as the name suggests, is contributory in nature, making it mandatory on employers and employees in both the public sector and private sector organisations with three or more workers to contribute 10 and 8 percent respectively of the emoluments of the employee into a Retirement Savings Account (RSA). Apart from ensuring that every worker receives his entitlement as and when due, the other objectives of the scheme includes to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Tax Issues

CITN signs MoU with ANAN

80% of taxation service depends on relationship management Pedabo

Iheanyi Nwachukwu

n furtherance of his agenda to enhance collaboration with relevant stakeholders, Cyril Ikemefuna Ede, president and chairman of Council of the Chartered Institute of Taxation of Nigeria (CITN) last week led a delegation of the leadership of the Institute on a courtesy visit to the Association of National Accountants of Nigeria (ANAN). The sole purpose was to cement the cordial relationship between both professional bodies as evidenced in the signing of Memorandum of Understanding (MoU) on membership and examination issues. The ANAN had initiated the proposal for MoU signing with the CITN earlier on Thursday June 28, 2018 which culminated in the actual signing of the mutually acceptable MoU on Monday November 19, 2018 at the ANAN national secretariat. Based on the MoU members of ANAN, possessing ANAN’s Practising Certificate, with the intention of becoming Tax Practitioners, shall be granted direct membership of CITN, with full rights to practice taxation upon the fulfilment of CITN’s conditions of granting Practising License to its members. Also, ANAN members without ANAN licence to practice and who desire to practice taxation, shall be granted direct membership of CITN with full rights to practice taxation after fulfilling all membership requirements as laid down by CITN, subject to applying for and

Endurance Okafor

O L-R: Ajibade Fashina; Founder/Managing Partner, Pedabo; Tunde Fowler, FIRS Chairman; Godwin Obaseki, Edo State Governor; Albert Folorunsho, Founder/Managing Consultant; Lola Folorunsho, CEO Pepos Ventures and Killian Khanoba, Partner, Pedabo at the 20th anniversary of Pedabo Consulting obtaining the CITN’s practicing licence as applicable to other CITN members, before being entitled to practice taxation, PROVIDED always that ANAN members shall not be required to sit for qualifying examination as a condition for being granted direct membership of CITN (CITN regulates tax practice and administration in Nigeria). With the MoU, CITN shall offer direct Fellowship to Members of ANAN who seek to become Fellows of CITN subject to their meeting CITN Fellowship conditions. Furthermore, members of Chartered

Institute of Taxation of Nigeria (CITN) interested in becoming members of Association of National Accountants of Nigeria (ANAN) shall be exempted from all Tax courses both at Professional A and Professional B examination levels; and any other conditions for admission into the membership of ANAN Members of Chartered Institute of Taxation of Nigeria (CITN) that are Accountants with Bsc/HND Accounting qualification and appropriate years of experience shall also be considered for direct membership of Association of National Accountants of Nigeria (ANAN)

Members of Chartered Institute of Taxation of Nigeria (CITN) that are Accountants with MBA/MSc/PhD Accounting and other related qualifications and appropriate years of experience shall be entitled to direct membership of Association of National Accountants of Nigeria (ANAN) The two bodies will collaborate in terms of training programmes and pursuant to that will harmonise the cost of joint training programmes organised by both bodies in view of the fact that members belong to both bodies and benefits shared accordingly.

Ease of doing business in Nigeria - A case for eliminating multiple tax reviews, audits and investigations Tosin Adedoyin & Sonichukwu Osakwe

he importance of ensuring a conducive environment for businesses cannot be over-emphasized, given their immense contribution to the growth of the national economy. This is more so, in the light of current economic growth and stability plans by Federal Government of Nigeria (FGN). One of the major steps taken by the current administration in demonstrating commitment towards the creation of a competitive business environment was to set up the Presidential Enabling Business Environment Council (PEBEC). The specific reforms spearheaded by PEBEC have yielded positive results as evidenced by World Bank’s 2018 Ease of Doing Business Index where Nigeria ranked 145th (out of 190 countries). This is an improvement on prior year’s ranking of 170th, placing Nigeria among the 10 most improved business environments globally. The foregoing notwithstanding, there is still a lot of room for improvement considering the current business realities in Nigeria, which still appear unfriendly. Generally, Nigerian businesses are exposed to multiple taxes/ levies from various regulatory agencies, cutting across tax, immigration, customs, etc. For tax administration in particular, the Federal Inland Revenue Service (FIRS), State Internal Revenue Service (SIRS) and Local Government Councils (collectively referred to as Primary Agencies) are the relevant regulatory bodies tasked with the primary responsibility of administering (including audits, reviews etc.) and collecting taxes at Federal, State and Local government levels respectively.

Wednesday 28 November 2018

However, in recent times, several other bodies such as the National Assembly, Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Ministry of Justice, Economic and Financial Crimes Commission (EFCC) etc., have also taken up the role of pursuing companies directly to enforce and monitor tax compliance. Considering the legislative focus of the Primary Agencies on tax, direct enforcement by these other bodies beg the question of the legality of their involvement in tax administration. Arguably, the laws establishing some of these bodies appear to permit direct review of taxpayers’ tax records. For instance, Section 6(1a) of the RMAFC Act empowers RMAFC to monitor accruals to and disbursements of revenue from the Federation account. While tax payments are not direct accrual/disbursement to the Federation Account, RMAFC has interpreted this power to extend to direct review of taxpayers’ compliance status since, ultimately, relevant taxes also accrue into the Federation Account. The banking sector is one of the sectors most affected by RMAFC’s intervention. Banks have had to undergo tax compliance reviews conducted by RMAFC, despite previously undergoing audit by Primary Agencies and settling resultant liabilities for the same periods. Considering that tax revenue moves from FIRS to Federation Account, normal expectation would be for RMAFC to obtain FIRS’ records on the tax position of the banks in order to monitor tax accruals to the Federation. This position is strengthened by the provision of Section 6(2b) (iii) of RMAFC Act, which empowers RMAFC to demand and obtain regular and relevant information, data or returns from FIRS. The National Assembly, EFCC, Ministry of Justice, and other bodies have

also been involved in the review of records of various taxpayers. FIRS and SIRS also conduct different types of reviews on taxpayers’ records some of which cover the same taxes and periods. These include desk reviews, value added tax and withholding tax monitoring exercises, tax audits, tax investigations etc. These multiple tax review processes can be quite hectic, spanning a number of months or years in some cases and requiring allocation of staff and other resources of the taxpayers to attend to regulators. Taxpayers are also made to collate the same information multiple times for the different agencies; thus, making them incur significant costs as a result. The duplication of activities by government bodies in monitoring and ensuring tax compliance in Nigeria is clearly an inefficient use of resources by both government and taxpayers. Also, the resultant effect on businesses can be far-reaching, including: • Significant hike in regulatory compliance cost • Reduced profitability • Valuable time of employees/ representatives not spent on core business activities • Disruption of business activities • Potential leakage of confidential and sensitive business information etc. Bearing the above issues in mind, as FGN seeks to achieve the budgeted tax revenues for 2018 and beyond, by ensuring increased tax compliance and improved efficiency in tax collection, the following actions may be considered: • collapse the operations of various regulators with overlapping functions such that only FIRS and SIRS would be required to carry out tax audits and investigations on the records of taxpayers.

Where other regulators must continue to carry on the review exercises, it may be necessary to have focal points of interest as opposed to full scale reviews by all relevant regulators. • encourage inter-agency collaboration and data sharing, such that where a taxpayer has filed required documentation with one regulator, the information can be shared with other relevant bodies in order to reduce the burden of compliance on businesses • ensure adequate training of officials and automation of review process by FIRS and SIRS to facilitate speedy reconciliation and conclusion of audits/ reviews • focus on expanding the tax net, rather than overburdening the existing compliant taxpayers One of the principles of taxation suggests that corporate entities and individuals should contribute their fair share of taxes towards the development of the economy. In enforcing tax compliance, it is imperative that the resources and processes deployed towards achieving this do not deter voluntary tax compliance while ensuring that taxpayers suffer no inconvenience. In essence, the manner in which tax compliance is enforced can itself weaken or strengthen public trust and ultimately affect the development of the economy. It is therefore expected that FGN will in the long run initiate reform strategies which would eliminate multiple tax reviews, audits and investigate and ensure optimal utilisation of available resources while boosting the ease of doing business in Nigeria and ultimately, investors’ confidence. Adedoyin is Manager Tax & Regulatory Services while Sonichukwu Osakwe is Assistant Manager Tax & Regulatory Services. They work for Deloitte & Touche.

ne of the foremost indigenous and Nigeria market leading accounting firm, Pedabo, has disclosed that relationship management in tax services is one of the core values that can make a firm successful in the industry. This was shared with BusinessDay during Pedao’s recent 20th anniversary, of which the company said relationship management was one of its strength and has made it possible for it to come this far since it started operations in 1998. “When it comes to taxation service, about 80 percent depends on relationship management, so if you are able to build that relationship, your clients’ problems are virtually solved, and that is one of the things we have built over years,” Albert Folorunsho, the Managing Consultant and Cofounder of Pedabo said. Meanwhile, the company celebrated its two decay anniversary in grand style at Eko Hotel and suits on 23rd of November, 2018. Present at occasion was the Executive Governor of Edo state, Godwin Obaseki, the Executive Chairman of the FIRS, Tunde Fowler and the immediate past ICAN President, Ismaila Zakari among other high profile dignitaries. The Governor of Edo state, Obaseki was the Keynote speaker at the event and his was paper delivery was on Succession planning. He reminded the partners that succession planning in an organization is different from just hiring a staff when he stated that “when recruiting, recruit someone who can replace you” as Succession planning is all about leadership. Pedabo’s Managing Partner, Folorunsho expressed his gratitude to all their longstanding clients for believing in them as an indigenous firm, he also thanked other stakeholders for their support and finally appreciated his staff for their dedication and commitment. “Our strength is basically being available for our clients at all times and to equip ourselves with knowledge in our field, that is our strength - I have time for all my clients both big and small, as we are just a phone call away and we try to meet our clients’ needs, coupled with the fact that we have very good relationship with our clients, the tax authorities and other regulatory authorities,” Folorunsho said.

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New Range Rover Evoque redefines luxury SUV Page 28

Lanre Shittu Motors sets-up best truck assembly plant …With a capacity to produce 1,800 JAC trucks yearly MIKE OCHONMA

new chapter was opened in the annals of trucking business in the Nigeria, with the historic completion of what many market watchers and industry analysts describes as the best truck, most equipped assembly plant located along the Apapa-Oshodi expressway by Lanre Shittu Motors (LSM). The frontline automobile dealers that cuts across decades is the sole distributors of JAC heavy duty trucks (HDT) and medium duty trucks (MDT) in the country. The new multi-million JAC truck assembly plant with the best equipment manufactured in Germany that benchmarks global industry standards, manned by well trained and skilled technicians has the capacity to assemble 6 units of trucks in one shift or 12 units on two shifts demanding on the interplay of market demand can also roll out an estimated 150 units of trucks every month (1800 units every year). The journey to achieving this historic milestone started about one year ago and was successfully completed this year with all the trappings of a modern truck assem-

Local and foreign JAC trained truck engineers at work inside the recently completed multi-million naira assembly plant in Lagos.

expressway late last Friday evening, Taiwo Shittu, executive director, Lanre Shittu Motors Limited stated that, the company went all out to invest massively into the assembly because it believes in the ongoing National Automotive Policy of the

L-R: Jack Huang, JAC Assembly expert; Yu DeKun, JAC country heavy-duty sales manager, Taiwo Shittu, group executive director; Lanre Shittu Motors; Ejaz Mughal, head plant and logistics, Lanre Shittu Motors and Udoh Anietie Philip, head, HR and admin, Lanre Shittu Motors.

bly plant found in any part of the world.As at the time of filing this report, number officials from JAC truck manufacturers from China are in the country overseeing the day to day assembly activities inside the assembly plant. The team is expected to work with the ulti-

mate aim of transferring requisite skills to local Nigerian engineers to continue from where they stops upon their final departure. Addressing automotive journalists on facility tour at the Lanre Shittu Motors JAC trucks assembly plant located on the Apapa-Oshodi

federal government. The executive director expressed optimisim that, the policy that has come to stay adding that, that was why Lanre Shittu has taken the startegic decision to invest into one of best and most sophisticated equipment that will last for a long time. “In his words, we believe genuinely in the JAC brand, it has come to stay and very soon, it will take over the market demand for trucks in the market because of its quality and our experience in the automotive business in the last 38 years in Nigeria. Already we have received orders for hundreds of units of these trucks from fleet customers including BUA group and many others. On the daily basis, the lists keep growing ’’. The executive director said that, LSM enjoys a lot of support from the JAC parent manufacturers in China, adding that, the teams are always in the country to supervise to ensure that every single truck assembled in the plant are of exactly the same standard as those produced in any part of the world. He expressed support and strong confidence on some of the stringent measures taken by the federal government to streamline auto assembly processes and procedures whereby nobody is allowed to set up an assembly

plant without satisfying the full requirement for the mandatory assemblers’ bonafide certificate. In arelated development, the dealership has completed and opened for business, its ultramodern 3-S ( sales, service and spares) facility located along Aba road, in Port Harcourt, the Rivers State capital. Lanre Shittu Motors is also simultaneously working on setting up another assembly plant situated on 40,000 square meters of land at Mekun, along the Lagos-Ibadan expressway way, near the Redemption camp and before the Sagamu interchange. Upon completion, Taiwo Shittu said that, the assembly plant will be producing buses, pick-up trucks and passenger cars, in addition to providing other ancillary support services of trailer flat bodies, tanks and buckets including local contents. To further align with the vision of the federal governments’ ongoing automotive policy, the executive director disclosed that, part of Lanre Shittu Motors plans includes using part of the upcoming assembly plant along the Lagos-Ibadan expressway to develop the manufacture of automotive batteries, tyres and other allied products. Furthermore Lanre Shittu Mo-

tors have placed renewed and very sustainable emphasis on empowerment. ‘’In the past nine years, we are expanding on this and every year, the company trains and employs about 40 skilled Nigerians as a way of giving back to the society in the form of corporate social responsibility (CSR). In his words, ‘’Prior to the recruitment of these set of people, they are majorly unskilled people, but have passion to develop themselves and some of them are university graduates, secondary and primary school leavers’’. When they are selected, they are sent out to the different training schools located in Lagos, Abuja and Port Harcourt set up by Lanre Shittu Motors. Upon graduation, they are employed and paid salaries by LSM for a period of one, two or three years on a graduated salary structures of N15,000, N20,000, N30,000 and upwards of N70,000 based on performance evaluation metrics conducted from time to time by the company. After four years, these skill sets are seconded to work with LSMs existing customers, other automobile dealer workshops or corporate fleet clients with large fleets based on a negotiated pay package including their accommodation if they are going to other parts of the country between LSM which is the skill set providers and the beneficiary clients that are the end users. Taiwo Shittu stated that, the advantage of this is that, these technicians must have undergone through the culture and basic rudiments of auto preventive maintenance. “What this means is that, we are taking the youths in our society out of the streets who are quacks, and later transformed into qualified technicians at the end of the day’’. He stated. “At the end of the day, they end up being ambassadors in the various companies where they are posted to go and work, and from time to time, we monitor their progress and they can refer back to us whenever the need arises. Because they are with us, they have full access to our online systems that is linked to our JAC partners in China whenever there is need for that’’. The executive director concluded.

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Space for sponsorship

New Range Rover Evoque redefines luxury SUV Stories by MIKE OCHONMA mikeochonma@gmail.com

he original luxury compact SUV is getting even better. At home both in the city and the mountains, the new Evoque joins the Range Rover family with a choice of diesel and petrol engines. Having pioneered the luxury compact SUV market, with global sales of over 772,096 and more than 217 international awards, the new Range Rover Evoque is a sophisticated evolution of the original. Combining unrivalled Range Rover heritage with cutting-edge technology – designed, engineered and manufactured in Britain – it meets the needs of today’s customers. In the submission of Finbar McFall, Global Marketing Director, Jaguar Land Rover, “Eight years ago we created a new segment and the world followed. Now we have redefined what it means to be a luxury compact SUV. With design and capability at its heart and the latest technology to hand, the new Range Rover Evoque meets your needs like never before and ensures you reach your destination, no matter the conditions.” Building on the original’s instantly-recognisable design, the new Range Rover Evoque is a sophisticated evolution of the distinctive coupé-like silhouette,

typified by its distinctive fast roofline and rising waist that identify the Range Rover family. The outstanding volume and proportions are amplified by its pronounced shoulders and powerful wheel arches that, alongside 21-inch wheels, combine to create a strong and dynamic attitude. The introduction of jewel-like elements such as super-slim Matrix LED headlamps provides a more sophisticated front and rear lamp graphic. Flush door handles add to the smooth, sculpted aesthetic, while sweeping directional indicators create a purposeful signature.

