BusinessDay 28 Sep 2020 by BusinessDay

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news you can trust ** MONday 28 september 2020 I vol. 19, no 659

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James Kwen

igeria will suspend the implementation of the higher electricity tariff for service bands A, B and C to allow for a joint ad-hoc committee of the government and labour to review the implementation modalities, it was agreed last night. It is part of the deal reached at a hurried meeting between government ministers and labour leaders at the Presidential villa, which may have staved off the impending nation-wide labour strike planned to begin this morning. BusinessDay learnt from seContinues on page 29

Khaled El-Dokani (l), country CEO, Lafarge Africa plc, receiving the Top CEOs awards from Frank Aigbogun, publisher, BusinessDay during the presentation of 2020 Top CEOs and Next Bulls Awards, organised by BusinessDay in partnership with Nigerian Stock Exchange in Lagos. Pic Olawale Amoo

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Government averts strike, tariff increase faces 2 weeks delay As Reps beg labour to shelve strike

FGN

Spot ($/N) 25-Feb-21 5-Mar-21 23-Jul-30 30-Apr-25 20-May-27 27-Feb-34

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In four charts, why Nigeria’s revenues need quick turnaround LOLADE AKINMURELE & OLUWAFADEKEMI AREO

etween January and May 2020, total government revenue generated was below total government expenditure by 59.1 percent, a stark reminder of Nigeria’s ailing finances. The Federal Government’s retained revenue has continued to perform poorly against total expenditure, with deficits of over 50 percent for three years straight. Revenue generated in the first five months of 2020 was N1.6 trillion and expenditure incurred was N3.9 trillion, according to data from the 20212023 Medium Term Expenditure Framework (MTEF) and Fiscal Continues on page 30

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NEWS

NAFDAC to partner Chinese, Indian agents against importation of falsified medicines ANTHONIA OBOKOH

ojisola Adeyeye, director-general of the National Agency for Food and Drug Administration and Control (NAFDAC) has declared the agency’s readiness to eliminate substandard and falsified medicines in the country through partnership with pre-shipment agents in China and India. The move is part of the agency’s efforts to take the war against importation of illicit drugs to the source countries. Adeyeye said “safeguarding the health of Nigeria means making sure that all regulated products that NAFDAC is in charge of have the expected quality”. This means ensuring robust control of the manufacture, the distri-

bution, the advertisement, the sale and the use of these products using international standards, in line with our mandate. Speaking on ‘’NAFDAC And Your Health’’, in Abuja, against the background of Nigeria’s 60th Independence Anniversary, Adeyeye noted that 70 percent of the medicines used in Nigeria are imported while only 30 percent are produced locally, stressing that attention must be paid to both imported and locally made drugs by the agency. She said imported drugs used in Nigeria were mostly from China and India, noting that “NAFDAC is now going to the source to ensure that we do pre-shipment analysis’’. She noted that although preshipment analysis had always been there even before she

came on board as the DG of NAFDAC, there were loopholes in that process that are now blocked. She stated that she travelled to China and India with a few staff last year to meet the agents that were given the responsibility many years back, adding that the riot act was read to them and they now understood that they are responsible for making sure that the products samples and analyzed by them in their home countries are of quality. The laboratories were approved based on the analysis they do on the products that are shipped to Nigeria. The NAFDAC boss, however, said loopholes were found in the process and NAFDAC had to withdraw the approval granted to one of the Clean Report Inspection Agents (CRIA) and several laboratories.

Lagos introduces MSMEs to e-commerce platform for business digitalisation SEYI JOHN SALAU

agos State government has begun digitalisation process for small businesses with the introduction of WARA, a local e-Commerce platform for Micro, Small and Medium Enterprises (MSMEs) subsector in Lagos. This was disclosed by the state commissioner for commerce, industry and cooperatives, Lola Akande, at the closing of the 5th Lagos State MSME exclusive fair on Sunday, September 27, with the theme ‘MSMEs in the time of Covid-19: survival strategies to beat the odds.’ According to Akande, equipment manufacturers and exporters were among the exhibitors at the fair to provide relevant technology solutions to businesses. “An

immense opportunity for networking was created for astute business persons with over 100 SME operators manning their booths,” she said. Akande stated that about 80 percent of businesses in Nigeria fail in their first year. But the number has increased by the Covid-19 pandemic with businesses folding up due to disruptions in global supply chains and local logistics. According to her, business model across the globe has been changed by the pandemic, hence MSMEs must embrace dynamic and innovative ways of doing business, “...digitisation of your business is increasingly essential,” said Akande, stating that innovation and education were integral to the survival and relevance of businesses in today’s fast-paced world.

Ibijoke Sanwo-Olu, wife of the governor, said the idea of the exclusive fair was to enhance the profitability of MSMEs in line with the state government drive of promoting local businesses. According to her, the theme of the fair was carefully selected to prepare members of the sector for the challenges foisted on the world by the unanticipated and unexpected crisis brought about by Covid-19 pandemic. “Although the global economy is slowly recovering from the downward trend occasioned by the pandemic but the fact remains that many economies are still contending with the sordid realities of health crisis which, at some point, literarily shut down economic activities across the globe,” said Sanwo-Olu.

Afe Babalola University demands accommodation levy despite moving classes online MARK MAYAH

s universities across the world are seeking ways of mitigating the impact of Covid-19 on students and parents, Afe Babalola University has increased the cost of tuition for programmes run in the university. The university is also charging full accommodation fee of N400,000 despite moving its lectures online for the first semester billed to commence on Monday, September 29,2020. Parents who spoke with BusinessDay also alleged that they paid the full accommodation fee of N400, 000 for the last semester despite the fact that their children spent barely five weeks on campus out of the three months duration for a semester. The parents, who craved anonymity for fear that their children could be victimised by the institution’s authorities said, “We paid N400,000 for

accommodation last semester. The students learned online, yet the school did not refund a dime to us. “Surprisingly, the university is asking us to pay full accommodation fee of N400,000 even after we have been informed that there would not be inperson teaching for the whole of the first semester. This does not make sense to us at all.” Aside the accommodation fee, the school has also increased its tuition. For example, tuition and accommodation for engineering which used to be N1.6 million per session before Covid-19 has been increased to N1.826 million. The university is only registering students that have completely paid the accommodation and other fees. As a result of this, parents and guardians were forced to pay for their children to register for the remote learning. When contacted on telewww.businessday.ng

phone, to justify the tuition increase by N200,000 and the demand on students to pay accommodation even when lectures would be online, Christy Olubode, the registrar of the university, said: “I have nothing to say to you. Information on the website is purely university decisions and policies. Thank you.” Recall that two private universities in Nigeria-Caleb University, Imota, Lagos and Ajayi Crowther University, Oyo in Oyo State, have said they would reimburse the accommodation fees for the second semester to students that had earlier paid for hostel facilities. The vice-chancellors of these universities in separate statements obtained by BusinessDay stated that the institutions had to take the decision since students did not stay on campus due to school closure occasioned by the Covid-19 pandemic. https://www.facebook.com/businessdayng

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COVID-19: FG mulls educational Lagos revives Ehingbeti summit, broadcast in place of classroom learning implements 109 resolutions

…says approach will break ASUU ‘monopoly’, slash school fees Godsgift Onyedinefu, Abuja

he Federal Government says it is considering the establishment of educational broadcast channels that will deliver academic lectures and lessons to students and pupils at all levels through television and radio and in the comfort of their homes going forward. This strategy, the authorities say came through several lessons learnt from the Covid-19 pandemic, which showed that academic activities can actually be delivered through technology without the formal classroom setting or physical contact, in addition to the incessant strike action of the Academic Staff Union of Universities (ASUU). Ben Bem Goong, the director of press, federal ministry of education, said the government has already had series of meetings with television and radio stations in the country on how to effectively drive educational broadcast, especially through TV. He explained that the ap-

proach would be designed in such a way that the educational channels will have timetables of every lecture and for every level of education. He said all students need do, is to tune in when it is time, while interaction with course lectures can be done via social media like WhatsApp. The director noted that this plan was the initial concept of the National Open University of Nigeria (NOUN), to ensure that lectures are delivered to the students from the comfort of their rooms, but has not been fully achieved. Goong also noted that pupils in primary schools and children in kindergarten would understand this approach better, because it involves graphics, and television often attracts children’s attention more. “So why not deploy cartoons as a means of teaching them”, he said, adding that “T V delivers even better than classroom, particularly to children, as all you need do is to package the content in such a way that the age bracket you are dealing with will understand.”

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Continuing, he said “Covid-19 has come to stay and it may take a couple of years to completely get over it, so part of what we have learnt is that we must find some means and ways of learning without having to physically go to a classroom. “Government is looking seriously in the direction of establishing an educational station that will deliver lectures to Nigerians in the comfort of their sitting room. We are working on that”, he added. The director informed that students would pay less as education broadcast will slash cost of school fees by more than 50 percent. He further disclosed that the plan would not only phase out physical learning, but also address several other rots in the system such as ASUU strike, nonchalant attitude of university lecturers and the menace of out-of-school children. According to Goong, government plans to break what it described as ASUU monopoly as the approach does not require as much lecturers as there is in the country.

Hope Moses-Ashike

agos State has resusc i t at e d t h e a n nu a l Ehingbeti summit after the last one held in 2014. This comes as the state has concluded plans to hold the 2020 summit in November 10 to 12. Samuel Egube, commissioner for economic planning & budget disclosed this on Sunday in Lagos. The theme for this year’s Ehingbeti is ‘for greater Lagos: setting the tune for the next decade’. He said Lagos State has implemented 109 out of 119 decisions from Ehingbeti. The Lagos State economic summit, he said, has been the convening platform driven by the private sector and backed up by the government to basically show the vibrancy of Lagos State as it interacts, collaborates in the way it pursues inclusive governance mechanism for the state. Ehingbeti brings together local, foreign private sector, technocrats, government representatives,

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civil society members, academia, multilateral agencies, and government partners, to have a conversation as to how the dream Lagos should look like. “The summit has a huge history and it’s now firmly established as a credible forum for stimulating econ o m i c g row t h i n L a g o s State,” Egube said. “We have started to implement from early decisions that have been made. So far about 119 resolutions were taken in the cause of the histor y of Ehingbeti and 109 of them have been implemented. The government is responsible to the decisions taken in Ehingbeti and we are obliged to return to next Ehingbeti what we have done with the decisions we took and if there are challenges we highlight those challenges and take another decision as to how to resolve those challenges,” he said. He said the blue line red line, and rail master plan were part of the ideas that came out of Ehingbeti. “I can tell you we are on our way to deliver both the red

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line and the blue line,” he said. T h e f a c t t hat w e a re trying to expand our activities on the waterways is also Ehingbeti, Lagos homes ownership scheme, all came out of Ehingbeti “. yemi Cardoso, co-chairman, 2020 Ehingbeti said there was much to look forward to in this year’s Ehingbeti as he commended the governor of Lagos State for bringing back the summit. Cardoso said it was a great opportunity for the private sector to show what Lagos is truly made of and what it can do. Muda Yusuf, director general of Lagos Chamber of Commerce said, “we are committed to partnering with Lagos State to continue to put this forward “. The summit creates an enabling forum for all stakeholders in Lagos and showcases Lagos as a destination for investment, democrac y, culture and tourism as well as a credible sub-national capable of pulling off a world-class global summit.

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Presidential diktats: How independent is the Central Bank of Nigeria? global Perspectives

OLU FASAN

he independence of a country’s central bank is linked to the credibility of its monetary policy and economic management. This is because independent central bankers usually take rational, market-oriented views in managing currency and monetary policies and in regulating the financial system, all of which tends to engender good economic performance. By contrast, where central banks are under political control and politicians are left to their own devices, interest and exchange rates are usually manipulated for short-term political expediency, and wider economic policies are driven by political rather than sound economic considerations. So, central bank independence is important for credibility in monetary policy and in economic governance in general. Indeed, as Milton Friedman, the renowned economics Nobel laureate, said, the relation between the central bank and the government is comparable to the relation between the judiciary and the government. In other words, just as one would not expect a president to tell a court how to decide a case; it is anathema for a president to instruct the central bank how to carry out its mandate. Which brings us to the Central Bank of Nigeria, CBN. Is it independent? Well, not if you judge by President Muhammadu Buhari’s regular orders to the apex bank. “I have ordered the central bank to …” is the language he has used since assuming office in 2015. Recently, after President Buhari ordered the CBN not to give “a kobo of our foreign reserves” to food importers, I tweeted: “All this @MBuhari ‘asks’, ‘orders’, ‘directs’, ‘instructs’ the @cenbank to do this or that is doing enormous damage to the credibility of #Nigeria’s central

bank.” Hundreds of people liked and retweeted the tweet, which suggested that many were rightly concerned about the CBN’s lack of independence. All over the world, countries grant independence to their central banks to solve credibility problem. For instance, the creation of independent central banks in many former communist countries was a signal of their readiness to embrace the free market system. Similarly, after nearly 20 years out of power, due to perception of economic incompetence, the UK Labour Party had to announce in 1997 that it would grant operational independence to the Bank of England, if elected, to win the confidence of the market. The truth is that foreign investors would shun a country whose central bank is believed to lack operational independence over monetary and foreign exchange policies. Furthermore, where a central bank regulates other financial institutions, the integrity of the entire financial system is at risk if the bank is perceived to be prone to political influence. Professor Charles Soludo, former governor of the CBN, made this point powerfully in 2015 in a speech titled “Avoiding the mistakes of the ‘old’ Buharinomics.” He said that “When it was widely publicised on two different occasions within three months that ‘presidency directs central bank to …, it got many players in the economy seriously worried.” He added: “When the market knows or believes that the central bank is merely an extension of the presidency and takes daily ‘directives’ from there, the Bank loses credibility.” Yet, this has not stopped President Buhari from treating the CBN as an arm of the Presidency and ordering the central bank governor around as he would one of his ministers. The central bank is so impotent that it could not take decisions on the foreign exchange regime without the president’s say-so! For instance, in 2016, until President Buhari reluctantly agreed to a partial floating of the naira, the central bank could do nothing, even though, by that time, Nigeria was experiencing massive capital flight and rapidly haemorrhaging foreign exchange due to the fixed value of the naira. An independent central bank would have known that if

you fixed rates when capital is mobile, investors would take their money out of the economy. But Buhari did not want to “kill the naira” by floating it, and the CBN sheepishly agreed with him – or could do nothing! Even today, the CBN, under the shadow of Buhari’s body language, if not direct orders, is still unwilling to do the right thing on exchange rate reform. In their paper on measuring central bank independence, Cukierman, Webb and Neyapti developed a widely cited index, based on four characteristics. A central bank is more independent if: 1) its governor is insulated from political pressures, 2) its policy decisions are made independently of government involvement, 3) its sole mission is to maintain price stability and a sound financial system, and 4) there are limitations on the extent to which the bank can lend to the government. Now, if you take each of these characteristics, it’s obvious that the CBN is hardly independent at all. Take the first characteristic: the role of the central bank governor. I mean, Godwin Emefiele, the current central bank governor, is probably the most political CBN governor in recent memory. He is in cahoots with the presidency instead of maintaining his professional and operational independence. Several central bank governors have resigned because of interference from the executive. But Emefiele does Buhari’s bidding at every turn, supporting his economically damaging protectionist and interventionist policies. That means the CBN lacks the second characteristic: the ability to make policy decisions independently of government involvement. Of course, with the president constantly saying, “I have ordered the central bank to”, it’s clear that the CBN lacks policy independence. Then, take the third characteristic. The principal objects of the CBN, according to the CBN Act of 2007, are to ensure monetary and price stability and to promote a sound financial system in Nigeria. But the CBN, under Emefiele, is engaged in mission creep. It now sees itself as “promoting sustainable economic development.” That phrase, innocuous as it sounds, accommodates a multitude of policies, and has been used by socialist regimes to justify misguided policies. The CBN is using to pursue import-substitution policies.

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The truth is that foreign investors would shun a country whose central bank is believed to lack operational independence over monetary and foreign exchange policies. Furthermore, where a central bank regulates other financial institutions, the integrity of the entire financial system is at risk if the bank is perceived to be prone to political influence

The CBN’s mandate “to maintain external reserves to safeguard the international value of the legal tender currency” requires a market-based solution, including export-oriented policies and measures that could inspire investor confidence and attract foreign investments. But the CBN, in lockstep with President Buhari, thinks that object can only be achieved through import bans and other protectionist measures. Independent central banks, usually strong economic reformers, would pursue a liberal approach. Then, take the fourth characteristic: limitations on the extent to which the central bank can lend to the government. Of course, there are no such limitations in Nigeria. The central bank is lending massively to the Buhari government to fund its huge fiscal deficit. Surely, being the banker and financial adviser to the government does not mean bankrolling it! Being an economic adviser to the government entails giving it sound advice on debt! Now, it is tempting to think that all of this happens because the CBN’s statute does not grant it independence. Yet, it does! Section 3 of the CBN Act 2007 says that “the Bank shall be an independent body in the discharge of its functions.” There is nothing in those words that justifies President Buhari’s “orders” to the CBN. The act only requires the CBN governor to “keep the President informed of the affairs of the Bank.” The CBN is not required to take orders from the president in exercising its policy and operational functions. Thus, as Kingsley Moghalu, former CBN deputy governor, rightly said, President Buhari’s directives “contradict the law”, and the central bank’s economic policy should not be “imposed by a political authority”. Of course, the CBN should be accountable, but only to the National Assembly. The CBN is not an arm of the presidency, and President Buhari should respect its independence. Unless he stops giving orders to the Bank, its credibility would be shattered into smithereens! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Evaluating strategy – Aligning short and long term strategic initiatives

key responsibility of the Board is providing direction and defining the central idea of the enterprise. In this regard, it plays a significant role, working with Management in articulating corporate strategy. It thus has a responsibility for monitoring the execution and implementation of Strategy by Executive Management and will have to periodically undertake an evaluation to determine that strategic initiatives remain aligned. The National Association of Corporate Directors (NACD), USA recently launched a series of toolkits on Adaptive Governance During COVID-19. One of the toolkits provides useful tips to the Board on identifying and reviewing warning signs of potential misalignment between longand short-term strategies. From the directors’ perspective, the degree of alignment between ongoing operations and long-term objectives may not always be easy to see. The following according to the NACD are warning signs that may indicate that the Board needs to pay closer attention when reports and presentations to the Board tend to focus heavily on historical issues and metrics, or on topics that have a short-term time frame. Expectedly, given the reporting responsibilities imposed by regulators and the need to bring the Board up to speed

with company operations, there is typically a lot of focus on historical and operational issues. To the extent that these are not synchronised with current and future scenarios, it is a sure sign that Management is focused on short term strategy. Discussions about business and market trends, emerging risks and opportunities, and other future-oriented topics should routinely be included in Management reporting to the Board at its quarterly meetings. Where these occur infrequently or only in response to a specific request, the Board needs to refocus the attention of Management to the long-term view of the business. The Board is always seeking ways of aligning the interest of Management with those of shareholders and one of the ways it does it is by emplacing long-term equity plans and other long-term incentives. If on the other hand executive compensation is primarily in the form of cash salary and bonuses, the focus will tend towards meeting short term objectives. Similarly, where incentive plans (including annual bonus plans) at most levels of Management are tied strongly to short-term goals and metrics, with few or no long-term objectives included, a misalignment clearly exists. Another sure sign of misalignment is when non-financial Key Performance Indicators (KPIs) www.businessday.ng

that should contribute to long-term growth product quality, customer satisfaction, employee engagement, and culture alignment - are given little or no weight in performance assessments. There is a tendency to focus only on the financial KPIs which clearly sends a message that shortterm objectives trump the long term view of corporate performance. Where the Board has established a pattern of replacing the CEO and other Senior Executives following short spells of perceived poor performance, it is reflective of the Board’s failure to set long term objectives for Management. Similarly, where investment declines year-on- year and is consistently low relative to peer organisations in such areas as R&D, employee development, safety, and other aspects of nonfinancial value creation. Again, where shareholder representatives on the Board and in Executive Management repeatedly push for dividend payout without adequate consideration of returns relative to longer-term investment alternatives, it is a sure sign that there is no alignment between short and long term corporate strategy. Other signs include performance swings or significant variance in performance relative to industry peers—either positive or negative—that cannot be explained; Management becomes

