BusinessDay 29 Apr 2019 by BusinessDay

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L-R: CEO, UBA Africa, Victor Osadolor; GMD/CEO, UBA plc, Kennedy Uzoka; Ogun State governor-elect, Dapo Abiodun; Lagos State governor-elect, Babajide Sanwo-Olu; chairman, UBA plc, Tony Elumelu; Kwara State governor-elect, AbdulRahman Abdulrasaq; wife of UBA chairman, Awele Elumelu; director, UBA plc, Onari Duke; former governor, Ogun State, Olusegun Osoba; governor, Cross River State, Ben Ayade; Ooni of Ife, Oba Adeyeye Ogunwusi; Representative of Emir of Kano and Sarikin Shanub Kano, Shehu Muhammad, at the Special UBA CEO Awards to mark the Bank’s 70th Anniversary in Lagos.

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Inside: Special Report on Governor Ambode’s Administration, 2015 - 2019 Nigeria SWF profit surges 106% to N46bn in 2018

L-R: Chairman/founder, Aliko Dangote Foundation, Aliko Dangote; Kaduna State governor, Nasir el-Rufai; executive secretary, National Universities Commission (NUC), Abubakar Rasheed; executive director, Aliko Dangote Foundation, Halima Aliko Dangote, and the Chancellor and the Obi of Onitsha, Igwe Nnaemeka Achebe, at the commissioning of Aliko Dangote Hostels in ABU, Zaria, weekend. See story on page A3

ONYINYE NWACHUKWU & SEGUN ADAMS

he Nigeria Sovereign Investment Authority (NSIA), an investment institution of the Federation set up to manage Nigeria’s sovereign wealth fund, has reported a 106 percent increase in its profit for 2018 full year. The growth in profit from N22.56 billion in 2017 to N46.5 billion

CBN issues 5 new banking licences

Globus, Titan, others to commence operations by August

LOLADE AKINMURELE

he Central Bank of Nigeria (CBN) has issued licenses to five new banks, according to three banking sources

familiar with the matter, who spoke to BusinessDay. Sources say the CBN is being driven by the need to attract new investments into the sector and serve the country’s over 50 million unbanked and under-

banked people, even as current banks have struggled to grow loan books since an economic slump in 2016 caused bad loans to surge. The sources, who say the banks plan to begin operations before August,

could only give specific details on two of them. One of the new banks, “Globus” is said to be spearheaded by Elias Igbi-

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in 2018 was largely driven by significant improvements in its other income and net forex gains. For 2018, total income of the fund manager ballooned 89 percent to N57.74 billion as against N30.62 billion recorded in 2017 on the back of the investment institution’s ability to improve earnings from core and noncore activities. Interest income grew by 9 percent to N23.82 billion, compared to N21.77 billion in the corresponding period of 2017 while investment income rose 23 percent to N3.21 billion from N2.6 billion in the previous period. A turnaround to post N797 million from income on financial assets at fair value through profit or loss (FV TPL) was a catalyst for improved performance of the fund in 2018 as in the preceding year there was no income from that source. Net gains on financial assets, however, declined by 94 percent

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MFBs’ disburse total of N482.9bn in loans

…72% less than N2 mn in size Hope Moses-Ashike in Gombe State

he Central Bank of Nigeria (CBN) on Friday disclosed that aggregate loans granted by MFBs was N482.896 billion and that loan sizes that are below N 1.4 million accounted for 72 percent of the total. Godwin Emefiele, governor of CBN, said this at the ongoing Finance Correspondents and Business Editors workshop organized by the CBN in Gombe State. Represented by Edward Lametek, deputy governor, corporate services, he observed that small businesses have been more successful in securing credit from the microfinance institutions than from conventional deposit money banks (DMBs). According to him, data from the licensed credit bureaus indi-

cate that the operations of micro finance banks have helped to improve financial inclusion amongst smallholder peasant farmers. However, the challenges remain, inadequate spread in the location of the MFBs in relation to their target beneficiaries, demand for immoveable collaterals for loans, high interest rate, and absence of a credit reporting system. “We are committed and working assiduously to address these limitations,” Emefiele said, adding that the Bank, in collaboration with other agencies of Government, is implementing various intervention schemes in addition to promoting microfinance. The Bank, he said has since then worked towards increasing access to financial services for

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Nigerian firms Capex spend up 26% as economic activities pick up BALA AUGIE

igeria largest companies are spending more on the acquisition of technologies, equipment, and facilities, signalling they are upbeat that economy activities would pick up. With data from companies’ 2018 audited financial statement, cumulative expenditure totalled N397.17 billion, up 26.19 percent from a year ago and

built capacity based on preannounced projects,” said Ebo. A breakdown of the figure shows building material sector account for 35.75 percent of the increase in spending by companies, with energy 19.64 percent, and consumer goods at 29.63 percent. Among the biggest spenders, Seplat Development Corporation Company Plc recorded N26.93 billion as capital expenditure in 2018, a surge of 163.18 percent from a year ago, the highest amount since at least

2016. Oando Oil Plc’s capex spend increased to N37.86 billion, representing a 91.12 percent increase from a year ago, while Mobil Oil’s spiked by 93.69 percent in the period under review. Oil and gas firms have been increasing capital expenditure since confidence picked up after crude oil prices climbed above $70 a barrel from a 12 year low of under $30 in 2016, thanks to output curb by Organization of

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Kenya’s GDP growth of 6.3% shows what Nigeria can do with agriculture DIPO OLADEHINDE

DP performance of Kenya presents Nigeria with an example of how a country can either decide to deliberately leverage its natural resources such as Agriculture to create shared prosperity for citizens or sit back, pay lip service and watch them descend into poverty. Just like Nigeria, Kenya, East Africa’s richest economy, is one of the fastest growing areas on the continent but its performance is often hit by drought as missed revenue targets, rising public debt and uncontrolled expenditure were main concerns for investors in recent years.

Analysis While Nigeria still continues to play to the gallery when it comes to driving Agriculture or boosting its GDP contribution to the economy, for Kenya the reverse is the case as the Agriculture sector, which accounts for close to a third of Kenya’s annual economic output grew by 6.6 percent leading to GDP growth of 6.3 percent. Data from Kenya’s statistical agency showed Kenya’s economy grew by 6.3 percent in 2018, helped by an impressive growth in agriculture, manufacturing and transport sectors which was a rebound from the 4.7 percent growth www.businessday.ng

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NGUS APR 29 2020 362.41

L-R: Saleh Dunoma, managing director, Federal Airports Authority of Nigeria (FAAN), and Kehinde Borisade, managing director/CEO, Zenith General Insurance Company Limited, during the inspection tour of the terminal building of Sam Mbakwe International Cargo Airport, Owerri, Imo State, recently engulfed by fire.

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on track to be the highest since 2016 when a recession damped cash flows. “They are just hoping that the economy will improve, and in terms of expansion they are trying to boost their capacity for the future, albeit sales have been growing at a slower pace,” said Ayodeji Ebo, managing director and CEO of Afrinvest Securities Limited. “Some major players in the industrial goods industry are able to increase prices twice while the construction giants

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in 2017, the slowest growth in five years. The performance of the Agriculture sector had a multiplier effect on other sectors of the economy as Transport and storage services sector also grew to a five-year high of 8.8 percent while ICT sector posted an increased growth by 11 percent. Manufacturing sector grew at a faster rate of 4.2 percent in 2018, compared with 0.5 percent in 2017 although new Jobs generated slowed to 840 600 in 2018, compared with 898 000 a year earlier while Inflation was 4.7percent in 2018 from 8 percent a year earlier. Kenya’s central bank targets price growth of 5percent

with a margin of 2.5percent on either side. The deficit on the current account narrowed to $4.1 billion at the end of last year. Also, about 2.02 million tourists visited the country last year while tourism is still the country’s largest source of foreign exchange after agriculture. Gbolahan Ologunro research analyst at CSL Stockbrokers, a subsidiary of FCMB Group Plc said Kenya’s usage of mechanized farming using modern equipment and agglomeration of farmers rather than individual farming is resulting in improved GDP performance unlike Nigeria.

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Kachikwu supports extension of OPEC production cut for six months ...as Saudi Arabia expresses desire to sign MoU with Nigeria

Olusola Bello

igerian Minister of State for Petroleum Resources, Emmanuel Kachikwu, has said the country is in support of a six-month extension of the current quota restriction on oil production by OPEC and its allies. OPEC would maintain production quotas after June if other suppliers boost output and the market remained as it was, though the group was likely to scale back cuts if supply tightened, Kachikwu said. “There definitely will be some quotas” after June, he said. Slower growth in oil demand is “worrisome.” The minister spoke to Bloomberg Television in Saudi Arabia just as the United States of America has vowed to enforce sanctions on Iran and would not extend the waivers given to those lifting its crude oil come May 1st, 2019. What this means is that if the production cut extends by six months the price of crude oil would continue to increase at the international market and thereby putting pressure on Nigeria which is a net importer of petroleum products, despite the fact that it is a major oil producer. The price of crude oil as at weekend stood at $75 per barrel. However- Saudi Arabia’s energy minister said the @Businessdayng

world’s biggest oil exporter saw no need to take immediate action in the crude market, signalling a cautious response to the U.S. decision to tighten sanctions on Iran. The Kingdom won’t significantly raise output in May and will stay within its OPEC production limit until the group’s current supply deal expires in June, Khalid Al-Falih said Wednesday in Riyadh. That would allow for a modest increase in production because Saudi Arabia currently pumps about 500,000 barrels a day below its quota. “We will see what the customers want,” Al-Falih told reporters. “I think our intent is to remain within our voluntary production limit, but at the same time to be responsive to our customers, especially those who have been under waivers, and those waivers have been withdrawn.” At the same time, Saudi Arabia is leading OPEC and allied producers in cutting supplies to try to buttress crude and avert a glut. If the kingdom boosts production sharply to offset missing Iranian barrels, it will have a hard time persuading others to limit output. OPEC, including Iran, plans to meet in June to decide whether to extend production curbs into the second half of the year.

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Unemployment rate falls in Rivers, Lagos, Enugu in Q3 2018 - NBS UOLUWASEGUN OLAKOYENIKAN & BUNMI BAILEY

espite Nigeria’s unemployment rate rising to an all-time high of 23.1 percent in the third quarter (Q3) of 2018, nine states reduced the rate in the period from Q3 2017, latest data from the National Bureau of Statistics (NBS) show. According to the state unemployment data released by the statistics bureau on Friday, Rivers, Lagos, Enugu, Nasarawa, Imo, Ondo, Kaduna, Kogi, and Akwa Ibom recorded declines in their unemployment rates in Q3 2018 from a year earlier. “The improvement can be traceable to the relative improvement in security situations in these states,” Ayodeji Ebo, managing director, Afrinvest Securities Limited, said. “This has attracted more industries to set up in these states.” Rivers state’s unemployment rate contracted by 36.38 percent in the third quarter of 2018, representing 4.92 percentage points lower than 41.30 percent recorded in the corresponding period of 2017.

According to Ebo, a lot of the companies shut down their operations at the peak of disruptions of oil production by militants. “Some of these companies have reopened their offices, hence reducing unemployment rate,” he said. Lagos state’s unemployment rate fell by 3.72 percentage points to 14.55 percent, Enugu recorded a decline of 1.82 percentage points to 18.66 percent, while Nasarawa achieved 1.52 percentage points reduction to 27.39 percent. Imo, Ondo, Kaduna, Kogi reduced the rate by 1.19, 1.17, 1.14, and 0.93 percentage points to 28.19 percent, 14.24 percent, 26.83 percent and 19.72 percent, respectively. However, Gombe, Bauchi, Adamawa, kebbi and Kano recorded the highest increase of 16.30, 14.22, 13.91, 11.92, 11.79 percentage points in unemployment rate for the period, respectively. Meanwhile, Lagos recorded the highest gains in net full time employment of 740,146 jobs between Q3 2017 and Q3 2018; Rivers, 235,438 jobs; Imo, 197,147 jobs; Ondo, 142,514 jobs; Enugu, 122,333 jobs; and Kaduna, 118,929 jobs.

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Marketers berate PPPRA over ineffectiveness in downstream regulation ... say agency abdicated responsibility to NNPC Olusola Bello

cold war is brewing between oil marketers and their regulating agency, Petroleum Products Pricing Regulatory Agency (PPPRA) over the former’s series of allegations against the agency. The marketers, who said they were losing confidence in the management of PPPRA because of the deteriorating situation in the downstream sector of the petroleum industry, want it to live up to its responsibilities. They expressed disgust over the way the Nigerian National Petroleum Corporation (NNPC) unilaterally changed the fuel template that had been fixed by PPPRA, a regulating government agency, from N111 ex-depot price to N117 per litre of petrol there by leaving the marketers with a loss of N1.03 per litre. This situation has eroded the margins of the marketers, they claim. “When the ex-depot price was N111.72 we were making N4 per litre margin but when the NNPC unilaterally increased it to N117, we are left with a loss of N1.03 for every litre,” an industry

source told BusinessDay The marketers under the umbrella of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Major Marketers Association of Nigeria have in various letters to the PPPRA expressed disgust at the way the agency was watching things getting worse in the downstream sector, and nothing was being done to stem the obvious downward slide of the sub-sector. According to the letters, the marketers said they had wanted to communicate in one way or the other with members of the board of PPPRA for quite a while but decided to hold on to see what action the agency would take regarding the travails of marketers which activities the agency is supposedly regulating. “It goes without saying from the records of the PPPRA that the number of active petroleum marketers is dwindling everyday and NNPC being sole importer has also contributed to the number further depleting,” the letter stated. It further stated that PPPRA was not bothered about the dwindling number of marketers, nor bothered that the number of

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marketers submitting import proposal was also reducing by the day. “It is not disturbed that marketer’s payment converted to promissory note since last December 2018 has not materialised in monetary terms.” The marketers said the PPPRA template has been obsolete for months, and that even though the agency updates it data base daily, it seemed to lack the courage to present same to the appropriate authority for necessary actions. The board of PPPRA would rather claim the exigencies of the moment and not take its rightful place and advise the Federal Government appropriately. “The implication of elements here changing means that the prices all must change, but because it is a political hot potato nobody touches it, meanwhile the operators are dying gradually,” they noted. “Despite spiralling cost that makes nonsense of the price template NNPC/PPMC took up the duty of PPPRA to caution against selling outside the band weight but when competition forces marketers to sell below band weight nobody says anything.” When was the last time PP-

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PRA calls for stakeholders meeting, this April 2019 no board and stakeholders meeting, the marketers queried. In the letter the marketers claimed that for several months they have called for review of Calabar port but nothing has happened and yet the bore the financial burden of operations there, DAPPMA is losing confidence in the agency MOMAN says PPPRA has a statutory role to play in the regulation of the downstream sector including the setting of prices and regulation of margins but it regrets to observe the ineffectiveness of the agency to perform this role currently. “We hereby appeal to the board of PPPRA to urgently look into the myriads of problems plaguing the sector to avoid a total collapse of the sector especially as it affects the margins,” the group pleaded. Efforts by BusinessDay to get the reaction of the PPPRA management were not successful as the phone calls and text messages sent to Abdulkadir Saidu, the executive secretary, and the general manager, public affairs of the agency, Reuben Apollo, were not responded to.

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For First Bank of Nigeria, 125 years is not just a number

Bashorun J.K Randle

• Continued from last week

or those who are anxious to avail themselves of a concise bio-data or testimonial of the Bank, both the website and the indefatigable Alex Otti (a former Executive Director) have conspired to deliver the following powerful advertisement: “The bank began as the Bank of British West Africa (BBWA) in 1894 and quickly began playing the role of the Central Bank of British West Africa in the absence of a regulator at those medieval times in the sub region. The bank witnessed the amalgamation of the Northern and Southern protectorates and the eventual independence of Nigeria in 1960. It was founded by Alfred Lewis Jones, a shipping magnate who imported silver currency into West Africa through Elder Dempster shipping company also owned by him. In 1957, the bank changed its name to Bank of West Africa (BWA). Sequel to Nigeria’s independence in 1960, the bank began to extend more credit to indigenous Nigerians as most of its credit facilities were hitherto concentrated on foreigners living in the erstwhile colony. Standard Bank acquired the Bank of West Africa in 1966 and changed its name to Standard Bank of West Africa.

In 1969, Standard Bank of West Africa incorporated its Nigerian operations and its name had to change once again, this time to Standard Bank of Nigeria Ltd (SBN). In 1971, SBN listed its shares on the Nigerian Stock Exchange and placed 13% of its share capital with Nigerian investors. Following the implementation of the indigenisation policy of the then military government soon after the civil war, Standard Chartered Bank reduced its stake in SBN to 38%. This action led to another change in name to First Bank of Nigeria in 1979 as Standard Chartered Bank insisted that since it had lost majority control, the bank should no longer bear its name since by the action, it had failed to be its full-fledged subsidiary. This marked a watershed in the history of the bank as more Nigerians were appointed to the board and it began to look and operate more like a Nigerian bank. The bank had subsequently moved from a limited liability company to a publicly quoted company and back to a limited liability company which it presently is. The latest status is in compliance with changes in the regulatory environment in 2012 that required that the group operates as a holding company, with the bank as one of its subsidiaries or spin off other operations not related to banking. That marked the birth of FBN Holdings which presently has the bank and nonbank subsidiaries as part of the group. In 1982, First Bank opened a branch in London and converted same to a fullfledged subsidiary, FBN Bank (UK) in 2002. Two years later, in 2004, a representative office in Johannesburg, South Africa, debuted. At the moment, First Bank has subsidiaries or representative offices in France, China, Democratic Republic of Congo, Gambia, Sierra Leone, Ghana, Guinea and Senegal. At the last count, First Bank had presence

across 10 countries in three continents. It operates from over 750 locations and employs close to 22,000 people. Its has over N3.3trillion in total assets. It also boasts over N2.5trillion in Customer deposits with a tidy 19% Capital Adequacy Ratio (CAR). The bank has over 1.3m shareholders and over 14million customers.” For those who have attempted to fault the Bank’s assertion: “Banking for Good” The least we can do is to remind them that the Bank spread the gospel of banking through missionaries, traders, “Mercantile Houses”, such as the United Africa Company (UAC); Lever Brothers; United Trading Company (UTC); Leventis Stores; G.B. Ollivant; Paterson and Zochonis(PZ); Mandillas; CFAO etc. The traders were mostly Lebanese, Syrians, Jews; Greeks and of course, British and French. At various times, the Bank was confronted with trenchant complaints that it discriminated against our fledgling entrepreneurs when it came to granting loans in order to assist them in their business pursuits. The bank had a ready self-fulfilling excuse – the “natives” had poor business experience and no collateral. However, we cannot overlook the fact that while the British managers had what was termed “Terms and Conditions of Service”, the “natives” had none!! It was not until much later that pressure from the Labour Union and the government resolved such glaring cases of discrimination. There was also the delicate matter of segregation. While the white managers lived in exclusive “Government Reservation Areas” (“GRAs”), the natives had to fend for themselves. Say what you will about the Bank, it is to its credit that at intervals it would select some of the local staff and send

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We are obliged to acknowledge that the Bank was very much part and parcel of the British colonial government which had tentacles all over what would become Nigeria in 1914

them off to the United Kingdom for training or posting, for short periods in order to prepare them for promotion into the management cadre. One of the earliest beneficiaries was Chief Julius Kosebinu Agbaje who was entrusted with the Bank’s public relations. He facilitated the recruitment of quite a large number of ex-students of St. Gregory’s College, Lagos (his Alma Mater) and many of his protégés served the Bank meritoriously. Somewhere along the line, the Bank switched its recruitment policy almost exclusively in favour of graduates, who after brief training, entered the management cadre. Inevitably, there was tension and conflictas well as envy as those who were stuck in the rank and file resented the new bunch of managers and bosses whose banking skills were somewhat rudimentary. Regardless, the graduates were rewarded with generous salaries along with cars and accommodation allowances. Quite a few of them gained rapid promotion as well as the much-coveted overseas training. We are obliged to acknowledge that the Bank was very much part and parcel of the British colonial government which had tentacles all over what would become Nigeria in 1914. Separately, we shall resolve the mystery behind the choice of the dour elephant as the dominant feature of its logo rather than the nimbler and more sure-footed leopard. Incidentally, in 1912, aleopard with its spots et all was shot dead right in front of the Bank’s office at 35 Marina, Lagos. The photograph has been preserved for posterity under the caption: “Colonialists AndSome Nigerians Watch The Remains Of A Leopard Shot Dead In Lagos in 1912.” Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Another victory for Buhari – but what will it mean for corruption? Joseph Ajefu

he keenly contested presidential elections in February saw Nigerians offered, among other things, a choice between two very different ways of tackling the corruption in the country. The keen contestation was largely due to the challenge thrown by other candidates to the incumbent President Muhammadu Buhari who had swept to power on an anti-corruption platform in his election campaign in 2015. The campaign worked largely because the electorate perceived corruption to be one of the key failings of the then President Goodluck Jonathan’s government. However stagnating economic growth and disruptive regional conflicts had subsequently overshadowed the Buhari government’s anti-corruption efforts, During the build-up to the 2019 elections, Nigerians were presented with divergent views on anti-corruption strategies by over seventy presidential candidates. However, the candidates who obviously caught the attention of most Nigerians were from the two main political parties—Buhari from the incumbent All Progressives Alliance (APC) and Atiku Abubakar from the main opposition party, the People’s Democratic Party (PDP). Atiku, President Buhari’s main opponent, proposed a liberal anti-corruption strategy that included granting of amnesty to those with corruption charges in order to help recover billions of dollars embezzled from the country. It also

involved a highly controversial proposal to completely privatise the Nigerian National Petroleum Corporation (NNPC). The NNPC is Nigeria’s state owned oil and gas corporation and responsible for regulating the managing the sector in Nigeria. However, his approach to corruption did not resonate strongly with ordinary Nigerians. Many had concerns that his approach could create a culture of impunityandamplify corruption by the country’s political class and powerful elites.The massive corruption under the PDP government prior to 2015, especially with regard to the oil and gas sector, lend credence to their scepticism. On the other hand, Mr Buhari, who gained significant political capital in 2015, maintains a tough posture on corruption, which contributed strongly to his victory. Yet after almost four years in power, Mr Buhari’s anti-corruption strategy has not yielded the desired outcome. The Economic and Financial Crimes Commission (EFCC),and other government anti-corruption agencies, have failed to claim many high-profile convictions. And a February 2019 Gallup poll found that 84 percent of Nigerians think that government corruption is widespread, and likely down by just 2 percentage points from 2014. Meanwhile, some critics argue that Buhari’s anti-corruption policy is a subtle ‘political witchhunt’ targeted mainly at political opponents and members of opposition parties. Using policies based on rule of law alone to fight corruption seems unlikely to yield results. In the face of intransigent corruption, and an entrenched Presidential view about how best to tackle it, how to break the impasse? Effective enforcement or systemic anticorruption strategy has been difficult to achieve in Nigeria for the following reasons. The last few www.businessday.ng

years after the return of democracy have witnessed the rise of political ‘entrepreneurs’ who owe little by way of political affiliations and cross parties based on their perceptions of the relative power of these parties and bring with them the ability to mobilise resources and voter support. This makes enforcement difficult. Businesses in the private sector can also carry out their activities informally and can generate benefits for themselves and their families through political connections. Hence, enforcement of formal rules is difficult in such contexts, that is, those with rule by law, or selective enforcement. This is true of most developing country contexts but the pervasive rents linked to the oil sector presents policy makers with a more complex scenario in Nigeria. Redistributive ‘live and let live’ rents from the sector are important for political stability in the country and it is due to a combination of these structural reasons why policies like privatising NNPC are highly unlikely to work effectively. The pertinent question remains, with politics what they are, what can feasibly be done about corruption? Studies by the Anti-Corruption Evidence (ACE) Research Consortium at SOAS, University of London, in partnership with several Nigerian research institutes, shows that effective anti- corruption requires two mutually inclusive factors: policies should be based on horizontal enforcement rather than top down vertical enforcement that requires a rule of law context. This involves rules being adhered to in their own interests by productive and powerful actors involved in specific sectors of the economy. This can be complemented by rule of law reforms. Buhari has so far focused on the second and ignored the first. What could it mean in practice? The powerful have no incentive currently to

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enforce rules on themselves and their peers – but incentives can be changed. The central idea entails carefully identifying critical sectors where changes in the structure of incentives could trigger productive behaviour from key stakeholders. For example, the privatisation of Nigeria’s power sector has not met expectations, largely because of the dominance of politically-connected companies in both the generation and distribution value chain. This makes it difficult to create incentives for genuine investors to enter the sector. In this context, the immediate approach requires an off-grid solution by creating credible incentives in smaller power plants that are embedded in industrial clusters or solar generation. Having a coalition whose incentives will be aligned with increasing electricity generation and willingness to pay is crucial. The success of this strategy, to a large extent depends on policy makers in the government having a clear understanding of why private and public organisations are engaged in corrupt practices –For sure there will be politically relevant sectors where reducing corruption will be difficult. However there are others where private incentives to reduce corruption are high coupled with political agency, for instance in the country’s power sector or with recent reforms in fertiliser subsidies. There are some signs so far that Buhari and his administration are open to a new way of doing things – and this is critical because without some change, Nigerians have little to look forward to on corruption than more of the same. Dr Ajefu is a Research Fellow for the Anti-Corruption Evidence research consortium (ACE) at SOAS University of London.

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Nigeria’s fast growing but opaque N728 billion industry

Patrick Atuanya

ecently I couldn’t shake the feeling that I wasn’t receiving the appropriate/ correct interest payments on an investment made in a money market fund with one of Nigeria’s financial services providers. Trouble is there was no real way to accurately tell if the right interest earned, minus (often hidden) fees and expense ratios (the amount companies charge investors to manage a mutual fund or exchange-traded fund ETF), was being remitted to my account for further re-investment as requested. A call to the customer care desk of the firm was largely unhelpful as they couldn’t provide a clear answer to questions regarding my money market fund investment. Money Market funds have grown fast in Nigeria in recent times, because for as low as N5, 000 (five-thousand naira), they provide an attractive alternative to savings or fixed deposits with banks, due to higher interest rates (between 10% and 13%) investors can

earn, compared to savings deposit rates of about 3 percent or fixed deposits at 8 percent on average. Mutual funds work as collective investments that join various individual contributions of investment capital to create a large pool of funds. It spreads the pool of funds across dozens of investment instruments in the stock market and other predetermined investment targets. The investment target where the fund will be invested is clearly stated, which enables investors select the funds that meet their own desired investing characteristics. Total assets under management (AuM) by Mutual fund providers in Nigeria including ETFs hit N728 billion ($2 billion), as at April, 2019, according to latest data from the Securities and Exchange Commission (SEC). Of this amount Money market funds made up a hefty 76 percent of the total, followed by fixed income funds 9.45 percent, Real Estate 6.26 percent, mixed funds 3.39 percent, Bond funds 2.4 percent, and Equity based funds 1.6 percent. The first modern-day mutual fund, Massachusetts Investors Trust, was created on March 21, 1924. By 1929, there were 19 open-ended mutual funds in the U.S.A competing with nearly 700 closed-end funds. In 1971, William Fouse and John McQuown of Wells Fargo established the first index fund, a concept that John Bogle would use as a founda-

tion on which to build The Vanguard Group, a mutual fund powerhouse renowned for low-cost index funds. Today in the U.S. alone there are more than 10,000 mutual funds. In Nigeria, there are about 90 different types of Mutual Funds and ETFs currently available for investors to buy into, however scant data (on expense ratio, relative performance or fund manager history) is available, which prospective investors can use to rank or rate these funds to enable them make informed buy decisions. Take the expense ratio which represents all of the management fees and operating costs of a fund. A mutual fund’s expense ratio is very important to investors because fund operating and management fees can have a large impact on net profitability. It is calculated by dividing a mutual fund’s operating expenses by the average total naira value for all the assets within the fund. Currently a lot of funds do not have this data readily available for prospective investors. Another major issue that confronts prospective investors is relative performance of a fund. Assuming an investor wants to put N100, 000 into an equity based mutual fund because he/she does not trust his/her stock picking abilities. Today there are eleven (11) such funds available on the market from fund managers that include Stanbic

‘

The problem lies in the inability of the prospective investor to make an informed choice from these set of funds

IBTC Nigeria Equity Fund, Chapel Hill Denhams Paramount Equity fund, Meristems Equity market fund, FBN Smart beta equity fund and Axa Mansards Equity Income Fund to name a few. The problem lies in the inability of the prospective investor to make an informed choice from these set of funds. Questions such as which equity fund manager outperformed its benchmark or other funds in its class over a 1, 3 and 5 year period or comparing expense ratios to gauge cost of investing in each fund is pretty much impossible to discern. Nigeria’s fund management industry must step up and make sure these data sets are available in a public, timely and easily accessible manner, to enable the investing public make the best possible investment decisions. As for my mutual fund investment? I continue to retain my current mutual fund provider, not for any major reason such as superior returns, or lower expenses, but intangibles like familiarity. This is something the fund management industry as a whole should be worried about as FinTechs gradually sweep the financial services space, bringing a promise of innovative services that can lead to churn for entrenched providers. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Taming the xenophobia in the rainbow country

Tony Ademiluyi

n June 12 1964, Nelson Mandela was sentenced to life imprisonment for attempting to violently overthrow the Caucasian dominated government. Alongside his comrades most notably Govan Mbeki, Thabo Mbeki’s father, he was sent to Robben Island to live the rest of his days in anguish. The campaign for the release of Mandela became a worldwide rallying cause as genuine agitators and hustlers all found a common cause in crying that the world’s most famous prisoner should be set free. Nigeria played a vital role in the destruction of apartheid. As Africa was the centre piece of our foreign policy in the hey days of military rule, the ‘Giant of Africa’ spearheaded the throwing open of Robben Island and financed some of the activities of the banned African National Congress. Former President Olusegun Obasanjo was particularly vocal in the Mandela cause and was known to have brokered peace deals between Frederick De Klerk and Mandela when he was eventually released using his African Leadership Forum platform. 1994 was an epochal year for the Rainbow country as the first truly democratically elections were held with Mandela declared as the winner. Many African nationals saw the country as a goldmine and rushed in to take

advantage of her numerous opportunities. Many Nigerians were not left out as they trooped in large numbers to become partakers of the new renaissance African State. The end of apartheid merely transferred political power from the whites to the blacks. The real economic power still largely resided in the hands of the whites. This led to some resentment by the hapless blacks as they lacked the skills and education to compete in the jet age. Activism had given way to administration and they clearly lacked what it took to consistently bring home the bacon. The black South Africans now saw their new adversaries in the hardworking African nationals of other African nations who were honestly eking a living without or with little governmental backing. The waves of killings started and the media did its best to downplay it so as to give the impression that all was well in Mandela’s country. The conspiratorial role of the white dominated media was made more pronounced by the fact that the whites weren’t happy with the progress that these other black nationals were making and they advocated running a more closed economy with high barriers to entry. The media suppression was short lived as in 2008 about sixty-two people were brutally murdered in a wave of xenophobic attacks. Many Nigerians were included in that horrible number. Subsequent attacks went on and on with the most recent being a few weeks ago when two Nigerians were killed. Nigerians are nicknamed ‘kwere kwere’ and are particularly hated by South Africans because of the former’s penchant for hardwork and the uncanny ability to squeeze juice out of stone. Their ladies are said to prefer the more aggressive Nigerians to the rather laidback South African men which only increases the hatred for them. The erstwhile apartheid fighters are allegedly envious of the loud swagger of their Nigerian guests and would do www.businessday.ng

anything including cutting short their lives to cut them down to size. It is tragic that Nigeria is yet to take an official position to defend the interests of her nationals in that country. It is a well known fact that Nigeria is home to many South African companies from MTN to Shoprite amongst many others. These companies make the bulk of their profits in Nigeria and remit it back home without any disturbance from the Nigerian government. Nigerians don’t have the time to haunt down and kill South African residents in the country as we have a rich culture of accommodating our guests even when they don’t reciprocate such to us. The xenophobia seems to be somewhat state sanctioned as the King of Kwa Zulu Natal, Goodwill Zwelithini was quoted to have said “We are requesting those who come from outside to please go back to their countries. The fact that there were countries that played a role in the country’s struggle for liberation should not be used as an excuse to create a situation where foreigners are allowed to inconvenience locals.” Given his position as a first class monarch, the pro-xenophobic backers would have taken it as a cue to spill the streets with raw blood. While South African businesses flourish in Nigeria, there are deliberate policies to stifle African owned businesses in that country. One recalls the attempt of a well known Nigerian media house that went there to set up shop in 2004 only to be frustrated out barely a few years later. There is need for the government to take a tough stance against the xenophobia that our nationals suffer in that clime. It was our terrible public policy that resulted in avoidable hardship that led these Nigerians to go there in the first place. Due to no fault of theirs, they are being hacked like rams with our government doing practically nothing to alleviate their needless suffering. How can the citizens of the so called ‘Giant of Africa’ be

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treated worse than dogs in another country in the African continent? The onus of ending the xenophobia should also be extended to the stakeholders in South Africa as well. For instance the South African King should have been severely sanctioned for promoting hate speech. We recall the punishment that was meted out to the Rwandan politicians who promoted hate speech on radio in the wake of the 1994 Rwandan genocide which lasted for three months. Hate speech shouldn’t be taken lightly at all as the after effect of it leaves a sour taste in the mouth. Kwame Nkrumah would turn in his grave as his vision for African unity which led to the formation of the Organization of African Unity now African Union in 1963 as he didn’t envision the killing fields that Africa has now become. He wanted an Africa bound in love and unity. Xenophobia clearly had no place in his dreams. The African Union should live up to his billing by being a rallying point for love and solidarity among the fifty countries that make up Africa. Appropriate sanctions should be meted out to countries that directly or indirectly tolerate xenophobia. The Nigerian government should also speak up and be more vocal in defending the interests of our citizens in South Africa. Our embassy should be a safe haven for our citizens to feel protected and loved. Our foreign policy should be rejigged for us to play a Big Brother Role in Africa whose citizens would be respected the continent over. The South African government should educate its largely illiterate black population so that they have the appropriate skills to contribute their quota towards nation building and not to turn to innocent Nigerians to slaughter rams. The killings must stop; Enough is Enough! Ademiluyi wrote from Lagos.

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Monday 22 April 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

The journey to 80% financial inclusion by 2020

igerians write or cash fewer cheques these days. They’re more likely to transact electronically via NIP, an instant payment service that can be done over the internet, a mobile phone or from a bank branch, POS, mobile phone or the web. According to data from Nigeria Inter-Bank Settlement System (NIBSS) and the CBN, the volume and value of transactions via these channels respectively increased by 39 and 42 percent between 2017 and 2018. Such data is a metric to judge the gains of the central bank’s cashless policy and the prospects of financial inclusion. NIP, a smorgasbord of different cashless transactions, accounted for close to threequarters of the total value of transactions in 2017 and 2018. It’s not clear, however, if most of the NIP transactions were from the confines of a physical bank branch as the data on money sent via NIP lumps transfers made from bank branches, the internet, mobile phones, ATMs, POS and USSD.

Monthly salary alerts are probably the reason for the dominance of NIP. In other words, Nigerian adults who have a bank account are the major beneficiaries of the cashless policy. And they’re inculcating the cashless habit. In terms of volume, three-fifth of transactions in both years was over the web, via ATMs, POS and by mobile money operators. ATM transactions accounted respectively for 24 percent and 32 percent of the total volume of transactions in 2017 and 2018. Distance of bank branches has hindered financial inclusion which is more than access to a bank account or an ATM. Where physical banks are absent, mobile money and POS operators are easing payments, the first most basic financial service. Nevertheless, majority of Nigerian adults (mostly women) are unbanked i.e. don’t have a bank account or underbanked i.e. most of their transactions are cash-based. Not to mention the paucity of other financial services such as loans for individuals and small businesses, insurance and wealth management. With the emergence of com-

panies (most of them are startups) that adopt technology to widen, scale-up and ease access to financial services there has been marked improvements in financial inclusion, says Findex, a financial-inclusion index compiled by the World Bank. Technology-driven innovations coupled with regulations have soothed the aches that come with sending money however remote and changed consumer behaviour. Innovations from banks like USSD-based payments have changed how we buy airtime, open an account, check our balance, make transfers and withdraw cash. Fintechs have found a way to analyse the creditworthiness of borrowers and approve loans in minutes without physical contact. As a result, cash-strapped Nigerians are able to access credit through alternative sources of finance. The CBN’s introduction of the Bank Verification Number (BVN) allows lenders identify borrowers, has made online lending possible. The Shared Agent Network Expansion Facility (SANEF), a collaboration of the CBN, banks and NIBSS

expanded access to POS in areas distant from a bank branch. And when approved, Payment Service Banks (PSB) will further expand financial access to every unbanked Nigerian with a mobile phone. Nonetheless, experts say there are plenty of barriers, from regulators, providers and consumers to achieving Nigeria’s 80% 2020 financial inclusion target. The lessons from the gains made so far show the barriers can be overcome through collaboration. A report by KPMG, a consultancy, reckons that the “right mix of technical skills, capital investments, government incentives, regulatory framework and an entrepreneurial and innovative mind-set” will catalyse the fintech industry. We have the talent. Adoption of technology is increasing. The market is attractive: a significant number of underbanked and unbanked adults have a mobile phone and Nigeria is a major fintech investment destination in Africa. . Collaboration between fintechs, vendors, financial institutions, regulators and other players in the industry is critical.

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Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

In Association With

The struggle continues

Too many challengers Spoiling the mood

Sudan’s junta clings to power as protests grow The people have toppled two leaders, now they are hoping for a “third fall”

O WALK AMONG the protesters in Khartoum, Sudan’s capital, is to be caught up in an intoxicating scene. Students, cheeks painted with Sudanese flags, march past, singing revolutionary songs. As their noise subsides so others rise: the rhymes of passing street poets, the speeches of firebrands atop makeshift stages. All around friends grab each other for selfies, recording for history (and Facebook) their role in ending three decades of dictatorship. They may call it a sit-in, but here nothing is still. It was the protesters’ sustained energy over several months that led to the ousting of Omar al-Bashir, Sudan’s president since 1989, on April 11th. The next day they forced his successor, Awad Ibn Auf, to step down as well. Today the street is calling for the “third fall”, that of the ten-member Transitional Military Council (TMC), which is in charge of the country. “We have to keep applying the pressure,” says Abuzar Awad, a 31-year-old engineer. “Otherwise the military won’t give us our rights.” The military says it is willing to share power with a transitional government for an interim period, as a presidential election is prepared. But there is little doubt that it wants to maintain a hold on the country. For that reason the Sudanese Professionals Association (SPA), a coalition of trade unions that spearheads the protests, suspended talks with the TMC on April 21st. “We want the military to protect the country, not rule the country,” said Ismail Eltag, a lawyer and spokesman for the SPA. The talks resumed on April 24th. A spokesman for the TMC said the two sides had reached an “agreement on most demands” and that, in a show of good faith, it would dismiss three generals who were close to Mr Bashir. A joint committee has been formed to try to bring order to the negotiations. But much was left vague, including whether any transitional government would answer to the generals. Unhelpfully, there is something of a political vacuum on the civilian side. The SPA has no single leader and has struggled to agree on who should be part of any new govern-

Rising oil prices could prevent a world economic rebound The risk of an oil-price shock is increasing

E SENSE of pessimism that hung over the world economy early this year has begun to lift in recent weeks. Trade flows are picking up in Asia, America’s retail sales have been strong, and even Europe’s beleaguered manufacturing industry has shown flickers of life. But it would not take much bad news to reinstate the gloom. One threat is that oil prices continue their upward march—on April 23rd the price of a barrel of Brent crude exceeded $74, the highest level for nearly six months. Though the dynamics of the oil market have

ment. Meanwhile, other political groupings under the opposition umbrella group, the Alliance of Freedom and Change, are jostling for position. “Unless there is a clear plan the military will take over again,” warns Osman Mirghani, a newspaper editor. Lieutenant-General Abdel Fattah Abdelrahman Burhan, the head of the TMC, and Muhammad Hamdan Dagalo, the deputy head who goes by the nickname Hemedti, say the right things, but seem reluctant to cede authority. Hemedti, a militia commander whom many believe to be the most powerful member of the TMC, is “playing a game”, says a Western diplomat, by suggesting to the demonstrators that he is on their side, while hoping to take the top job. The junta has much to lose. An estimated 65%-70% of state spending goes on security, compared with just 5% for public health and education. Families connected to the military and security services run the businesses that dominate the Sudanese economy. Corruption is rife. Helping or hurting? Neighbouring powers are helping the TMC cling on. On April 21st Saudi Arabia and the United Arab

Emirates (UAE) gave Sudan $3bn worth of aid, including $500m in cash deposited at the central bank— a lifeline in an inflationary economy short of hard currency. At a meeting in Cairo on April 23rd, members of the African Union, chaired this year by Abdel Fattah al-Sisi, Egypt’s president (who himself took power in a coup), extended the bloc’s deadline for the TMC to give up power by three months. Egypt, Saudi Arabia and the UAE see opportunities in Sudan’s upheaval. Mr Bashir’s National Congress Party grew out of the Muslim Brotherhood, an Islamist group that is loathed by the three countries. They now spy a chance to tear Sudan away from the Islamists of Turkey and Qatar, their regional rivals. The trio also wants to stamp out any hope of a new Arab spring. Egypt, Saudi Arabia and the UAE are being “unhelpful”, says another diplomat. The “troika” of America, Britain and Norway is urging negotiations between the military and the protesters. It is also suggesting that the SPA reconsider some of its demands, such as having a civilianled transitional government for four years (to allow the political scene to mature). The TMC may think it can buy

time and grind down the protesters. But at the sit-in there is no sign of flagging spirits. If anything, the movement is growing. When a train from Atbara, more than 200 miles north, arrived in Khartoum on April 23rd, thousands of protesters greeted it. The carriages were as packed as those of a Tokyo subway train—but with more joyous passengers. On April 25th a “million-man march” was held in Khartoum, one of the largest gatherings yet. Sudanese youth are the vanguard of the protest movement, but this is not a juvenile revolt. Their parents are behind them. Abd Elazim Muhammad Kheir, a 65-year-old businessman, spent 21 years working at the Sudanese central bank. “All of the old regime are completely corrupt; if you’re not corrupt you cannot stay in office,” he says. “But the kids are not accepting it.” His 15-year-old son, Aamin, and 23-year-old daughter, Roan, have gone to the sit-in almost every day. Roan came back from Manchester, England, to join her peers. “I told them they will be killed, but they are willing to die for their country,” says Mr Kheir, with a mixture of fatherly pride and concern. Now he goes to the protests too. “To build a new society we have to sacrifice,” he says.

changed over the past decade, dearer oil still acts as a drag on global growth. The latest jump in oil prices has resulted from anticipation of a shock to supply, rather than surging demand (see article). On April 22nd America said that it would end waivers granted to a number of big economies, including China, India and Turkey, which allowed them to import Iranian oil, bypassing America’s sanctions regime. These waivers were put in place after President Donald Trump pulled out of a nuclear deal with Iran in 2018. Their expiry on May 2nd could reduce the global supply of oil by more than 1m barrels per day (about 1% of the total). That is not the only threat to supply. War threatens production in Libya. Sanctions against Venezuela have taken supply off the market. Although a bottleneck in the Texan Permian basin will be relieved this year, it does not produce the heavy, sour crude found in Venezuela. And, after the American announcement, the Continues on page 15

Monday 29 April 2019

BUSINESS DAY

In Association With

Running to stand still

Egypt’s economy thrills investors, but locals are struggling The government’s reforms are causing pain at home

HE INVESTORS gathered at a posh Cairo restaurant were eager to pour money into an economy that, just three years ago, lacked the hard currency to import cooking oil. A revolution in 2011 (and a coup two years later) tipped Egypt into economic crisis. Investors and tourists fled. Growth was anaemic. Unemployment peaked at 13.2%. President Abdel-Fattah al-Sisi had to seek a $12bn loan from the IMF in 2016. Since then, though, his government has followed what one executive admiringly calls “almost a caricature” of an IMF programme. The state has raised electricity and fuel prices. This summer the (previously massively subsidised) official price of many types of petrol will be indexed to market rates. Quite a few people have been trimmed from subsidy rolls. A budget deficit that hit 12.5% of GDP in 2015-16 has fallen. Next year it is expected to be a manageable 7.5%. The currentaccount deficit, which bottomed out at $19.8bn three years ago, was $6bn last year (see chart). Investors call Egypt the world’s hottest emerging market. Bond sales are oversubscribed. Despite the positive indicators, few Egyptians feel progress. The past few years have brought higher prices and stagnant wages. Mr Sisi has shown little sympathy for their distress. He dismissed complaints over a surge in the price of vegetables last year—then criticised Egyptians for being overweight. A new hint of discontent came earlier this month, when 89% of voters approved constitutional changes that let Mr Sisi stay in power until 2030, instead of 2022 under the previous charter. The result was a foregone conclusion, since his autocratic regime did not permit a “no” campaign. But turnout was just 44%. Sympathetic businessmen had to

lure voters to the polls with boxes of food. For all the hot money flooding in, bricks-and-mortar investment is scarce. “I’m comfortable buying one-year paper,” says a trader from a big American firm. “Buying a factory would be a different story.” Inflows of foreign direct investment (FDI) were $6.6bn in the first half of the current fiscal year, unchanged from the previous year and 11% lower than 2016-17. Net FDI is down 35% over that two-year period. Much of it goes to hydrocarbons. Recent natural-gas discoveries have turned Egypt into a net exporter. Such investment boosts revenue, but creates few jobs. Officials insist that FDI is coming—that it is always a lagging indicator. Trade tensions and uncertain growth forecasts have caused investment to fall around the world. Some firms had profits stuck in Egypt during the dollar shortages and are leery about coming back. “It takes

time to rebuild that confidence,” says Razan Nasser of HSBC, a bank. Though Egypt will not seek an extension when the IMF scheme ends in November, most analysts think it will stick with its reforms. But sluggish investment also reflects the weakness of Egypt’s domestic market. Its size—almost 100m people, with 2.5m added annually—means it will always have robust demand for basic consumer goods. Last year both Coca-Cola and Pepsi announced $500m in investments. Mars, a confectionery giant, is opening two new production lines. Few Egyptians can afford products that would create better-paying jobs, however. “It’s a classic developing market where 20% of the population has 80% of the purchasing power,” says the head of a local business federation. Take the car industry, which officials hope will be an engine of growth. Sales slumped after a devaluation in 2016 which halved the value of the pound. Even in a good year, though, only about 100,000 Egyptians can afford new cars. (Wealthy Saudi Arabia has one-quarter of Egypt’s population and sells about half a million.) Instead of selling cars at home, Egypt wants to export them to other parts of Africa and the Middle East. The government plans to offer incentives for using domestic suppliers: firms that buy lots of locally made components could have 80% shaved off their customs bills. Nissan has agreed to produce 100,000 cars in Egypt each year with El Nasr Automotive, a state-run firm. But Egypt will have to compete with Morocco, which has invested heavily in infrastructure. Textile firms, another possible source of jobs, will struggle to undercut big players in Bangladesh and Vietnam. The improvement in Egypt’s current account comes entirely from travel and transfers. Tourism revenues more than doubled to $9.8bn (4% of GDP) last year, while remittances grew by a fifth to $26.4bn. Both are important. Tourism employs one in ten workers. Hundreds of thousands of families rely on transfers. But the trade

deficit in goods is getting wider. It hit $9.8bn in the first quarter of 2018-19, up $1bn from the previous year. Though the devaluation made Egyptian goods cheaper to export, it also made them more expensive to produce, because manufacturers depend on imports. Raw and intermediate goods make up 41% of Egypt’s import basket. After years of weak investment, there is little idle capacity at Egyptian factories. High interest rates mean local businesses cannot afford to borrow for expansion. In February the central bank cut the overnight lending rate by 100 basis points, to 16.75%. In March, however, the bank defied expectations and kept rates steady. The Ramadan holiday and a looming subsidy cut will bring higher inflation this summer, so further cuts are unlikely until autumn. There is one final obstacle to growth: the institution where Mr Sisi spent most of his life. It is hard to quantify how much of Egypt’s economy is controlled by the army. Its budget is secret, its profits untaxed. But everyone agrees it is growing. The minister of military production, Muhammad al-Assar, said his revenues hit 11.6bn pounds last year, a 130% increase. It has a $2bn deal with a Chinese firm to manufacture solar panels and an agreement with a French pharmaceutical giant to make vaccines. When firms struggled to get hold of dollars, the army offered them a deal—all the foreign currency you need, in exchange for a share of your company. Several executives tell a version of the same joke: “There are two kinds of successful businesses in Egypt, those run by the military, and those that will soon be run by the military.” Officials like to contrast Egypt’s recent progress with the dark days after 2011. Take a slightly longer view, though, and it looks like a reversion to the norm. Before the revolution Egypt posted healthy growth rates and manageable deficits. It was also a poor country with a weak industrial base, low wages—and a president out of touch with the struggles of his people.

Rising oil prices could prevent a world... Continued from page 14

head of Iran’s navy said that if it is prevented from using the Strait of Hormuz, through which one-fifth of the global oil supply flows, it could try to close the waterway for everyone else, too. Oil inventories are low, and it is far from clear that other producers will increase output enough to compensate for the supply shock. In the long term Saudi Arabia and other OPEC members have an incentive to avoid sky-high prices, which would lead to a new wave of capital pouring into American shale production. But the last time the Saudis complied with a request from the White House to pump more—after Mr Trump scrapped the Iran deal—they were then stung by his granting of the waivers. In public they have pledged to keep the market in balance, but they also say there is no need for immediate action. Working out what pricier oil means for the world economy is more complex than it used to be. In America gas-guzzling consumers will have to pay more to fill up their cars. But ever since the shale revolution, there has been an offsetting benefit to American GDP because higher prices stimulate investment in the Permian and other shale basins. Other producer countries are also more likely to spend any oil windfall than they used to be, supporting global demand. And more expensive oil should bring the benefit of lower carbon emissions (so long as it does not prompt the discovery of vast new oil fields). Yet right now, pricier oil would be bad news for the global economy. It would hit its weaker spots. Europe, whose economy is in worse shape than America’s, has no shale industry to compensate for a hit to its consumers. China, which imports vast quantities of the black stuff, was the source of much of the recent global growth scare. And economic crises in Turkey, Argentina and Pakistan would be made worse by the higher inflation and larger current-account deficits that a rising oil price would bring.

Monday 29 April 2019

BUSINESS DAY

In Association With

Good man, bad party

To stop the rot in South Africa, back Cyril Ramaphosa The liberal opposition cannot win an election on May 8th. So it is up to the president to clean up his own party’s mess

INCE THE days of Nelson Mandela, one of the most effective slogans of the African National Congress (ANC), South Africa’s ruling party, has been “a better life for all”. The contrast with the old apartheid regime, which promised a good life only for whites, has never needed spelling out. As the party that helped liberate black South Africans from votelessness and segregation, the ANC has ruled uninterrupted since apartheid ended in 1994, always winning national elections by wide margins. The trouble is, when one party has nearly all the power, the kind of people who seek power in order to abuse it and grow rich flock to join that party. Corruption, always a problem, became so widespread under Jacob Zuma, South Africa’s atrocious president from 2009 to 2018, that a more accurate ANC slogan during his rule would have been “a better life for the president and his cronies”. As our special report in this issue describes, in those nine lost years Mr Zuma’s chums systematically plundered the state. Honest watchdogs were sacked. Investors fled, economic growth stalled, public debt soared and unemployment (even by a narrow definition) rose from 23% to 27%. Eskom, the bloated, looted national electricity firm, can no longer reliably keep the lights on or factories humming. Corruption has crippled public services. Many South Africans are frightened of their own police, and nearly 80% of nine- and ten-year-olds cannot read or understand a simple sentence. Yet there is hope. Mr Zuma is gone, narrowly ousted by his own party and now charged with some 700 counts of corruption. His replacement as party boss and president of South Africa, Cyril Ramaphosa, is an honest reformer. He is also a tremendously skilful politician—he was one of the chief negotiators who persuaded the apartheid regime to give up power

long before it would have been forced to. At elections on May 8th voters have a choice. Do they back the ANC again, trusting that Mr Ramaphosa will continue to clean up the party and revive the nation? Or do they give the opposition a chance? (They cannot vote directly for the president; he is chosen by parliament, in which seats are allocated by proportional representation.) The case for dumping the ruling party is strong. It has been in power for 25 years—too long for any party, anywhere. Despite Mr Ramaphosa’s efforts, it is still stuffed with crooks, some of them too powerful for the president to sack. Though home to a broad range of ideologies, the ANC has recently seen a worrying resurgence of far-left populism among its cadres. For example, it vows to change the constitution to allow the expropriation of farmland without compensation. The case for backing the liberal opposition, the Democratic Alliance (DA), is also strong. It is far cleaner than

the ANC. Its charismatic young leader, Mmusi Maimane, believes in free markets. The parts of the country that it runs, including Cape Town and Johannesburg, are islands of efficiency in a sea of murk and incompetence. Though the vast majority of municipalities are controlled by the ANC, a recent study by Good Governance Africa, a think-tank, found that 15 of the 20 best-governed were run by the DA, alone or in a coalition. The Economist endorsed the DA in 2014. But this time, with deep reservations, we would cast our notional vote, at the national level, for the ANC. Our reasons are painfully pragmatic. The DA has the right ideas for fixing South Africa, but is in no position to implement them. It is still seen as the party of those who are white, Indian or Coloured (to use the local term for mixed-race). Because black South Africans are 80% of the population and mostly support

the ANC, the DA cannot win (except at the provincial level—and here, we would enthusiastically endorse the DA). For the national parliament, the crucial questions are: will the ANC win an outright majority? And will the election strengthen or weaken Mr Ramaphosa’s reforming hands? If the ANC does badly, it will undermine Mr Ramaphosa and embolden the large faction within his party that would like to see him stumble. These are the bigwigs who profited from the Zuma years, and did not mind the race-baiting that the Zuma camp used to distract public attention from its own misdeeds. It also includes some of the party’s hard left, who regard Mr Ramaphosa as altogether too friendly to capitalism. Given a chance, Mr Ramaphosa’s ANC rivals would love to replace him with someone more pliable—and that would be disastrous. If the ANC falls short of a governing majority and has to forge an alliance

with a smaller party, things could be even worse. It might climb into bed with the Economic Freedom Fighters, a black-nationalist group that outdoes Mr Zuma in its racist demagoguery and disregard for economic reality. (It wants to seize all white-owned land, and nationalise mines, banks and other “strategic sectors” without compensation, for starters.) Such an alliance would foster an even more bloated, corrupt and ineffective state. The least bad plausible outcome, then, is for voters to give the ANC a solid majority, thus boosting Mr Ramaphosa and allowing him to shun the populists and face down the mafia within his own party. That way, he can continue the tough work of replacing useless Zuma appointees with law-abiding, competent people. Over the next five years he should also allow prosecutors free rein to hunt looters; break up Eskom’s power monopoly; enact a moratorium on job-killing regulations; take on the teachers’ unions that throttle education reform; and ensure that any land reform extends property rights rather than trampling on them. The man Madiba wanted There is a big risk that none of this will happen, that the ANC has grown so rotten that no one can reform it. However, Mr Ramaphosa’s record so far suggests that he is more likely than anyone else to accomplish what is necessary. South Africa cannot afford for him to fail; nor can the rest of Africa. Despite the wasted Zuma years, the rainbow nation still has the continent’s most sophisticated economy, vibrant civil society and feisty media. Having overcome apartheid without a civil war, it has long been an inspiration to the world. All this is now in jeopardy, but Mr Ramaphosa, the man Mandela originally wanted to succeed him, has a chance to save his legacy. He must not blow it.

