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news you can trust I **WEDNESDAY 29 AUGUST 2018 I vol. 15, no 128 I N300

Exclusive

How Nigerian bank almost lost $400m to cyber security fraud JONATHAN ADEROJU

here has been an increase in cyber security threats faced by banks around the world and BusinessDay has learnt that recently a Nigerian bank was threatened by the hack of $400 million which is over

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$-N 357.00 360.00 Market Spot ($/N) £-N 459.00 467.00 I&E FX Window 363.38 €-N 406.00 414.00 CBN Official Rate 306.15

3M 6M -0.03 -0.21 11.15 13.03

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Stanbic IBTC 72m shares trade in cross deal worth P. 2 N3.6bn

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Modestus Anaesoronye

Emeka Ucheaga & Omobola Adu

Inside

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Date brought forward to October 1, 2018

Is 15% inflation harmful to Nigeria’s economy?

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Insurers shocked by NAICOM’s new minimum capital take-off date

Economics

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018

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recent study by David O. K. Okoroafor, Sesan O. Adeniji and Timilehin Olasehinde published in CBN Journal of Applied Statistics concuded that inflation levels beyond 15 percent in Nigeria

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fgn bonds

Treasury Bills

L-R: Peter Obi, former governor of Anambra State; Carlos Brito, global CEO, AB InBev: Boss Gida Mustapha, Secretary to the Government of the Federation; Ibikunle Amosun, governor, Ogun State; Annabelle Degroot, managing director, International Breweries plc, and Igwe Nnaemeka Alfred Achebe, chairman, International Breweries plc/Obi of Onitsha, at the official commissioning of the $250 million Gateway Brewery in Sagamu, Ogun State, yesterday.

here was confusion and shock among operators in the nation’s insurance industry yesterday following a sudden change in the transition timetable for the Tier-based minimum solvency capital regime, earlier exposed by the regulator, the National Insurance Commission (NAICOM). NAICOM had on 25th July 2018 published the draft guideline for the new capital regime for insurance companies in Nigeria, with take-off date fixed for 1st January 2019. But a new circular released on Monday night by NAICOM signed by Barineka Thompson, Continues on page 38

NNPC’s fuel smuggling claims at borders don’t add up ... retail price of $0.40 per litre reinforces need for deregulation ISAAC ANYAOGU & STEPHEN ONYEKWELU

Bd Investigative Series

he Nigerian National Petroleum Corporation (NNPC) has said the proliferation of fuel stations in communities with international land and coastal

borders across the country is leading to massive smuggling of petrol resulting in over N774million daily under recoveries but an investigation in a border community in Sokoto suggests the

corporation’s claims may have been exaggerated. Maikanti Baru, NNPC, GMD in March said activities of smugglers had led to recent observed abnormal surge in the evacuation of petrol from less than 35 million litres per day to more

than 50 million litres per day, which is in sharp contrast with established national consumption patterns. The NNPC monthly report put the average litres consumed per day in March 2018 at 80 milContinues on page 38

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CBN gears up lending as commercial banks shy away OMOBOLA ADU, EMEKA UCHEAGA & SOBECHUKWU EZE

n the last one year, the Central Bank of Nigeria (CBN) has geared up its lending activities to the private sector as commercial banks scaled back their lending activities according to data from the National Bureau of Statistics (NBS). The CBN’s credit to the private sector experienced a 12.79 percent growth to N6.42 trillion in June 2018 from N5.69 trillion in June 2017. On the other hand, commercial bank lending fell by 3 percent as credit declined from N16 trillion to N15.6 trillion in the same period. Analysts have tied the declining credit from commercial banks to the current high risk environment in the country while CBN’s credit expansion was aimed at stimulating output in key sectors of the economy. The results of the CBNs prime pumping has been largely unsuccessful. An area manager in one of the tier one banks told BusinessDay that the declining credit by commercial banks is as a result of the economic recession that brought about a weak demand in the economy. Due to this, most private companies have not being able to expand their production line; hence their borrowings have reduced. “The increased CBN lending