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Bisi Adeyemi defensive about views on company strategy and performance when challenged by the Board, analysts, investors, or other outside parties; the Company attracts attention from analysts who contend that the company is underperforming relative to its potential. Such claims could indicate either a lack of alignment between short- and long-term objectives or poor communication with external stakeholders. A robust and unbiased assessment of the foregoing will enable the Board to determine to what extent the Company’s short and long term strategies are aligned and begin to take definite steps to achieve alignment in the interest of sustainability and stakeholder value. Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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Resilience [forging ahead] – effectiveness and legitimacy

Bashorun J.K Randle

hese are really turbulent times. A headline read: “Nigeria added to Wikipedia’s list of failed states.” Wikipedia’s list of failed states has been updated and Nigeria is now one of the countries on the list. The free web-based encyclopaedia project which contains information on a wide variety of subjects, described a failed state as a political body that has disintegrated to a point where basic conditions and responsibilities of a sovereign government no longer function properly. It further added that a state can also fail if the government loses its legitimacy even if it is performing its functions properly. For a stable state, it is necessary for the government to enjoy both effectiveness and legitimacy. Likewise, when a nation weakens and its standard of living declines, it introduces the possibility of total governmental collapse. Some countries listed as a failed states include; Syria, Somalia, Myanmar, Nigeria, Iraq, Yemen, Turkey, Democratic Republic of Congo, Central African Republic, Rwanda, Liberia, Yugoslavia, Lebanon, Afghanistan, Sudan and South Sudan. The statement attributed to Lt.-General T.Y. Danjuma on social media somewhat echoes what he had said previously: “A former minister of defence, Gen TY Danjuma (retired), yesterday accused the Nigerian Armed Forces of aiding attacks by bandits on communities across the country, warning that if such attacks continued, the consequences would make what happened in Somalia a child’s play. Danjuma, a former Chief of Army Staff, said the military could not be relied upon for the security of the citizenry, advising

Nigerians to rise up to defend themselves or risk massacre. He spoke at the maiden convocation of the Taraba State University in Jalingo where he was conferred with an honorary Doctor of Science degree. His Taraba home state has recently witnessed attacks and counter-attacks between herders and famers, leading to hundreds of casualties. While speaking against the violence in the state and other parts of the country, Danjuma said it was time for everyone to rise up and defend themselves. “The armed forces are not neutral,” he said, adding, “They collude with the armed bandits that kill people, kill Nigerians. They facilitate their movement. They cover them. If you are depending on the armed forces to stop the killings, you will die one by one,” he said. He threatened that violence would result should the killings in his state and other communities in the country continue. The ethnic cleansing must stop in Taraba State. It must stop in all the states of Nigeria, otherwise Somalia will be a child’s play. I ask every one of you to be at alert and defend your country, defend your territory, defend your state. You have nowhere else to go.” he said. General Danjuma said Taraba was a miniature Nigeria with diverse ethnic and cultural heritage the armed bandits are trying to bring to ruins, warning that people must rise up to the challenge and resist them. Earlier, the state governor, Darius Ishaku said the university was a great blessing to the state and appreciated the founders for the initiative. He said he would continue to support the university. The Vice Chancellor of the university, Professor Vincent Tenebe disclosed that 5,900 students graduated with various degrees. General Danjuma donated N100 million to the institution.” Indeed, former Military Head of State and Former President, Chief Olusegun Obasanjo spoke in the same vein: “It is no longer an issue of a lack of education and employment for our

youths in Nigeria which it began as, it is now West African Fulanisation, African Islamisation and global organised crimes of human trafficking, money laundering, drug trafficking, gun trafficking, illegal mining and regime change” However, the most strident alarm was delivered from totally unexpected quarters by Dr. Obadiah Mailafia, the former Deputy Governor of the Central Bank of Nigeria on the “Morning Crossfire”, a radio programme on ‘NigeriaInfo FM’ on August 10, 2020: “Some of us also have our intelligence networks. I have met with some of the bandits; we have met with some of their high commanders, one or two who have repented, they have sat down with us not once, not twice. They told us that one of the Northern governors was the commander of Boko Haram in Nigeria. Boko Haram and the bandits are one and the same. They have a sophisticated network. During this lockdown their planes were moving up and down as if there was no lockdown. They were moving ammunition, moving money, and distributing them across different parts of the country. They are already in the South, in the rain forests of the South. They are everywhere. They told us that when they finish these rural killings, they will move to phase two. Phase two is that they will go into urban cities, going from house to house killing prominent people.” Even though Dr. Mailafia was invited by the Department of State Security in Jos and allegedly questioned for seven hours, he has stood by the alarm he raised in the radio interview. Even more alarming is the statement attributed to the former Chief of Army Staff, Lt.-Gen. Ihejirika: “Speaking to Vanguard Thursday, Former Chief of Army Staff, Lt-General Ihejirika shot back at former minister of the FCT, Nasir El-Rufai, who earlier today accused Ihejirika of being a sponsor of terror sect Boko Haram. The former Army Chief called El-Rufai’s allegations a “diversion” to take attention from his own involvement. “The (commanders), including El-Ru-

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A state can fail if the government loses its legitimacy even if it is performing its functions properly. For a stable state, it is necessary for the government to enjoy both effectiveness and legitimacy

fai, know where the problem is,” Ihejirika told Vanguard. “He should stop deceiving Nigerians by trying to divert attention”. He continued, pointing an accusatory finger at the former minister, claiming it was he who kept the necessary weaponry and equipment needed to fight the insurgency from the military. “The likes of ElRufai have been supporting Boko Haram. In fact, El-Rufai and his likes are the same group of people that ensured the army did not get the requested equipment to deal with this menace once and for all, as they used their cohorts to tell the government that procuring modern equipment was not necessary.” The former Army Chief also said that El-Rufai and others allegedly green-lighted Boko Haram’s activities and attempted to divert concern from the atrocities of the sect. “When the Boko Haram operation started, supporters of the sect like El-Rufai said that there was nothing like Boko Haram and that the army was just killing innocent youths,” he said, furthering, “El-Rufai said that I was re-inventing the killing of the Ibos during the Biafra war following government’s determination to rid the country of terrorism.” Iherjirika also says that he was the first person to declare that the country was dealing with a war situation, but El-Rufai and others allegedly denied the gravity of the situation, disagreeing with his judgment. This move, the General says, gave Boko Haram time to regroup and redevelop. “It is the same group of El-Rufai that started the human right abuses campaign. It was done in order to block any international assistance after the state of emergency was declared and the sect was initially tamed. That gave Boko Haram time and respite to build up again”. Ihejirika also told Vanguard that ElRufai and others are further involved with Boko Haram and its operations, but that he could not yet disclose that information.” J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services. Email: jkrandleintuk@gmail.com

Separating politics from economics – the subsidy question

or an average student of political economy the above seems impossible, especially in an economy where the state plays a pivotal role in major economic decisions. However, what is being advocated here is not the absence of the state in playing the role expected of it but in taking pure economic decisions devoid of partisan politics. The last sentence obviously is apt for many third world countries usually classified as developing economies, the majority of which are in Africa (Nigeria inclusive). Let’s take Nigeria as a case study considering what has happened there just recently regarding removal of subsidies in premium motor spirit (petrol) and electricity which has been described as hikes in the two items. No issue has been as emotive as that of petrol subsidy; the other petroleum products, namely Diesel and Kerosene having been successfully and completely deregulated. That many successive governments in Nigeria have had to battle with the issue is a truism. From the days of Gowon administration to date, over twenty six petrol price reviews have been carried out. Save for the Military governments that were able to carry out some hikes without much resentment, the same can’t be said of Civilian administrations. That is hardly surprising given that in democratic dispensations, policies are scrutinised and debated. Superior arguments grounded on hard facts usually triumph, even though politics has sometimes been

thrown into the mix. It was to largely tackle the issue of petroleum subsidy that the Obasanjo administration set up the Petroleum Products Pricing Regulatory Agency (PPPRA) in June 2003. Its mandate was to tackle, among others; scarcity of petroleum products leading to long queues at the service stations; low capacity utilisation and refining activities at the nation’s refineries (poor state of the refineries); large scale smuggling due to unfavourable economic products borders’ prices with the neighbouring countries; and low investment opportunities in the sector. The above are laudable objectives but how much of them have been effectively communicated to the citizens and what have successive governments done to actualise them? In my serialised article (see BusinessDay of January 17 & 18, 2012, p.14 respectively) entitled “Fuel subsidy removal, matter of redefining trust”, trust deficit was highlighted amongst other issues on why many successive governments in Nigeria have been finding it difficult pushing through with the policy. Governments after governments have usually canvassed the same lines of argument to justify the need for removal of subsidy and this is what politicians on the other side of government have usually capitalised on. Starting with the Obasanjo administration that inaugurated the PPPRA, not much opposition came from political opponents but largely the labour wing in its attempt at petrol subsidy removal. The administration through the PPPRA www.businessday.ng

did not achieve much in the set objectives. Not much, for example, was achieved at revamping the nation’s refineries despite turn around maintenance (TAM) activities carried out, neither were new refineries built. Smuggling of petrol to neighbouring countries was not halted. Before leaving office, the administration recognised the shortcomings of the government in effectively managing the nation’s refineries and succeeded in privatising them. Though the succeeding administration of late President Yar’adua didn’t last long in the saddle, the issue of subsidy persisted, albeit with little or no opposition from political opponents. Instructively, the administration took a major step backward by revoking the privatisation of the refineries instituted by the preceding administration. The move was seen as yielding to pressure from some interest groups against the privatisation rather than on sound economic reasoning. The full politicisation of the petrol subsidy was to be unleashed during the administration of President Goodluck Jonathan – an offshoot of the Yar’adua administration. Though the administration came up with the same worn out lines of the raison d’etre for subsidy removal, it tried to engage the relevant stakeholders on the need for the removal. Town hall meetings were held with the then coordinating minister of the economy, Dr (Mrs) Ngozi Okonjo-Iweala, at the head of government delegation. Statistics were provided by the government to buttress the fact

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Emeka Okolo that continued subsidisation of petrol prices was no longer sustainable. That government’s resolve at going full throttle with the subsidy removal was tested on January 1, 2012 when the administration jerked the price of the product from N65 to N141 per litre to reflect market realities. All hell was let loose! For about two weeks there was the “occupy Nigeria” demonstration at the Gani Fawehinmi Park at Ojota, Lagos. Politicians in power today were the arrow heads. Nobody was talking of the soundness or desirability of the policy but hid under the cover of the “timeliness” of it. Some even questioned the existence of any subsidy. Economic activities were practically grounded in Lagos and some states. The government was forced to backtrack and slashed the price to N97 per litre. The subsidy thus continued!

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr. Okolo is a Chartered Stockbroker and Management Consultant based in Lagos.

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What a fatal accident taught me about arbitrage in Nigerian justice system

David Hundeyin

n November 6, 2018, I watched a little girl die. I was driving along Osborne Road on my way to an appointment in Ikoyi in fast-moving rush hour traffic when a group of four schoolgirls walking at the side of the road about 50 metres in front suddenly dashed across to the other side. The first three of them narrowly made it but the fourth was not so lucky. The SUV in front of me had no time to react as it slammed into her at over 50km/hr, sending her flying into another SUV to its right, which in turn knocked her full pelt into the air before she came to a stop in front of my fender amid the choking white smoke of my screeching tires. It was absolutely horrible and she had no chance. The driver of the second SUV decided not to stop, but there was no way I was going to leave a child to bleed out on the road. The driver of the first SUV put her in his car and we both sped off to a nearby hospital in Dolphin Estate. Pastor Matthew Ashimolowo of KICC Church who happened to witness the accident also went in with us and graciously pledged to cover all her emergency treatment expenses. Despite his and our best efforts however, she suffered catastrophic internal bleeding and she was soon pronounced dead. Sitting in the waiting room with my hands and feet quivering in a full-on panic attack, I couldn’t see how the day could possibly get any worse. And then the police came. The Nigeria Police Force: An arbitrage machine In financial terms, the word “arbitrage” refers to the practise of making profit by buying and selling the same asset in different places and exploiting the price differentials. For example while petrol is available in Lagos via petrol stations selling at the official pump price, petrol in places like Ekwulobia or Issele-Ukwu is largely sold in

plastic containers by the roadside for up to 1.8 times the official pump price in normal times. Someone who buys fuel in Lagos and sells it for a markup upcountry is thus doing a form of arbitrage. The basic principle of arbitrage is the ability to get different results out of the same input in different places or situations. In terms of the Nigeria Police Force, arbitrage is the ability to interpret the law selectively and subjectively to get absolutely whatever outcome it wants out of any situation. The NPF is highly experienced at interpreting the same laws in different ways to achieve different outcomes for different people. Which brings me back to November 2018. The little girl had not actually been pronounced dead yet when a man walked into the hospital introducing himself as the Dolphin Police Station IPO and demanding that the other driver and I follow him to the station. He did not so much as glance in her direction - we were to come to the station and bring our cars with us. Upon getting there, the keys were promptly seized and we were treated like we had done something wrong. As I later found out, the act of being two young men driving cars we owned was strike 1 against us. First he wanted to know, where did we work? Who were our fathers? Where did we live? Next, he took us separately into a dimly lit room to write a statement. Fortunately, I was streetwise enough to understand what game was being played when he started hinting that I was in trouble, but I could get out of it if I wrote a statement that pinned the blame on the other guy. I warned the other guy when I came out and sure enough, it turned out that he tried to do the exact same thing with him - so that we would both write conflicting statements of a straightforward, unfortunate incident that was really neither person’s fault and then create a problem out of nowhere for the police to profit from. Now how arbitrage works in Nigeria’s criminal justice system is that the law does not cover specifics that will affect outcomes in Nigeria. The law for example, says that in the event of such an incident, any driver involved who does not have a valid drivers’ license may under some circumstances be charged with manslaughter. What the law does not say is what should happen if as in my case, my drivers license had

expired and I had applied for a new one which for some reason took so long to produce that even the temporary license card had expired. From the FRSC’s point of view, keeping people coming back every few months to get a temporary card is more profitable than simply producing their permanent cards. From a police point of view, this scam is profitable because it ensures that at least some drivers will neglect to obtain another temporary card the 3rd or 4th time it expires, while waiting for the license that they already qualified and paid for months before. So here I was, a fully qualified driver with over 12 years of driving experience and valid UK and Nigerian driving licenses, effectively criminalised over a deliberate inefficiency. Combined with the legal regulatory grey area about what to do with valid license holders who have simply not been given their renewed license cards, this creates a situation that is ripe for police arbitrage opportunities as I soon found out. Fortunately within 48 hours of the incident, the long awaited card finally arrived. Legislative arbitrage is a police and legal goldmine He drew me aside as if he wanted to finally drop the charade and negotiate for an off-book cash settlement. Pay N30,000 he said, and I will make this go away. In my disoriented state, I made the payment but I had the presence of mind to do so electronically, so as to leave a paper trail. Then he disappeared for hours. Around 10PM, the other driver and I were put inside the police detention cell. Bear in mind that neither of us had actually committed any kind of offense. The next day - another set of stories, threats and bluster. We both spent another night in detention. Finally around 9PM on the 3rd day, after parting with N15,000 and then N50,000, I was released. My car however, was kept impounded and thus began one of the worst months of my life. I spent much of the next month being summoned for this or that appointment at the police station, where I was constantly told to pay this or that sum of money or get “charged for murder,” ludicrous as it sounds. On one occasion, spotting me in a deeply upset state outside the station, an officer openly told me in pidgin, “Oga na you f*** up. Why you stop? You know say no be your fault and no be you kill am, so why you

‘

The nightmare only came to an end when the case file from the Directorate of Public Prosecution finally returned stating what should have been obvious from the start - there was no case whatsoever to answer, and we were both free to go

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Timeless ways to monetise your weekends

ne of the fastest ways to increase your disposable income is to immediately reduce your expenses...the second is to increase your inflow. Today’s topic and its lessons were picked up from a chat I had on a trip to the unpredictable Lagos Island. I asked my driver how she got into ride-hailing services and a full blown conversation ensued. Not only did Onuh have a 9-5 on weekdays, she also has a full-time family to care for in what’s left of the hours of the day. And so when they didn’t have an obligation on the weekend, the Onuhs took their cars out and made extra cash driving strictly on the island… Encouraging isn’t it? With what near-lasting effects that the pandemic, the fuel-price hike and the dollar scarcity have caused, we truly cannot afford to sleep with both eyes closed. Because you cannot make something out of nothing, I’m sharing 5 timeless ways to monetise your weekends starting this weekend focusing on what you already have. Drive for a ride-hailing service: You enjoy

driving. You have great inter-personal skills. You have a car. You have a free weekend. Why not just drive for Uber or Bolt, or any of the newer companies coming up on the radar? I was so inspired by Onuh’s story that for obvious reasons, this shows up as number 1 on this list. Have a yard sale: When we hear of yard sales, we immediately think of the western way of doing a proper block party with wares set out like in a market. It will surprise you to learn that there are apps and websites for this now. Are there functional things you or your family do not have a need for any longer? Old baby stuff, electronics, clothing or jewellery? Take advantage of your social media accounts to get rid of them in exchange for some cash. Monetise your hobbies: Turn your hobby into a business! Is there some skill you are particularly good at such as cooking, sewing, painting or photography to name a few? Weekends are a great time to take advantage of your gifts, no pressure. Who knows what this little hobby might fetch you if you just www.businessday.ng

paid it a little more attention. Tutor students: You’re smart. You have free time during the weekend. You have kids around you just running around. Why not offer some of your academic skills to their family? I personally had the time of my life teaching inter-city kids and remain one of my fondest memories as a young adult. Kids are now returning to school, meaning they’ll need all the help they can get to catch up. Once more, talk to parents in your circle on your social networks and see what’s best for you and the kids right now. Blog: Do you experience life in the most interesting ways or find a flair for fashion, make-up or art? Here’s an opportunity to write or vlog about it! The road to making that cool cash with this idea can be long at first but being productive now is way more fulfilling than asking “what if” many years later. If you’re up to the task, pick one thing you know you can monetise on your weekends (only things you can monetise), and just start. I want you to get into the habit of intention-

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stop? See make I tell you, next time, if you know say no be your fault, dey go. No stop!” I could scarcely believe my ears - here was an officer of the law telling me that I should have left an 11 year-old girl to die by the roadside like a dog or a chicken. The IPO tried every trick in the book to get both drivers to part with more money including leaking our numbers to the girl’s family after falsely portraying the incident to them as though we were at fault. I answered a call from a strange number one day only to find myself in the sort of unpleasant exchange you can imagine with people who have been dishonestly informed that you “killed” their daughter. When that did not work, he then said that in order to “prevent the case from going to court,” we would have to organise a “condolence visit”, which is code language for “pay some more money.” Needless to say, he would get a cut of this money from both source and destination. A friend then recommended the services of a lawyer who had apparently won some high profile litigation for a record label against a pop artist. That however, ended up becoming the biggest waste of N60,000 I have ever experienced in my life - lots of words spoken, zero value offered. He actually billed N120,000, but after just one day of working with him, I cut my losses and moved on. He was clearly just in it for the fees, and had no actual capacity or desire to solve the problem. The nightmare only came to an end when the case file from the Directorate of Public Prosecution finally returned stating what should have been obvious from the start - there was no case whatsoever to answer, and we were both free to go. Realising that they had been able to extort “only” N95,000 from me, the IPO and his fellow officers literally sulked as they showed me to the counter to collect my car key. Before I collected the key and finally moved on with my life, the policewoman at the counter spread out her palms and - no word of a lie - barked at me, “Oga where is my share?!”