Technology and security

Britain strikes an artful compromise on Huawei and 5G Its measured approach to dealing with the controversial Chinese firm is a model for other countries

N APRIL 24TH the news broke that Britain’s government had decided to permit parts of the country’s 5G mobile networks to be built by Huawei, a Chinese firm. Many Americans and other friends of Britain will be appalled by its decision and fear that the country is being naive and toadying up to China. Huawei has, after all, become one of the most controversial firms in the world and sits at the centre of a geopolitical storm. America worries that the telecoms equipment-maker is a Trojan horse for China’s spies and autocrats and poses a grave threat to Western interests. It has been urging its allies to ban it. Britain’s decision matters: it is a member of the “Five Eyes” intelligence-sharing alliance led by America, and was one of the first

Western economies in which Huawei built a presence. Britain also has experience of electronic spying and knows Huawei well. Far from being a betrayal, Britain’s approach, of using the firm’s gear on the edges of 5G networks, under close supervision, offers a sensible framework for limited commercial engagement while protecting Britain’s security and that of its allies. Huawei has annual sales of $105bn from 170 countries. It is a leading supplier of equipment for new 5G networks that will connect a vast array of devices and become deeply embedded in the economy. Rumours have long circulated that Huawei is cosy with China’s army, and worries about the firm have intensified in the past two years (see article). In February Mike Pompeo, America’s secretary of state, threat-

ened to limit co-operation with countries that used Huawei gear. America is also trying to extradite a Huawei executive (the daughter of its founder) from Canada for sanctions-busting. The easiest option for Britain would have been to ban Huawei from 5G networks, as Australia has. But that would be wrongheaded. One reason is technical. Refusing to use Huawei hardware does relatively little to eliminate the risk of cyber-attacks by hostile governments. State-backed hackers and saboteurs usually gain access to networks through flaws in software coding. This is why Russia can cause mayhem abroad, despite having no commercial role in Western telecoms networks. A ban would also have geopolitical costs. If an open system for global

commerce is to be saved, a framework has to be built for countries to engage economically even if they are rivals. No evidence of spying via Huawei gear has been made public. Most emerging economies have no intention of prohibiting it. A ban by a few American allies risks splitting the world into two blocs. And a system without rules could be abused to hobble other Chinese firms engaged in legitimate activity (see article). For a calibrated policy to succeed, Britain and other countries will need to observe three principles. The first is continual monitoring for hidden back doors and bugs. Since 2010 Britain has had a system for vetting Huawei’s software and systems. This should continue and be extended to other 5G providers, with the aim of minimising the sloppy coding that creates vulnerabilities.

Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

cityfile Be wary of guests with no address- Monarch tells hoteliers

Shina Olukolu, commissioner of Police Oyo State, (r), parades alleged kidnappers, notorious ex-convict, and hoodlums NAN arrested at Ayegun Olomi and Shina Olukolu in Ibadan at the Police headquarters Eleyele, in Ibadan.

Acute water scarcity hits Bauchi community …as families stay days without cooking

esidents of Tudun Wus, in Dass local government area of Bauchi State are faced with acute scarcity of potable water with threat of possible outbreak of waterborne diseases. A leader in Dass, Babaji Jibrin, says the entire community is served by only one solar borehole, leading to residents trekking long distances in search of water from sources not guaranteed of cleanliness. According to Jibrin, before now, nine hand boreholes served the community, but all have stopped working for more than a year now.

“We are left with only one functional solar borehole serving the whole community. The other nine hand boreholes have stopped working for about a year now,” said Jubrin as he lamented their ordeal to newsmen in Dass, weekend. He said because only one borehole is functioning, “we have to queue up to fetch water till midnight. Others fetch around 4:00 am in the morning while hundreds roam everywhere in search of water. “I have seen some households spending two days without cooking meal due to lack of water. We are calling on

the government and relevant stakeholders to rescue us from this water scarcity,’’ the community leader lamented. Another resident, Nazi Yari, said that men and women, including children in the community, usually abandon other duties in search of water on a daily basis. “The water scarcity in our community is as a result of irregular tap water supply, and most houses do not have wells. The only solar borehole we have cannot serve the population living in the community,’’ Yari said. Contacted, Ibrahim Bello, an official of the state Rural

Water Supply and Sanitation Agency (RUWASSA), said that the development was new to him. Bello, who is the assistant general manager of the agency, said RUWASSA was yet to receive any complaint from the community. “For them to say they have nine hand boreholes that are not working, to me, I think there is something fishy. This is because if it was true, they would have reported it. It is new to me, but we will definitely carry out a fact-finding inspection and swift action will be taken,” Bello said.

Police launch ‘Operation Puff Adder’ in Aba GODFREY OFURUM, Abia

he police in Abia have launched ‘Operation Puff Adder’ to combat robbery, kidnapping, and other criminal activities in the state. The Commissioner of Police (CP) in charge of the state, Ene Okon, launched the operation in Aba, the commercial hub of Abia State, just as he warned police personnel

against intimidation of residents. “The operation is hereby launched to stamp out kidnapping, robbery and other criminal activities in the state. We have all the strategies put in place to implement the vision of the Inspector General of Police as far as the operation is concerned. “So, inaugurating it in Aba will go a long way in curbing kidnapping, robbery, cultism and other www.businessday.ng

violent crimes in Abia State. Ene said that the operation would rely on intelligence gathering, surveillance and monitoring. He believed the operation would yield positive results while also calling on residents to assist by volunteering information on suspected criminal hideouts. Charles Esonu, interim chairman, Aba South local government Area, said the

operation was an indication that the police meant business. He appealed to residents to volunteer information that could help police make the project successful. Recall that the acting Inspector-General of Police (I-G), Mohammed Adamu, first launched operation ‘Puff Adder’ in Zamfara before it was later extended to other parts of the country.

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traditional ruler in Ekiti, Alawe of Ilawe Ekiti, Adebanji Alabi, has warned hoteliers in the community lodging guests with no fixed addresses in their hotels. Alabi gave the warning dur ing a meeting with hotel owners and heads of security agencies in Ekiti Southwest local government area of the state. The oba, a first class traditional ruler, said it was important for the hoteliers to work closely with security agencies to stamp out cases of rape, kidnapping and robbery. The traditional ruler said he was disturbed by the recent upsurge in criminal acts such as rape and drug addiction especially among the youths. He explained it was in order to tackle such crimes that he convened the security meeting. Alabi further advised the hoteliers to ensure at all times that they profile customers seeking accommodation in their hotels and forward

same to security agenc i e s, p a r t i c u l a r l y t h e police. According to him, doing so will enable security operatives have a clear picture of the goings-on in the hotels o n a d a i ly ba si s. Th e monarch also advised the hoteliers against l o d g i n g t w o t o t h re e men with a lady in one room. He sa i d t h e a d v i c e became necessary because guests could use the hotel to commit crime. According to h i m, t h e i s s u e o f s e curity should be taken seriously by all and sundry to sustain the existing peace in Ilawe Ekiti. He warned that anyone found to be involved i n c r i m i na l a c t i v i t i e s would be handed over to security agents. Usman Khanjallo, the divisional police officer in the area, who was one of the security chiefs at the meeting, commended the monarch for his initiative and promised to provide adequate security cover for the community.

Taraba: Police arrest 5 kidnappers, 4 cattle rustlers

he police command in Taraba says operatives h av e a r re s t e d five suspected kidnappers and four cattle rustlers wreaking havoc in the state. Alkasim Sanusi, Commissioner of Police (CP), Taraba State, disclosed t h i s t o j o u r na l i s t s i n Jalingo on Friday. Sa nu si sa i d o p e ra tives of the Special AntiRobbery Squad (SARS) arrested the suspected kidnappers when they attempted to collect rans o m f ro m f a m i l i e s o f kidnapped victims. “The five suspected kidnappers were arrested when they went to collect ransom with a stolen motorcycle. The suspects are at the moment helping us with useful information to enable us to arrest their colleagues at large,” he said. @Businessdayng

The police chief adv i s e d k i d na p v i c t i m s across the state to visit the police headquarters with witness to identify the suspected kidnappers. He called on families of victims of kidnap to always be courageous to volunteer information to the police any time ransom was demanded by the hoodlums. Sanusi disclosed that the command, similarly, arrested four cattle rustlers who had been wreaking havoc on cow owners in the state and recovered 58 cows from them. He said that the 58 cows would be handed over to the owners. The CP appealed to t h e p e o p l e t o a l way s provide timely information to the police to enable the command curb kidnapping and other criminal activities in the state.

Monday 29 April 2019

BUSINESS DAY

COMPANIES & MARKETS

Fidelity bank PBT hits N6.7bn in Q1 on gains from other income

COMPANY NEWS ANALYSIS INSIGHT

Pg. 20

CONSUMER GOODS

Weak demand takes toll as Guinness plunges to 7-year low DAVID IBIDAPO

uinness Nigeria, the secondbiggest brewer in the country by market capitalisation, fell to a seven-year low Thursday as investors sold the stock on concerns that the company’s full-year result could under-perform last year’s financial position. The stock fell 10 percent in Lagos trading to close at N48.60 after a 2-day flat performance at N54. Total volume traded on Thursday stood at 6.05 million shares. The stock underperformed consumer’s staple sector which fell 0.89 percent and consumer products industry which dipped 1.29 percent on the day. Nine-month net profit declined 16 percent to N4.25 billion from N5.08 billion during the corresponding period last year, with annualized 9M’18/19 EPS at N1.5 as stated in Guinness financial statement released on the Nigerian Stock Exchange Thursday. The company’s financial year ends in June. Quarterly profit declined

marginally by four percent from N1.74 billion in Q2 2018. Based on Guinness quarterly trend, the beer maker’s full-year earnings may total N2.1 billion at the end of the full year, given that in the last three quarters, Guinness has grown its profit at an average quarterly rate of 26 percent. At 26 percent growth rate, the company’s profit is likely to fall below the prior fullyear performance of N6.68 billion by N4.57 billion. During the period, revenue contracted by 3.9 percent y/y to N101.4 billion. Sales declined by 3.8 percent YoY to N33.6 billion. ‘‘We believe the weakness in sales likely reflected intense rivalry in the lager segment, which may have led to volume contraction,’’ analysts at Cardinal Stone said in a note to clients Friday. Also, Guinness reported 2.7 percentage points YoY moderation in gross margin to 31.1 percent, despite the 3.2% decline in production cost. ‘‘Sustained contraction in the beer segment left limited

scope for gross margin expansion (according to management, lower beer volumes typically imply a higher fixed cost per unit),’’ Cardinal Stone analysts said. “Guinness has not been doing well in recent times, and the stock is dominated by foreign investors,” Paul Uzum, a Lagos based stockbroker on the NSE, told BusinessDay. The share price of Guin-

ness has been on a downward trend since June 2018, resulting in a 48.8 percent plunge in the value of investors’ holdings, losing a whopping sum of N101.6 billion since the start of the current fiscal year. This is despite the rights offered by Guinness of 684,494,631 ordinary shares of 50 kobo each at N58 per share to existing shareholders to rise about N39.7 billion in 2017.

“Having sold at that low level, they created room for more investors to come in. However with recent financial performance, investors are reacting negatively to the stock,” Uzum explained further. “I do not think they will meet up with their full-year performance in the last financial year,” Uzum concluded. Year to date analysis of Guinness Nigeria shows that

as at Thursday, the stock was down 32.5 percent losing N51.24 billion in market value. According to data collated from Bloomberg, the last five years have seen investors lose a whooping N287.37 billion in market value. Analysts further explained that outlook for the company as well as its sector looks bleak on the back of excise duties which is currently weighing down the company’s top line. “Although prices are low now and multiples are indicating the stock is cheap, the big question is the future of their earnings amidst challenges currently facing the beer industry,” Gbolahan Ologunro, research analyst at CSL stockbrokers limited, said. “My stock recommendation is neutral for the company,” he added. ‘‘We re-highlight that the 9M’18/19 performance was underwhelming across all key line items; however, the stock appears to have been disproportionately punished by equity investors. We have a target price of N65.67 and a BUY recommendation on Guinness,’’ analysts at Cardinal Stone stated.

BANKING

FCMB commended for impressive performance, higher dividend declaration IHEANYI NWACHUKWU

hareholders of FCMB Group Plc have commended the Board, Management and Staff of the financial institution for recording another impressive performance in 2018 in spite of the challenging macroeconomic and regulatory environment. The commendation was given at the 6th Annual General Meeting (AGM) of the Group held on April 26, 2019 in Lagos. At the meeting, the shareholders approved the financial results of FCMB Group and payment of a cash dividend of 14kobo per ordinary share for the year ended December 31, 2018. This translates to a total amount of N2.77 billion. Going by its audited accounts for last year, FCMB Group’s profit before tax (PBT) rose by 73percent to N18.4billion as against N11.5 billion in the preceding year. Gross revenue grew to N177.4 billion, an increase of 4.3percent compared to the N169.9 billion for the same period in 2017. Net interest income as at

the end of 2018 rose by 3percent Year-on-Year (YoY) to N72.6 billion. In demonstration of the enhanced confidence of customers in FCMB, deposits also increased by 19percent YoY to N821.7 billion while loans and advances stood at N633 billion. Total assets went up by 21percent YoY to N1.43 trillion, just as capital adequacy ratio was 15.9percent. Commenting on the development and the financial results of the Group, the Chairman of Trusted Shareholders Association of Nigeria, Mukhtar Mukhtar, expressed delight on the increased dividend payment. According to him, “This is an excellent result achieved by FCMB Group in a period of low economic activities in the country. I am highly impressed with the Group’s balance sheet quality which witnessed a high growth. “This shows vigorous policies that have positively impacted on and optimised the balance sheet. Another significant aspect of the performance of FCMB is the growing contributions of the subsidiaries in the profit margin. The 14kobo dividend declaration

signals FCMB’s commitment to improving the lots of shareholders’’. On his part, the National Chairman of Progressive Shareholders Association of Nigeria, Boniface Okezie, said, “FCMB and its subsidiaries have done very well in terms of dividend payment and the overall performance, including the loans portfolio which is also encouraging. The fact the Bank has been able to increase its branch network is an indication that it is expanding. I believe that FCMB will build on this performance”. Presenting his report, Oladipupo Jadesimi, Chairman of FCMB Group said “In 2018, we continued to move forward on the path of good governance, strengthening and improving our corporate governance structure and bringing it into line with our long-term strategy and the highest international standards. This was in order to increase the confidence of our shareholders, investors and other stakeholders in an environment that is demanding even more transparency’’. He added that, ‘’the Board of Directors, fully engaged

and committed to the Group’s corporate culture and strategy, has the experience, knowledge, dedication and diversity needed to accomplish our objective of making FCMB one of the leading financial services groups of African origin, helping people and businesses prosper and upholding our adopted of execution, professionalism, innovation and customer focus’’. Also speaking at the AGM, Ladi Balogun, Group Chief Executive of FCMB Group Plc said, ‘’the Commercial and Retail Banking Group (which includes First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited) grew its profit by 61percent, driven by improved performance in our consumer finance business and increase in fees and commissions. Commercial and Retail Banking remain our largest group, contributing 83percent of profit. Our banking franchise continued to grow as reflected by a 20percent rise in deposits and our customer base also grew by 20percent to 4.9 million customers’’. Balogun also reported that, ‘’the pre-tax profit of our

Investment Banking Group (FCMB Capital Markets Limited and CSL Stockbrokers Limited) increased by 24percent in 2018. This performance was driven by higher conversion

of our investment banking deal pipeline as well as cost efficiencies. Our stockbroking business maintained its position as a top-three player in its sector’’.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Monday 29 April 2019

BUSINESS DAY

COMPANIES&MARKETS BANKING

Fidelity bank PBT hits N6.7bn in Q1 on gains from other income ...Customer deposits cross N1trillion mark MICHAEL ANI

igerian tier-2 lender, Fidelity bank, has kicked off the 2019 financial year on a strong footing as its first quarter (Q1) scorecard showed that Profit Before Tax (PBT) grew by 34 per cent to N6.7 billion from N4.9 billion same time the previous year. This is on the back of an increase by 230 per cent in the firm’s other operating income from N556 million in Q1 2018 to N2.5 billion in 2019, and a jump of 47.5 per cent in Net Fee and Commission income to N5.4 billion in Q1 2019 from N3.6 billion the same period in the previous year. The strong growth in the Other Income line was supported by net foreign exchange gains of N2.3bn realised in Q1 2019 compared to N146m in Q1 2018. On the other hand, the impressive growth in the bank’s Net Fee and Commission Income was driven by a higher account maintenance charges which were up 28 per cent; a higher Commission on travellers

cheque and foreign bills which was also up by 40 percent and Commission on E-banking activities which grew by 74 percent in the period. When annualized, the bank’s pre-tax profit touched N26.7 billion by the full year 2019, representing a 6.4 per cent increase from the N25.1 billion reported by the firm in year-end 2018. Gross earnings for the firm also grew 11.8 per cent to N48.4bn from N43.3 billion in 2018 while profit for the quarter closed at N5.9 billion from N4.6 billion the same period the year before—due to a higher than effective tax rate of 11 per cent compared to 7.1 per cent in Q1 2018. “We attribute the improvement in these income lines to the banks’ retail strategy, which involves the use of technology in delivering exceptional banking services”, analysts at Lagosbased investment and financial advisory firm said. For the first time ever, the amount of money deposited by customers crossed a one trillion naira mark at N1.01 trillion in Q1 2019, an increase of 18 per cent and 3.1 per cent from the N859.4 billion and N979.41

billion in Q1 2018 and as at 31st December 2018 respectively. Analysts say the growth recorded in deposits could be attributed to the firms continued efforts in rewarding the lowincome customers through its Savings Loyalty Scheme (SLS). Fidelity bank in 2017 set out a five-year plan that will see the lender join its counterparts in the Tier 1 space by 2022, driven majorly by organic growth. Nnamdi Okonkwo, chief executive officer in an interview with BusinessDay said the firm is very much on course to achieve the target it set out in its growth plan as implantation is staying comfortably around 44 per cent. The bank recently announced the appointments of three new executives into its board of directors as part of corporate realignment aimed at repositioning the bank for further growth. The bank successful raised $400 million 5-year Eurobond with a 10.50 percent coupon which is the second largest combined new issue and liability management offering ever by a Nigerian issuer after Ecobank. Although impairment

charges grew by 47 per cent, Cost of Risk (COR) for the firm remained flat at 0.4 per cent in Q1 2019. Similarly, interest income

for the firm grew 2.6 per cent to N38.7billion, while Interest Expense rose 6.5 per cent to N22.9 billion, on growth in customer deposits.

Its share price was up 2.07 per cent to close at N1.97, at the end of the trading session yesterday.

L-R: Ladi Smith, senior partner, SIAO; Ituah Ighodalo, senior partner, SIAO; Omolola Oke, chairman, Lagos District, Society of ICAN, Rasak Jaiyeola, ICAN President, during the courtesy visit of ICAN President and his team to SIAO Accounting Farm in Lagos.

INDUSTRIAL GOODS

CAP earnings up 8 percent in Q1 SEGUN ADAMS

hemical and Allied Products (CAP), subsidiary of United Africa Company of Nigeria, starts 2019 in upbeat, posting its biggest first-quarter profit in 5 years, albeit at slower growth compared to 2018 first-quarter. The paint manufacturer announced on Wednesday that it earned N498.9 million in profit for 3 months to March 2019, 8 percent more than its 2018 figure of N462.3 million. The drivers of growth were improvements in sales and net finance income. Although the earnings in the first quarter of 2019 is the company’s highest in the last five years, the rate at which profit grew year on year in the first quarter of 2019 slowed to 8 percent compared to 18 percent in the first quarter of 2018. Notwithstanding, the performance in the first quarter follows a strong 2018 full year where CAP improved its topline and bottom-line with profit after tax in double-digit growth. For the latest quarter, CAP saw a turnover increment of 8 percent to N2.12 billion from N1.96 billion in the corre-

sponding period of 2018. CAP, which owns the premium paint brand, Dulux alongside Caplux and other products, makes its income from sales of paint product as well as the application of paint services. Turnover from sales of paint segment was up 7 percent to N2.11 billion, contributing more than 90 percent to revenue while services segment contributed N14.3 million although it didn’t add to the revenue of CAP in the first quarter of 2018. CAP was able to retain N48.77 after accounting for the direct cost of sales from every N100 sales in 2019 maintaining its 2018 Q1 gross margin of 48 percent. A higher gross margin shows a company retains more on each naira of sales to service its other costs and debt obligations. Operating profit barely changed in the review period with a 0.65 percent increase to N615 million. The net effect of an 88 percent surge in selling and distribution expenses and 22 percent spurt in other income meant operating income remained around first quarter 2018 levels. Consequently, operating margin which shows how much CAP was able to keep

after paying for its variable cost of production but before settling interest and tax obligation fell in the first quarter of 2019 to 29.01 percent from 31.14 percent in the corresponding period of 2018. Net finance income grew 73 percent to N118.6 million on 69 percent growth in finance income and no finance cost incurred by CAP in the period. The gains in net finance income were enough to see profit before tax improve by 8 percent to N734million in the 3-month period of 2019 as against N462million made previously in 2018. A decline in tax expenses up to 8 percent also contributed to the 8 percent surge in the company’s profit after tax although its net margin remained at approximately 24 percent in the same quarter of both years. Earnings per share, however, grew to 71 kobo in the recently concluded quarter from 66 kobo in the preceding year. Chemical and Allied Product is down 2.44 percent on Year to Date as at Wednesday where the stock closed flat at N34, 32 percent above its 52week of N25.75 established November 2, 2018.

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L-R Olabanjo Alimi, sales and marketing lead. Enyo Retail and Supply Limited ; Bosun Tijani, CEO, STEM Cafe; Arinola Shobande, corporate communications lead, Enyo Retail and Supply Limited , and Ebere Nkoro, MD, STEM Cafe , at the launch of STEM Café at Enyo Olowo Eko Station in Lagos. Pic by Pius Okeosisi

L-R: Faith Adesemowo, CEO, Social Lender; Jerry Osagie, Chief Operations Officer, Zedvance Limited; Jameel Taiwo, MD/CEO Credit Registry; Mayowa Owolabi, CEO, Afara Partners and Tunde Popoola, MD/ CEO, CRC Credit Bureau during the Lendtech Leaders Panel at the Lagos Fintech Week

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Monday 29 April 2019

BUSINESS DAY

COMPANIES&MARKETS ICT

Firms need to measure digital marketing ROI for efficient strategy –Amplify FRANK ELEANYA

s part of efforts to deepen its footprint in Nigeria’s digital marketing landscape, Amplify Digital Agency has kicked off its monthly knowledge-based meet-up, with the call on organizations to ensure that they carry out some form of measurement of their return on investment (ROI) objectives. The educative event which held on Thursday, at the Workstation brought together practitioners as well as clients to share experiences and proffer solutions to some of the challenges that beleaguer the segment in the country. According to Alexander Edem, CEO of Amplify Digital Agency the meet-up was a platform to bridge the disconnection between the money C-Suite executives approves for digital marketing agencies and the results they derive. “We think that if marketers could deepen their knowledge of the industry and the tools that are available for use, and deepen the knowledge of the customer and their knowledge of the client, things will be better,” he said during an interview. Poor results from investment in digital marketing have seen many executives underplay the importance of

brand communication and visibility. Nevertheless, the survival of the business often depends on how well it is leveraging digital marketing channels. The 21st century customer has moved his location online hence any serious organization that does not have any form of presence online is essentially choosing not engage their clients in their new location. There are many new digital marketing trends and strategies that are evolving in the current high-tech, internet-connected era and organizations now need to use them to succeed in their efforts to scale. In the same vein, digital marketing agencies need to upgrade their knowledge on what really works for specific situations in order to achieve maximum results. This is where the clients’ ROI becomes very critical as the agency will often have to show proof that money was well utilized and results match up to investment. At a panel session, experts agreed that ROI does vary from one company to another. While company A may have a goal as its ROI objective, B could settle for financial returns. “I don’t think we will ever finish the conversation, it is an ongoing discussion because ROI can only be

subjective. For some companies having more customers engage with them is enough ROI, for some other people it comes down to the hard money, what was the investment and what was the profit from the investment? Different marketers have slightly different perspective to how to measure ROI. “However, a consistent theme across is that we must measure whatever is the objective for the brand. Some measurement must be done whether it is towards a financial incentive or some form of goal. Hitherto the idea wasn’t really measurement focused but it has become important. We must put the tools and systems in place to make measurement. Anything that isn’t measured cannot scale. That is what we have seen as marketers,” Edem said. The Think Digital meetup holds the Thursday of every month. It is expected to last for the next one year. Amplify Digital Agency has also commenced a digital podcast called the Think Digital podcast where they invite key decision makers to come and talk about what they are facing and how to improve on that. There is a thinkdigital.ng where you have a lot of long form contents, article with deep dive analysis of the industry that could be used by practitioners as actionable insights.

REAL ESTATE

Respite for aspiring home owners, as Pennek offers affordable housing promo JUMOKEAKIYODE-LAWANSON

he need for affordable and qualitative housing has always been a bane of Nigerians. Considering the bottlenecks in property acquisition, Pennek Nigeria Limited, a leading real estate company in Lagos has brought respite to property buyers with its ongoing property promo offering affordable housing projects along the Lekki – Ajah axis of Lagos State. Speaking to journalists about the property offer, Kennedy Nnadi, managing director of Pennek Nigeria Limited, said the company is offering prospective property owners a great deal in ‘The Estate’, strategically located at

Lekki Scheme 2, a quick 5-8 minutes’ drive from Chevron. The 72 acres of dry table land is sold in plots of 500sqm and comes with a good title of a Governor’s Consent at N18,000,000 if paid off out rightly. However, with only N3 million in down payments and a flexible plan that allows you to spread the balance across six months to a year, the company has lowered the bar for luxury property ownership. “The presence of many players in the property business has also made the pricing highly competitive. Our goal is to change the dynamics of the industry with our pricing and with offers like a free plot of land,” Nnadi said. www.businessday.ng

“We live in the same environment and understand the demands on our limited resources. Pennek’s goal is to make it easy for people to live in their dream homes, or make the best real estate investments as the case may be. This offer is one of the ways we are making luxury affordable for more Nigerians. This is one of the goals the company aims to achieve,” he added. Pennek Nigeria Limited is a real estate investment firm that specializes in the procurement and offering of choice plots of land in areas proven to yield the highest returns on investment (ROI) in the rapidly-developing Lekki and Ibeju-Lekki axis of Lagos State. https://www.facebook.com/businessdayng

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Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

Women Empowerment: GEEP empowers more women in Benue with interest free loans

ccording to a UN report, women form a disproportionately large share of the world’s unbanked population. One of the major reasons for this is due to inequalities in income levels between both genders, making women less able to operate accounts in formal financial institutions. Women also rarely have the collateral necessary to access loans from formal financial bodies. This has led to the rise of women’s microcredit savings and loans groups. These associations are spread across various market clusters in Nigeria and their sole aim is to provide a viable line of credit for its members. These microcredit savings and loans group operate using a contributory methodology where members are required to set aside a little part of their income either weekly or monthly with one designated member having access to that lump loan sum per week/month. This provides a line of credit for members but a major challenge is the amount of time it takes for members to access another loan as it may take months before the

loan cycle is complete. The Government Enterprise and Empowerment Program (GEEP) has bridged this gap through its interest-free loan products: Tradermoni, Marketmoni and Farmermoni. Women have been able to access these loan products through market clusters in the case of Tradermoni and market cooperatives in the case of Marketmoni. These market structures help to keep the women accountable as they receive the loans, put it to good use in their businesses while repaying over a convenient time frame. This was recently evident in Benue state where enumerations and loan disbursements continued for more traders in Markudi Modern Market and Wurukum Market in Benue state. Most of the TraderMoni beneficiaries who had received the initial N10,000 loan and successfully repaid it were on hand to receive the second loan level of N15,000. There have been over 40,000 disbursements for TraderMoni and 7,000 for MarketMoni in Benue with women making up a significant percentage of the beneficiaries for both GEEP

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products. These GEEP products have helped to close the gender gap in access to financial services with women making up 59% of GEEP beneficiaries. This has helped female Tradermoni beneficiaries to set aside a portion of the loans they are accessing in structured financial institutions using either a bank account or mobile wallet. Marketmoni beneficiaries have also recorded a significant and sustained boost in their working capital just from accessing the first loan. They are also able to use this loan to expand their business product offerings while getting included in formal banking structures. As a popular saying goes, “when you empower a woman, you empower a nation.” With the adoption of GEEP products by women-owned MSMEs, a solid bedrock is being built for national development. Interactions with these beneficiaries show the level of impact of these loans: Madam Magdalene Clifford who is a Marketmoni beneficiary gave insight into how the loan helped her expand her buka business. “I sell noodles, chips, salad, peppersoup and drinks. My sister was the one that told me about the loan from the Federal Government. She said it was real and that it would help my business. I got further information through my cooperative and I applied for the loan. I received 50,000 naira which I immediately put into my business. Before, I was not selling rice or swallow due to lack of funds. Today, I have expanded my menu options to include these and I have experienced an increase in patronage at my food house. The repayment process has been so easy and I am thankful to the Federal Government for remembering us this way.”

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Franca Abani who sells dry fish in Wurukum Market said “I always buy my fish on credit because I do not have enough money to pay the seller fully but with this Tradermoni loan, I have been able to buy dry fish, pay fully and also increase the quantity of dry fish I can buy at a time. This has definitely been a big boost for my business.”

Magdalene Clifford, a Marketmoni beneficiary

Franca Abani, Dry Fish Seller in Wurukum Market, Benue

Madam Kankuni who sells foodstuffs described the positive influence that the Tradermoni loan has had on her business, “I initially heard on radio that the government was giving money to petty traders. I was very reluctant to go because in the past, we have been promised this kind of loans but we never got them. I got registered and

afterwards, I got a message that my loan was ready. I went to the agent in the market and received my 10,000 naira loan. Before, I only have a small stock of food items to sell but now, I have doubled my stock with this loan. It has really helped my business and I am now saving to get a shop of my own in the market.”

Madam Kankuni, Foodstuff seller, Markudi Main Market

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Monday 29 April 2019

BUSINESS DAY

real sector watch

Manufacturers defy policy flip-flop to pump N4.55trn in economy in 5 years ODINAKA ANUDU

embers of the Manufacturers Association of Nigeria (MAN) ignored policy inconsistencies and high interest rates to invest N4.55 trillion in the economy between 2013 and 2018, data from the association say. The investments were made in plant, machinery, land, building, assets, vehicle furniture and different kinds of equipment. More than 70 percent of these investments went to Lagos and Ogun axes. Th e d at a s h ow t hat N552.64 billion were pumped by the manufacturers in 2018. Manufacturers in Lagos, which includes Apapa and Ikeja industrial zones, invested N287.16 billion while those in Ogun pumped N186.47 billion into the economy. Independent checks show that the companies that have made huge investments included Dangote Group, Flour Mills of Nigeria, Honeywell, De-United Foods, and African Industries, among others.

L-R: Olakunle Oloruntimehin, general manager, Cisco Systems (Nigeria) Limited; Ernest Oladipo Faulkner, country general manager, IBM Nigeria; Margaret Olele, CEO, American Business Council; Oluwatoyin Akomolafe, president, Nigerian-American Chamber of Commerce; Chike Maduegbuna, CEO, Afrinolly Creative Hub; Gimba Mohammed, general manager, MainOne, and Joyce Akpata, director-general, Nigerian-American Chamber of Commerce at the NACC April 2019 business luncheon held on 25th April, 2019 in Lagos

In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited, berthed Ogun. Procter &Gamble (P&G) set up a diaper plant in Agbara within that year, but this shut down in 2018 owing to high production and running costs.

Fidson Healthcare set up a N9 billion drug manufacturing plant in Ogun in 2016. Less than six months after commissioning its 1.5million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State, BUA has Cement completed its newest Obu plant in Edo State, which has a capacity to churn out three million mtpa of cement annually. This brings the total capacity of BUA Obu cement

Innovation takes centre stage as FMN flaunts Golden Penny Jollof Noodles Gbemi Faminu

n a bid to expand its market target and attract customer loyalty, Golden Penny Noodles, a unit of Flour Mills of Nigeria, has stormed the market with a new product known as ‘Jollof Chicken Flavour’. A report released by the World Instant Noodles Association ranks Nigeria as the 12th in global demand for instant noodles index in 2017. Golden Penny has leveraged this to produce more options to excite and encourage consumers. The new flavour comes in three pack sizes, which are the 70g, 100g and 150g, with spices that give appealing jollof flavour to consumers. It can be cooked within five minutes and contains high quality wheat for easy digestion. Speaking at the launch of the product, Chiaka Eluchie, category manager for Golden Penny Noodles, said the prod-

uct was manufactured on the basis of consumer preference and satisfaction. Eluchie said a survey carried out by the company showed that jollof flavour was the most appealing for Nigerian consumers. The findings prompted the company to recreate Nigerians’ favourite jollof flavour in a simpler and faster noodles form. “Golden Penny Noodles is one of the top three brands in Nigeria’s noodles industry, having existed for over 10 years. We excite consumers by giving another flavour in the market,” she said. The Jollof Chicken Flavour was produced in line with consumer needs and preference in mind, as the company put so much research into the product, which is considered as the most appealing flavour to Nigerians, Eluchie said. She explained that the Nigeria noodles market value is worth N190 billion, and grows consistently year on year, fuelled by rapid population www.businessday.ng

growth rate. She said there is a need to encourage the sector as the growth of the country’s economy is partially dependent on the consumer goods industry which is a unit of the manufacturing sector. Eluchie advised the government to stop influx of foreign instant noodles into the consumer market in order to encourage acceptance of the made-in-Nigeria products in the consumer market. The Golden Penny Noodles unit, which started production 10 years ago, has grown to reach 3rd place in the Nigerian noodles market among 16 brands. The brand initially had only the ‘Tasty Chicken Flavour’ but has added the Jollof Chicken Flavour to its profile. FMN is one of the most diversified conglomerates in Nigeria, with subsidiaries such as Golden Sugar Company, Golden Pasta Company, Thai Farm International, and Premier Feed Mills, among others.

operations to six million tonnes and move the entire group’s installed capacity to eight million mtpa. Beloxxi, on February 9, 2018, launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons. The biscuit firm in 2016

closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the company’s capacity from 40,000MT to 80,000MT while the staff strength is over 3,700. Similarly, Nestlé also pumped N4.1 billion into its Milo Ready-to-Drink (RTD) beverage plant in Agbara last year. The plant manufactures Nestlé Milo Ready-To-Drink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes. “This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80 per cent of our inputs with local farmers and investing in the development of rural communities,” said Mauricio Alarcon, managing director and CEO of Nestlé Nigeria. In the last four years, PZ Wilmar has pumped almost $150 million into oil palm plantations and palm oil mills, Santosh Pillai, managing director of PZ Wilmar, told BusinessDay. “We are determined to continue with these investments and looking for op-

portunities to expand our plantations in the state,” he said. Presco has so far invested N75 billion into the palm oil industry, Felix Nwabuko, managing director of Presco, said, adding that the company also plans a capital expenditure investment of N46 billion over a five-year period (2018-2022). Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 13.5 percent. Deposit money banks lend as high as 30 to 35 percent, according to BusinessDay checks. Manufacturers say they were charged over 20 percent in 2018. Policy inconsistencies have hurdled manufacturers, with the steel sector being one of the hardest hit. Apart from the suspended Export Expansion Grant (EEG), which is yet to be fully restored since August 2013, a particular policy on coldrolled steel was suspended abruptly by the present administration. Lack of policy relating to importation of textiles has killed almost all the firms in the sub-sector. In many manufacturing subsectors, there are policy laxities or silence, players in the sector say.

New-look Cadbury Nigeria’s revenue hits N9.3bn in Q1 2019 ODINAKA ANUDU

adbury Nigeria Plc has announced revenue of N9.283 billion for the three months ended March 31, 2019. This represents an increase of 12.7 percent over N8. revenue realised within the same period in 2018. The beverage maker also recorded gross profit of N2.375 billion, representing an increase of 32 percent over the N1,799billion, which was reported for the same period in 2018. Cadbury Nigeria’s profit for

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the period stood at N506 million, which translates to 2,200 percent growth, when compared to N22million realised in the first quarter of last year. Cadbury Nigeria’s first quarter result reflects a sustained positive trend in the company’s performance. In its full year result for 2018, profit before tax surged by 242.9 percent to N1.2billion, from N350 million in 2017. The company also reported an increase of 174 percent in its profit after tax from N299.9million to N823million, within the same period. Cadbury Nigeria had an-

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nounced the appointment of Oyeyimika Adeboye as managing director, effective 1st April, 2019. Adeboye took over from Amir Shamsi, who moves on to a new role within Mondelez International, the parent company of Cadbury Nigeria. Adeboye is the first woman to be appointed managing director since the establishment of Cadbury Nigeria over five decades ago. Cadbury Nigeria Plc (CN), a publicly quoted company, is the pioneer cocoa beverage manufacturer offering some of the most loved brands in the country. Cadbury Nigeria is a 74.99 percent-owned subsidiary of Mondelez International, a global snacking powerhouse with an unrivalled portfolio of brands. The remaining 25.01 percent of shares are held by a diverse group of indigenous, individual and institutional investors.

Monday 29 April 2019

BUSINESS DAY

real sector watch Proposed gas price cut for textile firms not likely to solve industry problems ODINAKA ANUDU

he Federal Government has intervened in the wobbly textile industry, as it negotiates with gas suppliers to cut price for the players from $7.8 per standard cubic metres (scm) to $3.85 per scm, industry sources told BusinessDay. But this may not likely lift the struggling industry as key issues that hurt the subsector remain unsolved. The industry sees the proposed gas price reduction as a welcome development, but believes that until issues around poor patronage, unbridled importation and smuggling of textile products are resolved, the move may achieve minimal result. “The gas price is good, though it is not yet in operation,” Hamma Kwajaffa, director-general of Nigeria Textile, Garment and Tailoring Employers Association (NTGTEA), told BusinessDay. “But the level of importa-

tion and smuggling in this country are killing the few surviving companies. They used to run three shifts but they have closed down these shifts,” he said. He explained that the industry is operating at 20 percent capacity and lacks basic infrastructure. He claimed that the local

surviving textile firms can meet domestic demand if given the needed policy push. “The Executive Order 003, for instance, has been pronounced, but it is not being implemented. So we have low patronage in the industry,” he added. Independent checks show that a few textile firms are

still competing with imports. They include African Textile Mills, Angel Spinning and Dyers Limited, Sunflask, and Nichemtex, among others. Kwajaffa said there are about 24 textile firms today. However, most of the firms are producing caps, rugs, sweaters and towels. Some are combining produc-

L-R: Kayode Yemitan, consultant toxicologist, Mouka Mossi Range; Raymond Murphy, managing director/CEO, Mouka Limited; Abimbola Osinowo, programme manager, Lagos State Malaria Elimination Programme; and Jimi Shodipo, chairman, Committee on Young Doctors of the Nigeria Medical Association (Lagos State chapter), at the press briefing on the 2019 World Malaria Day in Lagos recently

Mouka manufactures new malarial drug

ouka Limited, Nigeria’s leading manufacturer of mattresses and other bedding products, has launched an innovative range of insect repellents in line with its mission of adding comfort to Life. To commemorate the 2019 World Malaria Day, an event was organised by the foam manufacturer in Lagos on Wednesday 24th April. Raymond Murphy, chief executive officer of Mouka, said the launch of Mouka Mozzi Insect Repellents which create a protective halo from mosquitoes, is the company’s contribution towards the global campaign against malaria. Murphy said, in addition to mosquitoes, Mouka Mozzialso provides protection from bedbugs, mould, bacteria spores, spiders, cockroaches and dust mites. With each application, a consumer can enjoy 24 hours protection for up to 3 months, which is not possible with insecticides. Omoniyi Kayode Yemitan, who conducted the chemical evaluation, efficacy and toxicological assessment of Mouka Mozzi, endorsed the products as

safe for all members of the family including pregnant women and young children. Yemitan, who is of the Department of Pharmacology, Therapeutic and Toxicology at the Lagos State University Teaching Hospital, explained that the active ingredient in Mouka Mozziis extracted from plants which makes it non-hazardous for humans. Representing Olajide Idris, Lagos State commissioner for health, state Malaria Elimination Programme Manager, Abimbola Osinowo said the state government has renewed its commitment to tackling malaria using a

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multidirectional approach including environmental management and integrated vector control for prevention of malaria, adding that Mouka has taken a step in the right direction with the production of its repellents. “As you are all aware, malaria is endemic in Lagos State and it poses a major challenge to the state as it impedes human development. It is both a cause and consequence of underdevelopment and remains one of the leading causes of morbidity in the state,” Idris said. “The present administration has renewed the commitment of the state govern-

ment to tackle the scourge of malaria using a multipronged approach including; environmental management and integrated vector control for the prevention of malaria; effective diagnosis and appropriate treatment of malaria cases; and monitoring and evaluation with emphasis on operational research and the use of its results for evidence based programming,” he said. Saliu Olugbeng Oseni a , chairman, Lagos State Chapter of the Nigerian Medical Association(NMA), who was represented by Sodipo Oluwajimi, expressed admiration for Mouka’s repellent’s indigenous manufacture, adding that the NMA would be willing to endorse the innovation as it joins Mouka in its resolve to tackle the malaria scourge. Earlier in the month, Mouka Mozzi was officially launched at Mouka Business Partners Conference which held in Lagos, Abuja and Enugu. World Malaria Day is commemorated on April 25 annually by the World Health Organisation, in order to sensitise the global population about malaria and its health and economic burdens.

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tion of textile products with other businesses. In 2019, the Federal Government floated a N100 Cotton, Textile and Garment Fund to enable key players to have access to cheap funds. Sixty percent of this fund (N60 billion) has been disbursed by the Bank of Industry (BoI), which manages the fund. The Central Bank of Nigeria (CBN) recently set up an additional N50bn intervention fund to facilitate the takeover of existing debt and offer additional long-term loans and working capital to existing companies in the cotton, textile and garment sector. As of 2016, N3.4 billion had been disbursed to local firms. Recently, the Central Bank of Nigeria (CBN) placed access to FX for all forms of textile materials on the FX restriction list. “None of the interventions trickled down or lifted the sector from its present moribund state largely due to poor monitoring, implementation lapses and corruption,”

Vincent Nwani, an investment consultant and director at the Lagos Chamber of Commerce and Industry (LCCI), said. “For now, it is very difficult to find a textile company that produces 90 meter or more length for bedding in Nigeria,” Nwani added. Nigeria had over 180 textile mills in 1980s, which employed more than one million Nigerians. Some of the mills were United Nigerian Textile Limited (UNTL), Aswani Textile, Afprint, Asaba Textile Mills, and Edo Textile Mills. These firms disappeared in 1990s as they were unable to compete in an atmosphere of smuggling and unbridled importation. Most of what are described as textile firms in the country today are fashion and design shops. According to the National Bureau of Statistics (NBS), trade report importation of textile and textile articles declined by 52.9 percent to N92.1 billion in 2015 from N196.0 billion in 2010. But in rose by 46.9 percent to N168.6 billion in 2018 from N114.7 billion in 2016.

Ondo Industrial Hub set to create 20,000 jobs for youths YOMI AYELESO, Akure

lex Ajipe, manager of Ondo State Industrial Hub, has said that about 20,000 direct and indirect jobs would be generated when the hub begins to operate at full capacity. Ajipe made the remark during the visit of the wife of the state governor, Betty Anyanwu- Akeredolu, to the hub at Omotoso, on Ore Expressway in Odigbo Local Government Area of the state. The industrial hub, which is known as the Ondo-Linyi Industrial Hub, came into being as a result of the Memorandum of Understanding (MoU) between Linyi City in the Shanghai Province in China and the Ondo State Government. He said that nearly 15 different companies were already sited in the hub for operations, which include wood processing, textiles, exploration and agriculture. He said, “We have a textile mill which is producing sewing thread, polyester embroidery and it will soon start to produce fabrics, Lace and Ankara”. He said there is a wood-mill producing plywood and an agro-allied chemical company which is 60 per cent completed. “Also, there is a cassava ethanol plant which is only awaiting connection with electricity for operation. “This will require one mil@Businessdayng

lion tons of cassava every year and it means more money for cassava farmers and the company is ready to assist those cassava farmers in getting multiple harvests,’’ he said. Ajipe said that before the end of 2019, an automobile assembly would arrive at the hub for assembling different forms of vehicles. “We are expecting an automobile assembly to arrive in some months, to assemble different vehicles here in this industrial hub,’’ he noted. Ajipe also noted that the hub will have a training centre, to be called the African College of Agriculture Vocational and Technical Studies, where interested people could acquire needed manpower technology. Betty Akeredolu said she was in the hub with her team, the Forum of Wives of State Officials and Women Appointees (FOWOSO), to witness the giant industrial strides of the state government. She described the state governor as a man of purpose, high integrity and vision, who means well for advancement of the state. Akeredolu, therefore, urged women to think on how they can benefit from the industrial hub, considering that the various companies would need farm produce for their manufacturing and production activities.

Monday 29 April 2019

BUSINESS DAY

Start-Up Digest

In association with

Orekurin’s success shows why entrepreneurs must not overlook health sector Gbemi Faminu

ack of adequate health facilities and infrastructure deficit mirror major problems in Nigeria’s health sector. The country has about one doctor to 6,000 patients and maternal mortality is 814 deaths in 1,000 births. Before the close of today’s business, 3,000 women will have died of preventable diseases. Estimated 432 Nigerians die of tuberculosis annually, according to the World Health Organisation (WHO). About 80,000 breadwinners die of cancer yearly and 300,000 children will be killed by malaria between now and March 2020. More so, 15,000 Nigerians die of heartrelated diseases each year. About 2,000 doctors leave for the United Kingdom, the United States or Asia to make more money and work in better environments. These grim statistics and harsh realities characterise Nigeria’s healthcare system, which ranks 197 out of 200 countries in the WHO ladder or 171 out of 195 (in terms of investment) on the Institute for Health Metrics and Evaluation (IHME) at the University of Washington’s table, according to a report released by the National Bureau of Statistics (NBS), for the third quarter of 2018. Despite these startling statistics, some entrepreneurs are providing solutions to problems in the health sector, making money from doing so. Ola Orekunrin, chief executive of Flying Doctors Nigeria (FDN), is one of them. She provides majorly air ambulance services, moving injured patients as well as patients with health challenges to hospitals for adequate attention. She is a medical doctor, helicopter pilot and the healthcare entrepreneur. Brown

Ola Orekunrin

founded Flying Doctors Nigeria, West Africa’s first air ambulance service, after her younger sister died while traveling in Nigeria. Today, the 33-year-old entrepreneur, who graduated from the University of York, UK, has over 20 aircraft, which have airlifted more than 500 air travellers. Her outstanding performance earned her a MEXT Japanese Government Scholarship which enabled her to carry out research in

the field of regenerative medicine in Tokyo, Japan. From her undergraduate days, Orekurin has always been interested in creating new means of healthcare delivery and in reforming the health sector generally. The tragic incident which claimed her sister’s life pressed her desire for the reformation of the health sector, especially in her home country. Since the establishment of her company,

Orekurin has been able to manage it effectively and groomed herself by learning how to fly planes and helicopters. Her firm currently has the largest network of ground and air ambulances in West Africa. The company, which has its headquarters in Lagos and branches in Abuja and Port Harcourt, boasts of no fewer than 30 workers, including doctors. The FDN has airlifted hundreds of patients, using a fleet of planes and helicopters to rapidly move injured workers and critically ill people from remote areas to hospitals, ranging from patients with road traffic trauma, to bomb blast injuries and gunshot wounds. She has worked on moving them quickly and safely, while providing a high level of medical care en route. Recently, she complained of certain forces that hurdle entrepreneurship in Nigeria. “You pay 30 percent of your profit. If you do it the way it is supposed to be done, maybe 50 percent of your revenue can go to tax. But then, you now forget you owe the banks and you have to pay 20 percent interest. You also pay to Lagos Inland Revenue Service (LIRS). These are the kind of things that affect our competitiveness and stop us from reaching these standards.” Brown said, while talking about high interest rates in Nigeria at an event in Lagos. Her success shows that entrepreneurs can begin to take a closer look at Nigeria’s health sector to solve the big problems. “A lot of young people are moving to the health sector, but the enormity of the problems in the sector shows we need more,” Ifeanyi Okeleke, co-CEO of Kenrancis Farms, who is eyeing the sector, told Start-Up Digest. “In many cases, you need to be a health practitioner to do better, but outsiders can actually invest. What we lack in our health sector is investments and entrepreneurs need to understand the sector better to put their money there,” he said.

Business Opportunity

Making money from recycling of pet bottles, nylons ODINAKA ANUDU

ecycling is the process of converting waste objects into new materials. This big business is not yet popular in Nigeria as it is mainly done by few foreigners and multinationals. Nigeria’s population is almost 200 million. The country’s citizens drink bottled water estimated at N938.6 billion annually, according to a report by Euromonitor International. “The hot weather and poor availability of pipe-borne water in Nigeria lead to strong demand for bottled water, and this continued, despite a strong rise in unit prices caused by the higher production costs largely due to depreciation of the local currency,” said the March 2017 report. The tendency to spend many hours in traffic in major Nigerian cities has also driven the growth of the industry. The population of Nigeria is booming, and infrastructure and services are failing to keep up with the growth. Mismanagement of the public water system has compounded the problem, leading to warnings of a looming

water crisis in Nigeria, especially Lagos. Over 63 million Nigerians have no choice but to get water from wherever they can, while 57 million Nigerians don’t have access to safe water, according to Wateraid. The water needs of Lagos are put at over 700 million gallons per day. The state has capacity of a little over 200 million gallons per day, but actually produces and distributes between 145 to 150 million gallons each day from its facilities, leaving a huge gap of over 500 million gallons. But this has created enormous opportunities as water is bottled in PET bottles. The major area of this opportunity is recycling. Hence it is now possible to recycle these bottles and even nylon into more advanced products, for industrial use. Owing to this, few entrepreneurs have studied the business and want Nigerians to get more involved. Sabiduria Consulting Limited and Zeugnis International Limited are organising a training session for Nigerians of all ages about the potential in PET plastic bottle and nylon recycling. The training will take place on May 18 at

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Presken Hotel, Opebi, Ikeja, Lagos. Luther Kington Nwobodo, a PhD student, researcher and CEO of Zeugnis International, told Start-Up Digest that after the training, Nigerians would be confident of going into the recycling business as they will understand that the business can give them over 200 percent return on investment. “PET bottles are littered everywhere and I felt that someone had to find solutions with them,” he said. “I went to a dump site, stayed there for six months, learned plastics and its different types and I was able to see the gold in it. It is a goldmine, but many people do not know,” he explained. He further said that recycling is a going trend and the opportunity is so huge that there are only three major participants in it. “Ninety percent of our plastics are not recycled, unlike in Sweden where 95 percent are recycled. In fact, government will even pay you to bring PET bottled in that country,” he disclosed. He stated that Nigerians need to learn and re-learn about plastics as it is capable of cutting down 23.1 percent unemployment

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rate in the country. He said that participants in the training will have direct contacts of proven local and international vendors and could have access to funds/free export financing. “They could also get on-the-spot demand-supply business deals,” he said.