has been intended to stimulate the economy, especially to companies in the agricultural and manufacturing industry,” he added. The CBN has introduced two facilities to help out with funds to the real sectors; the differentiated cash reserve rates and the corporate bonds program (CBs). The DCRR will direct loans to Greenfield or for expansion projects by allowing banks to drawdown on their cash reserves with the CBN. The Apex bank plans to release N10 billion through the (DCRR) especially to agricultural and manufacturing Greenfield project a move which underscores the apex bank’s intention to increase the flow of credit to boost economic recovery. The banker went further on to say that “these companies are high risk loans to the banks as these companies usually demand for long term loans that commercial banks cannot grant due to their short term deposits.” Moses Hammed a research analyst at Investment One reiterated what the banker said adding that “the move by the CBN although a good effort, we however doesn’t see a lot of banks keeping up with this as currently most of the banks are trying to reduce their non-performing loans (NPL).”

•Continues online at www.businessdayonline.com

What you need to know about the shared agent project HOPE MOSES-ASHIKE

ecently, specifically in March this year, the Central Bank of Nigeria (CBN) in collaboration with the Bankers Committee established the Share Agent Network Expansion Facility (SANEF).

Why introduction of SANEF The initiative involves on-boarding 40 million low income and unserved Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and digital financial prod-

Explainer

A lot of Nigerian consumers and businesses have been asking questions about this project and how it can help improve the economy. Here are what you need to know about this project Shared Agent Network Expansion Facility is a project powered by the Central Bank of Nigeria, Deposit Money Banks (DMBs), Nigeria InterBank Settlement Systems (NIBSS), licensed Mobile Money Operators (MMOs) and Shared Agents with the primary objective of accelerating financial inclusion in Nigeria. Financial inclusion The CBN in collaboration with stakeholders launched the National Financial Inclusion Strategy on October 23, 2012 aimed at further reducing the financial exclusion rate of adult population from 53.0 percent in 2008 to 20 percent by 2020. Several policies and initiatives have been introduced by the CBN to ensure that the target is met. The CBN introduced the cash-less policy in 2012 as part of efforts to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach. In collaboration with other key financial sector regulators, the CBN in 2006 conceptualized the Financial System Strategy 2020. Also to further ensure that the financial inclusion target is met, the CBN, in 2017, inaugurated the Financial InclusionStateSteeringCommittee(FISSCO) as well as the Financial Inclusion State Steering Committee (FISSCO).

ucts and services such as savings accounts, micro loans, insurance, pensions by Nigerians. The project seeks to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable payment systems with limited concentration risk. It will create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Nigerians. So, wherever the SANEF sign is, a customer can perform basic financial services such as account opening, cash deposits, cash withdrawals, funds transfers and bills payments. What do Nigerians stand to benefit from the project? It will reduce transaction cost, provide convenience, job opportunities and increase adoption of digital financial services. It provides a platform to handle government social disbursements and initiatives. In addition, it promotes Financial Inclusion and empowerment, positive social impact and development. 500,000 new jobs will be created through SANEF by 2020. To the financial sector The initiative will Increase adoption of digital payments, agility and flexibility, lower operational costs. It will reduce the barriers of lending to individual and small businesses, as well as help in Integration of the formal and informal economy, social impact and development.

•Continues online at www.businessdayonline.com

President Muhammadu Buhari (r) receiving Adeyeye Ogunwusi Ojaja II, Ooni of Ife, introducing an investor in Green Projects/chairman of GDTC Investment, Sherif Ahmad Bin Zuhir Al-Natour to President Muhammadu Buhari, during their visit to the Presidential Villa in Abuja, yesterday. NAN

Lagos financial statement shows tax revenue up, deficits down ... State reports total net assets of N2.2trn BALA AUGIE

ncreased allocation from the federation account on the back of a gradual improvement in the economy in 2017 and upward movement in Internally Generated Revenue (IGR) has spurred Lagos State to growth as full year revenue increased, according to published financial statements. In the last 100 years, the state has transformed from a mosquito infested island to the commercial hub of the country. It will be recalled that the state pulled out of the recession before Nigeria, thanks to an aggressive tax collection and administration strategy, while it’s robust IGR eclipsed other federating units. For the year ended December 2017, Lagos State’s revenue increased by 13.65 percent to N511 billion from N449.60 billion the previous year. The growth in revenue was largely driven by a 20.42 percent increase in