Money Brain with

JR Kanu ally using your time and energy for profitable things. And while you’re at it, make sure you watch your cash flow to be absolutely certain that your finances are changing with your efforts. Good luck! Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www. reach.africa. His company builds software to help young people and companies to manage and grow their money.

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EDITORIAL Needless duplication of government agencies

Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Loot Recovery agency is policy somersault

arlier this month, Nigerians were rattled by the decision of the Federal Executive Council (FEC) led by President Mohammed Buhari to establish what it called Proceeds of Crime Recovery and Management Agency saddled with the responsibility of managing proceeds of crimes in Nigeria. A bill to that effect is already on its way to the National Assembly for passage into law. We see no justification for this new agency as the action amounts to duplication of functions and policy summersault. This is also tantamount to the federal government telling the world that looting has become part of our national life and has come to stay. We recall that the same government had plans to streamline over a thousand federal agencies. What has happened to that decision which was hailed by local and foreign experts? Already, two agencies have been created by this same administration – The Nigerians in Diaspora Commission and the Police Trust Fund. By the time the new agency comes on stream, the cost of governance will double. States will also have similar institutions. Why can’t we understudy seri-

ous nations who have effectively used law mechanisms to successfully galvanise national spirit through good leadership and motivation to encourage good behaviour and have eliminated or reduced looting of public funds? Instead of doing that, our policies create more burden than solve existing problems. It will not be a surprise if the new agency in the works ends up in the looting bucket. We recall that during Buhari’s electoral campaign in 2015, he promised to run a lean government. And on May 1, 2020, he ordered the implementation of the Steve Oronsaye Report on the rationalisation of federal parastatals and agencies six years after it was submitted to his predecessor, Goodluck Jonathan. In that speech, Buhari said he approved the implementation of the report because of dwindling resources caused by the collapse of crude oil prices and the costs of COVID-19. So, economic realities are the trigger for the decision. The Presidential Committee on reform of government agencies headed by Orosonye in its report recommended the reduction of statutory agencies of government from 263 to 161. The policy was to, among others, help to avoid duplication in governance structures, and ensure effective implementation of decisions.

Others are to help the federal government to save cost across all sectors, derive valuable contributions from board members, restrict membership of boards of parastatals to a moderate size of seven – except where a framework had been predetermined – and base appointment of members on competence and proven integrity. The government action also runs contrary to expert advice from the international community, especially the International Monetary Fund and The World Bank which recently advised African countries including Nigeria to cut down the cost of governance in view of the devastating effects of COVID-19 on the global economy as well as crash in the international crude oil price. It is surprising that a government which adopted measures such as increase in Value Added Tax from 5 percent to 7.5 percent, electricity tariff hike, petroleum products subsidy removal, all aimed at cutting down cost and improving revenue would thereafter turn round to create more institutions. Over the past six years, the Buhari administration has created several commissions and agencies. In his first term, President Buhari had 36 ministers; in his second, he increased the number to 43. Recently, the vice

president, Yemi Osinbajo said, “there is no question that we are dealing with a large and expensive government.” Sadly, the Buhari government has played lip service to the cost-ofgovernance problem. It is painful to note that, in today’s Nigeria, infrastructure in the various sectors are dilapidated. Some federal ministries and agencies still owe salaries of civil and public servants. Pensioners, who had worked meritoriously for a number of years, yet were paid meagre salaries during their years in service, pass through untold hardship when they retire to get what is duly their right as pensions and gratuities. The on-going ravaging coronavirus pandemic has exposed the deplorable state of the nation’s facilities. It is also unfortunate that during this period when starvation is staring people in the face, when Nigeria was classified as the poverty capital of Nigeria, what the government is thinking of is increasing the cost of governance. For us and many other Nigerians like us, this is unacceptable. Definitely, as a country, we cannot continue as if nothing is at stake. The future of this country must be paramount over any primordial interest. Anything that would add to the overhead cost of running governance should be taken out.

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong Konyin Ajayi

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COMPANIES&MARKETS

Business Event

MTN, 9Mobile are building chatbots: Why it matters FRANK ELEANYA

he chatbot market in Nigeria will soon get two new entrants, according to an industry source familiar with the matter. The source told BusinessDay exclusively that two telcos, MTN Nigeria and 9Mobile, are on course to launch their chatbots soon. In 2018, financial institutions in Nigeria like United Bank for Africa (UBA) and the defunct Diamond Bank led the way in the chatbot market. While the latter bank has been merged with Access Bank, UBA’s chatbot named Leo is still active. Sources told BusinessDay that both MTN and 9Mobile are looking to deepen customer experience with chatbots. For 9Mobile it may be part of efforts to rebuild its voice and internet subscriber base which has been depleted in the past four years and only starting to recover in July. A source at 9Mobile said the chatbot is still in production and would be unveiled to the public once it is ready for launch. However, a prototype seen by the source shows that it is a generic chatbot widget that will be resident on the telco’s website. It will be able to respond to basic customer requests. BusinessDay can also report that some fast-moving

consumer goods (FMCGs) in Nigeria are also working on chatbots which they plan to release as soon as possible. Thus, the chatbot market in the country looks to be picking up finally. The global chatbot market is projected to grow from $2.6 billion in 2019 to $9.6 billion by 2024. Analysts say the global disruption brought about by the pandemic has forced many organisations to embrace automation systems to help save costs and respond to customer requests at scale and chatbots are one of the key technologies driving this change. A report in 2018 found that the number of chatbots on Facebook Messenger increased from 100,000 to 300,000. UBA’s Leo is part of this population. But the market is still nascent in Nigeria and banks are already beginning to reduce the momentum they showed in 2018 when after UBA’s announcement of Leo, about four other banks followed in quick succession. Read more From Leo to Ada: Nigerian banks get creative with chatbots Over the months, indications have emerged that customers are not so in love with the chatbots as the banks’ had anticipated. Diamond Bank’s chatbot called Ada was rested as soon as the merger with Access Bank was completed. “The problem with Chatbots is that most of those at

the forefront of the technology don’t understand its practical applications,” Muyiwa Ogundiya, a certified chatbot professional, said. “There is really no product person. Just developers, hence the user experience or in this case conversational experience ends up being very very poor. This is not only in Nigeria but all around the world. He says for the new chatbots from MTN and 9Mobile to attract users, they have to be proactive and not reactive. Many of the chatbots launched by banks in 2018 merely reacted to questions customers asked and the responses to customers’ requests were done in a monologue fashion. This is why more global companies are opting for conversational chatbots. There are different classifications of chatbots. Conversational chatbots are by far the most advanced chatbots that utilize artificial intelligence. These chatbots use artificial intelligence and natural language processing in order to deliver the best experience possible to the user. Thanks to these technologies, the bot considers the different words that form the sentence, analyzes them as well as any available context in order to get a contextual understanding of a question. It can then apply that understanding towards the resolution of the query.

L-R: Teju Abisoye, executive secretary, Lagos State Employment Trust Fund (LSETF); Adesola Adeduntan, chief executive officer, First Bank of Nigeria Limited; Babajide Sanwo-Olu, governor, Lagos State, and Tatiana Moussalli- Nouri, member, board of trustees, LSETF, representing Chairman, BoT LSETF, Mrs Bola Adesola during the signing ceremony of the LSETF-FirstEdu Loan, a post COVID-19 support programme targeted at low cost private schools and vocational training centers in Lagos, at the weekend.

L-R: Ayo Aderibigbe, deputy managing director, operations, Bell Oil & Gas; Emmanuel Adegboyga Balgun, deputy managing director, Lekki Free Zone Development Company; Xigong Huang, managing director, Lekki Free Zone Development Company; Kayode Thomas, managing director, Bell Oil & Gas, and Tunde Adelana, director monitoring and evaluation, Nigerian Content Development and Monitoring Board (NCDMB), during the groundbreaking of Bell Oil and Gas Threading and Valve Assembling Facility, at Lekki Free Export Trade Zone, in Lagos.

Industry Group, BusinessDay host national dialogue on taxation and developing the non-oil sectors ...as ESC design strategies for economic growth through taxation MERCY AYODELE

he Telecommunication and Technology Sustainability Working Group (TTSWG) in partnership with BusinessDay Media will host an industry conversation addressing the country’s economic recovery and sustainability of organizations from a tax perspective against the backdrop of the global coronavirus pandemic and the resulting economic downturn. For a country like Nigeria, a combination of this with dwindling oil prices and global supply chain disruptions, pose a serious threat to its economic sustainability as it is heavily dependent on revenue from the oil and gas industry to survive. The dialogue will therefore explore how organizations can support the government through the post-pandemic phase

beyond tax remittances whilst also discussing exhaustively opportunities for innovation, collaboration, and progressive regulatory practices. The webinar aptly themed Fast-tracking Economic Recovery through Robust Tax Policies and Practices has been slated to hold on the 9th of October 2020 and will feature Ben Akabueze, Director-General, Budget Office, Federal Republic of Nigeria; Muhammad Mamman Nami, Chairman, Federal Inland Revenue Service (FIRS) as speakers. Other experts confirmed to join the conversations are Taiwo Oyedele, Fiscal Partner and West Africa Tax Leader, PwC Nigeria; Gbenga Adebayo, Chairman, Association of Licensed Telecommunications Operators in Nigeria; and Olusola Teniola, President, Association of Telecommunications Companies of Nigeria (ATCON). Expected to participate www.businessday.ng

in the dialogue are Government Agencies, Ministries of Finance, Industry, Trade, and Investments; Federal and State Inland Revenue Agencies, Telecommunications and Technology Regulators, Corporate Organisations and Industry Experts, Non-governmental Organisations, Academia, and the General Public. One of the avenues employed by the government to increase non-oil revenue is through taxes, following the creation of the Economic Sustainability Committee (ESC) to develop strategies and actionable plans to cushion the effect of COVID-19 on Nigerians and reposition the economy on the path of recovery, especially growing the non-oil sectors. This has led to various initiatives and regulatory reviews to increase tax rates, expand the tax net, and improve tax administration and transparency

L-R: Ben Ukaegbu, deputy registrar technical services, The Institute of Chartered Accountant of Nigeria (ICAN); Felix Osuji, council member; Ahmed Kumshe, registrar/chief executive, and Onome Adewuyi, president, during the launch of ICAN new syllabus in Lagos.

L-R: Olusola Teniola, Association of Telecommunications Companies of Nigeria ATCON; Dr. Fumilayo Morebise, Director, Research Planning and Administration, National Universities Commission, NUC; Prof. Umar Garba Danbatta, Executive Vice Chairman/CEO, Nigerian Communications Commission, NCC; Dr. Henry Nkemadu, Director, Research and Development, NCC; Dr. Fatima Kabir Umar, Deputy Director, National Board for Technical Education; Prof. Mu’azu Bashir, Chairman, Telecommunications Based Research Evaluation Committee; during the Inauguration of the Evaluation Committee for the 2020 Telecommunications Based Research Innovation from Academics in Nigerian tertiary institutions recently at the Commission Headquarters Abuja

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OLADIRAN FAWIBE

CEOINTERVIEW

Chairman and chief executive officer of International Energy Services Limited/Doris Joint venture

Interview with Private Sector Leaders

We have tremendous opportunity to industrialise Nigeria through our gas endowment, but… OLADIRAN FAWIBE is the chairman and chief executive officer of International Energy Services Limited/Doris Joint venture. In this interview with Olusola Bello, Fawibe speaks on many issues affecting the Nigerian oil and gas industry. Excerpt:

hat is your view on the current state of the Nigerian oil and gas sector? The oil and gas industry are the engine rooms of the Nigerian economy. The review of the economy was done recently across various sectors and the economy is contracting. Like it is often said we are just a quarter away from another recession. Recession affects different sectors such as manufacturing trade, services, and oil and gas. Oil and gas are very critical. We have always been saying we have to channel the resources from oil and gas to develop other sectors of the economy, so that the economy becomes self-sustaining. Fundamentally, oil is now in a state of transition whereby we have to use our oil resources in a judicious manner to help other sectors of the economy develop so that they can be lifted up before oil becomes irrelevant. You can see the usage of fossil fuels in developed countries for all manners of economic activities. But one of the basic issues now is that even the oil demand would not be as it used to be in the past. And when there is low demand for oil, obviously nations that depend on revenue from oil would now be having some problems particularly for revenue generation. Nigeria leaders therefore should take cognizance of these dynamics in the oil and gas industry not just locally but at the international level, so that our national policies would align with the understanding of what obtains across the world. What would you say concerning the current level of reserve? For the Nigerian oil and gas industry, we can signpost a number of issues. Professional organisations have come up from time to time to identify some of the challenges Nigerian Oil and Gas are facing. For example, the Society of Petroleum Engineers and Nigerian Association of Petroleum

Explorationists (NAPE) did emphasise the need to increase our oil reserve through explorations so that we don’t just continue to depend on producing the oil reserve that we have now. We need to increase it and the only way we can do it is by increasing explorations. Some international oil companies have also joined the chorus. What are the factors we can play upon to ensure this happens? One key factor that has been on the lips of everybody has been the Petroleum Industry Bill that is supposed to create an enabling environment for investment to come to Nigeria. It is unfortunate that for many years we have lost the opportunity when the oil and gas industry was still very active and people were looking at Nigeria as a very viable environment to invest in. But now, there is the dearth of investible funds. Many

The current level of the reserve we have can support a production level of about 2.2 million barrels per day for a couple of years more. But if we don’t add to it, the chances are that we would then be going done and in our producibility which would not be good for us. We have set a target of 40 billion barrels for national reserve for many years but we have been gyrating along 36 and 37 billion barrels while in fact, we have the potentials to increase it to 40 billion barrels. This is because there are still many fields out there, especially in the deepwater that can be explored to add to the national reserve and achieve the target of 40 billion barrels. But companies that would invest in explorations in these areas would need a conducive and enabling environment to do so by way of fiscal regime that will encourage them. We cannot be penny wise and pound foolish. If we want to make a quick gain it

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A big country like Nigeria with about 200 million people can certainly produce about two to three times what we are currently producing by way of developing various avenues of using gas, either to generate electricity, you know we are still far behind the level of power we need to drive the economy and other activities companies that would have invested in the Nigerian oil and gas industry have moved elsewhere. Some of them are even reducing their investment appetite for fossil fuel as they are going into renewable energy. So, to a large extent, we have lost some opportunities.

would not work out. This was why we had the unfortunate incident of last year where the government was accusing the oil companies of stealing oil revenue whereby the office of the Attorney General of the Federation (AGF) stated that companies were owing to the government $62 billion and many professional bodies came www.businessday.ng

up by saying that technically the government may have a point in terms of reviewing the government share when the price of oil rose beyond $20 per barrel. But to the extent that we did not invoke the clause at that time. How can we just wake up one morning and accuse the companies whereas we went to bed, sleeping when we were supposed to have raised the issue about reviewing the agreement that would enable government to have more revenue. The hangover of this would not just be blank with respect to the IOCs. And like we have always said, whatever we might want to do especially with respect to involving or encouraging indigenous participation in the oil and gas industry. We still need the IOCs because they have big pockets to be able to fund exploration and development in deep water

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and some difficult terrains. Nigeria independent companies are doing very well in many respects, but they still need these IOCs to work together with the government if only to be able to achieve the objective of developing oil and gas. To summarise these points, we need policies and enabling environment and encourage explorations, to make oil production in the country sustainable otherwise our ability to produce at a reasonable level that would export and earn foreign exchange would then be considerably reduced. What is your view about the government move towards gas? It often said that Nigeria is more endowed with gas than crude oil. Currently, the gas reserve is over 200 trillion cubic feet of gas. This could make the country a major gas producer in @Businessdayng

the world. This is another area where we have missed opportunities. At the time we would have developed Nigeria LNG to the level that would make big gas exporter we failed. Thanks to the present administration that encouraged the building of train7 which construction would start hopefully by next year. For Bonny NLNG, there is nothing that is stopping us from making it eight trains or more. The country proposed Brass and Olokola LNG before. At the time these projects were proposed there were opportunities for the country to develop them and put our gas into the international market. If those projects have come up today, we have to struggle to get the markets for their output because other countries have come up since that time to develop their gas. But if we are talking about domestic utilisation of the gas, the opportunities are just there. For example, the countries that are taking our gas identified

opportunities for the utilisation of such gas. A big country like Nigeria with about 200 million people can certainly produce about two to three times what we are currently producing by way of developing various avenues of using gas, either to generate electricity, you know we are still far behind the level of power we need to drive the economy and other activities. We should be able to use the gas to support the manufacturing industry, not only for power, for developing petrochemicals and produce intermediate products which can further be developed and used by manufacturing companies for economic activities. There are so many areas that are crying for utilisation of gas, that is why experts have suggested that we should not just be running around for oil bid rounds but we should actually undertake gas bid rounds so as not to limit our gas potentials to associated gas. We have tremendous opportunity to industrialise Nigeria through our gas endowment. And it is unfortunate for not doing so. Downstream sector of the petroleum industry what can say about it? We often said that the state of the downstream is lackluster. The only hope on the horizon is the Dangote Refinery that will help to reduce our dependence on imported fuel. Because for quite some decades our local refineries are not working. We often talked of rehabilitation every day but at the end of the day, we have not seen anything. We can put some hope on the present management of NNPC particularly the group managing director working in consonance with the minister of Petroleum. If they can fulfill the commitments they are making to Nigerians, then maybe those refineries may come on stream whether it is 2022 or 2023 and then working along Dangote refinery. Then we would have achieved a lot in wiping out the shame from the faces of Nigerians; that a major oil-producing country is www.businessday.ng

an importer of refined products. There are also plans to undertake condensate refinery which would also add to the level of our output for fuel in the country. Modular Refinery? I am not a fan of modular refinery. If we approve the modular refinery projects perhaps it could help to reduce political tension in the Niger Delta. But of the over 20 modular refineries that have been approved by the government none of them today has been completed or is functioning. Only recently one of them in Edo was said to have attained 60 percent. All others are still on the drawing board. But anything whether it is 1000 barrels per day or 500 barrels can be helpful at least within the locality in which they are operating. I keep saying if we are going to use modular refineries they can be cited close to the source of raw material so that the cost can be minimised. In the United States of America where you have the modular refineries, they are actually located near the fields and they serve local markets. It is not like you produce in Niger Delta and take the product to Lagos or elsewhere. However, whatever the refineries are able to produce would solve the country’s energy mix and help solve some of the problems. But more importantly, it may provide employment for some of the locals around the place and also help to stop the oil theft that is still rampant in the Niger Delta region. Subsidy removal, how appropriate is it at this point in time? The downstream sector still needs a lot of reforms. The current management of the NNPC especially the group managing director has been emphasing that subsidy has been removed and the Federal Government has made the commitment to the IMF or World Bank and some of the loans being given to the Federal Government are anchored on the basis that there would be no subsidy. https://www.facebook.com/businessdayng

The subsidy on fuel is one sour point that has created a lot of problems for the downstream sector. Its removal has to be done realistically and as matter of fact, it must be legislated upon. If it is done by administrative fiat chances are that we would be going back on it and it would not be permanent The removal of subsidy would eliminate all kinds of fraudulent cases associated with the procurement of fuel from the country. Like I have said, if the government is dead serious about the removal of subsidy this time, and I have no reason to doubt the government this time, the policy should be legislated upon. In this case, the reform of the downstream would then be meaningful. How has COVID19 affected the oil and gas industry? COVID-19 has created a lot of problems for the service sector. Everybody knows that the service sector provides the fulcrum for support for the oil and gas sector in various aspects. A lot of activities done by the IOCs and even Independent companies are carried out by the service sector. Now we have a situation where the activities of IOCs and major independent companies have been substantially reduced. This has affected the activities of

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various oil servicing companies. When you go to some of the IOCs some of the offices are like ghost towns. Because they are not making new investments, they are just doing maintenance jobs. In some cases, the maintenance of some of their facilities are not done as they should be done because they have no incentives to do so. Their corporate headquarters are not putting money in the local companies here and the government being unable to contribute or jump start some of these projects, hence the reason why things are at a very low ebb. If this is the case where do you expect oil servicing companies to get jobs?. This is why many service companies have laid off some of their staff. When you compare the performance of the oil services Pre COVID-19 to what is happening today their performance is about 50 percent of what it use to be. So many of the companies are now in bad financial shape. I hope the oil companies would be engaged at the highest level of government so that investment could be made in the sector. It is also my belief that the Petroleum Industry Bill would be passed very soon. So that the oil companies have an environment to see their way forward and then removed the uncertainty that has dogged the oil and gas investment in this country for too long.