Start-Up Digest Team

@Businessdayng

Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

Monday 29 April 2019

BUSINESS DAY

Start-Up Digest

How Adeola transformed passion for photography into profitable business Josephine Okojie

ome people have to wait a lifetime to discover their real purpose in life. But for talented photographer, Adeola Abdulrasdeed, founder of Cameraman.ng, that time came when life presented the opportunity for him while still an undergraduate. Since then, he has pursued his passion and turned it into a profitable business. Cameraman.ng does not just provide photography services to clients; it also connects users to professional photographers and videographers within their locality. Adeola is now a UI x UX designer and photographer. He was inspired to establish Cameraman.ng out of his love and passion for capturing memories. While still an undergraduate, he built D’AwareImages to capture existing memories in school. As a result of its success, he was inspired to venture into photography. “I started and successfully built D’AwareImages while still in school because I loved to capture memories and that develop my interest in photography,” he said. After his tertiary education, Adeola picked up a job in photography to equip himself with the acquired skills and after a year, he established Cameraman.ng in 2017. The graphics designer started his business with N200, 000, an amount he was able to raise from family and friends. After few months of starting, he won €1000 in the Co-Creation Hub NextEcon-

Adeola Abdulrasdeed

omy Acceleration Programme Challenge. The Yaba Tech graduate told Start-Up-Digest that he used the money to further expand the business and develop it scope in the Nigerian photography market. The young entrepreneur said that despite the large numbers of already established talents in the country’s photography business, Cameraman.ng has been able to create a niche market for itself leveraging technology, stating that the business has continued to grow

since starting. “We outsmart our competition by leveraging technology to deliver photography services with the fast automated booking system and affordable packages for all categories of customers using reliable professional photographers and videographer,” the young entrepreneur said. Speaking on how the platform connects users to photographers and videographers across the country with just a click, Adeola said, “Cameraman.ng instantly matches

81 new firms join LCCI ODINAKA ANUDU

he Lagos Chamber of Commerce and Industry (LCCI) has admitted 81 new firms, mainly micro, small and medium businesses. The firms join thousands of businesses that are already in the chamber’s registry. Speaking at an induction ceremony in Lagos, Babatunde Paul Ruwase, president of the chamber, said the objective of the LCCI, encapsulated in its mission statement, is to promote and protect the interest of its members and the business community at large through public policy advocacy, creation and facilitation of commercial and industrial opportunities as well as provision of business development service and observance of highest standards of

business ethics. He said the chamber has come a long way in building its highly reputable profile and credibility through vision, selfless services and integrity of illustrious founding fathers and their worthy successors. “It therefore behoves the inheritors of this goodwill and enduring legacy to keep the flag flying at all times. I enjoin you to participate actively in the chamber’s activities. This will position your business to enjoy the tremendous benefits of membership of the chamber,” he said. “As businessmen and women, we have obligations which transcend profit-making. We should pay adequate attention to the integrity of our business transactions and practices. I urge you all to be committed to the ideals of high ethical standards and responwww.businessday.ng

sible corporate ethics to which all members are to subscribe,” he explained. Suboma Ajumogobia, chairman of board of Business Education Services and Training (BEST) unit of the chamber, said new members are encouraged to join one or more of the 25 sub-groups that would best suit their objectives. He explained that the chamber would support the new members to grow, expose them to opportunities and do advocacy services on their behalf. He further stated that the chamber offers trainings, conferences, and networking opportunities for members while also protecting and promoting their images. He added that the chamber provides the biggest platform for networking, urging the new members to come up innovative ideas.

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you with professional photographers and videographers with just a few clicks around your locality.” “We have made the platform easy and affordable to users who are willing to capture and record every beautiful moment of their events,” he added. On how the photographers and videographers are selected by the organisation, he said, “For the photographers and videographers, we have a created a form that allows us to vet them and know who is fit for the platform because we

have pledged to give our users the very best. We also invite them to a physical meeting to get a better knowledge of who they are and their personalities.” Answering questions on the challenges confronting the business, he said that funding remains the major challenge confronting the business, noting that a lot of youths with entrepreneurial skills are limited by absence of funds to see their ideas to fruition. He added that the country’s huge infrastructural gap is also another challenge facing his business. He urged the government to provide key infrastructure such as power, good road network, good and affordable office spaces and forums for learning and collaboration, especially for start-ups. Adeola told Start-Up-Digest that his business plans to “expand its solutions across the continent, as we are all about capturing irreplaceable moments; and of course, everyone has a day in their life they want to capture forever, so we want to capture it for them at a great price.” He said he currently works with an amazing team that have brought the business to its current position, among whom are Ademosu Adetutu, who has seven years’ experience in brand design; Abdulazeez with vast knowledge in technology, and Bosun Tijani, who is their mentor. On his advice to other entrepreneurs, Adeola said, “Your mind is a soil, what you plant grows. So always push yourself to the limit and you would realise you can still push further. Never stop, Keep on Keeping on.”

Bankers Committee holds workshops for SMEs on access to funding, loans and grants

n line with the Federal Government`s commitment to growing small and medium enterprises (SMEs), the Central Bank of Nigeria through the Bankers` Committee has introduced the ‘Funding Nigeria SMEs’ initiative as a platform for SMEs to access loans, funds and grants to grow their businesses. Abiodun Tomomero of Sterling Bank, one of the participating banks, said, “this workshop is aimed at deepening the Federal government`s financial inclusion process and creating the necessary awareness and public enlightenment across three states of the federation on how SMEs can access funds, loans and grants available through the Funding Nigeria SMEs initiative.” He explained further that the @Businessdayng

sensitisation workshop billed to hold in the cities of Ibadan, 16th; Kaduna, 23rd; and Port Harcourt on the 30th of May, 2019 respectively is a follow-up to earlier workshops in Lagos, Kano and Aba These workshops shall be anchored by experts from deposit money banks, Central Bank of Nigeria, Ease of doing Business Team, Bank of Agriculture (BOA), Bank of Industry (BOI) and SMEDAN He encouraged SMEs, particularly those in agro business, farmers, local manufacturers and fabricators, fashion and textile, exporters, IT, creative sector and general commerce to avail themselves of the opportunityto participate by registering on www. fundingnigeriasme.com

Monday 29 April 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

For those staring at retirement in the face but still lack the courage to quit The Solid Wealth Messenger

Grace Agada

hen time can no longer be stretched and the borrowed wealth and public recognition that comes with being a top corporate executive will soon expire, the only logical option you have is to prepare. This preparation becomes even more urgent for you if you have placed your work at the center of your entire adult life and have sacrificed a lot of important things on your way up to the top. If you have been pushing the Idea of preparing for Retirement into the Future, the future is now here. No one is going to hold down the Clock for you until you are ready and the Courage to leave the corporate world will not be bestowed on you either you have to plan and prepare intentionally. It is at this point that you begin to ask yourself the three dreaded Retirement questions • What will I do when I retire that will excite and drive me like my Corporate Job? • How will I maintain my current living standard and remain financially relevant when the salary tap is turned off? • How do I cater for and maintain my Health after so many years of neglect? The Answers require deep thinking, options are few, time is

limited and you need to act now before it’s too late. You may think to yourself, well I have pension. Pension is great but the government pension scheme that you hope to retire to have a financial flaw that will fail you in retirement. If you want to live a life of fulfillment after retirement, maintain your current living standard, improve your relationship with your spouse, children, and friends, and still, have the time and resources to pursue other outside interest you must plan beyond pension. The Compulsory Pension scheme has only made provision for 15% of your financial life. You have contributed 7.5% of your salary monthly towards your retirement and your employer has also contributed 7.5% making a total of 15% of your current salary. What this simply means is that you are agreeing to a Retirement Plan that downgrades your current living standard, cut off all the things that currently make you happy and shrink your life into a 15% lifestyle In fact, the reality is that it would be less than 15%. Your 15% contribution over time will be further divided down by 20 or 30 years and the result of this division is what will be paid to you as pension on a monthly basis. If you decide to take the initial lump sum payment, this 15% is reduced even further. Pension is not designed to help you maintain your current living standard or achieve fulfillment in Retirement. It is designed to help you get by and at best survive on a painful budget. However, pension is not to be blamed. It is doing exactly what pension was designed to do. The government has made provision

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving. www.businessday.ng

for 15% of your financial life, who takes care of the remaining 85%? It is your Job to make provision for your own welfare and not the Government. If you do not act now and put your financial house in order, when your monthly salary tap is turned off you will be faced with a new reality. Your standard of living will crash, the effects of aging will become more noticeable and you will feel Unwanted and unproductive. You will call your friends but they will all be busy at work and you will miss the corporate world. Worse of all is that you will be putting the future of your children at risk as they will have to juggle between taking care of themselves and their future and taking care of you. But this does not have to be so. Retirement can be a thing to look forward to when you have the right system and support in place. You can decide how much you want to earn in Retirement, Plan for what you want to do and how you want to improve your health all before you retire. This is the only way to exit with courage. There are three things you need to do right away to begin the preparation process First, you need to be clear about what a fulfilling retirement means for you. How much do you want to earn, what areas of your life do you want to secure, and how do you want to live and create your own mark? Getting this clarity upfront is critical. Secondly you also need to get an income replacement plan in place. You need a financial sys-

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tem that can replace the monthly Salary you have now become so used to and depend on for survival. Your income is the only force that is currently keeping you at the level you are right now. If that force is removed and you do not have a solid replacement for it, it is only natural that you will fall. The last thing you need to do is to get the right support and guidance to implement your income replacement plan. It is important that you are able to test this plan and experience its functionality long before you retire. There is no second chance once retirement begins. So how do you set up an income replacement plan? There are Five Things you need to do to successfully replace your current income, maintain or upgrade your living standard and retire without financial fears. I have put together a special report titled “The 5 Years Retirement Master Plan” explaining the five things you need to do before you retire and how you should go about achieving them. “To get a copy of the special Report SMS “Income Replacement “to 08101860042 Today, you still have the time tomorrow might be too late. The Only way not to fracture in Retirement is to prepare.

‘

If you do not act now and put your financial house in order, when your monthly salary tap is turned off you will be faced with a new reality

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer. Email: info@createsolidwealth.com Tel: 08101860042 @Businessdayng

Monday 29 April 2019

BUSINESS DAY

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@Businessdayng

Monday 29 April 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Inclusive insurance key to poverty alleviation for individuals, families

Stories by Modestus Anaesoronye

ow-income individuals and families in emerging economies are more likely to be malnourished, live in an unhealthy environment, be more exposed to contaminated water supplies, have restricted access to healthcare, take fewer preventative health measures, and are disproportionately at risk from accidents and illness which can push them back into extreme poverty. Women are particularly exposed to reproductive health risks. According to the World Health Organization (WHO), about 150 million people around the world suffer financial catastrophe from out-of-pocket healthcare costs each year. Inclusive health insurance is a vital add-on to basic state social and health protection. But insurance doesn’t just help manage health risks - it encourages people to seek medical help when they need it and boosts well-being by providing peace of mind even when life is smooth. Many Micro Insurance Network members are helping to achieve SDG 3 (Good health and well-being) and SDG 5 (Gender equality) by providing inclusive health and life insurance. In Pakistan, for example, Kashf Foundation pioneered health insurance for lowincome households and currently enjoys around 30 percent market share, with more than 400,000 clients and 1.5m lives covered. Women make seven percent of claims and receive 72 percent of the total

ON THE MONEY Quick tips: Simple steps to successful budgeting

L-R: Davis Iyasere, head, corporate communications, Nigerian Insurers Association (NIA); Yetunde Ilori, director general, NIA; and Ebelchukwu Nwachukwu, deputy chairman, Media and Publicity SubCommittee of the Insurers Committee during an interaction session with Journalist in Lagos

claim amount. “Our research showed that any household money for hospitals or medicine was being spent on men and children,” says Kashf’s CFO Shahzad Iqbal. “The women were really missing out and were suffering as a result.” Payments for out-ofpocket expenses may be one of the biggest incentives for taking out cover. For example, as Lead Foundation found when designing their new health product for Egypt, more than half the population has access to government health insurance, yet 72 percent of total health expenses are out-of-pocket transport, medicine, special diets, hospital stays, loss of income - and even bribes. As Jon Hellin and Eleanor Fisher wrote in the State of Microinsurance 2018, “Women represent an untapped target group for insurance with high growth potential. There is a social and

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business case for factoring gender into the design and implementation of inclusive insurance.” “Low income women don’t talk about being uninsured,” says Gilles Renouil of Women’s World Banking (WWB) - also a MiN member. “Health, education, income and - depending on the region - food security are their main financial pain points, but you always find health in the top three.” There’s a solid business case for low-cost health insurance, according to the ILO’s Impact Insurance Facility. Their recent report Financial Inclusion and Health: how the financial services industry is responding to health risks finds there is a huge, as yet unmet demand for health solutions to keep clients and their families healthy. However, the market is not without its risks. Some clients might

be tempted to make overenthusiastic use of benefits such as cash payments for overnight hospital stays. “As soon as the women realised they could claim on the insurance they started using it for themselves,” says Kashf’s Shahzad Iqbal. “There was a 155 percent loss ratio in the first year!” Health insurance could be a good way to build clients’ trust, provided they have a good experience. Having to pay an up-front premium, delays in settling claims and complicated claims paperwork are among the reasons why some products are unsuccessful. As always, listening to customer feedback is key. The ILO lists some top tips for successful health microinsurance, among them making it mandatory, designing simple products, offering value-added services and bundling health insurance with savings products.

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udgeting is said to be the foundation of great financial planning. Whatever your financial goals are, be it to settle a debt or save up for a dream; making a budget is the first step towards making that dream happen. Basically, a budget is “a plan for money”. By differentiating between your wants and your needs, a budget can help you identify where you could spend less than you bring in so you can save for the future. On this edition of On The Money, we will be explaining five simple steps to create a successful budget; 1. Track your income: To create a successful budget, you need to know how much money you make monthly. If you have one source of income from a salaried job, this shouldn’t be difficult, all you need to do is to calculate your net pay after deductions to arrive at your take-home-pay. If you have multiple sources of income from a business, investment portfolio etc, you need to factor this into your income as well. Once you have an idea of what you earn in a month, you can make a plan for a workable budget. 2. Calculate your expenses: To create a successful budget, you need to know how much your expenses are, i.e., how much you are spending at any particular time. You can calculate this by checking your bank statements, keeping receipts and taking notes every time you make a purchase. If you cannot track every purchase, you can calculate your income for past three months, deduct your

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current account balance and divide this value by 3 to find your average monthly spending. Calculating your expenses help you visualize your spending and determines where you can make spending cuts. 3. Create financial goals: Now that you know your income and expenses, you need to set your financial goals. This goal will guide your budgeting: Do you want to earn more money or build an emergency fund? Are you saving up for education or a vacation? Having a financial goal will help you plan accordingly, and it is also rewarding when you smash them! 4. Be accountable: Now that you have created a budget; make sure you stick it. Remember that following through with your plan will give you the desired results to reach your end goals. You can choose the right financial tools to help you reach this goal or talk to a financial adviser to give tips on how to stick to your budget and grow your money. This is where Old Mutual comes in with their over 170 years of building a solid reputation for providing financial advisory, insurance and wealth management opportunities. You can call Old Mutual on 01-2719393 to arrange a free financial education session for your team, or on a one-on-one basis. Our financial advisers can help you with savings and insurance services. For more information, visit your nearest Old Mutual branch or go to www.oldmutual.com.ng. We look forward to helping you with your money matters.

Monday 29 April 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Verify authenticity of your motor insurance on USSD code *565*11# - NIA advices Stories by Modestus Anaesoronye

otorist and vehicle owners have been urged to verify the authenticity of their insurance certificate on USSD code *565*11# to avoid running into trouble with security agencies. The verification will enable you confirm that the certificate you carry is either original or fake, so that you can easily know what you are carrying before you run into security checks. Again, if your insurance company has not uploaded the policy on the industry NIID platform, the verification will enable you follow up and ensure it is uploaded before you are fined. Yetunde Ilori, director general, Nigerian Insurers Association (NIA) said the

association is working hard with technology companies that designed the platform to ensure that it nears perfection.

She stated that efforts were being made to ensure that its member companies comply with the agreement to upload their motor poli-

L-R: Veeranna Tokapur, Infosys; Ganesh Premsankar, Infosys; Olubukola Ajetunmobi, Providus Bank; Ireti Yusuf, V.P, Service Delivery, CWG Plc; at the Future Banking Tech West Africa event at the 2-days Infosys event at Lagos Continental Hotel

Custodian Shareholders applaud dividend payout

hareholders of Custodian Plc, a leading non-bank financial institution quoted on the Nigerian Stock Exchange (NSE) with investments in life and non-life insurance, pension fund administration, trusteeship and property holding businesses have commended the company’s dividend paying ability at a time when its peers are struggling to remain afloat. The company during the 2018 financial year paid out 45 kobo as total dividend, having paid interim dividend of 10 kobo in September 2018 and final dividend of 35 kobo during its Annual General Meeting held last week in Lagos. Many of the shareholders including Bayo Adeleke and Sunny Nwosu commended the board and management for their dividend policy, stating that Custodian from its former brand name has paid dividend consistently for 11 years. Omobola Johnson, chairman of the Company speaking during its 24th AGM in

cies without leaving any gap. Ilori stated that the USSD code is a new concept, which she said is evolving, adding that the NIA is doing every-

Lagos said the board recognizes the importance of dividend to shareholders and therefore sustained the company’s practice of regular dividend payment by rewarding shareholders. She said that despite the moderate macro-economic growth on the domestic front, the company was able to post strong financial performance across all of its business lines and from the subsidiaries. “Our overall strong performance underscores the resilience of our business model and tenacity of our management team and staff. Johnson said the gross revenue for the year grew by 16.6 percent to N50.2billion from N43.1billion reported in 2017. This is as profit before tax rose to N9.5billion from N8.9billion posted in 2017. The Total asset base remained strong at N98.1billion from N80.57 billion in 2017, showing a 21.8 percent growth, while shareholders fund suswww.businessday.ng

tained similar trend closing at N40.5billion with year-onyear growths 13.2 percent. Going into the future, she said “In spite of the uncertainty that usually accompanies electioneering cycles in Nigeria, it is my utmosts believe that our management is well positioned and adept enough to weather the storm and continue to take our company to greater heights”. Wole Oshin, managing director, Custodian Plc had expressed satisfaction with the result considering the operational headwinds of the year 2018 and he is optimistic that the company will continue to thrive in all sectors in which it operates as it will be guided by its vision to always exceed stakeholders’ expectations in the delivery of services to its esteemed clients, observance of high corporate governance standards and the recruitment and retention of highly skilled personnel while leveraging on innovation and bespoke technology for excellence.

thing within its powers to ensure that the initiative works and solicited the support of Nigerians. According to her, the platform is considered an important step in the fight against insurance fraud and economic sabotage. Ilori said prior to the establishment of the platform, cloning and faking of insurance certificates were thriving business in the country, but now, it has reduced. She said the platform would further protect the image of the industry and also ensure that only insured vehicles were driven on Nigerian roads. NIA DG noted that the association would continue to evolve technologies to solve challenges confronting the industry and to deepen insurance penetration in the country. The USSD (Unstructured Supplementary Service Data) is a Global System for

Mobile Communication (GSM) technology used to send text between a mobile phone and an application programme in the network. It works independent of internet connectivity. In this instance, any mobile phone (not necessarily a smartphone) would communicate with the NIID system to retrieve policy status whenever required. It is hoped that with the USSD, we would have fully overcome the problems associated with the dedicated devices as it guarantees uninterrupted service throughout the country and on all networks, Tope Smart, chairman of the NIA said during the launch in Lagos. “Our existing and prospective customers now have the opportunity to confirm the genuineness of their respective policies at the time of purchase to avoid any embarrassment should claim occur.”

AIICO Insurance 5-year transformation plan yields expected result - Fajemirokun

IICO Insurance Plc says its five-year transformation plan which ended at the end of n2018 has yielded significant The company’s Gross written premiums for the year ending 31 December 2018 increased 17.4 percent to N37.7 billion from N32.1 billion in 2017. This outstanding performance was predominantly driven by growth in both the Life and Non-life businesses of the company. Babatunde Fajemirokun, executive director / COO “the year 2018 was significant for our company, as it marked the end of a 5-year transformation plan. The meticulous execution of our transformation plans continues to yield expected results with year-on-year improvements in our performance”. “Profit after tax (PAT) continued on the same positive path with a 146 percent improvement to close at N3.1 billion for FY’18 compared to N1.3billon in 2017. Earnings per Share (EPS) increased by 144 percent from 18k in 2017 to 44k in 2018. The company’s deliberate

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approach to risk selection, superior technical underwriting capabilities, actuarial excellence, asset / liability management, reinsurance arrangements and positive movement in yields contributed to over 180 percent improvements in underwriting profits from negative N4 billion in 2017 to over N3.2 billion in 2018. Edwin Igbiti, managing director/CEO, of the Company “as a company, we are in the business of bringing relief to our esteemed clients in times of losses”. This is evidenced by over 25 percent growth in gross claims from N23.3 billion in 2017 to N29.1 billion in 2018. From this amount, about 76 percent was for benefits and claims payment in our Life business with the remaining 24 percent incurred in the Non-Life business. We expect that as the company continues to grow, claims expenses will grow accordingly, however, sound reinsurance arrangements (for Non-Life) and conservative reserves (for Life benefits & claims) have been put in place to moderate impact on the company’s statement @Businessdayng

of financial position. The company’s financial position remains robust and continues to improve with total assets witnessing a 19 percent growth from N92.4 billion in 2017 to N109.9 billion in 2018. Shareholders’ equities also increased by 38 percent to N14.5 billion (from N10.5 billion in 2017). Our financial position is an indicator of our capacity and ability to continue to provide protection and risk assurance services to our clients over the long-term. In line with decision to adopt a progressive dividend policy, the Board shall recommend to the shareholders a 20 percent increment in dividend payout for approval at the annual general meeting of shareholders. This shall translate to a payment of N415, 812,268.80, representing six kobo per ordinary share of fifty kobo each for the financial year ended December 31, 2018. The proportion of earnings recommended for dividend pay-out this year has taken into account regulatory solvency requirement for future business growth.

Monday 29 April 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

When airbnb listings in a city increase, so do rent prices DAVID PRIEMER

nly a few years ago, most travelers stayed in hotels. Airbnb changed that. As of 2018, the company offers over 5 million properties, in over 85,000 cities across the world, and its market valuation exceeds $30 billion. Critics have argued that home-sharing platforms like Airbnb raise the cost of living for local renters. It is not difficult to see why the idea could be true more widely: By making short-term rentals easier, Airbnb could cause some landlords to switch their properties from long-term rentals, which are aimed at local residents, to short-term rentals, which are aimed

at visitors. Cities and towns have a finite supply of housing, so this process would drive up rental rates over time. Because of the limited empirical evidence, we decided to dig deeper.

We found that a 1% increase in Airbnb listings is causally associated with a 0.018% increase in rental rates and a 0.026% increase in house prices. While these effects may seem very small, consider

that Airbnb’s year-overyear average growth is about 44%. This means that, in aggregate, the growth in homesharing through Airbnb contributes to about onefifth of the average annual

increase in U.S. rents and about one-seventh of the average annual increase in U.S. housing prices. By contrast, annual ZIP code demographic changes and general city trends contribute about threefourths of the total rent growth and about threefourths of the total housing price growth. In our study, we present two additional results that help explain the underlying economics. First, we show that ZIP codes with higher owner-occupancy rates (the fraction of properties occupied by the owners themselves) are less affected by Airbnb. Second, we present evidence that Airbnb affects the housing market through the reallocation of housing stock. On the one hand, these

platforms allow homeowners to make money when they have more room than they need. On the other hand, absentee landlords are reducing the housing supply. According to our results, one way to reduce the latter effect while retaining the benefits of home-sharing would be to limit how many homes can be added to the short-term rental market, while still allowing owner-occupiers to share their extra space.

(Kyle Barron is a former health care researcher at the National Bureau of Economic Research. Edward Kung is an assistant professor at UCLA. Davide Proserpio is an assistant professor at the University of Southern California.)

Raising wages doesn’t have to be bad for your bottom line ZEYNEP TON

he “working poor” are a growing problem in America — one that is increasingly embarrassing to the corporate elite. Business leaders who are morally inclined to do the right thing should and can play a stronger role in solving this problem by raising wages to a level where their employees’ earnings cover the cost of living. WHEN DOING THE RIGHT THING HAS LITTLE BUSINESS RISK During the last few years, several business leaders have substantially increased the minimum

wages for their employees, citing both a moral imperative and a “business case.” In 2015, Mark Bertolini, CEO of Aetna Insurance, announced

a minimum wage hike from $12 an hour to $16 an hour. And in 2016, Jamie Dimon announced that JPMorgan Chase would increase

the minimum wage for 16,000 of its employees from $10.15 an hour to anywhere from $12 to $16 an hour, depending on where they worked.

What these examples have in common, however, is that the company could already afford the raise. WHEN DOING THE RIGHT THING CAN WIPE OUT PROFITS When labor intensity and profit margin seem to forbid higher wages, how can they make the moral and competitive case work financially? The way out of this trap is to design jobs in a way that increases workers’ productivity and enables them to drive sales and lower costs. In short, you make it possible to pay workers more by making them worth more to your business. Costco, for example,

Expertise It’s in our DNA

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent. You can be conﬁdent that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

Visit www.ﬁrstbanknigeria.com to learn more about us.

can offer a $15-an-hour minimum wage and pay store employees an average of about $22 an hour with generous benefits because it has made specific operating system design choices — such as offering fewer products and promotions, setting clear standards and empowering employees to make decisions — which enable its employees to be highly productive and to contribute significantly to customer value.

(Zeynep Ton is an adjunct associate professor at MIT’s Sloan School of Management.)

Monday 29 April 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

How board members really feel about ESG N. CRAIG SMITH AND RON SOONIEUS

riving sustainable business practices in companies requires involvement from boards of directors. And there is some evidence that environmental, social and governance, or ESG, criteria are rising up the board agenda. Many board members today have the right aspirations, but there is a substantial gap between those aspirations and the capacity of their boards and firms to deliver. To better understand this gap we interviewed 25 experienced European nonexecutive directors representing 50 large, well-known companies. We discovered that directors cohere around five distinct archetypes of behavior, and identified strategies to help directors overcome resistance to ESG issues at the director level. THE DENIERS:Deniers are adept at “greenwashing,” using PR or corporate communications to overstate the environ-

mental benefits, or understate the environmental damage, of a company’s products and services. Approach sustainability — indirectly if necessary — through specific, concrete concepts like cost reduction, business opportunity, consumer demand or risk exposure. THE HARDHEADED: For hardheaded board members, sustainability tends to be reduced to strategic reasoning. Again, it’s essential to meet board members on their own terms. Start with areas where the business case is strong and results are tangible. THE SUPERFICIAL: These directors are well meaning but are often scared of taking the lead. The trick with these board members is to play to their good intentions. They often don’t know where to start, so make positive suggestions and choose them wisely. THE COMPLACENT: Unfortunately, many early adopters have not kept up with the latest developments in sustainability. Acknowledge past successes while highlighting current shortfalls. Seek out like-

minded directors and create coalitions. THE TRUE BELIEVERS: For true believers, the long-term economic viability of their organization is closely linked and dependent on social and environmental responsibility. True believers need to consider not only how best to engage with other board members

but also not to get too carried away. As sustainability takes on more weight globally, and as investors continue to reward companies for improvements to material ESG issues, we believe it is only a matter of time before board directors find that bridging the gap between aspirations and action is

a requirement of fiduciary duty, with all the attendant obligations and liabilities. (N. Craig Smith holds the INSEAD Chair in Ethics and Social Responsibility in Fontainebleau, France. Ron Soonieus is an INSEAD executive in residence and managing partner at Camunico.)

The rapid growth of digital business in Africa with students from Harvard and Stanford,” he told us. “But we do it using one-tenth of the real estate and at one-tenth to one-twentieth of the cost.” We believe it is time to step up, scale and replicate such innovations. Much greater investment is needed in the African technology sector. And given Africa’s education gaps, shortages of digital talent can be a further barrier to growth. That calls for innovative approaches.

ACHA LEKE AND TAWANDA SIBANDA

frica already has 122 million active users of mobile financial services, more than half the global total. Its number of smartphone connections is forecast to double from 315 million in 2015 to 636 million in 2022, twice the projected number in North America. Over the same period, mobile data traffic across Africa is expected to increase sevenfold. In our book, “Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market,” we spotlight Africa’s unfolding digitization and show how investors and entrepreneurs from across the world can be part of it. Digital technologies allow forward-looking businesses to recast Africa’s challenges as an opportunity to innovate and address massive unmet demand. We estimate that private consumption in Africa rose from $860 billion in 2008 to $1.4 trillion in 2015 — significantly higher than that of India, which has a similar

population size. We forecast that it could reach $2.1 trillion by 2025. Yet Africa’s consumers are still woefully underserved: There are 60,000 people per formal retail outlet in Africa, compared with just 400 per store in the United States. Entrepreneurs are harnessing technology to solve deepseated gaps in Africa’s markets. One is Mitchell Elegbe, CEO of Nigerian startup Interswitch. He told us how, back

in 2002, he observed people carrying piles of cash to pay for everything from groceries to cellphone airtime to utility bills. Today, Nigerian consumers and businesses make more than 300 million digital transactions a month across a suite of Interswitch-enabled channels. Consider higher education, where Africa’s rate of enrollment is half that of India’s. One tech-enabled innovation

to close that gap is the African Leadership University (ALU), whose campuses in Mauritius and Rwanda empower students to manage their own education using technology, peer-to-peer learning and four-month internships with partner companies. Founder Fred Swaniker set about creating a business model for higher education from scratch. “Our university produces talent that competes

Brought to you courtesy of First Bank Nigeria

(Acha Leke is the chair of McKinsey & Company’s Africa practice. Tawanda Sibanda is a partner at McKinsey & Company and a leader of the firm’s digital services work across Africa.)

Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 26 April 2019

Top Gainers/Losers as at Friday 26 April 2019 LOSERS

GAINERS Company

Company

Closing

Change

N80

N72

-8

N13.45

N12.15

-1.3

DANGCEM

N188

N186.9

-1.1

INTBREW

N21

N20

-1

VALUE (N billion)

N10.4

N9.4

-1

MARKET CAP (N Trn)

Closing

Change

N26.7

N29.2

2.5

OKOMUOIL

N14.15

N15.55

1.4

UNIONDICON

N4.85

N5.3

0.45

CADBURY

N11

N11.35

0.35

GLAXOSMITH

N8.7

0.3

FO DANGFLOUR OANDO

ASI (Points)

Opening

PREMPAINTS

DEALS (Numbers) VOLUME (Numbers)

29,740.41 3,444.00 244,576,171.00 1.542 11.176

Global market indicators FTSE 100 Index 7,428.19GBP -5.94-0.08%

Nikkei 225 22,258.73JPY -48.85-0.22%

S&P 500 Index 2,932.00USD +5.83+0.20%

Deutsche Boerse AG German Stock Index DAX 12,315.18EUR +32.58+0.27%

Generic 1st ‘DM’ Future 26,481.00USD +41.00+0.16%

Shanghai Stock Exchange Composite Index 3,086.40CNY -37.43-1.20%

2019 looks positive for Oando

Nigerian Breweries’Q1 profit disappoints

Stories by Iheanyi Nwachukwu

…PBT down by 24.86% to N11.4bn …stock price declines 24.4% year-to-date

he year 2019 continues to favour Oando Plc, Nigeria’s leading indigenous energy solutions provider. Recall that at the end of March, the company published its full year 2018 results with the announcement of a third consecutive year of profits. It continues to wax strong posting results for the first quarter (Q1) of 2019, with a profit after tax (PAT) of N4.6billion which is an 11percent increase from the Q1’2018 level. At N5.30 per share which the stock closed as at Friday April 26, 2019, it has advanced this year by 6percent. Analysis of the company’s financials reveals that its turnover grew by 12percent to N168 billion from N150.6 billion in Q1 2018; profit-after-tax increased by 11percent to N4.6 billion compared with N4.2 billion in Q1 2018. The Group also decreased its total borrowings by 5percent to N200.9 billion compared to N210.9 billion in financial year ended (FYE) 2018 while its long term borrowing decreased by 1percent to N75.8 billion compared to N76.8 billion in FYE 2018. These figures reflect an increase in production by 11percent at 43,745 Barrels of oil equivalent per day (boe)/day compared to 39,556boe/day in the same period of 2018 in Oando’s upstream subsidiary. The company’s production activities reveals that oil production increased by 13percent from 14,823 barrels per day (bbls)/day in Q1 2018 to 16,815bbls/ day in Q1 2019, whilst natural gas production increased by 18% from 124,910mcf/day in Q1

L-R: Yinka Edu, member, Nigerian Bar Association Section on Business Law (NBA-SBL) Capital Market Committee; Fola Akande, member, NBA-SBL; Adeoye Adefulu, NBA-SBL secretary; Oscar N. Onyema, OON chief executive officer, The Nigerian Stock Exchange (NSE); chairman, Seni Adio, NBA-SBL, SAN; Justina Lewa, member, NBA-SBL and Ozofu Ogiemudia, vice chairman, Merger & Acquisitions and Corporate Re Organisations Committee, NBA-SBL, during a Closing Gong Ceremony at the Exchange to foster sustained collaboration with the Exchange to enhance the vibrancy of the capital market in Lagos recently.

2018 to 147,163mcf/day in Q1 2019. This is in line with the company’s Group Chief Executive Adewale Tinubu’s promise to aggressively grow production organically and inorganically in its upstream business. “With ICE Brent Crude Oil price currently at a decent level of $74.48 per barrel, our efforts will be geared towards increasing our production to sustain profitability and position us on the path to resumption of dividend payment to our shareholders,” Tinubu said. Increased production speaks to just one metric that is supporting these strong financials; the company’s nearcompletion of the implementation of its widely spoken about corporate strategic initiatives is another strong contributor. Oando continues in its unrelenting drive, working assiduously to restore stakeholders’ confidence in its promise to return economic value to shareholders in the very near future. The company has leveraged on the increase in the price of crude oil which www.businessday.ng

peaked at a little over $66 per barrel in the first quarter of the year, $3 more than the projected average for 2019. The current stability in oil pricing has also tilted in the favor of the Nigerian economy as the Government predicted a $60 per barrel price in the 2019 budget. Despite its partial divestment from its marketing subsidiary the company continues to increase its market share in the downstream sector through its trading business, Oando Trading which recorded an 11percent increase year-on-year, driven by a strong performance in its crude oil trading division and a 3percent increase in turnover to $312 million, from $301 million. Commenting on the company’s financials, the Group Chief Executive said: “Our results reflect the progress made over the last few quarters and provides an indication of our expectation for the year. Now that our debt profile is down by 78percent from $2.5billion as of December 2014 to $558million, and our de-leverage program is 90percent complete with

most of our non-core operations divested for good value, we can now focus on steady growth in our upstream entity.’’ In line with the oil and gas sector the Nigerian economy has also been positively impacted by the recovery in oil pricing. A review of the GDP growth rate shows an increase from 1.8percent in Q4 2018 to 2.4percent this quarter; a reflection of the current stability in oil price against the steady fall that characterised the industry in the last quarter of 2018 and the stability of the forex market. As is the nature of commodity pricing nothing is certain, the economic outlook for 2019 indicates that oil prices are likely to fluctuate which would leave Nigeria’s largely oildriven economy vulnerable. The company has regularly spoken of a realignment in its business operations with a focus on cost optimisation, proactive debt reduction to name a few, as a result of learnings taken from the 2014 oil crash, the expectation therefore is that a downward shift in oil prices will not have an adverse effect on the company.

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igerian Breweries Plc has released its firstquarter (Q1) 2019 scorecards which revealed disappointing bottom-line figures. The results at the Nigerian Stock Exchange (NSE) showed that though the brewer grew its revenue by 3.33percent in Q1’19 to N91.38billion against N88.44billion in the corresponding Q1 period of 2018; its Profit Before Tax (PBT) which printed at N11.45billion represents a decline of 24.86percent, from N15.24billion PBT recorded in Q1’18 period. At N8.02billion in Q1’19, Nigerian Breweries Plc profit after tax (PAT) declined by 21.35percent from N10.20billion in Q1’18. The share price of Nigerian Breweries Plc has decreased by 24.4percent this year to N64.65

as at close of trading on Friday April 26, 2019. The stock has underperformed the NSE All Share Index (ASI) which is just down by 5.38percent this year. Following the released results at the Nigerian Bourse, the Company Secretary/Legal Director, Uaboi Agbebaku said in a statement signed by Sade Morgan, Corporate Affairs Director that the increase in Net Revenue was offset by higher excise duty following the excise duty regime introduced in 2018. According to Agbebaku, the 2019 operating environment so far, has shown similarities with the difficult environment witnessed in 2018. “Notwithstanding, the Board remains confident that it has a clear strategy to deliver good return on investment”, the statement reads.

Shareholders laud Sterling Bank’s performance

hareholders of Sterling Bank Plc have commended the bank for its performance in the financial year ended December 31, 2018. The shareholders gave the commendation at the 57th Annual General Meeting (AGM) of the bank in Lagos on Thursday April 25. Timothy Adesiyan, president of the Nigerian Shareholders’ Solidarity Association said the performance of the bank is highly commendable in view of the massive improvement in most of the indices, especially in gross earnings, net interest income, liquidity ratio and profit after tax. He noted that even though the bank is not paying any dividend to shareholders for the year, “we are happy with the capital appreciation of the share price and the future bountiful dividends that await us.” Adesiyan also commended the board and ex@Businessdayng

ecutive management of the bank, especially the Chief Executive Officer, Abubakar Suleiman, for the good results and for imbibing good corporate governance practice which makes Sterling a dependable bank that is solid. Also commenting, Gbenga Idowu, National Coordinator Shareholders United Front (SUF) said the results reflect a very good start by Abubakar Suleiman as CEO of the bank. He said the results clearly show Suleiman’s ability to provide good leadership for the executive management of the bank since April 2018 when he took over from Yemi Adeola. In his address, Chairman of the board of directors of the bank, Asue Ighodalo said, “Our financial results in 2018 reflect an even stronger business performance despite the impact of an ailing operating environment.”

Monday 29 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

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Week Ahead

Watchlist

Dangote Cement eyes trillion Naira revenue as volumes improve Bala Augie Segun Adams Ameachi

angote Cement is inches away from becoming the first quoted Nigerian firm to hit the N1 trillion revenue

mark. The largest producer of the building material posted 11.9 percent year on year (yoy) growth in revenue to N901.21 billion in December 2018, largely driven by the 11.4 percent growth in Nigerian volumes to 14.18 metric tonnes, and better per tonne prices in PanAfrica (+11.3% yoy to an average price of N32,126/ton). Analysts at Chapel Hill Denham Ltd expect revenue to increase by 14.6 percent yoy to N1.03 trillion by the end of 2019, on the back of their 6.3 percent yoy group volume growth forecast to 25.08 metric tonnes and higher effective pricing. Dangote Cement has been leveraging on the country’s huge infrastructure deficit to grow earnings and maximize the wealth of shareholders. “We believe that the newly signed Executive Order 7 for Road Infrastructure Development as well as management’s strategy to grow the export business (plans to export $600mn worth of cement in FY19E) is positive for Nigeria volume growth,” said analysts at Chapel Hill Denham Ltd. An efficient energy mix has helped bolster margins. Dangote Cement’s gross margins increased to 57.46 percent in December 2018 from 56.40 percent the previous year. Net profit margin moved to 43.31 percent in December 2018 as against 25.35 percent as at December 2017. The company’s net cash from operating activities of N375.34 billion as at December 2018 shows it has the financial strength to pay its

debt, reward shareholders in form of dividend and fund future expansion plans. It has spent N131.04 billion on the acquisition of property plant and equipment on optimism of a pickup in economic activities. The Cement sector expanded faster than the broader economy last year, growing at 4.5 per cent while the country’s Gross Domestic Product (GDP) increased by 1.9 per cent. Between 2013 and 2015 before Nigeria entered a recession, Cement recorded 30 per cent growth per annum, outpacing the economy’s 5 per cent growth. In addition to opportunities in the sector, Dangote Cement has been able to keep cost down, saving energy costs and leveraging on its Pan-African outreach to lessen exchange rate pressures. Accounting for 71 per cent share of sales volume among listed cement makers- Lafarge and Cement Company of Northern Nigeria (CCNN) which are part of the biggest players in Nigeria’s cement market Dangote has been able to grow its capacity and maintain dominance in the industry. Dangote Cement’s three plants in Nigeria (Obajana, Ibese and Gboko) have a capacity of 29.3Mta, about 61 per cent share of total installed capacity among the listed cement makers. Across Africa as at the end of 2017, the cement maker has 45.6M t/a and is the 10th largest cement producer globally. The race for the N1 trillion marks may not be as easy as it sounds for Dangote Cement should MTN Nigeria go ahead with its planned listing on the Nigerian Stock Exchange (NSE) this year. MTN Nigeria, the biggest telecommunications service provider with 65.57 million subscribers grew its revenue from N887 billion in 2017 to N1.03 trillion in 2018, promising an interesting tussle as history beckons on both companies.

ccess Bank Nigeria Plc has recorded the fastest profit expansion among its peer rivals as total assets soared after it acquired Caryle Group LPbacked Diamond Bank Plc. Access Bank’s net income increased by 86.05 percent to N41.14 billion in the first quarter of 2019. That compares with United Bank

for Africa (UBA), (+20.76); Fist Bank Holdings, (+6.97) and Guaranty Trust Bank (GTBank) , +10.37 percent. A precipitous drop in short term government securities last year resulted in reduction in interest income on investment securities that have been adding impetus to earnings. However, there is light at the end of the tunnel because yields have been attractive post elections as the central bank continues to mop up excess liquidity with a view to curb-

SHORT TAKES 11.25% Headline inflation rate (consumer price index) slowed by 0.06 percentage points from 11.31% in February to 11.25% in March 2019. The drop in inflation rate was buoyed by continuous decline in food inflation, which dropped for the fourth straight month from 13.47% in February to 13.45% in March.

N619.86 billion The Federation Account Allocation Committee (FAAC) disbursed the sum of N619.86bn to the three tiers of government in March 2019 from the revenue generated in February 2019. The amount disbursed comprised of N474.42bn from the Statutory Account, N96.39bn from Valued Added Tax (VAT), N4.02bn as excess bank charges recovered, N44.17bn distributed as FOREX Equalisation Fund and N858.46mln exchange gain differences.

N145.30

Access Bank records fastest profit expansion in Q1 BALA AUGIE

P.E

ing inflation. But that means lenders will continue to refuse to turn on the tap of lending to the economy as they are yet to recover from the deteriorating asset quality brought on by a sharp drop in crude oil price that hindered customers from meeting their obligation. For instance, Access Bank’s recorded the fasted jump in interest income among peers, but the growth was supported by a 458.98 percent surge in interest income from in-

vestment securities whilst interest income from loans and advances dipped by 21.32 percent as at March 2019. Fitch Ratings have said that a 50bp cut in Nigeria’s monetary policy rate to 13.5 percent is unlikely to spur substantial growth in lending to priority sectors or wean banks off investing in Nigerian Treasury-bills (T-bills). The agency said they expect credit Continues on page 37

Average price paid by consumers for premium motor spirit (petrol) decreased by -11.1% year-on-year and 0.00% month-onmonth to N145.30 in March 2019 from N145.30 in February 2019. States with the highest average price of premium motor spirit (petrol) were Oyo (N146.50), Plateau (N146.55) & Taraba (N150.55).

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

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

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Monday 29 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Market, Fixed Income and Bond Consumer good firms’ cash shrinks as Money funds grow by 14.35% in Q1 2019 economic woes bites Ifeanyi John

BALA AUGIE

igerian consumer goods firms are not efficient in transforming operations into cash as a low consumer purchasing power continues to undermine sales. According to the 2018 audited financial statement of nine largest firms, combined average cash operating margin fell to 11.29 percent in December 2018 from 15 percent the previous year. Operating cash flow margin is a cash flow ratio which measures cash from operating activities as a percentage of sales revenue in a given period. Operating cash flow margin measures how efficiently a company converts sales into cash. The higher the ratio the better as it indicates that a firm has the financial strength to pay debt and fund future expansion plans. Consumer goods firms are the hardest hit from a sluggish economic recover as low consumer purchasing power, decrepit infrastructure, and taxes have battered gross profit margins. Sales have fallen to an all-time low since they can no longer hike the price of key products like they did in 2017 to fend the effect of rising inflation and severe dollar shortage. Nigerian Breweries cash operating margin fell to 19.13 percent in

December 2018 from 30.05 percent as at December 2017. Net cash operating activities dipped by 39.67 percent to N63.12 billion in the period under review from N103.12 billion the previous year. The decision by Federal Government to hike excise duties on alcoholic drinks is seen as exacerbating the already anemic position of players in the industry. The tax increases is hitting revenue as companies will not be able to pass on the burden of the tax on the final consumer. Nascon Allied Industries Plc’scash margin fell to 3.83 percent in December 2018 from 51.12 percent as at December 2017. Net cash from operating activites dipped by 98.63 pecentto N986.40 million in the period under review from N13.83 billion the previous year. Dangote Flour Mills Plc’s cash

margin fell to 0.38 percent in the period under review from 2.65 percent the previous year. Net cas from operating activities reduced by 86.59 percent to N432.46 million in December 2018 from N3.30 billion the previous year. According to a filing on the Nigerian Stock Excgnage (NSE), Olam International, a leading food and agri-business company, has offered to acquire full ownership of the miller for N130 billion. Dangote Sugar’s cash margin fell to 23.01 percent in the period under review from 26.22 percent the previous year. Net cash from operating activities were down 35.43 percent To N34.61 billion as at December 2018. Companies had raised capital via a right issue to settle debt, and the strategy has yielded fruit as evidenced in a reduction interest expense, but margin still remained pressured.

he equities market continuous beat-down by debt securities led to the re-balancing of portfolios across the country which saw equity-based fund in the market shrink by 0.14 percent in the first quarter of the year. This restructuring process led to corresponding money market, fixed income and bond funds growth to record highs, averaging a 14.35 percent growth in AUM in Q1. The total AUM of the three funds grew to N599.94 billion at the end of march 2019 from N536.39 billion at the beginning of the year. Dayo Obisan, president, Fund Managers Association of Nigeria (FMAN), in an earlier interview with BusinessDay said the growth in funds was a reflection of products creation and increased effort in distribution. “Within the asset management space, more products have been created and a lot of Fund managers are into distribution, in terms of marketing,” Obisan told BusinessDay. Money market funds recorded the highest absolute growth as it saw a N52.36 billion increase in AUM from N465.24 billion to N517.60 billion representing a growth rate of 11.25 percent, Fixed income funds grew by N8.87 billion from N56.84 billion at the beginning of the year to N65.71 billion at the end of Q1 showing a growth rate of 15.60 percent while Bond funds improved by N2.31 billion from N14.30 billion to N16.62

billion representing a growth rate of 16.20 percent in the same time period. Money market funds are openended mutual funds that invest in short-term debt securities such as treasury bills, certificates of deposit, and commercial paper. The impressive growth span out of the regular suspects in these funds as Stanbic IBTC money market fund, FBN money market fund, ARM money market fund and AXA Mansard money market fund all grew their asset by a combined N45.62 billion out of the total absolute money market fund growth of N52.36 billion which represents an 87.13 percent market share. In the Fixed income space, Stanbic IBTC dollar fund and Lotus Capital fixed income fund grew their asset by a combined N7.38 billion out of the total absolute growth of N8.87 billion representing 83.23 percent market share. The Bond funds which saw the highest relative growth was led by United capital Euro bond fund and FBN fixed income fund as they grew their asset by a combined N1.92 billion out of the total absolute growth of N2.31 billion which represents 84.34 percent share of the total bund funds growth. Since inception, the Asset Under Management (AUM) of Nigerian mutual funds has appreciated by N608.82 billion from N 77.67 billion Net Asset Value (NAV) reported for the week ended August 19, 2011, to N686.49 billion reported at the end of the first quarter of 2019.

Nigerian yield curve return to normal convexity Ifeanyi John

igerians can breathe easy as a key economic metric of impending recession lessened with the long-term vs short term yield environment in the country transitioning from an inverted yield curve after the recently concluded OMO auction. A month ago, yields on long-

term debt notes issued by the Federal Government of Nigeria where lower than the yields on short-term maturities but with the new market closing rates after the OMO auction last week Thursday, the inversion of the yield curve turned to normal convexity. Obinna Uzoma, a Lagos based economist told BusinessDay that “the economy is looking good as threats to the financial position of Nigeria weakens on higher

crude oil prices and a direct policy implementation path. Political opposition has also been quiet which gives a general sense of calm and confidence for investors who tend to take long term bets on countries.” The yield on the most soughtafter short-term maturity, the 12 months treasury bills, declined to 14.3 percent from 14.49 percent last month while the longer term 10year and 20-year bonds improved from 14.32 percent to 14.48 percent and 14.13 percent to 14.51 percent respectively. An inverted yield cur ve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession. Although the yield curve is still inverted in short term maturities with the 2-year FGN bond rate 66.7 basis points below the 12-month treasury bills, the outlook on economy is trending upwards as crude oil prices and GDP forecast of the IMF portends that the economy is out of the likelihood of another recession.

Access Bank records fastestexpansion... Continued from page 37 demand to stay weak and banks to continue favouring T-bills, as interest rates are still high. Fitch also admitted that lending is also inhibited by banks’ risk aversion given their high proportion of non-performing loans (NPLs), and by the Central Bank of Nigeria’s (CBN) actions to mop up excessive liquidity in a bid to contain inflation and support the naira. “We forecast loan growth to pick up slightly, given more favourable operating conditions, an easing of NPLs and greater FX availability,” said Fitch. “However, we believe lending growth over the medium term will ultimately depend on banks’ continued recovery from weak asset quality

and capital stemming from the 2015 oil price crash, and structural reforms such as lowering of cash reserve requirements and easing of open market operations to enable banks to deploy their liquidity to lending,” said Fitch. Drilling down the first quarter financial statement of big lenders shows GTBank’s loans and advances to customers increased by a mere 1.78 percent to N1.28 trillion from a year ago while UBA’s loans and advances to customers by reduced by 1.49 percent to N1.68 trillion in March 2019 from a year ago. First Bank Holdings’ loans and advances were down by 0.59 percent to N1.67 trillion in the period under review from N1.68 trillion as at December 2017.

Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

INTERVIEW

How PWC’s Government Delivery Unit delivered for Ambode

SHULI ADEBOLU is an Associate Director, Government & Public Sector Services at PricewaterhouseCoopers (PwC) in Lagos. In this interview with the BusinessDay team, she provides more insights into the essence and workings of Government Delivery Units (GDU), which is PwC’s initiative meant to enhance public sector service at federal and state government levels and how this unit greatly helped the administration of Governor Akinwunmi Ambode of Lagos State. Excerpts:

weeks to get your licence done. The e-governance tries to cut around the usual crowd in government offices for this kind of stuff and take these payments into one single account and avoid theft and diversion of government finances.