Optional R-Dynamic details and burnished copper accents add to the unique appeal. Inside, the finely crafted design integrates uncluttered surfaces and simple lines with carefully curated premium materials to create a luxurious, minimalist, digital cabin. Technical textiles that use recycled plastics are offered as premium alternatives to leather, such as a Kvadrat wool blend and Dinamica suedecloth, as well as Eucalyptus and Ultrafabrics options. The cabin is designed to be a calm and serene space, ensuring

comfortable, healthy and happy occupants, with technologies such as the twin touchscreen Touch Pro Duo system, featuring new, faster software, 16-way seat controls and cabin air ionisation that complement the increased interior space. Gerry McGovern, Land Rover chief design officer, said: “When Range Rover Evoque made its debut back in 2010, it transformed the world of compact SUVs and the new model is set to continue that remarkable journey. This characterful vehicle combines refinement and fun to create that all important emotional reaction

VW investment decision in Nigeria timely, says Minister

he minister of Industry, Trade and Investment, Okechukwu Enelamah has reitereated the readiness and willingness of the federal government towards adopting models that had worked well in other parts of the world, and make them applicable to Nigeria Enelamah said at a stakeholders’ meeting in Lagos when the federal government and the Volkswagen Group kicked started dialogue as a forunner to the commencement of local manufacturing of vehicles by the automaker in the country. It would be recalled that the last September, Nigeria signed a memorandum of understanding (MoU) with Volkswagen Group for the production of various types of vehicles in Nigeria. The minister said Nigeria remained the choice destination for investment on the continent, adding that Volkswagen made a wise investment decision by coming to establish a vehicle production plant in the country. It is expected that, the outcome of the open dialogue session would lead to the gradual transition from the importation of used cars to the manufacturing and distribution of new passenger

vehicles in the country. He noted the, government is committed to providing the right environment that will encourage an automobile hub in Nigeria. “This open dialogue session is a major step in our walk toward the development of a robust automotive industry that will contribute to the continuous economic development of the country. We believe in the strategic and catalytic role of the automotive industry in

the diversification of the Nigerian economy’’. Enelamah said. He said the country remain committed to encouraging and partnering with relevant stakeholders, especially investors and friends of Nigeria. ‘’We will meet our commitments and look forward to welcoming other Original Equipment Manufacturers interested in working with us.” At t h e m e e t i n g , T h o m a s Schaefer, chairman and manag-

ing director of Volkswagen Group, said the group had been able to demonstrate the seriousness of its intentions in sub–Saharan Africa. On his partm, Aliyu Jelani, director general of the National Automotive Design and Development Council, (NADDC) said the country offered not only a significant domestic market, but also the opportunity of a gateway to the West African market. “Nigeria will move from a place where there are few highly expensive cars and millions of cheap very old ones, to a place where there are millions of modern new cars and even more of current high-end ones’’. He said NADDC was pleased by the progress that had been made in the engagement with Volkswagen, and excited to be partnering with a strong stakeholder with a full understanding of Nigeria’s potential. He said, “These initiatives, when fully implemented, will have the multiple effects of creating thousands of jobs, generating unlimited skills acquisition opportunities for Nigerians in the automotive design and development sectors and create avenues for enhanced government’s revenues through diversification.

that will turn heads and make people smile.” The footprint is almost identical, yet built on Land Rover’s new mixed-material premium transverse architecture; there is more interior space than before. A longer wheelbase yields 20mm extra rear kneeroom and an increase in small item stowage – the larger glove box and centre cubby can now fit tablets, handbags and bottles with ease. Luggage space is 10 per cent larger (591 litres) as well as much wider and easily fits a folded pram or set of golf clubs, with space increasing to 1,383 litres when the flexible 40:20:40 second-row seats are folded. Nick Rogers, Executive Director, Product Engineering, Jaguar Land Rover, said: “Underneath the skin is an engineering and technical revolution. The architecture is all-new, with only the door hinges remaining unchanged on the body. The chassis has been significantly reworked to make the most of the stiffer body, ensuring the characteristic ride comfort and refinement of a Range Rover.” Jaguar Land Rover’s commitment to the UK car industry continues following a £1 billion investment to support its creation and delivery. This includes £110 million into the company’s UK manufacturing plant in Halewood, Merseyside, to develop the stateof-the-art flexible manufacturing facility.

LSPWC abandones Okokomaiko-Seme palliative road repairs

otorists plying the Seme to Okokomaiko end of the Lagos- Badagry expressway may still have to wait a bit longer following the shoddy palliative job purported to have been carried out by the Lagos State Public Works Corporation (LSPWC) some weeks ago. Few weeks ago, officials of the LSPWC had embarked upon what many of the communities within the locality described as partial palliative work to forestall the planned demonstration by residents within the Local Government Development Areas (LCDAs) over the pitiable condition of the expressway that has become a nightmare for a long time. But few weeks into embarking into repair of selected sections of the road stretch which runs into kilometres to avoid running into a coalition with angry residents , the state works department appear to have parked all their equipment out of the road. A typical example of uncompleted sections are the Iyana Isashi intersection on both sides of the road, the failed portions in front of Federal Government College, Ijanikin, Adio and the front of Adeniran Ogunsanya College of Education, all the way to Oke Afor stretching to Iberekun and Badagry.

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In Association with

‘We support customers in bridging financial gaps’ Credit Direct Limited, is driving financial inclusion through consumer lending. Akinwande Ademosu, managing director/CEO, said in this interview that the company has so far granted over N150 billion loans to 1.5 million customers. Excerpts, Hope Moses-Ashike Credit Direct is the dominant player in the unsecured lending industry in Nigeria, how did you achieve this feat? redit Direct has provided over N150 billion in loans to over 1.5 million Nigerians across the country since inception. Before we pioneered the first structured unsecured consumer lending business in Nigeria, salary earners and small enterprises who could not get funding from banks either do not have their finance needs met or borrow at rates ranging between 120 per cent to 500 per cent annually from unstructured and unregulated loan companies using their personal belongings as collateral. We embraced structured unsecured lending business to find solution to a problem that bothers us. We are deeply concerned about the plight of income earners and small businesses. And since we started business, we continually innovate and take steps to address our customers’ concerns. Eleven years on the job, my team and I are as firedup today as we were years back due to the market opportunities and reception our offerings are getting from the market. Our drive is beyond “What is in it for us, but a desire to see more Nigerians included in the financial service eco-system. For us, it goes beyond commercial returns, it is the commitment to something bigger and better than collective ‘Us’, it is a mission. That is why our mission is simply “we enable peace of mind” for all our stakeholders. What makes Credit Direct different from its competitors? Three things differentiates us from competitors and these have allowed us produce great results in the last 11 years. Firstly, our people. Aside having the right people doing the right things, we believe investing in their development is both critical and a competitive differentiating factor. The quality of our team is one of the best in the industry. Secondly, we have a service model that prioritises customers’ needs in offering financial solutions that is both personal and fit-

Akinwande Ademosu

ting. This is because we understand the role we play in their lives and as the dominant lender in the nonbank financial industry, we support customers in bridging financial gaps and ultimately enabling their peace of mind. Lastly, we have a culture of transparency, innovation and open communication which empowers our team to develop world class solutions in executing the organisational goals. How does Credit Direct fit within the First City Monument Bank Group? We began business as a subsidiary of the commercial bank - First City Monument Bank (FCMB). Over the years, we have grown into a stand-alone member of the holding company FCMB Group Plc. As a group, we have several leverage areas that when fully explored have transformational and performance implications. What is the secret to the company’s success? Our success is largely attributed to our teeming customers across the country who continually choose us as the preferred non-bank finance partner. We have a team of experienced and committed professionals

with vast local and international experience. Beyond having vast local experience and the best of education in leading local and global institutions, we are fortunate to have a team of management and staff that are deeply connected to our purpose of enabling peace of mind to our customers. Not leaving out our proprietary world class core technology that ensures seamless service delivery. You recently launched your new head office in Lagos, what does this mean for Credit Direct? Credit Direct has always been about sustainable growth, customer satisfaction and work-life balance. The new corporate head office is another indication of our resolve to remain the market leader and preferred non-bank financial solutions partner in Nigeria and beyond. It is an environment that will facilitate even greater service delivery, innovation and a whole new level of outstanding customer experience. How is your organisation able to tackle the challenges of recovering non-performing loans? Contrary to the myth that Nigerians do not want to repay (unsecured) loans, at Credit Direct, we

believe otherwise. We build our customer relationships on a twoway trust. That is, we demonstrate trust to our customers and we earn their trust. Our on-boarding process from profiling to disbursement ensures that customers can manage the loans approved and disbursed to them and our repayment system is designed in a way that does not overstretch our customers. After other risk management metrics have been deployed, we are certain that those customers are good and rarely default. How is Credit Direct reaching out to communities? We believe that organisations and the societies in which they do business are in a symbiotic relationship. For us, our relationship is mutually beneficial and we have taken Corporate Social Responsibility (CSR) as a core of our existence right from our inception. We cannot afford to overlook these critical aspects of our lives so we have designed a mechanism that ensures a systemic approach to meeting these needs. We are totally committed to this and a portion of our earnings is geared towards structures, initiatives and life-transforming projects. We have executed several projects in different states including provision of a fully equipped ICT center, support for workers during the annual Workers Day celebration, provision of free health care for civil servants, cleaning of major traffic hubs to support a healthy environment, training and various rewards for outstanding teachers in different education districts across the country, renovation of classrooms and provision of work tools for over 50 schools in Nigeria. We are fortunate to have employees who are also actively engaged in all our CSR activities and their dedication and commitment has in no small measure impacted positively on our stakeholders, on our host communities and the society at large. What is CDL’s plan for the future? The future is developing our already strong brand into full-fledged financial wellbeing company ready to serve across markets. We have

and will continue to invest in technology to remain the leading digitalenabled business. We are excited about the future and the opportunities that it brings to our business. We will continue to serve our customers faster and better in the future and we have ongoing plans to achieve this objective. We look to improve customer experience, ensuring seamless interaction between our customers and the business. We will continue to position the company in a way that eases customer acquisition and talent attraction as well as contribute to our community and national development in the best ways possible. You have just received an award for Innovation. What would you say is the basis for this public recognition? Credit Direct has always been first in class in our market for innovation being the first and among a few companies in the Nigerian financial services space to have built an in-house core proprietary technology platform certified as world class. This is besides our wide variety of unique products and services. As we maintain this innovative edge, we believe we can consolidate and improve our market position and bring financial services to more people through tech-enabled offerings. Can you tell us a bit about Credit Direct? Credit Direct Limited is a nonbank financial services company founded to meet specific needs of peculiar market segments. It has a strong legacy and culture of service, transparency and sustainability. We have redefined the consumer lending space since we commenced operations 11 years ago. The unsecured consumer lending industry has evolved into a strong financial inclusion segment that is serving the Nigerian community long neglected by traditional financial institutions. With our people and digital footprint, our operation from over 40 business offices currently covers all main areas of the country including the Federal Capital Territory Abuja. We have a loyal customer base of over 300,000 in the public and private sectors.

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1. Dismissal- Where the agent breaches any of his duties then the principal can dismiss the agent. 2. Damages- the principal can institute an action in damages against the agent. 3. The Principal can institute an action against the agentWhere the agent commits a tort then the principal can bring an action in tort against the agent. An example of such situation is where the agent commits tort of conversion. 4. Action to recover money had and received- This kind of action can be brought where the agent makes money from the transaction without the knowledge or informing the principal. The principal can institute an action against the agent to recover the money. In the case of Andrews vs. Ramsay

and Co (1903) 2 KB 635- The agent made profit on the goods he sold for the principal without informing the principal. The principal then sued to recover the commission he paid to the agent and the secrete profit he made. The court held that he was entitled to recover the money. Remedies available to the agent 1. The agent can institute an action against the principal to recover the payment due to him under the agency contract. 2. The agency can exercise a right of lien on the goods of the principal that are in his custody or possession lawfully. This can be done where the principal refuses to fulfil his obligations under the agency contract. However, before the right of lien

can be exercised, the following must be fulfilleda. The agency contract does not have provisions that opposes the right of lien b. The goods are lawfully in the possession of the agent. c. The goods came into the agent’s possession by reason of his position as an agent. 3. The agent can institute an action for indemnity against the principal- This he can do to be indemnified for losses incurred by the agent in the course of carrying on his duties as an agent. A third party also have remedies against the agent or the principal in a situation where he suffers any form of loss1. He can maintain an action against the agent and principal for tort of deceit. 2. Equitable remedies are also available to a third party.

need to establish some elements. They are1. That a clear promise was made. 2. You relied and acted based on the promise. 3. The reliance was a reasonable one and foreseeable by the person making the promise. 4. You suffered injury due to the reliance. A promissory estoppel punishes the person making the promise for misleading the person he promised. The person is prevented from claiming that it was just a promise and no consideration was given and there-

fore no contractual obligation exists. An example of where the principle was applied was in the case of McIntosh V Murphy 52 Haw. 29, 469 P.2d 177 (1970) In this case, the defendant employer challenged a decision entering judgment for plaintiff former employee in an action for breach of a one-year oral employment contract. Plaintiff moved 2200 miles from Los Angeles to Hawaii to take the job and was fired prior to the end of the one-year contractual term. On appeal, the court affirmed and held that the action of plaintiff moving 2200 miles from Los Angeles to Hawaii was

foreseeable by defendant. Injustice could only be avoided by the enforcement of the contract and the granting of money damages because no other remedy was adequate. The court found that it was also clear that a contract of some kind did exist. Plaintiff’s reliance was such that injustice could only be avoided by enforcement of the contract. Therefore, extra caution must be taken in making promises especially in business dealings. Such careless promises if relied on can be enforceable in law even though no consideration was given.

LegalPerspectives

With

Odunayo Oyasiji

Agency relationship in law

gent and principal relationship is an important part of our day to day life. This relationship often exists for the purpose of business. It arises in form of a person hiring other people to do things on their behalf. Agency relationship is a fiduciary relationship where the principal appoints an agent to act on his behalf. The agent is however acting subject to the control of the principal. Examples of agency relationship are lawyer/client and employer/employee. Agency relationship can be created orally or in writing. An agent can act based on actual or apparent authority. Actual authority also means express authority. In this situation the principal instructs the agent on what to do. Apparent authority on the other hand exists where the agent acts on behalf of the principal concerning a business with a third party and the third party is made to believe that the agent has the authority to take decisions. The agent is required to be loyal to the principal he is acting for. This simply means that the principal’s interest must take priority over that of the agent. Also, he must act according to the express and implied terms of the agency contract. This means that the terms of the terms of the contract must be strictly followed. The agent owes the principal a duty of care, competence and diligence. The agent must dedicate his skills to the principal’s task or assignment. Furthermore, the agent is expected to follow the instructions of the principal. On the other hand, the principal also owes the agent some duties. That is, the duty to act

in accordance with the terms of the contract entered into with the agent. The principal is expected to indemnify the agent where his assignment causes the agent to incur liability. The principal also owes the duty to deal fairly and in good faith with the agent. Breach of duty and its remedies in an agency relationship It has been disc ussed that both parties owe each other some duties. What happens when there is a breach of duty either on the side of the principal or the agent? What are the remedies available for the two parties? Such remedies are outlined belowRemedies available to the principal

Promissory estoppel

n our day to day lives people make promises and fail to fulfil it. What happens in that situation? We simply move on without making claims as it is just a promise and since nothing is given in exchange for it then no claim can be made. However, the condition is different with regards to contractual issues. Ordinarily, a contract without consideration (consideration can be in form of a price or something in return) may not be enforceable. The doctrine of promissory estoppel makes such contract enforceable even though there is no consideration

attached. An illustration of such situation is where someone (a footballer) approaches you as the head of a sports centre to discuss taking training classes/ sessions for people interested in football. Based on this, you then incurred expenses to put in place the needed facilities and in the long run the footballer changes his mind. You may think that you have no claim since there is no contract. However, promissory estoppel can help you claim for the cost you incurred by acting on the promise of the footballer. To claim successfully under promissory estoppel, there is