Monday 28 September 2020

BUSINESS DAY

In Association With

The pandemic and the long haul

AFailing Balkan betrayal the poor

Why governments get covid-19 wrong

Therapies and vaccines will come, but not for many months. Until then, politicians will have to work on the basics

ITHIN THE next few days the global recorded deaths from covid-19 will surpass 1m. Perhaps another 1m have gone unrecorded. Since the start of the pandemic, nine months ago, the weekly cases logged by the World Health Organisation have been trending very slowly upwards and, in the seven days to September 20th, breached 2m for the first time. The virus is burning through parts of the emerging world. India has been registering over 90,000 cases a day. Some European countries that thought they had suppressed the disease are in the throes of a second wave. In America the official death toll this week exceeded 200,000; the seven-day case total is rising in 26 states. Those figures represent a lot of suffering. Roughly 1% of survivors have long-term viral damage such as crippling fatigue and scarred lungs. In developing countries, especially, bereavement is compounded by poverty and hunger (see article). The northern winter will force people indoors, where the disease spreads much more easily than in the open air. Seasonal flu could add to the burden on health systems. Amid the gloom, keep three things in mind. The statistics contain good news as well as bad. Treatments and medicines are making covid-19 less deadly: new vaccines and drugs will soon add to their effects. And societies have the tools to control the disease today. Yet it is here, in the basics of public health, where too many governments are still failing their people. Covid-19 will remain a threat for months, possibly years. They must do better. Start with the numbers. The increase in Europe’s diagnosed cases reflects reality, but the global effect is an artefact of extra testing, which picks up cases that would have been missed. As the Briefing in this issue explains, our modelling suggests that the total number of actual infections has fallen substantially from its peak of over 5m a day in May. Extra testing is one reason why the fatality rate of the disease appears to be falling. In addition, countries like India, with an average age of 28, suffer fewer deaths because the virus is easier on the young than the elderly. The fall in fatalities also reflects medical progress. Doctors now un-

Covid-19 has reversed years of gains in the war on poverty Politicians deserve much of the blame

HIS CORONAVIRUS affects everyone, but not equally. The young often shrug off the virus; the old often die of it. The rich shrug off the economic shock; the poor cannot. Because of covid-19, the number of extremely poor people (ie, those making less than $1.90 a day) will rise by 70m100m this year, the World Bank predicts. Using a broader measure, including those who lack basic shelter or clean water and children who go hungry, the ranks of the poor will swell by 240m-490m this year, says the UN. That could rederstand that organs other than the lungs, such as the heart and kidneys, are at risk and treat symptoms early. In British intensive-care wards, 90% of patients were on ventilators at the start of the pandemic; in June just 30% were. Drugs, including dexamethasone, a cheap steroid, reduce deaths in seriously ill patients by 20-30%. Fatalities in Europe are 90% lower than in the spring, though this gap will narrow as the disease spreads back into vulnerable groups. More progress is in store. Monoclonal antibodies, which disable the virus, could be available by the end of the year. Although they are expensive, they promise to be useful after someone is infected or, for the high-risk, prophylactically. Vaccines will almost certainly follow, possibly very soon. As different medicines use different lines of attack, the benefits can be cumulative. Yet, in the best of all possible worlds, the pandemic will remain a part of daily life well into 2021. Even if a vaccine emerges, nobody expects it to be 100% effective. Protection may be temporary or weak in the elderly, whose immune systems are less responsive. Making and administering billions of doses will take much of next year. Early vaccines may well need two shots, and complex “cold chains” to keep fresh. Medical glass could run short. There may be fights over who gets supplies first, leaving pools of infection among those who cannot elbow their way to the front of the queue. Multi-country

polls suggest that a quarter of adults (including half of Russians) would refuse vaccination—another reason why the disease may persist. Hence for the foreseeable future the first line of defence against covid-19 will remain testing and tracing, social distancing and clear government communication. There is no mystery about what this involves. And yet countries like America, Britain, Israel and Spain persist in getting it disastrously wrong. One problem is the desire to escape a trade-off between shutting down to keep people alive and staying open so that life goes on. The right lauds Sweden for supposedly letting the virus rip while it makes a priority of the economy and liberty. But Sweden has a fatality rate of 58.1 per 100,000 and saw GDP fall by 8.3% in the second quarter alone, worse on both counts than Denmark, Finland and Norway. The left lauds New Zealand, which has shut down to save lives. It has suffered only 0.5 deaths per 100,000, but in the second quarter its economy shrank by 12.2%. By contrast, Taiwan remained more open but has seen 0.03 deaths per 100,000 and a 1.4% fall in GDP. Blanket lockdowns like the new one in Israel are a sign that policy has failed. They are costly and unsustainable. Countries like Germany, South Korea and Taiwan have used fine-grained testing and tracing to spot individual super-spreading venues and slow the spread using quarantines. Germany identified abattoirs; South Korea con-

tained outbreaks in a bar and churches. If testing is slow, as in France, it will fail. If contact-tracing is not trusted, as in Israel, where the job fell to the intelligence services, people will evade detection. Governments must identify the trade-offs that make most economic and social sense. Masks are cheap and convenient and they work. Opening schools, as in Denmark and Germany, should be a priority; opening noisy, uninhibited places like bars should not. Governments, like Britain’s, that bark out a series of ever-changing orders which are broken with impunity by their own officials will find that compliance is low. Those, like British Columbia’s, that set principles and invite individuals, schools and workplaces to devise their own plans for realising them, will be able to sustain the effort in the months ahead. When covid-19 struck, governments were taken by surprise and pulled the emergency brake. Today they have no such excuse. In the rush to normality, Spain let down its guard. Britain’s testing is not working, though cases have been climbing since July. America’s Centres for Disease Control and Prevention, once the world’s most respected public-health body, has been plagued by errors, poor leadership and presidential denigration. Israel’s leaders fell victim to hubris and infighting. The pandemic is far from over. It will abate, but governments must get a grip.

verse almost a decade of progress (see article). If a vaccine is found, economies will no doubt bounce back. But widespread vaccination will take years and the very poor cannot wait that long. By then, malnutrition will have stunted a tragic number of children’s bodies and minds. Governments in rich countries have spent over 10% of GDP to ease the economic pain. Others cannot be so ambitious. Emerging economies have spent just 3%, and the poorest nations less than 1%. Safety-nets in low-income countries are cobweb-thin. Governments there have handed out only $4 extra per person on social programmes—in total, not per day. Donors should help. Rich countries are on course to cut direct aid by a third compared with last year. The IMF and World Bank have raised lending, but only Continues on page 19

Monday 28 September 2020

BUSINESS DAY

In Association With

Covid-19 has reversed years of gains...

The corporate undead

What to do about zombie firms

Without care, measures taken during the pandemic will keep alive firms that ought to be put out of their misery

OR YEARS economists have argued about whether governments and central banks in the rich world have mistakenly prolonged the lives of “zombie firms”. The corporate landscape, it is said, has turned from one filled with red-blooded creatures of creative destruction to a grey zone of the living dead, incapable of innovation or dynamism. Now the debate has new importance. The pandemic could lead governments to prolong the life of many undeserving firms. Keeping the growth of the undead in check will be vital to the long-term economic recovery. Marginally profitable firms were central to Japan’s “lost decade” in the 1990s, when banks, unwilling to recognise losses, kept credit flowing to otherwise insolvent borrowers. Zombie-infested industries suffered from inert labour markets and lower productivity growth. Since then, the rich world as a whole has begun to look more zombified (see article). In advanced economies the share of listed firms with low market capitalisations given their book value, and whose profits are insufficient to cover their interest payments, grew from around 4% in the mid-1980s to 15% in 2017, according to the Bank for International Settlements. The OECD reckons Italian and Spanish productivity levels would be over 1% higher were it not for the growth of zombie firms, which are alleged to have crowded

out would-be rivals. The evidence for zombification in the 2010s is incomplete: the world economy displayed few signs of capital or labour shortages, which you might expect to see more of if zombies were hoarding resources. Many firms were marginally profitable because aggregate spending was weak. Yet the pandemic is creating a greater risk of extra zombification. Governments have intervened in the economy on an enormous scale in order to keep firms alive. A combination of furlough schemes to reduce wage bills, state-backed loans to provide liquidity and laws or other measures to stop bankruptcies has prevented a wave of company failures. The danger is that, as economies emerge from the pandemic with new wants and needs, some firms that should be allowed to fail are

instead kept going. The march of the undead can be kept in check. Governments should support workers not jobs, and intervene more surgically. Furlough schemes keep workers tied to companies; it would be better to offer generous unemployment benefits. State-backed loans should not be rolled over indefinitely, but instead be subject to gradually increasing interest rates, encouraging borrowers to rely on private finance. If governments truly believe that the disruption to the hospitality industry will be only temporary, then their support would be justified. But because the industry will never recoup the income that it has lost during the pandemic, it will need grants, not loans—a shift that would help concentrate politicians’ minds. Another priority is to avoid a bank-

ing crisis. Lenders with stretched balance-sheets have an incentive to keep funding their existing customers, masking past lending mistakes with yet more loans. In the short term this avoids recognising losses, in the long term they are funnelling capital to firms which squander it. Regulators must be alive to the risk of these zombie assembly lines. Banks should be kept as strong as possible during the pandemic, to reduce their incentive to conceal losses. That is a reason to limit their ability to pay dividends. Last, ensure that firms can fail quickly and efficiently so that they can either be recapitalised or their assets and staff redeployed. Bankruptcy courts must be able to revive firms with reasonable prospects, or liquidate assets that can find new productive uses in other hands. Making the process faster and clearer will reduce the incentive of creditors to seek scorched-earth liquidations, especially for small businesses. Suspending bankruptcies for long periods, as Australia and Germany have done, is to deny reality. America, with its unsentimental approach to resolving ailing firms, sets a much better example. All-but-indiscriminate aid to support firms and workers was a necessary feature of this year’s economic rescues, which took place amid widespread lockdowns of the economy. However, aid has become a threat to dynamism. As economies recover, the market should be allowed to play its proper role of determining winners and losers.

After RBG

How to make American judges less notorious

Supreme Court judges should be term-limited

T THE TIME of her death, Ruth Bader Ginsburg featured on more than 3,000 pieces of memorabilia which were for sale on Amazon.com. Fans of “Notorious RBG” could buy earrings, mugs, babygrows, fitness manuals and Christmas decorations (“Merry Resistmas!”), all bearing her face. The number and variety of these tributes suggest two things. First, that Justice Ginsburg was an extraordinary woman with an extraordinary place in American culture (see article). Second, that something has gone wrong with America’s system of checks and balances. The United States is the only democracy in the world where judges enjoy such celebrity, or where their medical updates are a topic of national importance. This fascination is not healthy. Republicans have often lamented that the Supreme Court is too powerful. But faced with the opportunity to tilt it decisively in a conservative direction, the prize is too great for them to resist (see article). The Republican majority in the Senate is likely to push through the confirmation of a replacement for Justice Ginsburg before the election. Since judges have life tenure, the newcomer could still be on the court in 2060.

That is bad for American democracy and for the court. In 2016, when a vacancy came up in a presidential year, Mitch McConnell, the Senate majority leader, declared that “The American people should have a voice in the selection of their next Supreme Court justice. Therefore, this vacancy should not be filled until we have a new president.” Having invented that principle when it suited him, Mr McConnell and friends have abandoned it when it no longer does. The move is as cynical as it is unsurprising. For the record, the precedent can cut both ways. There have been 25 Supreme Court nominations in

presidential-election years. More than half have been confirmed by the Senate. And yet, no appointment has ever been confirmed this close to an election. Precedent is not really the point here, though. Judicial nominations have become exercises in raw power, where the only real principle is that anything goes, so long as your side has the votes. For Republican senators this unconservative approach to institutions makes sense, for several reasons. For some who privately disdain President Donald Trump, reshaping the court for a generation was the chief reason to support him. Most conservatives still resent

the judicial remaking of America from the 1960s onwards, after liberal courts discovered a right to abortion in the constitution, abolished organised school prayer and enshrined other lefty priorities that should properly have been decided by the legislature. And all members of the Republican caucus believe, with some justification, that Democrats began the breaking of the judicial nominations process, and that this unprincipled act is payback for past wrongs. Better to get their retaliation in first. Inevitably, Democrats feel the same way, also with some justification. Republican presidential candidates have won the popular vote just once in the past seven cycles, yet Republican presidents will soon have appointed six of the nine Supreme Court justices. The division of American politics along urban-rural lines makes the Senate even more antimajoritarian than this suggests. The Democratic minority in the Senate represents about 15m more Americans than the Republican majority that will confirm Mr Trump’s latest judge. Some Democratic activists favour levelling things up by increasing the number of judges on the court when their party next has power, an idea that, thankfully, has not yet been adopted by Democratic senators.

Continued from page 18

31% more of the bank’s money has reached poor countries, says the Centre for Global Development, a think-tank, about half the increase in the global financial crisis, a much smaller shock. Governments in poor countries, meanwhile, need to spend their money wisely. Too many offer pork for chums and crumbs for the poor. Since the crisis began, Mexico has provided no new programmes for the hard-up but has given Pemex, the state oil giant, tax breaks worth $2.7bn, or $21 per Mexican. India has poured $7bn down coal mines. South Africa is expected soon to confirm another wasteful effort to keep its money-losing airline aloft. Even when money is earmarked for good ends, it is too often wasted or stolen. South African investigators are probing possible fraud in 658 contracts worth $300m for covid-fighting kit. Nigeria’s health ministry bought some masks for $53 each. In a leaked recording, a voice allegedly belonging to a Ugandan official guffaws as she and her colleagues appear to plot to pocket money meant for alleviating suffering in the pandemic. The best way to help the poor is to give them money directly. The simplicity of this policy makes it less vulnerable to corruption. With a little extra cash in their pockets, recipients can feed their children and send them back to school. They can avoid a fire-sale of assets, such as a motorbike-taxi or a cow, that will help them make a living in the future. One country that has done well getting cash into poor pockets is Brazil, despite President Jair Bolsonaro’s habit of downplaying the effects of covid-19. Various measures of poverty there have actually fallen, largely because the government has sent $110 per month for three months to the impecunious, helping 66m people. A priority for governments should be basic health care, which the pandemic has disrupted so badly that vaccination rates for children have been set back about 20 years.

Monday 28 September 2020

BUSINESS DAY

Start-Up Digest How Abiye, Yinka link buyers with verified sellers In association with

Josephine Okojie

ntrepreneurs in Nigeria have unique stories to tell. They are usually inspirational stories of how their entrepreneurial journeys started. For Abiye Aambo Briggs and Yinka Akinsulie, cofounders of ThePROfficers, their inspiration to establish an e-commerce platform came out of their desire to address some of the problems facing MSME operators. The ThePROfficers creates a unique e-commerce solution that helps MSMEs take their businesses online speedily, seamlessly and affordably. Amid the virus outbreak, ThePROfficers is helping small businesses who cannot afford the running cost of owning a website to sell their products online with a click of the button. “We created a platform that is will solve some problems MSMEs - who form a bulk of the drivers of the economy face,” Abiye says. “We saw that MSMEs desired to maintain direct relationship and connection with their buyers. Another problem we noticed was that buyers wanted to buy from their products from verified sellers,” he says.

Abiye Alambo Briggs

After doing some research on what the ideal e-commerce platform could be, Abiye and Yinka established ThePROfficers in 2019 to address these problems. Now, the business provides targeted marketing, e-commerce store management, social media marketing, video marketing, graphic designs and trainings, among others, for MSMEs using their platform. Abiye and Yinka started their business with the money they raised from their sav-

Yinka Akinsulie

ings and also sourced additional capital from family and friends. The co-founders tell StartUp-Digest that their business has grown tremendously since starting their operation with over a 100 registered vendors in Lagos, Aba, Port Harcourt, Abuja and Ibadan ranging from hotels, restaurants, home businesses, spa and grooming, saloons and clothing stores. ThePROfficers currently has 14 full-time employees. “At the moment, we have 12

employees,” Abiye discloses. “Our solution is a custombuilt cloud-based solution with our app running on the Google Play store and the Apple store,” he adds. Speaking on what the business is doing differently to survive the country’s difficult operating environment that has forced many e-commerce businesses to shut down operations, the co-founders say that the unique thing about their platform is that buyers buy their products below the current market prices.

“We are poised to do differently is to ensure that sellers get paid immediately for their products sold. No intermediaries involved,” he further says. “Helping them work along the lines of cashless policy for their security and safety, with proper structure so that buyers are buying from a registered business,” he explains. The co-founders say that the COVID-19 pandemic has made businesses in the country move most of their processes online, thus making the services they provide vital for them. “When we started, we saw into the future. This prompted our vision and our model. It is a future where you can buy whatever you want to buy right from your home and pay to the seller you have not seen directly but are sure you know is verified with online real time receipt,” he says. “It has revealed that our solution is one of the best answers for today’s problems meaning that with our contactless solution services is assured,” he states. In evaluating the e-commerce industry, Abiye and Yinka say the industry has been progressive. According to them, the industry is a learning curve that comes with its challenges. They note that the likes of Jumia and Konga have paved

the way for others in the sector, thereby helping grow thousands of businesses in the country. Nigeria’s 41.5 million MSMEs contribute 50 percent to Nigeria’s GDP and account for 86.3 percent of jobs (59.6million jobs in 2017), according to a report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). Despite their contributions, they face several challenges ranging from poor infrastructure to low access to capital, among others. It has not all been rosy for Abiye and Yinka as infrastructural challenges have continued to impact negatively on their business. To address this, they urge the government to bridge the country’s huge infrastructural gaps and support small businesses with adequate finance. Their business was selected in the innovator category of the 2020 Tony Elumelu Foundation. On their advice to other entrepreneurs, “Get to work on your idea all day. Get into the market as quickly as possible and start iterating on your idea.” “Stay dedicated to it too. But most importantly, tag along with industry experts, mentors and coaches,” the co-founders say.