Outcome of traffic and transport summit With the traffic and transport summit, we put all the critical stakeholders who have anything to do with transport business and ran stakeholders’ summit for them in Lagos. The stakeholders came together, everyone was supposed to contribute in terms of civic engagement; you felt you were contributing to government what mattered to you; people are able to point out the kind of policy they expect to see in terms of transport, which critical areas needed to be addressed. Then we have academia that can to look at the system structurally for them to come up with action plans that will make traffic flow. We also did research into the Lekki – Epe axis. We are interested in how long it takes to drive from end to end. Part of the discussion was that the roundabout was a major hindrance. What we did was to remove two roundabouts and measure again the traffic flow from end to end. At the initial stage,

Managing Government Delivery Units at State Government Level Our team has extensive and unrivalled experience and expertise in setting up and delivering Government Delivery Units. We have a team of experts and specialists who have worked with a number of state governments in Nigeria. Our experience suggests that, by using the knowledge of new innovations and constructs such as a GDU, governments, whether at state or federal level can continuously improve their own service delivery models to directly impact the lives of the citizens who voted them into power –not by trial and error, but by adopting proven best practice models from around the world. Understanding learning from Governments and Countries across the globe that you aspire to emulate should serve as inspiration to implement the same innovations and reforms they have adopted in order to ensure the success of your own administration. The PwC team were engaged to set up and run the Governor’s Delivery Unit whose role is to serve as a Central Policy and Strategy ‘Think-Tank’; provide coordination across all ministries departments and agencies of government; provide oversight of the progress and implementation of the Governor’s priorities under the key strategic pillars; assist with the formation and management of a Finance and Development Commission; set up and provide terms of reference for a Governor’s Advisory Council, and provide Subject Matter Experts (SMEs) with relevant expertise and industry knowledge to review, provide insight, give presentations and make recommendations to the Governor on their areas of specialism as required by the Governor, among others. It is worthy to stress here that the GDU’s are not set up to compete in any way with existing formal structures of government such as the Executive Council or the Ministries, Departments and Agencies, contrary to this, they are in fact set up to support these essential and critical arms of government. GDUs by their nature require holistic, ‘entire-government’ perspective and sufficient authority to ensure all key officials across government are all on board to ensure the removal of all obstacles, deepen internal relationships by ensuring all arms of government are united and working towards the same mandate, improve coordination to avoid siloworking mentality. GDUs are often referred to as the ‘fire-fighting’ engine room for Government to rely on as they help ministries think through and resolve problems preventing them from achieving their objectives, provide advisory services to program managers and directors as well monitor, evaluate and keep government accountable on its stated objectives, and manifesto promises.

indly provide an overview of PwC’s Government Delivery Unit As political landscapes change, political leaders increasingly grapple with demanding political environments where public bodies and governments will be required to change and evolve in order to address the country’s growing economic needs. Citizens yearn for governments that are adaptive to their circumstances and ready to deliver on its defined purpose in the face of a world in constant change. A government innovation which seems to be gaining popularity internationally due to noted successes in seemingly transforming governance is the construct of a ‘Government Delivery Unit at the heart of government. Originating in the UK under Tony Blair’s Government in 2001, GDUs are small teams embedded at the heart of government which help to drive implementation and ensure each of the mandates, manifesto promises, and agenda of the government of the day are realized. Credible examples to site a few successful GDU’s in motion can be found in Sierra Leone where the President set up a new delivery unit in 2015 to help revive the national economy in the wake of the Ebola epidemic. Canada’s newly elected Prime Minister adopted the PM’s delivery unit model in early 2016 as part of an effort to restore public trust in government. Government Delivery Units are small specialist teams enlisted to assist political leaders stay focused on the delivery and implementation of their key agenda and priority items. GDUs at the granular level also serve as a function to hold government accountable and ensure transparency in processes and functions of government. With elected leaders going in and out of government without fulfilling their mandate and promises, citizens decry the non-performance of government and increasingly attach this nonperformance to the failure of political leaders. The nature of the priorities on the ‘customer promise’ has never been more challenging!

Shuli Adebolu

the trip from end to end lasted for about two and half hours. It was later reduced to 40 minutes. The traffic and transport summit yielded a lot of benefits. Lagos population is about 22 million people according to research, but some people estimate it to be 23 million people. Imagine a situation where you are producing education, health care, housing per head for this amount of people. Because of how Lagos is run, you then have 90 people converging per hour on Lagos. The research compares that to cities like London, which only has 7 people; New York which receives 9 per hour; Beijing has 22 converging per hour but in Lagos, situation is different because once people come, they don’t go back. So, it is a moving target. We have got a governor who is looking into the future of multi-modal transport sys-

‘‘

We have got a Governor who is looking into the future of multi-modal transport system. Apart from the urban renewal that is transforming the slum area and making it an economic hub, in execution and implementation are areas where the Governor has got it absolutely right www.businessday.ng

tem. Apart from the urban renewal that is transforming the slum area and making it an economic hub, in execution and implementation are areas where the Governor has got it absolutely right. Implementing his four strategic pillars, Governor Ambode said the key things he was going to tackle were – jobs, power and transport. It is around these key things that the governor set to work. The progress so far made on the ease of doing business… Infrastructure is a way forward for a megacity. However, there is a huge infrastructural deficit that hinders the growth of Lagos as a megacity. To bring it back to us, it was important for us as PwC and Lagos State Government to understand that Lagos is not competing with other states in Nigeria; Lagos, if it were an independent country, would be the fifth largest economy in Africa. So, the target was to grow the economy to the 3rd largest within the term limit of Governor Ambode. We are comparing Lagos to other global megacities around the world. What best practices obtain in these cities? What drives policies and what really works for these megacities were some of the questions we hoped to answer in modelling Lagos as an independent city. We therefore were interested in the ease of doing business. We had to put across to investors across the world that Lagos is open for business. To this end, we set a think-tank where we had subject matter experts who advised His Excellency on major issues and proffered effective solution thereof. One such is the Economic Advisory Committee headed Bode Agusto. So, looking at the ease of doing business in the Nigeria, the figure is typically an 80-20 split between a Lagos and Kano. The challenge then was therefore how to communicate to the state govern-

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ment on the key benchmarks around the ease of doing business. We set up a unit hosted by Lagos Global coordinate with the Federal Government and the Kano State Government to look at the critical issues around ease of doing business. The result is the improvement that we saw on the ease of doing business last year. The target was for Nigeria to take a great leap on the ease of doing business. We approached the UN on a template to make the state the top 20 within a given period. The teams at the Lagos Global are working systematically to address the red tapes and fulfilling other requirements and targets that projects Lagos State and Nigeria on the ease of doing business index. Current situation of land registry and the EGIS project in Lagos As we know the land administration in Lagos is a chaotic process in terms of aerial mapping and ownership structure. Globally, land is a substantial economic resource especially as regards to mortgage development. So, the whole idea about the EGIS project is to conduct an aerial mapping of the entire Lagos State to identify what lands are fallowing; what lands are used and for what purposes; distribution and ownership structures; identifying the concentration of commercial as well as residential buildings. The essence of this is to build database and data management systems that facilitate electronic transaction around land administration in terms of registration and land titles. Again of back of the EGIS project, is another one of the e-governance projects. E-governance is an attempt to reduce the interface with the state administration on little matters such as driving licence. In the UK for instance, if you need to renew your licence, you could get online, key in your details and wait three @Businessdayng

Monday 29 April 2019

BUSINESS DAY

NEWS

Nigerians spend N758m on movies in Q1 2019 BUNMI BAILEY

igerians may be showing immense interest for entertainment as N758.1 million was realised from movie sales in weekends from January-March 2019, according to statistics from the Cinema Exhibitors Association of Nigeria (CEAN) website. CEAN is an association of cinema owners, operators and managers incorporated by the Corporate Affairs Commission of Nigeria and is meant to promote and protect the value of cinema exhibition in Nigeria. A breakdown of the CEAN figure for January showed that in four weekends, the total gross of the top 20 movies was N289.6 million and they were viewed by 211,801 people; for February, it recorded N178.7 million from 133,132 people, and for March it was N292.5 million viewed by 211,007. Movie ticket prices usually range from N1,000 - N3000 across cinemas, depending on the packages that come with it like complementary drinks and popcorn. The major film distributors across cinemas in Nigeria are FilmOne, Silverbird Film, Genesis Deluxe cinemas

and Metro Classic. Gbolahan Ologunro, an equity research analyst at Lagosbased CSL Stockbrokers, said Nigerians had always placed a premium on entertainment despite the fact that disposable income remained pressured. Yinka Ademuwagun, a macroeconomic analyst at United Capital, said, “It is noteworthy that they are spending that much on leisure. And this is given that most of these figures are from urban areas where you will find cinemas. This says a lot about the movie industry.” Recently, watching movies in cinemas seems to be the new ‘thing in town’ and this is aside from its entertainment values, movie-going is quickly becoming a lifestyle in which people go to the cinemas with their loved ones and friends to see movies and relax. “The cinemas have a bigger space to enjoy the latest movies with loved ones while relaxing,” Ruth Udembal said, while expressing her love for the cinema. Usually, people go to watch foreign movies (Hollywood) than home ones (Nollywood) but recently, people are beginning to appreciate the home ones.

Baru, Ojulari decry Nigeria’s energy deficit FRANK UZUEGBUNAM

roup managing director, Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, says despite abundant oil and gas reserves, Nigeria experiences shortages in electric power. Baru spoke in Abuja at the 2019 Oloibiri Lecture Series and Energy Forum (OLEF) organised by the Society of Petroleum Engineers (SPE) with the theme “Energy Security and Sustainable Development in Nigeria: The Way Forward.” According to the NNPC GMD, based on available data, Nigeria’s energy consumption was projected to rise from six gigawatts (GW) in to 2015 to 30GW by 2025, noting that to achieve this, the country would need aggressive development of gas and renewable projects. Baru further disclosed that the Ajaokuta-Kaduna-Kano, AKK, pipeline that was proposed to convey gas from the Niger Delta, through Ajaokuta, to Kaduna and Kano, would be completed by 2022, adding that the 1.1 billion standard cubic feet (SCF) of gas, 342 kilometres by 36 inches Escravos-Lagos Pipeline System, ELPS II, had achieved 97 percent completion, noting that the remaining 70 kilometres of the pipeline would be completed by the middle of 2019. “The 130 kilometres by 48 inches/36 inches Obiafu/ObrikomOben, OB3, pipeline with the capacity to link the eastern and western parts of the with about two billion SCF of gas daily, was at 92 percent completion and would also be concluded by the middle

of the year.” Also speaking at the event, Bayo Ojulari, managing director of Shell Nigeria Exploration and Production Company (SNEPCO), described Nigeria’s energy gap as disgraceful, adding that 70 percent of households and small businesses in Nigeria hardly get more than four hours of electricity daily. This, he said, was as a result of the fact that 70 percent of electricity generated by power companies was lost before it getting to the consumers. He explained that this translated to about 120 million people without electricity, noting that only India had such larger off-grid/badgrid population. Ojulari disclosed that the gap is currently filled by about 60 million environmentally diesel/petrol generators, adding that the energy gap poses negative consequences for Nigeria’s productivity, competitiveness, employment, security, food security, nutrition, environment, health and education. “The gap in terms of energy supply is disgraceful. The energy gap in Nigeria is the foundation for so many of the country’s economic and social development problems. In most countries, when you talk about energy security they are talking about the health of their people, education of their people, for their children and for their future. “They are talking about being a competitive country where people can invest. They are talking about the environment, productivity and food security among others. Energy is not standing alone. Our industry is not about producing and exporting oil, it is about how we impact our societies,” Ojulari said. www.businessday.ng

L-R: Akinbiyi Akinsete, member, board of trustee, Magodo Residents Association; Olajide Oduyoye, project secretary, Magodo Residents Association Phase 2; Jade Niboro, chairman; Abiodun Agbaje, regional head, Lagos Island, Heritage Bank; Yoni Akinyemi, financial secretary, and Mohammed Sadiq, security secretary, during the Magodo Cultural Day 2019 Dinner, by Magodo Residents Association Phase 2, in Lagos.

Single-digit inflation target eludes CBN … as inflation stuck between 11-11.5% range for 10 months IFEANYI JOHN

t is now three years since the Central Bank of Nigeria (CBN) announced that it plans to contain inflationary pressures in the economy and bring inflation back to a single digit within a target range of 6-9 percent. However, since inflation doubled from 9.5 percent in 2015 to 18.5 percent in 2016, CBN has attempted to use a contractionary policy strategy to reduce it to single digit, which till date is yet to occur. The monetary contraction strategy has brought some benefits though. Since CBN raised interest rate in July 2016, inflation has dropped from 17.1 percent in July 2016 to 11.2 percent in March 2019. The performance looks good until you realise that inflation has been stuck within the 11-11.5 percent range since

June last year (that’s now 10 months and counting). Analysts now wonder if the inflation will remain stuck at 11+percent for the next few months with many waving off the possibility that inflation will return to single digit anytime this year. Obinna Uzoma, a Lagosbased economist, told BusinessDay, “The single digit target seems like a far cry given current economic realities. In fact, there is a higher likelihood for inflation to trend higher than lower given that we may see the effect of the increase in minimum wage kick in soon.” “Forget CBN inflation forecasts,” he said, “they hardly ever get it right anyway.” Analysis of CBN inflation forecasts over the years shows that CBN has struggled for years to accurately forecast inflation over the next period, in fact, the performance

has been very woeful. Based on data compiled from CBN Statistical Bulletin, the difference between the CBN inflation target and actual inflation in Nigeria exceeded 100 basis points in 19 out of 23 observations between the years 1995 and 2018, translating to 82.6 percent chance that CBN will fail to achieve its monetary inflation target annually. The only years the CBN was spot on in its inflation forecasts were 2004, 2006, 2010 and 2014, when the difference between CBN target inflation and actual inflation was 0.01 percent, 0.45 percent, 0.6 percent and 0.48 percent, respectively. When asked why CBN still make inflation forecasts if it is going to be wrong, Uzoma responded saying, “They wouldn’t be doing their job if they didn’t. CBN needs to have an inflation target that it is trying to achieve

to guide monetary policy decisions. “If they left it open without an anchor, any inflation performance may look like the right one. Even though the goal is to achieve the inflation target, it could take months or even years for the target to be achieved especially when the economic environment is very unstable.” Nigerians will be watching closely to see if CBN achieves its policy reference target of 6-9 percent. With prices still rising at double-digit rate in the country, the cost of doing business as well as the cost of living continues to increase rapidly after year. While the country will be hoping that inflation level trends lower in the coming months, economists say the interest rate cut from 14 percent to 13.5 percent by CBN last month wouldn’t lend a helping hand to that cause.

USNC backs CBN’s monetary policy to spur Nigeria’s economic growth ODINAKA ANUDU

sador and USNC chairman, said the council was satisfied with the positive economic developments taking place in Nigeria and would encouraged investors to take a new look at the Nigeria’s economy under the present administration of Muhammadu Buhari. He said that the council supported the apex bank’s monetary policy under the CBN governor, Godwin Emefiele, for steering the country’s economy out of recession and sustaining economic growth. He said US companies would be urged to continue to invest in Nigeria’s economy in a bid to strengthen the two countries’ economic ties. “The council remains the only business group solely focused on Nigeria, and we are pleased to serve as a convener

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of U.S. and Nigerian entrepreneurs in support of this important bilateral relationship,” McCulley said. Emefiele, in his speech at the dinner meeting, said Nigeria’s economy had witnessed seven quarters of sustained economic recovery and growth. He urged US companies to take a closer look at the new dawn in Nigerian economy by coming to invest in the country. Also speaking, the US Ambassador to Nigeria W. Stuart echoed the optimism for Nigeria’s progress by assuring the CBN governor of more US companies’ presence in Nigeria. In his own speech, Emmanuel Okeleji, founder of SeamlessHR, explained that the USNC partnership has greatly impacted on Nigeria’s economy, in terms of job creation, food @Businessdayng

security and ICT development. “Partnering with leading Nigerian and US companies can greatly accelerate our growth and thus job creation in Nigeria,” he said. In attendance at the dinner meeting were the host chairman Ambassador Terence McCulley, co-chair John Coumantaros of Flour Mills of Nigeria; Central Bank Governor Godwin Emefiele; Governor of Edo State Godwin Obaseki; Emmanuel Okeleji, founder of SeamlessHR; Sam Immanuel, founder of Semicolon, and Kendall Ananyi, founder of Tizeti (wifi.com). From the U.S. government were US ambassador to Nigeria W. Stuart Symington, deputy assistant secretary of state for West Africa and security affairs Whitney Baird.

Monday 29 April 2019

BUSINESS DAY

NEWS USNC backs CBN’s monetary policy to spur Nigeria’s economic growth ODINAKA ANUDU

nited States Nigeria Council (USNC), a business organisation dedicated to deepening commercial ties between the US and Nigeria and creating a platform for leading Nigerian entrepreneurs, has backed the Central Bank of Nigeria’s (CBN) monetary policy to stimulate Nigeria’s economic progress under the present administration. At the annual executive spring dinner in Washington DC, USA on the margins of the World Bank/IMF Spring meetings, with over 60 leading Nigerian and American business executives and high-level public officials in attendance, Terence McCulley, an ambassador and USNC chairman, said the council was satisfied with the positive economic developments taking place in Nigeria and would encouraged investors to take a new look at the Nigeria’s economy under the present administration of Muhammadu Buhari. He said that the council supported the apex bank’s monetary policy under the CBN governor, Godwin Emefiele, for steering the country’s economy out of recession and sustaining economic growth.

He said U S companies would be urged to continue to invest in Nigeria’s economy in a bid to strengthen the two countries’ economic ties. “The council remains the only business group solely focused on Nigeria, and we are pleased to serve as a convener of U.S. and Nigerian entrepreneurs in support of this important bilateral relationship,” McCulley said. Emefiele, in his speech at the dinner meeting, said Nigeria’s economy had witnessed seven quarters of sustained economic recovery and growth. He urged US companies to take a closer look at the new dawn in Nigerian economy by coming to invest in the country. Also speaking, the US Ambassador to Nigeria W. Stuart echoed the optimism for Nigeria’s progress by assuring the CBN governor of more US companies’ presence in Nigeria. In his own speech, Emmanuel Okeleji, founder of SeamlessHR, explained that the USNC partnership has greatly impacted on Nigeria’s economy, in terms of job creation, food security and ICT development. “Partnering with leading Nigerian and US companies can greatly accelerate our growth and thus job creation in Nigeria,” he said.

NIPOST mulls partnership with NEPC, NACCIMA on e-Commerce for Adire, other local fabrics … FG picks Ogun for local fabric’s launch RAZAQ AYINLA, Abeokuta

s part of efforts to better market locally produced goods for both Nigerians in Diaspora and foreigners using online platforms, the Nigerian Postal Service (NIPOST) has started driving tripartite partnership with the Nigerian Export Promotion Council (NEPC) and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA). The establishment of NIPOST e-Commerce coupled with creativity of Nigerians with usage of locally produced fabrics such as Adire, tie and dye fabric, to produce clothes, bags, shoes, wall paintings, souvenirs, among others, has prompted the proposal of NIPOST to partner NACCIMA and NEPC for easy online marketing, designed for exports of Nigerian brands to various countries of the world. Speaking at the unveiling of Ogun Seal of Authenticity in Abeokuta, the Ogun State capital on Thursday, Adebisi Adegbuyi, Postmaster General/CEO of NIPOST, said, “e-Commerce is growing exponentially” and Nigeria as a country must adopt it to market locally produced goods, especially to market all the products manufactured out

of African creativity and culture in order to further showcase Nigerian products and culture to the world. He said, “You will recall that JUMIA was listed on New York Stock Exchange last week, that tells us that e-commerce is growing exponentially and we (Nigeria) must get Nigerians to benefit immensely from this. We suggest a collaboration between NIPOST, NACCIMA and NEPC, because through e-commerce platform, we (NIPOST) deliver goods and parcels all over the world.” Yewande Amusan, senior consultant on Culture and Tourism to Governor of Ogun State, noted that the Federal Government had picked Adire Ogun as the main local fabric to drive local production of fabrics in Southwest, Nigeria, saying there would soon be a national launch of local fabric production and usage in Southwest to be organised by the Federal Ministry of Industry, Trade and Investment. “Due to an aggressive drive for usage of locally produced goods, especially for local fabrics the Federal Government through the Federal Ministry of Industry, Trade and Investment has chosen as a clothing brand to drive flag-off of local fabric production and usage in Southwest,” she said.

L-R: Gbenga Oyebode, director, MTN Nigeria; Polly Alakija , founder, Five Cowries Initiative; Dennis Okoro, director, MTN Foundation, and AbasiEkong Udobang, senior manager, programme implementation, MTN Nigeria, at the press launch of the Five Cowries Initiative sponsored by MTN Foundation as part of its Arts and Culture initiative to promote and retell Nigerian and African Stories, in Lagos . Pic by Pius Okeosisi

NUPENG asks Buhari to implement policies to end reliance on imported fuel JOSHUA BASSEY

igeria Union of Petroleum and Natural Gas Workers (NUPENG) has urged President Muhammadu Buhari to, in his second term, work towards ending what it called ‘Nigeria’s continued dependence on imported petroleum products to run its economy despite being a leading producer and exporter of crude oil in the world. The call was part of the resolutions adopted at the end of the National Executive Council (NEC) meeting of NUPENG weekend, in Lagos, where

the oil workers described the practice as ‘shameful and unacceptable’. The union, in a communiqué, read by Williams Akporeha, its president, noted it would give necessary backing to actions by the government to ensure that Africa’s biggest economy was able to refine locally as opposed to exporting crude and importing finished products. “NEC-in-session is pleading with President Buhari to use the strength of his second-term in office to end Nigeria’s reliance on imported petroleum products so as to meet local consumption. As a union, we will give the president all necessary www.businessday.ng

supports required from us to put an end to this shame of depending on imported products for local consumption. “NEC-in-session equally encourages state governments from the oil rich Niger-Delta region to invest in building of oil refineries to cater for domestic, commercial and industrial use by the citizenry.” Against this background, the union stressed the need for the Federal Government to revive Nigeria’s existing refineries in Warri, Kaduna and Port Harcourt and impress it upon investors granted oil-refining licences to build private refineries. According to the union,

until such investors are sanctioned, they will not see the need to start building the refineries. The union also condemned what it called ‘gross violation of workers’ right by International Oil Companies (IOCs), citing Shell Nigeria and its contractors as places where Nigerians working under contracts are being denied their rights. “It is sad and disheartening to put across to the public the flagrant violation of the rights of contract workers in Shell Nigeria. Shell contractors have brazenly refused to implement an agreement they willingly entered into with the workers since November 2018.

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Edo, NEMA roll out agric intervention programme for farmers affected by flooding

do State government in collaboration with the National Emergency Management Agency (NEMA) has commenced an agricultural intervention programme for farmers in three local government areas of the state affected by flood disaster in 2018. The affected local governments are Etsako East, Estako Central and Esan South East Local Government Areas (LGAs). During the inauguration of the programme in Etsako East and Etsako Central, Edo State Team Supervisor for the NEMA programme, Christian Omeje, said the intervention was designed to provide farm inputs to the affected farmers and alleviate the sufferings from the disaster. The programme holds simultaneously in other states affected by the 2018 flood disaster to prevent food shortage across the country, noting that the first stage of the programme includes data capture of affected farmers, which will provide details on the type of inputs to be distributed, Omeje said. “The first stage of the programme has commenced in Etsako

East and will be extended to Etsako Central and Esan South East LGAs, while the second phase will involve distribution of farm inputs such as agrochemicals and seedlings to the farmers, who were captured at the first stage,” Omeje noted. Special adviser to Edo State governor on Special Duties, Yakubu Gowon, commended the Federal Government for the initiative and assured of the state government’s commitment to ensure a transparent process. Yakubu said the initiative was a follow up to the distribution of relief materials by the state government, noting, “Farms in the three councils of the state were destroyed by the flood disaster. We believe NEMA’s agricultural programme will guarantee food security.” Chairman, Etsako East LGA, Aremiyau Momoh, commended the state and Federal Government for the programme, noting, “We commend the cooperation between the state government and federal government in ensuring the victims of flood disaster in 2018 are given succour. The agricultural initiative is laudable and will increase food production in the state.”

BPP tasks permanent secretaries on transparency, procurement reforms SEGUN ADAMS

irector-general of Bureau of Public Procurement (BPP), Mamman Ahmadu, has tasked permanent secretaries (PSs) and other stakeholders in the procurement process to ensure transparency and accountability in carrying out their responsibilities. Speaking at the ninth Annual Public Procurement Retreat for Federal Permanent Secretaries, held in Lagos at the weekend, Ahmadu said the timing of the exercise was apt, as the consistency of the forum had improved Public Procurement process, and led to better public funds expenditure pattern and budget implementation in Nigeria. The programme is an opportunity to bring all participants on the same page in the implementation of the procurement reform programme, he said, saying subsequent retreats will be for the Chief Executive Officers (CEOs) of parastatals and the directorate cadre in the Ministries Departments and Agencies (MDAs). “To ensure the success of the procurement reform, the BPP is, in line with global best practices, embarking on new sustainable public procurement initiatives. For instance, the National Open Contracting Portal (NOCOPO), the global award winning initiative, which further emphasise the need for transparency, competition and level playing field among contractors, consultants and service providers, has placed Nigeria among the best public procurement regulators in the world,” he said. He said while the national upgrade, a version 2 of the Contractors, Consultants and Service Providers (CCSP) was ongo@Businessdayng

ing, the Price-Checker platform, which harmonises prices of items, was also in progress. The BPP currently runs Research Centres at the Federal University of Technology, Owerri (FUTO), Ahmadu Bello University (ABU) Zaria, and the University of Lagos, among others, to boost capacity for key stakeholders in the public procurement practice, he disclosed. He urged the Federal Government to institutionalise the National Conference on Public Procurement (NACOPP) so as to provide a regular forum for advancing the course of procurement reform nationwide. With support from the BPP and international development agencies, 25 states have so far established their procurement regulatory agencies to enable the agency continually meet emerging challenges, he said. The BPP remains committed to working with PSs to ensure that success is continually achieved in the Nigeria procurement system. He said the yearly retreat helps BPP to take stock of progress in the reform and, most importantly, discuss the actions needed for budget implementation in the area of Public Procurement. He reiterated the key roles being played by Permanent Secretaries, who he sees as the Accounting Officers, in the implementation of the public procurement reform. He said: “Federal Permanent Secretaries are recognised as the Accounting Officers in the Ministries under Section 20, Sub-Section 1 of the Public Procurement Act 2007 (PPA, 2007). This places them at the heart of the procurement process. They take responsibility for ensuring the compliance of MDAs with the provisions of the Public Procurement Act, 2007,” he said.

Monday 29 April 2019

BUSINESS DAY

news CBN issues 5 new banking ... Continued from page 1 nakenzua, a former Executive Director at a Tier One bank. “The Bank (Globus), whose head office is on Sanusi Fafunwa, Victoria Island, may open by May 2nd,” one of the sources said. The second bank would go by the name “Titan” and is said to have secured the services of a former Heritage bank executive director. Another owner of one of the new banks is said to be Indian the former owner of Chi Limited who recently sold a majority stake to Coca Cola - and the initial strategy would be to target large Indian and Lebanese clients with investments in Nigeria especially in the Manufacturing and other sectors, sources said. The other banks remain largely anonymous but would be a mix of micro-finance, Merchant and/or deposit money banks, according to the sources. CBN spokesperson, Isaac

Okarafor, did not respond to calls seeking comment. Three bank CEOs declined to comment, as the CBN is yet to go public on the matter. BusinessDay gathered from sources that most of the capital needed to set up the banks were sourced locally in Nigeria. The minimum capital requirement for a Regional bank is N10 billion, while for National banks its N25 billion and international Banks N50 billion, according to the Banks and Other Financial Institutions Act (BOFIA). The capital requirement of microfinance banks, which was amended by the CBN in 2018, is as follows: For a Unit Microfinance bank, the requirement is N200 million, while its N1 billion and N5 billion for a State and National Microfinance bank respectively. For a merchant bank, the minimum paid-up share capital is currently N15 billion. Attempting to place a finger

on the motivation for licensing five new banks almost out of the blue, one of the sources said, “The CBN will not want to preside over an industry that is shrinking.” Another said “Nigeria is under-banked and investors are responding, if the CBN wants to grow credit, by N1 trillion, none of the old banks can take it. Banks available are already at capacity, in one way or another.” The CBN has been somewhat desperate for banks to increase lending to critical sectors but an economy fraught with risks has tamed lending appetite. Nigerian banks were unable to grow their loan books in the past year, a signal that the macroeconomic environment remains weak and non-supportive for growth. The 12 largest lenders quoted on the floor of the Nigerian Stock Exchange (NSE) saw combined loans and advances dip by 6.37 percent to N12.34 trillion in December 2018, from N13.18 trillion a year earlier. This compares with a 25.14 percent increase

between the 2013 and 2014 financial year. The CBN is worried about the trend, Governor Godwin Emefiele indicated in the aftermath of the monetary policy committee last March. To encourage lending to the real sector, the CBN promised to allow banks draw down from their regulatory cash buffers sitting with the apex bank, if the banks gave loans to manufacturers and players in the agriculture sector at single-digit interest rates. The response has been largely underwhelming, with banks preferring instead to stash cash in double-digit yielding government debt where they take considerably less risk.Even the CBN’s surprise interest rate cut to 13.5 percent after keeping it at 14 percent for over two years, was not able to move the needle on lending. The banks argue that to increase lending the CBN should instead reduce the Cash Reserve Ratio (CRR) to free up idle funds. The effective CRR in the sector is

as high as 40 percent. Licensing five new banks can pass for the latest strategy by the CBN to boost bank lending, according to a source. “However, if the problems that hinder the current banks from growing their loan books persist, then even the new ones will struggle,” the third source said. Total credit to the private sector grew by a meagre 2.2 percent to N24.16 trillion, according to the CBN’s Depository Corporation survey report for February 2019, another indication of weak credit flow in the economy. Johnson Chukwu, managing director and CEO of advisory firm, Cowry Asset Management Ltd, said the expansion in credit has been going to the public sector as yields remain attractive at between 13 and 14 percent. “The economic recovery rate has been slow and financial institutions are cautious of booking new Non Performing Loans (NPLs),” said Chukwu. Sources tell BusinessDay that the CBN feels that some of the

current banks may be becoming a little bit removed from the needs of the average customer. “The banking public has very few options. The bigger the bank the more distant the relationship. There is at worst an oligopoly and at best a duopoly,” the first source said. BusinessDay learnt that the licensing is a done deal according to the processes involved which may take up to 2 years. This includes sending the name of directors to the Department of State Security (DSS), Assistant General Manager’s and above being vetted by CBN, offices and branches inspection, staff recruitment, printing of checks and software deployment. The emergence of the new banks is good for staff, good for signalling and will increase competition in the sector our sources said. “When you realize CBN will not allow any bank to fail, you realize there is nothing to fear. You can go ahead and request a license,” the second source said.

Nigeria SWF profit surges 106% to... Continued from page 1

to N246 million but the weakened earnings was compensated for by a 993 percent rise in net forex gains, from N1.65 billion in 2017 to N18.05 billion in 2018, and a spike in other income from N7.96 million in 2017 to N11.45 billion in 2018, more than 100,000 percent increase year-on-year. On the other hand, N S I A n o t e d a 4 4 p e rcent increase in its Investment management and custodian fees from N709 million in 2017 to N1 billion in 2018. In 2018, impairment charges on financial assets rose to N944 million compared to no impairment charges in the preceding year. Operating and adm i n i s t ra t i v e e x p e n s e s eased by 20 percent, from N4.72 billion in 2017 to N3.76 billion i n 2 0 1 8 w h i l e i nt e re s t expens e ros e to N2.62 b i l l i o n a s aga i n st N 8 5 million recorded in the earlier year. Loss from infrastructure subsidiaries investment also saw an increment as it hit N3 billion in 2018 from N2 billion in 2017. Despite the increase in expenses, NSIA was able to sustain its performance and announced a 101 percent surge in its profit before tax which grew N22.96 billion to N46.19 billion year on year. Tax expense reduced by 45 percent to N219.46 million and profit for the year hit N46.5 billion, 106 percent more than NSIA noted for 2017. A look at the Invest-

ment Authority’s balance sheet shows total asset grew by 15.7 percent to N617.7 billion in 2018, compared to N533.82 billion in 2017. NSIA improved equity by 8.45 percent to N543 b i l l i o n w h i l e re t a i n e d earnings rose by 50 percent to N257 billion, although Total liabilities jumped significantly to N74 billion in the period. Current share ownership structure is Federal Government 45.83 percent, States Government 36.25 percent, Local Government 17.76 percent and Federal Capital Territory 0.16 percent. The Nigeria Sovereign Investment Authority is a n ag e n c y o f t h e Fe d eration tasked with the management of funds in excess of budgeted hydrocarbon revenue. NSIA derives its mandate from the NSIA Act which was signed into law in May 2011 and empowers the Authority to re ceive, manag e and invest funds in a diversified portfolio of medium and long term assets on behalf of the t h re e t i e r s o f G ov e r n ment including the Fede ra l Cap i t a l Te r r i t o r y , and Local Governments Area Councils. The essence is to provide a buffer for the eventual depletion of Nig e r i a’s hyd ro ca r b o n resources. The NSIA established t h re e ma i n f u n d s : t h e Stabilisation Fund, the Future Generations Fund a nd t he Nig er ia Inf rastructure Fund to achieve it’s mandate. The Authority commenced operations in 2012. www.businessday.ng

L-R: Godwin Onoro, executive director finance and operations; Rilwan BeloOsagie, chairman, board of directors; Morohunke Bammeke, MD/CEO; Abdulahi Aliyu, executive director–technical of Pensions Alliance Limited (PAL Pensions) at the annual general meeting in Lagos.

MFBs’ disburse total of N482.9bn in... Continued from page 2 the economically active poor in order to enhance job creation and poverty reduction. The target is to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020. He said the CBN remains committed to the economic empowerment of disadvantaged

groups including women and actively seeks to achieve this through the instrumentality of microfinance amongst other initiatives. Tokunbo Martins, director, Other Financial Institutions Department, CBN, noted that the regulator is doing a lot to derisk the sub-sector by introducing collateral registry and credit bureau to enable them to lend

to potential borrowers. In his remarks, Ibrahim Dankwambo, governor of Gombe State said the State receives the second lowest amount from the federation account, and in spite of the low amount the state receives, it had been able to utilise it efficiently. Represented by his deputy, Charles Iliya, he said the present administration had in the last eight years transformed the

state by being prudent managers of scarce resources. Speaking during the colloquium on the topic, ‘Real Sector Credit Delivery: Catalyst for Sustainable Economic Growth’, Isaac Okorafor, director, corporate communications department, expressed happiness that the CBN is working with the bankers committee, NIRSAL, and NIPOST to realize the national Microfinance bank project.

Nigerian firms Capex spend up 26% as economic... Continued from page 2 Petroleum Exporting Countries (OPEC), Russia, and others. Nigeria’s Gross Domestic Product (GDP) growth rate increased to 2.38 per cent (yearon- year) in the fourth quarter of 2018 (Q4, 2018), indicating a 0.55 percentage rise compared to the 1.81 per cent growth recorded in the preceding quarter, according to the National Bureau of Statistics (NBS). Nigeria’s Consumer Price Index (CPI) report for March showed headline inflation eased for the third consecutive month by 6 basis points to 11.25 percent year on year (yoy) from 11.31 percent yoy in February.

“Companies invest in fixed assets because they expect a pickup in economic activities and increased demand for their products. There has been improvement in economic outlook,” said Onyeka Ifeoma, research analyst at Vetiva Capital Management Ltd. “But increased capex spend could be company specific. For instance, between 2017 and 2018 Seplat has been selling gas to Azura power plant in Edo State. They are also working on different projects that require huge capital outlays,” said Onyeka. Onyeka added that Oando is poised to invest in the upstream sector as the company is

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divesting from its downstream operations. Oando has finalized a N14 billion Axxela divestment. For the industrial goods players, Dangote Cement’s capital spending hit N131.04 billion, up 21.39 percent from a year ago as the largest producer of the building material continues to spread its tentacles across Sub Saharan Africa. Julius Berger, the largest construction company in Nigeria saw investment in property plant and equipment surge by 840.16 percent to N5.45 billion from a year ago as it anticipates contracts from Federal government. Cement Company of Northern Nigeria (CCNN) investment in asset also surged from a year @Businessdayng

ago as the cement maker increased operating capacity with a view to increasing share of the market. Analysts say additional spending could extend the growth circle for earnings if it results in increased sales and operating efficiency. Nigerian Stock Exchange 30 Index- the list of the most liquid and capitalized firm- saw cumulative net income rise by 29.23 percent to N1.38 trillion in December 2018 from N1.06 trillion as at December 2017. The growth was largely driven by banks that leveraged on lower impairment and uptick in noninterest income to compensate for receding revenue.

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Dangote donates multi-billion naira 2,160 bed space students’ hostels to ABU Abdulwaheed Olayinka Adubi, Kaduna

hairman of Aliko Dangote Foundation, Aliko Dangote, has made yet another critical intervention in the educational sector when he donated fully equipped 2,160 bed space hostel complex to the Ahmadu Bello University, Zaria, at the weekend. The students’ halls of residence comprising of 10 blocks of 360 rooms built at the cost of N1.2 billion is coming after similar gestures to Bayero University, Kano, and University of Ibadan, where the business mogul donated multi-billion naira business school complexes, respectively, as part of his contribution to the educational development in the country. The new students hall of residence was commissioned to commemorate the 41st convocation of the University during which the university authorities reciprocated the act of philanthropy by confer-

… bags doctorate degree ring on him and the renowned labour leader, Hassan Sumonu, honorary Doctorate Degree. Also 15,787 graduating students were also awarded various degrees. The President of Dangote Group on the occasion explained that he was moved to build the structure having realised that the student population at the universities have recorded significant increase without a corresponding growth in terms of infrastructure lamenting that the situation has remained a subsisting and growing major challenge as Nigerian public universities continue to grapple with under funding. “Thus, I will like to use this opportunity to enjoin the Federal Government to consider allocating special funds to the universities to enable them to improve on research and upgrade their infrastructure. Such special intervention has become imperative given the perennial funding challenges facing our universities”, he stated. Dangote posited that the Federal Government alone

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could not shoulder the entire burden of funding tertiary education due to competing needs of other sectors that also demand priority attention. This is where Public Private Partnership (PPP) can and should come in to fill the gap. He then enjoined the private sector to adopt a new approach towards supporting the federal government in tackling the funding deficit in the higher institutions of learning. He said: “I strongly believe the private sector must go beyond just the payment of the 2% Education levy and be ready to join hands with the State and Federal Governments in expanded funding for tertiary education in Nigeria. This will ensure that our institutions of higher learning are positioned to produce graduates who can transform this nation. “If there are two things that I am passionate about, they are education and entrepreneurship. I believe they go hand in hand. Some years ago, as Chairman of the Na-

tional Committee on Job Creation, my committee strived to fashion out strategies for integrating entrepreneurship into our national educational curriculum, in line with what obtains in the Western world. While commending him, Governor Nasiru el-Rufai of Kaduna State, who officially opened the hostel, said Dangote’s philanthropic spirit should be emulated by others who have been blessed by God. The governor, who is an alumnus of the University, said both government and the private sector could partner to lift the educational sector in Nigeria pointing out that if not for the efforts of the university management, the institution was already dying. Vice Chancellor, Ibrahim Garba, who was very excited at the magnitude of the structures, said the University is the largest in West Africa and described the Aliko Dangote hostel project as a “big relief,” saying lack of adequate accommodation is one of the nightmares of the university.

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Airspace radio communication undergoing upgrade, modernisation - NAMA IFEOMA OKEKE

igerian Airspace Management Agency (NAMA) say it has started a process to accelerate an ongoing programme geared towards the total upgrade of its radio communication infrastructure across Nigeria. This is to ensure that communication challenges experienced by pilots in some parts of the airspace are eliminated. As part of efforts to boost the clarity of radio communication especially at the upper airspace, the agency said in a statement yesterday that it has taken steps to replace all the Very High Frequency (VHF) radios at the existing eight remote sites in Lagos, Kano, Wukari, Sokoto, Ilorin, Port Harcourt, Abuja, and Maiduguri. It also added six new sites in Jos, Kaduna, Yola, Enugu, Benin and Calabar making a total of 14 VHF sites spread across the nation. These VHF remote sites are operated in a network, which will have signal pattern that covers the entire Nigerian airspace.

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The agency has taken delivery of the VHF radio equipment under the ‘Extended Range VHF Coverage’ project and installation will commence soon. In 2018, NAMA said it deployed four stand-alone Jotron High-power long-range VHF radios at Lagos East and Lagos West as well as Kano East and Kano West Area Control Centres (ACCs). This backup solution is targeted at addressing Remote Control Air to Ground (RCAG) communication challenges in the upper airspace by providing reliable backup in the event of loss of VHF radio communication on the main system. Khalid Emele, general manager, public affairs, NAMA stated that plans have also been completed to extend the range of the abovestated long-range backup radios and is only awaiting the passage of 2019 budget by the National Assembly for implementation to commence. Emele said when completed, the backup radios would also have sufficient overlap of propagated signals to cover the entire Nigerian airspace.

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NEWS Pan Ocean deepens Nigeria’s oil, gas infrastructure with 3 key projects DIPO OLADEINDE

he technical start up and unveiling of three newly completed milestone projects of Pan Ocean Oil Corporation (Nigeria) Limited (operator of the NNPC/Pan Ocean Joint Venture), is slated for June 2019. The projects are the Amukpe-Escravos Pipeline Project (AEPP), Ovade-Ogharefe Gas Processing Plant Phases I & II and OML 147 Early Production Facility at Owa-Alidinma. Pan Ocean is the contractor for OML 147 in Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC). These projects are set to significantly boost infrastructure in the Nigerian oil and gas industry. The Amukpe-Escravos Pipeline is a 67-kilometre X 20 inch, low-risk underground pipeline that will evacuate crude oil from Amukpe, to Escravos Export Terminal. The pipeline system has capacity to deliver 160,000 barrels of oil per day (bopd). It is designed to minimise vandalism and mitigate the loss of revenue to the Nigerian govern-

ment and oil and gas companies operating in the northern fringe of the Niger Delta. The pipeline was installed using Horizontal Directional Drilling (HDD) method to ensure minimal ecological and environmental disruption during construction and operation. It is the longest of its kind in Africa. The Ovade-Ogharefe Gas Processing Plant will supply lean gas to the NIPP Power Plant located at Ihobbor, Edo State and liquefied petroleum gas (LPG) to households across Nigeria. It has a processing capacity of 200mmscf/d, and is equipped with 29 storage tanks built to store approximately 194,400 gallons of Propane and 244,640 gallons of Propane/ Butane mix (LPG). The third project, OML 147 Early Production Facility at Owa-Alidinma is expected to process 11,000 barrels of crude oil and 90 million standard cubic feet of gas daily when fully operational. “With the support of our joint venture, financial and technical partners, our team delivered these world-class projects safely and with the highest consideration for en-

vironmental impact,” Collins Akinkugbe, general manager (OML 147 Asset), said. “We set out to deliver infrastructure that will bring operators in the northern fringe of the Niger Delta closer to zero gas flare, monetisation and commercialisation of their gas resources, stability of revenue from the location of the Amukpe-Escravos pipeline, improved power supply and the attainment of the national gas plan. We are proud of our achievement.” The three projects establish Pan Ocean as a fully integrated energy, oil and gas industry player and will enable the company serve a more diverse clientele drawn from the manufacturing industry, power sector, households and other segments of the economy. In particular, the full commencement of the AmukpeEscravos Pipeline positions Pan Ocean as a major player in the international oil and gas logistics business. The projects are relevant to the communities where they are sited as they provide a platform for socioeconomic empowerment of the people and communities.

Consumers’ need for innovation drives Fintech, future of money SEGUN ADAMS

he pace of development of Fintech in Nigeria would be determined by the lifestyle need and demand for innovation by consumers, Toyin Albert, group head of Switching Processing and Terminal Services, Xpress Payments Solutions, said at the inaugural edition of Lagos Fintech. According to Albert, there has been a dynamic shift in the drivers of growth of financial technology in Nigeria from what it used to be, and this has significant implications for the country where a lot of start-ups are springing up around financial technology solutions. “Before now, about 15 to 20 years ago, the e-payment space actually gives you what they have but now, customers demand what they want,” she said. The progress noted in Fintech ecosystem has seen Nigeria drive closer to its financial inclusion

target of 80 per cent by 2020 as was acknowledged by experts in the industry and regulators at the event tagged “Fintech: Exploring the huge opportunities.” The event held from April 23 to 25, 2019. However, with the increasing need for convenience, faster and cheaper ways to move money around coupled with the rise of a social-media influenced lifestyle, Fintech solutions need to evolve and match consumer behaviour to sustain its impact on the economy in bringing more people into the formal financial system. “At Xpress Payment Solutions, we have a lifestyle platform that allows households to pay for bills, make purchases or carry out any kind of transactions stress-free,’’ she said. In addition to finding out what consumers need is, she suggested that Fintechs must pay attention to the manner in which the solutions were made

CBN to unveil clean note policy, banknote fitness guidelines Tuesday Hope Moses-Ashike

entral Bank of Nigeria (CBN) in furtherance of its mandate to ensure the management of legal tender currency in Nigeria and ensure the recirculation of clean, fit and high quality banknotes has approved the issuance of the Clean Note Policy and Banknote Fitness Guidelines to the general public. Consequently, the unveiling of the clean note policy and banknote fitness guidelines documents would be held on Tuesday in Lagos. The documents would be unveiled by the governor, CBN, Godwin Emefiele, in consort with key industry stakeholders. The Clean Note Policy pro-

vides a uniform standard for the circulation of only clean and fit banknotes in Nigeria, while the Banknote Fitness Guidelines provide the industry with clear and acceptable criteria for determining the quality of banknote in circulation. These documents were developed after extensive collaboration and engagements with key industry Stakeholders under the auspices of the Nigerian Cash Management Scheme, a Bankers’ Committee initiative. The intention of the bank is to ensure that unfit, dirty, mutilated and counterfeit banknotes are not in circulation in Nigeria. This is pursuant to Section 18,20 & 21 of the CBN Act 2007, which prohibits the counterfeiting, sale and abuse of the Naira.

The bank cannot achieve these objectives without the collaboration of Deposit Money Banks(DMBs), Merchant Banks, Microfinance Banks, Government agencies, Cash-in- Transit ( CIT), Cash Processing Companies (CPCs), Market Associations, Merchants/Retailers, Chambers of Commerce and Industry, Security agencies, Currency Management equipment manufacturers , bank customers and the general public. The Bank has developed a mechanism to ensure full compliance with the documents by stakeholders. Compliant channels such as phone and emails would be provided to enable the general public provide information on infractions of the two documents.

Edo Innovation Hub excites youth, as 50 commence Amazon Web services programme

s the Governor Godwin Obaseki-led administration in Edo State continues to fortify structures for the state’s growing tech ecosystem, the Edo Innovation Hub has strengthened ties with more technology giants, as at least 50 youths at the hub have commenced the Amazon Web Services training programme at the hub. Senior special assistant to the state governor on Skills Development and Job Creation, Ukinebo Dare, who disclosed this in an interview with journalists, said the state government’s unrelenting drive to open the state up for investment was yielding fruits. She said the Edo Innovation

Hub had been a beehive of activities since its launch a year ago, opening up the space for youths interested in the highly-rewarding technology space to get top-of-therange training and exposure in a serene environment. She said the Hub was now home to three other hubs, namely Edo Innovates Hub, South-South Innovation Hub and Sabi Hub, which has attracted top technology companies Google, Facebook, Microsoft, Siemens and Amazon. According to Dare, “At least 50 young people from the Curators Data Science Lab have commenced the Amazon Web Service Program, which builds their capacity in cloud computing. They have a www.businessday.ng

high potential for employment with this training and are most likely going to be highly sought after. These are the kinds of training and opportunities at the hub.” She said two new start-ups, Zaytun Naturals and New Digits, have also been birthed at the hub, noting that there are plans to expose Edo youths to more exciting opportunities so they can better contribute to development in the state. “New Digits is a group of inventors developing energy gadgets. They have grown a successful business model that puts them on the path of profitability. This is very exciting for us at the hub and we are happy to be part of their success story,” she said. https://www.facebook.com/businessdayng

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available. “For us, we sit with our clients to co-create and offer innovative solutions to improve their processes,” she said. At the event, stakeholders called for greater collaboration between players in the ecosystem and more infrastructure investment from the government and private sector, which would enable the sector attain its full potential in terms of innovation. A panel discussion held on “The future of money” agreed that money was changing form and the digitalisation of money was going to disrupt the banking space as consumers were increasingly able to carry out many of their transactions outside of a traditional banking platform. According to the panel, “consumers want to be able to make purchases from the comfort of their bed and have it delivered at their doorsteps,” necessitating the use of new payment systems and forms of money.

Monday 29 April 2019

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 26 April 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 234,598.49 6.60 -4.35 284 18,058,547 UNITED BANK FOR AFRICA PLC 234,266.04 6.85 0.73 213 29,985,102 ZENITH BANK PLC 670,315.14 21.35 -0.47 258 11,260,725 755 59,304,374 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 260,240.87 7.25 -8.23 179 6,920,206 179 6,920,206 934 66,224,580 BUILDING MATERIALS DANGOTE CEMENT PLC 3,184,870.83 186.90 -0.59 151 761,975 LAFARGE AFRICA PLC. 182,823.48 11.35 - 39 233,367 190 995,342 190 995,342 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 334,236.51 568.00 - 6 302 6 302 6 302 1,130 67,220,224 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 68,681.52 72.00 -10.00 34 418,611 PRESCO PLC 62,750.00 62.75 - 3 1,283 37 419,894 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,920.00 0.64 6.67 5 146,540 5 146,540 42 566,434 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 5 125,000 JOHN HOLT PLC. 182.90 0.47 - 2 746 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 45,525.75 1.12 -0.88 105 17,319,423 U A C N PLC. 18,728.43 6.50 3.17 148 5,844,229 260 23,289,398 260 23,289,398 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,700.00 22.50 - 25 127,994 ROADS NIG PLC. 165.00 6.60 - 0 0 25 127,994 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 4 35,252 4 35,252 29 163,246 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,334.94 1.32 - 4 7,700 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 106,452.61 48.60 - 42 150,104 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 -4.76 11 3,809,801 NIGERIAN BREW. PLC. 516,999.72 64.65 -0.54 60 371,073 117 4,338,678 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 77,750.00 15.55 9.89 70 1,868,925 DANGOTE SUGAR REFINERY PLC 171,000.00 14.25 -3.06 34 510,989 FLOUR MILLS NIG. PLC. 66,631.17 16.25 -0.31 38 466,167 HONEYWELL FLOUR MILL PLC 9,516.24 1.20 6.19 12 465,890 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 100 50,339.33 19.00 - 23 425,546 NASCON ALLIED INDUSTRIES PLC UNION DICON SALT PLC. 3,321.07 12.15 -9.67 1 50,000 179 3,787,617 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 21,317.59 11.35 3.18 86 3,786,748 NESTLE NIGERIA PLC. 1,228,617.19 1,550.00 - 70 105,016 156 3,891,764 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,865.78 3.89 1.30 13 3,064,017 13 3,064,017 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 37,521.01 9.45 - 12 84,005 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 19 61,124 31 145,129 496 15,227,205 BANKING ECOBANK TRANSNATIONAL INCORPORATED 198,175.15 10.80 0.47 31 191,912 FIDELITY BANK PLC 56,211.11 1.94 -1.52 73 1,226,154 GUARANTY TRUST BANK PLC. 1,006,546.33 34.20 -0.87 108 3,610,884 JAIZ BANK PLC 14,142.84 0.48 9.09 10 1,121,295 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 78,597.84 2.73 - 11 120,792 UNION BANK NIG.PLC. 198,021.12 6.80 - 14 101,331 UNITY BANK PLC 10,169.72 0.87 6.10 16 746,940 WEMA BANK PLC. 29,316.59 0.76 8.57 125 25,318,725 388 32,438,033 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 321,047 AIICO INSURANCE PLC. 5,128.35 0.74 1.37 27 591,900 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 2 300 CONSOLIDATED HALLMARK INSURANCE PLC 2,195.10 0.27 - 3 20,100 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 4 56,972 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 16 11,374,000 2,148.17 0.50 -7.41 3 205,000 LAW UNION AND ROCK INS. PLC. LINKAGE ASSURANCE PLC 4,160.00 0.52 - 6 77,900 1,760.00 0.22 -4.35 6 614,000 MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC 10,613.81 2.01 - 8 213,048 NIGER INSURANCE PLC 1,547.90 0.20 - 1 785 PRESTIGE ASSURANCE PLC 2,691.28 0.50 -9.09 4 231,001 REGENCY ASSURANCE PLC 1,600.50 0.24 -7.69 8 511,000 2,085.21 0.25 8.70 13 5,459,368 SOVEREIGN TRUST INSURANCE PLC STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 14,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 40,000 WAPIC INSURANCE PLC 5,085.44 0.38 -5.00 46 4,636,502 151 24,366,923 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,544.29 1.55 1.97 3 177,900 3 177,900

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Monday 29 April 2019

BUSINESS DAY

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Monday 29 April 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Doubts grow over Germany’s balanced budget rule

Economists call for debt brake to be ‘fine-tuned’ as under-investment bites GUY CHAZAN

he knives are out for one of the holiest of Germany’s sacred cows. The debt brake, a 10-year-old fiscal rule that virtually bans Berlin from running budget deficits, has long been a pillar of the country’s political and economic orthodoxy. Yet just as it celebrates its 10th birthday, an increasing number of economists who previously supported it are questioning whether such a rigid rule is still appropriate. “In view of the huge investment needs that Germany now has, it has become a hindrance,” said Michael Hüther, head of the German Economic Institute in Cologne. Once a champion of the debt brake, Mr Hüther is one of a chorus of experts who are demanding a rethink. The complaint is that it is too restrictive, and that more flexibility is needed at a time of zero interest rates and a cooling economy that will curb tax revenues. Marcel Fratzscher, head of the German Institute for Economic Research (DIW Berlin), said Germany was seeing a “mind shift” away from such diktats. “There’s this feeling that maybe we overdid it,” he said. “After all, if you take the debt brake seriously, it means that at some point sovereign debt will be abolished entirely.” The debt brake was introduced in 2009 after the global financial crisis blew a hole in Germany’s public finances. The law, which is enshrined in the German constitution, effectively prohibits its 16 regions from running budget deficits and limits the federal government’s structural deficit to 0.35

per cent of gross domestic product. Its advent came as Berlin was reeling from two fiscal stimulus packages and a €500bn bank bailout, which left it with an €86bn deficit and a debtto-GDP ratio of 81 per cent — much higher than the 60 per cent limit set in the Maastricht treaty. But its genesis lies further in the past, originating at a time in the early 2000s when Germany was the sick man of Europe. The exorbitant cost of reunification had drained state coffers and, with unemployment soaring and debt spiralling, the idea gained ground that strict rules were needed to force spendthrift ministers to behave more responsibly. The debt brake certainly helped repair Germany’s public finances: every year since 2014 the government has run a balanced budget — known in German as the “schwarze Null”, or black zero. Its debt-to-GDP ratio stands at 60 per cent, and on current projections should drop to 50 per cent by 2022. Thanks to a booming economy, record employment and bumper tax receipts from business, the Treasury delivered a surplus of €54bn last year. Meanwhile, no big political party in Germany shows any inclination to deviate from the orthodoxy of the schwarze Null. Olaf Scholz, the Social Democrat finance minister, who has ambitions to be Germany’s next chancellor, has vowed to cleave to the legacy of his famous predecessor Wolfgang Schäuble: the coalition agreement negotiated last year between his SPD and Angela Merkel’s centre-right Christian Democratic Union insists on balanced budgets, stable finances and “no new debts”.