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Why I insist Nigeria can pay N100, 000 Minimum Wage- ADP Presidential Candidate The Presidential candidate of the Action Democratic Party (ADP) is worried over the lingering controversy over the issues of N30, 000 Minimum Wage stressing that if he is elected President of the country in 2019, he will energise the economy through massive investments in critical sectors that will generate decent jobs that will pay the least Nigerian worker N100,000 Minimum Wage. In this Interview with journalists during the official kick off of his presidential campaign, Sani says he will create cottage industries in each senatorial zone of the federation and exploit the natural and human resources of the states of the federation and make them more viable. INNOCENT ODOH was there. Do you have confidence that INEC will conduct credible elections in 2019 going by what happened in Osun and Ekiti states? ell, going by what happened in Osun and Ekiti, it will make one to have measured confidence on the ability of INEC to deliver on their mandate. But Presidential election is not like out of season or local elections like we had in Ekiti and Osun. The Presidential election is one election that I think will be different. If you remember what happened in 2015 elections, it was not the case of election taking place in Nigeria, it was election taking place in the whole because the whole world was interested, and is still in interested in what is happening in Nigeria. Nigerians have the burden of correcting those mistakes that they made innocently when a dummy of ‘change’ was sold to them as the credible alternative, the change that we have not seen and will never see. So, what I am saying is that the international community will be effectively engaged from the beginning of the process to the end of it. This is also an election that Nigerians are so sensitized because of the kind of awareness that was demonstrated when a sitting government was changed to another government, which has become an anti-climax in any case in spite of whatever you call it, the power of incumbency, money power, still a change was effected. In fact the change that we want now is even more necessary if this country must survive. This is because the most highly respected institutions in the world have spoken. They have passed a vote of no confidence on the President Buhari government. The International Monetary Fund (IMF) has sounded a note of warning that our country is on a roller coaster and where it lands is anyone’s guess. The Honkong Shanghai Banking Corporation (HSBC), the number one private financial institution in the world, in fact even left because as a private organization, they cannot afford the calamity that will be visited on this country if we allow this government to continue for another four years. I heard that a former UK top official has said that people should not bring their investments to Nigeria. This is to tell how bad the situation is and is also to tell you how interested the International Community is in what

Sani

is happening in Nigeria. So, INEC more than anybody is aware of what is ahead of them. But that is not to say that Nigerians do not have what we need to do. During elections, other countries are never swayed by pittance; they don’t sacrifice their future on Election Day like we do here in Nigeria. Though I symphathise with Nigerians but if you go through the hardship of this administration and you can still answer your father’s name, and not be lowered by this money they dangle, then I salute your courage and I ask Nigerians to stand up and be counted in 2019. We will not sell our future, our conscience, our country to those who cannot save the country. So, time has come for this new direction, time has come for this credible alternative and for us to stand up to rescue this country, recue this economy, rescue the political space and show the rest of the world that we have what it takes to make it and we are going to make it. Do you know that other countries that started with us in 1960, like Indonesia, Malaysia, Singapore, were not as rich as we are? Some of them were coming here to borrow from us but today they have left us far behind. Their GDP is growing at a rate that is everyone‘s dream. You know that we are better endowed in Nigeria such that there is no state you visit in this country that you will not see what will make that state independent economically. What is lacking is leadership. So I believe that not only INEC, not only International community but we are gathered here must carry this massage that time has come for that change, we must make change for

the sake of our children, the International Community has warned us about the danger that is ahead and we cannot afford it. Thank God we have our PVCs and we can cast our votes with our knowledge, with our conscience, with our dignity and rescue our future for us and our children. So I know INEC will not lose the essence of their mandate. Elections in Nigeria usually involve a lot of money. Do you have the required amount of money to fight the big parties? If you remember what happened in 2015, if you talk about money, I think a sitting government in a country like this has more money. I want to also say that they will use their money but we will use our heads. Sir, to win elections in Nigeria you must also have structures across the federation like the ruling APC and the main opposition PDP. Do you have the nationwide structures to win election? If you talk about structures, what you have in PDP and APC are those things really structures when they are jumping from one party to the others and fighting themselves? All they did was to divide themselves into these two camps and fight themselves to finish. But I can assure you that those structures will destroy them. The only structure that is available is the ADP and the other new parties who have answered the clarion call to come forward and be counted that is why we are here. We saw this coming, we knew that time like this is coming that is why we want you to join us to save this nation because we are

a laughing stock, and we cannot afford this. In ADP, we have the capacity because we are a credible platform of discerning Nigerians who have come together to form this party. If you know the number of people coming to ADP today you will know that we have that capacity that you are talking about because Nigerians are wise now. We believe that we have the capacity and we have Nigerians who are more informed than before. People have seen the killings, they have seen the hopelessness, and they have seen also the promise of this country. That is our capacity. There is usually a deluge of promises by politicians when they are jockeying for power but as soon as they acquire power, they hardly keep to their promises. How different will yours be? We will keep our promises. If we do not I am sure we would not only have disappointed you but, we would have disappointed ourselves. In Nigeria the problem is that we sold a democracy without political parties and we realized the fact that you cannot dream of a democracy without political parties. You cannot also call these ragtag organisations that we have as political parties. You need to have those fundamentals like accountability and party supremacy meaning that all of us are accountable to this party’s rules and regulations. You must have all-inclusiveness; the President’s immediate staff must not come from his house or relations. This country belongs to all of us. You must also lay the foundation for the youth and women of this country; they are the promise of this country all they want is to be given opportunity. And our party’s constitution said that we must allocate 50% of executive positions in our party to the youth and women. Going forward they will be the ones to sit on the round table to take decisions on who governs the country and how. So, we are going to keep our promise that is the promise we also made to our creator. Sir, the issue of Minimum Wage is in the front burner. When you become the President of Nigeria, what will be your Minimum Wage for Nigerian workers? Secondly, how many jobs will you create in one? The Nigerian economy has the capacity to give N100, 000 Minimum Wage to the least paid worker in Nigeria, we have the capacity. What we are losing is the leader-

ship. Nigeria is country that is number six among the crude oil exporting countries in the world; a country this is number three among the gas exporting countries in the world; a country that has the largest population in the continent of Africa; a country that is the next frontier in terms of where the resources of this world are deposited; a country that has the youngest population, the youngest workers, the youngest capital. With the kind of potential that we have, Nigeria cannot be paying N30, 000 to its workers, it is too small. What is happening is that the day we start growing our economy, that day you will believe me that we can pay more than N100, 000. For instance, why should we be importing petroleum products? Why should we be importing cloths that we use for uniform for our children from China? Why should China that 20 years ago was also a developing country be giving us jumbo loans to now make us slaves may be in ten year? This country can do better than we are doing now. So, let take this new direction, accept this credible alternative and you will see wonders. On jobs, one of our policies is that we must have cottage industries in each senatorial district. If you go to any state in this country, you will find either a cash crop or solid minerals or oil and gas deposits or something that the state can export and earn foreign exchange. That is what China that we are trying to follow today in SMEs has done. So I believe that we can create jobs and if you ask of the number, we can create 5 million jobs per annum in this country. Why? Because the agriculture potentials of this country is unmatched by any country, our GDP can grow at a faster rate than even America that has 70% of their GDP from agriculture. How will you relate with the National Assembly and how early will you submit the MTEF and other Budget documents to the National Assembly to avoid delay? My representatives in the National Assembly will have no choice but to toe the party’s line because we believe in party supremacy. The only reason why you have this commotion, this fight among the three arms of government is because there is no party in charge. It is intended in the constitution that the institution should supervise and superintend what is happenContinues on page 32

BUSINESS DAY

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APC loses 135 members to PDP in Kwara SIKIRAT SHEHU, Ilorin

e s s t ha n t h re e months to the general elections in 2019, about 135 members of All Progressives Congress (APC) in Alanamu Ward of Ilorin West Local Government Area of Kwara State have defected to the ruling People’s Democratic Party (PDP). The defectors said their action was fallout of the emergence of the candidates of the APC in the primaries, which was characterized by imposition and impunity. Yusuf Imam Akeyede, who led the defectors at the event held in Ilorin, said the action of their former party was against the will of the people and negated the principles of free, fair and credible elections that would usher in positive

change in the state. He noted that the defectors under auspices of Akeyede Youth Progressive Association were in politics for the progress, development and growth of their community and the state at large The PDP chairman in Alanamu Ward, Abdullahi Amosa Olonde, stated that his party

was the only party to beat in 2019 general elections across the country and Kwara in particular. Also speaking at the ceremony, the General Manager, Kwara State Signage And Advertisement Agency (KWASAA), Hameed Olufadi, said the PDP umbrella was big enough to accommodate

everyone while urging the defectors to work diligently for the success of the party in forthcoming polls. Olufadi, who stressed that PDP was ready to bring the dividends of democracy to the grass roots, added that the achievements of the party since 1999 cannot be overemphasised in the areas of infrastructure and workers welfare among others. The Chairman, Ilorin West Local Government Chapter of the PDP, Aminullahi Baba Okota, congratulated the defectors and assured that the party would operate an open door policy that would accommodate every member for the success of the party in the next elections. Speaking on Saraki political dynasty, Baba Okota urged the people of Kwara to support him in the bid to take the state to greater heights.

2019: Why Urhobo nation must vote for Buhari- Omo-Agege Francis Sadhere, Warri

he senator representing Delta Central Senatorial District at the National Assembly, Senator Ovie OmoAgege, during the weekend, canvassed support of Deltans for President Muhammadu Buhari in the 2019 general elections. He boasted that President Muhammadu Buhari, the Delta State APC gubernatorial candidate, Chief Great Ogboru and himself will win the 2019 general elections. Omo-Agege who spoke during his “End of Term Report and Score Card” to Urhobo people in Delta Central at the PTI Conference Centre, Effurun, said that it would be a great mistake for Urhobo Ethnic Nationality in the Niger Delta region to vote against the President Buhari-led APC gov-

ernment in the 2019 elections. Omo-Agege said in his over two years and nine months at the Senate, he had sponsored nine bills including a bill for an Act Establishing the Federal University of Petroleum Resources, Effurun (FUPRE) which was signed into law by President Buhari in 2017. He disclosed that he has also helped to attract 43 federal government funded projects to Delta Central Senatorial District and empowered over 300

Omo-Agege

market women drawn from the eight local government areas of Delta Central. The programme was attended by several prominent Urhobo leaders including traditional rulers, and other lawmakers. Omo-Agage pleaded the people of the senatorial district to return him to the red chamber to enable him to continue with his track record which he said had brought honour to the Urhobo Nation in Nigeria’s politics. “The hard work to make Urhobo Great Again has begun. Think about how the Urhobo nation is better off, thanks to President Muhammadu Buhari and APC, Urhobo is now linked to by rail to Aladja after 34 years that the project was abandoned. Retirees of Delta Steel Company are now being paid their entitlements after over years

of neglect. “We have delivered on our promises, and today Delta Central is better positioned to play a strategic role in national politics. And as we approach another critical election, it’s important that President Buhari and the APC are given the chance to build on this success so Urhobo can continue its revival. “ The Urhobo pe ople shouldn’t forget in a hurry how the PDP marginalized the 5th largest ethnic group in Nigeria and the largest ethnic group in Delta. Do not be deceived, Buhari will win again and Urhobo should be part of the success by massively supporting APC and voting for Buhari, Ogboru, myself and indeed for all APC candidates in 2019. “It’s important that we are given the chance to build on this success and continue the effort to restore Urhobo greatness.

Wednesday 28 November 2018

2019: How Gov Okowa received more defectors to PDP Francis Sadhere, Warri

he Governor Ifeanyi Okowa Campaign Organization on Friday received and welcomed more defectors from other political parties to the People’s Democratic Party Party, PDP. Okowa who received the defectors at a well-attended meeting in Warri, said since 1999, Deltans have continued to keep faith with the PDP and the strength of the party has increased ahead of the 2019 general elections. Leading political leaders who led their members to join the PDP include: former Governorship candidate of the MPPP, Afro Biukeme, former member of the Delta State House of Assembly, Misan Ukubeyinje, former Delta South Chairman of the All Progressives Congress, (APC)Yemi Omaghomi, Efe Happy, Col Ideh , Omolubi Omowunmi, Comrade Nathaniel Ovedhe, Ikede Onome Joseph, Femi Uwhawha, among others. Elated Governor Okowa, who spoke through his Deputy, Kingsley Otuaro said, “I thank you all for the painstaking efforts you have made over time, contributing to the victories we have always had in the PDP since inception.” The governor called on all members of the PDP to increase the tempo of the

Chairman of the PDP in the state, Olorogun Kingsley Esiso who joined Governor Okowa to receive the defectors, thanked party leaders from the district for making it possible for those who are remaining in opposition political parties to return to the PDP He urged party faithful to remain resolute as PDP in the state led by Governor Ifeanyi Okowa will win in all the offices in the 2019 general elections. “Let me thank our party leaders for making this occasion possible, and let me also assure you all that in PDP we all have equal rights irrespective of when you joined the party,” Esiso said. Earlier in a welcome address, the Chairman of the PDP, Delta South Senatorial District, Emman Amgbaduba urged party faithful to be united and committed to the party to enable them re-elect Governor Ifeanyi Okowa and other candidates of the party in the 2019 general elections. He noted that PDP is a party for all Deltans and urged the returnees and the new entrants to work assiduously for the victory of the party in the coming elections. “Governor Okowa is from Delta North Senatorial district and this is their turn to produce the governor for another term; beyond coming from Delta North, he has performed creditably well in all parts of the state even as we ask for more roads and

Why I insist Nigeria can pay N100, 000 ... Continued from Page 31 one of the invitees. You can see how we stand the pyramid ing in the governments from on its head. Definitely our national government to the National Assembly members state. A governor cannot say will toe the party line they that because he is the gov- have no choice. ernor he is the leader of the On budget delay, do you party, that will be standing know why we have budget the pyramid on its head. A delay? It is because we have President cannot sit in his introduced laziness in the house and said they are hav- system of budgeting in this ing caucus meeting and the country. In this country chairman of the party is just they say we can spend up

to our last budget without bordering about what the National Assembly or anybody is doing. That is not the system of productive and forward looking countries like the US. There they have time frame for budget. Once the budget is not passed nobody gets paid, everything stops. So if we have a budget system that stipulates that nobody

gets paid until the budget is passed, everybody will be on their toes and the budget will be delivered on time because National Assembly know that they cannot spend, government know they cannot spend, private sector know they cannot spend , so everybody will be on their toes to deliver the budget, that is what we are going to introduce in this country.

Okowa

door-to-door sensitization of registered voters within their various units to ensure that everybody collects their Permanent Voters Cards (PVCs) He urged Deltans to vote for all the candidates of the PDP in the forthcoming general elections, noting that the PDP will always have the interest of the people at heart.

schools in our Senatorial District,” he said. Other leaders who spoke at the event include former Secretary to the Delta State Government, Comrade Ovuozourie Macaulay, Joseph Otumara, and Emmanuel Okumagba among others. They resolved to work for the reelection of Governor Okowa

Wednesday 28 November 2018

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BUSINESS DAY

Does Nigeria need Buhari’s proposed Entrepreneur Bank? ODINAKA ANUDU

uhammadu Buhari, presidential candidate of the All Progressives Congress (APC), says he will create the Entrepreneur Bank to enable micro, small and medium enterprises (MSMEs) access cheap funds. Buhari, Nigeria’s current president, is seeking a second term, having been elected in 2015 to serve a term of four years. In his abridged manifesto entitled, ‘Next Level’, Buhari says his government will provide debt and equity support for young entrepreneurs and enable them access soft loans to support their business ideas across different value chains. He explains that his next term will usher in business planning support profiling and tailored advisory services for entrepreneurs. He pledges to help in developing the capacities of Nigerians, especially entrepreneurs, where needed, adding that he will legislate and enforce deadlines for issuance of government licences and permits in line with his plan to improve the doing business environment. Buhari further pledges to simplify investments, customs, im-

President Buhari

migration, trade and production procedures, while creating a onestop shop for all regulatory agencies under one roof in each senatorial district. Buhari’s plan to create an entrepreneur bank is hinged on the general belief of the business community that funding is one of the

biggest challenges facing small businesses in the country. Results of survey conducted by the Manufacturers Association of Nigeria (MAN) shows that the average interest rate charged manufacturers (including SMEs) by banks in the second half (H2) of 2017 was 23.05 percent as against 22.65 per-

cent in first half (H1) of 2017 and 21.4 percent in H1 of 2016. Many banks are unwilling to offer loans to MSMEs and those that do often provide same at above 20 percent. Though experts say funding is not the biggest challenge facing small businesses, they unanimously agree that it is among the top four. However, the question is, does Nigeria really need Buhari’s proposed Entrepreneur Bank? To answer the question, it is critical to understand that Nigeria already has development banks that lend credit to entrepreneurs. The Bank of Industry (BoI), for instance, lends credit to entrepreneurs at about nine percent. The focus of the BoI is the industrial and value-adding sectors such as manufacturing, agro processing, entertainment and export, among others. The Bank of Agriculture (BoA) also lends to farmers and those in the agric value chain. Ideally, BoA is supposed to lend to farmers at a single-digit rate, but the bank has been cash-strapped for a long time now. The bank officials are unhappy that they are not in charge of the Anchor Borrowers Scheme, which ordinarily could have increased the relevance of the bank, BusinessDay

understands. Similarly, the current government set up the Development Bank of Nigeria (DBN) in 2016 with a view to increasing lending to small businesses and development-oriented sectors. Entrepreneurs tell us that this bank lends to them at a doubledigit rate of 13 to 16 percent. Hence the country already has three banks that cater to the needs of entrepreneurs. BusinessDay found that what these banks lack is adequate funding. “Recapitalise BoI, BoA and any other DFI in the country, rather than duplicate institutions that perform the same function,” Ike Ibeabuchi, managing director of MD Services Limited, said. “Buhari may expand the roles of these banks, but Nigeria does not necessarily need another bank. This comes with its bloated cost profile,” Ibeabuchi said. Buhari has in 2016 pledged to recapitalise BoA to increase lending to the agricultural sector and serve as money deposit bank for farmers. As part of the plans, the bank was tapped to be eyeing to raise N1 trillion for its partial privatisation. The same year, Buhari also pledged to recapitalise BoI the same year. But all these plans were not implemented.