taxationincome-whichmakesup57.64 percent of total revenue- to N294.22 billion in December 2017, as against N244.66 billion the previous year. Additionally, income from statutory allocation was up 14.76 percent to N141.77 billion in December 2017 as against N123.53 billion as at December 2016. Deficit for the period after capital items, foreign exchange losses and public charges declined by 13.03 percent to N196.76 billion in December 2017, thanks to a 73.73 percent reduction in net loss on foreign exchange transaction. Lagos State’s surplus for the period before capital items, foreign exchange loss and public debt charges were up 13.16 percent to N234.67 billion from N205.14 billion as at December 2016. The 2017 fiscal year started with turbulence as a precipitous drop in the price of crude oil since mid-2014 that resulted in a recession in 2016 continued to deal a blow on government revenue.

However, the country exited its first recession in 25 years as the economy expanded in the second quarter of 2017, thanks to the introduction of a new foreign exchange policy and the rebound in the price of crude oil. By December of that same year, inflation rate had dropped to 16.50 percent from 18.72 percent. Analysts are of the view that the refusal of former President Olusegun Obasanjo to pay Lagos State its full Federal allocations, forced it to focus on raising its own internal revenues. Lagos’s output in 2017 was $136 billion, according to official estimates, more than a third of Nigeria’s gross domestic product. “Despite all the vulnerabilities and structural imbalances in the Nigerian economy, Lagos performance was commendable and the financial management of the state has been effective,” said the report signed by the Accountant General, A.S. Umar.

•Continues online at www.businessdayonline.com

Stanbic IBTC 72m shares trade in cross deal worth N3.6bn MICHEAL ANI

ome 72 million shares of Stanbic IBTC Holding were sold at N49.5 each on the stock exchange on Tuesday in a cross trade valued at about N3.6 billion. A cross trade is a practice where buy and sell orders for the same asset are offset without recording the trade on the exchange, an activity that is not permitted on most major exchanges. A stock broker familiar with the deal said the transaction was done by two offshore investors who are interested in Nigerian stocks due to recent sell-offs in stocks that are making valuations attractive. The NSE index closed the day up 58bps to 35,516 with the share price of Stanbic trading at N49.50 at the close of trading session yesterday. Stanbic IBTC, is the local subsidiary of South Africa’s Standard Bank. Standard Bank Group-Africa’s in July this year acquired additional shares worth N61.3 billion in Stanbic

IBTC Holdings Plc to increase its majority equity stake in the Nigerian subsidiary to 64.44 per cent. In a regulatory filing announcing the transaction, the Company secretary of Stanbic IBTC Holdings Plc, Chidi Okezie, confirmed that Stanbic Africa Holdings Limited, a wholly owned subsidiary of Standard Bank Group Limited, acquired additional 1.14 billion ordinary shares of 50 kobo each in Stanbic IBTC Holdings. Stanbic Africa Holdings Limited represents Standard Bank Group in Nigeria as the parent company of Stanbic IBTC Holdings Plc. The acquisition was done in an “offmarket” transaction. “With this acquisition, the total percentage shareholding of Stanbic Africa Holdings Limited in Stanbic IBTC has increased by 11.35 per cent from 53.09 per cent to 64.44 per cent post this transaction,” Okezie said. The South African banking group had opted to buy the Stanbic IBTC Holdings shares at premium. The deal was struck at N53.75 per share,

considerably higher than Stanbic IBTC Holdings’ current market price of N46.10 and 52-week highest price of N50.05 per share at the Nigerian Stock Exchange (NSE). The shares were transferred to Stanbic Africa Holdings in eight deals, which were consummated through the NSE. As an off-market, negotiated cross deal, it means that the deal was not subjected to the dynamics of price discovery for the particular period. Off-market trade implied that the deal was sealed outside NSE floor. The negotiated cross deal platform of the Exchange is a specialpurpose trading platform that is meant for voluminous transaction. By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to close the deal at reduced cost.

•Continues online at www.businessdayonline.com

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Experts insist on favourable land, tax policies for affordable housing delivery CHUKA UROKO

xperts in the real estate sector say for Nigeria to reduce its housing deficit estimated at 17 million units by the World Bank since 2014, there should be collaborative efforts by the public and private sector operators to deliver houses that will be affordable to lowincome earners. Besides the 17 million housing units deficit, which has become a subject of debate for reasons of population growth, high urbanisation rate, rising number of school leavers, etc, Nigeria has one of the lowest homeownership level at less than 10 percent as against 70 percent in the US and 80 in UK. Nigeria needs to build, at least, 200,000 housing units each year for the next 15 years to be able to bridge its housing deficit, but the total number of houses built in the country in a year by both the public and private sector operators is less than 50,000 units, making housing situation here critical.