Financial, crypto, biotech start-ups in Nigeria attract biggest deals in Q1 Josephine Okojie

igeria’s start-ups attracted over $126million investment deals in the first nine months in 2020 despite the COVID-19 outbreak that has obstructed the global economy. A recent venture capital data compiled by Startuplist Africa – a data-driven platform that focuses on African start-ups— show that start-

ups in the financial services, crypto and biotechnology industries accounted for the largest investment deals for the period. The financial services industry attracted $46million (38percent) in investment deals for the period. This was followed by startups in the crypto industry with $17million investment deals; biotechnology with $15million; healthcare with $11million; e-commerce with $10million, and re-

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newable with $7million. Others account for the remaining. Experts in the country’s start-up ecosystem say it is an indication that entrepreneurship is gaining momentum in the country. “Start-ups in Nigeria have created thousands of jobs and activities within the ecosystem and this is striving to consolidate the nation’s status as a topnotch international hub by attracting investors and

stimulate entrepreneurship in the country,” O.O. Nwoye, executive director, Tech Circle, said. Nwoye explained that Nigeria was transitioning into a dynamic ecosystem offering start-ups a platform to potentially grow into million-dollar businesses. “Last year, tech companies such as Paystack and FlutterWave received huge funding from abroad to strengthen their mobile payment solutions,”

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he said. Uche Aniche, the convener of StartupSouth, believes that the Nigerian ecosystem has undergone a transformation in recent years. “Thanks to the wave of fresh young talents. Lots of start-ups and small businesses have taken off, creating a surge of co-working spaces and a collaborative spirit that is vital for the success of innovation hubs,” Aniche said.

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He further said that investments in Nigerian companies havd grown steadily over the past year, pointing to a relative improvement of the investment in the ecosystem and a huge amount of money available to invest in start-ups. The COVID-19 pandemic has infected over 30million people and claimed 952,033 lives globally since the first outbreak was recorded in Wuhan, China in January 2020.

Monday 28 September 2020

BUSINESS DAY

real sector watch

Nigerian manufacturers flag infrastructure, ports as AfCFTA nears Gbemi Faminu

igerian manufacturers say poor infrastructure and lack of access to Lagos ports are critical challenges that will de-market them as the African Continental Free Trade Area (AfCFTA) begins in January 2021. Nigeria’s road network is full of potholes while railways are still at inchoate stages. Access roads to Apapa and Tin Can ports are becoming impassable due to congestions caused by trucks and heavy-duty vehicles. Frank Onyebu, chairman, Manufacturers Association of Nigeria (MAN), Apapa branch, said that local manufacturers were not ready to participate in the trade agreement as they lacked the necessary policies and infrastructure to thrive amid such competition. “Most of our manufacturers are hardworking and have, over the years, managed the numerous challenges they face daily, but they are not prepared at all for the trade agreement,” he said. “We have a lot of problems in Nigeria, including infrastructure deficit, unfriendly business policies, the almost inaccessible ports, all of which have caused us to increase our cost of production as we have to solve the problems ourselves. Do we expect to thrive after

opening our economy to other countries with greater advantage and better infrastructure?” he asked. Onyebu pointed out that beyond the inaccessible ports, industrial areas were becoming crowded with trucks which have caused limited access, thereby discouraging customers from coming in. He added that already many manufacturing companies

were either closing down or on the verge of collapsing. He recommended that the government needed to put in urgent measures and policies that would aid the competitiveness of local manufacturers. “Beyond that, the government should provide incentives that will boost productivity in the sector as well and ultimately address the infrastructure challenges,”

Onyebu said. He also said the border closure directive ought to be reviewed ahead of the AFCFTA because it would affect the volume of sales of local manufacturers with trade partners with neighbouring countries. The Lagos Chamber of Commerce and Industry (LCCI) recently said 5,000 trucks seek access to Apapa and Tin Can ports in Lagos

every day, despite that the two ports could only accommodate 1,500 trucks. Nigeria loses N600 billion in customs revenue, $10 billion in non-oil export sector and N2.5 trillion in corporate earnings across various sectors on annual basis due to the poor state of Nigerian ports, the LCCI said in a report. Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry, said the AfCFTA would be challenging for local manufacturers, especially those in the micro, small, and medium scale enterprises (MSMEs) category, adding that the government was in a better position to help manufacturers thrive internally and externally. “The issue is not so much with the manufacturers, but for government to provide the enabling environment to make Nigerian manufacturing sector competitive. What is paramount in international trade is competitiveness, in account of price and quality,” he explained. He further said that there was an AFCTA Readiness Report prepared by a Committee set up by the federal government which made far-reaching recommendations on what the country needed to do to prepare Nigerian firms for the AFCTA. “Regrettably, not much of the recommendation has been implemented,” Yusuf noted.

Experts canvass boosting Nigeria’s mining sector to spur industrial growth Gbemi Faminu

xperts in the mining industry have reiterated the need to boost the country’s mining sector for economic and industrial growth. They say mining is a promising sector which can attract investments in various forms beneficial to the country and its citizens. Speaking during the pre-NES summit webinar hosted by the Nigerian Economic Summit Group (NESG) held recently themed ‘The New Normal - Opportunities for the Nigerian Mining Industry,’ Olamilekan Adegbite, minister for mines and steel development, said beyond making contributions to the economic growth, the industry can help address the country’s huge infrastructure deficit and also supply minerals used in production of mobile phones, batteries and a wide range of gadgets. He noted that Nigeria must take a cue from countries that leveraged and developed their mining industry for economic growth “There is a very strong political will by the government to diversify

the economy through mining, so Nigeria is highly prepared to harness the opportunities. The vision is to build a globally competitive minerals and mining ecosystem capable of contributing to wealth creation and providing jobs,” he said. He said on-going reforms in the sector were geared towards revamping the sector, and the reforms would help improve and serve both the domestic and export market. “Our roadmap is focused on strengthening our geo-science base, data accessibility for investors, data gathering, data dissemination and archiving,” Adegbite said. ‘Laoye Jaiyeola, chief executive officer (CEO), NESG, said in his remark that Nigeria’s mining industry had the potential to provide jobs and trigger wide-scale infrastructural development. He reiterated the need for Nigeria to take a critical look at current practices in mining and create a sustainable path for growth. Adeyanju Binuyo, deputy chief of Staff to Osun state governor, noted that Osun State, which www.businessday.ng

also had abundance of natural resources, was making moves to collaborate with the federal government on fully utilising the abundance of natural resources in the state “Osun State is creating cut-out zones for the processing and integration of small-scale artisanal miners with large scale miners for effective collaboration to aid

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the sector. “In addition, the state envisions a process where the federal government deliberates with the state government before issuing mining licenses to ease the issues miners face with the state and the communities they operate in,” he said. Similarly, Edet Akpan, permanent secretary, Ministry of Mines and Steel Development, in his

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remarks, said that in developing the mining sector, the ministry was making steps to encourage private sector investments and also advance the technology. “The ministry is involved in a number of developments including increasing private sector investment in the mining sector and a digital archiving collation system that are being championed by the Nigeria Geological survey agency to aid the development of the mining industry,” he explained. David Turvey, managing director, Kogi Iron Limited, stressed the need for policy stability to attract foreign and local investments in order to enjoy the full benefits of mining in the country and also fill the employment gap. He added that there had to be efficient roads, rail and ports network for the movement of bulk extractive minerals and overall development of the mining industry. The pre-summit was held ahead of the upcoming annual 26th Nigerian Economic Summit scheduled to hold from October 26 to 27, 2020 which is themed ‘Building Partnerships for Resilience.’

Monday 28 September 2020

BUSINESS DAY

FEATURE Leveraging COVID-19 as catalyst for progress towards a more sustainable future IFEOMA OKEKE

restoration,” Youngman said.

Helping businesses survive Roberto Suárez Santos, SecretaryGeneral, International Organisation of Employers (IOE) who was also a speaker at the digital dialogue said IOE members are all over the world, and 60 percent of the population right now are in the informal sector and there is a balance to be made in terms of risk in companies. According to Santos, “At the end of the day, we want to have a sustainable model, many of the measures, some of which include incentives and tax cuts etc. can help in terms of middle and long term perspective. These measures can help businesses face many of the obstacles that they see in terms of excessive regulations. “Sometimes overlapping between different administrative burdens, all those elements have not taken in with ambitions that they should before. From our perspective, we should look at how we can help these businesses to develop, because at the end of the day these businesses are the ones creating values, they are the ones bringing the innovation, they are the ones also helping to have a sustainable future. “What you need rather than a subsidy is a permanent sustainable fund. And that is, of essence I mean at the end of the day, if you want to have investment in the green economy, you need to bring the links which are permanent.”

cross the world, business sustainability and public policies have been tested by the COVID-19 pandemic in ways that are unimaginable. Reliance on digital platforms has increased especially with the mass transition to working from home. Supply chains have been stretched to the limit due to increased demand for certain products. At the same time, governments have been forced to make decisions resulting in entire industries being effectively shut down. Now is the time for both business and government to rethink strategies for sustainability beyond the pandemic. Companies have to capitalise on the behavioural shifts seen to benefit both consumers and investors. The impacts of Covid-19 can be a catalyst to tackle climate change with the right approach. Businesses and governments can work together to build a more inclusive society. These were some of the burning issues discussed at the recently held global conference tagged FT Digital Dialogue, with the theme: Building a More Sustainable Future: The Pandemic as a Catalyst for Progress, organised in partnership with JTI and the International Organisation of Employers (IOE), where speakers shared perspectives on how business, government and civil society can work together to use the pandemic as a catalyst for progress towards a more sustainable future. Impact on businesses Speaking at the Financial Times Digital Dialogue, Suzanne Wise, Senior Vice President, Corporate Affairs and Communications, Japan Tobacco International (JTI), said businesses have been globally impacted by the pandemic and it has massively impacted companies; most of which have lost some or all their economic activities. Wise disclosed that as a tobacco company, JTI operates in one of those industries that’s largely been able to continue operations during the crisis, adding that JTI have also not been without challenges, as some parts of the business, for example, worldwide duty free has disappeared overnight as a result of COVID-19. Navigating challenges of COVID-19 Suzanne Wise noted that in addressing the challenges resulting from the pandemic, JTI has always had a long term approach that is helping it sail through the times. “We operate in one of those industries that have largely been able to continue operations during the crisis. We have, at the heart of

our company, four stakeholders’ models. And we really try to make sure that we focus and deliver for our four key stakeholder groups, which are our employees, consumers, shareholders and the wider society. This model embedded in our business has stood us in good stead. “Despite the global crisis, it has enabled us to stay true to our principles and continue to strive to do the right thing. And from an industry perspective, there is obviously a real conflict between economic recovery and sustainability goals and like all companies and projects; to improve our impact on the environment, we have to go on a long list of other investment projects and we have to look at return on investment,” she explained. She hinted that it was time to look at long term projects that could help sustain companies and the environment, adding that JTI’s decisions are being informed by its consumers and employees who are increasingly driven by sustainability in its agenda. She reiterated that now is the time to build for the future and to invest in long term projects. Disclosing some of the projects JTI has, she said, “We have a strong commitment to reach net zero carbon emissions from our own operations and we are actually already well on track to reduce greenhouse gas and gas emissions by 35 percent between 2015 and we are looking to accelerate, and that means net zero commitment. “We have many projects in terms of our factories that will impact the environment. Perhaps one of our best examples is our www.businessday.ng

factory in the Philippines, where we’ve installed the largest driven power roofs and self-consumption solar systems which is the largest of those systems in Asia. “I had the privilege of actually visiting that factory before COVID and all the travel restrictions, and it was all inspiring in terms of its scale and ambition. The factory provides excess energy which we give back to the local community.” Green recovery measures Speaking earlier at the session, Robert Youngman, Team Leader for Green Finance and Investment, Environment Directorate, Organisation for Economic Co-operation and Development (OECD) said governments in some countries are already incorporating green recovery measures amid the COVID-19 pandemic. According to Youngman, they have looked at policies across member countries and partner countries such as Brazil, China, India, Indonesia, and South Africa to see the extent to which they’re incorporating green recovery measures. He disclosed that what they have seen is that so far the measures are concentrated in the energy and transportation sectors; for example, some countries are scaling up efforts and funding to reallocate current space to more sustainable models, and this has been seen in different cities. He observed that there is a concern about whether to go back to the old model, and some countries are conditioning for recovery support in key sectors such as aviation in Air France, adding that their

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rescue package includes provisions that the airline reduce its carbon footprint. He said Canada for instance offers bridge financing to large employers and that is conditioned on businesses publishing annual climate disclosures, to help companies and investors in those companies understand exposure to physical and transition climate risks. “So we’re seeing different ways to support a green recovery. For example, Germany doubled their incentive for electric vehicles to 6000. What we estimate so far is that governments have committed some amount of money to this. This is sort of an unpublished preliminary estimate that we will be revising probably upwards. “At the same time, 24 national governments have announced measures that are likely to have a direct or indirect negative impact on environmental outcomes. So even though that’s not the focus of today’s discussion, it’s definitely worth noting that we see some rollbacks in existing regulation. “The inverse of this is unconditional bailouts of emissions intensive industries of companies such as airlines, fossil fuel, extractive industry, but also we see increased subsidies to possibly one sense of infrastructure including road transport. “For positive measures, there’s a lot of ways that governments are supporting it. You can see grants, loans and tax relief for green transport, financial support to household renewable energy, to energy efficiency and new funding to create jobs through ecosystem @Businessdayng

JTI strides in job creation, amid COVID-19 Suzanne Wise said despite the impact of COVID on JTI’s operations, the company is bringing up new innovations in a bid to create jobs and increase economic activities. Wise said JTI is a very large company with about 45,000 employees spread across 190 countries with various farmers in Africa who will lose their whole livelihoods because they don’t have enough water resources or enough wood. She said JTI has factories in some countries where it observed they will run out of water resources and won’t be able to operate, adding that these are real risks that have been identified and those are part of the reasons they absolutely support their tobacco farmers as much as possible. “This is one of the reasons why we have a target in the next 10 years to make sure that all our growers are using wood for tobacco curing from renewable sustainable forests as an example. “So for us as an organization, it’s not about jobs today, but it’s absolutely about jobs in the future. It is the obvious choice we have to tackle these issues, as we can’t wait to start tackling them in 10 years’ time,” Wise said.

Monday 28 September 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Badaru appoints new DG for Jigawa State Investment Promotion Agency Adeola Ajakaiye, Dutse

o v e r n o r M u h a m mad Badar u -Abubakar has approved the appointment of Furera Jumare as the new Director-General of the Jigawa State Investment Promotion Agency “INVEST JIGAWA”. This was contained in a statement signed by the Secretary to the Government of Jigawa

State, Adamu Fanini, and made available to BusinessDay. According to the statement, Jumare has thirty years’ experience in the fields of Agriculture and Development at the Central Bank of Nigeria, and also as an independent consultant with ENABLE2 (DFID). Before her private sector working experiences, she had worked with the Social Development Department under Kano State Ministry

of Women Affairs, and later with the Jigawa State Investment Promotion Agency. She is the founder and Chief Executive Officer of MicroDevelopment Consulting Limited, leading its research, project management, and capacity development activities. Jumare is a member of the Nigerian Institute of Management (Chartered), member Institute of Directors, a fellow of the Institute

of Management Consultants (IMC), and an Independent Director on the board of Union Bank of Nigeria Plc. “While congratulating the new Director-General for a well-deserved appointment, the Governor of Jigawa state is wishing her success in the discharge of her official duties”, the statement read in parts. The statement further disclosed that the appointment takes immediate effect.

The Pro-Chancellor, University of Abuja, Alhaji Sani Maikudi, Vice Chancellor, Professor AbdulRasheed Na’Allah, during their visit to the Chancellor, late emir Alh Shehu Idris shortly before his death

Jamub unveils new brand, sets market targets Harrison Edeh, Abuja

amub Group of Companies, a conglomerate of duly registere d co mpa nies with focus on general contracting has unveiled new brand with targets on specific market across the country. Jamub said it is diversifying into different subsidiaries to pursue specific businesses with bold presence in the relevant sectors of the economy. The group explained that it seeks to reposition itself in the market place as a major player in products and services with the unveiling of new Jamub Group brand to take over certain markets. In its thirteen years of operations, Jamub group has grow n from Jamub Global services Limitedthe pioneer companyinto

several subsidiaries set up with requisite structures that have successfully achieved great and e nv i a b l e f e a t s i n t h e i r various sectors of operations. Speaking at the unveiling ceremony held at the Group’s Corporate Office in Abuja, the Group Managing Director, Jacob Momoh said the group was founded on the desire to bring together workforce from various works of life. He further stressed that he was pushed by the passion to create jobs for the teeming youth and unemployed. Fred Okhiria, the Public Relations Officer of the company in a statement issued said the company has its foothold in project management, construction, education, housing, engineering, training and contracting services.

Hajj Commission, JAIZ Bank launch savings scheme in Abuja James Kwen, Abuja

FCTA to partner competent developers Military revamps, commissions primary health centre in plateau on 5000 affordable housing James Kwen, Abuja

he Federal Capital Territory Administration (FCTA) has expressed the willingness to partner with any developer who has the capacity and competence to deliver on affordable housing aimed at bridging the housing deficit in the nation’s capital, Abuja. The FCT Minister of State, Ramatu Aliyu who stated this during a meeting with the management of Tayan Group, an Estate Developer in Abuja, also stressed that such partnership would fast track the execution of the presidential mandate to deliver 5000 affordable housing units to residents of the Territory. Aliyu however, warned that all development in the nation’s capital must comply with all engineering rules and regulations of construction within the FCT, just as she reiterated the commitment of the administration to complete all abandoned and ongoing projects. The Minister also stated that the Administration would only partner with companies with financial muscle to execute a project

within 18 months period in order to avoid the mistakes of the past of littering the city with abandoned projects. Aliyu also noted that one of the cries and challenges of people who work in the FCT was a place of abode, stressing that in order to ease that burden and to reduce the difficulties, the president has ordered the provisions of affordable housing. She said: “I have seen your beautiful projects, but hoping that the property has valid documents and certified by the Federal Capital Territory Administration. All property in the Territory must comply with all engineering rules and regulations of construction within the Federal Capital Territory. “I want to use this opportunity to inform you that under the administration of President Muhammadu Buhari, and under the 13 presidential deliverables given to the Federal Capital Territory Administration, affordable housing is given priority. And in this affordable housing project, we intend to carry along competent companies of repute whose integrity have been proven by the various jobs they have executed within the nation”. www.businessday.ng

Godsgift Onyedinefu, Abuja

he Nigerian military has commissioned the Rim Primary Healthcare Centre revamped by the Defence Headquarters in Riyom Local Government Area of Plateau State, as part of it’s Civil Military Cooperation activities (CIMIC). T h e D e f e n c e He a d quarters medical team in conjunction with Headquarters Operation Safe Haven medical team also conducted a 2-day medical outreach in ZangonKataf Local Government Area of Kaduna State. This was disclosed by John Enenche, Coordinator, Defence Media Operations (DMO), in Abuja. The Coordinator also disclosed that the Headquarters Operation Safe Haven fostered several stakeholders meetings in various parts of Plateau and Kaduna states including Bokkos, Bassa, Mangu, Jos, Barkin Ladi, and Riyom L ocal G overnment Areas of Plateau State, as well as Jama’a and Zangon-Kataf Local Government Areas of Ka-

duna State. In addition to CIMIC activities, Eneche said troops in the North-Central zone, have continued to sustain intensive clearance operations against armed bandits and other criminals. He said in the last one week, troops of Operation Safe Haven raided suspected Sara Suka criminals’ hideouts at Jenta Adamu, Rikkos, and Gangare Yan Doya area of Jos North Local Government Area of Plateau State. Enenche said the troops stormed the hideouts and arrested 14 suspects while 12 knives, 4 daggers, 4 mobile phones, two swords, assorted charms, a large quantity of substances suspected to be Cannabis Sativa, amongst other illicit drugs were recovered. He fur ther dis cos ed that the troops raide d another suspected drug peddlers’ hideout within Barkin Ladi Area of Plateau State, where a most wanted drug dealer was arrested with a large quantity of substance suspected to be Cannabis Sativa.