A peep into Atiku’s 10% growth target in agriculture CALEB OJEWALE

tiku Abubakar, PDP presidential candidate and main challenger to incumbent President Muhammadu Buhari, is promising to make agriculture thrive better in Nigeria than recorded under the current government. He plans to achieve this by increasing large-scale private sector investments, and a private sector led commodity exchange system. By 2025, Atiku hopes to have achieved an annual growth of 10 percent in the sector. The Buhari government made agriculture one of the important components of the administration’s objectives, but Atiku in his campaign blueprint, which has been made public, is planning to trounce the incumbent’s attempts at making the sector viable. “The overall focus shall be on attracting new investments into the non-oil sector, modernising the agricultural sector to make it attractive for large scale private investments,” read a portion of Atiku’s ‘Let’s Get Nigeria Working Again’ policy document for 2019.

The PDP presidential aspirant aims to develop agriculture into a modern, productive and competitive venture with high job-creating and poverty reduction capacity. “We would increase agricultural output from the current level of N23.85 trillion to about N40 trillion by 2025. This would imply an annual growth in agricultural sector from 4.11 percent to 10 percent between 2019 and 2025,” said the former vice president. Atiku, in his campaign’s policy document, also said his government (in the event of victory), will focus on revolutionising agriculture, encouraging development of an effective off-take system for producers and farmers to stimulate production and growth of the agricultural sector. “Companies presently engaged in the processing of agricultural produce for export are beleaguered by high cost of production, absence of reliable off-take contracts, inadequate technical, operational and quality expertise as well as lack of access to adequate working capital. Part of addressing the foregoing will require the existence of a well-functioning commodities

exchange and well-funded processing factories. We shall develop a thriving commodities trading ecosystem. This will not only aid the diversiﬁcation of the economy and foster real GDP growth, but will create jobs within the value chain of the ecosystem thereby engendering inclusive growth.” Some of the major policy proposals for the agricultural sector

Atiku

include collaborating with states in the design and implementation of robust and sustainable land reforms to simplify and strengthen titling and land transfer processes with a view to encouraging commercial farming. Atiku’s plan also proposes strengthening the markets for agricultural commodities through the establishment of private sector-led commodities exchanges around the major crop production regions of Nigeria. It also includes increasing incentives to attract private sector agribusinesses to set up processing plants in the staple crop processing zones across the country. Continue to improve agriculture sector’s access to ﬁnancial services, through NIRSAL by derisking lending to the sector by commercial and development banks. It also includes encouraging investment in agro-processing cluster by offering concessional ﬁnancing, tax breaks and seed funds for upgrades or construction of access roads, embedded power plants and water/waste management systems. Atiku’s plans to retain some of

the interventions of the incumbent administration such as the Anchor Borrowers’ Programme, and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL). The policy document highlights Atiku’s plan to “strengthen and scale up the Anchor Growers Scheme in the agricultural sector.” It also highlights a plan to encourage farmers to form cooperatives that would enable them set and guarantee commodity prices amongst their members, with the purpose of alleviating the risk of low prices at harvest time whilst also helping them to remain competitive. It also stated that following from the successes of the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL-Co) in de-risking agriculture credit. Atiku’s administration aims to ensure that the scope of Infra-Credit – Infrastructure Credit Guarantee Company Limited, is broadened to complement the operation of a proposed Infrastructure Debt Fund (IDF). This will function by de-risking investments in infrastructure to build investor confidence in taking risk and investing capital.

34 BUSINESS DAY NEWS FG partners Coderina to introduce robotics, coding to schools … education ministry sets up committee to execute project JUMOKE AKIYODE-LAWANSON

he Federal Government through the Federal Ministry of Education (FMoE) has set up a ministerial committee to work with Coderina Education and Technology Foundation on a pilot to introduce robotics, coding and projectbased learning to all Federal Government schools. Already, a number of schools have been selected from across Nigeria’s six geopolitical zones in a bid to ensure that the programme can be scaled up along the zones. Teachers from the selected schools gathered in Abuja on October 24 for two-day hands on experiential training.

According to Sonny Echono, permanent secretary, FMoE, “Information and Communication Technology (ICT) has become the driver of competitiveness in the world today. It has redefined efficiency and productivity, and changed the dynamics of the world of work. Coderina is well known in Africa for the advancement of computer science and STEM (Science, Technology, Engineering and Maths) education. There is therefore no doubt that our partnership will bring great improvements to the education sector and Nigeria as a whole.” Speaking about the programme, Akinniyi Obaide, Coderina’s relationships

and engagement director, said the teachers had been provided with resources to train students, form teams and bring the teams from the Federal Government schools to join others in the annual SAP FIRST LEGO League event. “This unprecedented move by the FMoE underpins a commitment to substantial change within the education sector by the Honourable Minister, Adamu Adamu. “The vision to reposition the educational system of Nigeria in line with the changing future of work by fostering lifelong learning and promoting skills such as creativity, critical thinking and complex problem-solving are essential for the knowledge economy,” Obaide said.

Obaseki walks BEDC MD out of his office for throwing state into darkness

here was mild drama at the office of the Edo State governor, Godwin Obaseki, on Tuesday, as the governor walked Funke Osibodu, managing director, Benin Electricity Distribution Company (BEDC), out of his office for failing to meet obligations to electricity consumers in Edo and throwing the state into darkness for weeks. This happened when the governor received members of the House of Representatives Committee on Power led by Daniel Asuquo, who were in Government House, on a courtesy visit. The governor was surprised to see the BEDC boss, whose name was not on the list of expected guests to Government House, but embedded herself in the National Assembly delegation, to gain access to the governor, who has been in darkness alongside millions of the state residents, for weeks. Speaking with the delegation after Osibodu had left the gathering, the governor said

BEDC had continued to fail in collaborating with the state government to provide stable electricity in the state, instead the company had posed as an obstacle to meeting the goal. “BEDC has been an obstacle all the way. They will not provide electricity and will not allow you to get alternative sources of power. The state will not allow it,” the governor said. According to Obaseki, “As Governor of Edo State, we have lost confidence in BEDC. We don’t want them here. We are in darkness. Let us remain in darkness until we find people who are capable of delivering electricity. This is our position.” Despite the fact that the state generates about 600mw to 700mw of electricity, the people are still in darkness, the governor said, wondering how he is expected to explain the irony to the people, who are well aware that they produce a substantial amount of electricity in the country. He noted that the BEDC had failed to recognise that

they have to be patriotic and responsible to the state and the country, but instead they had been noncommittal about the issue of power distribution. “To assist, we set up electricity committee across the local government areas chaired by the Deputy Governor of the state, Rt. Hon. Philip Shaibu, with BEDC as member to understand the challenge. But BEDC frustrated our resolve to finding a lasting solution to the issue of providing electricity to our people.” Earlier, Daniel Asuquo, chairman of the House Committee on Power, said they were in the state for an oversight function on the activities of BEDC and other players in the electricity value chain. Edo State consumes half of daily power supply under the BEDC, he said, noting that the state has the highest number of consumers on the network, which makes it critical to engage with the governor and people of the state on the level of service delivery by players in the value chain.

Hajji succeeds Onyema as ASEA president IHEANYI NWACHUKWU

frican Securities Exchanges Association (ASEA) held its 22nd annual general meeting (AGM) on November 25, where the election of officers took place. Karim Hajji, CEO, Casablanca Stock Exchange, and Edoh Kossi Amenounve were elected as the president and deputy president of ASEA, respectively. Hajji takes the leadership of the Association after Oscar Onyema, Nigerian Stock Exchange (NSE) CEO’s two terms of two years as president.

Other officers constituting the newly formed ASEA executive committee include, Geoffrey O. Odundo, CEO of Nairobi Securities Exchange; Nicky Newton, CEO of Johannesburg Stock Exchange; Mohammed Farid Saleh, CEO of the Egyptian Exchange; Thapelo Tsheole, CEO of Botswana Stock Exchange; Pierre Ekoule, CEO Douala Stock Exchange; Koffi Yamoah, CEO of the Ghana Stock Exchange and Pierre Celestin Rwabukumba CEO of the Rwanda Stock Exchange. Speaking on his election, Hajji said, “I am looking for-

ward to working with each member of the Executive Committee to continuously advancing the vision of ASEA while delivering value to the membership.” He commended his predecessor, Onyema for the good work done in the past four years and noted that the newly formed executive committee would build on the legacy he had left behind. Hajji also added, “I believe that through advocacy and strategic lobbying, ASEA will be able to unlock opportunities for the much-needed liquidity in the African financial markets.”

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35 NEWS

BUSINESS DAY

Inefficiencies, political uncertainties stall BPE’s planned sale of power assets OLUSOLA BELLO & DIPO OLADEHINDE

he planned sales of some power assets with the aim to use the revenue to bolster 2018 budget have been stalled due to macro-economic challenges, volatile foreign exchange, uncertainty in the economic environment, thanks to heightened political tensions and uncertainties as the 2019 election draws near. According to sources, investors decided to pull back from the exercise in order not to get their money stocked because they are apprehensive of what could be the outcome of next year’s elections. Investors are said to have expressed fears that they do not want to take the risk of putting down their money, and if another party forms the government they will have to

start renegotiating all over again, which will put their investment under risk. Ayo Akinwumi, head of research at FSDH Limited, says the current scenario occurs in all election periods across the world, as investors are always sceptical before election because they can buy an asset and another new administration comes in to reverse the transaction, which we saw under late President Yar’dua’s administration. Reacting on how the government will fund the budget if the sale of the power assets fails to proceed, “The government has a constitutional power to keep spending money up to a particular limit until another budget is approved,” Akinwumi states. The assets slated for sale include the Geregu Power Plant 2, with an installed capacity of 434 megawatts (mw); Omotsoho 2, with in-

stalled capacity of 450mw, and Calabar Power Plant, with an installed capacity of 561mw. Dolapo Ashiru, managing partner at Nirvana Communication, says the matter is beyond 2019 elections, as BPE may be struggling to sell those assets because the government still fix and control price. “The main questions we should be asking is, are the power companies in Nigeria value chain viable or profitable?” Ashiru asks. All efforts to reach Amina Tukur, head of public communications at BPE, proved abortive as all phone calls and text messages yielded no response. In July this year, Alex Okoh, BPE director-general, disclosed that most of the Distribution Companies (DISCOs) were technically insolvent, and harped on the need to immediately solve the challenges both-

ering on price structure and liquidity of DISCOs. “We need to solve the liquidity challenge. How do we make the industry viable in terms of liquidity? If we take all the energy that the DISCOs buy and the energy sold, assuming there is a minimal loss on collection side, we find it difficult that there is enough revenue to push us through,” he noted. The fate of Yola Electricity Distribution Company and Afam Power Plant slated for privatisation in January 2019 is also hanging on the balance because of the elections, as no fewer than 19 firms have indicated interest to acquire the two companies. While seven companies submitted bids to buy Afam, 12 others submitted for the Yola Disco at the close of the submission of bids for the Expression of Interest (EoIs) for the two power companies. L-R: Oremeyi Adeola Akah, chief core operation officer, Interswitch Group; Onyinye Ikenna-Emeka, general manager, enterprise marketing, MTN Nigeria; Lilian Odim, founder, MumsAtWork, and Lynda Saint-Nwafor, chief enterprise business officer, MTN Nigeria, during the MumsAtWork symposium held in Lagos.

Experts urge increased investment in deficit sectors of economy GBEMI FAMINU

xperts at the 2018 Investment Advisers and Portfolio Managers (IAPM) forum/ launch of Association of Corporate and Individual Investment Advisers (CIIA) called for increased investment in needy sectors to drive economic growth. They believe that major challenges to some sector in the economy were poor funding and lack of access to finance, stating that this will be a major catalyst to drive expansion and growth in those sectors. Bolaji Balogun, CEO at Chapel Hill Denham, in his remark urges investment advisers and portfolio managers to enhance their relevance and also take up the

role of forming capital and ensuring its transmission into required areas. Balogun says this while delivering a speech at the forum with the theme: “The Future of Investment Advisory.” He also mentions the need for investors to invest in appropriate instruments and sectors regardless of their duration. Addressing the importance of the capital market, he says banks are important but the capital markets are much more important, as he states that there is no developed market without a good and diverse capital market. Using an analytical data that show Nigeria has substantial deficit in education, infrastructure, healthcare and housing coupled with the rapid growth rate of the popula-

tion, which is greater that the economic growth rate. Nigeria could become the largest failed state in history if it is continually financed in the way budget is structured, but if financed successfully, the Nigerian economy has the ability to run at 78 percent annually thereby becoming the seventh largest economy in the world by 2050, which will be an upward movement from its present ranking as the 25th largest economy in the world, he says. He further analyses that by 2050, Nigeria will also be the most populous nation on earth with a forecast of over 45 million people, which significantly means the continuous expansion of deficits, especially the housing deficit, will move from 20 million to 50 million.

Stephen Nwadiuko

Sonny Iroche

United Capital announces appointment of new non-executive directors as John Shinkaiye retires

nited Capital plc, an investment banking group, has announced the appointments of Stephen Nwadiuko and Sonny Iroche as non-executive directors following the retirement of John Shinkaiye. These appointments are subject to requisite regulatory approvals effective October 2, 2018. Nwadiuko is a fellow of Chartered Institute of Bankers of Nigeria, Institute of Chartered Accountants of Nigeria, Compliance Institute of Nigeria as well as an associate of Certified Pension Institute of Nigeria. He is a retired Deputy Director, Banking Supervision Department of the Central Bank of Nigeria (CBN) where he worked for over 20 years. He was a former council member of the

Chartered Institute of Bankers of Nigeria and Chairman Chartered Institute of Bankers of Nigeria, Abuja Branch. He is currently a Member of the Investigating Panel of both the Chartered Institute of Bankers of Nigeria and Institute of Chartered Accountants of Nigeria as well as a member of the Board of Trustees of the Compliance Institute Nigeria. He was recently appointed as the Managing Director/CEO of First Guarantee Pensions Limited by the National Pensions Commission. Iroche is a seasoned Finance Executive with over thirty years’ experience in Banking, Power and Public Service. He has served on various boards such as the International Glass Industries Limited and First Merchant Bank, Sierra Leone.

Senate stands down confirmation of EFCC nominee OWEDE AGBAJILEKE, Abuja

enate on Tuesday stepped down the confirmation of Olanikpekun Olukoyede as secretary of the Economic and Financial Crimes Commission (EFCC). The Senate suspended the nominee’s confirmation following a complaint by a member of the Senate Committee on AntiCorruption and Financial Crimes, Isa Misau (PDP, Bauchi State) that the com-

mittee did not follow due process in submitting its report. Olukoyede, President Muhammadu Buhari’s nominee for the position, is the current chief of staff to the acting chairman of EFCC, Ibrahim Magu. Chairman of the Committee, Chukwuka Utazi (PDP, Enugu State), had read out the report of the committee where he stated that the nominee possessed integrity and competence to perform the duties for which he was nominated.

Growth enablers receive fresh impetus in Edo as Obaseki budgets N7bn for investment drive in 2019

uilding on the gains of his administration’s industrialisation drive in the outgoing year, Edo State Governor Godwin Obaseki plans to rev up activities that will increase the growing list of investors that will berth in the state in 2019, with N7.007 billion. Obaseki said this during the presentation of the state’s 2019 budget proposal before a session of the Edo State House of Assembly, in Benin City, the state capital. According to Obaseki, “Our efforts at expanding the state’s economic base will receive a major boost this year as we plan to spend N7.007 billion on investment promotion, which will help bring to fruition a number of our investment initiatives.”