The experts who spoke at an African Real Estate Conference in Lagos, Tuesday, insisted that when the private sector operators come with their capital and expertise, government should go beyond paying lip service to housing by coming up with favourable land and tax policies that should encourage private capital to go into affordable housing development. “Affordable housing is not profitable to private capital, but the government can make it happen by playing its part, giving developers some comfort. Taxation should be friendly so that whoever brings in money should be able to take it out,” Uzo Oshogwe, MD, Afriland Properties, said, explaining that private sector capital that should go into affordable housing could only come as off-shore fund since the interest rate on local funds was outrageous. Developing a creative way of incentivising private developers is another way housing could be developed and delivered at affordable cost.

This, according to Femi Akintunde, GMD/CEO, Alpha Mead Group, comes in form of land-swap programme. “In Lagos State, for instance, where urbanization and rural-urban migration rate is high, government can give free land to private developers in the highbrow locations such as Ikoyi, Victoria Island and Lekki and, in return, demand from the developer about 1,000 low cost housing units built in low cost area of the state,” Akintunde recommended. The conference which had as theme, ‘Growing African Cities: The Reshaping Model’, took a critical look at high rate of rural-urban migration and the impact of that development on the growth of African cities. A United Nation’s report on the growth of cities projects that about 60 percent of the world population will be living in the cities by 2050 if nothing is done to check the rural-urban drift, which calls for sustainable housing development not only to house the population, but also to reduce household energy cost.

FG denies plan to sell NLNG, as Reps query NNPC, Total over $1.6bn contract variation KEHINDE AKINTOLA, Abuja

ederal Government on Tuesday dismissed report on the planned sales of Nigerian Liquefied Natural Gas Limited (NLNG) located in Bonny Island. Ibe Kachikwu, minister of state for petroleum resources, disclosed this in Abuja, at the ongoing investigative public hearing held at the instance of House Committee on Gas Resources chaired by Frederick Agbedi. Kachikwu, who was represented by Esther Ifejika, director of Gas Resources,

argued that the ministry was not aware of the Federal Government plans to sell its equity in the multibillion dollar facility. The lawmakers queried the $1.6 billion contract variation, noting the cost of the entire contract was too staggering. The committee was also mandated to ascertain the rationale behind the controversial variations. According to the NNPC, there was no infraction in the entire contract regime, noting that the award followed due process and was to the benefit of Nigerians In his presentation, Maikanti Baru, NNPC group

managing director, explained that the project was aimed at upgrading security in order to improve gas for local and international consumption. He said the contract was duly approved before awarded, adding that the contract suffered $1.6 billion variations as a result of community disturbances among other challenges. The GMD, who was represented by Bello Rabiu, chief operating officer (upstream), argued that no amount of money had been paid to any contractor as variation because there had been no board approval.

No Visionscape staff’s salary has ever been compromised - Irvine CHUKA UROKO

isionscape Sanitation Solutions, a waste management company, has described as false the allegation that it owes its staff salaries, stressing that the allegation is unfounded. The company in a statement obtained by BusinessDay reacted to a protest by the Community Sanitation Workers (CWS) at the Lagos State government secretariat, Alausa, on Monday. The CWS alleged that they were owed salaries by the environmental firm. “While we cannot ascertain the information that

has been published, we can confirm that no Visionscape staff’s salaries have ever been compromised in any way,” the statement quoted John Irvine, the firm’s CEO, as saying. The company advised that all enquiries regarding the CSW should be directed to the Public Utility Monitoring Assurance Unit (PUMAU) of the state’s Ministry of the Environment. Irvine said that the company continues to guarantee the complete safety and security of its employees with the highest levels of protection and equipment. “We remain committed to working with all stakehold-

ers as we carry out our respective roles and responsibilities and will continue to support the Cleaner Lagos Initiative”, he assured. As an environmental solutions and infrastructure company, Visionscape has expertise that covers solid waste management, resource recovery, recycling, waste management infrastructure, and waste-to-energy solutions. “Our culture is driven by a ‘cradle -to-cradle’ approach in creating a sustainable environment. By generating value from waste, our aim is to be the leading environmental utility group across emerging markets.