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he National Ha j j C o m m i s sion of Nigeria (NAHCON) in collaboration with JAIZ Bank launched the much awa i t e d Haj j Sav i ng s Scheme to reduce the cost of Hajj and make seamless preparation towards Hajj. The Hajj Savings Scheme which is patterned after the Malaysian Tabung Hajj is an effort at self-sustaining and funding of the Commission offering Muslims opportunity to save for the journey of a life time. The scheme which is a semi-contributory is meant to improve the social and economic wellbeing of the Muslims in particular and Nigerians in general. While declaring the Scheme open, the Chairman/CEO of NAHCON, Zikrullah Hassan commended the foresight of the founding fathers and the preceding boards for their unflinching commitment and dedication to build financial independence for the Commission. “Today, we are launching the decade old innovative scheme which has been in the pipeline even before the establishment of the National Hajj @Businessdayng

Commission of Nigeria (NAHCON). The launching of the Bank-led option is designed to fast-track and press forward the implementation of the scheme. “In other words, the events of today is, but just a stop-gap to secure the Central Bank of Nigeria (CBN) license to operate the scheme as a fullfledge business entity”, Hassan said. In his remarks, the Minister of FCT, Muhammad Bello, praised NAHCON, for bringing the Scheme into reality, saying: “I must therefore commend the current management of NAHCON for its determination to see that the Scheme is up and running to meet the objectives for which it has been established through its partnership with JAIZ Bank. “I hereby call on intending pilgrims from the FCT to take advantage to the provisions of the Hajj Savings Scheme to save up and experience a stress-free pilgrimage. “The FCT Muslim Pilgrims Welfare Board will continue to work very closely with NAHCON and we pledge to continue to key into and take advantage of the various forward looking policies for the benefit of our intending pilgrims”.

Monday 28 September 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 25 September 2020

Top Gainers/Losers as at Friday 25 September 2020 GAINERS Company

LOSERS Opening

Closing

Change

N47.85

N52.55

4.7

Company

Opening

Closing

Change

NNFM

N4.5

N4.05

-0.45

N7.4

-0.4

N49.5

N53

3.5

CADBURY

DANGCEM

N135.9

N139

3.1

OANDO

N2.25

N2.03

-0.22

STANBIC

N39.1

N40.5

1.4

DANGSUGAR

N12.5

N12.3

-0.2

FLOURMILL

N20.15

N21.5

1.35

UACN

N6.3

N6.1

-0.2

PRESCO

ASI (Points)

26,319.34

DEALS (Numbers) VOLUME (Numbers)

4,231.00 335,749,166.00

VALUE (N billion) MARKET CAP (N Trn)

4.277

Global market indicators FTSE 100 Index 5,842.67GBP +19.89+0.34%

Nikkei 225 23,204.62JPY +116.80+0.51%

S&P 500 Index 3,258.23USD +11.64+0.36%

Deutsche Boerse AG German Stock Index DAX 12,469.20EUR -137.37-1.09%

Generic 1st ‘DM’ Future 26,713.00USD -2.00-0.01%

13.754

Shanghai Stock Exchange Composite Index 3,219.42CNY -3.76-0.12%

Nigeria’s stock investors book over N380bn gain in one week sumer good and banking stocks, as well as industrial goods stocks. The NSE Consumer Goods Index increased by +5.99percent; NSE Banking Index went up by +3.59 percent; NSE Industrial Good Index (+2.44percent); NSE Oil & Gas Index (+1.16percent); and NSE Insurance Index (+1.08percent). “With the influx of liquidity coming into the equities market on the back of the reduction of the MPR by the MPC during the week, investors reacted positively to the announcement, leading to a number of fundamentally sound stocks closing the week higher” said equity research analysts at Lagosbased Vetiva Securities.

Iheanyi Nwachukwu

igeria’s stock m a r k e t continued on its upward route throughout the trading days in the week ended Friday September 25, 2020. The record positives made equity investors in Africa’s largest economy witness investments growth of about N389billion. Investors took advantage of cheap valuations of fundamentally sound stocks. In the review trading week, the gains were largely driven by increased buy sentiment around con-

The Nigerian Stock Exchange (NSE) All Share Index (ASI) appreciated by 2.92percent from weekopen low of 25,572.57 points to 26,319.34 points at the end of the review week. Also, value of listed stocks increased from N13.365 trillion to N13.754trillion. The year-to-date (ytd) negative return of the market decreased remarkably to -1.95percent. The analysts expect the positive performance to filter into the new week “as both institutional and retail investors continue to channel their funds into attractive counters.” However, given the rally witnessed in the review week, the possibility of profit taking cannot be overruled.

SEC DG urges Investment and Securities Tribunal to discharge duties diligently

Royal Exchange records N14.21bn gross premium

oyal Exchange Plc, Nigeria’s premier insurance and financial services group, has announced its results for the 2019 financial year, posting a Gross Written Premium of N14.21 billion from its business activities as at ended December 31, 2019. Net Premium Income for the period amounted to N8.72 billion, while Net Underwriting Income was N9.19 billion, after the addition of Fees and Commission Income, which was N479.6 million. Kenny E. Odogwu, chairman, Board of Directors disclosed this to shareholders at the company’s 51st Annual General Meeting (AGM), held virtually, in Lagos. A further analysis of the operating results showed that the Total Assets of the group stood at N32.10 billion as at December 31, 2019, with Net Claims Paid to Policyholders for the period under review to N3.17 billion. The company with inter-

he Chairman and Members of the Investment and Securities Tribunal have been urged to diligently work together to discharge the responsibilities of the tribunal. This was stated by the Honourable Minister of Finance, Budget and National Planning, Zainab Shamsuna Ahmed, on the occasion of the swearing–in in Abuja of Barrister Azi Amos Isaac and Barrister Nosa Smart Osemwengie, as the chairman and member of the Investments and Securities Tribunal (IST) respectively. Ahmed said “With your appointment, the tribunal now has a full complement of 10 members in line with the enabling law, the Investments and Securities Act (ISA), 2007. It is, therefore, my hope that all the members will justify the confidence reposed in them by President Muhammadu Buhari.” While congratulating them for being found worthy by

President to be appointed to the highly exalted positions, the Minister also said, “Your appointments have come at a time when all hands are needed to build our economy. As you all may be aware, the IST was first inaugurated in December, 2002. It is a specialised fast-track court, established for the settlement of disputes in the capital market.” Since its establishment, the tribunal, Ahmed noted, has made some strides, particularly in its adjudicatory role which has gone a long way to sanitize the capital market and build investors’ confidence. Within its short time of its existence, in view of the dynamism in law, “the tribunal has reviewed its Procedure Rules with the publication of the IST (Procedure) Rules 2014. Also worthy of note is that the tribunal has partnered with the Securities and Exchange Commission (SEC) to review the enabling law with the enactment of the www.businessday.ng

ISA, 2007. Besides, the tribunal has to its credit the publication of its Law Reports, ‘The Nigerian Investments and Securities Law Report (NISLR)’. The publication, in her views, has, in no small measure, enhanced capital market jurisprudence. Recalling the challenges that affected the tribunal in the past, the Honourable Minister said: “Notwithstanding these commendable achievements, the tribunal has in the last five years suffered many setbacks due largely to poor administration. These setbacks have blurred, if not completely wiped out, whatever modest achievements the Tribunal might have recorded in its adjudicatory role. We may recall that in November, 2015, the Tribunal was dissolved and the Chairman and its members relieved of their jobs. A new panel of the tribunal, which includes many of the members here seated, was inaugurated in 2017.”

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Modestus Anaesoronye

est in general insurance, life insurance, finance, healthcare as well as micro finance banking is seeking to take advantage of synergies, as a financial conglomerate in its new drive for growth. Rufai Mohammed, director, Royal Exchange Plc, who stood in for the chairman, told shareholders that the future of the company is bright, stating that the present management has done very well in growing the business and bringing stability in her operations. “As always, Royal Exchange will continue to stay abreast with many of the initiatives it has put in place to grow its market share and attain market leadership position.” According to him, the Group is currently streamlining major components of her business, service delivery, processes and operations to deliver superior returns in the short-term to the shareholders. “This we believe will reposition our great company as not only a major industry player, but as potential game changer”. Speaking further, he added that “the Group was able to grow its top-line figures by partici-

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pating in large-ticket financial transactions, as well as playing in the retail insurance market-a key growth driver of the future and we envision a portfolio rebalancing, whereby retail insurance market contributes 40-50 percent of our revenues seeing that we have a largely untapped market”. “For the future that we behold, our goal is to continuously redefine, reinvent and differentiate ourselves in the market place. The focus would be on achieving sustainable growth for our company through deepening of our revenue base, improving service delivery support system and at the same time keeping a lid on our group-wide costs”. Some of the initiatives recently undertaken to show our customer-centric approach to doing business include the deployment of world-class coreinsurance software for our two insurance subsidiaries – Royal Exchange General Insurance Company and Royal Exchange Prudential Life, which have started yielding positive results by enhancing workflow and ability to respond quicker to our clientele.

Monday 28 September 2020

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

GEEP: Impacting lives, reducing poverty Odinaka Anudu

he Government Enterprise & Empowerment Program (GEEP) is making a huge impact on the lives of Nigeria’s bottom of the pyramid. Before the launch of the programme in 2016, those in that class had thought they were forgotten citizens, as government programmes focused mainly on the middle-class and the rich segments of the country. GEEP has brought smiles on the faces of the poor since its launch. About 2.4 million petty traders, artisans and MSMEs and MSMEs have so far been supported to grow their businesses. The microloans have helped the petty traders revive their businesses and boost their earnings. It has also enabled MSMEs hit by COVID-19 lockdown measures to have access to micro funds that will enable them to stay afloat. About 87, 614 micro businesses benefitted from the COVID-19 intervention loans in the first phase. The second phase of the loans will be disbursed to 412,368 traders across the country to boost their productivity and ease the impact of lockdowns on them. GEEP has become a critical vehicle for reducing poverty in Africa’s most populous country. Local and international data say poverty has been on the rise in recent times owing to global fundamentals and absence of programmes focusing on the poor in the past. In 2018, World Poverty Clock and Brookings Institute said 87 million Nigerians were extremely poor. In May 2020, the National Bureau of Statistics (NBS) said that 40 per cent of Nigerians lived below the poverty line of N137,430 ($381.75) per year, representing 82.9 million people out of a

Jumai Bello

Taiwo selling her food stuffs

population of about 200 million. Similarly, unemployment has risen to 27 percent in the second quarter of 2020, from 23 percent in the third quarter of 2018. The Federal Government is not living in denial, which is why it introduced the Government Enterprise & Empowerment Program (GEEP) to reduce poverty and unemployment while improving livelihoods. A lot of micro traders who have benefitted from the programme are testifying that the process of getting the loans is seamless and that the loans are lifting them out of poverty. Makinde Helen sells palm oil at Oja Bisi market in Ekiti State. She had been in the business for over 10 years before having an encounter with the GEEP team. Until GEEP came, she had been making little profit from palm

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oil because she sold in small portions. One day, she came to the market and overheard women saying that the Federal Government was helping petty traders. “They told me that the government wanted to add to our capital so we don’t sit idle at home,” she said. “One of the people came to register me. They asked for my name, phone number and they took a picture of me and my goods. They said I would get a text message the next day. I was so surprised I got the text message the next day and they came to give us the money,” she testified. Helen got N10,000, which has helped her get two extra kegs without having to buy on credit. She is hoping to get more after paying back. “This means I can now buy

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three kegs. Also, my profit has increased. In fact, I am so happy,” she further said. In four years, GEEP variants such as Tradermoni, Marketmoni and Farmermoni have provided loans ranging from N10,000 to N300,000 to petty traders, artisans, small businesses and farmers. This has seen over two million Nigerians significantly receiving boosts to their businesses. GEEP has been implemented in 36 states of the federation and the FCT with a spread of over 2,600 market clusters. These loans are not given out at random. Instead, they are done through existing clusters and associations in various markets across the country. This helps in proper tracking of the loans and provision of easy repayment options for the beneficiaries.

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GEEP has also been able to provide this access to credit to IDPs in the North East. This has provided the IDPs with a viable way to get back on their feet while also contributing to economic development. To ensure that these loans get to the target audience, market visits are done across the country to engage with beneficiaries as they go through the process. The programme has become critical due to the economic situation worsened by COVID-19. It has helped micro businesses in the country to begin to dream again, after many have lost hope. “I want government to continue with this programme because it will help many families,” one of the beneficiaries, Aisha Adamu, a local fruits seller at Jimeta Modern Market, Yola, said.

BUSINESS DAY

Monday 28 September 2020

BUSINESS DAY

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Monday 28 September 2020

BUSINESS DAY

PHOTOSPLASH Winners of 2020 Top CEOs and Next Bulls Awards organized by BusinessDay in Partnership with Nigerian Stock Exchange in Lagos

Khaled El-Dokani (l), country chief executive, officer, Lafarge Africa Plc, receiving the Top CEOs awards from Frank Aigbogun, publisher, BusinessDay.

Roger Brown (r), chief executive officer, Seplat Petroleum Development Company Plc, receiving Top CEOs awards from Ogho Okiti, managing director, BusinessDay Media.

Andrew Otike-Odibi (r), MD/CEO, C&I Leasing Plc, receiving the Top CEOs awards from Ogho Okiti, managing director, BusinessDay Media

Pat McMichael (r), CEO, Eat â&#x20AC;&#x2DC;Nâ&#x20AC;&#x2122; Go, receiving the next bulls awards from Patrick Atuanya, editor, BusinessDay Media.

Thomas Pelletier (l), managing director, Massilia Motors Limited, receiving the next bulls awards from Patrick Atuanya, editor, BusinessDay Media.

Femi Adeoti (l), MD/CEO, Inlaks, receiving the next bulls awards from Patrick Atuanya, editor, BusinessDay Media.

Ganiyu Musa, GMD/CEO, Cornerstone Insurance Plc, receiving Top CEOs awards from Kristabel Eriaye, assistant conferences manager, BusinessDay Media.

L-R : Larry Ademeso, MD, Custodian Life Assurance Limited receiving the Top CEOs Award 2020 from Ogho Okiti, MD, Businessday Media.

Babatunde Fajemirokun ( r ) , MD/CEO,AIICO Insurance, receiving the Top CEOs Award 2020 from Ogho Okiti, MD, Businessday Media.

L-R: Ogho Okiti, MD, Businessday Media, presenting the Top CEOs Award 2020 to Valentine Chime, MD/CEO, inq. Digital Nigeria.

Hanu Fejiro Agbodje (r), founder/CEO, Patricia Technologies, receiving the next bulls awards from Obiora Onyeaso, manager, conferences and events, BusinessDay. Media.. Pictures by Pius Okeosisi and Olawale Amoo

Monday 28 September 2020

BUSINESS DAY

News Government averts strike, tariff increase faces... Continued from page 1

nior government officials that the electricity tariff suspension for the three bands would last for two weeks, and it takes effect immediately.

It is believed that labour might have conceded that it cannot press the demand for the reversal of the removal of petrol subsidy given the precarious state of government finances in the aftermath of the crude oil price collapse. “This suspension of the new tariff regime for bands A, B and C customers is not an indefinite action and has nothing to do with the reasonableness of the policy,” a senior government official told BusinessDay. “It is a compliance review action and recommendations on a fairer mode of implementation will be submitted and the new tariff will thereafter go into effect.” The government side to the meeting was led by the secretary to government of the federation, and had ministers of Labour, Power, Petroleum as well as the GMD of the NNPC in attendance. It could be recalled that the House of Representatives on Sunday appealed to the organised labour to shelve their nationwide strike billed to commence Monday, September 28, saying some of their agitations would be captured in the 2021 national budget. The appeal by the reps came amid intense mobilisation by the Nigeria Labour Congress (NLC), Trade Union Congress of Nigeria (TUC), and their civil society allies who were still insisting on the strike, unless the government reverses to the old fuel price and electricity tariff regime, and fully implement the N30,000 minimum wage and its consequential adjustments. To forestall the industrial action and its impact on the already battered economy, the leadership of the House Sunday met with Ayuba Wabba, president of the NLC; Quadri Olaleye, president of the TUC, and Emma Ugboaja, secretary general of the NLC. Also at the meeting were the deputy majority leader, Peter Akpatason, and chairman, house committee on labour, Ali Muhammed. At the end of the closeddoor meeting that lasted about an hour, the NLC president said as long the demands on the Federal Government were not met; the strike and protests would go on as planned. He said: “Well if the issues are not addressed, you are aware that we have given a notice and that notice will certainly expire tomorrow. All the action pronounced will take effect”. While dismissing an existing court judgement restraining labour from embarking on strike, Ayuba said: “We have not been served as I said. In good faith you recall that we are on the negotiation table up till

late Thursday night and therefore our expectation is that we should be able to in good faith continue to dialogue not to try to also ambush because we have not received the order as of today we don’t also know the details of any order”. But speaker of the House Representatives, Femi Gbajabiamila, at the meeting the meeting, appealed to the organised labour to shelve the industrial action as it would cripple economic activities of the country. “You know we can’t do this, we can’t go on this strike. We can’t in good conscience, we are on the same page on most of the things and you know that. We, the leadership and the House of Representatives are on the same page with you. “The consequences of the strike; and that’s the bigger picture. When we have complete government shut down, the people we seek to protect invariably end up holding the short end of the stick. So, it ends up defeating the purpose”, he said. Gbajabiamila noted that the legislature has been meeting with the executive to review the policies on fuel and electricity prices and called on labour to at least wait for weeks and see the outcome of legislative interventions. He disclosed that the 2021 budget would be submitted to the National Assembly in a couple of weeks and most of issues raised by labour concerning the welfare of Nigerian workers would be provided for. “We have had meeting with the Vice President, we have had meeting with the executive on this issue, but the issue of electricity, we told them at least wait till the first or second quarter of next year and that is where we left it. “The good thing is that, this agitation is coming at the right time in the sense that I believe in the next couple of weeks or less, the budget will be presented. Many of these things have a lot to do with the budget. “To stop estimated billings, we also need the meters to capture the true cost of the electricity that is being consumed. Now, in metering, we will provide for that in the budget, it is a deficit of about 8 million meters with my understanding, that can be provided for in the budget, if need be”, Gbajabiamila said. www.businessday.ng

L-R: Chukwuemeka Nwajiuba, minister of state for education; Suleiman Elias Bogoro, executive secretary, TETFund; Femi Odekunle, vice chairman, TETFund standing committee on R&D; Hajia Fatima Buhari; N.M Gadzawa, chairman, TETFund standing committee on R&D, and Abubakar Rasheed, representing the executive secretary of NUC, at the inauguration of the TETFund standing committee on R&D, held in Abuja.