The governor explained that through this, we intend to provide guarantee for investments from the private sector, match funding for projects and provide the right environment for investors to come on board. Speaking on the status of the state’s big-ticket investments, which final investment decisions were sealed earlier in the year, he said, “Our big-ticket projects, including the Benin Industrial Park, the Benin River Port and Edo Modular Refinery Project, are well on course. “Three billion naira (N3bn) has been set aside as the contribution of the state as initial investment commitment for the Benin Industrial Park, the necessary preliminary works are ongoing and in no distant time, the first set of compa-

nies will set up shops to provide jobs and services in the state.” He added, “One of the priority areas in the proposed 2019 capital expenditure framework is to strengthen internal capacity for project execution and governance with a view to achieving 80 percent closure rate on all ongoing projects.” He maintained, “Considering the nexus between investment and security, we will reinforce our security architecture with N2 billion which will be contributed to the State Security Trust Fund. “We expect that wellmeaning Edo citizens and corporate bodies will also contribute to this fund towards ensuring improved safety of lives and property within the state.”

BUSINESS DAY

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Jigawa: The emerging agribusiness hub of Nigeria

griculture is the main economic activity of the vast majority of the people in Jigawa State providing livelihood for over 80 percent of the population. However, the agriculture sector has for so long been plagued with a myriad of challenges ranging from inadequate funding, poor yields and productivity, inadequate research and extension services among other things. This is despite the existence of high potential for market – oriented agricultural production. Since the emergence of the Governor Badaru led administration in the state, the sector has witnessed a massive turnaround. A significant progress in the business environment in Jigawa State is that farming is now seen mostly as a commercial venture. Majorly, government’s intervention within the sector has been the facilitation of an agricultural transformation in such a way that the sector significantly contributes to economic growth with poverty reduction and increased food security. This has been made possible by opening up the sector beyond subsistence, enhancing productivity through new production techniques to ensure sustained agricultural growth with agricultural value-chain development that supports increased agrobased investments that provide employment opportunities. Indeed, the potential of an agriculture- led socio-economic transformation in Jigawa State is enormous as will be examined critically in this publication. The state has large expanse of agricultural land, rivers and flood plains suitable for crops, livestock and fish production. Out of about 2.452 million hectares of land area, over 1.6 million hectares consisting of upland soils, are cultivatable during the rainy season with an additional 381,000 hectares consisting of FADAMA Lands and river flood plains suitable for all-year round irrigation.

Another crop that is being supported is the sugar value chain where an $80 million investment has been attracted in the Gagarawa axis of the state. The GNA sugar project will produce 120,000MT or refined sugar as well as other ancillary products. Smart investors are encouraged to tap into these opportunities and set up businesses in crop processing and value chain development.

Currently, it is estimated that less than 40 percent of the total FADAMA lands is actually being utilized. Jigawa State’s enormous comparative advantage in the production and processing of a number of crops remains largely untapped, opening up opportunities for private sector players to participate in the development of value chains across the identified crops. Crop production and processing

producing state in the country. Investors are taking advantage of this and are setting up integrated rice mills in the state. Notable among them are the on-going 32 tonnes per hour Dangote Rice Mills, Kaugama and the 320 tonnes per day Jigawa Rice mills in Gujungu. The multimillion dollars mills are expected to complement the existing ones in the state by significantly increasing its rice milling capacity. The same can be said of other staple crops like wheat, cowpea, soybeans, millet and guinea corn.

Export oriented agricvalue chain development The state government is encouraging value addition to export crops by encouraging exporters to engage cluster groups for farm gate purchase which affords a better price for the farmer. These crops are then warehoused in a facility for sorting, bagging and export. So far, exporters in the sesame and hibiscus have been engaged for the development of the local value chain. The WACOT Sesame plant at

reserves across the state offers an opportunity for investors to enter into a long term lease agreement for the utilization of these reserves as cattle/sheep/ goats ranches or even large scale poultry farms. The state has an appreciable livestock population currently put at about 1.8 million cattle, 1.5 million sheep and 2 million goats. The estimated population of poultry is 5 million. This opens up an opportunity for investments in veterinary clinics, dairy operations, fattening houses, slaughtering facilities, pack houses and cold storage facilities, essentially targeting the protein demands of southern Nigeria market while also exploring opportunities for the export market. The huge livestock population in the state also presents opportunity for the establishment of tanneries for leather processing as well as facilities for the production of secondary leather products for

PIC: Inside WACOT sesame processing facility in Maigatari. Facility supports more than 6,000

The introduction of the cluster model of farming and the increasing participation of the private sector in outgrower schemes have significantly increased crop yield across the state. From a state average of 2.4 tonnes per hectare pre-2015, the yield of rice has been increased to an average of 5.5 tonnes per hectare. The area brought under cultivation has also increased tremendously. For instance, under the state cluster program alone, more than 30,824ha of rice fields have brought under cultivation. The investments in rice production have made a large impact on the total rice output in the state. According to a DFID report released in 2016, Jigawa was ranked as the 3rd largest rice

the EPZ in Maigatari for example is improving the sesame value chain and expanding the state’s export market of the product. Through their organised outgrower scheme, 6,604 farmers were engaged to cultivate sesame on a farm size of 12,000ha. The company plans to expand to 16,000ha in the coming season. The creation of an agricultural export terminal in Andaza in 2018 is opening up the state for the international export market through a joint venture agreement between the state government and a private investor. Jigawa remains the leading producer of sesame, Gum Arabic and jathropa. It is also a major producer of sorghum. Investors are advised to take advantage of the support given by the Jigawa Government in developing cluster programs for the range of crops. Livestock production The availability of hundreds of government owned grazing

both domestic and international markets. Tomato value chain development Tomatoes, peppers and a host of other vegetables are major crops grown in the dry season under irrigation. Thousands of hectares are usually cultivated. Lack of processing and storage facilities is a major impediment to the expansion of tomato value chain as farmers suffer loss of income due to huge post harvest losses that characterise the production season. The Jigawa State Government is willing to support large scale investments in any area along the tomato value chain development. Interventions are welcomed in the development of good agricultural practices leading to improved yield on adopted clusters, sorting and packing facilities, cold storage facilities and transport services. Investments in tomato farming with linkages to industrial processing of tomatoes as puree and concentrates are highly welcomed.

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Transport industry gets boost with launch of driver ID platform

Suspend excise duty on alcoholic drinks, tobacco, Senate tells FG

MODESTUS ANAESORONYE

OWEDE AGBAJILEKE, Abuja

igeria’s transport sector is set to experience a significant leap as a new start-up, DriverCheck, has launched an easy and reliable Driver Verification Service. The online platform allows users to make background check of their drivers from the comfort of their locations, by relying on some basic details provided. The platform is set to transform the way verification is made by making it easy for employers to obtain useful information about their drivers within a very short waiting period and at a very affordable cost. Speaking about the new solution, Babs Akinyemi, DriverCheck’s CEO, explained that the platform had been designed to help employers get informative reports about their employees and not to investigate people. This will reduce the risk they are exposed to and increase the information they have about their staff. “DriverCheck solves the nagging problem of proper staff identification in Nigeria. Often, people are forced to work with their personal staff based on trust because the tools available for verifying requisite details of such staff are either too expensive to use and mostly unreliable. DriverCheck is an easy, affordable and very reliable option that is available to everyone,” he said. To start, users will log on to https://www.drivercheck.ng/and upload the National Identification Number (NIN) or the Biometric Verification Number (BVN) of the driver being verified. You will also be required to upload the image of the Driver’s license, a personal picture and the address of the individual.

he Senate on Tuesday asked the Federal Government to immediately suspend the implementation of Excise Tariff increment on alcoholic beverages and tobacco until all relevant stakeholders were adequately consulted. This, it believes, will give an avenue for consensus rates and implementation approach among stakeholders in the beverage and tobacco industries. It also asked the Federal Government to sensitise producers and consumers of alcoholic and tobacco products to understand the need for the increase and its advantage in adding to the economic fortune of the country as well as providing the government with more resources to invest in health services of the nation. This followed the adoption of the report of the Senate Committee on Finance on the Urgent Need to Review the Excise Tariff Increment in order to save Local Distillers of Beverages from Looming Extinction.

It would be recalled that in May 2018, sequel to a motion on the floor the Senate, it mandated its Committee on Finance to organise unfettered discourse between the Federal Government and relevant stakeholders on the matter. In June this year, the Federal Government had raised excise duty on alcoholic beverages and tobacco. Although President Muhammadu Buhari had approved the amendment to the excise duty rates in March, implementation of the upward review, however, took effect from June 4, 2018. The immediate past minister of finance, Kemi Adeosun, had stated that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the impact on prices of the affected products. Under the rates for tobacco, in addition to the 20 percent ad-valorem rate, each stick of cigarette now attract a N1 (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k

specific rate per stick (N58 per pack of 20 sticks) in 2020. Similarly, the new specific excise duty rates for alcoholic beverages cut across Beer and Stout, Wines and Spirits from 2018 to 2020. Also, Beer and Stout attract N0.30k per centilitre (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. In the same token, Wines attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020. The former minister had disclosed that the new excise duty regimes followed allinclusive stakeholder engagements by the Tariff Technical Committee of the Federal Ministry of Finance with key industry stakeholders. But in a report presented by the Vice Chairman of the committee, Umaru Kurfi (APC, Katsina State), the panel observed that most industry players in the beverage and tobacco industries were not properly engaged during the consultative process that led to the adoption of the new excise tariff rate.

L-R: Baker Magunda, MD, Guinness Nigeria plc; Viola Graham-Douglas, corporate relations director, Guinness Nigeria; John Meheux, zonal commanding officer, zone 2, FRSC; Femi Giwa, director of operations, LASEMA, and Hyginus Omeje, Lagos State sector commander, FRSC, during the flag-off of Responsible Drinking campaign for Ember Months rally organised by Guinness Nigeria in Lagos. Pic by Pius Okeosisi

Oyetola sworn in as Osun governor

degboyega Oyetola has been sworn in as the governor of Osun State at Osogbo City Stadium, in Osogbo, the state capital. Oyetola won the September 22 governorship election on the platform of All Progressives Congress (APC). The News Agency of Nigeria reports that he arrived at the venue of the event with his wife, Kafayat and children at 11:40am. Chief Judge of the State, Oyobola Adepele-Ojo administered oath of office on Oyetola at 1:02pm. His deputy, Benedict Alabi, took oath of office at 12:55pm. Oyetola took over from

Rauf Aregbesola, who came into power on November 27, 2010. Aregbesola came to power after the Court of Appeal sitting in Ibadan, sacked his predecessor, Olagunsoye Oyinlola, who had spent three and half years of his second term in office. In his good will message, President Muhammadu Buhari urged Governor Oyetola to rule with human face and with the fear of God. The President, who was represented by Boss Mustapha, the Secretary to the Government of the Federation, also urged him to be a governor for all. Buhari said the peaceful transition from one govern-

ment to another was a demonstration that Nigeria democracy had matured. The President commended the people of the state for conducting themselves peacefully during the governorship election in spite of the hitches, adding that the victory was for the people. Buhari also commended Aregbesola for steering the ship of the state in the right direction in the last eight years and for handing over power to another APC governor. The President, however, said the Federal Government was committed to the completion of various infrastructure projects in the state, saying Federal Government

had supported the state in the area of health, housing, water, economy and education. Also speaking, Bola Tinubu, the national leader of the ruling APC, commended Aregbesola for his achievements while in office. He said, “Aregbesola earned progressive mandate for eight years, developed progressive programmes and handed over to another progressive governor. “This is not a mere achievement, and we pledge our total support, both of us in office or out of office for the continuity of the progressive government established by President Muhammadu Buhari.

Wednesday 28 November 2018

UBA Foundation commits to human capacity development with education grants KELECHI EWUZIE

nited Bank for Africa (UBA) Foundation says it will continue to seek ways to improve human capacity through education, improving environment and economically empowering communities around the location where it operates. Kennedy Uzoka, group managing director/CEO, UBA plc, stated this while speaking at the grand finale of the 2018 UBA National Essay Competition in Lagos, where Divine Omesiri Odjegba, a 14-year-old student of International High School, Delta State, emerged the overall winner of the competition and with it an educational grant worth N2,000,000.00 to study in any African university of her choice. According to Uzoka, UBA

as a bank is happy that it is touching lives and making a solid impact through this competition and the grant it gives out annually to those who emerge winners. “We have indeed noted the increase in the cost of living and have therefore increased the prize money by 100 per cent in all the categories. Seeing past winners tell their stories on the impact the grants have made on their education and particularly how the financial burden was lifted off their parents, gives us joy that our foundation is unique and deeply touching lives,” he said. He specifically mentioned the Each One Teach One initiative - the Foundation’s latest initiative where thousands of UBA staff members gave back to their communities across Africa, by imparting knowledge to students and the less privileged.

BoI committed to attracting FDI, cheap funds for industrialisation - Pitan ODINAKA ANUDU

ank of Industry (BoI) says it is committed to attracting cheap funds for industrialisation as well as foreign investments into the country. Olukayode Pitan, managing director, BoI, at a meeting with Fahad Obaid AlTaffag, ambassador of the United Arab Emirates to Nigeria, in Lagos, said the bank was ready to support genuine foreign businesses willing to invest in Africa’s biggest market. “So, if you are thinking about bringing in companies to invest in the country, we will be willing to partner with you and give those companies the kind of facilities we have to support their investments. “We know that we have a good relationship with your country. I understand

CHANGE OF NAME

I, formerly known and addressed as Agunsoju Michael Ayodeji Ibukunwole now wish to be known and addressed as Agunsoju Oladimeji Michael Ibukunwole. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Udedinaihu Kelechi now wish to be known and addressed as Udedinaihu Concelia Adaku. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Augustus Wallace Ewohime now wish to be known and addressed as Augustus Ose Ewohime. All former documents remain valid. General Public please take note.

you want to know what we do and how we can mutually cooperate for the benefit of the two countries. We are the leading DFI in Nigeria. We focus on many areas for development, but the major areas are emphasis of government, such as light manufacturing, oil and gas, creative industry, agric processing, technology and many more,” Pitan said. He said the bank just concluded a syndication, trying to raise about $5 million to support industrial development in the country.

CHANGE OF NAME

I, formerly known and addressed as Forstina Chijioke Oparaocha now wish to be known and addressed as Forstina Chijioke Giwa. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Eze Blessing Chidimma now wish to be known and addressed as Nwankwo Chidimma Blessing. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ngeleh Florence Chidinma now wish to be known and addressed as Maxwell Florence Chidinma. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Okparaugo Jane Chiamaka now wish to be known and addressed as Onyekwere Jane Chiamaka. All former documents remain valid. General Public please take note.

Wednesday 28 November 2018

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NEWS NNPC’s leaking pipelines cost Nigeria... Continued from page 2

of the NNPC show that in July alone pipelines leading to five

leading terminals for crude exports suffered major leakages costing the country several millions of dollars in lost revenue. The $467 million (N168 bn at US$/N360) is more than the N128 billion transferred by the NNPC into the federation account in July. This represent significant loss of revenues to both the federation and state governments, who are already struggling with significant revenue shortfalls, forcing them to resort to raising debt to finance their governance obligations. The $467 million loss to pipeline leakages also compares with just $450 million Nigeria received as export earnings in August, an indication that that receipts from export earnings could be twice higher, if leakages can be eliminated. Sources in the oil and gas industry have told BusinessDay that the country’s pipelines are not only old but are poorly secured, thereby making them easy targets of repetitive attacks by vandals. The NNPC August monthly report shows the five terminals that had major shut-in as a result of leakages connecting them to major oil wells include; Bonny Terminal, Forcados Terminal, Erha Terminal, Usan Terminal and the Agbami terminal. “Bonga, Yoho and Odudu terminals were also shut down for varying days for Christmas-tree change-out, Scrubber leak repairs and Rig movement respectively,” according to the NNPC August performance report. Combined production shut-in from all the five terminals in July

was 6.29 million barrels worth, with a total value of US$467 million, using the average price of the International Brent crude, the benchmark for Nigeria crude oil which sold for an average price of $74.4 in July. Abreakdownofthevariousshut-ins showed that 160,000 bpd worth $11 millionwaslostwhentheNembeCreek Trunk Line (NCTL) was shut down on June 8, 2018 “due to leaks at San Barth, OwangaiandElemKalabari”Thepipeline was reopened in July 2018. Another 100,000 bpd worth $7.4 million was lost when the Trans Niger Pipeline (TNP) leading into Bonny was shut down due to leaks at Rumukrushi area for three days in July while the Ogbagi Flow Station was also shut down for maintenance for a period of nine days starting from June 27 to July 5, 2018 causing a shutin of about 150,000bpd. Similarly, the Trans Forcados Pipeline (TFP) was shut down twice on 15 July 2018 and 24 July 2018 for duration of six days and eight days respectively due to observed leaks in the Otegele and Batan areas leading to a production shut-in of about 200,000bpd worth $14 million. The pipelines only came back on stream July 31, 2018. Also the Trans Ramos Pipeline was shut down in April 2018 due to leaks in a creek crossing around Odimodi area with a loss of approximately 35,000bpd worth $2million as production into Forcados Terminal remained shut all through the month of July. Oil production in the Erha Terminal was shut down from July 2 to 3 2018 for maintenance with production shut-in of 32,000 bpd worth $2.0 million and again on July 19 to manage the tank top with cut back of 20,000 bpd worth another

$1.4 million. Usan Terminal was shut down from July 2-5, 2018 to manage the Top tank resulting to shut-in of 34,000 bpd worth $2.5million while the Agbami, Terminal Production loss of 21,000 bpd worth $1.5million due to plant emergency shut down for a period of 4 days with effect from July 1, 2018. NNPC admitted that Payments into the Federation Account were affected after adjusting crude and product losses and pipeline repairs and management cost incurred during the period. NNPC pipelines suffered a total of 1,828 vandalized points in the 12 months between August 2017 and August 2018 fuelled mainly by crude oil theft and vandalism, with the corporation admitting that this incessant vandalism has put it at disadvantaged competitive position. The corporation said it spent N1.4 billion for pipeline repairs and management in July alone. Speaking to BusinessDay on the challenges the NNPC looks to be having with its leaking pipelines, Ademola Henry team leader at the Facility for Oil Sector Transformation (FOSTER) questioned why government is still operating pipelines when it is such a high cost centre. “Anytime NNPC cannot find anywhere to hide expenses that they have incurred, they just recorded them as loses under pipeline repairs, which is very sad,” Henry said by phone. He advised that the federal government should “deregulate the sector and commercialize the pipelines and allow it operate on a tariff model which will further block leakages.” “The allegation in the industry now is that the biggest beneficiaries of pipeline vandalism are the Military’s Joint Task force, which is very sad,” Henry concluded.