Donald Trump unlikely to achieve quick trade deal without offering more concessions

onald Trump’s hopes of completing a trade deal with Japan next month have been severely dented after he failed to persuade prime minister Shinzo Abe to give the US greater access to the country’s agricultural market. At a White House meeting with Mr Abe on Friday, the US president said he hoped trade talks would “go quickly” and enable him to sign a deal when he visits Japan in late May to meet the new emperor. However, the US did not offer any concessions to Tokyo and several people familiar with the talks said Mr Abe had stressed that Japan could not soften its stance on agriculture ahead of Upper House elections scheduled for July. Ahead of the visit, Robert Lighthizer, the US trade representative, had pushed his Japanese counterpart Toshimitsu Motegi for an “early harvest” that would have cut barriers to selling agricultural products to Japan. But Tokyo rejected the proposal as it wants a more comprehensive deal with concessions on both sides. One person familiar with the discussions between the two leaders said it appeared that Mr Abe had “dodged a bullet and will not

have to force through agricultural liberalisation” ahead of the election. The electoral calendar, however, is not the only obstacle. Japan wants to ensure it gets something in return for granting US farmers greater market access to its market, namely removing the threat of tariffs on car imports on the basis of US national security. Japan would prefer that the US went even further, phasing out levies on light trucks, cars and parts along the lines agreed in the Trans-Pacific Partnership — the 12-nation trade deal agreed under the Obama administration from which Mr Trump withdrew in early 2017. But there are few signs that Washington is prepared to do so. The US has not put anything on the table that would help Mr Abe to sell a deal domestically even after the July elections, according to a person familiar with the discussions. “Trump still has not given him anything to work with,” the person said. “With TPP, the US would have modestly reduced some tariffs to make the deal two-way. Trump won’t do that or reduce new tariffs he slapped on steel and aluminium. It is classic Trump win-win negotiations — Trump expects to win twice.” www.businessday.ng

Yet the economic mood music has changed remarkably since the early days of the debt brake, largely thanks to the European Central Bank’s loose monetary policy; its bond-buying programme and negative interest rates have seen long-term German bond yields trading at close to zero for much of the past couple of years. “The nominal interest rate is now below the nominal GDP growth rate, so the argument that new borrowing burdens future generations doesn’t hold any more,” said Mr Hüther. The mind shift is even being felt in that stronghold of fiscal rectitude, the German finance ministry. Observers have linked the change of tone to the arrival of Jakob von Weizsäcker, a former Social Demo-

crat MEP who in January replaced the hawkish Ludger Schuknecht as the ministry’s chief economist. Mr von Weizsäcker recently invited a group of experts, including Messrs Fratzscher and Hüther, to discuss how Germany could ramp up investment and what that would mean for the debt brake. “The question is: isn’t there a good deal to be had for investing in our country by borrowing money for free?” said one official with knowledge of the discussions. The background is growing public concern about under-investment in Germany’s infrastructure — its rundown schools, crumbling bridges, unreliable internet and underfunded army. This has now eclipsed worries about public debt.

Yet some economists reject that as an argument to do away with the debt brake. “The question is: what are these big investment projects that we need right now?” Lars Feld, professor of economic policy at Freiburg university, told the German press last week. “What is so bad about our infrastructure that we can’t finance it through taxes?” Mr Feld has argued that investment is low because of Germany’s cumbersome construction permits system, not its commitment to solid public finances. Abandoning the debt brake would leave the country with the “same problems we used to have — more government consumption [of goods and services] and more government transfers. But there won’t be much investment.”

US warns China on aggressive acts by fishing boats and coast guard

Japan refuses to give greater access to US farmers DEMETRI SEVASTOPULO, JAMES POLITI AND ROBIN HARDING

Germany’s chancellor Angela Merkel and finance minister Olaf Scholz have so far kept to the fiscal rule that effectively prohibits Berlin from running budget deficits

Navy chief says Washington will use military rules of engagement to curb provocative behaviour DEMETRI SEVASTOPULO AND KATHRIN HILLE

he US has warned China that it will respond to provocative acts by its coast guard and fishing boats in the same way it reacts to the Chinese navy in an effort to curb Beijing’s aggressive behaviour in the South China Sea. Admiral John Richardson, head of the US navy, said he told his Chinese counterpart, vice-admiral Shen Jinlong, in January that Washington would not treat the coast guard or maritime militia — fishing boats that work with the military — differently from the Chinese navy, because they were being used to advance Beijing’s military ambitions. “I made it very clear that the US navy will not be coerced and will continue to conduct routine and lawful operations around the world, in order to protect the rights, freedoms and lawful uses of sea and airspace guaranteed to all,” Adm Richardson told the Financial Times. On top of its militarisation of artificial islands in the South China Sea, Beijing has deployed paramilitary actors. In several incidents involving the US, Vietnam and the Philippines, Chinese fishing boats have rammed vessels, blocked access to lagoons,

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harassed ships and been involved in the seizing of reefs and shoals. The maritime militia has been strengthened since 2015, when it created a headquarters in the Chinaadministered Paracel Islands, a disputed area in the South China Sea that is also claimed by Vietnam and Taiwan. It has also received training alongside the Chinese navy and coast guard. In its last annual report on the Chinese military, the Pentagon said the fleet “plays a major role in coercive activities to achieve China’s political goals without fighting”. China has increasingly used the maritime militia because fishing boats are less likely to prompt a military response from the US. But the latest warning significantly raises the stakes for China’s non-navy vessels engaging in aggressive acts. “By injecting greater uncertainty about how the US will respond to China’s grey-zone coercion, the US hopes to deter Chinese destabilising maritime behaviour, including its reliance on coast guard and maritime militia vessels to intimidate its smaller neighbours,” said Bonnie Glaser, a China expert at CSIS, a Washington-based think-tank. William Choong of the International Institute for Strategic Studies, @Businessdayng

a Singapore-based think-tank, said the maritime militia gave the People’s Liberation Army Navy an “additional military arm” to help enforce Beijing’s stranglehold on the South China Sea. “It’s a clever strategy because the naval ships of the other claimants will think twice before they engage vessels that are technically not armed, not military ships, in a way they would other naval vessels,” he said. The US warning also affects the Chinese coast guard. Dennis Wilder, a former head of China analysis at the CIA, said President Xi Jinping put the coast guard under the control of the Central Military Commission in 2018. “By having both the navy and the coast guard under the CMC, it improves in wartime the co-ordination and control of maritime forces,” he said. “As China’s coast guard is heavily armed, it is a logical assumption that it would be incorporated into military plans and operations.” The US navy has been conducting Freedom of Navigation Operations, whereby it sends warships through disputed waters to prevent a claimant from denying others access in violation of international law. Analysts have long pushed for a more effective US response to counter China’s mix of military, paramilitary and economic coercive measures.

Monday 29 April 2019

BUSINESS DAY

NATIONAL NEWS

Hong Kong protests over extradition law draw tens of thousands Proposed legislation would allow people to be sent to mainland China to stand trials

SUE-LIN WONG AND NICOLLE LIU

ens of thousands of people marched to Hong Kong’s parliament on Sunday, demanding the government abandon its proposed extradition law that allows people from the former British colony to be sent to mainland China to stand trial. Sunday’s rally drew the largest crowd of protesters to the city’s streets since the Umbrella Movement in 2014, a three-month occupation of roads in the heart of Hong Kong by tens of thousands of citizens. The proposed law, introduced by the Hong Kong government in February, has spooked an unusually diverse cross-section of Hong Kong, including business leaders, lawyers, professional groups, journalists and human rights organisations, which fear it may be used as a weapon against anyone passing through the international transport hub. “I don’t usually come out to protest but this is extremely important so I’ve come today,” said Kevin Wong, who is self-employed and was marching with his friend. “The laws of Hong Kong have become a tool to suppress opposition. The

government is using the law as a weapon.” Organisers said more than 130,000 people participated in Sunday’s rally, while Hong Kong police estimates put the figure at 22,800. Hong Kong’s chief secretary Matthew Cheung Kin-chung said the number of people in attendance at the rally was not the focus of the government, adding that “a lot of concerns arise from people not fully understanding the actual situation”. The amendment was designed to plug gaps in the law highlighted by a murder case in Taiwan involving Hong Kong residents, he said. ProBeijing lawmakers say the proposed law plugs “legislative loopholes” that potentially made Hong Kong a “paradise for fugitives”. Some protesters wore yellow clothing and carried yellow umbrellas, the symbol of the Umbrella Movement, as chants calling on Carrie Lam, Hong Kong’s chief executive, to resign rippled through the crowd. “There is a lot of fear that once the extradition law is passed, we won’t be able to come out to protest on the streets,” said Cindy Cheng, an English teacher, holding an antiextradition law sign.

Weak US inflation scrambles debate on Fed’s next rates move Policymakers have opened the door to further easing if the data warrant it SAM FLEMING

luggish inflation numbers are persistently overshadowing firmer US growth and teeing up a debate in the Federal Reserve over whether the next move in interest rates may need to be down rather than up. The US central bank, led by chairman Jay Powell, is likely to keep policy unchanged at 2.25 to 2.5 per cent when it meets on Tuesday and Wednesday. With US activity improving after a shaky start to the year and overseas risks diminishing, many analysts remain confident the Fed will keep rates at their current level for the remainder of the year. But policymakers including Charles Evans of the Chicago Fed have opened the door to future discussions over whether the central bank may wish to lower rates if inflation disappoints further or growth takes an unexpected turn for the worse. Richard Clarida, the Fed’s vice-chair, this month noted in a CNBC interview that in 1995 and 1998 the central bank had taken out some “insurance cuts” even though a recession was not looming. Bill English, a Yale University professor who used to be director of the Fed’s monetary affairs division, said he did not see a compelling case for a rate reduction at present. “My guess is they stick with this for a while and let the data speak,” he said. However, he added that if the Fed concluded over the summer and autumn that inflation was running lower than it wanted and the economy was slowing, it may want to push through one or two “easing moves” to see if that improved the outlook. The US on Friday posted strong growth, with the economy expanding at a 3.2 per cent annualised pace, adding to signs that a growth scare earlier this year was overstated. The headline figure was well above

the US economy’s trend pace, and it comes on top of healthy US jobs growth and improving prospects in overseas economies including China. As such, some economists find it difficult to see why the Fed should ditch plans to keep rates on hold this year and watch the incoming economic data for signs that inflation is finally beginning to gain traction. At its most recent meeting, the Fed did nothing to tee up the possibility of a rate cut, with minutes from the meeting stressing “significant uncertainties” about the outlook and adding that policymakers’ rates expectations could move in either direction. But the picture is being complicated by a number of factors. First, the US headline growth figures vastly overstated the economy’s underlying strength, according to Bob Schwartz, senior economist at Oxford Economics. A key measure of underlying private demand expanded just 1.3 per cent in Friday’s Bureau of Economic Analysis report, down from 2.6 per cent in the fourth quarter. And weak inflation data contained in the report only added to concerns that US price growth is decelerating even as wage growth firms up and unemployment hovers at just 3.8 per cent. The core personal consumption expenditures price index rose at a 1.3 per cent annualised pace in the first quarter, Friday’s figures showed, weaker than the 1.4 per cent Wall Street expectation. Inflation’s persistent weakness is troubling the Fed, given the central bank has failed since the great recession to keep price growth sustainably at its 2 per cent target. Bond investors, said Mr Schwartz, “see the glass as half empty. They view the persistence of low inflation in the report as a sign the economy may be weaker than thought.” www.businessday.ng

UK education secretary Damian Hinds is proposing to end the preferential status of EU students for courses starting in 2021/22 © PA

EU students to pay more to study in England under Brexit plan Government accused of hobbling universities with proposal to charge full fees to students from bloc GEORGE PARKER

U nationals living in the UK are being urged to use European elections next month to protest against a government proposal to make future students from the bloc pay more to study at English universities. Damian Hinds, education secretary, is proposing to end the preferential status enjoyed by EU students for courses starting in 2021-22, by which time Britain is scheduled to have left the bloc. The proposal, first reported by BuzzFeed News, was not denied by the Department for Education and has already attracted criticism that the government is willing to hobble its thriving universities by turning away international talent. “Another dreadful idea from this dim-witted government,” said Gavin Esler, a former BBC journalist and a candidate for the Change UK party in next month’s European Parliament elections. “Any EU students or nationals in this country who can register to

vote please do so. We want a brainy Britain and to attract the best and brightest,” he wrote on Twitter. EU citizens have until May 7 to register to vote in the elections on May 23. There were an estimated 3.7m nationals of another EU country living in the UK in 2018. Under the proposals — which have not been finalised or signed off by cabinet — future EU students at universities in England would no longer have the right to pay the same tuition fees as domestic students. The European elections are a unique opportunity for Change UK The plan could see them charged the significantly higher fees currently paid by international students from non-EU countries. Theresa May, prime minister, has often clashed with cabinet ministers over her insistence that foreign students should be included in net immigration figures. If the government were to impose higher tuition fees on EU students, critics would argue that it would blow a hole in Mrs May’s claim to be developing a “Global

Britain” strategy after Brexit. Mr Hinds has previously guaranteed home fee status for new EU students starting courses in 201920 but has said nothing about the policy after that date. “We have said that EU students already here will have access to financial support for the duration of their course on the same basis as is available today,” said a person close to Mr Hinds. Irish students would continue to enjoy home fee status, while the Scottish government has guaranteed home fee status for EU students starting courses this year and in 2020-21. The Department for Education said the government would “provide sufficient notice for prospective EU students on fee arrangements”. But Angela Rayner, Labour’s shadow education secretary, said the Conservative party had “refused to recognise the vital contribution made by international students” and were “failing to support our world-leading universities”.

Military leaders in Sudan and Algeria slow the shift to democracy Protesters who helped topple presidents fear army chiefs will not hand power to civilians DAVID PILLING AND HEBA SALEH

hortly before Sudan’s president Omar al-Bashir was toppled on April 11, he asked to see Lieutenant General Mohamed Hamdan Dagalo, better known as Hemeti, the head of a paramilitary force under his command. At the meeting, according to Lt Gen Hamdan, the 75-year-old president quoted a piece of Islamic jurisprudence that supposedly gives a leader the right to kill up to a third of his people. Based on that Koranic interpretation, the soldier said, the president had ordered him to disperse tens of thousands of protesters calling for his removal, no matter what the cost in lives. Lt Gen Hamdan refused. “I said God forbid,” he told a press conference in Khartoum after Mr Bashir had been ousted and taken to Kober maximum-security prison. “That was our last interaction.” Thus ended Mr Bashir’s 30-year rule. In Sudan and also Algeria, where another authoritarian ruler was ousted this month, militaries that had long preserved the rule of one man have responded to popular uprisings by turning against their heads of state. In Algeria, Ahmed Gaid Salah,

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the army chief of staff once loyal to Abdelaziz Bouteflika, the 82-year old president, reluctantly agreed to deliver the coup de grâce. The wheelchair-bound Mr Bouteflika, whose decision to stand in elections for a fifth term had sparked mass demonstrations, was removed from office. The question is what happens next? In both countries, some find it hard to believe that the military ejected longtime rulers in order simply to hand over power to civilians. In Algeria, where the military has long been at the core of the regime, there is a widespread belief that the armed forces are motivated by regime preservation rather than any desire to dismantle a system of power and patronage in place since independence from France in 1962. Even in Sudan, where the military has been in talks with civilians over new political arrangements, many fear the generals could backslide if a transition to democracy is not quickly cemented. “We are powerful now because we have those people on the street,” said Osman Mirghani, a prominent journalist, referring to the tens of thousands who congregate daily on the streets of Khartoum, pressing for a transfer to civilian power. “But @Businessdayng

once those people withdraw, the army will not talk to us.” The paradox for pro-democracy groups is that, to reach their goals, they must negotiate with the very forces that propped up the old regime. In both Algeria and Sudan, protesters know only too well what happened in Egypt after Hosni Mubarak was ousted as president during the first wave of the Arab spring in 2011 and the army controlled the subsequent transition. The flawed and chaotic democratic experiment that followed was cut short by a military coup in 2013, in which Abdel Fattah al-Sisi emerged as a new authoritarian leader. Protesters in both Algeria and Sudan have held banners proclaiming: “No to the Egyptian outcome.” Since Mr Bouteflika was ousted three weeks ago, Gen Salah has insisted Algeria must follow a constitutional process by holding elections within three months. Demonstrators say that an election presided over by the existing apparatus will merely bring new faces to the head of the old regime. Instead, they want a purge of Bouteflika-era officials. A weekly Friday protest has been maintained to keep pressure on the regime, which has reacted by blocking roads to the capital to deter people from taking part.

Monday 29 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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The unbreakable, unsustainable eurozone Without an ECB to do the heavy lifting in the next crisis, real reform will be needed WOLFGANG MÜNCHAU

he eurozone belongs to the category of the simultaneously unbreakable and unsustainable. The two can comfortably sit side by side. But a recession could bring the conflict out in the open. It is still too early to say whether the observed weakness in the economic data since the second half of last year marks the start of a recession or a mid-cycle dip. I have no views on this point. But when the downturn happens, as it eventually will, the unsustainable will hit the unbreakable. And then what? There is a lazy answer to this apparent contradiction. When faced with the next crisis, the EU’s leaders will do what they have always done in the past: they will reform. The trouble with this theory is that it is based on a fiction: reform did not happen after the previous eurozone crisis. If you consider the most probable sources of future tension, the eurozone is no stronger today than it was before it acquired a half-baked banking union and the European Stability Mechanism. The eurozone only survived during the crisis years between 2010 and 2015 thanks to two decisions, both initiated by Mario Draghi, president of the European Central Bank. The first, in the summer of 2012, was the vague but forceful promise to do “whatever it takes” to prevent the break-up of the European single currency. This was followed up in March 2015 with purchases of eurozone

sovereign bonds. But it is worth recalling that quantitative easing was not an overt crisis response. It was only possible because of the eurozone’s descent into disinflation in 2014. Without it, Mr Draghi would otherwise never have found a majority in his governing council for the scale and length of the sovereign bond purchases that ultimately succeeded in stabilising the eurozone bond markets. It was a fortuitous coincidence. There are three reasons to believe that the ECB is unlikely to act as a backstop in future crises in the same way. The first is that Mr Draghi’s term of office expires at the end of October; there are not many replacement candidates on the horizon with similar instincts. The second is that the ECB can only purchase government bonds within the remit of its policy mandate. Even Mr Draghi’s ECB was never a discretionary actor. And third, the ECB has no room for rate cuts. It says a lot about the eurozone economy that it reached the top of its business cycle with shortterm interest rate at -0.4 per cent. Without an ECB able or willing to do the heavy lifting in the next crisis, real reforms will be needed. Those agreed recently are of the wrong kind. The eurozone does not really need another small structural budget facility. Even if a eurozone budget were to grow to 1 or 2 per cent of gross domestic product eventually — which is beyond what is imaginable by several governments — it would not be enough even to make a dent in a severe financial or economic crisis.

EBA faces calls to reform after dropping Danske Bank probe Europe’s banking watchdog criticised for closing investigation into money-laundering JIM BRUNSDEN

urope’s financial regulation chief has called for the EU to overhaul its money-laundering safeguards after the bloc’s banking watchdog shelved an investigation into the €200bn Danske Bank scandal. The European Banking Authority voted on April 16 to reject an internal draft report into supervisory failings linked to Danske Bank, the Danish bank whose Estonian operations were at the centre of revelations last year of large flows of illicit Russian money. The draft, seen by the Financial Times, identified four breaches of EU law in how the bank was supervised by Danish and Estonian authorities, and made recommendations to the two countries for follow-up action. Instead, the EBA’s board of supervisors, the agency’s key decision-making body, voted to close the investigation without adopting any findings, a move that has drawn sharp criticism from senior EU policymakers. “It is disappointing that the board of supervisors of the EBA did not act on one of the biggest moneylaundering scandals in Europe,” Valdis Dombrovskis, vice-president of the European Commission responsible for financial services policy, told the Financial Times. He said the case

showed it was “essential” that legislation be adopted to “transform” the way decisions were taken at the agency. The Danske Bank revelations are part of a wave of money-laundering scandals to hit the EU over the past 18 months, laying bare weaknesses in the enforcement of EU rules that require banks to carry out due-diligence checks on customers. The European Commission and MEPs have urged the EBA, which is responsible for ensuring consistent application of bank rules across the EU, to undertake investigations to find out what went wrong. The 45-page draft EBA report into Danske identified breaches of union law including “significant shortcomings” in co-operation between the Danish and Estonian supervisors, a lack of effective monitoring of whether due-diligence procedures were followed by the bank and insufficient reviews of Danske’s governance arrangements. The draft report examines the period from 2007, when Danske acquired the operations in Estonia, to 2014, when Estonian authorities carried out on-site inspections that revealed the compliance violations. It was prepared by EBA staff and a panel of senior supervisors. www.businessday.ng

The eurozone only survived during the crisis years thanks to two decisions, both initiated by ECB president Mario Draghi © AFP

EBA faces calls to reform after dropping Danske Bank probe Europe’s banking watchdog criticised for closing investigation into money-laundering JIM BRUNSDEN

move that has drawn sharp criticism from senior EU policymakers. “It is disappointing that the board of supervisors of the EBA did not act on one of the biggest moneylaundering scandals in Europe,” Valdis Dombrovskis, vice-president of the European Commission responsible for financial services policy, told the Financial Times. He said the case showed it was “essential” that legislation be adopted to “transform” the way decisions were taken at the agency. The Danske Bank revelations are part of a wave of money-laundering scandals to hit the EU over the past 18 months, laying bare weaknesses in the enforcement of EU rules that require banks to carry out due-diligence checks on customers. The European Commission and MEPs have urged the EBA, which is responsible for ensuring consistent application of bank rules across the EU, to undertake investigations to find

out what went wrong. The 45-page draft EBA report into Danske identified breaches of union law including “significant shortcomings” in co-operation between the Danish and Estonian supervisors, a lack of effective monitoring of whether due-diligence procedures were followed by the bank and insufficient reviews of Danske’s governance arrangements. The draft report examines the period from 2007, when Danske acquired the operations in Estonia, to 2014, when Estonian authorities carried out on-site inspections that revealed the compliance violations. It was prepared by EBA staff and a panel of senior supervisors. According to people involved in the meeting on April 16, the vote on the report was split, with one country voting in favour of there having been a breach of union law and a number of abstentions.

Azimut becomes a Hydra — with five joint heads

Milan-based asset manager’s controversial leadership plan wins approval from shareholders CHRIS FLOOD

wo bosses seldom prove better than one at an investment company but an Italian asset manager has opted for a multiheaded Hydra in a radical leadership experiment. Milan-based Azimut has won approval from shareholders for a controversial plan to appoint five co-chief executives to replace Sergio Albarelli, who resigned in December after just two years at the helm of the €42bn Italian group. Joint leadership models for asset managers have been unpopular with many investors and governance specialists because of the potential for clashes over policies and strategy among senior leaders. They are also expensive. The appointments of co-CEOs following mergers at both Standard Life Aberdeen and Janus Henderson proved shortlived. Gian Luca Ferrari, an analyst at Mediobanca Securities, said he was sceptical about Azimut’s new structure. “Regulators could find this is not the most appropriate governance,”

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he said, adding that a new highprofile CEO to implement a recovery strategy for Azimut would have been preferable. Pietro Giuliani, Azimut chairman, rejected the criticism. Speaking to the Financial Times, he said the five cochief executives each had “a proven record of major accomplishments” and their joint appointment had won overwhelming approval at the annual shareholder meeting on Wednesday. Gabriele Blei succeeds Sergio Albarelli as CEO. Paolo Martini (marketing), Alessandro Zambotti (administration and finance), Massimo Guiati (distribution) and Giorgio Medda (asset management) will act as co-CEOs. Takeover speculation swirled around Azimut last year when its share price dropped 37 per cent, touching a six-year low in late December. Mediobanca and Banca Generali were among the players rumoured to be considering a bid. The stock has recovered strongly this year with an 85 per cent rebound, valuing the group at €2.4bn. Mr Giuliani said Azimut’s shares remained “deeply mispriced” when compared with the valuations at@Businessdayng

tached to similar players, such as St James’s Place. He said even if a takeover bid included a significant premium, the price would still represent “a gift” to the buyer and a poor deal for shareholders, who include almost 1,900 Italian financial advisers. “Azimut’s DNA is to be independent. I don’t see that any Italian operator could present a takeover proposal that would build value for our shareholders,” he said. Azimut has pursued acquisitions and joint venture partnerships to build its presence in international markets including the US, China, Australia, Brazil, Switzerland, Turkey and Singapore. This year it acquired Rasmala Egypt Asset Management, establishing a foothold in north Africa. “We remain interested in opportunistic deals that could enhance shareholder value, even larger transactions than those completed in the past few years. But we are becoming more selective,” said Mr Giuliani. Another option would be to partner with an insurer in Japan, a market where Azimut is not yet present, providing access to Italy in return.

Monday 29 April 2019

BUSINESS DAY

ANALYSIS

China, the US and trade in a dog-eat-dog world An agreement between the world’s two biggest economies would sideline the WTO

orget for a moment how many bushels of soyabeans China will promise to buy from American farmers. Leave aside China’s expected vow to stop its theft of US intellectual property. Such pledges will buoy the markets when Donald Trump and Xi Jinping finally unveil their deal. The radical part is the way in which they have agreed to hold each other to account. Unlike trade deals signed under Mr Trump’s predecessors, this one calls for no third parties to be involved. Each country will be licensed to decide when the other is in breach. Having sought a reset with China, Mr Trump would be enshrininga diet of endless tit-for-tat. If ever there was a blueprint for bilateral instability, the coming US-China deal would qualify. But that is only half the story. The other is what the compact will do to everyone else. When the world’s two largest economies agree to

them because they know future decisions might go in their favour. Clear rules and a predictable process allow the private sector to take decisions with more certainty. It is hard to imagine having today’s sophisticated global supply chains — and the associated benefits of poverty reduction, lower consumer prices and skills transfer — without a stable trade regime. Mr Trump and Mr Xi are poised to undermine those arrangements. Ironically, the US has won the vast majority of cases it has taken to the WTO. (Like most countries, the US loses most complaints against it.) Do not expect many in Washington to trumpet that fact. There is a hardening bipartisan consensus in favour of a new cold war with China. Unlike the original one with the Soviet Union, in which trade between the two blocs was minimal, this is between deeply entwined giants. The coming deal’s enforcement mechanism will offer Democratic and Republican presidents an irresistible set of punitive tools to use

settle disputes between themselves, the World Trade Organization is instantly sidelined. As it is, the WTO no longer accepts new cases because the Trump administration is blocking a quorum on its appeals body. Now it will be relegated to a bystander. One of the signature creations of America’s global leadership would be halfway towards irrelevance. This is not just the outcome of Mr Trump’s “America first” philosophy. It will be a co-production with China. Ironically, other countries could sue China at the WTO for its expected pledge to buy more US goods. That would breach the principles at the heart of the free trade system. Do not expect the equity markets to worry about the deal’s pitfalls. Except when prices are falling, Mr Trump believes the stock market is always right. In this case, he will surely be rewarded. What follows is another matter. Much as grazing herds in search of greener pastures ignore the scree slopes beyond, markets are often myopic. Almost regardless of its contents, a deal will trigger a relief rally. The spectre of a dangerous nosedive in US-China relations would have been averted. But it would come at the expense of future stability. There are three reasons to worry about the deal’s impact on the global economy. The first is that it will deepen uncertainty. One of the key benefits of the WTO has been to enable trade disputes to be settled at arm’s length from political capitals. Countries may not like individual rulings. But they generally accept

against China. There will be no WTO to keep them honest. Nor will there be any natural breaks between trade policy and diplomacy. Mr Trump has cited US national security as grounds for tariffs on European and Canadian metal imports. Pretty much any Chinese economic activity can also be blocked on those grounds. The second concern is that the trade deal will further weaponise the rule of law. Judicial hostage taking is becoming more frequent. After Canada detained Meng Wanzhou, a senior executive at Huawei, on a US arrest warrant, China arrested — and continues to detain — two Canadian nationals. Mr Trump then suggested he would drop Ms Meng’s case in exchange for Chinese trade concessions. Some western executives tell me they have cut back on trips to China recently. Chinese executives are also said to be doing the same in reverse. Meanwhile, Chinese student enrolment at US universities is falling. When the rule of law is subject to political whim, the effect on business can be chilling. The final worry is the deal’s impact on global politics. Westerners have long assumed that as China became more integrated with the global economy, it would move closer towards something resembling liberal democracy. It would be a troubling irony if China’s influence drew the rest of the world in the opposite direction. At face value, the looming trade deal will probably look like a victory for Mr Trump. Further reflection reveals how much damage the deal would do to the rules-based order that America created.

EDWARD LUCE

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Polar powers: Russia’s bid for supremacy in the Arctic Ocean As climate change opens northern shipping lanes, Moscow is spending billions to dominate the region NASTASSIA ASTRASHEUSKAYA AND HENRY FOY

ust days before a major Arctic conference this month in St Petersburg, where president Vladimir Putin was to host four regional leaders under the banner “Arctic: Territory of Dialogue”, Russian warships were on manoeuvres in the frigid northern waters. On the waves of the Barents Sea, a frigate from the Northern Fleet fired rockets to shoot down cruise missiles launched from one of its own antisubmarine warships. It was a show of strength not missed by Mr Putin’s guests. The Barents, whose waters lap Norway’s coast, marks the western boundary of the Northern Sea Route, a stretch of water encircling the North Pole that has for thousands of years remained mainly ice-bound, but whose rapid thaw has ushered in one of the world’s biggest emerging geopolitical flashpoints. Fuelled by climate change that is rapidly shrinking the northern ice cap, the NSR has become an arena of growing competition. Its potential as a preferential shipping route between Europe and Asia could change global trade flows. The colossal hydrocarbon reserves that lie beneath it could upend energy markets. And its growing militarisation has caught the attention of world powers. While dozens of countries have begun staking claims to its riches, none has been as proactive as Russia in seeking to exploit the region, leaving others scrambling to keep pace. One-tenth of all of Russia’s economic investments are currently in the Arctic region, Mr Putin said this month in St Petersburg. Since 2013, Russia has spent billions of dollars on building or upgrading seven military bases on islands and peninsulas along the route, deploying advanced radar and missile defence systems — capable of hitting aircraft, missiles and ships — to sites where temperatures can fall below -50C. It gives Moscow almost complete coverage of the entire coastline and adjacent waters. The message is clear. If you want to sail through the Arctic and travel to and from Asia faster, or have designs on the oil and gas assets beneath the sea, you will be under Russian oversight. “The Americans think that only themselves can alter the music and make the rules,” Sergei Lavrov, Russia’s foreign minister, told the St Petersburg gathering. “In terms of the NSR, this is our national transport artery. That is obvious . . . It is like traffic rules. If you go to another country and drive, you abide by their rules.” While traffic is light today, it is growing. Experts estimate that during ice-free months, eastward shipment from Europe to China through the NSR is estimated to be around 40 per

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cent faster than the same journey via the Suez Canal, lopping hundreds of thousands of dollars off fuel costs and potentially cutting carbon dioxide emissions by 52 per cent. At the moment the Arctic Ocean has just three ice-free months a year but several estimates suggest that number will increase in coming years, boosting access and driving up traffic. In anticipation of a shipping boom, Russia has pushed through legislation to increase its control, including giving Rosatom, its stateowned nuclear power conglomerate, a monopoly over managing access to the NSR through icebreakers that can chaperone ships. With a fifth of its land inside the Arctic Circle, Russia has gone in search of more territory, claiming that underwater ridges mean it should be granted another 1.2m square kilometres of the Arctic Ocean. The UN Commission on the Limits of the Continental Shelf has recognised part of the neutral Arctic waters as a continuation of the Russian shelf. As a result, the Mendeleev Rise and the Lomonosov Ridge may become Russian by the summer of 2020, says an official familiar with the talks. Rivals are scrambling to catch up: This week the US announced it had ordered its first icebreaker for more than two decades, spending $746m on a ship to be ready in 2024. “Against the backdrop of great power competition, the [ship] is key to our nation’s presence in the polar regions,” says Admiral Karl Schultz, commandant of the US Coast Guard, citing “increased commerce, tourism, research, and international activities in the Arctic”. In 2007, Russian explorers planted a titanium white, blue and red tricolour flag on the seabed below the North Pole. That act, the most audacious and theatrical part of a bid to claim the Pole, came almost 300 years after Russia’s Arctic exploration began. Expeditions ordered by Peter the Great first mapped out an Arctic coastline of around 24,000km — roughly the same length as Russia’s entire land borders. Russia built the world’s first icebreaker, the Yermak, 120 years ago. In 1957, it built the first nuclearpowered version, the Lenin. Its Arktika icebreaker was the first to reach the North Pole in 1977. “Little has changed essentially in those years, both in the shape of the frame and the inside components,” says Sergei Frank, head of state-owned shipping company Sovcomflot. During the cold war, the Soviet Union threw huge resources at the region. The Northern Fleet was the largest in the Soviet Navy, and Arctic air bases provided refuelling points for nuclear-capable bombers. Western powers settled for containment, with Nato forces patrolling the gaps between Greenland, Iceland and the UK in a bid to prevent Soviet @Businessdayng

submarines armed with ballistic missiles from passing into the Atlantic undetected. But as the Soviet economy crumbled, the Arctic infrastructure steadily fell into disrepair. Expensive to maintain and lacking a strategic rationale, Moscow slowly shifted focus. Climate change and the growing power of Asian economies have changed that calculation. Arctic ice has shrunk by 12.8 per cent a decade on average since 1979, according to Nasa data, and last year’s September ice cover was 42 per cent lower than in 1980, turning a frozen, secure northern border into a hotbed of potential exploitation and conflict. Last year Russia’s Northern Fleet conducted its largest military exercise for a decade. “Russia simply doesn’t have another ocean,” the country’s natural resources minister, Dmitry Kobylkin, said last week. “All projects implemented in the Arctic are our future horizons.” But where Moscow sees a security challenge, other countries see opportunity. Last August, Danish shipping major Maersk ran a trial shipment along the NSR, when the Venta Maersk ferried electronics, minerals and 660 containers of frozen fish from Vladivostok to St Petersburg. The first-ever NSR transit by a container ship, which Maersk says was a “one-off trial” to gain experience, was chaperoned by a Russian icebreaker along most of the country’s north-eastern coastline. Ships from 20 different countries plied the waters of the NSR last year, carrying a total of 20m tonnes of cargo. While paltry in comparison to traditional global shipping routes, it is double the amount in 2017, and Russia expects that figure to quadruple by 2025. “This is a realistic, well-calculated and concrete task,” Mr Putin said this month. “We need to make the Northern Sea Route safe and commercially feasible.” Rosatom says the cargo target could be beaten, provided it receives new icebreakers on time. “Life doesn’t end there,” says Alexei Likhachev, Rosatom’s head. “We are aiming for 92.6m tonnes in transit by 2024 rather than 80m tonnes. And by 2030, we hope to add a significant part of international transit to that.” China’s increased interest in the Arctic, and its developing friendship with Russia, will be critical in hitting that target. Beijing has observer status on the Arctic Council, a body designed to manage regional co-operation; has a research station on the Norwegian archipelago of Svalbard; and is the biggest foreign shareholder in Russia’s Arctic liquefied natural gas projects, which will rely on NSR shipments for exports. Last year, China published an Arctic policy paper that explicitly linked the NSR to its ambitious Belt and Road strategy of developing pathways for both trade and influence, dubbing it the “Polar Silk Road”.

BD Money

Monday 29 April 2019

BUSINESS DAY

Cover PERSONAL FINANCE Structural challenges will limit impact Income cankerworm pulls Nigerians of higher minimum wage towards extreme poverty line

Billionaires Index

Meet Nigeriaâ&#x20AC;&#x2122;s capital market billionaires Despite the lull in the equity market in recent times, there are a group of individuals who are billionaires as their stake in some of the quoted companies run into billions of naira.

Pages 60-61

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On 18 April, President Muhammadu Buhari signed into law the Minimum Wage Repeal and Re-Enactment Act 2019, which prescribes an upward adjustment in national minimum wage to N30,000/month (US$83.3)from N18,000 (US$50.0).

If your income has not doubled within the last seven years, then you have every reason to worry as you may soon be caught up in extreme poverty flood currently drowning 91 million Nigerians, according to the World Poverty Clock.

Pages 62-63

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Monday 29 April 2019

BUSINESS DAY

Billionaires Index

Meet Nigeria’s capital market billionaires OLUFIKAYO OWOEYE & ISRAEL ODUBOLA

espite the lull in the equity market in recent times, there are a group of individuals who are billionaires as their stake in some of the quoted companies run into billions of naira. The list briefly highlights the worth of billionaires based on their direct and indirect shareholding in these companies as at the first quarter of 2019. Valuations were computed using closing prices as at last trading day (March 29) in Q1 2019. Aliko Dangote Top of the list of billionaires on the nation’s capital market is Africa’s richest man, Alhaji Aliko Dangote fondly referred to as Alhaji by friends and business associates. Dangote is the President of Dangote Industries Limited (DIL) a diversified business conglomerates with interest in cement manufacturing, sugar and salt refining, flour milling and pasta processing, food and beverages, port operations and the ongoing Dangote refinery and petrochemicals which is the largest single train petroleum refinery in the world with a production capacity of about 650,000 barrels per day. Through DIL, Dangote has 14.5billlion ordinary shares in Dangote Cement Plc. The company traded N191 at the last trading day of the first quarter, 29TH March 2019, this gives the value at N2.77trillion. Also, Dangote has 27.6 million units of ordinary shares directly to his name this gives a value of shares at N5.27billion. DIL also has 8.12billion ordinary shares in Dangote Sugar and as at the last trading day in the first quarter 2019, it traded at N14.20 this gives the value at N115.3billion, he also 653milllion ordinary shares directly to his name this gives a value of N9.27billion. DIL also has 1.64billion units of shares in Nascon Allied industries Limited. The company traded at N20 on the last day of trading in the first quarter 29th March 2019, this gives the value of the stock at N32.95billion. DIL also has 3.78billion units of shares in Dangote Flour Plc. The company trad-

Source: Company Financials ed at N10.20 as at 29th March 2019, the last trading day in first quarter 2019 this gives the value of the stock at N38.59billion. The business mogul is set to pocket N231.9billion in dividends from profits made by the cement in 2018 after the company declared an N16.00 dividend to shareholders for the full year 2018. According to Forbes, Dangote is the wealthiest black man in the world with a fortune estimated at $10.8 billion. Jim Ovia Jim Ovia is the founder of Zenith Bank Plc. He was Group Managing Director from its inception in 1990 till his resignation in July 2010 due to a CBN policy. He was appointed Chairman in July 2014. Jim Ovia has a direct holding of 3.54billion shares and indirect holding of 1.51billion shares in Zenith Bank. At the bank’s share price of N21.80 as at 29th March 2019, this gives the value at N77.3billion direct shares and N32.98billion indirect shares. The tier-1 bank also declared a total dividend of N2.80 to shareholders for the full year 2018. By implication, he will earn N9.92billion in dividend from his direct holding in the bank and N4.24billion from his indirect holding in dividends. This brings the total dividend to N13.53billion in 2018. A dividend is however subject to a 10% withholding tax in Nigeria.

Austin Avuru Austin Avuru is the co-founder and Chief Executive Officer of Seplat Petroleum Development Corporation. Prior to joining Seplat, Avuru spent twelve years at NNPC beginning in 1980, where he held various positions including well site geologist, production seismologist, and reservoir engineer. Avuru holds 70.8million shares in the company this amounts to N41.78 billion as the last trading day in the first quarter

“

Dangote has 14.5billlion ordinary shares in Dangote Cement Plc. The company traded N191 at the last trading day of the first quarter, 29TH March 2019

29th March 2019. 27.2 million out of his total shares are held by Professional Support Limited and 1.9 million shares are held by Abtrust Integrated Services Limited, each of which is an entity controlled by him while 40.65million shares are held by Platform Petroleum Limited, which is an entity in which Austin Avuru has a 23% equity interest Avuru is set to earn N3.5billion in dividend payment for the full year 2018 profits just as the company declared a final dividend of N0.50 for its shareholders which will be ratified at the company’s AGM next month. Herbert Wigwe Wigwe is a Nigerian banker and entrepreneur. He is currently the CEO of Access Bank Plc, Nigeria’s biggest lender by assets. He has a direct stake of 201million shares in Access Bank as at December 31, 2018, and an indirect shareholding 1.24 billion shares through United Alliance of Capital Limited and Trust & Capital Limited. Access Bank closed N6.45 on our cutoff date and this equates to a direct and indirect valuation at N1.29 billion and N8 billion respectively, thereby indicating a net worth of N9.29 billion. The bank also declared a total divi-

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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@Businessdayng

Monday 29 April 2019

BUSINESS DAY

Billionaires Index

Aliko Dangote

Austin Avuru

Herbert Wigwe

Ambroise Bryant Chukwueloka

Jim Ovia

Tony Elemelu

Ayoola Oba Otudeko

Mike Adenuga

dend of 50K for its shareholders in 2018, this brings the value dividend earned by Wigwe in 2018 at N72.06billion.

stake in the firm. Out of its total shareholding, 16.15million units are held directly by him and Shebah Petroleum Development Company Limited; another 16.3million units are held by Vitol Energy Limited, 900, 000 units are held by Pursley Resources Limited, a firm owned by his wife, and 12.6million units by his siblings. Shares of the oil firm closed at N590 on our cut-off date, implying that Orijako’s net-worth in Seplat N27.11 billion. ABC is also the chairman of Neimeth Pharmaceuticals Plc and has an indirect share in the drug company totaling 372million unit of shares held through Ordrec Investment Limited and Helko Nig. Ltd.

equates his valuation in the conglomerate to N1.02 billion. In UBA Group, Elemelu owns 189million direct stake, and 2.04billion, indirect stakes through HH Capital Limited, Hiers Holding Limited and Hiers Alliance Limited. His total shareholdings in UBA amounts to 2.23 billion units in the period of focus, and the tier-one lender traded last at N7.7 on our cut-off date, bringing his net-worth in the bank to N17.21 billion.

N4.41 billion. In addition, he owns 5.29 billion indirect holdings in Honeywell Flour Mill Plc through Siloam Global Services Limited, and given the fact that shares of the miller closed N1.2 on our cut-off date, his valuation equaled N6.35 billion. This, therefore, implies that the foremost industrialist, Otudeko, worth N10.76 billion on the Exchange.

Ambroise Bryant Chukwueloka (ABC) Orijako ABC is the Chairman and Co-founder of Seplat Petroleum, a trained General Surgeon, who later sub-specialized in orthopedic and trauma surgery, and became a fellow of the West African College of Surgeons in 1996. Whilst still practicing at the National Orthopaedic Hospital Igbobi, Lagos, Dr. Orjiako established and managed various companies in the upstream, downstream and services sectors of the oil and gas industry in Nigeria. He also has other business interests in construction, real estate development, pharmaceuticals, and shipping. Dr. Orjiako went into a full-time business in 1996 after eleven years of active medical practice. He co-founded Seplat in 2009 and became the Chairman. He is also the Chairman of Neimeth Pharmaceutical International Plc, which is listed on the NSE. Orijako owns 45.9million units of shares in the oil company as of December 31, 2018, representing 7.81percent equity

Tony Elemelu Elemelu, an entrepreneur is the chairman of Heirs Holdings, Transnational Corporation of Nigeria Plc, United Bank for Africa Plc and founder of Tony Elemelu Foundation. In Transcorp, he has 273million direct holdings and 567million indirect holdings through in the conglomerate, bringing his total shareholding to 840million units. Multiplying Transcorp’s closing price at our cut-off date, which is N1.21 www.businessday.ng

Ayoola Oba Otudeko Oba Otudeko is an industrialist and the current Chairman of FBN Holdings Plc. Oba Otudeko is a Chartered Banker, Chartered Accountant and a Chartered Corporate Secretary. He also has significant stakes in Honeywell Flour Plc, a member of the Honeywell Group he founded and FBN Holdings (First Bank). He has 5.89million shares indirect holdings and 532million indirect holding in FBN Holdings Plc as of December 31, 2018. Shares of the tier-one lender closed N8.20 on our cut-off date, implying Otudeko direct stake worth N48.3 million, adding his indirect worth of N4.36 billion, elevates his net-worth in the company to

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Mike Adenuga Michael Adeniyi Agbolade Ishola Adenuga Jr is a Nigerian billionaire businessman and the second richest person in Nigeria. His company, Globacom, is Nigeria’s second largest telecom operator and has a presence in Ghana and Benin. Mike Adenuga, has direct holdings of 103,259,720 shares and indirect holdings of f 516,298,603 shares through Conpetro Limited in Conoil Plc. Conpetro Limited holds 74.40percent of Conoil’s issued share capital. He also has 1.6 billion units of shares in Sterling Bank. Forbes has estimated his net worth at $5.8 billion as of 2017, which makes him the second wealthiest Nigerian behind Aliko Dangote, with a net worth of $14.1 billion.

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Monday 29 April 2019

BUSINESS DAY

Monday 29 April 2019

BUSINESS DAY

Cover Story

Structural challenges will limit impact of higher minimum wage expenditure with revenues generated (Federation Accounts Allocation Committee (FAAC) and Internally Generated Revenue) over first half of 2018. As such, our baseline expectation is that compliance by sub-nationals (states and local governments) will be underwhelming at first, while there may be aggressive push by state governors for revenue measures (VAT increase or removal of petrol subsidy) to create fiscal headroom for funding higher OPEX.

Omotola Abimbola (Chapel Hill Denham) Higher minimum wage necessitated by weaker purchasing power of employee compensation n 18 April, President Muhammadu Buhari signed into law the Minimum Wage Repeal and Re-Enactment Act 2019, which prescribes an upward adjustment in national minimum wage to N30,000/month (US$83.3)from N18,000 (US$50.0). The 67 percent increase in minimum wage follows months of agitation by the labour union which, in our view, is not misplaced, considering the purchasing power of the previous minimum wage more than halved between 2011 and 2018. Nigeria’s labour productivity barely grew within the period, with data from the National Bureau of Statistics (NBS) showing per unit labour productivity (real output of employed population per hour) grew in real terms at a rather underwhelming Compound annual growth rate of 1.2 percent between 2011 and 2016. However, our analysis reveals labour unit cost (real compensation of employed population per hour) fell at an annual rate of 4.2 percent within the same period. This implies that unit labour cost has not kept up with the modest growth in productivity since the previous minimum wage was passed in 2011. Impact on medium term growth limited by slack labour market and weak fiscal revenues Although we expect the increase in minimum wage to have a positive knock-on impact on consumption expenditure-which has stagnated in recent years -the policy falls short of deeper fiscal and economic reforms required to lift medium growth outlook above 3 percent level. Our conclusion rests on two arguments. First, the capacity of the Federal Government (FG) and sub-nationals to fund higher personnel costs without reducing public investment in human and physical capital is limited. This is against the backdrop of unresolved revenue challenges, reflected in limited fiscal space to raise aggregate expenditure or significantly increase deficit spending. Secondly, the private sector will struggle to implement the new minimum wage in the interim, considering that the timing of the wage increase coincides with a period of weak corporate

profit and slack labour market. According to NBS data, unemployment rate rose to a record high in the third quarter of 2018 (23.1%) while operating surplus in the economy weakened in 2017 and first half of 2018 by 2.1 percent year-on-year and 3.0 percent year-on-year respectively. Given the minimum wage is targeted at employers in the formal sector with more than 25 employees, voluntary compliance by the larger informal sector (estimated at 50-60 percent of GDP) will likely be low until the recovery in the economy gains momentum. As we noted in our fiscal policy update last week, the impact of the increase in minimum wage on the FG’s budget might not be www.businessday.ng

substantial (current estimate –N200bn) as the wage increase will likely be passed on moderately on other salary grades. A much higher jump in minimum wage in 2011 (+140% to N18,000 from N7,500) resulted in a 16 percent or N245.76bn increase in personnel cost over 2-years post-implementation. In addition, the Federal Government can continue to rely on access to deeper and diversified funding sources (either through monetary financing, local and external debt market) to continue to meet higher operating expenditure (OPEX) obligations. Sub-nationals, however, do not have the same luxury. According to BudgIT, 18 out of 36 states were unable to cash-back recurrent

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wastelling on household consumption spending which contracted 5.7 percent year on year in 2016. Fortunately, greenshoots of recovery are appearing, with NBS data on national accounts showing a remarkable rebound in real income between 2017

and 2018, thanks to the recovery in oil prices which have stabilized fiscal and external accounts. Nonetheless, the impact is yet to fully translate to consumer sentiment. Household

The productivity question: balancing funding for higher wages with investment financing needs With the FG likely to delay aggressive revenue measures until a new cabinet is formed in the fourth quarter of 2019 to 2020, the more likely scenario is for fiscal authorities to continue to prioritize personnel expenses over capital expenditure and human capital investment. The downside to this is the longer term feedback on economic productivity and competitiveness. Nigeria’s labour productivity seems to have stalled over the last decade and barely kept pace with frontier markets in Asia and East Africa. According to data compiled from the International Labour Organization (ILO), Nigeria’s output per capita (GDP constant 2010 US$) grew at a CAGR of 0.4 percent between 2011 and 2018, slightly ahead of Sub Saharan Africa (SSA) region (+0.3%) but behind high growth markets in ASIA (ASEAN: +3.7%) and East Africa (Kenya: +1.9%, Rwanda: +4.0% and Ethiopia: +5.6%). In our view, prioritising higher minimum wage without addressing the broader productivity challenge could worsen the competitiveness of the Nigerian economy as authorities aim to double the contribution of manufacturing sector to GDP to 20 percent by 2025 from 9.5 percent. Nigeria faces acute infrastructural challenges in power, transport and roads limiting growth potential. Notably, capital formation as a ratio of GDP has declined by 5ppts over the last decade to 13.7 percent in 2018 and trails both SSA average (20.2%) and Emerging and Developing Asia (40.2%) according to data from the International Monetary Fund (IMF). Financing investment across priority areas in infrastructure, education and healthcare will be key to unlocking productivity gains and growth capacity over the medium term. Will the wage increase lead to a turnaround in consumer sentiment? Nigeria’s much vaunted household consumption expenditure has been under pressure over the past four years in the face of high cost inflation and the economic recession in 2016 which weighed on real income. According to the NBS, aggregate employee compensation fell by a cumulative 18.5 percent in real terms between 2014 and 2016, thus forcing consumers to downsize to cheaper products. The impact

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consumption spending contracted 1.0 percent year on year in 2017 and grew by a soft 0.3 percent in first half of 2018. The big question is if the increase in minimum wage will be the catalyst for stronger real wage growth and turnaround in consumer sentiment. We have a nuanced view on this. As we noted earlier, the minimum wage increase itself is not enough to lift short to medium term growth prospect above 3 percent without structural reforms to unlock productivity. Nonetheless, similar to the scenario hat played out in the aftermath of the wage increase in 2011, we expect to see some re-allocation of national income from operating surplus to compensation of employees. This could unlock additional N500bn – N700bn increase in nominal compensation to workers beyond steady state growth, dewww.businessday.ng

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pending on the level of compliance by subnationals and the private sector. Increase in minimum wage is typically targeted at low and lower-middle income classes that spend a disproportionately large share of income on household essentials. This implies that producers of consumer durables (food, pharmaceuticals and apparels) and to a lesser extent, consumer non-durables, stand to benefit more. As such, we expect industry revenue to recover in the FMCG sector over Full year 2019/2020 on the strength of improving household spending, bolstered by higher real wages and stable exchange rate. However, the impact on profitability may be constrained by higher wage inflation, increasing competitive pressure and the likelihood of the government taking revenue measures to reduce fiscal

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Monday 29 April 2019

BUSINESS DAY

Personal Finance Income cankerworm pulls Nigerians towards extreme poverty line OLUWASEGUN OLAKOYENIKAN

f your income has not doubled within the last seven years, then you have every reason to worry as you may soon be caught up in extreme poverty flood currently drowning 91 million Nigerians, according to the World Poverty Clock. A Brookings Institute report published this year showed six Nigerians fall into extreme poverty in one minute, you can imagine the number of new entrants before you finish reading this article. As worrisome as that could be, the next batch of Nigerians may not even be aware that they are on their way to living below $1.90 a day, this owes to the fact that a steady pay raise or income would most likely obscure any unsuspecting employee or entrepreneur. Whilst a higher income excites the mind, a cankerworm is right beneath eating the value at a blistering rate of which only discerning individuals can see, and that is inflation. In the last seven years, Nigeria’s inflation rate has grown more than double but some people’s income has only risen by 50 percent, some 20 percent, while some other probably remained unchanged. Here is how it works, the amount you earn perhaps on a monthly basis is in nominal terms, but the real value of the money can be obtained by adjusting for inflation. According to the National Bureau of Statistics (NBS), the Consumer Price Index (CPI), which measures the composite changes in the prices of consumer goods and services purchased by households over a period, was 132.6 as of March

2012. The statistics bureau put the index at 280.8 as at March 2019, implying that if you earned N70,000 in March 2012, you

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would need to earn N148,235 in March 2019 to buy exactly the same quantity of goods and services you bought seven years ago, else you may soon be a new

In the last seven years, Nigeria’s inflation rate has grown more than double but some people’s income has only risen by 50 percent, some 20 percent www.businessday.ng

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entrant into extreme poverty kingdom. As inflation worsens, so is your purchasing power, this explains why N100 could buy two packs of sachet water years back but the same amount would not even buy one today. Also, with N2, 000 you could be sure of getting 23 litres of premium motor spirit, otherwise known as petrol, in 2012 while the same amount can only buy less than 14 litres today. The purchasing power of N70,000 in March 2013 was N52,790, if remained unchanged, that would weaken to N24,928 in the same period in 2019. These amounts can be obtained by dividing the nominal income value by the cor@Businessdayng

responding CPI figure and multiplying all by 100. The CPI measures the nation’s inflation rate. With all this in mind, you can begin to set new income standards for yourself through constant evaluation to know if your income is increasing faster than the nation’s inflation. That would help you in salary negotiations while seeking for a new job (even though the value you are bringing to the table would play a major role here) or inform new strategies to spur sales in your business and ultimately translate to increased net income for you, as this is the only escape route from being flooded by extreme poverty.