Hope rises for unpaid private school teachers on FG’s survival fund MARK MAYAH

he Federal Government has lifted the hopes of private school teachers who have been enduring hardship over unpaid salaries following the six-month closure of learning centres due to the ravaging coronavirus (Covid-19) pandemic, as the affected tutors are billed to draw from the government’s survival fund. Already, the affected teachers had as at Monday, September 21, at 10pm commenced registration on the Federal Government portal link provided on Sunday, September 20, by the Project Delivery Office at the Presidency. The survival fund and payroll is a conditional grant support for artisans, private

… to benefit 10 teachers per school

school teachers, vulnerable micro and small enterprises in meeting their payroll obligations and safeguard jobs in MSMEs from the shock of Covid-19 pandemic. The scheme is estimated to cater for at least 1.3 million jobs across the country, while targeting an average of 35,000 individual per state. Yomi Otubela, national president, Nigeria Association of Proprietors of Private Schools (NAPPS), gave the news at an exclusive interview with BusinessDay, last week in Lagos, saying the salary arrears of private school teachers would be paid from the N2.3 trillion stimulus package recently approved by the Federal Government. According to Otubela, only 10 teachers per private

school stand to benefit from the fund, noting that not the entire 42,000 private schools in the country owe teachers’ salaries from March to date. “ W h i l e ma ny o f t h e schools recorded 100 percent in payment of staff wages, greater percentage of the schools did not pay at all and few paid between 50 and 75 percent,’’ Otubela said. Though, the NAPPS president stated, ‘’The 10 teachers per school is inadequate. Others who could not access the fund would share with their colleagues who stand to benefit from the fund.’’ The affected teachers for the survival fund had fully registered as the portal for the registration of prospective beneficiaries opens on Monday, September 21, 2020,

he said. The support by the Federal Government, with the inclusion of private schools, ‘’is a welcome development to save private education sub-sector from imminent collapse,” he said. NAPPS, he noted, had engaged the government in a proposal sent to the Economic Sustainability Committee, headed by Vice President Yemi Osinbajo, on the need to support private schools to cushion the effect of the pandemic. “We have written to the Federal Government to understand that these teachers are teaching Nigerian children and that they need to keep them and their families together during and after the lockdown.

Here’s what reversing electricity tariff order will cost Nigeria HARRISON EDEH, Abuja

he Nigerian government risks rolling back the gains of the recent reforms in the power sector and will further miss opportunity to build on a credible electricity market for investors if it reverses to a subsidised electricity market, industry stakeholders have said. This is coming against the backdrop of pressure by Nigerian labour unions threatening to embark on strike from Monday if the government refuses to reverse the new increases in the electricity tariff and fuel price. Industry analysts say there is no point reversing the decision on the service-reflective tariff and subsidising the electricity market since it would deter investors and drag Nigeria’s push to enforce a credible electricity market. Chuks Nwani, energy lawyer, warns that the Federal Government may not recover from the cost of reverting to the former tariff rate as it

would suffer huge credibility deficit. “For me, I would call it economic suicide mission if the government reverts and succumbs to labour pressure. This will lead to near death of the power sector in Nigeria,” Nwani said. “The issue of taking one step forward and one step backward in the power sector will keep pushing away the credible electricity market we are seeking to build,” he said. Nigeria’s central bank and other industry stakeholders comprising the Nigerian Electricity Regulatory Commission (NERC), the 11 distribution companies (DisCos) and others have been leading a progressive charge to drive reform in the power sector. The World Bank has also tied most of its facility support to Nigeria’s power sector, which is in the neighbourhood of $750 million, to a credible market reform in the power sector. “What the government needs to do is to explain to labour how it arrived at the

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new numbers. If labour is saying drop down the tariff, can labour also say drop down the cost of fuel used in generating power? Remember, these are determined by market forces and people have to pay,” Nwani said. “It is like telling the woman in the market to drop the cost of one mudu of garri in the market. Can labour do that? I understand the fact that the purchasing power of workers dropped but government can still be engaged properly on that to sort it out,” he said. On the positive impact of the power sector reforms, Nwani expressed optimism that the tariff reset, NERC’s franchising regulation would widen investors’ interest in Nigeria’s power sector. “For me, I believe that investors should see an opportunity with the tariff increase. Recall before the tariff increase, NERC has passed the franchising regulation, which is a window for investors who possibly have intended to invest in the distribution net@Businessdayng

work to come in and invest,” he said. He noted further that from his observation, the tariff increase is a bit above generation cost, which is a very big incentive for new players to come in and invest. “I still believe that investors would now start seeing the sector from a different perspective. We still need to appeal to them to see a different sector from what used to be. Possibly, there is a need for the BPE to sensitise investors that where we are today has been able to create a wide profit margin for any investor who wants to come into franchising business,” he said. The tariff review, analysts say, will ensure that prices charged by DisCos are fair to consumers but sufficient to allow recovery of efficient cost of operation, including a reasonable return on the capital invested in the business. It is expected to provide the path to transitioning the Nigerian electricity supply industry to service-based costreflective tariff by July 2021.

Monday 28 September 2020

BUSINESS DAY

news In four charts, why Nigeria’s revenues need... Continued from page 1

Strategy Paper (FSP). What is worse is the sheer amount of money going

to debt servicing from already lean government earnings. The same data from the MTEF/FSP show that between the five-month period under review, debt servicing swallowed up to 96 percent of the total generated revenue. Since 2015, national expenditure has doubled but the nation has continuously failed to meet revenue targets, necessitating the need to incur debt to meet the government’s obligations. The reasons for Nigeria’s declining revenue are not farfetched. The country derives the bulk of its government revenue and foreign exchange earnings from oil exports. However, the inflow of petrodollars has steadily declined in recent years owing to a fall in the price of crude oil from a peak of $113 per barrel in 2012 to around $60 in 2019, a situation that has resulted in the inability of the government to meet revenue targets. Nigeria has largely attacked its revenue challenge by going on a borrowing spree, but that has not impacted the economy that has been stuck in a low growth path despite higher debt levels. As at June 2020, Nigeria’s public debt stood at N31 trillion with external debt accounting for 36.7 percent at N11.36 trillion and domestic debt accounting for the remaining 63.3 percent at N19.65 trillion. That is more than double the debt stock in 2015. As if Nigeria’s fiscal woes were not bad enough, the Covid-19 pandemic and volatile oil prices this year have made matters worse, with the government growing increasingly broke. The poor performance of Nigeria’s revenue profile and the huge debts before the government have led to the introduction of several policies aimed at boosting revenues, especially from taxes. Nigeria has one of the lowest tax revenue to Gross Do-

mestic Product (GDP) ratio in sub-Saharan Africa of 6.1 percent, and is less than half of the government’s target of 15 percent stated in the 2019 public finance bill. The government launched the Voluntary Asset and Income Declaration Scheme (VAIDS) and raised Value Added Tax (VAT) by 50 percent, but the result has been underwhelming, as they have proved insufficient in materially boosting government revenues. It was always going to be difficult to boost tax revenues in an economy still grappling with the aftereffects of the recession it suffered in 2016 as well as spiralling unemployment and a low growth rate. The VAIDS scheme for instance, which was to give defaulting tax payers the opportunity to make up their outstanding tax obligations from 2011 to 2016 in return for waiver of penalty and interest and criminal prosecution, was supposed to fetch $1 billion (N360bn) had only added N70 billion to government coffers as at January 2020, according to Zainab Ahmed, the minister of finance, budget and national planning. That is less than 20 percent of what was targeted. The renewed pressure on earnings this year from Covid-19 and lower oil prices means the government’s desperation is growing. The Federal Government said last Wednesday that it was taking over the revenue management of 10 Government Owned Enterprises (GOEs). “Government is increasingly concerned with the dwindling profile of revenue and this trend has to be quickly arrested, particularly with key revenue generating agencies of the government,” said finance minister Ahmed. On the same Wednesday, the Federal Government put up a jet in the presidential fleet for sale. Some findings indicate that the same jet sold for $22.91 million in 2012. The aircraft, which the government said had a range of 3,190-nau-

Total expenditure versus total revenue

Targeted tax revenue and actual collected tax revenue

Source: CBN, Budget Office of the Federation, BusinessDay

Source: FIRS, BusinessDay

Debt service to revenue ratio

Capital expenditure versus debt servicing costs

Source: CBN, Budget Office of the Federation, BusinessDay

tical mile and had flown for 1,768 hours, will surely be worth much less today as it is no longer brand new. While the proceeds of the aircraft sale will not significantly boost government revenue, the move is perhaps a signal of the government’s desperation. Some of the ways to know the troubles facing Nigeria’s government revenue are the comparison of total expenditure and total revenue, comparison of target tax revenue and actual tax revenue, trend analysis of debt service to revenue ratio, and the comparison of the proportion of total expenditure used to service debts and apportioned to capital expenditure. Nigeria’s 2020 revised budget showed a budgeted expenditure of N9.9 trillion and expected revenue of N5.4 trillion. That leaves a budget deficit of N4.5 trillion. In any economy, when the total expenditure exceeds the total revenue generated, the government resorts to external or domestic borrowing and makes use of future revenue

to service the debts. Nigeria has always been faced with fiscal deficits over the years, but the gap between total expenditure and total revenue started to worsen from 2013 when deficits started jumping to trillions of naira. With recurrent expenditure superseding capital expenditure by about 305 percent, the end of 2019 saw total expenses incurred by the government amount to N8.3 trillion while total revenue generated was about N4.5 trillion, showing a deficit of N3.8 trillion. Nigeria generates revenue from both oil and non-oil sources, but the bulk of revenue has been gotten from oil over the years. In a bid to reduce the dependence on oil for revenue in Nigeria, tax revenue became the go-to option to boost non-oil revenue, with tax revenue contributing over 89 percent of total non-oil revenue generated in Nigeria. Data from the FIRS show that actual tax revenue obtained has been performing poorly against the targeted tax revenue since 2013.

In the first half of 2020, taxes raked in N2.5 trillion as revenue, but this was a shortfall of 27 percent when compared with the target tax revenue for the period of N3.4 trillion. Revenue from oil has dwindled due to the crash in global oil price as well as Nigeria’s increased compliance with the production cut of the Organisation of Petroleum Exporting Countries (OPEC+). This, therefore, means that if oil revenue and non-oil revenue are performing below their targets, the expenditure financing ability of the FGN becomes incapacitated and debts will continue to expand, with a large chunk of revenue being used for debt servicing. Nigeria has a public debt to GDP ratio of 21 percent, which is still within the 25 percent threshold stipulated in the Fiscal Responsibility Act and within the 56 percent advised by the World Bank and International Monetary Fund (IMF). Nonetheless, if the debt service to revenue ratio is

higher than the accepted 20 percent threshold, serious interventions are highly required. Having a growing debt service to revenue ratio indicates lower revenue figures and higher debt service figures. In the first quarter of 2020, it was reported by the Debt Management Office (DMO) that debt service to revenue ratio in Nigeria stood at 99 percent as total revenue of N951.6 billion generated was used to service debts of N946 billion. Debt service to revenue ratio in the second quarter was reported by DMO to have dropped to 72 percent, but it still remained far beyond the acceptable threshold limit of 20 percent. Countries borrow when there is a shortfall in revenue, so borrowing is not a big problem in itself. A problem arises when debt is not being channelled efficiently like on capital projects that ensure the money borrowed can be paid for without hassle in the future.

Petrol price for October to drop to N157 as landing cost falls

igerians could enjoy up to three Naira drop in the pump head price of petrol for October, courtesy of a fall in the international products price that is now used to determine the month-long price at which petroleum products are priced in the country. According to BusinessDay investigation, there has been about $10 drop per ton of the product on the international market and this could translate into a N2.50-N3 cut from the current N160 per litre in the price of petrol at gas stations across Nigeria.

Marketers and petroleum economists say Nigerian workers could get the cut in petrol price they want without even having to go on strike, given the market driven nature of the mechanism for fixing price in the country. As September comes to an end, there is consensus that the average Platt’s quotations for Premium Gasoline (10ppm) could fall from $400.750 per ton in August to $390.5 per MT, which will be the base price for determining the pump head price of petrol in October. This means that petrol could sell for about N157 across www.businessday.ng

major marketers and independent stations, down from the September price of N161 a litre and it leaves petrol prices at the lowest in West Africa where a litre sells for N296.54 in Togo; N276.88 in Sierra Leone; N361.43 in Chad; N325.93 in Ghana, and N352.36 in neighbouring Benin. By our calculation, the Pipelines and Products Marketing Company (PPMC), which is currently the sole importer of petroleum products should set its ex-depot price for October at around N143.70 a litre, all things being equal. The pricing template de-

veloped by sector regulator, PPPRA allows for pump head price to be made up of the landing cost or product cost plus freight cost, lightering expenses, insurance, NPA charges, NIMASA charges, Jetty throughput charges, storage charge, financing cost, wholesale cost, as well as distribution margins made up of retailer margin, bridging fund, MTA and PPPRA admin charge. Nigeria currently operates what is called DSDP programme, where it swaps crude oil for European fuel refined mainly in Belgium and the Netherlands. Nigeria

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receives petroleum products from Ex-Rotterdam for delivery to Lagos offshore, which is what is also referred to as coastal. Coastal is the amount of money equivalent to the actual cost of importing finished petroleum products, anchored at full cost recovery. The template assumes an FOB, which is a function of the prevailing benchmark price (Rotterdam) and prevailing exchange rates. In addition, the template allows for freight to Lome, which is a function of demand and supply for vessels and prevailing exchange rate and insurance cost which on @Businessdayng

the average is about $0.75-$1.0 per MT. Financing cost is typically charged at between $1.0 and $1.0 per MT. There is also blended cost of $5/ton which is the cost charged for transforming imported gasoline to fit or comply with Nigerian government specifications. The Nigerian government had in March said it would no longer subsidise petrol and that the pump price would be determined by market forces, stating that how much Nigerians would pay would be determined by the international price of crude oil.

Monday 28 September 2020

BUSINESS DAY

News INVESTIGATION (2) Ticketing corruption by railway staff, soldiers, policemen derailing Abuja-Kaduna rail project Fisayo Soyombo

‘Army general buys 30 tickets’ step out of the train knowing, without being told, that securing a 10am ticket is impossible. If there was a long queue in Abuja, here there are two longer ones, male and female, each tailing into a curve rather than the straightforward line I witnessed in Abuja. Mariam Mohammed, a frequent train user, tells me I have no hope of securing even the 6pm ticket if I join the queue without “pressing buttons”. I heed her advice but I also join the queue. I soon discover that even though it was just 9:30am, the last-resort ‘standing’ tickets for the 10am trip were unavailable for sale.

The 10am ride flies past and anticipation of ticket sale for the 2pm ride starts to build. We all wait for 30 minutes but nothing happens: 10:40am, 10:50, 11:00, 11:15, 11:30, 11:45am; still no-show. At this point, I dial the phone number of Ahmad Attahiru, Mariam’s go-to person for tickets. Attahiru tells me he’s run out of tickets but sends me the contact of one ‘Habu’, another ticket peddler with links to railway officials. Habu tells me I am a few minutes too late. “I would have had tickets for you,” he says. “But an Army General just called to buy 30 tickets.” The very surprising thing is that when the train eventually takes off, there are no 30 soldiers in it. So, for whom did the said Army General purchase the 30 tickets? Like army general, like soldiers Due to the unwieldy size

of the crowd at Rigasa, the authorities put a soldier in charge of the queue. Dressed in a fez cap and white tracksuit with a little opening for a glimpse of his camouflage, his real job is to puncture any potential crowd commotion in the race for tickets but it turns out he is the ringleader of illegal ticket purchase and resale. When he is not watching over the crowd, he is busy negotiating deals on the phone with prospective ticket buyers. Finally, at exactly 11:55pm, the windows open for the first-ever sale of tickets for a train ride scheduled for 2:20pm. In anticipation of ticket sales, more than half a dozen soldiers and policemen bulldoze their way to the front of the queue. This agitates the patiently-waiting crowd. Crowd turns on policeman, soldiers Please place ‘Passenger Tension At Rigasa Train Station’ video https://youtu.be/ BM4tUju5zto here When the sale of ticket finally commences, it is exclusively to soldiers and policemen. It doesn’t take too long before the crowd develops the needed bellicosity to challenge the officers. One policeman emerges from the sales point with six tickets, much to the consternation of the men in the queue who can only buy one ticket per time. “Are they above the law?” one passenger asks. “They’re the ones who should uphold the law but they’re the ones breaking it,” one adds. “Imagine? What will he do with six tickets if not to resell them?” While many of those passengers do nothing but grumble, one particular passenger, seen in the video as spotting a white vest and blue pair of

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jeans, confronts the officers. “I’ve been here before 10am; [it’s almost 1pm] and I’m still way back in the queue. Meanwhile, some officers here are buying 10 tickets, 15 tickets,” he laments. Soon he walks towards the sales point and tells the railway officials: “See, what you people are doing is not good o. I’m here in the sun while some idiots are in their house yet they’ll get tickets.” Riding to abuja with ghost tickets Please place ‘Riding A Train From Kaduna To Abuja With Ghost Ticket’ video https://youtu. be/4VykAXBuzX0 here Not wanting to risk missing the 2pm ride since there was no assurance of securing tickets for 6pm, I approach Isa, a young man whom I had noticed was speaking to stranded passengers in hushed tones. I had made friends with two other stranded passengers, so we were three listening to his instructions. The young man promised to “help”. He told us we would pay N1,500 each; we would receive a ticket; however, the ticket would not be marked used. For this to happen, we would, at the boarding gate, identify his partner in crime who would collect the ticket from the first passenger but wouldn’t mark it. The same unmarked ticket would be brought back to clear the second passenger and also the third. “You see that tall guy in black shirt by the gate, the one standing on the left? He’s the one you’ll give your ticket. Don’t give anyone else,” says Isa. My friends and I all follow his directive. At the boarding gate, the tall guy waves us in without ticking the ticket. A third man further inside asks to see the ticket but the moment he has a look, he motions us in. Isa joins us moments after to lead us to two seats on Coach 8. He disappears to bring in the third guy, then reappears to demand his and his bosses’ payment. “Let me go settle my bosses outside,” he says, before adding: “Anything for your boy? You no go show me love? This one na my oga go collect am, highest na small thing go reach my hand.” A conversation on ‘help’ passenger tickets. Seeing we couldn’t produce any tickets, one threatens to eject us unless we pay him. We protest vehemently, reminding him we had paid Isa hence we weren’t going to make a second payment. A lady seated nearby says we shouldn’t have mentioned Isa’s name. “He was only trying to help you,” she argues, thus sparking a lengthy argument about the difference between ‘help’ and ‘exploitation’. “If he didn’t help you with those fake tickets, you would still be there in that queue by now.”

Boss Mustapha (m), secretary to government of the federation who led yesterday’s meeting with Labour unions; Chris Ngige (2nd l), minister of Labour, and others at the meeting.