Olukayode Pitan (r), managing director, Bank of Industry (BoI), welcoming Ibukun Odusote, permanent secretary, Federal Ministry of Labour and Employment, during her working visit to the BoI office in Abuja, yesterday.

Continued from page 1

revealed that N280.8 billion was generated by the states and FCT for the first quarter of 2018 while the remaining N263.3 billion was generated in the second quarter of the year under review. Meanwhile, Lagos, Delta, Oyo and Kaduna states among others reported a consistent increase in their IGR figures in the last three years. Lagos state generated internal revenue of N333.9 billion in 2017, which is higher than the N302 billion recorded in the previous year and also bigger than the N268.2 billion the cen-

DIPO OLADEHINDE

he Federal government on Tuesday announced that the country has awarded mining contracts to ten exploration and consulting companies as part of efforts to expand the development of mining and steel across the country. According to Reuters, Nigeria’s Minister of State, Mines and Steel Development Abubakar Bawa Bwari had offered mining companies a three to five year “tax holiday”, duty and tax-free importing of equipment, full ownership of their businesses and the ability to take profits out of the country. “Recently we gave a contract to four exploration companies, with six consulting firms to explore our mineral resources focusing on gold, zinc, iron ore, rare earth metals,” Bwari told Reuters on the sidelines of the Mines and Money conference in London. “Apart from the normal budgetary allocation government has given intervention of $100 million and we are focusing on exploration,” he said, adding that the funds would be used to help government to develop the sector. Bwari explained that the World Bank was in Nigeria few weeks ago to discuss progress on spending the $150 million the bank agreed to lend

the country in April to develop the mining industry. The minister did not say how much the contracts were worth but in July after at the end of Federal Executive Council (FEC) at the presidential villa he said eight firms would be awarded a government contract to the tune of N12.7 billion ($41.5 million). “The perception is gradually changing and for us to really encourage this people to come in, we really need to explore because you cannot mine without information and information can only be gotten through exploration,” the Minister told Journalist after FEC meeting in July. Nigeria is endowed with vast reserves of solid minerals, including, but not limited to, precious and base minerals, industrial minerals, energy minerals and metals. The country was a major exporter of tin, columbite and coal in the 1960s to early 1970s. However, activities in the sector began to nose-dive considerably by the mid-1970s due to a number of political and economic factors, especially the significant focus on crude oil production as a major source of foreign exchange for the country.

•Continues online at www.businessdayonline.com

Law school graduates 161 first class... Continued from page 2

yer Afe Babalola. Chiroma disclosed that of the 161 students graduating with first class 21 of them had First Class in their universities, 134 had Second Class Upper, while six had Second Class Lower in their universities. “The students maintained their positions as the best of the best in their universities as well as the Nigerian Law School.” SpeakingTuesdayinAbujaatthecall to bar of 4, 779 law graduates who were successful at the August/September 2018bar finalexamination, he disclosed that in about 55 years of the existence of the Nigerian Law School it has not had interrupted session, as there has never been any incident of closure on account of student unrest, strike action by staff or for any other reason. To cure the perceived downturn in the training of lawyers and the consequence of producing low quality lawyers, he said the law school has embarked on aggressive review of curriculum to include teaching of ethical, legal writing, teaching

methodology, as well as methods for general assessment of students. He said out of the total number of 5,846 students who participated in the final Bar examinations, 4,779 candidates were successful. Ciroma enjoined the new lawyers to make the best out of the legal profession and ensure strict adherence to the norms and ethics of the profession. Meanwhile, the Legal Practioners Disciplinary Committee (LPDC) has, between January and November this year, debarred seven lawyers, suspended 12 and admonished one for various professionalmisconduct,theChairman oftheBodyofBenchers,BashirDalhatu, disclosed this yesterday. Dalhatu said the LPDC which is a committee of the Body of Benchers has been carrying out its mandate in a just and fair manner without giving room for compromise, affection or ill-will. He advised the new lawyers to be of good behaviour and abide by the ethics and traditions of the legal profession to avoid been bought before the committee.

•Continues online at www.businessdayonline.com

ASUU strike leaves students vulnerable to... Continued from page 2

States’ IGR up 27.7% to N579.4 bn in first... report by the nation’s bureau

FG awards mining exploration contracts to 10 mining, consulting firms

tre of excellence generated in 2015. Delta state generated N40.8 billion in 2015 while in 2016 and 2017 it reported N44 billion and N51.8 billion respectively. Oyo and Kaduna states also followed in line with three years of consecutive revenue growth. The former generated N15.66 billion, N18.8billion and N22.4 billion in 2015, 2016 and 2017, respectively while the latter generated N11.5 billion in 2015, N23 billion and N26.5 billion in 2016 and 2017 respectively. Enugu state also made progress in its IGR figures, as the coal city state reported 54.6 percent increase

from N14.23 billion in 2016 to N22 billion in 2017. Akwa Ibom saw a decline in the amount it was able to generate internally, from N23.2 billion in 2016 to N15.9 billion in 2017 while Bauchi state also dropped in its IGR figures by 50 percent from N8.6 billion in 2016 to N4.3 billion in 2017. The figures for Lagos State show that PAYE revenue of N190 billion accounted for 62 percent of the N302 billion total revenue generated for the six months, according to BusinessDay calculations. The same calculation for Cross River, Kano and Ogun states, showed 84 percent, 33 percent and 33 percent, respectively.

who had since relocated to Lagos where his parents are staying, said it was frustrating staying home and doing nothing. “It is no fun at all. I have been home for about three weeks now. From what we have heard so far, it doesn’t look like the ASUU and Federal Government are making any headway in their negotiations. Twice or thrice they have met without a favourable outcome. It calls for concern,” Olulade told BusinessDay in Lagos on Tuesday. Imohimi Edgal, the Commissioner of Police (CP) recently warned parents and guardians of the consequence of allowing their children and wards to be used as thugs by desperate politicians as the elections inch closer. Sharing the sentiment, Ibukun Odusote, the Permanent Secretary

(PS), federal ministry of labour and employment, appealed to ASUU to suspend the strike in the interest of the nation and the students “If our children are sitting at home at a critical time like this, with the year coming to an end, and the nation preparing for a national election. The tendencies that they will start running into political groups for vices engagement are high” “Therefore, it is in national interest that the on-going industrial action embarked upon by ASUU be amicably resolved through social dialogue for our children to continue their educational pursuit,” said Odusote, while addressing delegates of the African Students Union Parliament (ASUP) led by the Speaker Kewul Abel, who visited her in Abuja, on Tuesday. Odusote said that the lecturers neededtomakesomesacrificestoguarantee secure the future of the youths.

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FINANCIAL TIMES

World Business Newspaper

Malaysia’s Anwar demands more than $600m in reparations from Goldman Prime minister in waiting condemns bank’s ‘disgusting’ role in 1MDB fund scandal Stefania Palma

nwar Ibrahim, the likely future prime minister of Malaysia, has condemned Goldman Sachs’ role in the 1Malaysia Development Berhad scandal as “disgusting” and demanded reparations in excess of the $600m the bank gained in fees from the state investment fund. Mr Anwar said G oldman should return “significantly more” than the $600m the bank was paid for arranging three bond sales because “it’s a cost to the image of the country, it’s a cost to investments and now it’s a burden shouldered by the government because of the complicity of so many of these so-called credible, renowned financial institutions”. In an interview with the Financial Times, he said: “For them to use a country like Malaysia — which is struggling to reform itself economically, moving up the ladder — really, to me, it’s disgusting.” Goldman Sachs declined to comment on Mr Anwar’s remarks. The bank has previously insisted it had no knowledge of a bribery and embezzlement scheme that US prosecutors claim saw about $2.7bn plundered from 1MDB after the bank helped the state-backed fund raise $6.5bn in 2012 and 2013. It has also said it is co-operating with those investigating the fund.

Lim Guan Eng, Malaysia’s finance minister, told the FT his government is set on recouping more than just the bond fees, without specifying an amount. Kuala Lumpur’s demands add to the mounting pressure on the bank. The US Department of Justice has indicted two former Goldman bankers— Tim Leissner and Roger Ng — and an Abu Dhabi sovereign wealth fund has sued the Wall Street bank for allegedly bribing its officials during the 1MDB fraud. Revelations that more than 30 Goldman executives reviewed the 1MDB bond deals and that former chief executive Lloyd Blankfein met Jho Low, the Malaysian financier deemed to be the architect of the scheme, on at least two occasions could hamper the bank’s efforts to distance itself from the actions of Mr Leissner and Mr Ng. Mr Leissner has pleaded guilty in the US to conspiracy relating to money laundering and bribery. Mr Ng, who could not be reached for comment, has been arrested in Malaysia on money laundering and bribery charges. His pleas in the US and Malaysia are unknown. Mr Low has maintained his innocence. Mr Anwar called for “aggressive negotiations” with Goldman that could range from litigation to having the bank share information that could support Malaysia’s escalating 1MDB probe. While the DoJ is acting in re-

sponse to crimes under US law, Malaysia was not precluded from negotiating directly with Goldman over offences committed in the south-east Asian nation, said Mr Anwar. Yet Malaysia is not seeking to slap penalties on the bank in the form of restrictions on its business, because it would hinder discussions, he added. “We want them to give their fullest co-operation in assisting the probe,” he said. Mr Anwar’s comments come as Malaysia attempts to balance its books by suspending or cancelling big infrastructure projects and by

clawing back much of the $4.5bn allegedly misappropriated from 1MDB. Malaysia’s ruling coalition faces up to RM43.9bn ($10.5bn) in debt repayments linked to the state investment fund and is grappling with a weak fiscal position, having revised the 2018 fiscal deficit from 2.8 per cent to 3.7 per cent in the latest budget issued in early November. Mahathir Mohamad, the nonagenarian prime minister who has pledged to cede the premiership to Mr Anwar in the next two years, unleashed a fierce investigation

into 1MDB after his alliance with Mr Anwar ousted the fund’s founder, Najib Razak, in a May election marked by popular outrage at official corruption. Mr Najib has been slapped with more than 30 charges of corruption and money laundering and will face trial in early 2019. His wife, Rosmah Mansor, who Mr Mahathir says is complicit in the 1MDB affair, faces 17 charges of money laundering and tax evasion. The couple, who are banned from leaving the country, have pleaded not guilty and have been released on bail.

EFF accused of aiming to silence DR Congo’s risky bet on digital democracy Gordhan on Zuma-era graft claims Millions of voters will be asked to use unfamiliar tablet computers in presidential poll South African ex-finance minister hits at attacks on his family by oposition party Joseph Cotterill

outh Africa’s ex-finance minister Pravin Gordhan has accused the radical opposition Economic Freedom Fighters party of inciting violence in an attempt to silence his testimony on alleged political corruption under former president Jacob Zuma. Mr Gordhan on Monday filed criminal complaints of incitement and defamation against Julius Malema, EFF leader, following days of verbal attacks against his family by the country’s secondbiggest opposition party. “Enough is enough,” he told reporters.

Mr Gordhan’s appearance last week as a star witness before a judicial inquiry into alleged state looting was marred by Mr Malema calling him a “dog of white monopoly capital” and urging EFF supporters to “crush the enemy”. “We can’t any longer allow the corruption that’s going on at all levels in this country to be masked by racism, by personal attacks, by family attacks and, of course, political attacks as well,” Mr Gordhan said. The attacks signal the resistance to an anti-corruption drive Continues on page A2

Tom Wilson

emocratic Republic of Congo is preparing for Africa’s biggest experiment in digital democracy: an election in which millions of people who have never used computers will be asked to vote on electronic tablets in polling stations hundreds of miles from the nearest plug socket. The country’s electoral commission says the machines will improve the speed of the vote count and cut costs. Diplomats, opposition leaders and analysts warn the new system — untested in Congo — could derail one of the most important presidential elections in the nation’s history. “This is one huge gamble,” said

a diplomat in the capital Kinshasa. “If something goes wrong, millions of voters could be disenfranchised.” Opposition candidate Martin Fayulu, who is challenging Emmanuel Ramazani Shadary — President Joseph Kabila’s chosen successor — has called the tablets “cheating machines”. Four weeks from voting day he is still insisting that the electoral commission withdraws the machines and reverts to a paper ballot. Moves towards electronic voting have become controversial around the world in an era of digital malfeasance and organised hacking. Argentina planned to use voting machines in 2017 but changes to the country’s electoral law failed to pass

the Senate. Australia has toyed with the technology but it is not used in federal votes. In the US, the world’s richest democracy, there are growing doubts about the wisdom of e-voting. “In the US, with all the transparency, with all the good intent, with the hundreds of years of experience with the electoral process, it is still a problem,” said Mvemba Dizolele, a Congolese lecturer at the Johns Hopkins University School of Advanced International Studies in Washington. “In the case of DRC, it just doesn’t make sense.” It will be only the second time that an African government has used an electronic voting system in a national vote and the first in an election of this scale.

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NATIONAL NEWS

FT EFF accused of aiming to silence Gordhan on Zuma-era graft

Gold company Resolute Mining to seek UK listing

Continued from page A1

launched by President Cyril Ramaphosa after his ruling African National Congress sacked Mr Zuma this year. The EFF has also claimed last week that Mr Gordhan’s daughter had looted state funds. Her former employer, Investec, subsequently released evidence refuting the claims. The party retaliated against Mr Gordhan’s move on Monday, announcing in a statement that it planned to file unspecified charges of fraud and other crimes against him. The attacks on Mr Gordhan have heightened fears that Mr Zuma’s allies allegedly implicated in wrongdoing are using Mr Malema as populist cover to intimidate witnesses and roll back Mr Ramaphosa’s anti-graft successes . The president has removed a number of Mr Zuma’s acolytes from state-owned companies, the revenue service and other bodies that became central to the looting allegations. The president has come to the defence of Mr Gordhan, who serves in his cabinet. Mr Rampohosa said the EFF attacks were linked to those “deeply embedded in what was going wrong in our country”. The EFF emerged as a powerful critic of corruption after Mr Zuma fell out with Mr Malema, his former protege, who then led a breakaway from the ANC. It pushed in particular to launch a judicial inquiry into the Gupta scandal. But there is speculation that Mr Malema has joined forces with Mr Zuma’s allies in a campaign to undermine ANC chances of a majority in elections next year. Such an outcome could allow him to play kingmaker. Mbuyiseni Ndlozi, EFF spokesperson, denied there was any such alliance. Mr Malema has also lashed out at journalists, regulators and anticorruption figures in an apparent attempt to distract from mounting pressure on the EFF over its links to illicit funds from VBS, the subject of a recent high-profile bank collapse. Last month a forensic report commissioned by South Africa’s central bank into the collapse of VBS said the bank’s management had cultivated political ties while carrying out massive depositor fraud. It publicly identified a company owned by Brian Shivambu, a brother of the EFF deputy leader, among beneficiaries of suspect funds. Mr Shivambu has said the payments were legitimate. People familiar with the matter said a broader investigation into suspect transactions involving VBS had also implicated a company owned by a cousin of Mr Malema. The cousin has denied wrongdoing. Investigators have examined evidence that the EFF’s purchase last year of an exclusive Johannesburg property was funded by the transfers. The party has yet to explain fully how it acquired the house, which Mr Malema previously rented. Mr Ndlozi said the house was an investment financed by a legitimate bank loan but declined to disclose details. The EFF, Mr Malema and his deputy deny any financial links to VBS.