Monday 29 April 2019

BUSINESS DAY

Data

Federal Government Eurobond Yields on Eurobonds rose week on week by c.44bps from an average of 6.80 percent when the market closed last week to 6.83 percent as buying interest on sovereign Eurobonds eased marginally. Brent maintained its $71per barrel range which it reached on account of the violence in Venezuela, OPEC cut and US Sanctions on Venezuela and Iran that tightened supply forcing prices up although. Price was below $74 it had averaged all week at $71.48, 18:03 (GMT+1) on Friday according to information from Bloomberg.

Corporate Eurobond Yields on corporate Eurobonds fell C.199 bps across all tickers from last week with average yield at 8.83 percent on Friday, compared to 8.66 percent when the market closed on Thursday last week. Yields on Diamond Bank Plc rose by 9.25 percent while Yield on Seplat Petroleum dropped the most by 1.36 percent. Zenith Bankâ&#x20AC;&#x2122;s 6.25 APR 22 2019 corporate Eurobond matured in the week. www.businessday.ng

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Monday 29 April 2019

BUSINESS DAY

Commodities Leveraging soilless farming to diversify production, shore up yield Temitayo Ayetoto

ack of capacity for production can be a repelling factor for people willing to pin money in the production chain of agriculture. Considerations about land acquisition, soil fitness, farm implement, fertiliser quality, storage and transportation among others needs top the list of fears for farmers but BusinessDay findings from Samson Ogbole, a food production expert show that investors can diversify their means of production with the soilless farming approach. Soilless farming simply implies farming without soil. However, the idea is not to replace soil but to complement soil. Augmenting production for instance with hydroponics – a method of growing plants in water rather than in soil - means that urban farms can efficiently exist within cities, supplying farm fresh products and bridging the huge gap between local demand for farm produce and supply. Since food security is a germane issue in the wake of the rapid growth in Nigeria’s population, bracing up for that challenge means opportunities for investors and savvy agricultural enthusiasts would be gaining via soilless farming an all year round that is profitable without sacrificing the health of

the farmers, the consumer and or the environment. The process The method questions the function of the soil in growing plants. Here, farmers can do without the soil as a support system for supplying nutrients, retaining water or facilitator of aeration. The alternative is to grow in water while ensuring the supply of necessary nutrients. A farmer is also able to automate most of the processes; monitor growth, the Potential Hydrogen (PH) of the nutrients, the Electro Conductivity (EC) of the nutrients, the chlorophyll level of the nutrients and be sure that it is functioning properly. The method is pre-emptive, rather than waiting for signs of symptoms treatment. “If I need the vegetable to keep growing, all I would have done is to add nutrients to the water. When you do so, what you have done is called hydroponics because you are growing in water,” Ogbole explained. Essentially, growing without soil could happen by reducing the water base substring, which is hydroponic; growing in the air, which is aeroponics or be able to combine aquaculture - which is rearing of fish with the growing of plants, aqua-phonic. Fish rearing is rife in Nigeria and people tend to change water regularly but the water being wasted contains a high-level urea, proven to be good for vegetable plants. It is a

Week Ahead

Week Ahead (Monday, 29th April – Friday, 3rd May, 2019)

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodities Cocoa – Lower rainfall in Ivory Coast likely to reduce output and mount pressures on prices. Oil – Brent to trade within the range of $73 - $75 per barrel in the short term on tightened global supplies, and Saudi Arabia’s refusal to elevate output to mitigate the impact of US’ decision to halt sanction waivers on Iranian oil exports. Fixed Income Commercial paper with description “Sterling Bank CP VII 2-May-19” issued by Sterling Bank Plc at 13.97% issue yield will mature on Thursday, May 2. A 91-day Treasury bill auctioned in the secondary market for N41.4 billion at 11% stop rate will mature on Thursday, May 2. Currency The naira is expected to hover around prevailing levels this week due to higher oil prices and regular intervention of the Nigerian Apex Bank. Data Release The National Bureau of Statistics to release Telecoms Data on Active Voice and Internet per State, Porting & Tariff Information for Q1 2019 on Thursday, May 2. Event The Honourable Minister for Industry, Trade and Investment, Okechukwu Enelamah, will lead a delegation from the Presidential Enabling Business Environment Council (PEBEC) to the Nigerian Stock Exchange for a courtesy visit on Monday April 29, and they will be honoured with a Closing Gong ceremony. www.businessday.ng

nutrient vegetable plants need to grow from seed to harvest. Hence, if the waste product from fish rearing can be channelled to plant, the plant automatically cleans the water which can be returned to the fishes, Ogbole explains. “It will solve the problem of having to change water regularly, thereby conserving water. At the same time, you are able to produce another by-product which is the plant from the same system. That is aquaponics soilless planting.” Capital intensive? Yes. But the expenditure on setup is a onetime cost. An average soil-based farmer, fresh cost of input accrues each planting season but with soilless farming but the the major cost of planting is incurred

once afterwhich spending will focus on maintenance. And the harvest from the farm is equivalent to 15 acres of land. This means where the soil-based farmer is producing for 6 months because of dependency on rain, the soilless farmer on the same number of land would be raking greater harvest. “His cost of production doesn’t change and you realise that whether you like it not, the soilless farmer is the person that is controlling the price of the produce,” he said. Better funding prospects With soilless farming, you are able to predict what will happen to a reasonable extent which means financial institutions are much more willing to give credit facilities. You can be certain about planting on Monday, January 1st, for instance, vegetable and harvest by January 27th. You can also monitor the process and even secure market ahead of production. The insurance company finds it bankable because soilless farming puts plants at less risk weather challenges, pest and diseases under greenhouse farming practice. And with the insurance cover intact, financial institutes are usually more willing to fund. Crops compatibility It can work for all crops but the expert does not encourage use for all. Other technologies are advised in growing trees. It’s basically for vegetables, including tomatoes.

Chart of the week Akwa-Ibom leads in States Unemployment Statistics

Last week, the NBS reported that for Q3 2018, nine states including Rivers, Lagos, Enugu, Nasarawa, Imo, Ondo, Kaduna, Kogi, and Akwa Ibom reduced unemployment rate from Q3 2017 levels as Akwa-Ibom overtook Rivers as worst state in terms of unemployment. Akwa-Ibom had the highest unemployment rate with 37.7 of its labour force without work. Rivers (36%), Bayelsa (32.56%), Abia (31.6%) and Borno (31.39%) ranked 2nd to 5th respectively as states where labour found it most difficult to get work. On the other hand, Lagos (14.55%), katsina (14.33%), Ondo (14.24%), Oyo (10.34%) and Osun (10.06%) had the lowest rate across the federation.

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Monday 29 April 2019

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Housing: FG to use indigenous professionals, firms

...ARCON vows to check quackery James Kwen, Abuja

he Federal government will henceforth use indigenous professionals and firms in the design and execution of sensitive building projects, particularly those that house the nation’s security outfits. Babatunde Fashola, Minister of Power Works and Housing made the decision of the Federal government known in Abuja while declaring open the 12th Architects Colloquium organised by Architects Registration Council of Nigeria (ARCON ). Fashola who represented by Eucharia Alozie, Director

of Public Private Partnership in the Ministry stated that the government’s decision only permits foreign experts to be engaged for such sensitive projects where indigenous professionals were lacking, stressing that even when foreigners are considered for such jobs, Nigerian professionals in that field must be attached to understudy them. “The Federal Government is thus placing premium on the use of indigenous professionals and firms in the design and execution of projects including those involving national security. “Foreign experts will only be engaged when their Nigerian counterparts are not

available. Even at that, the Nigerian professionals would be attached to understudy them”, the Minister said. Dipo Ajayi, ARCON President in his speech declared that the Council will leave no stone unturned in the ongoing fight against quackery in the profession which is a major contributory factor to incessant collapse buildings in the country. Ajayi revealed that to curb incessant building collapse in the country, ARCON has developed a secret code, ARCON Project Registration Number System (APRN ) to ensure that only qualified professionals are certified for any projects. He further stressed that

the secret code will help to check mate quacks and reduce activities that contribute to substandard execution of projects and the menace of building collapse. According to ARCON President, the code that shall be in all documents of the projects will certify that such works are being undertaken by the Council’s duly registered architects. “The Council has instituted the ARCON Project Registration Number System ( APRN ) to certify that projects are done by duly registered architects and by so doing ensure they are executed by properly constituted teams of building professionals”.

UNICEF, Nasarawa train 25 people on emergency response Solomon Attah, Lafia

nited Nations Children’s Fund (UNICEF) in collaboration with Nasarawa State Emergency Management Agency (NASEMA) and Nasarawa State Rural Water Supply and Sanitation Agency have trained 25 people on effective preparedness and response to emergency outbreaks in the state. Michele Trainiti, UNICEF Emergency Specialist and Facilitator who made this known during a one-day Emergency Preparedness Training in Lafia said the training was aimed at preparing stakeholders involved in handling emergency outbreaks to be well prepared to handle emergencies to mitigate the effect on the victims particularly, internally Displaced Persons (IDPs). “Part of what the participants have been taught is for them to understand the type of emergency that can occur, what is the population of the people in the place where the

event happened, what are the needs of the people affected and how we want to respond to those needs. “Once we have this picture of the situation, we need to reflect on what we should do to be properly prepared to respond to this type of events and this type of needs. We talked about the risk analysis which is what could happen. “Also we talked about the key elements of the response which is what we would have to do to respond to the needs and preparedness actions. This is what we need to put in place before the emergency in order to be able to respond,” he said. On his part, Zachary Alumaga, NASEMA Executive Secretary said the 25 participants were carefully selected from relevant agencies and Non-Governmental Organizations in the state and invited for the one day workshop to learn and brainstorm on effective ways of responding to emergencies in the state.

Stakeholders harp on deepened research activities in Nigeria universities Cynthia Egboboh, Abuja

L-R, Nneka Chidoka, pharmacist, Pharmetro Pharmacy Limited, Victor Etuokwu, executive director, retail banking Access Bank Plc, Safa Khoury-Nyako, pharmacist, Pharmetro Pharmacy Limited, Voke Isivore, external director JNCI and Sufiyanu Garba, regional sales director, Abuja and North West Access Bank Plc during the ‘The Business of Health’, Access Business workshop held in Abuja. Picture by TUNDE ADENIYI.

FCT: Bello asks traditional rulers to partner government for development James Kwen,, Abuja

inister of the Federal Capital Territory (FCT), Muhammad Bello has called on traditional rulers to work with government for the overall development of their subjects and areas of domain. Bello who made the call when he received the Estu of

Karu, Nassarawa State, Luka Panya-Baba who paid him a courtesy visit, said the FCT Administration was working with all stakeholders inclusive of traditional rulers in states neighboring the Territory to ensure the mutual growth and development of both the FCT and those areas. While commending the leadership of Karu Chiefdom

for ensuring that the ingredients needed for growth were present in Karu, he said; “Karu Chiefdom is a community that is destined to grow because you have opened your arms to people from all over the country. They are bringing development to your place and thus, it is a vibrant economic community. “All that is needed is mini-

mum intervention with respect to needed infrastructure and then it will be like any other developed community because the ingredients for growth and prosperity (which include) solid and focused leadership, an open minded community… and more importantly, peace are already there in your kingdom and I congratulate you for that”.

YEDC losses N160m to 10,000 customers in Taraba monthly - Hanawa Nathaniel Gbaoron, Jalingo

erbert Hanawa, Business Manager, Yola Electricity Distribution Company (YEDC), Jalingo Business Unit has lamented that the Company lost over N160 million to 10,000 customers every month in Jalingo, Taraba State. Hanawa who disclosed this in Jalingo while briefing journalists on the activities of

the Unit, explained that out of 18,000 customers in Jalingo distribution Unit, only 8,000 were up to date in the payment of bills thereby causing it a serious set back. “For instance in March this year, our target was N267, 869,700 million. You can see that the target is high that our collection can not get to half of the target because we only collected N80 million”, he said. The Manager attributed the steady supply of light in the

area to the synergy between the Company and the Taraba state government which led to the installation of 21 trasformers with 14 yet to be installed adding that, the allocation increase from 10 mega wats to 25 mega wats with the aid of governor Darius Ishaku was the main reason for steady power supply in Jalingo town. “Last year the state government purchased 18 transformers it made us recognized governor Ishaku with

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an award. Recently also 21 transformers were installed, by the state government 14 new ones are also yet to be installed”. “We got an allocation increase of 10 mega wats to 25 mega wats daily in Jalingo Business Unit. Another reason is the synergy between YEDC and Taraba state government. Prompt action on faults. When faults are reported we ensure they are cleared promptly”, he noted.

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takeholders in the education sector have raised concern on the need to deepen research activities in the Nigeria tertiary institutions, particularly universities. Abubakar Rasheed, Executive Secretary, National Universities commission speaking at interactive session with directors of research of Nigerian universities in Abuja, said that there is need to promote credible research centers in tertiary institutions, adding that no university can perform effectively without a credible research activities. He said, “promoting research in our universities is key to achieving the desired competitive standard in our universities. We must begin the process of consciously creating more research intensive universities across the country”. Rasheed further explained that research across Nigerian universities is characterized by low participation and lack of motivation for researchers,as well as low usage of research outputs by industries adding that Nigeria universities must take the necessary steps to put research at the fore front of their activities. “Nigeria universities must take the necessary steps to put research at the fore front of their activities so that they can take their rightful place as the leaders in knowledge generation industry with the outcome of researches, innovation which will add tangible value to their lives of every citizen of the country”. “The universities must be @Businessdayng

in the lead in terms of creating a robust innovation system for Nigeria, the universities should collaborate with research and innovative centers, what we see now is universities and industries operating in monopoly, if it continues it will be terrible for the future of the universities and the nation at large”, he added. Elias Suleiman Bogoro, Executive secretary, Tertiary Education Trust fund also stressed the need to understand the importance of research, innovation and entrepreneurship in the Nigerian industry and education sectors. “We should reflect over the role of research in the development agenda of the nation, most researches done over the years has been only for publication and that is where we missed it all, universities should remain the leaders in innovative and creativity, opinions from universities research work can make the difference in our country”. Bogoro lamented the poor outcomes of research works recorded in the past and pledged the continued support of TETfund in ensuring that the education sector focuses more on promoting sound research system across the nation. “We have missed it a long time, it is time for us to correct it, and we are here to partner with the NUC. we must deepen investment in research infrastructure and the universities must refocus effort in building robust innovation structure to enable them re-position themselves to take advantage of the large pool of qualitative research grants available across the globe”, he said.

BUSINESS DAY

news you can trust I monday 29 APRIL 2019

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Insight Free trade: Why Adam Smith sided with consumers and not producers global Perspectives

OLU FASAN

he nineteenth century is often described as the “golden age” of free trade. It was the era during which the freedom to trade, unhindered by government, spread across the world, spearheaded by Britain. But the golden era didn’t just happen. The periods before it, particularly the 17th and 18th centuries, were marked by widespread protectionism, and then a tepid move towards freer trade conditioned upon reciprocity. However, in the mid-19th century, Britain abandoned reciprocity for unilateral free trade and unleashed a global phenomenon that allowed international commerce, the import and export of merchandise, to take place unrestricted. It was a victory of the liberty of individuals over state control. But the above narrative is incomplete without mentioning the epic battles of ideas and clashes of interests that led to the paradigm shift. It is those battles, in which the free trade doctrine prevailed over mercantilism and the primacy of consumers’ interests over those of producers was recognised, that I want to talk about here. This is important because we must constantly restate the fact and remind ourselves, particularly in Nigeria where protectionist sentiments are very strong and dominant in business and government circles, that free trade is about improving the welfare of individuals and increasing real national income. Of course, the mercantilists of old, like the protectionists of today, did not share that view. They believed that imports must be restricted. Their argument was that, by restricting import, a nation can

achieve a favourable balance of trade, accumulate foreign exchange, protect domestic industries, maximise employment, promote national wealth and, ultimately, increase state power.Thus, Thomas Mun, the father of English mercantilism, wrote in his book, England’s Treasure by Foreign Trade (1664): “The ordinary means therefore to increase our wealth and treasure is by Foreign Trade, wherein we must ever observe this rule: to sell more to strangers yearly than we consume of theirs of value”. The mercantilist ideas fed into economic policies in the 17th and 18th centuries and led to widespread protectionism. Germany built a tariff wall, with the Zollverein (customs union), which imposed high tariffs against foreign goods. Britain introduced a series of Navigation Acts that allowed only British ships to convey foreign goods to Britain, a measure effectively designed to restrict foreign trade. Then, from 1815, under pressure from landowners, who wanted to keep the prices of their grain at a high level, Britain introduced a series of statutes, known as Corn Laws, restricting the import of grain. Of course, as the mercantilists had wanted, the Navigation Acts and Corn Laws protected Britain’s domestic producers and enabled them to expand their output and increase their revenues through high prices. But at whose or what expense? Well, at the expense of consumers, the expense of economic efficiency and the expense of national welfare! These were the counter-arguments that Adam Smith made powerfully in his seminal work, The Wealth of Nation (1776), which set out the most intellectually coherent argument against protectionism and the most cogent case for free trade. It is difficult, if one follows Smith’s analysis with an open mind, to flaw his logic. Let’s try and simplify his argument. Smith’s starting point was a recognition that the primary aim of every producer or, if you like, every businessman, is to pursue his own interest by using his resources to secure maximum financial benefits. Businesses are not charities, and, thus, not motivated by the desire to provide public goods. As Smith put it: “It is not from the benevolence of the butcher, the brewer or

A world of plusses and minuses? ECONOMIST

NONSO OBIKILI

recently had reason to read some elementary physics and had a flash back to my secondary school days. I have not done much physics since then. Reading physics now as an economist opened my eyes to some of the ways in which different fields kind of tell the same story. For example, one of the most important laws in physics is the law of conservation of energy. I remember almost none of it from my secondary school days but read it again during the week.The law roughly translates to the idea that in a closed system, nothing new is created or destroyed but just transformed from one form to another. Apologies to the physicists for butchering their law but you get the gist. If you think of the universe as a closed system then everything we do or “create” can be broken down into

the transformation of energy form one form to another. Transforming energy from a form we don’t want to a form we want. In a way business, economics, and policy follow the same law with everything really being about transformation of things from one form to another and trade-offs between what is gained and what is lost. Take farming for example. Farmers get seeds, fertilizers (or the chemicals in it), and soil and harness energy from the sun to “create” the produce that we eat or use as raw materials. I put create in quotes because all farmers really do is facilitate the conversion of energy from the sun, combined with other chemicals from the soil and fertilizers, to food that is presumably more valuable. Imagine if you took a jar of sunlight to the Wuse market in Abuja to sell. You may be arrested for attempted fraud. But if you harness that sunlight through rice plants and convert all that into rice that people eat, then you are in business. In the simplified closed system, the farmer has subtracted energy from the sun and nutrients from the earth and added grains of rice. The trade-offs are even more apparent in manufacturing sectors where all that is being done is converting raw materials to finished goods or

the baker, that we expect our dinner, but from their regard to their own interest”. Yes, they are self-interested and want to make money, a lot of it even! But, as the businessman or producer pursues his own interest, he ends up promoting the interest of the society too. How? Well, this is one of the most profound insights from Adam Smith’s analysis of the economic interactions of individuals. He said that an “invisible hand” would lead the businessman to promote an end – the public interest – which was not part of his intention. The logic is simple and flawless. Surely, if you want to produce something and make a lot of money from it (which serves your own interest), then you must produce something that society wants (which serves the public interest). A product can only survive in the real marketplace if the society wants it! The idea of the invisible hand, therefore, is that the competitive market (not government) is the best mechanism for determining profitable lines of activities and allocating resources to those ends. Put simply, a business would not allocate resources to a commercial activity unless it’s profitable, but an activity won’t be profitable unless people want it. That market mechanism ensures efficient allocation of resources, which, in turn, ensures that the wants and desires of individuals are met, and that the annual revenue of society (real national income) is raised to its highest level. But where producers are not exposed to foreign competition but, rather, have a monopoly of the domestic market through protectionism, they can afford to be slothful, producing goods at poor quality and yet charge higher prices. In a monopoly or a protected market, the people are forced to buy poor quality products at artificially high prices, which reduces their welfare. It was the detrimental effect on consumers and the national welfare that formed the core of Adam Smith’s criticism of mercantilism. As he put it, “consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer”, adding: “But in

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Many governments collect taxes in exchange for public goods that are not more valuable that the taxes they collect

‘

...where producers are not exposed to foreign competition but, rather, have a monopoly of the domestic market through protectionism, they can afford to be slothful, producing goods at poor quality and yet charge higher prices

pre-assembled components into more valuable units. Converting things from something less valuable to something more valuable. Things get a bit more complicated once you think about digital goods or services like finance. But if you think about it long enough they are still basically about conversions, transforming knowledge or memories or types of valuable stuff into other types of more valuable stuff. The important point here is that almost everything is about trade-offs. For every plus on one side, there is a minus on the other. For every new valuable thing “created” some other presumably less valuable thing is “destroyed”. A world of plusses and minuses. What about government? Pretty much the same thing. Governments in theory collect taxes, the minuses, and convert that into public goods, the plusses. A government collects some of your rice crops and uses it to pay soldiers to protect you. Or collects a value added tax on your financial transactions and uses it to pay judges who provide the public good called justice. Still a world of plusses and minuses. If a government says they want to provide some public goods then they must collect some taxes or borrow for somewhere else. For the private sector we assume

the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer”. So, while Adam Smith recognised the desire of the producer to secure the most advantage from employing his resources as legitimate, he concluded that such self-interest couldn’t be justified if pursued at the expense of the interest of the consumer for, to repeat his words, “consumption is the sole end and purpose of all production”! By the early 19th century, Adam Smith’s ideas had begun to gain traction in Britain, thanks to a number of events that vindicated his views. The Corn Laws had negative impacts on the disposable income of the people and knock-on effects on manufacturing as most people couldn’t afford to buy manufactured goods, having spent the bulk of their income on grain. This led to the emergence of the Anti-Corn Law League, led by Richard Cobden. The Irish Potato famine, the Great Hunger, which broke out in 1845, also made restrictions on food imports unsustainable. Well, the Corn Laws were repealed in 1846, as were the Navigation Acts. Britain declared unilateral free trade. Of course, protectionism and reciprocity later returned globally, but Britain remains instinctively a free trade nation. Indeed, it recently announced that after leaving the EU, it would unilaterally remove import tariffs on nearly 80% of products. Sadly, Adam Smith’s ideas do not resonate in Nigeria. Production, and not consumption, is the ultimate end and object of industry and commerce in this country. Every policy is geared towards protecting the producer. Which is why, despite widespread poverty and hunger, Nigeria continues to ban food imports. The competitive market that allows efficient allocation of resources, that improves the welfare of the people and that increases real national income is patently absent. Nigeria must love Adam Smith, not Karl Marx!

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

that people will mostly only convert less valuable stuff to more valuable stuff. Else there would be no point. Few businesses exist to make losses. In practice it is a bit more complicated once you think about externalities and other costs that are borne by parties other than businesses. But by and large, businesses mostly obey the rule. For the public sector though, the case is not that clear cut. Many governments collect taxes in exchange for public goods that are not more valuable that the taxes they collect. This is even before you talk about corruption. In essence, many governments collect more valuable stuff and convert in into less valuable stuff.The question to ask of any public service then is what is the cost, or the “minus”, and is it worth it? So, what happens when the government tries a new policy, like ordering the Central Bank and the ministry of agriculture to give collateral free loans to farmers? A plus if you are a farmer for sure. But the question to ask is, what is the minus? What is the provider of this collateral-free finance going to subtract and is it really worth it? I leave that for you to decide. Dr. Nonso Obikili is Chief Economist at Business Day.

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GOVERNMENT CAN WORK

LAGOS REPORT APRIL 2019 3

CONTENTS Editor’s Letter

5-7

Lagos as a driver of the Nigerian Economy

22-24 Lagos as Africa’s

financial hub

36-37 Interview with

DG of LCCI

The fact that AFC has its head office in Lagos affirms that the ‘Centre of Excellence’ is the financial headquarters of West Africa

A centre of excellence and a city of aquatic 25-26 Interview with splendour, Lagos conCommissioner for tinues to grow ...

I am not sure that there is any state that supports the security agencies as much as Lagos State... Muda Yusuf

Trade and transport hubs in Lagos

Lagos State Government continues to set up more efficient transport schemes that will... 12-13

Interview with Commissioner for Works and Infrastructure

“We extended the road construction from 11 to 20 roads...” Adebowale Akinsanya 14-15

Photos speak -1

Picture reels of Ambode’s projects across the state 16-18

A glance at Lagosbased companies with dual listing

Companies trading at Customs Street grew their profits significantly... 19-21

Fintech hubs: How Lagos is transforming into Africa’s Silicon Valley

Lagos

Asides Yoruba, Igbo and Hausa-Fulani, several other minority tribes have come to see Lagos as their home.

38-40 How Lagos

waterways are enhancing its regional influence

Finance

8-11

48-50 Cosmopolitan

Lagos has potential for tax to GDP ratio of 10 per cent with proper reforms-

The reforms in the Lagos waterways have started to yield fruits ...

It comes with a ramp bridge designed to provide a U-turn from Ajao Eastate ....

Akinyemi Ashade

27-28 Photos speak -2

Picture reels of Ambode’s projects across the state 29-32 Interview with

Governor Ambode

All I did was to take the four strategic pillars which are... Gov. Ambode 33-35 How Lagos

became the 5th biggest economy in Africa

The total IGR of Lagos was more than the total IGR of at least 30 states combined...

Teliat Abiodun Sule Managing Editor/Research Manager

41-43

Tourism, Oshodi transport interchange

New Lagos Airport Road

52-54 Lagos Night

Economy

For the first time, Lagos State Promotion Agency Tourism Bill has been passed...

Lagos today is becoming a 24-hour city... 55-57 Expatriate

44-45 Interview with Commissioner for Tourism, Arts, and Culture

Communities in Lagos

Over 76 nationalities are present in Lagos, with the Chinese and Indians leading the park ...

“Ambode’s interventions in Lagos’ tourism are indelible-”

Steve Ayorinde

46-47 Photos speak -3

Epilogue

Lagosians will forever remember Ambode, because his strides have written his name in gold!

Ikeja Bus Terminal, Ayinke House, LASUTH

Lagos Report Project Team Yvette Uloma Dimiri Head, Audience Engagement

Michael Ani Analyst (Editorial)

Joshua Bassey Editor, City File

Ademola Asunloye Data Analyst(BRIU)

Oluwasegun Olakoyenikan

Lolade Akinmurele Editor, Companies & Markets

Amamchukwu Okafor Research Analyst (BRIU)

Temitayo Ayetoto Analyst (Editorial)

Samuel Adebayo Head, Business Development (BRIU)

Endurance Okafor Analyst (Editorial)

Analyst (Editorial)

Isaac Esowe Research Analyst(BRIU)

(Report Design) Aderemi Ayeni(Digital) David Ibemere(BRIU)

GOVERNMENT CAN WORK

4 LAGOS REPORT APRIL 2019

EDITOR’S NOTE

Lagos Report Management Team Publisher Frank Aigbogun

Government can work

e owe the inspiration for this special report to the comment of a foreign journalist who was visiting Nigeria last December. Weeks later, those comments led our reporters who were travelling with him in the car from the Muritala Mohammed Airport, to produce a story, titled, “Ambode airport road project is proof government can work.” The journalist who has visited Nigeria seven times, described what is easily the main gateway into Nigeria, as a “creative and purposeful use of public resources in a country in dire lack of even the most basic infrastructure.” Each time he visited in the past, the scandalous state of the road formed a good line in many stories he had written about Nigeria. Not any more, he says. Our foreign colleague fired our imagination with his comments and I hope you too will be inspired by our reporting of the ground-breaking transformation that is underway in Lagos. See the captivating drone photos we have on offer and read about the transformation of the life saving Ayinke House located in the wellrun Lagos State University Teaching Hospital and then, Oshodi, our beloved Oshodi that has now been turned into a wonder of sort. BusinessDay Media Limited 6 Point Road, Off Liverpool Road, Apapa GRA Lagos, Nigeria Tel: 01 2799100 Established: July 2, 2001

Editor (BusinessDay) Patrick Atuanya Deputy Editors(BusinessDay) John Osadolor-Abuja Bill Okonedo Editor (The Lagos Report) Teliat Abiodun Sule News Editor Chuks Oluigbo

Whether you are reading this in Lagos or somewhere else, our researchers and reporters have gone to great length to showcase tangible dividends of democracy for your delight. Ambode ran Lagos for four years but the works captured in this report will ensure that an enduring place is apportioned to him in history.

Our foreign colleague fired our imagination with his comments and I hope you too will be inspired by our reporting of the ground-breaking transformation that is underway in Lagos.

Assistant News Editors Osa Victor Obayagbona Vincent Nwanma Executive Director Operations Fabian Akagha Executive Director, Strategy, Innovation & PartnershipsOghenevwoke Ighure General Advert Manager Adeola Ajewole Advert ManagerIjeoma Ude Finance Manager Emeka Ifeanyi Head, Business Development Nicole Umoren Manager, Conferences & Events Obiora Onyeaso Business Development Manager (South East, South South) Patrick Ijegbai Circulation Manager John Okpaire Digital Sales Manager Linda Ochogbua GM, Business Develoment (North) Bashir Ibrahim Hassan GM, Business Development (South) Ignatius Chukwu

GOVERNMENT CAN WORK

LAGOS REPORT APRIL 2019 5

Lagos as a driver of Nigerian economy Lagos is so small and yet so big: so small it has the smallest land mass among the 36 states in Nigeria, so big , it has unarguably the largest economy among the states.

eyond population, it is the 5th largest economy in Africa (from the 7th in 2016). Independently, it is larger than the economies of Kenya and Tanzania, the two major economies of the East African region. A centre of excellence and a city of aquatic splendour, Lagos continues to grow with a consistent implementation of the Lagos State Development Plan–LSDP–(2012-2025). The LSDP harmonises the existing high level policy documents with an intention to transform Lagos into a model megacity that is productive, secure, sustainable, functional and safe. The main “pillars” of the vision are economic development, infrastructural development, social development, security and sustainable environment pillars. The grand aims of the LSDP to actualize the conditions of a mega city including poverty reduction, increased private sector investment, increased tax revenue, lessened traffic congestion, improved power supply and environmental consciousness, an enhanced primary health care service, and improved educational system and housing environment. To drive the Nigerian economy, Lagos relies on its key advantages including population, transport hubs (air and seaports), manufacturing, commercial activities (Oil production and refining)

Dangote Refinery, Lekki Free Trade Zone, Lagos

and hub effect. Other socio-political advantages include its status as a former British colony and national capital which brought in some form of urban bias and agglomeration effects. There is strength in numbers The population of Lagos widely estimated at 23 million people. This represents 12 per-

cent of Nigeria’s total population. The first line advantage of population is that it is representative of markets – consumer market. As of 2013, a report by McKinsey & Company shows that consumption in Lagos is 134 percent greater than the country average. This tells why consumer-oriented industries and the retail economy in Lagos and invariably in Nigeria has been increasing.

GOVERNMENT CAN WORK

6 LAGOS REPORT APRIL 2019

These new entrants into the Lagos consumer markets are visible across industries. Some examples over the last 5 years include Uber and Taxify in the digital transport; Spectranet and Smile in the broadband internet space; Eat n Go; SIFAX , Equu Marine, Sea Coach and Green Transport, in water transportation, among others. And because production follows consumption, it implies concentration of industries. Manufacturing activities in Lagos contribute over 65 percent of the non-oil output whereas construction constitutes about 31 percent (in 2017) – jointly representing about 96 percent of the non-oil sector. Nonetheless, Lagos is experiencing impressive structural transformation as services sector continues to expand, accounting for 79 percent of state GDP whereas non-oil output is 21 percent and agriculture takes 0.08 percent. Lagos State’s GDP is about N37.6 trillion, representing 33.1percent of National GDP as of 2017.

taxation such as tenement rate is raising the tax revenue in the state. The total PAYE in Lagos is 34 percent of national total in 2018. In terms of total State IGR, it stands at 64 percent. Lagos is an aquatic state bounded by the Atlantic Ocean along its coastal line in the west posing different economic and social advantages. A motley collection of beaches both private and open allows for tourism and recreational activities. It also holds the nation’s busiest and active seaports at the Tincan/Wharf ports in Apapa.

Big investments come to Lagos The last five years have seen significant investment projects that would reposition the state beyond being the 5th largest in economy in Africa. Sometime in 2016, Lagos discovered oil and would join the league of oil producing states to enjoy the 13 percent statutory derivation from crude oil exploit. Significant investments have been flowing into the state since then; some of the big investments are the Dangote oil refineries, Total Egina FPSO

Trade Zone, it is set to be the largest refinery in the world with a production capacity of 650,000 barrels per day. The complex would include a $10 billion oil refinery and $2.5 billion fertilizer factory and a gas pipeline infrastructure. Generating huge welfare gains by reducing drastically oil import bill on Nigeria, it would revolutionize the Lagos economy in terms of output, employment and state revenue expansion. Over 7000 workers are on the project with about a thousand others taking trainings abroad.

IGR is growing! Another implication of population and industrial clusters is tax revenue which is captured at state level as the internally generated revenue (IGR). Repositioning itself, Lagos is fine-tuning its tax collection technologies and strategies while broadening its tax base. Even where the tax per capita is low and the tax base is broad, it has significant revenue implication. The introduction of hitherto overlooked areas of

President Muhammadu Buhari with Governor Akinwunmi Ambode

This infrastructure anchors the national economy beyond those of the state. It is not only the case that the state has an equally busy international and local airport; it claims a significant proportion of total business tourism to Nigeria.

projects, humongous housing projects in high brow areas, and more. The Dangote oil refinery is a $15 billion dollars investment expected to commence full operation in 2020. Situated on 2,500 hectares in the Lekki Free

Another already completed project is the Total Egina FPSO by LADOL’s shipyard Mega-Construction and Integration FZE (MCI-FZE) and Samsung Heavy Industries in a joint venture within the LADOL Free Trade Zone in Lagos. The

GOVERNMENT CAN WORK

Floating Production Storage and Offloading (FPSO) worth about $3.3 billion is designed to hold 2.3 million barrels of oil and the largest FPSO infrastructure by Total. It would produce 200,000 barrels of oil per day. The project would facilitate oil production, boost employment as 77 percent of the man-hours were sourced domestically, and overall economic activities in the deep ocean subsector. The Lagos rail project is yet another massive infrastructural investment currently underway. The Lagos Rail Mass Transit (LRMT) network is a major component of the Strategic Transport Master Plan (STMP) designed for the development of public transport infrastructures in the State. As the economic and commercial nerve centre, Lagos would require an efficient transport system which decongests the traffic on road network in urban centres. Effectively, the Lagos Urban Rail Network (LURN) outlines an urban railbased system covering seven major corridors of high commuter-traffic demand within the metropolitan Lagos and extending to border areas with states like Ogun and Oyo. The LURN consists of seven (7) railway lines linking seven major population and activity centres in the state. The network is structured to integrate other existing water transport and BRT routes.

LAGOS REPORT APRIL 2019 7

Huge Private Sector Driven Investments In The Last Five Years

Total Egina FPSO Lekki Free Trade Zone Digital Transport companies Tech Hubs

Ibom

33 34 64 65

Lagos State GDP is about N37.6 trillion, representing 33.1percent of National GDP as of 2017.

Total PAYE in Lagos is 34 percent of national total in 2018.

In terms of total State IGR, it stands at 64 percent.

Over 65 percent of the non-oil output whereas construction constitutes about 31 percent (in 2017)

Governor Akinwunmi Ambode (m) with Aliko Dangote, Okechukwu Enelamah, and others

GOVERNMENT CAN WORK

8 LAGOS REPORT APRIL 2019

Transportation hubs in Lagos

transport management system for roads, walkways, lay-bys, bridges, ﬂyovers, water and rails (through channelling and dredging) which will be a legacy for his successor, albeit, some of these projects are long-term.

Major road transport hubs in Lagos Major transport hubs that engage in inter-state road commercial bus transport services are Oshodi, Mile 2, Ojota, Iyana Ipaja, Jibowu/Yaba, Ikeja, Mazamaza, Berger, Oyingbo, Volks—Okoko, Obalende and the growing transport hubs in Ajah.

Developments in the taxiing systems

New buses ready for deployment

agos - being a city of opportunities continues to attract more people from far and near; this influx and population growth also put a lot of pressure on existing infrastructure including the transportation and mobility system. In the bid to address these needs, the Lagos State Government continues to set up more efficient transport schemes that will cater for the shortfall

and make the mega city attain international standard among its counterparts. Like his predecessors, under the administration of His Excellency, Governor Akinwunmi Ambode, major transformations in the transportation system and networks were kick-started in Nigeria’s most populous and dynamic commercial state—Lagos. His administration birthed projects to fully integrate

Lagos has several taxi network companies that are metered or have fixed fares. The Lagos yellow buses are regulated by the National Union of Road transport Workers (NURTW). They ply the main roads in all parts of Lagos and fares are based on negotiations. There are also taxis at the airport, but these are painted blue and only take passengers from the airport to their destinations. Digitized disruptions from the likes of Uber and Taxify led the pack of metred taxi companies. New local companies such as Jekalo, Oga taxi, Afro and Smart cab have also joined the space. Recently on-demand tech driven motorcycles companies like GOkada and MAX Okada have taken advantage of technologies to grow opportunities in Lagos by providing more mobility alternatives. These transport services are accessed through mobile apps allowing customers to interact with riders or drivers from any location in the state.

GOVERNMENT CAN WORK

LAGOS REPORT APRIL 2019 9

Logistics companies in Lagos Satisfying various transportation needs such as haulage services with companies like DIN Logistics, one of the top delivery companies in Lagos, interstate and cross country (goods and passenger) road transport services with ABC Transport Plc, Chisco Transport Nigeria and GIG Group to mention a few. Some other logistics companies providing services in freight forwarding, customs clearance, general warehousing, cargo handling and servicing include Ronish Nigeria Limited, Savol West Africa Limited and Value Handlers International Limited among others.

Road infrastructure in Lagos as at 2015 Classification/Ownership

Length (km)

Percentage

Federal Road

468

State Road

1,287

17%

Local Government Roads

5,843

77%

Total Road Network

7,598

100

Rail Network

–

Source: Lagos Metropolitan Area Transport Authority, 2015

Fostering an efficient transport scheme through transformative initiatives

ment. At the same time, work is on-going on the 27-kilometre Blue Line Rail project from Okokomaiko West of Lagos to Marina in Central Lagos even as the second line, the Red Line, will run from Marina to Agbado. The Lagos Metropolitan Area Transport Authority (LAMATA) who is responsible for regulation, policy direction and infrastructure for the network envisions constructing more lines.

Creating easy access to Nigeria’s largest airport The on-going reconstruction on the road of the busiest airport in Nigeria, Murtala Muhammed Airport (international and MM2), into a ten-lane road (three major lanes and two-lane service roads on both directions) is

In order to ease mobility and create an enabling environment in the cosmopolitan Lagos, over 200 roads have either been constructed, rehabilitated or reconstructed across the 20 local government areas and 37 local council development areas, including two new roads per LCDA under the Ambode road revolution. His Light-Up Lagos initiative installed street lights in over 1,300 kilometres across the state to aid security.

Lagos Bus Reform Initiative (BRI) New Bus Rapid Transit (BRT)air-conditioned buses were provided for the public to aid transportation; with the establishments of designated bus stops/routes in Lagos. To have an integrated public transportation system, 5000 air-conditioned buses were targeted to replace the yellow commercial buses in preparation for the take-off of the Bus Reform Initiative (BRI) of the govern-

Commissioning of LAMATA Office

a major pivotal project of His Excellency, which will link up with the Oshodi Transport Interchange (OTI). The 70,000 square metres Oshodi transport interchange is another mega project of the Bus Reform Initiative (BRI) of the Ambode’s administration. It thrived through a Public Private Partnership (PPP) initiative which features the consolidation of 13 interstate parks, a multi-storey bus terminals and shopping mall is plunged on 3 key agenda; urban renewal, environmental regeneration as well as transformation and security. The project which is to be completed in 2019, is aimed to regenerate Oshodi into a world-class Central Business District (CBD) which will consequently increase the economic value of the state.

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10 LAGOS REPORT APRIL 2019

The leading port in Nigeria— Apapa port, Lagos There are a number of seaports in Nigeria with the two main ports located in Apapa, Lagos – The Lagos Port Complex and Tin Can Island Port Complex. These two ports account for most of the goods that come into Nigeria through Lagos. Another is the multi-purpose, Deep Sea port at the heart of the Lagos Free Trade Zone— Lekki Seaport. It is anticipated to be one of the most modern ports in West Africa.

Efficient commuting on Lagos busiest routes Another landmark achievement was the drastic reduction of journey time in the lekkiepe axis of Lagos (Abraham Adesanya to Lekki Admiralty Tollgate) from 2 hours to about 36 minutes. This milestone was attained as a result of the removal of 6 round abouts (Ikate, Chisco, Jakande, Igbo Efon, Chevron and Victoria Garden City) along the Lekki-Epe expressway which consequently saved about N87 billion yearly (N240 million daily) lost to traffic.

Up scaled investment into government agencies for better outcome Lagos State Emergency Agency, (LASEMA): was repositioned into 4 operational centres at Command & Control Centre, Alausa, Ikeja; LASEMA Response Unit (LRU) Cappa Oshodi; LASEMA Response Unit, Lekki and LASEMA Response Unit.LRU was equipped with modern equipment for on-spot reconnaissance assessments of emergency incidents. The Lagos State Traffic Management Agency (LASTMA) under went reforms, task force was reinvigorated and mobile courts were inaugurated in the state to ensure free flow of traffic as

well as adjudicate fractious drivers. The N4.8 billion worth equipment purchased to vitalise security were saloncars, pick-ups, power bikes, trucks, helicopters, gun boats, armoured personnel carriers, revolving lights, siren and public address system, vehicular radio communicators, handcuffs, uniforms, bullet proof vests, helmets, kits among others. Also, insurance and death benefit schemes for officers were equally improved.

Lagos and its buzzing trade hubs Trade continues to thrive in the mega city because historically businesses have been made the same way friendship is made, albeit, government intervention,

Governor Ambode inspecting one of the new buses

regulations and policies aid its activities. Markets in Lagos continue to evolve from traditional markets to modern markets like supermarkets, superstores, mega storeseven ultra-modern markets. There are massive iconic markets where varied trading activities take place. Alaba International Market (Ojo) is known as a market for electronics, Computer Village is the home of ICT (Ikeja), accessories and softwares, and Ladipo (Mushin) the biggest auto spare parts market in Lagos. Talking about a second-hand market where you can get very cheap apparels popularly called “Okirika”, Aswani market (Isolo) and Kotangora (Abule-Egba) take the pride.Balogun market is arguably the hub of textiles, fabrics, office wears

GOVERNMENT CAN WORK

and shoes marketin Lagos as it sprawls across so many streets on Lagos Island. Jankara(Adeyinka Oyekan Avenue) market is a major hub for locally made goods such as; tie-dyed, beads, pottery, and clothing. Another major hub located at one of the popular landmarks in Lagos State is the Mile 12 market (Mile 12) known for wholesale and retail foods and vegetable business in Nigeria. The Abattoir meat market (Oko Oba Agege) for meats and the trade hub where culture meets commerce is the Oluwo market (Epe) popularly called Epe fish market for large varieties of fishes like crayfish, crocodile, turtle, monitor lizard, big snails, game meats among others are sold. Tunde, a fisherman who inherited the business from his father said that the market continues to blossom because of the strong bond between the fishermen and the fishmongers. With reformative plans, the market promises to promote tourism and revenue for the community and the government. Asides traditional market, modern stores as supermarkets or superstores also competes within the space but with fixed prices and elegant designs. Markets like Shoprite, a South African firm, Addide, Spar, Park N Shop, Justrite all engage in modern marketing especially edible products while Cash N Carry is an electron-

LAGOS REPORT APRIL 2019 11

ic store. Modern open markets like Akorede Int’l modern market, Orisunmibare modern market, Abibat Mogaji modern market, Iyana Ipaja Modern Market, Awolowo ultra-modern market, Onitire International modern market and others are dominant in major trade hubs in the state. The magnificent edifices— these markets like Oyingbo ultra-modern (Oyingbo) which seats a massive open market complex with 622 open shops; 102 lockup shops; 48 open offices, 134 toilets; six exit gates and 150-car capacity parking lot on the ground floor, whereas, Tejuosho ultra-modern market (Yaba) seat massive complex with over 1,692 shops on four floors, 342 KeeKlamps, children’s area, food court, bar/lounge, promotion courts, advertising space, a massive underground parking lot for more than 350 vehicles, 24-hour power supply with standby generators, police/fire station, waste management, and round-the-clock-security. Also with an increasing internet penetration and a more affordable internet services, Lagosians are taking advantage of its ecommerce channels. Lagos currently serves as the headquarters of two of the fast growing ecommerce giants in Africa (Konga and Jumia).

Thriving SME hubs in Lagos State To foster the growth and development of SMEs within the state, the Lagos State Government made provisions for interest free loans, tax moratoriums and other tangible investment incentives. Lagos is the hub with the largest concentration of micro, small and medium enterprises (MSMEs) in Nigeria. SMEs in Lagos vary in sizes, assets and by the type of businesses they engage in.

Lagos International Trade Fair Held in the commercial nerve centre of Nigeria—Lagos, the 10-day annual event continues to revitalise and diversify Nigerian economy beyond oil. In 2015, under Ambode’s administration, saw the premiere international trade fair in West Africa in a different design as it held in 3 different venues for the first time—Tafawa Balewa Square (General Trade Fair), Freedom Park(the Lagos Creative Industry Fair) and the Muson Centre (the Business to Business Exhibition) in Lagos State. Under one umbrella, LITF usually brings together diplomatic corps, captains of industry, local companies, multinational organisations and foreign investors into the state to seek wider access to domestic markets, inter-

national markets, joint ventures and market for intermediate and capital goods. Little wonder there is high hope for the 33rd edition of the LITF from November 1st to 10th 2019. To reduce the stress often encountered by traders transporting their wares into the metropolis, construction began on the new Mile 12 market at Imota in Ikorodu. Aside the 3000 newly constructed stall, the 1000-vehicle capacity car park and other facilities will in turn make the axis a market hub. Traders remained optimistic that the relocation of the Mile 12 market to Imota will drive commerce and investment into the area.

Lagos night markets and informal trade As the city’s size expanded, informal life began to flourish. Informal settlements beget informal livelihood strategies. The economic conditions necessitated some type of informal nightlife and therefore night trading emanated. The phenomenon of night trading in urban Lagos is not negligible as it operates across the state.The dynamics of these markets show that aside from those who cannot afford stalls and shops, those who own shops also participate in the night trading.

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12 LAGOS REPORT APRIL 2019

‘For the economy to grow, you have to put people to work’

New look of Murtala Muhammed International Airport

Adebowale Akinsanya, Commissioner for Works and Infrastructure

You have been in the ministry for almost four years. Could you give us an overview of the policies, ideas and understanding that shaped your activities since assumption of office? The fundamental element of any government is to improve the quality of life of its citizens and to grow the economy. Let’s focus on infrastructure and transportation and how it impacts on the society. When you’re in traffic, you waste a lot of time. On that premise, the governor said how do we improve the travel time for people, and at the same time, how do we open

up other areas to connect different parts of the state? That formed the basis for some of the works we have done, as you ca n see in some areas instead of doing one or two roads, we ended up doing 10 to 20 or 30, and also at the same time creating jobs. You know for the economy to grow, you have to put people to work. It is not just for the people to get the salary, they also have to go out and buy things. These processes create a multiplier effect on the economy. In terms of economies of scale and works created within the last four years, I can categorically say that more than two hundred thousand people have been gainfully em-

ployed across the state on different projects especially through the ongoing airport road project. At different times, we have more than six thousand people working. Similarly, we connected Ogun and Lagos at different locations. Before now, a lot of people were avoiding Lagos – Abeokuta express route. Overall, our projects have touched people’s lives. Also, the Alimosho to Ojokoro area where we initially rehabilitated 3 roads, we increased the construction from 3 to 11. In order to make everyone have a sense of belonging, we extended the road construction from 11 to 20 roads, and in all within that axis alone, we are looking at 31 roads. One of the things the governor said was that when you look at transportation issues, the roads have to be integrated with rail and water transportation. Luckily for us, in some areas, we have water, so we are building jetties.

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look since it is the first thing you see when driving out of the international airport. Let’s talk about the Oshodi Interchange and the possibility of completing it before this administration hands over power...

t Road, Lagos

There are different chalets in the state – Epe is one and Badagry is another. But we are increasing and upgrading that of Badagry to over a 100 capacity and that will be a seven-storey world class chalet. Also construction of road is going on at a place called Samuel Ekundayo. The first phase is about 7km, and another project nearby. All these projects will open up the whole area. There is another project ongoing at Badagry and Eko theatres. There are some projects we know that are very key to Governor Ambode. Projects like the Oshodi Interchange, Lagos airport road. Can you give some specific details on the ongoing projects? What drove this

administration in embarking on such projects? What led to the construction of the aforementioned projects especially the international airport road was to give the state a fascinating

Newly constructed Bariga Jetty, Lagos

If you know the genesis of that area, you will understand that – Oshodi is the notorious area for all sorts of crimes. In that area, you have 13 bus stops with all the Danfo clusters everywhere. So we started with urban regeneration and in a way of defeating the traffic, we integrated the 13 bus stops into one. All these led to the Oshodi Interchange. NURTW will make use of the facility, is there any form of orientation session organised for them on

how best they can use the facility? The drivers will be trained and also there will be an orientation for the drivers too. Apart from the Oshodi transport interchange; there is a depot not too far from the interchange, which is where the maintenance of the buses will be done. Right now, we have 820 buses on ground, but the program is design to have 5,000 buses. So what is happening at the Ayinke House? The old Ayinke House had ageing facilities. The new one now has 170 bed spaces. The construction work is almost completed. Also members of staff are being trained.

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14 LAGOS REPORT APRIL 2019

Ambodeâ&#x20AC;&#x2122;s legacies in photos Ambode inspecting New LAMATA Place and BRT Intelligence Transport Systems

LASEMA rescue unit office

Ikola-Ipaja Command Road Junction, Alimosho

LASWA office

Jubilee Bridge, Ajah

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Ambodeâ&#x20AC;&#x2122;s legacies in photos Jubilee Chalet, Epe

One of the five Art Theatres completed by Ambode

Oworonshoki Lay-By

Launch of LAKE Rice in Lagos

Lagosians celebrate Easter at JJT Park, Alausa

Jubilee Chalet, Epe

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A glance at Lagosbased companies with dual listing net profit of the firms grew by a quarter to N1.47 trillion in 2018 compared to N1.18 trillion in 2017. The total loss made by the considered firms waned to N38.1 billion in 2018 from N39.19 billion in 2017, affirming improved profitability in these businesses with headquarters majorly in Lagos State.