But the guy right next to me was having none of it. This was a nine-coach train with 88 seats each; that’s 792 seats, yet the number of seat tickets sold for this trip was nowhere near 100. “To hell with help!” he yells. “This train seats 792 passengers but those who got seat tickets by queuing up were probably between 60 and 80. The number of people in that queue was between 400 and 600. If the train officials sold to everyone in that queue, every single person would get a ticket without anybody’s help. You must be really myopic to think those who hoarded tickets to make money off you were indeed helping you.” ‘A lot of distrust’ Mairo Ibrahim, a frequent user of the Abuja-Kaduna train service, believes one of the damages caused by ticketing corruption is the “immense distrust” passengers now have in the system. “The passengers no longer trust the system,” she observes. “There is a complete lack of trust in it.” Restoring sanity to the system, though, isn’t rocket science. “People should do their jobs with integrity,” she says. “If you’re selling tickets, just do it the right way. The NRC should be organised. People see that the ticketing system is disorganized; that is why they try to find shortcuts.” Transport ministry passes up the chance to speak There was an attempt to contact Rotimi Amaechi, the Minister of Transport, but his media aide David Iyofor said all enquiries should be directed to Eric Ojikwe, Direc-

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tor of Press of the Transportation Ministry. However, when contacted, Ojikwe told the journalist to come to the office immediately. When the journalist asked to speak on the phone since he was based in Lagos while Ojikwe was in Abuja, he was told to visit the railway station at Ebute Meta, Lagos, to speak with one “Alhajia Mahmoud”. Online ticketing is the way to go Dr. Bola Oyesola, a Nigerian who has lived in the UK and has recently completed her Ph.D. at Cornell University, Ithaca, United States, believes the NRC can eliminate ticketing fraud by modelling its operations after the famed train system of the UK. “Cards valued for a month can be made available to passengers travelling a route every day; they buy the card, swipe it every time they pass that route, then the fare is deducted,” she says. “Passengers can also be made to buy the tickets online outright. People can buy cards, get their receipts online and only show up at the station to swipe the cards.” Typically, tickets for all London Overground trains and many National Rail services in the UK are purchased with a Visitor Oyster card, Oyster card or Travelcard, as well as contactless payment cards. Oyebola reckons there will always be people who prefer buying the tickets in person, but the strategy for discouraging them is to cheapen the online tickets. “If online tickets are half the cost of inperson tickets,” she argues, “less people will fancy physical purchase of tickets, which in

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turn bypasses fraud”. Changes after lockdown but ticketing corruption still thriving Some things have changed in the operations of the AbujaKaduna rail line since the start of the Coronavirus pandemic that momentarily grounded almost everything in Nigeria, including original plans to publish this story back in March. For example, on resumption of train travel after a four-month suspension, President Muhammadu Buhari approved a 100 percent increase in fares, with economy class now N3,000 instead of N1,500, business class now N5,000 instead of N2,500, and the VIP coaches that went for N3,000 now going for N6,000. However, the ticketing corruption remains constant. After travelling from Kaduna to Abuja by rail on Monday September 14, 2020, Aliyu Dahiru Aliyu, a Co-founder of Hausa Wikipedia, moaned about his endless wait for a ticket. “I was at Rigasa Station to board a train to Abuja yesterday. I couldn’t get ticket for 10:00am train so I waited for the 2:00pm one. They started selling the tickets at around 12:30 and didn’t sell it to more than 30 people when this woman [points down] came and asked them to stop selling!” he tweeted. “They told us the tickets had been sold out! A train that could accommodate more than 300, even with the social distancing! I was about to cry when someone that I was there with since 10:00am sold his ticket to me because he couldn’t get two more tickets for his family.” ‘The train has derailed’ Every major government pronouncement on rail transport is always about the comfort of the people and ease of doing business. From Obasanjo to Goodluck Jonathan and now Buhari, these were always the tag lines. Just last month when the Nigerian Railway Corporation announced that the “LagosIbadan railway line will grace the newly acquired 24 coaches”, with the trains to “run 16 trips daily when operations begins next in September”, it gleefully added: “With this, you comfortably reside in Ibadan and work in Lagos.”

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CBN’s AGSMEIS loan disbursement: North-Central gets N18.29bn Hope Moses-Ashike

i g e r i a’s N o r t h Central geo-political zone received N18.29 billion, the highest, from the N66.18 billion Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS), as at September 22, 2020, the Central Bank of Nigeria (CBN) said at the weekend. Following is South-South, which got N13.93 billion; South-West, N12.52 billion, and North-West received N9.12 billion. South-East geopolitical zone got the lowest at N5.44 billion, followed by North-East which got N6.86 billion. Philip Yila Yusuf, director, development finance, said at a zoom meeting that the regulator was collaborating with government of the respective states and private sector to grant long-term facility to farmers within agricultural value-chains in a coordinated manner. He disclosed that the CBN has commenced a large scale food production in select states to ensure food security especially during the dry

season. AGSMEIS is an initiative to support the Federal Government’s efforts and policy measures for the promotion of agricultural businesses and small/medium enterprises (SMEs) as vehicles for sustainable economic development and employment generation. The Monetary Policy Committee (MPC) at its meeting last week noted that the various interventions by the CBN to reflate the economy, improve aggregate supply, and drive down inflation. Recent interventions were largely in the areas of manufacturing, agriculture, electricity & gas, solar power and housing constructions among others. It expressed optimism that these initiatives will significantly ease the adverse impact of the Covid-19 pandemic and set the economy on a path of recovery. Godwin Emefiele, governor of the CBN said after the MPC that so far, total disbursements from the Bank’s interventions in the wake of the Covid-19 pandemic amount to N3.5 trillion including: real sector funds, (N216.87 billion); Covid-19 targeted credit facility (TCF), (N73.69 billion);

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AGSMEIS, (N54.66 billion); pharmaceutical and healthcare support fund, (N44.47 billion); and creative industry financing initiative (N2.93 billion). Under the real sector funds, a total of 87 projects that include 53 manufacturing, 21 agriculture and 13 services projects were funded. In the healthcare sector, 41 projects which include 16 pharmaceuticals and 25 hospital and health care services were funded. Under the targeted credit facility, 120,074 applicants have received financial support for investment capital. The AGSMEIS intervention has been extended to a total of 14,638 applicants, while 250 SME businesses, predominantly the youths, have benefited from the creative industry financing initiative. In addition to these initiatives, the CBN is set to contribute over N1.8 trillion of the total N2.30 trillion needed for the Federal Government’s 1-year Economic Sustainability Plan (ESP), through its various financing interventions using the channels of Participating Financial Institutions (PFIs).

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How investors are adjusting to post-COVID-19 property market with products offering CHUKA UROKO

s Nigeria and its economy recover gradually from the severe impact of coronavirus, real estate investors and sundry developers are already picking the pieces, adjusting and rethinking their products offering in response to the post-Covid-19 market demand. Commercial real estate in general and Grade A office space market in particular remain slow with high vacancy rate and virtually no new ground-breaking for new developments in any of the major nodes, especially Ikoyi and Victoria Island in Lagos, Nigeria’s sprawling commercial city. But, on the contrary, the residential and logistics (warehousing) segments of the market are relatively active. Besides conversion of residential buildings to other uses, investors are doing developments, offering small family units such as 1 and

2-bedroom apartments that are in high demand. It should be noted, however, that even before Covid-19, economic recession and political shifts had encouraged moderation in the luxury real estate market. A recent survey indicates that most residential occupiers in Lagos are renters with only 29 percent confirmed to be homeowners. For this reason, high-end areas in Lagos (Ikoyi, Victoria Island and Banana Island) and Abuja (Maitama and Asokoro) have the most luxury houses even though a steady proportion of these have been empty since the last five years. Paul Onwuanibe, CEO, Landmark Group, confirmed to BusinessDay in a telephone interview that developers were already adjusting to what was now called the new normal and rethinking their product offering for the future of work and also for apartment buyers. “We are already thinking in line with the new normal and preparing to respond to the future of work. Apart from

observing all the protocols— washing hands with soap, applying sanitizers, and maintaining social distancing, we are already taking businesses online,” he said. Landmark Group is the developer of the expansive Landmark Village in Lagos, which is a mixed use development and one-stop destination for living, working and leisure. Some of these facilities may be affected by the new approach and attitude to work. A recent report on the Nigerian real estate market by Northcourt Real Estate notes that developers have continued to rely on flexible payment plans to attract new buyers. But the report raises concerns, saying, “Rising construction costs will be aggravated by local currency devaluation and the influence of the coronavirus pandemic.” Rising demand has encouraged some state governments to invest in residential developments. Borno State, for instance, has launched N5 billion residential projects

consisting of 400 two-bed units and 100 one-bed units for low-income earners. Bauchi has also started building 2,500 housing units under the Family Home Funds (FHF) scheme, estimated to cost $33 million. Unity Homes’ 500-unit residential project has started in Alaro City, Lekki –Lagos, with plans to expand to 2,000 apartments. Ayo Ibaru, Northcourt’s chief operating officer, notes that infrastructure quality and availability of space have started directing investors and property owners to lowincome areas as Mowe, Ajara and Badagry. It is understandable why commercial office space is slowing. The lockdown order given by government at federal and state levels as part of measures to contain further spread of the deadly virus reveals a lot of things that are possible, especially with regards to working at home and virtual conferences that have now become part of the new normal.

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9mobile supports FG’s policy, strategy on digital economy Jumoke Akiyode-Lawanson

ne of Nigeria’s telecom service providers, 9mobile, at the weekend, pledged support for Nigeria’s economic transformation through the Digital Economy Policy and Strategy of the Federal Government. Alan Sinfield, the chief executive officer of 9mobile, who was accompanied by members of the company’s management team, gave the assurance while on a courtesy visit to Isa Ali Ibrahim Pantami, the minister of communications and economy, at his office in Abuja. The minister, who congratulated the recently appointed CEO of 9mobile, said Sinfeild’s experience as a seasoned telecommunications experts with global operational expertise, represents what is needed in Nigeria’s telecoms sector at this time. “I read about your appoint-

MAX.ng issues $22m bond to grow financing for 2, 3-wheelers ENDURANCE OKAFOR

etro Africa Xpress (MAX.ng), the leading mobility platform in Nigeria and West Africa, has announced the successful issuance of a N400-million 1-year fixed rate notes (the N400m Series 1 Bond) under its newly structured N10bn/$22m Private Company Bond programme (PCB Programme). The N400 million Series 1 Bond is MAX.ng’s first ever bond issuance and the first bond issued by a mobility company in Africa. Despite the challenging global economic backdrop, the Bond, distributed through a private placement, received strong interest from highly reputable local and international fixed income investors that are seeking ex-

posure to a high-quality issuer like MAX. The Series 1 Bond is the first issuance under MAX’s multicurrency N10 billion ($22m) PCB Programme, which was structured in line with our mission to build the technology and financing infrastructure for mobility across Africa. Proceeds from the Bond shall be used to fund MAX’s growing asset financing programme across two-wheeler, threewheeler and other vehicle classes in Nigeria and beyond, as MAX continues to institutionalise driver financing across the continent. The transaction and the PCB programme were both arranged by DLM Advisory (DLM), a Nigeria-based SECregulated full-service developmental investment bank that combines advisory, origina-

tion, underwriting and distribution capabilities. DLM has built a successful track record of structuring, participating in and delivering bespoke and innovative capital raising solutions to sovereign entities as well as public and private organisations. Adetayo Bamiduro, CEO/ co-founder of MAX.ng, said, “MAX is extremely pleased with the successful Bond issuance, which reflects the market confidence in MAX’s mission, strategy and execution capabilities. This is further evidence that MAX remains at the forefront of technology, financial and business model innovation to solve a fundamental aspect of Africans’ lives.” Similarly, Chinedu Azodoh, chief growth officer/co-founder of MAX.ng, said, “The fully integrated and innovative

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nature of MAX’s DVC (drivervehicle-collection) technology stack was essential to demonstrating our ability to scale and manage an ever-growing pool of financed drivers across six cities with unmatched efficiency, speed and agility. This funding was delivered on the basis of those proprietary technology capabilities that enable heightened levels of portfolio scrutiny and monitoring. These were fundamental to successfully closing this trailblazing transaction.” Likewise, Sonnie Ayere, group CEO of DLM Capital Group, said, “This is a bold step in advancing DLM’s developmental driven mandate by providing innovative solutions to meet the funding needs of players in key sectors of the economy, through the capital markets.

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ment on June 1, 2020, the same day it was announced, and I was excited because we need people with creative, analytical thinking and innovative ideas that will come and support us in driving the sector forward,” Pantami said. He also commended 9mobile’s growth plans as laid out by Sinfield and assured that the government would continue to facilitate the enabling environment for the industry to thrive. Speaking further, Pantami said, “I’m excited about your innovative ideas. Your plan is highly impressive, and I’m glad that you are ambitious. As a government, we will provide a more enabling environment for the industry and especially indigenous companies like you to thrive. We have many policies that are promoting indigenous investments and innovation that will positively impact the economy.”

British Council empowers five creative entrepreneurs with £10,000 grants KELECHI EWUZIE

L-R: President Muhammadu Buhari; Godwin Obaseki, governor, Edo State, his wife, Besty; Philip Shuaibu, deputy governor of Edo State, and his wife, Maryann during their thank-you visit to the President at the Presidential Villa, Abuja.

etermined to provide young creative entrepreneurs with access to artistic, technical and enterprise skills, British Council has awarded five fashion-Tech entrepreneurs with £10,000 as seed funding towards the growth of their businesses. The five fashion-Tech entrepreneurs emerged winners of the British Council’s creative enterprise support programme as each winner received a prize of £2000 including access to 8 weeks mentorship with key fashion industry players. British Council initiative which provides young creative entrepreneurs with access to artistic, technical and enterprise skills training as well as mentorship and coaching opportunities.

The winners selected were Cherish Ibeh of Cher Stunner, Vivian Ogbuagu of Handsmithen, Anthony Sule of Antoine Collections, Misan Atsemude of Omali Bridals and Mabel Sontan of Adire Biz Hub. One of the winners, Vivian Ogbuagu was selected for a unique business which focuses on fabric wastes being turned into raw materials. Adetomi Soyinka, director, higher education, skills and enterprise, British Council said the programme aims to support capacity development of creative entrepreneurs as well as stimulate UK -Nigeria linkages between individuals and institutions to share, learn and collaborate within their respective sectors. Soyinka observed that such the programme leverages the UK and Nigeria’s expertise within two key sectors, Fashion and Technology.

Tech for development takes centre stage as ACT Foundation hosts breakfast dialogue JOHN SEYI-SALAU

n the wake of a global pandemic that has disrupted the overall growth and development of the African continent in many areas, there is an urgent need for public discourse on proffering solutions to these multifaceted challenges. This is the focus of Aspire Coronation Trust (ACT) Foundation as it hosts the fourth edition of its breakfast dialogue; an annual event that provides a platform for public, private, and social sector leaders to have insightful conversations on global social issues. The 2020 edition of the breakfast dialogue which is to hold virtually from September 29 to 30, 2020 will focus on the theme: “Tech for Good: Fostering Social Innovation and Digital Investments for Transfor@Businessdayng

mative Change”. The dialogue is set to address the challenges occasioned by the pandemic on the socio-economic wellbeing of vulnerable populations in Africa. The first virtual edition of the breakfast dialogue will also seek to explore technologydriven and smarter solutions to tackle the complex issues that have confronted the development of the continent. According to the foundation’s CEO, Osayi Alile, “While digitised economies have been able to significantly maintain socioeconomic and education systems in spite of social distancing policies, Africa seems to be way behind these developments. We have discovered that although mainstreaming digitalisation for innovative growth must be a priority for Africa’s leadership, technology must be combined with a will towards the common good”.

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Nigeria’s big banks see 13% dip in interest expense as customers’ deposits hit 4-year high Favour Olarewaju

igeria’s tier 1 banks saw a combined 13 percent dip in interest expense on customers’ deposit to N196.8 billion in half year (H1) 2020 from N225.9 billion in H1 2019, the largest drop in 4 years stemming from downward revisions of interest on deposits and monetary policy rate (MPR). The tier 1 banks in Nigeria are Guaranty Trust Bank (GTB) Plc, Zenith Bank Plc, Access Bank Plc, United Bank for Africa (UBA) Plc and Union Bank Nigeria Plc (UBN) according to market value by the Nigerian Stok Exchange (NSE). Meanwhile, customers’ deposits reached its highest point of N18.37bn in 2020, a 24% rise from N14.8bn in 2019 on half-year basis. This increase is a huge improvement from N10.05bn in H1 2017, which accumulates to 82.8% growth in customers deposits over the four-year period. Source: NSE Whereas, the increase in customers deposit is a stark contrast from the 16.5% decline in interest expenses on these deposits to N196.8bn in H1 2020 from N235.7bn within the four-year period observed. “One major factor that triggered the reduction of interest on deposit was the increased loan-to-deposit ratio (LDR) in July 2019 to meet 60% threshold by 30th September 2019”, said Gbolahun Ologunro, a research analyst at Lagos-based CSL Stockbrokers. “This hike in LDR was initiated by the Central Bank of Nigeria (CBN), which later extended LDR to 65% by December 2019 for Nigerian lending banks”, added Ologunro. In line with this, Omobola Adu, a research analyst at Growth and Development Asset Management (GDL) explained that “the new LDR means that for every N100 banks receive as deposit, they must give N65 as loans as against the former N60 and prior lesser amounts. “So, in a bid to avoid the risks that come with non-performing loans and avoid penalty charges from CBN by meeting up with the LDR threshold, banks are left with two options. “First, banks can either reduce customers’ deposits by making it unattractive to discourage people from depositing money with them. “But this could negatively drain their customer base and hurt the banks who majorly thrive on customer deposits for their expansion. “Alternatively, banks could reduce interest rate on customers’ deposit, which seems to be the preferred option given the recent trends of Nigerian banks”,

Source: NSE said Adu. For instance, a N500,000 deposit in access bank would attract a 1% interest earning between the end of 2019 till now compared to previously higher interest rates of 5%. “This preference to reducing interest on customer deposit can be easily understood considering the fact that Nigerian banks were wary

of the already high level of nonperforming loans”, Adu added. According to the latest banking sector report released by the National Bureau of Statistics (NBS), non-performing loans in Nigerian banks rose by 14% to N1.212 trillion at the end of June 2020 from N1.059 trillion in December 2019. Also, the Computer and Enterprise Investigation Conference

(CEIC), a Global Economic Data Platform, reported Nigeria’s nonperforming loan ratio stood at 11.4 percent as at December 2018 with non-performing loan defined as interest or principal that is due and unpaid for 90 days or more. So, banks’ reluctance to expand on loans to customers was related to the repayment difficulties that many individuals and sectors

faced as a result of difficult economic situations, and a need to cut cost to match their now lower revenue stream. “Ologunro further mentioned that “Prior to the revised guideline from CBN, banks had already reviewed their interest rates on all form of customer deposits (time, savings and current deposits) downward since Q4 2019” The statistical database from CBN shows how the weighted average interest rate of deposit money banks has been on a downward trend for some years now. As far back as 2017, which is the starting year of the period under review, the weighted average on savings has consistently declined to 3.78% in July 2020 from 4.22% in January 2017. Similarly, commercial banks interest rate on time deposit for various maturity periods ranging from 7 days to 12 months have reduced within the period of study with very slight increases in 2018. This corresponds with data gathered by BusinessDay from NSE financial reports on the interest expense of tier 1 banks in Nigeria. “Another key factor that contributed to the drop in interest on customer deposit was the reduction of monetary policy rate (MPR) by the monetary policy committee (MPC) of CBN to 12.5% in May 2020 from 13.5% in May 2019”, Adu said. Ologunro added that “this drop in MPR was a response to CBN’s policies and consequently restricted domestic investors from participating in the open market operations (OMO) market. “Further, these CBN policies led to decline in low yields on loans and risk-free assets causing banks to scramble for customers. “Customers, then had bargaining power to demand lower rates for borrowed funds and fixed deposits in addition to taking advantage of re-financing existing debt obligations at lower rate”, Ologunro said in explaining the reduced interest on customer deposits. More recent trends of the further reduction of MPR to 11.5% on September 22, 2020 signal that interest on customers’ deposits is likely to plunge even deeper. This is because the former MPR of 12.5% meant that interest rate on savings deposit of minimum 1.25% in May 2020 as against its former 3.75% would now further reduce to 1.15%. So, customers would likely earn even lower interest on their deposits moving forward while banks strive to reduce their cost and meet up with the new LDR rate of 65% to avoid huge penalty (50 percent of the shortfall in LDR in additional cash reserve requirement) from CBN.

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