Neil Hume

Muhammadu Buhari, a former general, was elected president in 2015 on a promise to destroy Boko Haram’s jihadist insurgency © Bloomberg

Deaths of Nigerian soldiers put pressure on president

Election opponents accuse Muhammadu Buhari of failing to deal with Boko Haram insurgency Neil Munshi

he killings of scores of Nigerian soldiers by Boko Haram insurgents during the first week of the country’s presidential election campaign has put the administration of President Muhammadu Buhari under fire for its failure to deal with the insurgency. Boko Haram fighters killed about 100 soldiers last week at a base in northern Borno State, the heart of the jihadist insurgency, according to Reuters. Mr Buhari first acknowledged the deaths on Saturday night in a press release expressing “deep shock over the killing of military personnel” without confirming the number of casualties. On Friday, before the government or army had acknowledged the deaths, a video purporting to be from an Isis-backed faction of Boko Haram, known as the Islamic State West Africa Province (ISWAP), claimed credit for the massacre at Metele military base near the border with Niger. In a subsequent statement on Friday, the army did not provide a

figure for the number of casualties, but noted that “the location is under control”. Mr Buhari, a former general and military ruler who briefly held power in the 1980s, was elected in 2015 on a promise to destroy Boko Haram. The jihadi group no longer controls a territory the size of Belgium, as it did when he came to power, but it continues to terrorise north-east Nigeria. Soldiers have long complained about being under-equipped, unpaid and stuck on deployments for years after they were meant to be sent home. The conflict has lasted nine years, killed more than 27,000 people and displaced more than 2m. The army has struggled to control the crisis. This month it named its fifth commander in two years to lead the fight, replacing a commander who took over in July. Mr Buhari said on Saturday that the government was ready to give the military “all the needed support in terms of equipment and manpower to succeed in ending the renewed threat”. “No responsible commander-in-

chief would rest on his oars or fold his hands to allow terrorists to endanger the lives of its military personnel and other citizens,” Mr Buhari said. Last week Mr Buhari’s chief rival for the presidency, former vicepresident Atiku Abubakar, called for increased funding for the military and said he would fund scholarships for the children of the soldiers killed. “It is unacceptable that terrorists and criminals are frequently better equipped than members of our armed forces,” Mr Abubakar said after reports of the soldiers’ deaths emerged. “It is the duty of the political elite to put aside any political differences and take a united stand to put an end to this.” Idayat Hassan, director for the Abuja-based Centre for Democracy and Development, said their deaths were becoming “highly politicised”. “It is something that is believed can win or lose the election for either political party,” said Ms Hassan. “This [attack] is countering the so-long-held assertion by the administration . . . that they have been able to defeat the Boko Haram insurgency.”

African countries should demand loans are made in local currencies Foreign-denominated debt has a pernicious effect because of rising interest rates Vera Songwe

recent warning by the IMF about rising debt levels in low-income countries has raised questions about the extent to which debt distress is due to lending by China. The growing debt burden is particularly onerous in Africa. But while China’s contribution to that debt is an important issue, it should not be the main focus of policymakers’ concern. There are many reasons to be worried about African debt. It will curtail already depressed growth. It will have a chilling impact on job creation and may lead to a renewed rise in conflict across the continent. It could increase the already substantial migration into Europe and would jeopardise achievement of the UN’s sustainable development goals. These are the probable consequences if a lasting solution to the challenge of balancing growth in Africa with macroeconomic stability is not found. With more than 20 countries on the continent in medium to high levels of debt distress, this is in no one’s interest. Market access is the main driver of recent bulging levels of debt. With African countries needing to

accelerate infrastructure development, many sought and obtained access to international capital markets. Before 2006, only Morocco, Tunisia and South Africa had issued sovereign bonds denominated in foreign currencies. This number grew to 14 by 2017. In 2018 alone, African countries have sold $18.3bn-worth of euro and dollar-denominated debt. The frequency of bond issuances has also increased. As a result, about 70 per cent of Africa’s foreign debt is denominated in dollars or euros. While some analysts link rising debt levels with lending by China, Chinese liabilities in fact accounts for less than 10 per cent of Africa’s total external debt. In an environment of tightening financial conditions, a rising dollar and heightened global protectionism, foreign currencydenominated debt has a pernicious effect on the debt service burden as interest rates rise. The Ghanaian cedi and the Nigerian naira, for example, have been depreciating against the US dollar since 2008. This means that the current nominal values of the eurobonds issued by both countries have increased significantly.

In the case of Ghana, the nominal value of its $750m 2007 eurobond was $3.4bn in 2017. A similar trend is discernible in the case of Nigeria, which issued $500m-worth of eurobonds in 2011. By 2017, their nominal value had risen to $966m. Is this a poisoned chalice? Is debt denominated in foreign currency a sustainable option for African states? Many countries are increasingly moving to debt denominated in their local currency, thereby lowering exposure and exchange risks. The decision of India, for example, to borrow mostly in local currency for infrastructure financing through rupee-denominated “ masala bonds” is a good example of this strategy. African countries should — and no doubt will — keep going to the market to finance their growth. However, governments and international financial institutions have a role to play to ensure that this is done in a prudent manner. Countries should demand that a significant majority of their loans, both market and concessional (that is, loans extended on terms more generous than those offered on the open market), be denominated in local currency.

frica-focused gold company Resolute Mining has announced plans to list in the UK and fill the void left the by the imminent departure of Randgold Resources. London will lose its biggest and most successful gold company early next year when Randgold is swallowed by its Canadian rival Barrick in a $6bn all-stock deal. Resolute, which is currently listed in Australia, is looking to copy Randgold’s business model with plans to build a low-cost African-focused gold producer mainly through exploration. Chief executive John Welborn said the Perth-based company had already started the preparatory work for admission to a standard listing category on the London Stock Exchange, including plans to change its financial year end from June to December. “The mantra that Mark Bristow [the chief executive of Randgold] has been preaching for 20 years is something I want to follow: rewarding shareholders, creating value and being very judicious with capital allocation,” said Mr Welborn “This is something we are trying to copy and employ. We are hoping to attract the same investors that have had a successful experience with Randgold,” he said. Randgold has won plaudits from investors for developing a string of mines from scratch across Africa and eschewing expensive and ill-timed acquisitions that have forced its rivals to write off billions of dollars. Mr Welborn said Resolute would ultimately look to shift its listing solely to London and seek a premium listing, a gateway to a berth in one of the prestigious indices run by FTSE. “This part of the world has always been the focus of investment in not just gold but African gold,” said Mr Welborn. The sector, however, has performed poorly this year weighed down by a lacklustre gold price and also apathy from investors who are fed up with years of wild overspending and, in North America, excessive executive pay. Resolute, which has a market value of around $500m, has two producing assets, one in Australia and the other in Mali. It also has a project in Ghana and has taken strategic stakes in a handful of junior explorers. The company expects to produce 300,000 ounces of gold in 2019 and the underground expansion of its Syama mine in Mali will be fully automated. Analysts at Berenberg said it was positive to see a new gold company looking to come to London. “The Company is looking to shift its strategy to focus on Africa and is therefore becoming increasingly vocal about the potential to sell the Ravenswood mine in Australia,” said the analysts. “ We think the sale could release cash to support the company’s growth ambitions in Africa where it looks to become a low cost, multi mine gold producer. The company’s core skill set is in the construction of mines, but it is also open to acquisitions where it sees it as particularly accretive and an asset shows synergies with its existing assets,” they added.

A4 BUSINESS DAY

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BUSINESS DAY

Wednesday 28 November 2018

Leadership

Shaping people into a team

The problem with charitable giving Aaron E. Carroll

TAXPAYERS SHOULD NOT HAVE TO SUBSIDIZE RICH PEOPLE’S DONATIONS. tarting this fall, and well into the future, medical students at New York University will get free tuition. In a few years, shiny new facilities will welcome cancer patients in Atlanta and brain researchers at Stanford. The announcements about these developments credit generous philanthropists, but fail to mention who else is footing much of the bill: American taxpayers. Like most charitable giving, health care philanthropy is taxdeductible. When wealthy people give away millions of dollars, their tax bills go down. But that leaves the rest of us either to pick up the slack or go without the investments that our government could have made with those funds. NYU is raising $600 million, for instance, as part of its tuition initiative; the lost federal revenue resulting from the tax breaks those donors receive could amount to hundreds of millions of dollars. In 2018, health-related charitable gifts could reduce federal tax receipts by $4 billion to $5.7 billion, according to reports from the Joint Committee on Taxation and the Treasury. States lose out as well. The numbers might seem trivial compared with our projected $4 trillion federal spending. But they’re not at all trivial when you look at the health care agencies and programs paid for with our tax dollars. The budget of the National Cancer Institute is $5.7 billion; the budget for Pepfar, which treats infectious disease worldwide, is $6.7 billion . The Centers for Disease Control and Prevention, the agency at the forefront of our efforts to tackle the opioid epidemic and reduce maternal mortality, has a budget of about $11 billion. The two of us differ over some of these funding priorities, and whether one philanthropist’s ef-

forts are smarter than another’s. But our views should matter no more than any other American. Deciding how our collective resources should be used to improve health is the job of our government, even if it sometimes makes us sigh in exasperation. We suspect that funding tuition at one expensive New York City medical school, constructing another cancer treatment center in a city already rich with them or building even more research capacity at one of the nation’s bestendowed universities is not at the top of most voters’ priority lists. It is, instead, mainly the very, very wealthy who pass on the costs of their causes. In 2016, half of all the tax dollars deducted as a result of charitable gifts in New York State were deducted by the top 0.5% of

tax filers, who earned $1 million or more. The bottom 60% of tax filers were responsible for 5%. The wealthier the donor, the more taxpayers lose out. According to the Tax Policy Center, in 2017, a $1 donation from someone in the top 1% of earners reduced the government’s funds by 32 cents, while a $1 donation from someone in one of the bottom two income quintiles reduced it by less than 5 cents. This is because higher earners are in higher tax brackets, which means that giving them a pass on those taxes costs the country more. It is also because wealthy individuals often have appreciated stock that they can donate, which lets them avoid paying the capital gains taxes that they would otherwise owe

if they cashed in on that stock themselves. Finally, you have to itemize deductions to get almost any reduction in taxes from giving. Nearly all wealthy people do so, but it’s rare among lower-income people. The new tax law will make it even rarer; the Tax Policy Center predicts that it will reduce the number of households that take the charitable deduction to 16 million from 37 million. Eliminating the tax deduction for charitable giving would not be politically viable. But we could limit it, either through lowering the cap on how much of a gift can be deducted or setting a flat percent of each donated dollar that can be used as a credit against one’s tax bill. We could also call on the phi-

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

lanthropists who are making these enormous contributions to voluntarily forgo the deduction. Many megawealthy individuals have followed Bill Gates’ and Warren Buffett’s lead and pledged to give away half of their accumulated wealth. Perhaps they could also pledge that through their funding of the causes they hold dear, they will neither reduce the ability of our government to fund its priorities, nor shift some of the cost of their gifts onto other taxpayers. Any of these steps could reduce the amount of charitable giving. But some studies suggest that donations would fall far less than tax receipts would increase. One frequently cited figure is that for every additional dollar raised by the government through changes in the deduction, charitable giving might fall by 40 cents. This is not that surprising, really — wealthy philanthropists fund their causes to the level the effort requires, not merely as a way of reducing taxes. To be clear, we aren’t saying that our messy democracy gets spending right all of the time — or even most of the time. Nor are we critiquing the magnanimity of wealthy philanthropists who choose to bestow some of their accumulated wealth on causes they believe will make us all better off. We just think that if everyone has to pay, everyone should have a say. Aaron E. Carroll is a professor of pediatrics at Indiana University School of Medicine and vice president for faculty development at the Regenstrief Institute, a nonprofit health care research group. Peter B. Bach is the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York City.; Art note: This article is accompanied by an illustration by Pete Gamlen that is available at no charge to clients of The New York Times Op-Ed service.

A6 BUSINESS DAY Financial Inclusion

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& INNOVATION Hike in Mfbs’ capital could hurt financial inclusion search – Sanusi Supported by:

…CBN says move was to strengthen banks Endurance Okafor

‘

very huge increase in the capital base of microfinance banks which will actually just reduce the number of banks that will be available, are only likely to have a negative impact on the penetration of financial inclusion in the system

‘

he recent hike in the minimum capital base of Micro-finance Banks (MfB) could impact negatively on the country’s search for increased financial inclusion, former governor of the Central Bank of Nigeria (CBN), Muhammadu Sanusi, has said. Sanusi, who is now the Emir of Kano, said this in a recent interview in Abuja with the Enhancing Financial Innovation & Access (EFInA) on issues surrounding Nigeria’s financial inclusion drive, especially in the north. “Some of the signals that have been sent suggest that things are getting more expensive and the charges, for example ATM charges,’’ Sanusi said. He added that with the “very huge increase in the capital base of microfinance banks which will actually just reduce the number of banks that will be available, are only likely to have a negative impact on the penetration of financial inclusion in the system.” Nigeria, Africa’s most populous nation currently has about 41.6 percent financial exclusion rate. This means that about 40.1 million of the country’s total adult population do not have access to financial services and products, according to official figures. Sanusi explained however that having been away from the central bank for a long time, he has limited information on the basis for such an increase in the bank’s capital base. Sanusi was governor of CBN from 2009 to 2014. Sanusi, who headed the ban during the global financial crisis, said he was not criticising CBN for the hike. “I do not know the reasons. I am sure there must be reasons for these,” he said, and added that he had not discussed with the management of the central bank.

Meanwhile the governor of the central bank, Godwin Emefiele, has explained that increase in the minimum capital base was aimed to “strengthen the capacity of MFBs.” Emefiele, spoke through Osita Nwanisobi, the Deputy Director, Development Finance department of CBN at the this year’s EFInA financial inclusion conference. The theme of the conference was “The Business case for Financial Inclusion.” However, financial inclusion analyst have argued that there are indications

the new minimum capital requirements could undermine financial inclusion in a country where millions of people do not have access to bank accounts. Under the new requirements, the minimum capital base for National MfBs was increased to N5 billion from N2 billion, while that for State MfBs was increased to N2 billion from N100 million. CBN also increased the minimum capital for Unit MfBs to N200 million from N20 million. There are 1,008 microfinance banks in the country, out of which 893

have unit licenses. Taiwo Joda, MD of ACCION Micro-finance Bank believes that “there are more fundamental issues that needs to be addressed. The overriding issue is on financial inclusion and harvesting more Nigerians into financial system.” He said that a micro finance bank works on two legs: financial sustainability and social sustainability. “You cannot drive financial sustainability without social sustainability. The new guidelines is focused more on financial sustainability, and as laudable as that may sound, every owner of a micro finance bank is looking at returns on investments because they are business

people,” he said. The CBN has set a target of 80 percent year 2020. CBN has blamed economic constraints, insecurity issues in the northern part of Nigeria, obsolete strategies as part of obstacles to financial inclusion in the country. CBN at the recent EFInA 2018 conference reassured Nigerians that the set 80 percent financial inclusion rate is still achievable by 2020. “The set 20 percent exclusion target is still achievable,” the governor said. “I think we have not done as much as we could on mobile phones, and telephone banking,” Sanusi said. “When you look at countries like Kenya and how far they have gone, we could do much better, given the level of mobile phone usage and penetration in Nigeria,” the former CBN governor said. Nigeria currently has a bank-led financial inclusion model, and that seems to have retarded the country’s inclusion rate as compared to its Africa peers who have through the Telco-led model made progress in including more of its citizens. A survey by BusinessDay showed that Kenya moved 81.6 percent financial inclusion rate in 2017, from 74.7 percent in 2014, supported by 60 percent mobile money service penetration. Also, Ghana’s decision to have a Telco-led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to

World bank data, and this has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014. Sanusi said the telephone banking in Nigeria is lagging far behind where it should be. “Now, I’m personally responsible, I think, for having been very strict in terms of insisting on a bank module as far as mobile banking was concerned,” Sanusi explained. On whether financial inclusion should be opened up to the mobile operators, he called for flexibility in policies, “and after five years of trying something, if it’s not working, maybe we should try something else or introduce some flexibility.” He concluded that perhaps there is a role for the MTNs and the Airtels in this area, “that maybe they could help “and we could figure out how the concerns of the CBN as a regulator can be addressed while we involve them in this process,” he mentioned. On how to achieve the 80 percent financial inclusion target, Nwanisobi said that “what we want to do is to include more Nigerians into the financial sector, especially through the shared agent network facility.’” He said that the essence of that is to offer incentives and allow some of these super-agents and mobile money operators to roll out agent network across the 774 local governments in the country.