The Nigerian Stock Exchange

Lagos State has enjoyed a high influx of businesses since May 2015 when Akinwunmi Ambode was sworn in as the executive governor of the state.

his is largely due to the state’s huge investment in security and road infrastructure which have helped bolster business confidence in Nigeria’s commercial headquarters, says Madu Yusuf, Director-General of the Lagos Chamber of Commerce and Industry (LCCI). While most companies that have recorded unprecedented growth recently may have not listed their IPOs on the Nigerian Stock Exchange in Lagos, they might have been constrained by their internal

strategies to wait for a more appropriate timing or a possible deterrence due to NSE cost of listing and other regulatory fees. Available data extracted from the Nigerian Stock Exchange revealed that companies trading at Customs Street grew their profits significantly in 2018 when compared to 2017. NSE’s 2018 financial report on after-tax profits of 93 publicly-listed companies shows that the total

Since its inception in 1960 as Lagos Stock Exchange but renamed to Nigerian Stock Exchange (NSE) in 1977, at least 266 companies have been listed at the domestic bourse, according to the NSE. Ninety nine companies have been delisted either voluntarily or as result of regulatory offenses since 2002 while the remaining 167 publicly-listed companies have a total market capitalization of about N13 trillion placing the Lagos exchange as Africa’s second-largest stock market after the Johannesburg Stock Exchange (NSE) with about four hundred (400) listed companies. Among the firms that are currently listed on the NSE, only five have dual listings, implying their shares are traded in more than one exchange. This represents about 3 percent of the total number of companies trading at the Nigerian Stock Exchange.

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Three companies including Nigeria’s most-capitalized lender, Guaranty Trust Bank Plc, tier-one Zenith Bank Plc and a leading Nigerian indigenous upstream exploration and production company, Seplat Petroleum Development Company Plc

LAGOS REPORT APRIL 2019 17

NSE placed Diamond Bank’s shares on full suspension, resulting in the delisting of the tier-two lender from the daily official list of the NSE. With this, the total number of Nigerian companies with dual listing dropped to four (4).

Closing bell on the Nigerian Stock Exchange were listed at the London Stock Exchange (LSE) while African indigenous energy company, Oando Plc, was the first company in the continent to have a cross-border inward listing on the Johannesburg Stock Exchange. The defunct mid-tier lender, Diamond Bank Plc which recently merged with Access Bank Plc was one of the companies with listings on the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE). But since the completion of the merger deal between the two banks with the approvals of the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) on March 20, 2019, the

Oando Plc debut Africa’s dual listing, otherwise known as cross border listing, at the Johannesburg bourse in 2005, paving the way for Guaranty Trust Bank Plc to list its shares at the London Stock Exchange two years after. In 2013, Zenith Bank Plc joined by listing its share at the LSE, while Seplat Petroleum Development Company Plc went public at the London bourse on April 17, 2014, a few days after its shares were listed on the daily official list of the Nigerian Stock Exchange. Seplat’s 2014 listing did not only mark the last listing recorded through an initial public offering on the NSE,

but it is also the most recent dual listing from any Nigerian company. The low number of Nigerian cross-listed companies attests to the rigour the management of such firms would have to go through in meeting up with listing requirements, particularly initial listing cost, and regulatory compliance, and general complexities involved in offering shares publicly at exchanges different from the domestic market where the business operates. But since the four Lagos-based companies have gone public on Africa’s largest stock market and one of the world’s oldest exchanges, they have recorded significant surge in their revenues as well as their bottom lines over the last four years with Akinwunmi Ambode as the governor of the state. A look at the companies’ audited financial results shows that some of these firms have already doubled their profits within the space of four years

Oando Plc Within the space of three years spanning from 2016 to 2018, Oando enjoyed consistent growth in its post-tax profit after recording losses two years earlier. The oil firm lost N183.9 billion in 2014, but in 2015, the loss reduced to N49.7 billion. This could be attributed to the shock in the prices of crude oil at the international market, which eventually drove Nigeria

into its worst economic woes in 25 years. However, Oando’s profit rose 114 percent in 2018 to N28.8 from N13.5 billion, the biggest profit leap recorded by any publicly-owned downstream oil and gas firm operating in the country. Likewise, its sales have continued to soar steadily since 2015, reaching N679.5 billion in 2018.

Seplat Plc Seplat Petroleum Development Company Plc, an indigenous upstream exploration and production company, grew sales from N113 billion in 2015 to N228.39 billion in 2018. Seplat suffered a loss in 2016, no thanks to Nigeria’s economy recession, the company bounced back to the path of profitability a year after to post an after-tax profit of N81billion. Seplat’s profit, however shrank in 2018 largely due to higher deferred tax, causing a significant decline in its profit to N44.9 billion compared with a N80.6 billion pre-tax income.

Guaranty Bank Plc

Trust

Unlike the oil and gas firms with performance tied to the volatility in crude oil prices in the international market, Nigerian banks located in Lagos and having dual listings have impressive income year after year. Net income of Nigeria’s

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largest bank by market capitalization, Guaranty Trust Bank Plc, rose to N184.6 billion in 2018 from N167.9 billion, this is despite a marginal decline in its net interest income to N222 billion from N246.7 billion in 2017. When compared to its 2015 profit of N99.4 billion, that represents over 85 percent increase. The tier-one lender issued its $824 million Global Depository Receipts (GDRs) in an unprecedented concurrent global offering in the domestic and international capital markets, to become the first Nigerian company and first Sub-Saharan African bank to be listed on the London Stock Exchange. GDRs are instruments like shares or foreign currency convertible bonds which are issued as depository banks and represent ownership of a given number of a company’s shares which can be listed and traded independently from the underlying shares.

each at the London Stock Exchange (LSE) was to improve liquidity in its stock through GDRs, according to Zenith Bank, making the largest GDR listing by any Nigerian bank on the LSE to date.

Economic Importance of Dual Listing In most cases, international cross-listing of firms coming from developing economies receive significant and positive reactions in their domiciled markets, particularly on the valuation of the companies’ stocks. Companies seek dual listing for a number of reasons which include better access to raise capital from a wide range of major institution-

al investors, grant domestic shareholders confidence through value maximization, growth opportunities and to raise their international profiles. Due to the high level of liquidity at international stock exchanges like the JSE and the LSE, which are often perceived as “better markets”, publicly-owned firms approach these stock exchanges for easy capital raising for business expansion. The perception is mostly based on the premise that the markets are not only liquid but also have good investors’ protection, accounting standards and limited ownership restrictions. That presents the cross-listed companies as high-value firms compared to their

Zenith Bank Plc Tier-one lender, Zenith Bank Plc, emerged Nigeria’s most profitable bank in 2018 having grown profit by 11 percent to N193.4 billion in the year. The bank has improved significantly both in the areas of revenue generation and profit making. Its 2018 profit almost doubled the profit of 105.7 billion made after tax deductions in 2015. The bank listed $850 million worth of its shares at $6.80

Governor Ambode with Theresa May, British Prime Minister

peers that do not cross-list, thereby boosting investors’ confidence and creating growth potentials for the companies. Consequently, the growth opportunities of dual-listed companies are likely to be more valuable not only because investors are at a better position to take advantage of their stocks, but also because of the lower possibility of taking over the of firms’ resources by major shareholders.

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Akinwunmi Ambode, with I.T entreprenuers during one of his visits to Yaba

Fintech hubs: How Lagos is transforming into Africa’s Silicon Valley Yaba Tech Hubs

ust like the Silicon Valley in the southern San Francisco Bay Area of California, home to companies like Apple, Facebook and Google, Nigeria is said to have almost a replica in Lagos, home to the largest tech hub ecosystem in Africa. Located in the suburb of Lagos is the Yabacon Valley,

the high-tech innovation hub, which started life in 2010 with one building, earmarked as an incubator for talent. Supported by overseas investors, the Co-Creation Hub (CCHub), backed by the founder of eBay was one of the first tech infrastructures built in the Yabacon Valley. The government chipped in with another building

in 2013, the Information Technology Developers Entrepreneurship Accelerator (iDEA), for would-be entrepreneurs to get access to docking stations, meeting rooms and mentors. Recently listed on the New York Stock Exchange (NYSE), Jumia, Africa’s largest e-commerce company has about two offices in Yaba. The Lagos tech hub is also home to Jumia’s strong

competitor, Nigeria-based Konga considering it moved its headquarters from the affluent business districts of Victoria Island to Yaba. Africa Internet Group, a leading online conglomerate backed by Germany’s Rocket Internet, South African mobile phone giant MTN and Sweden’s Millicom, are also among companies in the tech hub as they moved six of their tech firms, including Hellofood and Easy Taxi, to Yaba. As tech start-ups are taking root in the suburb of the city; creating a buzz that is drawing international venture capitalists and more established digital firms to the mainland axis of the busy Lagos city as seen in the high net worth island of lekki, VI or Ikoyi. Google and Microsoft ran coding workshops, while a deal between CCHub, the Lagos State Government and local telecoms firm MainOne brought cheap high-speed Internet via fibre optic cable. Under the Akinwunmi Ambode led administration, Lagos State has been able to create the enabling environment for technological advancement, especially in the Fintech space, leveraging on its natural blessings of huge population and high level of economic activities to enable them grow. One of the recent developments of the current administration is the CodeLagos initiative which is located in the heart of Yaba, aimed at training 1 million Lagos residents to code by 2020, it is an initiative that provides

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Fintech industry in Lagos

Lagos’ Contribution to Africa’s Fintech lanscape

Lagos State Government in the last few years has taken bold steps towards repositioning the tech start-ups and hubs in the state for the desired impact, by providing broadband infrastructure through ﬁbre optic cables in the Yaba area.

Lagos

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Lagos

80%

is home to about of FINTECH hubs in Nigeria

tech companies especially those in the financial industry sufficient labour and technical know how to measure up to global standards while also giving opportunity to the less enabled residents of the state. This holds the record as one of the largest Edutech initiatives in Africa. This was implement by the Ambode led administration after it inaugurated the Lagos State Employment Trust Fund (LSETF) in March 2016 with a cumulative sum of N25 billion, aimed at providing grants for start-ups like Fintech companies coupled with the intention to provide office space for the emerging companies through partnership with co-working hubs and spaces. Recently commissioned in 2019, is The Nest, an innovation technology park to help technology startups thrive, and achieve their desired results. Located in the Yabacon area of Lagos,

Leveraging its demographics, Lagos is using technology to shape the way people live, communicate, work, play, interact and transact business for an ease of operations and better customer servicein Nigeria’s Centre of Excellence especially in the financial sector. Financial Technology or Fintech refers to new technology or innovation that disrupts the traditional ways of conductLagos State Government in the last few years has tak the tech start-ups digand hubs in the state ing financial repositioning transactions through providing broadband infrastructure through ﬁbre opti itized process for efficient and effective service rendering. According to PWC 2017 financial industry survey, Nigeria’s industry leaders acknowledge the emergence of Fintech and recognize its impact on the industry. The main impact of Fintech will be the development of new FS business models, which will create challenges for both regulators and market players. The emergence of Fintech companies may have been a threat to Nigerian banks but the financial institutions are not throwing in the towel, they have increased their investment, they are also review their digital banking strategies such as partnerships with Fintech companies to utilize more financial technology offerings and unleash new technology driven products and services in the market. Stakeholders in Nigeria’s financial industry– including bank executives like Jim Ovia of Zenith Bank – acknowledge that Fintech existence is good for competition and innovation in the financial industry. Deremi Atanda of SystemSpecs Limited says the opportunities for Fintech industry are not local but global and requiries more collaboration and investment opportunities from public and private sector Lagos

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Lagos

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the hub was built to cater for the needs of startups and tech enthusiasts continues to impact on the yaba demography with growing neigbhoods with savvy businesses such as a coffee shop chain, serviced homes and restaurants—opening up shop looking to service Yaba’s new residents. It has been designed to provide a community that fosters innovation for technology startups by encouraging experimentation, research, and adoption of new and emerging technologies for cutting-edge product development and entrepreneurship. YabaCon Valley is therefore considered one of the biggest tech hubs in Africa as compared to Kenya’s Silicon Savannah, South Africa’s Silicon Cape and Rwanda’s kLab in Kigali owing to the fact that it is home to over 50 startups with many more techies hoping to create the next global unicorn.

Fintech is changing the financial service experience The benefits from the evolution of Fintech industry in Nigeria is enormous; with Fintech, small businesses are ex-

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Ambode’s inspection visit to Andela a tech hub in Yaba posed to a world of benefits in terms of access to funding, e-commerce, online order/ supply channels and customer transactions options. With improved payment systems and customer relationship management, users can now carry out transactions through their mobile devices, thus improving response/ feedback time. When it comes to financial inclusion; unbanked and under banked Nigerians through some developed solution by Fintech companies now have access to financial services and products. IyaBeji, an old petty trader in the Makoko axis of the Lagos mainland, through a mobile wallet account by a Fintech company, she can now receive money from her children who live on the island even though she don’t have a basic bank account. Fintech is also aiding a shared economy as electricity producing companies col-

laborate with banks and Fintech companies to provide a platform where customers can pay for their electricity on the Bank’s Mobile App platforms. This shared economy is being witnessed across sectors – Cable, education, environment, health, transportation and even entertainment. Customers continue to be availed with a growing access to credit facilities as Bimbo, the first and only graduate in her family, who can choose to borrow credit from either a Fintech company or a conventional bank through a credit app on her phone to send to her family members without stress, as the lender will have it deducted from her salary at the end of the month. A few years back, the aforementioned would sound like a miracle to many Nigerians except for those that have seen that happen abroad. Government has set the plat-

form for smooth operations of startups with favourable policies and tax incentives. Also with demonetization and digitization effect, it will be easy for government to trace and stop circulation of Black Money giving more opportunities to Fintech companies to grow in the above area.

Local and foreign funding Many investors describe the fintech industry as a goldmine owing to the manner at which the tech driven companies have been getting investments from Lagos State Government, local and foreign investors in the past few years.Through the LSETF, a lot of tech start-ups have gotten to expand their operations Nigerian Fintech funding exceeded $250 million investment in 2018 alone, making it the most of any period, fig-

ures from industry sources show. Some startups that raised big ticket funding in the review year include; Branch which raised $70 million in Series B; Cellulant secured $47.5 million in Series C to expand into more countries; Mines got $13 million Series A investment to hire talent, expand into Africa and beyond; Paga raised $10 million in Series B2 to expand into Africa and other markets; Paystack raised $8 million in Series A to expand into other markets; SureRemit raised $7 million in an ICO to develop its non-cash remittance platform; and Lydia secured $6.9 million in Series A to hire skill, expand its loan book. Armed with increased investment, some of these startups have launched ambitious products and services targeted at both existing banking customers and the millions of unbanked Nigerians. From banking to international money transfers, from business and personal loans to personal investment, and much more, Fintech is presenting non-traditional finance means of carrying out transactions through waves of new, innovative ideas which are making life easier for Nigerians, and the Ambode led administration has contributed directly and indirectly to the growth of the industry.

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Lagos as Africa’s Financial Hub

partnership with some Development Finance Institutions (DFI) in the continent that has comparative advantage at regional or sub-regional levels in certain strategic sectors. The fact that AFC has its head office in Lagos affirms that the ‘Centre of Excellence’ is the financial headquarters of West Africa, and a leading financial centre in Africa.

Merchant Banks Africa’s fifth-largest economy, Lagos is home to the head offices of all licensed merchant banks in Nigeria such as Coronation Merchant Bank (Victoria Island), FBNQuest Merchant Bank (Ikoyi), Nova Merchant Bank (Victoria Island) and FSDH Merchant Bank (Lagos Island). Microfinance Banks According to the Central Bank of Nigeria, there are 882 licensed microfinance banks (MFBs) in Nigeria as at Sept 2018 with a higher presence in Lagos compared to other states constituting a fifth of MFBs operating houses, a wide gap when compared with Abuja (49) and Kano (46) respectively.

Nigerian Stock Exchange

Business District, Marina, Lagos

African Finance Corporation (AFC)

FC, headquartered in Ikoyi, Lagos, is a pan-African multilateral financial institution established in 2007 to bridge Africa’s infrastructural investment gap through the provision of debt and equity finance, project development as well as financial advisory services. The Central Bank of Nigeria along with United Bank for Africa Plc, Access Bank and First Bank of Nigeria account for some 73 percent shareholding in AFC. The institution is saddled with the responsibility of financing infrastructure

projects in Africa, with specific focus on power, transportation, telecommunications, heavy industries and natural resources. The institution has made notable investments, including Azura Edo in Nigeria, Ghana Airport Company, SAIF acquisition in South Africa, Kenya Power & Lighting Company, Ethiopian Airline Expansion and Olam Gabon Special Economic Zone to mention few. According to Bloomberg, the institution’s investment in 26 African countries stood at $4.5 billion as at September, 2016. In 2018, the African Development Bank approved an equity investment of $50 million in Africa to foster strategic

Powering Africa’s largest economy, The Nigerian Stock Exchange (NSE) hosted in Lagos, provides liquidity for some of the country’s biggest companies across sectors; from banking, insurance, oil and gas, consumer goods through industrial goods. The NSE was awarded Africa’s best performing stock exchange in 2017, after a stellar performance which saw it gain 43 percent. The Nigerian Stock Market is more liquid than it has been in 2015 with a total market capitalisation of N27.62 trillion as at April 2019. Nigerian Stock Exchange, alongside Egyptian Exchange, Johannesburg Stock Exchange and Nairobi Securities and

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Exchange, ranks among the top seven exchanges which account for 90 percent of market capitalisation on the continent.

Insurance Companies With about 51 insurance companies in Nigeria, Lagos is home to virtually all layers in the sector; from the general life segment, life and the re-insurers. At least 90 percent of all insurance companies operate in Lagos. The concentration of insurance companies in Lagos is a natural effect of its large population, aggregation of financial institutions situated in the metropolitan city, high Gross Domestic Product, literacy rate, and technological advancement. Leadway, NEM, Axa Man-

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sard, Mutual Benefits, Prestige Insurance, Cornerstone, Industrial and General Insurance, Consolidated hallmark insurance, Linkage Assurance, Custodian and Allied Insurance, AIICO Insurance, are a few of the insurance companies that operate in Lagos.

Deposit Money Banks Lagos, the commercial and economic nerve centre of Nigeria, inhabits the headquarters of all commercial banks with international authorization (Access Bank, Fidelity Bank, United Bank for Africa, Zenith Bank, First Bank of Nigeria, Union Bank, Guaranty Trust Bank and First City Monument Bank).

Not only that, the city is also home to the head offices of deposit money banks with national authorization (CitiBank Limited, EcoBank, Wema Bank, Unity Bank, Sterling Bank, Stanbic IBTC, Polaris Bank, Keystone Bank & Standard Chartered); and the ones with regional authorization (SunTrust Bank Nigeria Limited & Providus Bank Limited). Notable Chief Executive Officers One major characteristics of financial hub is that it is home to the headquarters of large number and varieties of financial services institutions and this simply describes Lagos! Almost all players in the financial sector ranging from insurance sector, merchant

banks, to deposit money banks have their head offices situated in Lagos. The list below briefly highlights prominent Chief Executive Officers (CEOs) steering the wheels of leadership of their respective institutions.

Adesola Adeduntan, FBN Holdings Plc Adesola Kazeem Adeduntan took the mantle as Managing Director/CEO of First Bank of Nigeria Limited and its subsidiaries within FBN Holdings Plc on January 25, 2016. Prior to his appointment, he was Executive Director and Chief Financial Officer for the Bank. Before joining First Bank in July 2014, Adeduntan was a Director and pioneer Chief Financial Officer of African Finance Corporation.

Segun Agbaje, Guaranty Trust Bank Plc (GTB)

Governor Ambode with President of France, Emmanuel Macron and Bimbo Ashiru

Segun Agbaje is the Managing Director/CEO of Guaranty Trust Bank, Nigeriaâ&#x20AC;&#x2122;s biggest bank by market capitalization. Agbaje is also a Director on Master Card Advisory Board Middle East and Africa. Agbaje became helmsman of GTB in April 2011 after the demise of Tayo Aderinokun. Awards conferred on his institution as the Managing Director include Best bank in Nigeria by Euromoney, Best Bank in Nigeria by World Finance,

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United Kingdom, among others. Peter Amangbo, Zenith Bank Plc Peter Amangbo was appointed Managing Director/CEO of Zenith Bank Plc on June 1, 2014, following the appointment of Godwin Emefiele, as Governor of the Central Bank of Nigeria. Prior to joining the banking industry, Amangbo was a senior consultant with PriceWaterhouseCooper where he covered assignments in financial services, general commerce and manufacturing. He was the pioneer non-executive director of Zenith Bank, UK. He is set to retire as MD/ CEO on June 1, 2019. Herbert Wigwe, Access Bank Plc Herbert Wigwe is a Nigerian banker and entrepreneur. He is currently the CEO of Access Bank Plc, Nigeria’s lender by customer base, after

succeeding his business partner, Aigboje Aid-Imoukhuede in 2019. Wigwe has a degree in accountancy from the University of Nigeria, an MA in Banking & Finance from the University College of North Wales (now Bangor), and MSc in Financial Economics from University of London. He is also an alumnus of Harvard Business School Executive Management Programme. Kennedy Uzoka, United Bank for Africa Plc Kennedy Uzoka took over from Phillip Oduoza as Group Managing Director/ CEO of UBA Plc on July 31, 2016. Uzoka has been with the group since 2006. He was the General Manager and Head of UBA Group South Bank covering across the Eastern, Southern, Mid-western and Western states of Nigeria. Prior to his appointment, he was theDeputy Managing Direc-

tor of UBA Group.

Oscar Onyema, Nigerian Stock Exchange (NSE) Oscar Onyema is the CEO of the Nigerian Stock Exchange, a position he assumed on April 4, 2011. Prior to his role, he has served for over 20 years in United States financial markets and Nigerian Information Technology Sector. Bola Onadele Koko, FMDQ OTC Securities Bola Onadele is the pioneer Managing Director/CEO of FMDQ OTC Securities. Prior to this role, he was the President of FSDL, a financial markets and risk management consulting firm he founded in 2001 where he provided leadership in the empowerment of Nigerian financial markets.

Anya Duroha, Nova Merchant Bank Limited Prior to his appointment as CEO of Nova Merchant Bank, Anya Duroha was the Executive Director, Wholesale Bank responsible for development and management of the Bank’s corporate banking relationships. Anya holds M.Sc in Banking & Finance from the University of Benin, and is an alumnus of Lagos Business School and Wharton Business School. Kunle Ahmed, AXA Mansard Insurance Plc Kunle Ahmed took over from Yetunde Ilori as CEO of AXA Mansard Insurance Plc on July 17, 2017. Ahmed became an Executive Director on the Board of the Company in February 2012; he has also served as a Non-Executive Director of AXA Mansard Health Limited, which is a subsidiary of the company. Peter Ashade, United Capital Plc Peter Ashade was announced Group CEO of United Capital Plc, following the retirement of former Group CEO, Oluwatoyin Sanni. Prior to this role, Ashade was the CEO of African Prudentials Plc, and has championed disruptive innovation in the registrars’ business in Nigeria and across Africa.

Governor Ambode with Aliko Dangote

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‘Lagos has potential for tax to GDP ratio of 10 per cent with proper reforms’

Akinyemi Ashade, Finance Commissioner

The administration set out with a N500 billion bond programme. Can you tell us what has happened to that? When we came in 2015, we retired some bonds. We then established a bond insurance programme of N500 billion. Out of the N500 billion, we have accessed about N144.4 billion. For you to appreciate that, everything has been used for capital projects. Being a fiscally responsible state, we don’t take loans or

do deficit budget financing to fund recurrent expenditure or running cost. We always devote such to capital projects. Given that we have only done N144.4 billion out of the N500 billion, there is room for the incoming government to get more bond or loan. The fact that we issued ten-year tenure shows the kind of confidence that investors have in the capacity of Lagos State Government to always deliver.

For the first time in Lagos, this administration came up with an ambitious budget of N1.04 trillion in 2018. What informed that? We have always been saying that it has to be the combination of growth in Internally Generated Revenue (IGR) and good debt management processes and system. I would also say good financial engineering in order for Lagos to bridge its infrastructural gap quickly. If you look at it sincerely, we don’t have enough resources to be able to attend to the level of infrastructural decay in our state. Currently the resources available to Lagos State are not enough. People can argue and rightfully say that Lagos generates a whole lot of IGR. The last time I check, on a monthly basis, the IGR is between N30 and N34 billion, depending on how the performance is and that has always been the trend for the past one or two years. But is that enough? If you want to bridge the infrastructure gap of 50 billion dollars and that doesn’t involve education, it doesn’t involve health and housing needs. So you see how wide that infrastructure deficit can be. What we need to continue to do in 2019 is embark on revenue reform. We look at some areas like consumption tax which is lawful, and we realise that some people don’t even collect it. When they collect, they don’t remit. We believe that we can generate more than 500 per

cent of current consumption taxes if we introduce technology. We also looked at the controversial land use charge to see how we could generate more revenue by capturing more property. Those were the things that went into the budget of over N1 trillion that you saw in 2018. However, in the course of implementing the budget, we had issues pushing the land use charge and the governor had to intervene using the state executive council to reduce some of the rates, which was fine. We learnt some lessons in that area. Painfully, people collect revenue on behalf of government and they don’t remit. And these are the same people that will complain about infrastructure deficit and when you say okay let’s introduce technology; the same people will go to court to delay the process. That takes me again to the issue of consumption tax and the battle we have had with hoteliers and the likes of them. Today, whatever happens, it is one battle we can’t afford to lose because technology helps solve problems of collection and remittance and that is what fiscalization is all about. I believe strongly that we have capacity to generate about N60 billion annually from fiscalization alone. The planning went into it and we thought we would be able to pull those reforms through but we experienced some kind of slow down. That is what happened in 2018 and which affected the

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implementation of the 2018 budget. Notwithstanding, we achieved about 70 per cent implementation in terms of the funds available. We were conscious in 2018; we did not go to the capital market though it was provided for in the budget. We also practice what we call multi-year budgeting system where we have medium term expenditure framework. We believe that as a state, we

should be at that level where we should earn based on all that has happened. And that is what led to the review of the 2019 budget which is N852.13 billion. Maybe some of those reforms we would continue to push them because they will take time before they mature. But clearly, we need more revenue in Lagos if we cannot have physical federalism, we should be able to look inward and be very creative by employing technology to block leakages, get people excited about paying taxes. How can they be excited? Is it that we do the infrastructure and they see it and pay their taxes or we get the money to fix infrastruc-

ture. The answer is neither here nor there. Both ways, it depends on where you are looking at it from. But fundamentally, paying taxes is a constitutional responsibility, a civic duty. The fact that one can end up in jail for failure to pay tax shows how important it is.We should continue to engage them using various means such as moral suasion, enlightenment and provide an enabling environ-

ment that will endear people to pay their taxes because we need those funds in order to move Lagos forward. How is the state resolving the disagreement on consumption tax with hoteliers and the controversial land use charge? As I said we had challenges in terms of the reforms that we wanted to push. We are still currently in court in respect of some hoteliers on the fiscalization reform and consumption taxes. I don’t want to pre-empt what the court will say but I believe that those revenue are just been kept for us and we will be able to unleash the reve-

nue into the infrastructure development of Lagos State. In terms of the Land Use Act, the amendment is currently before the House of Assembly and all the input that we got in the cause of implementing it have gone into the amendment. We believe that it will soon be re-enacted. Once we are able to do that, block the loopholes and motivate the staff of the revenue service, you will see that we will push the revenue higher. We don’t want to be seen to be too aggressive in the area of tax because taxation can be very emotive. We just take it gradually and continue to talk to our people about the need for them to fulfil their civic obligation. We continue also to ask for more powers to the state and physical federalism. Imagine if all the revenue coming from the ports is being handled by Lagos State; see the amount of funds that will be available. But the truth is that we don’t get the revenue but we bear the brunt of infrastructure damage that occurs on our roads and the congestion. We hope we will continue to work on the structure of our federation to also ensure that we have more devolution of powers to the state. That is what will make Lagos able to rise up to the infrastructure deficit that we have. When we look at the IGR of the state, we realise that most of the revenues come from PAYE. What about other sources?

We have looked at what is called data analytics. Data analytics tends to look at profiling the spending pattern of a tax payer. How does he live his life? Where does he make his money from? How does he spend his money? So that is an area that we have started working on in terms of building data base so that we’re able to profile a potential tax payer to know those points we need to attack in terms of generating revenue. We are currently implementing a system that will improve on our ability to collect data and analysis them and able to use them towards ensuring we bring more people into the tax net. The Lagos Inland Revenue Service (LIRS) is currently ensuring that we make good use of data to also capture the informal sector. Now you have Bank Verification Number (BVN), some people use card, do transfer, even pay toll. Every point you do those transactions and interact with the IT system, we are able to capture what you are doing. We are able to analyse your tax returns to the state and we follow up from there. So, good data base management system is key. And also your phone, dress and even the car you bought. So we look at your lifestyle to be able to capture more people. It is all about using technology to drive the process.

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Ambodeâ&#x20AC;&#x2122;s legacies in photos

DNA and Forensic centere, Lagos Island

Ketu Road

BRT terminal, TBS

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Ambodeâ&#x20AC;&#x2122;s legacies in photos Ketu Alapere

New Airport Road

New Epe Road

Governor Ambode commissions Multi-Agency Safety Arena, Oshodi

Pedestrain bridge Berger

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I came into government eager to serve Lagosians- Ambode

Can you please help us to understand the four pillars and intellectual reasoning underpinning the projects that we have seen in the last four years? First, when you go into my inaugural speech of May 29, 2015, you will actually see that it was stated clearly that we would work with the development plan which was a policy document that I met and was handed over to me by my predecessor, Governor Raji Fashola. That policy document is actually speaking to the Lagos State Development Plan (2012-2025). Apart from the fact that I imbibed into it, I also saw it as a document I could

work with. In that document and up till today, the four strategic pillars of development were actually embedded in it and that is what we have run with in the last four years. It was a culmination of past development plans or whatever it is that is being referred to as the master plan or blueprint. Donâ&#x20AC;&#x2122;t forget also that I have been part of this Lagos State system for the past 30 years. In the plan, we had the 10-point agenda; we had the Ehingbeti Summit; we had every other thing that was put together in which Governor Fashola ran with. When I came in in 2015, there was no reason for me to pre-

pare another development plan and so all I did was to take the four strategic pillars which are the Economic Development Pillar, the Infrastructure Development Pillar, the Social Development and Security Pillar, and the Sustainable Development Pillar. So, from day one on May 29, 2015, those were the things that we started to implement. From the development plan, we extracted the ministries and the departments that would focus on those pillars and then divided our functions and the roles of Commissioners and the MDAs into those pillars. The style might have been different but it is still just a continuation. If you remember clearly at that inauguration, we said ours was a government of continuity and that implies continuation from the time of Governor Bola Ahmed Tinubu when he started in 1999 and we must give it to him as the enabler of modern Lagos. It was also what Governor Fashola continued and that is what I have actually done in the last four years and hopefully, we believe strongly also that because that devel-

opment plan is something that is a carryover, which is the same development plan that my successor, Jide Sanwo-Olu is likely to extract from. Styles, functionality and emphasis might be different but the ground work and the content is the same. Can you tell us the secret behind how you are able to run the economy of the state with IGR? As I said, one of the strategic instruments in that development plan is to create a financial model for Lagos State. It is not enough for us to say we are having strategic pillars of development without knowing how to fund it and so in the development plan, a growth plan for revenue generation had actually been embedded in it. Fortunately for Lagos, we have statistics that favour revenue growth. Lagos is the commercial capital of Nigeria; the business community in terms of population or location is here and this is like 70 per cent of what is happening in Nigeria; we have the market

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and again Lagos is the most sophisticated state. Those indicators were just enough for anybody to leverage and manage the state well. Remember also when we came in, the revenue that was generated on a monthly basis was about N12 billion and then it moved to almost like N20 billion.

Today, we are having an average of N30 billion to N35 billion monthly which has been made possible not as a result of increase in taxes or rates but more of improvement in collection machinery by investing in technology, a more dedicated human resources and an efficient civil service system that was able to tap into those things. Remember also that 67 per cent of the total revenue that accrues to Lagos State comes through the IGR so the best model is to continue to expand the IGR base in order for you to be able to cover your fixed cost and also do

every other thing that we have been able to do. Despite the recession, you carried out several projects that impacted the entire state, many of which have been commissioned. Now, what does this say of you

and your style of leadership? I was Accountant-General for two years during Asiwaju’s tenure; and as Accountant-General for six years during Governor Fashola’s tenure, and also now for four years, I have been managing the finances of the state and that speaks a lot about the financial acumen that I bring to this work, which is peculiar to me and which in itself is a singular advantage of how I was able to hit the ground running because having understood the financial groundwork of the state

as an Accountant-General and as Auditor-General and as a Chief Executive Officer. It doesn’t come that easy but obviously I understood what were the critical things in terms of financial decisions and I was able to prioritize. Yes, we can laugh it off now; at the beginning especially the first three to six months, there were lots of backlashes but at that time, we were trying to put the financial groundwork and the framework of how the financial model would run into place. However, I never had the position or the opportunity to say to the public that this is more about financial framework than grandstanding, and once we got the financial model right, every other thing began to fall in place. As to the style of leadership, my financial experience I would say gave me a very great advantage as to what we have done. The other advantage is that I have been part of the story of this blueprint, master plan and the development plan for long. All I did was to use what were critical or of priority to me and extracted from the development plan and then dispersed it. That was what led to all these massive and ambitious projects. The truth is that then in a recession, the bottom line and the whole story was about reflation; you reflate the economy and government spending has to increase to allow more jobs to be created. So, it wasn’t as if we were cra-

zy trying to do projects in all the local governments. The idea was that I did not want anybody to travel all the way from Badagry to look for job in CMS. So, whether the project was going to be paid on schedule or not, give jobs to people in Badagry, don’t let them go to Epe to look for jobs. Create jobs in Epe and give the contract to someone there and if you are paying just N5,000 to that bricklayer, you are creating a multiplier effect on the household economy; that was the whole idea about massive projects. When you talk about 114 local government roads by local government contractors, the idea was to keep them busy and spread income across board and stabilize the economy. Our main vision was just on the bedrock of three issues: job creation, renewal of infrastructure and then secu-

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rity. So, there was no dichotomy as per elitist projects or mass oriented projects; it was more about does it meet security issue? Does it create jobs? Does it actually have impact on the people? Those were the factors that informed the projects we started at that early stage going into the hinterland. Lagos State seems to be blessed with good leadership that thinks about the future. What can we say is responsible for this formula?

Let’s go back to what I said earlier. Here is a state that has continually used the same set of objectives and goals in a plan that is consummated into a development plan and the same set of policy docu-

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ments from one government to the other and we have not changed party. It is the same party that has been able to run the state in the last 20 years using the same set of policy documents, the same set of development and the same set of specialists. Luckily enough, the people that have been governors in Lagos have been people who have actually worked in the system and same for Sanwo-Olu that is coming in, he has worked in the system. So, that could be a positive thing to draw synergy from the policy documents and if you don’t deviate too much, you are likely to deliver on the set objectives in the policy documents. So, we don’t expect anything away from that and Lagos is lucky, the next four years should actually see something better than what I have done because there has been a trajectory that if you

are using the same set of policy documents, whoever is coming in next should actually build on what you have done and I don’t expect anything less from the incoming government.

What, in your view, are those ground-breaking projects not more than five that you would be pleased if they are repeatedly spoken about after you leave office?

I can say it clearly here that every project means so much to me because I did everything with so much passion. I have done all my projects with the sense that each project has a positive impact on the people. I have been people-centric so to speak and when you look at all the projects, you would see that each has one thing or the other to do with the people. Truthfully, I don’t know which sector I will consider and would not be emotional and if you tell me I should mention five, it’s a very difficult thing for me. There are even things that are not projects but soft issues that are actually innovative; that have not been started before and we tried our hands on them. So, before I go to projects, look at the impact of what has been done with Employment Trust Fund. It has never been done and it’s

something that we would like to be replicated. The one I think has actually created the greatest impact to people is the Ojodu Berger re-arrangement with the pedestrian bridge. It’s a project out of the box. You can imagine the number of people that have been killed on that expressway but now you can cross all the way from Ibadan road down to the other end at Isheri because the bridge stretches about 250 meters to 400 meters and we also changed the face of Lagos and changed the traffic situation in that area. If you move away from there and talk about things that have to do with Ayinke House, that project has been abandoned for about seven years and that is the biggest children hospital in Nigeria. Now, we are almost there because in another few weeks, it will be opened to the public. It’s about the people; how the poor ones who cannot afford private hospitals in their thousands and millions waiting. So, if I am to remember projects that I have done, it’s about the number of people that I have actually touched their lives. When I came here at the beginning and I told people when we were even trying to prepare for this and I can’t say I am not a politician now. I have learnt my lessons and I can say I am a core politician now. I came in as a technocrat and all I wanted to do was to work. The drive I had

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was that I felt God was just trying to give me an opportunity to touch humanity because each time I look back, I have had extra surplus of blessings from God looking at everything that has happened to me. So, I took the seat of governor as a payback to God and I just believed that I could do something to humanity and if the space is larger, let me touch more people. So, every project was about touching people. I mean when you do like 27 roads one day in Alimosho axis opening up Abule Egba to connect Ogun State without going through Agege Motor Road, it’s about the people there who have been left untouched and that is it. When I look at the Airport Road today with 10 lanes, 3.6km between Oshodi and Airport Road and when you are talk about 10 lanes, it means you are doing 3.6 multiply by five with three flyovers and pedestrian bridges. So, I used to look at it, I am well-travelled like other people and I have gone to other places and so it was always a sore in my heart that if I ever have the opportunity, I will do something. So, I am happy I did it. Is it about the roundabout on Ajah axis? I used to be part of the traffic that go through Third Mainland Bridge and looking at it that one day if I have the chance, I will do something and so God gave me the chance and I did laybys, bus stops and so on. I can’t do everything but again

I would have laid the foundation for somebody to use that same policy document to improve on what I have done. I must have hurt a lot of people with the projects but I am happy I did them because they were for the general good. But we are paying compensation to them; I have not finished paying but again I have done every of my project with a human face and every project that we have demolished, we have paid compensation. With all these positive trends of development that you are leaving behind, what is your projection or vision for Lagos over the next 10 years? Well, it’s not even more about my vision now but more about what has been documented in that Lagos State Development Plan to be the goals of Lagos in 2025. I am drawing from what has been put there which is also my own dream to make Lagos that financial hub, to make Lagos a safe, secure city, to make it a mega city, that compares to all developed cities. So, I met Lagos as the fifth largest economy in Africa, my dream, which I have always said, is that we take Lagos to the third largest economy in Africa. That’s the dream. So, in 10 years, is that doable? I believe strongly that all the parameters that can actually grow the GDP of Lagos are in place and

only need to be accelerated. We have done it to a particular stage, we have stabilized it from where we met it and irrespective of the recession and slow pace of the economy, there has been significant growth in the Lagos economy which is visible. But what is the most important part of it also, we have been able to create a night economy which was part of my mission. So, one thing that we should be seeing ahead is an economy that compares to New York; an economy that actually takes that vantage position because we know that the next economic development in the whole global system is in Africa and Lagos is just positioned as a trigger because of its natural advantages not necessarily because of our skill-sets; and but the competencies and the skill-sets that we will draw in terms of governance and leadership is what should see Lagos as the third largest economy and then compare favourably with cities like Mumbai and everywhere that you go. I mean, you want to see Lagos like a Tokyo but you need a lot of investment in technology. At what stage is your administration leaving the Health Insurance Scheme now? I think my major achievement in terms of the Health Insurance Scheme is that that scheme has been on the table in this Lagos State Government House since the time of Asiwaju Tinubu. Again,

this administration has been able to sign it into law after a very long time and signing it into law means that it is totally irreversible as we speak. Now, we have put the framework and the institutional personnel in place; we have also approved the rates and also at this time approved the stakeholders that will take part in it. But again because of the situation that we actually found ourselves in terms of the politics and the elections, funding has been a little bit of the limiting factor for a full roll out but technically all the logistics and operational issues are being worked on and I believe strongly, in another few weeks or months, the incoming government should make the operational layout to be in place and we are getting more people who are interested in coming into it. As we said, it’s majorly advantageous to a cosmopolitan state like Lagos and it would actually give access, most importantly, to the poor, the people who cannot afford it. The whole thing is about the people; it’s just a people-centric policy and once it is in the stage that it is a law, it’s just more about operation. For me, yes I might not have had the opportunity to do the roll out in the full way I wanted it, but again I have created that framework that would not allow it to disappear again.

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How Lagos became the 5th biggest economy in Africa The total IGR of Lagos is more than the IGR of 30 states combined.

pportunities continues to abound in Lagos with growth driven majorly by vital reforms in state service—taxation, transport services and management—Lagos State remains the economic hub of Nigeria twenty-eight years after the mantle of being the state capital of Africa’s most populous nation was taken from it. In two years, the state moved up the ladder to being the 5th largest economy in Africa from a position of 7th in 2016 thanks to Nigeria’s sporadic rural-urban migration that resulted has in more domestic and foreign economic activities in the state. The massive investment flows from both the local and foreign investors into the country further boosted the state’s ability to generate more revenue for itself.

Source: New world wealth, visual capitalist

Lagos – Growing at an accelerating rate In the first 3 quarters of 2018, the state generated N283.5bil-

lion as internally generated revenue, accounting for about 34 per cent of total state Internally Generated Revenue (IGR) which stood at N843.9bn this period, according to NBS data. The total IGR from Lagos was more than the total IGR from the 30 least generating states combined (N273.6bn). Home to about 21 million people across different ethnicities, religions and tribes; Lagos boasted a Gross Domestic Product (GDP) of $137 billion in 2017 which is about three times the entire $47 billion economies of Nigeria’s West Africa neighbour, Ghana. This performance was a 52 percent increase from the $90 billion it recorded in 2014. The state moved three places up behind Egypt after overtaking Algeria, Angola and Morocco to take the fifth spot, despite having a far-smaller land area compared to these economies. Akinwunmi Ambode - the current governor of Lagos State, was sworn into office on May 29th 2015, and has taken bold reforms in setting the state to becoming one of the mega cities in the world. Major projects such as Lagos airport road, the construction of the Oshodi Transport Interchange (OTI); the light-up Lagos project and the Lekki-Aja Bridge among others are some of the facilities that happened under his watch. Like other megacities of the world, Lagos has recorded giant stride infrastructural development in Education, Health care system, Commerce, Sports, Transportation, Oil and Gas, Justice Delivery and Agriculture amongst others that are in the works are making the state

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34 LAGOS REPORT APRIL 2019

on Victoria Island—home of at least 250,000 residents and a daily flow of 150,000 commuters—which upon completion carries positive environmental impact, as it will help in stopping the erosion of Lagos State’s coastline. Eko Atlantic is a marvel of modern architectural engineering and technology, and a testament to the rise of Nigeria on the world stage with a focal point for investors capitalizing on rich development growth based on massive demand – and a gateway to emerging markets of the continent.

LADOL facility

holds the record of being one of the world’s fastest growing economies. With the Dangote refinery coming into the limelight in three years’ time, Lagos has been expected to overtake Egypt as the third largest economy in Africa in dollar term by 2035, according to an estimate by the Lagos State Government. The refinery which has been estimated to cost as high as $13 billion will have the capacity to produce 650,000 barrel per day of crude oil. Not only will the refinery give a face life in the Lekki-Epe axis of the state, it will also help in closing the supply gap in Africa’s oil market. It will also help in lifting millions of Nigeria out from the poverty trap by creating employment opportunities in a country where unemployment is staying as high as 23

per cent, based on data from state-funded National Bureau of Statistics. “What we are trying to do is to replicate exactly what we did in cement. Nigeria used to be number two in the world after the US in terms of cement importation but now we are self-sufficient and by this year, we will be the largest exporters of fuel in Africa with 8 million tons of extension”, Aliko Dangote—Africa’s richest man and Chairman of Dangote group—said while listing five key infrastructural projects to be executed by him, to boost development in Africa. Lekki Zone

Free

Trade

rail and sea links that will help open up investment, business and tourism potentials in Nigeria to the world.Situated around the East zone of Lagos, the project was initiated following the approval of the former Nigerian president (President Olusegun Obasanjo) in 2002, and it is expected to be completed by 2022. The project would host a total of nine designated industrial zones occupying over 800 hectares of land that would enjoy a 100 per cent tax exemption and preferential policies. Another notable project that being the cynosure of all eyes and have caught the interest of both domestic and foreign investors is the Eko-Atlantic. Eko Atlantic

This Free Trade Zone is the first private owned free trade zone in Nigeria that is designed to serve as an integrated hub with active road,

Nigeria’s International Commerce City, Eko Atlantic or Eko Atlantic City, is a master-planned coastal city built

The project is privately funded by South Energyx Nigeria Limited – the developers and city planners, a subsidiary of the Nigeria-based Chagoury Group of companies – working in strategic partnership with the Lagos State Government and supported by the Federal Government of Nigeria. Standing on 10 million square meters of land reclaimed from the ocean and protected by an 8.5-kilometre-long sea wall, the project will be the size of Manhattan’s skyscraper district that will include state-ofthe-art urban design, its own power generation, clean water, advanced telecommunications, spacious roads, and tree-lined streets, that will transform the state to one of the mega cities in the world. Across Eko Atlantic, independent reliable electricity, advanced fiber optic telecoms, and clean water utility services are already installed below street level. With the foundations in place, this magnificent engineering and technological city is now rising.

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This new city has evolved rapidly from a visionary design concept into a technological reality. Infrastructural road works and underground surface drainage pipes are already laid along major routes across the new city. All bridges in Phase 1 & 2 of the project have been completed. And the Great Wall of Lagos sea revetment, which is being built more than two kilometers offshore at eight-and-a-half meters above sea level, has surpassed 6 kilometers in length and is now protecting over 6 million square meters of Eko Atlantic and Victoria Island. For savvy investors, Eko Atlantic City represents far more than just surging Lagos land value. As Nigeria continues its unstoppable trajectory to become the financial capital of Africa, investing in Eko Atlantic opens unprecedented opportunities for tapping into the wider potential of the continent as a whole – widely recognized as the world’s most promising growth horizon.

Lagos Deep shore Logistics (LADOL)

OffBase

Built out of a disused swamp on a secure island inside Apapa Port; this new, state-of-the-art Free Zone is strategically located at the point of entry into Lagos Harbour to provide fully serviced facilities and heavy infrastructure designed and deployed to support the largest industrial projects in the world. LADOL is the first fully integrated, independent and secure base that is specifically

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designed to meet the logistical needs of deep-water offshore oil and gas operations and projects in and around Nigeria. By providing world-class facilities and services, facility will encourage the multinational firms exploiting the deep-water oil reserves to utilize Nigerian companies to service their operations, creating jobs for Nigerians as well as ensuring training, knowledge and technology transfer into the country. Apart from it being developed to support long- term sustainable industrialization across Nigeria, it will also to drive both local and global prosperity; the projects align with the UN’s Sustainable Development Goals of ensuring environmental sustainability. Lagos-Kano Investment Summit Nigeria knows an economic alliance between two of its most populous cities with most economic activities needed to be strengthened to aid more inclusive growth and such successful relationship will also spill over to other states in the economic value chain of both states. Lagos – Kano Investment summit was initiated to solidify this economic partnership. “If Nigeria must continue to make progress on the ease of doing business, Lagos and Kano are vital. Our ranking improved in the last rating. Both Lagos and Kano states contributed to our improved ranking on the ease of doing business. If we must sustain that progress, we must really focus more

on Lagos and Kano states,” said Akinyemi Ashade, commissioner for finance, Lagos. An example of a successful state partnership was the agro-economic Lagos-Kebbi partnership that produced “Lake Rice.” The partnership provided residents of both states with access to rice by bridging the supply gap during the economic recession that gripped the nation. While a state or any economy cannot boast of recording developmental growth in infrastructure without making a swift reference to its education and health sector—two key sectors required to drive development in human capital—it should be worthy to note that Lagos has made a giant stride in this regard In order to further boost educational skills, the governor Ambode-led administration started the Code Lagos in May 2017.

Code Lagos The CodeLagos is an initiative

Eko Atlantic

of the Lagos State Ministry of Education aimed at making coding education accessible to one million Lagos State residents and to prepare the youthful population in the state to meet new workforce demands, harness the benefits of technology and communicate in the language of the future. CodeLagos is positioning residents of Lagos State to approach the future of work as problem solvers to develop innovative solutions to local problems The initiative which kicked off in May 2017 with about 65 government and private schools across six education districts in Lagos State has since scaled up significantly. It now runs in 648 schools across the State, teaching Scratch, Python and Oracle’s Alice and Greenfoot. Lagos continues to ride on strategically planned initiatives coupled with efficient execution to drive the state’s economy into becoming one of the worlds’ leading economies.

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Lagos has put significant emphasis on security to promote investment - Yusuf

Muda Yusuf - DG LCCI

Lagos is now the 5th largest economy in Africa if it were to be treated as a country. How did businesses fare in the last 4 years and what role did LCCI play? It is difficult to isolate discussion on Lagos businesses from businesses in the economy because Lagos is like a heartbeat of the economy. It is the commercial and nerve centre of the economy. We may not be able to circumscribe as it were or discuss Lagos in isolation of the larger economy of Nigeria. Generally, I will say that businesses have been doing fairly well in Lagos, and as we know, the prosperity of businesses also reflects in the performance of government. In terms of tax revenue, if you

look at the model in Lagos, you cannot compare it with any internally generated revenue of any Nigerian states. Sometimes, people say that when you combine about six or seven states, it is not even up to the IGR of Lagos State which is over N300 billion. So that is a reflection of the robustness of the economy of Lagos State and the performance of the private sector because it is the private sector that pays the taxes, and do not forget that this is just a fraction of the taxes that the private sector pays in Lagos State. The company tax does not go to Lagos State Government, the education tax does not, the Value Added Tax (VAT) as well does not go to the Lagos State Government. Most of what goes to the Lagos State Government is the PAYE and maybe the property tax. Generally, businesses in Lagos have been doing very well and as you

know, majority of those businesses are actually in the services sector in Lagos, those that are really contributing to the prosperity of the Lagos economy are actually in the services sector. So, be looking at the financial services sector, that is, banking, insurance, stock exchange, ICT, telecoms, trading community (Commerce). These are the key drivers of the Lagos economy. Manufacturing is a bit of it, but manufacturing is more in Ogun State than Lagos. For oil and gas, operationally, they are not here in Lagos, they are in the NigerDelta but their head offices and principal offices are here in Lagos. But in terms of operational activities taking place in Lagos, itâ&#x20AC;&#x2122;s more in the services sector. The fact that Lagos is also the port city hosting the maritime sector is also contributing in great deal to the economy of the state because Tin Can, Apapa port, together account for close to 70 percent of our international trade transactions and of course, the biggest airport or the busiest airport is also in Lagos which is the Murtala Muhammed International Airport. The fact that Lagos is a port city, has the biggest airport, a large concentration of the services sector make it the financial hub of the country. It is also like a gateway because all the activities taking place in Nigeria and neighboring countries, a lot of things happen around this axis, i.e. Badagry-Semen axis. Of course, we have the Idi-Iroko but Badagry axis has the biggest in terms of cross border transactions. These are the things that give Lagos the kind of status it has and also the population. Are there anything the Lagos State Government has done or is doing to create more opportunities for businesses ? The government is investing a lot in security. I am not sure that there is any state that supports the security agencies

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as much as Lagos State and that is informed by the fact to boost investorsâ&#x20AC;&#x2122; confidence, security is key. No matter your investment promotional campaign, if the state is not secure, investors will not come in, be it domestic or foreign. Lagos has put significant emphasis on security to promote investment. The Nigeria Police Force in Lagos will not be anywhere without the support of the state government. They have this Lagos State Security Trust Fund with billions of naira supported by the private sector. So, security is number one. The second major thing is investment in infrastructure. There has been a lot of investment in infrastructure even though there has been a lot of congestion, and the government is doing a lot to attract investors to the free trade zone. The Lekki Free Trade Zone is a major initiative of the Lagos State Government to attract investors here and a lot of progress is being made. For example, Dangote is among, and so also other manufacturing companies. So, it is more of infrastructure and security. Those are the two big things the government has been doing. With all these investments coming up, like Dangote refinery, Eko Atlantic, what should we be expecting the Lagos econo-

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my will be like ? The opportunities are enormous and it will rub off on all sectors because as economy activities grow, Gross Domestic Product (GDP) naturally will grow. Opportunities to make money by all the key economy operators will improve because there is a relationship between the prosperity of the state and the prosperity of the citizens. The capacity of the government to also provide the welfare of the citizens will be enhanced because there is a relationship

between the revenue that government gets and the level of economic activities that take place. The members of the chambers are business people, our membership are corporate. And so, if you are operating in an environment that is prosperous, you will have more quality members in the chamber and more members who will support the chamber financially and otherwise.

What is your assessment of this current administration generally? I think the current administration has done a lot. What Lagos has going for it is continuity. Right from Asiwaju Bola Ahmed Tinubu to Fashola and to Ambode is continuity. Ambode has done quite a lot in terms of physical infrastructure with very great initiatives. He made big moves, although we have issues on taxation, and so

on. Such issues always arise between stakeholders in the business community and the government. Of course, we want to pay tax but we do not want too much burden. Tax issues have always been the issue for businesses. So, what will you suggest the government

should do? What the government should do is to ensure that all the people that should pay tax are paying tax because the challenge we have in Lagos is that the few people who are in the formal sector are the ones carrying the burden of taxation and we are dealing with an economy that is almost 50 percent informal. There is no framework to ensure that the 50 percent informal sector is properly within the net. So, it is the formal sector that is carrying the burden and when

you continue to shave the head of the same set of people, after sometime, there will be no hair to shave. We need a framework to ensure that we get the informal sector segment in the tax net because many of them donâ&#x20AC;&#x2122;t have proper records, payrolls and published accounts. It requires a lot of creativity to bring them on board. We need to look at this economy and ensure that we have a true federal receipt.