Wednesday 28 November 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Financial Inclusion: Lessons from Kenya Usoro Usoro

enya is a typical example of how mobile and digital technologies can help drive financial inclusion. The country moved from a dismal rate of financial exclusion of over 40percent of adults to 17 percent between 2006 and 2016 (EfInA). Financial services in the country are now available through a diverse group of institutions, including banks, nonbank financial institutions and informal financial groups. In 2017, more than seven in 10 adults were financially included (73%); and of these, 98% held mobile money accounts (Intermedia FII). Mobile money transactions in the country hit a record $33 billion in 2016 and accounted for 67 percent of transactions tracked by the National Payments System. The mobile money system, which has revolutionised financial services in the country, was the key to reaching a large number of financially un/underserved individuals in the country, most of which were at the bottom of the pyramid. It was first launched in 2007 by the country’s largest mobilenetwork operator, Safaricom, to allow micro-finance loan repayments to be made via phone with its product M-Pesa. However, mobile banking ser vices has since evolved beyond its initial scope to allow for merchant and bill payments, government payments and transfers, credit, savings, investment and insurance, with a number of other service

providers joining the system e.g. Shwari and Equitel. Advanced services beyond regular deposits and withdrawals are undertaken by 85% of active mobile money holders. A primary driver of the massive uptake of mobile money was the difficulty in transmitting funds to rural dwellers, which make up nearly two-third of Kenya’s population. Prior to M-Pesa, Kenyans used unreliable shared taxi vehicles or expensive, slow remittance services to send and receive money. Safaricom bridged this gap by leveraging its network of airtime vendors and converting them into mobile money agents. Today, there are 120,000 M-Pesa agents in the country, and between its launch in 2007 and 2016,

M-Pesa is estimated to have lifted 194,000 households — or 2 percent of Kenyan households — out of poverty; now, with up to 96 percent of Kenyan households using mobile money services, poverty levels are expected to be further reduced. Nigeria faces similar circumstances with a larger number of unbanked individuals (41.6%). However, we have a lot more resources at our disposal to allow for successful mobile money adoption. These include a high level of mobile penetration (86%) and about 1,000,000 unique agents selling airtime for top telecoms companies across the country, which can be leveraged to cause desired change. Kenya’s success can be

attributable to a number of factors but a critical component is a regulatory environment that not only encouraged innovation but was conservative enough to accommodate the iterations that are now embodied in M-Pesa. Over the years, the Kenyan government developed regulations and guidelines to support financial inclusion. For example, the Agent Banking Guidelines which allowed commercial banks and microfinance banks to partner with third party enterprises; and the Credit Reference Bureau Regulations in 2008 and licensing of credit reference bureaus from 2010 which provided an opportunity for individuals and businesses to rely on good credit history as an alternative form of col-

lateral, thereby expanding access to credit. This formed the basis for the success of M-Shwari, Kenya’s largest mobile savings and loan product, which has disbursed more than $1 billion in loans since its launch in 2012. Government institutions have begun to integrate mobile money solutions into their systems: licence renewals, parking fees and more recently, there are plans to enable taxpayers make payments through mobile money platforms. In 2017, the National Treasury officially launched MAkiba which enabled the public to purchase government bonds from as little as USD 30 using their mobile phones. The financial inclusion journey in Kenya is not

without its challenges. The country’s mobile money solution is being used as an avenue for fraud. This is more common with mobile money transactions than ATM cards, online banking or use of cheques; however, these issues are currently being addressed. Also, the government’s recent tax proposal to raise duties on mobile cash transfers by 2 percent poses a threat to the gains made in financial inclusion in the country. Notwithstanding Kenya’s challenges, there are key learnings Nigeria can take advantage of, from its monumental success. Nigeria will benefit from relaxing regulations on the mobile money operations e.g. the prohibition of telco-led mobile money services and raising of capital requirement of mobile money licensees to N2billion, if it is to expand access to financial services. Further adoption of digital financial services across federal and state government agencies nationwide will drive inclusion. The impending launch of the Payment Service Banking License is likely to have the greatest impact — by empowering non-banking institutions (such as telecommunications companies, retail chains, mobile money operators, financial technology organisations, etc.) to effectively act as providers of financial services, and by leveraging their resources, access to excluded customers will no doubt be vastly increased. On our road to financial inclusion, the possibilities are endless and the impact for a truly included Nigeria, exponential. Usoro Usoro is the General Manager of Mobile Financial Services at MTN Nigeria.

SEC to deepen financial inclusion through initiatives Endurance Okafor

he Securities and Exchange Commission (SEC) has restated commitment to pursue initiatives that would aid financial inclusion of Nigerians to grow the nation’s economy. Mary Uduk, SEC Acting Director-General, stated this in her remarks at the 2018 PEARL Awards Night

held recently in Lagos. She said SEC would continue to highlight and promote developments and trends in the Nigerian Capital Market and drive financial inclusion aimed at reducing adult exclusion from financial services. “Innovations in financial technology have made possible the potential of using digital tools to make financial services available to a wider range of consumers

and enterprises, promoting financial inclusion and the affordability of financial services,” she mentioned. According to her, a financially inclusive society will provide increased access to finance, especially for women, help support sustainable growth and will create million more jobs. “The gains of having a more inclusive financial system are enormous, as it helps broaden financial

markets and make policies more effective,” Uduk said. She commended the efforts of the Board of Governors and Management of PEARL Awards Nigeria, for giving consideration to companies with good corporate governance practice in the award nomination process. The Acting DG, Uduk also enjoined them that in future editions, emphasis should also be given to com-

panies with technological innovation in the capital market, in the advent of the convergence of Finance and Technology. She said that the commission was implementing various initiatives aimed at making the market deeper, vibrant and more effective. Uduk noted that the forbearance window for shareholders with multiple subscriptions had been extended by another year from

the Dec. 31, 2018 deadline previously communicated to Dec. 31, 2019. She, however, enjoined those who have not come forward for the regularisation of shares purchased with multiple identities to do so. “We have also developed a two-pronged approach to addressing the intractable challenges associated with transmission of shares related to the estate of deceased investors.”

BUSINESS DAY

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Wednesday 28 November 2018

BUSINESS DAY

Opinion

Franklin Nnaemeka Ngwu (PhD)

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

xcitingly named as Next Level, PMB launched his re-election campaign on 18th November with a focus on 12 key areas that will help take Nigeria to the next level of sustainable growth and development. The key areas include jobs, infrastructure, broadband, technology, power, people moni bank, the entrepreneur bank, education, health, policies for improved ease of doing business, MSMEs and inclusive government. To be honest the plan has good contents and details but there are so many doubts. The first is that considering how PMB government has performed in the last 3.5 years, there is a wide perception that the plan will not be effectively executed and achieved. There is nothing significantly different with regards to details of execution from the campaign plan and promises of 2014 which disappointingly have remained largely unachieved. At the end of 2014, Nigeria GDP was valued at $568.419 billion, it

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news you can trust I wednesday 28 november 2018

PMB’s next level: From what level? (1) is currently about $411 billion, a decline of about $157.419 billion or about 28% since PMB took over. Not only has our external debt increased, it has more than doubled from $10.71 billion in 2015 to about $23 billion as at June 2018. While inflation was about 8.062% in 2014, it is currently about 11.2%. In addition, a highly disturbing performance of PMB’s government is in the area of unemployment which has astronomically increased from about 4.56% in 2014 to about 18% presently. To further affirm our lamentable situation, we are now the poverty capital of the world moving from our third position in 2014 to first overtaking India and China. These are countries with a population of over a billion people each as compared to our less than 200 million. As if the above is not bad enough, we are presently bedeviled with unprecedented levels of insecurity, violent killings and destruction of farmlands and properties, kidnapping and other violent crimes. Our economy remains undiversified with a possible recession and exchange rate problem next year! So the question is from what level are we moving to the next level! Considering our frightening socio-economic and political situation, the second doubt of the PMB next level is if the plan is really the appropriate plan for a very precarious society like ours. Reading through the plan, it comes across as a plan for a reasonably stable and growing economy. It looks like a plan for

any of the BRICS or the top Asian country with very visible trajectory of positive developments and growth. Ours is not like that and as such, it is important for PMB and his team to properly appreciate and reflect the seriousness and complexity of our problem and then revise the plan and governance strategy. The third major doubt of the plan is the limited explanation for effective reforms in areas of rule of law, government effectiveness and regulatory quality. As Nigeria has consistently failed woefully in these key factors, I think that reforming these factors should have been the first level that will take us to the next level. For instance, rule of law which is the fulcrum of governance of a country reflects perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence. The question that should disturb the government is why majority of Nigerians don’t accept and obey the laws of the country and what should be done about it. The effectiveness of a law depends on the extent to which the law is understood, accepted, internalized to enhance compliance. To better understand the kind of reforms needed in rule of law, the view of Caenegem (1986: 8) is most helpful. “English legal development appears as a historical continuum. There is no obvious

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With borrowing seemingly the main way through which the PMB government has executed government projects since 2015, there is a need for serious thinking and innovation on how to fund the 2019-2023 plans outside unsustainable debt accumulation

rupture, no wholesale wiping out of legal wisdom of centuries and no division of the law into a pre-and post-revolutionary era. In English law, the present is never completely shut off from the past and its historical roots are easily perceived. Out of hard and bitter experience, Englishmen had come to learn that the remorseless, incalculable power of the past over the present was not to be dispelled by the strivings of a single generation. From 1660 onwards, England was never again entirely to forget that the secret of a nation’s strength is to have the power of the historic past behind it, not against it”. From the above quote, a helpful question that we should ask of our abysmal

level of rule of law is if the same as above can be said of our legal system? Unless and until proper reforms are effectively achieved in these key institutional factors (rule of law, regulatory quality and government effectiveness), it will be difficult for us to move away from the zero level that we are in to any other level. Our poor performance in these relevant factors is further affirmed with our 145th position in the Ease of Doing Business ranking that surveyed 190 countries in 2017. The fourth doubt which is related to the third and even central to everything in the plan and PMB’s government is the confusion with regards to the call for the restructuring of the country. While PMB in numerous statements seems to suggest a rejection of the need to restructure, the vice president, Yemi Osinbajo, argues that he is an advocate of restructuring. Unsurprisingly, this confusion is very evident in the Next Level plan possibly enhanced with the position of the vice president as the head of government’s economic team. While the key areas of the plan such as agriculture, industrialization, infrastructure, power, education and health can only be better executed and achieved through a kind of restructured economy, there is no clarity that it will be so even though it is very evident in the plan. For instance, under industrialization and jobs section of the plan, 6 regional industrial parks and special economic zones will be built in addition to

109 special production and processing centers (SPPCs). Thinking deep about such project indicates that it is a kind of admission of the need to somehow restructure the country. For the 6 regional industrial parks to work, effective co-operation and co-ordination of the respective states of the regions will be immensely required. If this is the case, it means that the regional states should be supported and encouraged to properly collaborate through the devolution of powers to them to enhance the sense of ownership and seriousness. For Nigeria to truly move to the next level, this regional approach need to be extended to other areas such infrastructure, power, health and education. This will allow the federal government to focus on issues of common national interest such as external defense and foreign policy. A fifth and major doubt of the plan is in the area of funding. With borrowing seemingly the main way through which the PMB government has executed government projects since 2015, there is a need for serious thinking and innovation on how to fund the 20192023 plans outside unsustainable debt accumulation. There are other short, medium and long term options on how to diversify the economy and enhance revenue generation that remain untapped. As oil price is presently hovering below 2019 budget benchmark, the urgency for innovative thinking in so many areas of national existence and survival cannot be overemphasized.

Trump’s next target: World Trade Organization

Dan Steinbock Dr Dan Steinbock is the founder of global consultancy Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup. net/

s t h e W h i te Hou s e began to escalate the U.S.-Sino trade war last spring, President Trump’s trade adviser Peter Navarro was asked on CNN whether the United States is planning to leave the World Trade Organization (WTO). The controversial advocate of American neo-protectionism known for his China-bashing books and documentaries, Navarro said that “a lot of problem has been the World Trade Organization, which is over 160 countries, and a lot of them simply don’t like us and so we don’t get good results there.” When Navarro was asked whether the U.S. will ultimately leave the WTO, he dodged the question saying that it was “a provocative question.” But it

was a fair question. At the turn of the 1930s, Wa s h i n g t o n o p t e d f o r t h e Smoot-Hawley Tariff to reenergize the U.S. economy. In reality, the 1930 Act made the Great Depression even worse paving the way to World War II. In fact, if today’s “Trump tariffs” were to prevail and broaden, they would be at the level of those U.S. tariffs that last prevailed around 1945. With its “America First” stance, the Trump administration aims to reverse seven decades of world trade expansion in just seven months. That’s what Trump’s trade hawks are after and that’s why they are targeting the W TO (which contributed to the dead-end of the recent APEC Summit). The goal is to bury the WTO – or to “reform” and “modernize” it into an “America First” WTO. How Obama paved way to Trump’s anti-WTO attacks Ironically, the U.S. was the key architect of the WTO; the 1 6 4 - m e m b e r i nt e r nat i o na l organization established in 1995 that replaced the General Agreement on Tariffs and Trade (GATT), which was created in 1948. Today, the WTO oversees global trade rules and resolves trade disputes on the basis of international trade law and practices. It covers some 98% of global trade. In the postwar era, successive rounds of trade liberalization promoted great expan-

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In the Trump White House, not only China but all emerging and developing economies are potential targets, as evidenced by the Trump administration’s criticisms of emerging economies claims of special treatment under WTO rules for developing countries

sion of trade. As a result, the average most-favored nation applied tariff of WTO members fell from 25% in 1994 to less than 10% today - before the Trump era. As president, Trump prefers bilateral agreements to exploit US economic might – not multilateral, international cooperation. As a candidate, he already called WTO trade deals a “disaster” urging the U.S. to “renegotiate” or “pull out” from such agreements. Along with the WTO, Trump’s trade hawks targeted China. As Trump declared in Iowa in 2016, “China is not a market economy.” But what’s less understood that he built his

attack on his predecessor’s legacy. Trump’s attack against the WTO and China was preceded by the refusal of former President Obama, the EU and Japan to grant China its market economy status (MES) as the key clause in China’s 2001 agreement to join the WTO expired on December 11, 2016. It is this distortion of market realities –which paralleled the ObamaClinton “pivot to Asia” - that now fuels Trump’s tariff wars and the effort to undermine the postwar international trading regime. Trump has greatly benefited from the decisions of those who now criticize him. W h e n C h i na j o i n e d t h e WTO on December 11, 2001, it was written into the agreement that member states could treat China as a “non-market economy.” Due to the size of the Chinese economy, government inter vention, and state-owned enterprises, advanced economies argued that Chinese domestic price comparisons must be ignored and “constructed values” be used to gain a “true picture” of China’s economy. That’s why, since the early 2000s, the surrogate figures have permitted wide discretion and manipulation of price data, which was then used as the basis for antidumping charges; i.e., tariffs up to 40% higher than normal anti-dumping duties. On the campaig n trail, Tr ump exploited precisely such figures

when he pledged he would introduce 45% tariffs against Chinese products. In the Trump White House, not only China but all emerging and developing economies are potential targets, as evidenced by the Trump administration’s criticisms of emerging economies claims of special treatment under WTO rules for developing countries. The WTO is just the latest, though very symbolic, target of those who see America as a “victim” of “unfair” trade – in contrast to the historical record. America First Versus WTO Setting the scene, the White House has suggested that the U.S. may ignore WTO rulings that are not in its favor, amid alleged concerns that dispute settlement infringes on U.S. sovereignty. It is a curious p re m i s e : I f e v e r y m e m b e r country of the WTO would opt for a similar approach, a Hobbesian “war of all against all” would replace international cooperation – in the name of “fair trade.” Starting already with the Obama administration, the U.S. has been blocking new appointments to the W TO’s Appellate Body (AB), which is responsible for appeals. As more judicial terms are set to expire, AB may no longer meet its quorum after December 2019. The tactic basically exploits W TO to dig its own grave.

Unsurprisingly, the Trump administration’s overall approach has sparked questions regarding the future of U.S. leadership and participation in the WTO, as well as the role of Congress in U.S. trade policy. Yet, although unease about the ‘America First’ world trade is growing, many countries still seek bilateral deals with the U.S. Such opportunism enables the Trump administration to divide and rule over its allies. In the absence of effective Democratic opposition, a sustained effort by President Trump to withdraw the U.S. unilaterally from the WTO – if legal under U.S. law – would devastate America’s foreign trade and debilitate the WTO. It would certainly accelerate the major U.S. contraction or severe recession that already looms in the hor izon. The more global its impact, the greater the likelihood that it will herald the kind of headwinds and horrors that led to the postwar WTO in the first place. There is a way to defuse such challenges, but that requires u nit y and co op e ra tion among and between the major advanced and emerging economies – not against America, but with America (most Americans disapprove “America First” policies). The world can live without “America First” supremacy. But the world cannot live without relatively open free trade.

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