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How Lagos waterways are enhancing its regional influence

The economy of Lagos stands tall among the six sub national governments in the South West region.

hen it is compared with the seventeen states in southern Nigeria, not even the oil rich Niger Delta states come close to it, and collectively when you assess it alongside the 36 states and the Federal Capital Territory (FCT) Abuja, Lagos State is primus inter pares. This status is undoubtedly true for any institution located in Lagos, cutting across various sectors, from its airport, seaports, markets or the tourism sector. Today, Lagos State’s economy is an outlier as its humongous economic size makes it difficult for any meaningful comparison to be made with any state in Nigeria. Its GDP has leapfrogged more than any state in Nigeria and the credit for moving Lagos to this enviable pedestal goes

to the forward looking leadership, meticulousness in planning, doggedness in policy and programme implementation especially in the last four years whose results have catapulted the state to becoming the fifth biggest economy in Africa. Meanwhile, one of the catalysts that propelled Lagos to its new status is the contribution of its water economy particularly, water transportation. A coastal state whose aquatic grandeur could not be resisted by the Europeans and other Africans, the injection of life into Lagos waterways has not only given commuters and businesses the opportunity to be more productive; it equally shows what other coastal states in Nigeria could do with their water resources which so far idle away.

Lagos is the home to Nigeria’s biggest seaports and there are hardly any notable businesses in the country with import and export orientations that do not have connection and interaction with Lagos ports. The seaports in Lagos, although owned by the Federal Government and managed by FG’s agencies or concessionaires, the movements into and outside these ports create more economic opportunities for the state government. The major seaports are Apapa, Tin Can Island, Lillypond and Tincan Bonded Warehouse. These ports do not only serve Nigeria but also countries in West African sub region. Apapa Ports controls over 75 percent of the nation’s export trades annually. Tincan Island and Lillypond terminal account for 1.2 percent and 0.1 percent of the export trades yearly. Further, 47 percent of the nation’s imports usually come in through the Apapa ports; 21 percent through Tincan; Tincan Bonded Warehouse , 6.2 percent while Lillypond terminal does about 1.8 percent of the nation’s import activities. While the above applies to the trading activities through the high seas, revenue accruable from these activities goes to the federation account; there are a whole lot of economic activities being carried out through the lagoons and major rivers. A typical visit to any of its sea or lagoon shores will show the different kinds of economic activities such as fishing, sand fishing and movement of people and goods. Fishing in the lagoons are done by the locals who mostly use local wooden boats and nets of different sizes depending on the sea animals being targeted, and this also depends on the seasons of the year which influence the movements of aquatic animals. Looking at the mode of transportation, there are locally made canoes or boats, modern ferries and yachts by the top notch individuals. The yachts can mostly be found around Falomo, Victoria Island and Lekki, due to the concentration of the headquarters of the leading indigenous and multinational companies. The three aforementioned areas have the

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leading housing estates in the country where the middle and upper classes live. It is also the axis of the state where the Lagos Yacht Club Nigeria is situated. Lagos waterways To get the Lagos economy up to where it is in the last four years, concerted efforts were made to demarcate the routes for better understanding by commuters. This includes estimating the distances between jetties and times it will take to move from one point to the others. At present, Lagos State has 35 routes whose travel distances range from 0.4231 km to 30.069 km corresponding to 54 seconds and 33.48 minutes respectively and travel time are at an average of 19 minutes, according to the data provided by the Lagos State Government Waterways Authority (LASWA). The farthest route is Badore to Five Cowries covers 30.069km and lasts for about 33.48 minutes and an example of the least distance is marina CMS to Liverpool in less than 8 minutes to travel over 8 km The farthest routes include Marina CMS to Ikorodu , Ebute Ojo to Marina CMS via Ijegun Egba, Ikorodu Metro to Addax, Agboyi Ketu to Five Cowries, Ajah to Oworonshoki, Ebute Ero to Ikorodu, Agboyi Ketu to Marina CMS, Baiyeku to Addax, Oworonshoki to Five Cowries, Ibeshe â&#x20AC;&#x201C; Addax, Mile 2 to Addax/Falomo, Addax to Igbo Elejo, Marina CMS to Oworonshoki, Mile 2 to Marina CMS averaging

about 17 - 20km travelled in less than 20 minutes Each of the other routes is less than 8km and lasts for about 8.6 minutes. The routes in this category are Ebute Ojo to Ijegun Egba; Ebute Ojo to Ibasa; marina CMS to Liverpool; Baiyeku to Ajah; Ebute Ojo to Irewe; from Liverpool to either Five Cowries or Igbo Elejo; Marina to Tarkwa Bay; Badore to Ijede in Ikorodu; Baiyeku to Langbasa; Agboyi Ketu to Mile 12 ; Liverpool to Olodi Apapa; Ijora to Ebute Ero; and Ijegun Egba to Ibasa. Jetties/terminals in Lagos Jetties and terminals are categorised into five groups in Lagos, thus expanding the maritime space for many sectoral players to choose their scale of participation. This model takes into cognisance the riverine communities whose entire economic activities revolve round la-

goons, rivers, seas and estuaries. There are eight commissioned state-owned terminals. These are Elegbata/ Ebute Ero terminal, Ebute Ojo, Oworonshoki, Ikorodu Ferry, Badore, Osborne, Mile 2 and Falomo. While Ebute Ojo Ferry Terminal and Falomo Ferry Terminal are of floating nature, others in this category are made of concrete. The second categories are state owned jetties and are fourteen according to LASWA. Ijegun Egba and Ibeshe jetting are of floating types; Ipakodo and Langbasa are wooden while others concrete. The third category is the landing-public access. These could be found in Coconut Apapa, Slave Route in Badagry; Alex Jetty in Apapa, and Ijora landing. There are four non-state owned jetties in the state. These are Temidire Ajegunle and Origin, which are both

made of wooden materials, while Addax Jetty and CMS Jetty are concrete. The fifth categories are regarded as terminals/jetties without LASWA oversight. These are thirty in number just as all of them are made up of concrete materials. Leading fish markets in Lagos Lagos boasts of notable markets where fresh fish can be bought. The most prominent of these markets is the Oluwo Market in Epe. This market does not only serve the Lagos population, buyers travel hundreds of miles such as residents of Ogun and Ondo states to buy fish from this market mostly by water. In this market, fish of different kinds and sizes are daily sold to households, retailers; wholesalers as well as notable hotel brands who want special delicacies for their top notch clients. A visit to Oluwo Market in

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Epe revealed that better access to Epe division because of the new roads is the reason many Lagosians now throng the market and others within its environs to get fresh water fish. “Since Epe roads have been given a facelift, I come to this market every fortnight. You know, there are some species of fish you cannot get in Lagos metropolis unless you come to this place. Besides, you are sure of their freshness”, a senior oil and gas worker who preferred anonymity, said. “I’m here for sightseeing. This is how I get to know more about Lagos, many thanks to the good roads in this place. I just couldn’t imagine fish as big as those over there are caught in this place”, Omolara Abiodun, whom we met at Oluwo Market, said to BusinessDay Research team in response to our enquiry. Notable private investments in Lagos Waterways The reforms in the Lagos waterways have started to yield fruits, which could be quantified basically by the amount of new investments into the sector. Notable among these investors are Sea Coach Ferry Service, SIFAX Group, Texas Connection Ferries, Equus Marine, Green Transport and Halo Waters (WAXI). Sea Coach commenced operations in March 2015, before Governor Akinwunmi Ambode was sworn in, according to the information provided by Bolaji Alaka, general manager, Sea Coach Nigeria Limited, with a fleet of nine coastal ferries. The ferry plies Ikorodu to Marina CMS, Falomo,, Apapa, Victoria Island and Lekki. “We started operations in March 2015 with nine coastal ferries. Later in that year, we added one to make it ten. With additional boats in 2016, we have a fleet of fifteen boats as I speak”, Bolaji Alaka said. The increase in the fleet size from nine to fifteen was a manifestation of the amount of the opportunities in the waterways of the Centre of Excellence. “Of course, before us, there had been movements of people and goods across

the waterways. Sea Coach decided to raise the bar by providing water transportation system through which people could be moved across the waterways with more convenience, safety and pleasure. We have 35-seat capacity, equipped with GPS, compass, search light, navigation light, among others”, Alaka said. Shortly after, SIFAX Group won the concession of Ebute Ojo jetty, it started the provision of water transport services with two modern ferries between Ojo town in Ojo Local Government Area to other parts of the state. The company was motivated to invest in this sector due to the massive development of the waterways by the Lagos State Government under Akinwunmi Ambode. There are world-class yachts in Lagos for the super wealthy among its residents. Africa’s richest man and the president of the Dangote Group, Aliko Dangote is among the few Nigerians to own a yacht. Femi Otedola, oil mogul also has one, but slightly smaller than that of Dangote’s. Confidence boosting measures that are promoting water transportation in Lagos The Lagos waterways are regularly exposed to industrial and domestic wastes. In this regard, there is need for regular orientation of the households and firms towards making Lagos waterways hitch free. This is done through LASWA’s cleaning up exercise and orientation programs. “ LASWA initiated a one-day campaign called “Keeping the Waterways Clean”. This initiative was as a result of the current non-desirable state of our waterways. The Lagos waterways are constantly exposed to industrial waste from companies, human wastes, litters such as cans, bottles, empty food wrappers have become a common sight on our waterways. All these affect the aesthetic value of the waterways whilst also endangering the marine life and usage by boat operators and passengers. “The clean-up exercise and campaign

seek to address waterways waste challenges by educating the public on hygiene and safe practices to engage the waterways whilst also actively picking litters and cleaning the waterways and its immediate environment”, LASWA said. Another measure put in place is the stakeholders’ forum which is aimed at improving water regulation, security and safety standards in the state. At such forums, the role of water transportation in Lagos State’s economic development as well as guidelines for ferries and infrastructure operations, its operational challenges and water safety and advocacy are appraised for better service delivery by players in this sector. To constantly renew access of the waterways for ferries and passengers, water hyacinth is constantly removed. Doing this increases the lifespan of the engines of ferries, makes communities in the riverine areas devoid of dangerous reptiles which could find abode in the water hyacinth , as well as create jobs for the local labourers who are usually engaged to do the job.

Passengers waiting room

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Growth of Lagos Tourism built on six Pillars

Culture and heritage

Business Tourism

Lagos Tourism Lagos, West Africa’s commercial hub, is currently the 5th largest economy in Africa under the Ambode-led administration.

Film, Art and Entertainment

Nature and Adventure

Medical and wellness

Beach and leisure

s a matter of fact, Lagos has gained momentum in every sphere of its economy.

The sight of Lagos at night is enthralling, the music, cuisines, commerce and industry even the night hold a lot of promises for visitors and this was achieved with Ambode’s quest to make Lagos a smart city and grow it from the 5th to the 3rd largest economy in Africa. Governor Ambode’s commitment to growing Lagos Tourism and Entertainment sector The governor met a ministry that was hibernated with In-

ter –Governmental Affairs – where tourism was and culture in Home Affairs. What he did was to pull culture out of the Home Affairs and tourism out of Inter-Governmental Affairs and made it a whole ministry with a commissioner and special adviser, which was crucial in driving the sort of vision he had. He was able to create a ministry solely responsible for tourism, arts and culture. This was a quick win for him. Intervention in the area of policy and law For the first time in the state, the Lagos State Promotions Agency and Tourism bill has been passed. It was a bill initiated by the executive which essentially seeks to put Lagos on the same pedestal with cities in

any other developed country of the world. Statutory bodies were inaugurated to regulate and intervene in the matter of promoting culture and tourism. Similarly, the Lagos State tourism master plan has also been completed. Part of what led to the tourism master plan was the tourism summit which was held in April 2018. Interventions geared towards galvanizing the creative economy The administration also ensures there are activities that could create a buoyant economy that are driven by tourism. Lagos is well known or better known for cultural tourism and entertainment. In 2018, for the first time, the administration came out with a calendar of art and culture event published

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digitally and in print so that any visitor who is planning on visiting Lagos will have idea on what is happening in what month, and that has assisted visitors coming into the country to know what to expect. Lagos is known as birth place of Afrobeat, Nollywood and also the heart beat of core entertainment. There were specific interventions and supports the government granted and also hosted the Africa Movie Award (AFRIMA) back to back, and the Africa Academy Award (AAA). We created what has become the Africa biggest end of the year concert in Lagos through One Lagos Fiesta (OLF) â&#x20AC;&#x201C; This was an improvement on the Lagos countdown which started in 2013 as a one-day event at one venue. The governor in his campaign promised an inclusive government, hence the OLF was spread across other regions of Lagos like Epe, Ikeja, Badagry so as to have a feel of what the Island enjoys. OLF lasted for five days in 2015 and from 2016, it was made a whole week, 8 days of massive fun across the state; nothing is bigger than it in Africa, which was made free to the public at any given time more than 150 top rated artists performed. Contribution of Tourism to Lagos economy Activities within the tourism sector contributed about $2.2 billion to the state Gross Domestic Product (GDP) in 2017. In the last quarter of 2018, Lagos State Government captured a total spending in excess of N50 billion in cash transactions. This volume was achieved during the preceding

week before the yuletide season. The direct contribution of Lagos tourism to the GDP of Nigeria in 2016 amounted to $2 billion, 2017 ($2.2 billion) which is forecast to increase further to $3.4 billion in 2026. Findings shows that tourism and travel related ecosystem

Eyo Festival

contribute directly or indirectly to the economy in terms of employment/job creation. Its contribution is encompassing, as it positively affects other sectors of the Lagos economy from transport, hospitality, sports, entertainment, visual performing art, bloggers, media personalities and security outfits as more people will be needed to handle specific job designation.

that comes out only in Lagos Island. It is believed to represent the spirits of the ancestors. The Eyo festival may be held in honour of a chief or an elder of a ruling family or an Oba, who is dead. It may also be held when a new Oba is installed. Eyo is usually held on a Saturday.

Eyo Festival is indigenous to the people of Lagos Island, also known as Isale Eko. The event is often celebrated on very special occasions. The Eyo is the masquerade

Direct contribution of Lagos tourism to Nigeria economy

$2.2

billion

2016

2017

The Eyo festival is organized under the auspices of the Yoruba tradition, as well as social organizations or clubs. It is an outlet used to showcase the culture of the Isale Eko people, since it can be organized for spe-

cial occasions apart from the death of prominent chiefs, elders, or installation of a new Oba. It can be used to entertain at special state functions or occasions.

In the last quarter of 2018, Lagos State Government captured a total spending in excess of N50bn in cash transactions, this volume was achieved during the preceding week before the yuletide seasoning. Mobolaji Bank Anthony Fly Over, Ikeja

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Oshodi Transport Interchange

he Lagos State Government is changing the face of Oshodi with the on-going construction of the 70,000 square metres transport interchange. Oshodi, a melting point of Lagos, allows commuters to transverse within and beyond Lagos to other parts of Nigeria. Oshodi Transport Interchange (OTI) features the consolidation of 13 interstate parks, 3 multi-story bus terminals, shopping mall among other facilities to regenerate the area into a world class Central Business District (CBD). “Lagos has to run like a smart city. We made attempts in that area and again there

will be continuation by other government to make sure that the city runs smartly and then we can only invest more in e-governance to be able to make the city smarter”, Governor Ambode said. The interchange comprises three major sections which are: · Terminal One will run from

the Mosafejo Market axis and will be used for inter-state transport activities. · Terminal Two will run from the former Owonifari Market and will be used for intra-city transport activities. · Terminal Three will run from the area adjacent to NAFDAC and will also be used for intra-city transport activities.

The project which is nearing completion would make available access to efficient and effective transportation to all Lagosians, especially major stakeholders including passengers, transport unions, transport operators as well as shop owners as it would ensure an organised transport system that will ultimately manage traffic. Each bus terminal will be 30,000 square metres and will include standard facilities such as waiting areas, loading bays, ticketing stands, driver lounge, parking areas, rest rooms, among others. Under the Ambode’s Bus Reform Initiative (BRI), the $70 million project thrived

through a Public Private Partnership (PPP) initiative between the Lagos State Government via Ibile Holdings, Translink Capital Development Limited and Planet Projects Limited. The rebranding of the city into an iconic international gateway to the rest of the world is hinged on a 3-key agenda: urban renewal, environmental regeneration as well as transformation and security. According to the Lagos State Government, on a daily basis, Oshodi accommodates about a million pedestrians, 100,000 passengers who utilise the 13 parks, while 76 per cent of the area is dedicated to transport. When operational, the project will serve at peak time an average of one million people with each of the three terminals serving 300,000 passengers daily as 300 buses would be departing the terminals every hour. The new plan will not only increase the economic value of the state, the travel and leisure experience will be greatly enhanced and it will be conducted in a serene and secure environment, which will further boost tourism, thereby positioning Lagos as West Africa’s transport and tourism hub.

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Ambode’s interventions in Lagos’ tourism industry are indelible

intervention in touris. The first thing he did which I think was instrumental to assisting him to achieve all he planned for was to have the ministry that is wholly dedicated to matters of tourism, arts and culture. He met a Ministry that was hibernating with Inter-Governmental Affairs which was where Tourism was, while Culture was with Home Affairs. So what he did was to pull Culture out of Home Affairs and Tourism out of Inter-Governmental Affairs and made it a whole Ministry with a Commissioner and a Special Adviser which I think was crucial in driving the sort of vision that he had. Having done that, I think he set out basically in three key areas of interventions. One, interventions in the area of policy and law; two, interventions in the area of infrastructure development; and three, interventions in the area of activities galvanizing the creative economy generally and you can measure the gains and the achievements. Lagos State Tourism Promotions Agency

Steve Ayorinde, Commissioner for Tourism, Arts and Culture

What would you say have been the key projects and policies that defined the administration of Governor Akinwunmi Ambode in the tourism industry? I think basically the key projects that I can point at will be the fact that Governor Ambode has stayed committed to what he prom-

ised. If you recall, tourism was one of the key issue he campaigned with in 2014/2015. Specifically, he used PROJECT T.H.E.S.E which stands for Tourism, Hospitality, Entertainment and the Arts plus Sports to achieve excellence. The first thing was to be specific as to what he wanted government to achieve as an enabler, as policy maker and as the organ for

In the area of policy and law, to the glory of God, for the first time in the history of the state, the Lagos State Tourism Promotions Agency Bill has been passed. It was an executive bill wholly initiated by the executive from the Ministry and the Governor’s Office which essentially seeks to put Lagos on the same pedestal as any other entity be it in a state or country to have outside of the Ministry, which is the statutory government body that regulates and intervenes in matters of promoting culture and tourism. You would also have a Tourism Board that actually does the promotion of the sector which is what this agency whose bill has been passed by the Assembly and has been signed into law by the Governor. So, it’s one of the key things that the Akinwunmi Ambode administration is bequeathing to the incoming administration of Mr BabajideSanwo-Olu. Lagos State Tourism Master Plan Similarly, the Lagos State Tourism Master Plan has also been completed which is also something that he would bequeath to the JideSanwo-Olu administration. It took

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LAGOS REPORT APRIL 2019 45

if you talk of Dubai tourism or South African tourism or New York tourism, those are agencies that promote tourism; they do not organize events, all they do is to promote the sector so that people can begin to come. But, of course, what we did was that we didn’t wait for these two important interventionists movement to be ready – that is the agency and the master plan. Creating Enabling Environment, Building Theatres

MKO Abiola statue, Ojota Lagos

clearly more than a year to do a thorough job by the consultant that we engaged and part of what led to the Tourism Master Plan was the Tourism Summit we had in April of 2018 in which everybody that had something to do with the tourism sector, I mean the tourism ecosystem was invited, opinions sought and suggestions here and there so that we could have a document that would enrich the discuss that would make the master plan sustainable. So, what we have therefore is a master plan that has defined what needs to be done

about how to grow the tourism economy, how to grow the creative economy in Lagos State and the key areas where investments are needed all these built on six pillars on heritage, arts and entertainment, medical and wellness and different areas of tourism. The Promotions Agency will play a crucial role together with the Ministry in driving the next four years under Mr Sanwo-Olu in promoting tourism. The key documents that are required and the law that would drive it, we have provided which is important because

Part of what we have done, as I have said, was to make sure that while we were waiting for the master plan and the promotion agency, we needed to first and foremost use the first three years of the administration to create an enabling environment for tourism and creative economy to thrive. So, two key things as I said, in the area of infrastructure development, you would see that we would be unveiling four of the five theatres that we promised to Lagosians by the end of April, 2019. What this means that rather than have one theatre that can take performances and so on and so forth, what we have done is to have four 400 to 500-seater multi-purpose theatres in different parts of Lagos State which is the first time we would have that sort of intervention at a time that the National Theatre, for example, is not working at optimum capacity. And so we have four Eko Theatres that are modeled after Terra Kulture which is about the only functional privately-owned theatre still operating, perhaps, in the country in a decent, tidy and world-class manner. But ours is slightly

bigger than what Terra Kulture has and it means that we are increasing the arts spaces that we have in Lagos State for performances, for exhibitions, for rehearsals, for trainings, and for different things in Epe, in Badagry, Oregun and in Igando. Land has been provided for the fifth one in Ikorodu, which again is something that the incoming government would have to do.

Upgrade of Glover Memorial Hall We did not stay at that alone, we have also touched a space which is perhaps the oldest cultural space in Lagos, which is the Glover Memorial Hall. In 1903, that was where the first film screening in the country by the Colonial Film Unit was done. It belongs to Lagos State, but what the administration of Governor Akinwunmi Ambode has done is to now restore Glover Memorial Hall on Customs Street close to Broad Street in the very heart of Lagos to its lost glory. It’s a total refurbishment and upgrade without losing the value and the essence of what the Glover Memorial Hall stood for, and that will be ready by the middle of May and unveiled to Lagosians. So, it means that we are increasing, because you could argue that four theatres were given to other places outside of Lagos Island, our argument is that Terra Kulture that was the inspiration to the other theatres is on the Island even though private, but then, we have got Glover Memorial Hall which actually sits more people than the theatres that we have built and we have now restored it so that it can be fully functional from the middle of May.

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Ambodeâ&#x20AC;&#x2122;s legacies in photos

Commissioning

Ikeja Bus Terminal

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Ayinke House LASUTH Ikeja

Fully equipped by the Ambodeâ&#x20AC;&#x2122;s Administration

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Cosmopolitan Lagos

Lekki-Epe Expressroad showing Jubilee Bridge, Ajah

Lagos State was created on May 27, 1967 via Decree N0.14 of 1967 which divided Nigeria into 12 states.

owever, before this creation, the Lagos municipal was governed as a federal territory by the Federal Government of Nigeria via the Federal Ministry of Lagos Affairs as the regional authority, while the Lagos Council administered the city of Lagos. The metropolitan areas of Lagos (Colony Province) consisting Ikeja, Mushin, Ikorodu, Ojo, Epe, Badagry and Agege were all then administered by the Western Region Government.

The state became the administrative entity on April 11, 1968 with Lagos Island serving both as the state and Federal Capital. But with the creation of the Federal Capital Territory (FCT), Abuja in 1976, Lagos Island ceased to be the capital of Lagos, as this was moved to Ikeja. With the formal movement of the seat of Federal Government to Abuja, on December 12, 1991, Lagos ceased to be Nigeria political capital. However, the state remains Nigeriaâ&#x20AC;&#x2122;s economic and

commercial nerve centre. For ease of administration, Lagos State, which covers a land area of about 351,861 hectares, is split into five major divisions. The divisions are Ikeja, Badagry, Ikorodu, Lagos (Eko) and Epe, which form the acronym IBILE The Ikeja Division is a predominantly Awori enclave. The division consists of eight local governments listed in the Constitution of Federal Republic of Nigeria. They are Agege, Kosofe, Mushin, Oshodi-Isolo, Somolu, Ifako Ijaiye, and Alimosho. However, there

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are 15 other sub authorities, referred to as Local Council Development Authorities (LCDAs) created by the state government in an effort to further take governance closer to the grassroots. The Badagry Division, which also has the Aworis in addition to the Ogu, extends in the west to the Nigerian border with Benin Republic. The division consists of four local government areas, including Ojo, Amuwo-Odofin, Ajeromi-Ifelodun and Badagry. The four local governments were also further split into six LCADs namely, Iba, Oriade, Olorunda, Ifelodun, Oto-Awori and Badagry West. The third Division, Ikorodu, lies 36 kilometres north of Lagos and derives its name from ‘Oko-Odu’ which means vegetable farms. It consists of Ikorodu Local Government Area and five LCDAs. The LCDAs in-

Jubilee Bridge, Abule Egba

LAGOS REPORT APRIL 2019 49

clude Ikorodu West, Ikorodu East, Imota, Ijede and Igbogbo-Baiyeku. Ikorodu is populated by the Ijebu and Remo groups. The Lagos Division is the kernel of Lagos State. This highly urbanised division has five local government areas and eight LCDAs. The five local government areas include Eti-Osa, Apapa, Surulere, Lagos Island and Lagos Mainland. The eight LCDAs are Itire-Ikate, Coker-Aguda, Ikoyi-Obalende, Iru-Victoria Island, Eti-Osa East, Apapa-Iganmu, Yaba and Lagos Island East. The division is the heart of commerce in Lagos, as several of Nigerian blue chip companies, banks and insurance firms have their head offices located on the Lagos Island. The last of the five divisions of Lagos is Epe. It is consist of two local government areas and three LCDAs. The

local government areas are Epe and Ibeju-Lekki while the three LCDAs include Lekki, Ikosi-Ejirin and Eredo. Epe lies about 89 kilometres north-east of the city of Lagos. Its peculiar feature is a long range of hills, which divides the coastal town into equal parts. Lagos, originally inhabited by the Aworis, is today populated by Nigerians of diverse ethnic backgrounds and foreign nationals. Although the smallest of Nigeria’s 36 states, it has the highest population, about 27 percent of the national estimate, according to the United Nations –UN Habitat. In 2006, the population of Lagos was put at over 9.03 million residents according to the census conducted by the National Population Commission (NPC) which put the national population at 140 million people.

However, based on the UN-Habitat estimate, Lagos population was put at about 24 million in 2015. This is largely due to migration from other parts of Nigeria and surrounding countries. Asides Yoruba, Igbo and Hausa-Fulani, several other minority tribes have come to see Lagos as their home. There are over 250 ethnic groups represented in Lagos. It will not be out of place to say Lagos mirrors Nigeria’s complexity, as there is hardly any Nigerian family across the six geopolitical zones of the country that does not have at least one representative in the state. However, the Yoruba remains the dominant ethnic group. The complexity associated with Lagos as ‘mini Nigeria’ and its ever growing population puts immense pressure on available infrastructure and facilities, as everything, including housing, potable water, electricity, transportation etc, is in short supply. This leaves millions of the residents struggling to survive in heavily congested areas like Makoko, Ijora Badia, Amukoko. The population of Lagos is expected to double by 2050, which will make it the 3rd largest city in the world. It is for such reason that the government of Lagos and its representatives in the National Assembly have continued to push for a ‘special status’ for Lagos.

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Cultural Events in Lagos There are several cultural events in Lagos. According to information from the state ministry of tourism, arts and culture, the cultural events now have a full calendar that runs throughout the year. The idea is to give would-be participants and enthusiasts across the globe opportunity to plan well ahead of time for any of the cultural events they wish to be a part of. Indeed, over 80 state-sponsored and endorsed arts and culture programmes are lined up every year in the bid to garner visibility for tourism-oriented art programmes in the state. Some of the events as captured in the calendar include Gidi Culture Festivals, Lagos Water Regatta and Fanti Carnival and Arise Fashion Show. Others are the International Jazz Day celebration; the Lagos Comedy Festival and the Lagos Film Fest scheduled to be hosted at the Eko Theatres in Epe, Badagry, Opebi and Igando. The African Movie Academy Awards (AMAA) is listed to return to Lagos in June while the Lagos Festival of Plays and the Lagos Poetry Festival highlight the third quarter of the year. Others are the Lagos Fishing Festival (Oshoroko) in Ibeju-Lekki and West Africa’s leading tourism market fair, the Akwaaba Travel Market in September.

There are others like the Olokun Festival, MUSON Festival, Kayo-Kayo Festival, the Lagos Luxury Summit/Fair; Felabration; Lagos Books & Arts Festival (LABAF) as well as the One Lagos Fiesta. The calendar is a novel exercise designed to frontload state and privately driven arts, culture and entertainment events that will have positive effects on tourism promotion. It is in fulfillment of the state government promise to announce a yearly calendar of events to guide programming, tourists and visitors’ decisions. According to Steve Ayorinde, commissioner for tourism, arts and culture, the idea of the calendar of events, is to make planning, tour book-

Another Pedestrain Bridge, Alausa

ings and business decisions easier for tour operators and the general public. The calendar is part of the state’s innovation to project arts, entertainment and leisure benefits inherent in Lagos and makes the state attractive to domestic tourists; business travellers and stop-over passers-by. “The state is forging ahead of expanding the consumption of its tourism products by improving access to tourism information and creating an events guide for the media and tour bloggers”. The state is expected to leverage on infrastructural development, regeneration of old and creation of iconic attractions for entertainment, arts and culture enthusiasts to boost economic activities

and expand opportunities for job creation during the various events slated on the calendar. Here is how Ayorinde puts it: “The administration of Governor Ambode believes that the quantum of cash transactions across the tourism and entertainment value-chain, as tracked in December 2017 when about N50 billion was spent on entertainment and leisure alone, is a testimony to the huge economic gain in promoting tourism in Lagos State. This and other economic factors make Lagos one of the most vibrant culturally significant cities in Africa with potential to make enormous impact in driving in-bound tourists from across the globe.”

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New Lagos Airport Road

ears after Akinwunmi Ambode would have left office as the 14th Governor of Lagos State, he will continue to be remembered for the significant contribution to the face of Lagos. In just four years, Ambode is leaving the state better than he met it. One of his illustrious projects includes the new Lagos airport road. According to Ambode, every time he travels and sees what is obtainable in other climes; he’s always at a lost why the case in Nigeria is different. And so when God gave him the privilege to mount the saddle as governor, he knew

it was an opportunity to change the narrative of the airport road. According to Ambode, the road in its former state not only lowered Nigeria’s image internationally, it also rubbished Lagos’ status as the economic power-house of West Africa. “I am well-travelled like other people and I have gone to other places and so it was always a sore in my heart that if I ever have the opportunity, I will do something about the airport road. I am happy I did it” Ambode secured the approval of the federal authorities to redesign and expand

the road in June 2017 and flagged off the reconstruction work in September of same year. The new status of the road, according to a resident of Ajao Estate, John Amadi, “speaks to the undying commitment of Ambode to changing the ignoble past and giving Nigerians a sense of pride”. For decades, the road had been left in a state of squalor despite being the route into Nigeria for international visitors and investors arriving the country through the MMIA. Indeed, the upgrade of the federal road which leads

directly to the international wing of the Murtala Mohamed International Airport (MMIA) had been long overdue, but successive governments had turned a blind eye and showed less concern. For many years, the road elicited concerns from all quarters and provided uncomplimentary headlines for local and international media. But all that has changed now, as the road has been redesigned into a ten-lane carriage expressway. It comes with a ramp bridge designed to provide a U-turn from Ajao Estate to the airport. Incorporated is a flyover at NAHCO/tollgate, and drainage works. The new road has two pedestrian bridges at Ajao Estate and NAHCO/Hajj Camp, as well as slip road to provide access to Ajao Estate, laybys and streetlights to meet required international standards. Interestingly, the airport road links up with the Oshodi transport interchange which is also being completed by the Ambode’s administration to provide a seamless drive into the commercial city.

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Lagos Night Economy

Adeniji Adele Bus Stop, After Third Mainland Bridge

Lagos, West Africaâ&#x20AC;&#x2122;s commercial hub, is currently the 5th largest economy in Africa under the Ambode-led administration.

nother attribute of Lagos today is that it is becoming a 24-hour city â&#x20AC;&#x201C; one that never sleeps. The night time is gradually shrinking as activities continue to extend into the night. As an attestation to this, many travellers reveal their assurances when travelling late into Lagos than elsewhere in Nigeria. This assurance tends to be majorly driven by the round-theclock trading activities and the active

transporters patiently waiting to convey the last commuter. A drive through the metropolis at night would reveal the pockets of night markets and trading activities scattered across the mega citystate. Weekends begin on Fridays! Friday nights are typically the longest, unsurprisingly, as it is the last of five

working days in a week. Residents and visitors try out different relaxation venues including bars, club houses and restaurants to unwind and get a feel of the night. These relaxation venues are usually classified based on their locations, facilities, pricing and calibre of customers visiting. Wherever you are in Lagos, there is always a suiting place within means to unwind. A much deeper nightlife during yuletide December arguably has longer nighttime activities than any other month in the year. In the spirit of the yuletide, traders endure longer trading hours while entertainers launch different

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events, typically at nights in major relaxation and event centres across the state. As the saying goes: “money is no problem” especially with the growing cashless economy in Lagos as most financial institutions already operate a 24-hour mobile and digital services that enable simple cashless transactions. This lifestyle is further supported by the availability of a round-the-clock transportation in form of the traditional yellow taxis parked at these relaxation spots and the access to a wider pool of drivers through digitalized solutions like Uber, Bolt and Gokada; these and more allow for night economy to thrive in Lagos. Nonetheless, the strength of the night economy builds on other infrastructural ancillary services. The chief of these infrastructures is security.

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trust fund – Lagos State Security Trust Fund (LSSTF) – which is open to public donation for better security in the state. In 2016, the Lagos Neighbourhood Safety Corps (LNSC) was inaugurated to patrol the 20 local government areas and 37 local council development areas (LCDAs) on motorbikes and bicycles to swiftly gather local intelligence while securing state properties and providing neighbourhood security. The LNSC, constituting of people from the locality, fills the gap of the much-craved state policing. The Light up Lagos Initiative Street lighting was also an approach to beef up security and support nightlife in

Lagos–fostering round the clock safety Lagos is a cosmopolitan city; it is safe to live in. It has a relatively high mix of different ethnic groups and concentration of capital which provides some form of implied security. In Lagos, people meet people; they bump into old friends and relatives, they make new friends and foster lasting relationships. The city-state has an exciting number of different security personnel ranging from road safety to environmental safety corps. Lagos has a security

Allen Roundabout, Ikeja

the hitherto dark alleys of many streets in Lagos. Introducing the “Light up Lagos initiative”was a smart approach that incorporated residents in lighting up their streets. The Lagos State Electrification Board and the Power Advisory Committee champions the Light up Lagos project. There are helplines to call in the event of any damage to power installations and street lights. Since the inauguration of the project in 2015, 68 local communities in Ibeju-Lekki area have received 86 new transformers, and a high tension network covering 131.5 Km. Other areas where significant progress has been recorded include Badagary,

Ikorodu road, Ikeja-Ogba, and Ojodu-Berger area. Today, a significant number of the streets in Lagos are well lit up and the project is still on-going. Transportation is yet another infrastructure that assures a thriving night economy in Lagos. Though still largely informal, the road transport system is on average, a 21-hour service system. It is mainly dominated by the members of the National Union of Road Transport Workers (NURTW), defined by the approved routes they ply daily. However, the game is changing with the new revolutionaries within the Lagos transport ecosystem such as Uber and Taxi-

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fy (now Bolt) which are also having their slice of the pie by offering commuters more convenience. The city anticipates a new, developed transport system that matches and caters for its many commuters. The Bus-Rapid Transport (BRT) has heralded a scheme of the metropolitan transport system; an improved system which is coordinated with the private sector participants, is underway. The target is that night intercity transport would be properly formalized and launched following the complete electrification of all major roads and streets through the Light up Lagos project. Again, look to the development of modern bus-stops and bus terminals in strategic locations around Lagos to get an idea of the metropolitan transport system that is in the offing.

Night life in Lagos

Emergency Services in Lagos – swift, efficient and ready to act Lagos has functional emergency services that operate 24 hours of the day. The Lagos State Emergency Management Agency (LASEMA) coordinates the response services in the state. They have emergency lines and vehicles positioned strategically across the state. Some of these emergency services include state fire services, ambulance services, and mobile hospital services. The police also have a Rapid Response Squad (RRS) which swings into emergencies any time of the day. All these are implicit levels of safety and security that put the megacity on the path to becoming a 24-hour economy.

Night markets and restaurants Nearly all major markets in Lagos operate a version of night trading lasting into hours of the night depending on the level of security and the type of goods traded. As in Oshodi, Yaba, Ojuelegba where markets have developed around rail lines, the goods are somewhat similar ranging from simple consumer goods to household appliances and clothing. In Mile 12, it is mostly a market for perishable farm produce. The catch across night markets is the low price offering–especially on perishables such as fruits and vegetable–compared to day time trading. On trade venues such as beer parlours, bars, pubs and

restaurants, depending on the degree of formality are a major aspect of the thriving night economy of Lagos. There is a wide range of outof-home relaxation service outlets offering all kinds of assorted varieties at prices that specify their market targets. The informal operators are common around main markets, street markets – offering foods and drinks to traders happy about the day’s sales. The formal relaxation spots like restaurants and bars are often strategically located, often around premium locations offering continental dishes and bar services to the working class and expatriate communities looking to unwind.

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Entertainment clubhouses

and

The entertainment industry is flourishing and Lagos is at the heart of it all. A city of survival and hustle, everyone brings to Lagos his own unique skills and offerings. The music and the movie industry hosting different programs and industry nights with the attending buzz and razzmatazz are great embers of the night economy. The success in this sector is spilling over into other basking subsectors – club houses are spinning off in every corner of Lagos. They identify with musical abundance, night parties, and bar services. The state also inaugurated an end of year festival (One Lagos Fiesta – a celebration of the culture, arts and people of Lagos, this celebration is usually graced by the governor to usher Lagosians into the New Year. There are also a number of game houses, cinemas, hangouts and relaxation spots where one can spend the evening or burnout the night around Lagos.

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grows, competition increases and the average room rate falls (expectedly). Although, prices are largely determined by the location and facilities; today, there are room offerings at N6, 000 per night compared to N10, 000 five years ago. Some places to unwind at night

In all, the place to be at night is a function of one’s ability to pay and people’s subjective aspirations. As much as people go to malls to window shop, some also visit relaxation joints to experience the atmosphere. Some exciting places to be at night would include Kalakuta Republic (Fela’s Shrine), Rufus & Bee, Quilox Club, The Place Restaurants and Bars,

The entertainment industry is flourishing and Lagos is at the heart of it all. Ikorodu Road inwards Ojuelegba

Hospitality industry Another night economy subsector is the hospitality industry. Hotels ranging from 2-star to 5-star are springing up in urban Lagos. It is representative of the increasing business and social tourism within the state. In Lagos alone, there are over 2030 hotels, and as the number

Rhapsody, among others. The night economy in Lagos is currently a multi-billion naira industry with the significant potential to be harnessed and expansion largely possible. So much is yet underway to improve the necessary infrastructures that make for a thriving night economy. Lagos can be among the cities with the largest night economy worldwide.

Commissioning of project light up Lagos(Ile Zik - Sango toll gate)

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Expatriate Communities in Lagos

Expatriate neighbourhoods

Governor Ambode with some dignitaries

Saying 80 percent of the expatriate population in Nigeria are concentrated in Lagos is not by happenstance.

here is a magnet of huge market and a vast pool of limitless opportunities getting business executives, professionals and experts from different world quarters on the next flight to the epicentre of West Africaâ&#x20AC;&#x2122;s commerce.

consulates-general and trade offices dot the city centre than any other state except the Federal Capital Territory, the most popular representations are led by the United States, Germany, South Africa, Spain, United Kingdom and Brazil. Basically, when multinational corporations consider domesticating their operations in a terrain, they place cities on key metrics of local economic buoyancy, infrastructure, healthcare and security. On these fronts, Lagos has been striving to up the development of public utilities via its megacity vision and Akinwunmi Ambodeâ&#x20AC;&#x2122;s administration has continued to work on that dream through infrastructural projects such as bus terminals, street lights, and reconstruction of airport road. These and more make the state not only enabling businesses to thrive but also for dwelling and residence. Expatriates concentration in Lagos is not only driven by the market opportunity it presents; it is also bolstered by the presence of beautiful coastlines that help foreigners feel at home away from home as well as the receptive nature of Lagosians. Recognising the weight of expatriate contribution on its economy, Lagos State Government has always ensured continuous development and preservation of the prime areas where expatriates dominate in the state.

Over 76 nationalities are present in Lagos, with the Chinese and Indians leading the pack in the wake of renewed partnership with the state in infrastructural growth and development of industrial hubs. While several deputy high commissions,

In Lagos, the highest priced areas are synonymous with expatriates as they have grown to become an exclusive preserve of those who command the hard currency. Yet compared with other cities in the world, Lagos is reported as considerably cheap for expatriates to live, according to latest survey by the Economist Intelligence Unit(EIU), ranking the city sixth on the list of ten cheapest cities in the world.

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Although spreads across the state in various domains, expatriates are predominant on the island, especially in the skyscraper-studded Ikoyi, Victoria Island, Lekki, occupying residential and commercial condominium. Out of the 47 foreign consulates in Lagos, 21 are domiciled in Victoria Island with huge presence on Walter Carrington Crescent. On Lagos Island, apart from being home to prime estates including Banana Island, exquisite foreign restaurants, malls and bars, Nigeria’s most expensive neighbourhood, Ikoyi also harbours 12 foreign consulates. Similarly, prime real estates such as the 1004 Estate at Victoria Island have 95 percent of its occupancy rate dominated by expatriates and the Eko Pearl, a high rise building located in the burgeoning Eko Atlantic City in VI to name a few. In Mainland Lagos - Ikeja, the city capital, Ilupeju have become a city of Indians, who occupy most residences and are widely engaged in the manufacturing businesses. This makes the area lucrative for businesses to focus on providing necessary lifestyle items in ample quantities. Well stocked Indian supermarkets such as SPAR, and Karma supply almost every domestic need, likewise other popular Indian vegetable markets across Lagos such as Under Bridge Ikoyi, Jakande in Lekki and Bazaar in Ilupeju.Couple of temples are also

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Governor Ambode with country director of the World Bank, Rachid Benmessaoud

there such as Geeta Ashram in Lekki, Ram Janki Temple above SPAR, Sai temple Ilupeju and Gurudwara in Victoria Island. For education, there is an Indian Language School which runs the curriculum at par with the Central Selection Board Cards (CBSC) standard. Peai, an administrator at the school, believes the age-long relationship between India and Nigeria reposes confidence in many Indians to stay in Lagos. Cinema halls like Silverbird Galleria in VI and The Palms in Lekki regularly features latest bollywood releases; similarly, there are several good restaurants which serve great indian meals such as Spice Rot, Cumberland, Lagoon Restaurant and

Viceroy in VI, Sheralton in GRA and Bazaar in Ilupeju. Top rated hotels such as the Eko Hotel and Suites, Four Points by Sheraton, Oriental Hotel and Intercontinental Hotel are all products of expatriates’ mission in Lagos. At Ibeju-Lekki where Tolaram Group is promoting the Lekki Free Trade Zone - the first privately initiated free trade zone in the country - foreign investors spread over 805 hectares of land, building a hub set to change the industry. The state acknowledges that challenges abound but to attract investors to the opportunities, the Ambode’s administration continued to foster the enabling environment needed for them to thrive.

For the trade zone for instance, investors and businesses are guaranteed a host of preferential policies including 100 percent incentives, a lenient tax regime, expatriate quotas for hiring foreign employees for companies operating in the zone; permission to sell manufactured, imported and assembled goods in the Nigerian domestic market and repatriation of capital, profit and dividends ,among others. Recently, Ambode opened a $50 million dollar Chinese facility belonging to Longrich Nigeria Manufacturing Plant at the Lagos Free Trade Zone. It is one of the outcomes of the administration’s effort to attract investment and a sign of the kind of economic expansion

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expected to be driven by the free trade zone to the state. Under his watch, the total number of companies that have set up manufacturing plants within the zone increased to 25. Professions The growth of the international community in Lagos has translated to an increase in professional opportunities for expatriates. As such, foreign nationals are identified with unique skills, professional areas of expertise and businesses. Expatriates work in all kinds of sectors, including trade, telecommunications, hospitality, energy, and construction including the Chinese, German, and Lebanese for instance are easily identified with construction and real estate developmental activities under the umbrella companies such as Julius Berger Nigeria Plc., China Civil Engineering Construction Corporation (CCECC) since the construction of the Eko Bridge in Lagos â&#x20AC;&#x201C; its pioneer project. According to Pierre Daaboul, the deputy mayor of Miziara, a village in Lebanon where Lebanese expats build luxury mansions from revenues earned in Lagos and Abuja, the entire economy relies on emigration to Nigeria as 80 percent of the village population works here. Most expats live on the Island, including the affluent Victoria Island neighbour-

hood, 17km south of the city centre and part of the larger Lekki peninsula; or equally high-end Ikoyi, located 15km south of the city centre. Those who work in manufacturing are more likely to be found on the mainland: Ilupeju (8km north of the centre) and Ikeja (15km north) which are more stable with infrastructure and location close to many businesses. Expatriates business continue to thrive in Lagos ranging from retail, telecommunication, hospitality servicesfrom South African enterprises, Indians, Lebanese competing for local market share.Talk of building skills, cooking or tiles laying or sewing, Togolese are famously dexterous at it. Foreign restaurants by nationalities As the city evolves into an international centre, hotels and restaurants make it a point of duty to integrate

foreign flavours into their recipes in order to stay ahead of competition. Hence, opportunities to eat out are vast, including sushi in Izanagi and soothing sights at La Veranda. These restaurants are usually classified by over 20 nationalities including Chinese, Italian, Lebanese, American, British, Indian and Japanese, among others. The Chinese are presented with several options as many Chinese restaurants of top grade are spread across the city such as Jade Chinese Palace Cuisine, Ikeja, Pearl Garden, Oriental Garden, Shiro Restaurants, Ying Yang Express, and Marco polo. La Veranda Restaurant, Debonair and Dominos and some big hotels are some of the centres for Italian Pizza. Nicely prepared seafood are easily sourced at places like Seafood Ocean Basket in Victoria Island, Samanthaâ&#x20AC;&#x2122;s Bristol and Grill and Lagoon restaurant.

According to Frank Diermann in an interview with BusinessDay on how he relaxes in Lagos and the cuisines he loves said he loves sports and socializing with friends in Lagos, eating out and trying new locations offering good and healthy food. He also enjoys the Lebanese kitchen, as well as Italian or Thai mostâ&#x20AC;?. Foreign celebrations Expatriates are not left out in their celebrations though most prefer to return home to celebrate with their families and loved ones, some stay back to celebrate same in Lagos sich as the Indians celebrate Puja and Diwali, Chinese celebrate the Chinese New Year Festival also known as Lunar New year. In recent times, expats also take pleasure in local festivals in Lagos, including the Lagos International Jazz Festivals and Lagos Carnival modernised by the Ambode administration to usher in the New Year. Lagos is safe for all As the city becomes more attractive to visitors, it is also transforming into a global city with improved security structure, personnel and process.This also includes more fruitful policies and programs targeted at improving security with more efficient security response and presence, investment in technology for security and prosecution of offenders.

Lagos TOURISM

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EPILOGUE

Ambode’s Strides Foretell Lagos of the Future!

A scenic Lagos, dotted with many strategically located skyscrapers and competing bridges, a boisterous city of many energetic youths and dream chasers, Africa’s most populous city and home to Africa’s bourgeoning entrepreneurs is gradually evolving into the financial capital of the continent. There is a master plan which is being followed by successive administrations. The Governor Ambode’s administration did not derail. In a four-year term, he touched on all the critical sectors of the state economy – from health care to education, to environment and security, employment and investments. He thought of an egalitarian

Lagos for all, where the transport systems aid productivity and government institutions work for the good of the common man. On healthcare, he enhanced the deployment of ambulance services and mobile clinics for swift responses to emergency cases anywhere in Lagos. By creating a friendly start-up ecosystem which allows for medical innovations, he engendered a disruption of the traditional blood donor that eventually birthed LifeBank – an app that facilitates blood donation. The Lagos of Governor Ambode’s dream is where both the common man and high net worth individuals

could find affordable services either from the efficient government hospitals and primary healthcare centres or through the bespoke services rendered by the privately owned specialist hospitals in the state. Having ensured an environment that craves for investments, and consequently, he won the Dangote’s $15 billion refinery to Lagos! The state today sits comfortable as a startup haven, attracting venture capitalists, patient capital and angel investments in Foreign Direct Investments. He dreams of a Lagos which will be a first port of call to any investors coming to Africa, who are attracted to it by its seamless financial systems, interesting places for sight-seeing and leisure, supported by policies, laws, institutions and the people who are business friendly. He set up a well-structured, self-evaluating framework from the first day in office to appraise what has been done, and by asking questions concerning what has not been done in order to know the causes of the deviation from the goal. He assembled men and women whose careers are laced with worthy achievements either in the public or private sector. From economic planning to finance and education as well as tourism, men and women of valour were assigned to different portfolios. The results so far justify the meticulousness that followed the selection of his cabinet members. But why was Governor Ambode so much obsessed with a Lagos that works? If you have ever been a part of a team that made a system function seamlessly against all odds; a state that creates opportunities and that converts every challenge to opportunities for all, you will be greatly disturbed if such system begins to deviate from the standards

for which it is known when you are at the helm of affairs as the chief executive officer. It was an uncommon resolve that saw him execute some of the projects in Lagos during his tenure as his coming on board was greeted with an economic recession which lasted for over six quarters. Even after the exit from recession, the growth of Nigeria’s gross domestic product (GDP) since then has been uninspiring. Governor Akinwunmi Ambode carefully selected projects that can best be described as “killing two birds with a stone”. They are all projects that not only promote the local economy; they also give foreign investors the reasons to invest in Lagos, and by extension, Nigeria. Unlike now, coming out of Nigeria’s busiest international airport, the Muritala Muhammad International Airport (MMIA) was demeaning when compared with the experiences travellers have in sane climes. The next time you will be travelling out of this country or just returning to the country, you would think you are heading towards or coming out of leading airports in the world thereby placing Nigerian travel experience similar to what obtains in advanced countries. In order to address unemployment challenges he set up the Lagos Employment Trust Fund even when the country was in a recession. Other notable projects include the transformed Ayinke Hospital at Ikeja, Oshodi Interchange, modernised Epe roads, Code Lagos and many more.

He will hand over the reign of governance to his successor in a few weeks’ time; Lagosians will forever remember Ambode, because his strides have written his name in gold!

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Oshodi Interchange Inauguration by President Buhari

Oshodi Interchange

President Buhari after the commissioning

President Muhammadu Buhari (3rd left); Lagos State Governor, Akinwunmi Ambode (2nd left); Ogun State Governor, Sen. Ibikunle Amosun (left); Governor-elect of Lagos State, Babajide Sanwo-Olu (3rd right); Oyo State Governor, Sen. Abiola Ajimobi (2nd right) and Ekiti State Governor, Kayode Fayemi (right) during the commissioning of the Oshodi Transport Interchange along with the Mass Transit Buses, on Wednesday, April 24, 2019.

President Buhari flanked by Governor Ambode

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Ayinke House LASUTH Ikeja

The newly commissioned Institute of Maternal and Child Health (Ayinke House) with facilities at LASUTH, Ikeja, on Wednesday, April 24, 2019.

President Muhammadu Buhari (2nd right), with Lagos State Governor, Akinwunmi Ambode (right); Governor-elect of Lagos State, Babajide Sanwo-Olu (left) during the unveiling of the plaque to commission the newly reconstructed Institute of Maternal and Child Health (Ayinke House), LASUTH, Ikeja, on Wednesday, April 24, 2019.

The newly commissioned Institute of Maternal and Child Health (Ayinke House) with facilities at LASUTH, Ikeja, on Wednesday, April 24, 2019.

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INAUGURATION OF GOV. AMBODEâ&#x20AC;&#x2122;S PROJECTS BY PRESIDENT BUHARI

Lagos Theatre Oregun

Lagos Theatre, Oregun Lagos Theatre Hall, Oregun

President Muhammadu Buhari (3rd left); Lagos State Governor, Akinwunmi Ambode (3rd right); Ogun State Governor, Sen. Ibikunle Amosun (2nd right); Deputy Governor-elect, Lagos State, Obafemi Hamzat (right); Minister of Health, Isaac Adewole (left); Governor-elect of Lagos State, Babajide Sanwo-Olu (2nd left) during the commissioning of the newly built Lagos Theatre at Oregun, Ikeja, on Wednesday, April 24, 2019

Lagos Theatre, Oregun

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INAUGURATION OF GOV. AMBODE’S PROJECTS BY PRESIDENT BUHARI

Airport Road Lagos

President Muhammadu Buhari (left) and Lagos State Governor, Akinwunmi Ambode during the President’s working visit to Lagos, at the Government House, Alausa, Ikeja, on Wednesday, April 24, 2019.

Aerial view of the Airport Road constructed by Governor Ambode

Night view on the newly constructed Airport Road

Aerial view of the Airport Road constructed by Governor Ambode