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Kumuyi seeks media collaboration in gospel propagation SEYI JOHN SALAU

eneral Superintendent of the Deeper Christian Life Ministry, Pastor William Folorunsho Kumuyi, has solicited the support of the media in the propagation of the gospel to overcome the ills besetting the Nigerian nation. Kumuyi made the call in Lagos yesterday at a breakfast fellowship with media executives. Explaining the nature of collaboration, the cleric said: “The Great Commission is the sacred mandate by the Saviour to all believers to go into the world with the glorious gospel, which has the capacity to draw men out of the fetters of sin and darkness, into God’s marvellous light. “It is my keen understanding therefore, that this sacred assignment fits perfectly into the primary purpose and elevated thrust of the mass media, especially in this modern world, where the information super-highway has transformed the world into an online, real time, global village.” According to Kumuyi, “There can be no variation in the fact that the best way to reach the over seven billion people of the word is through the expansive channels of the

print, electronic, and the new social media. The diverse and direct access of the mass media to reach souls in all the continents of the world has no match even as we talk.” On the nexus between the church and the media, he pointed out that, “While the media exist largely as a catalyst for social change, the church seeks after spiritual reawakening of those trapped in the miry clay of sin.” He, therefore, expressed the optimism that the media and the church “working assiduously together, have the capacity to cause more than a stir in our country’s spiritual and moral fabric, as well as in other spheres of life. “My prayer therefore, is that we form an engaging and result-oriented partnership, one that will help us reach every nook and cranny of the world, in the justified bid of transforming the temporal and eternal state of our people and of our nation.” Listing some specific areas that the church would want the media to help amplify, Pastor Kumuyi said: “Let me urge that the media and the church actively cooperate rewardably, to instil the moral rearmament needed to heal the famished soul of the nation and her citizens.

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ENAW 2018: Delegates upbeat as Obaseki parades Edo-BEST, housing estate, others in Canada

n a concerted effort to get the buy-in of the state’s Diaspora community, Edo State Governor Godwin Obaseki will be showcasing the innovative Edo Basic Education Transformation (EdoBEST) programme and the 1,800-unit Emotan Gardens project, among other growth and development enablers at the Edo National Association Worldwide (ENAW) convention in Canada. The four-day Toronto convention, the 27th in the series, will hold from August 31 – September 3. It is arguably the single largest gathering of Edo professionals in the Diaspora, making it a key stakeholder in the state’s affairs. Governor Obaseki will lead the state government’s delegation to the Toronto convention and will be showcasing a bouquet of projects, which needs the input and buy-in of the Diaspora community.

Among the star projects listed to feature in the governor’s discussions is the EdoBEST programme, for which approval has been given for full roll-out in three oil and gas producing local government areas, comprising Ovia North East, Orhionmwon and Ikpoba-Okha. A pilot phase is running in select local governments across the state. However, more investment is needed for full rollout across the state. An initiative of the Obaseki-led administration, the Edo-BEST programme, will develop a highly-skilled teaching workforce by training, supporting and motivating Edo State teachers to succeed in the classroom of tomorrow; enhance the Edo State Basic Education curriculum thereby empowering children to compete effectively in the world of work. The programme is expected to leapfrog the basic education delivery systems by leveraging technology in

education provision and to gather and utilise accurate and timely data to drive policy and planning decisions. In the programme, every teacher will receive tablets loaded with digital lesson plans for every lesson needed for each day. Head teachers are given smart phones and provided with monthly data to enable them use the software in the smart phone to register all children and take attendance and manage teacher performance in each classroom every day. The other project is the 1,800-unit Emotan Gardens, an ambitious real estate project, that seeks to rejuvenate the state’s real estate sector and provide affordable housing to residents and those in the Diaspora. The state government is developing the estate through the Edo Development and Property Agency (EDPA) in partnership with MIXTA Africa, a renowned real estate and property de-

velopment company. Executive chairman, Edo Development and Property Agency (EDPA), Isoken Omo, in the build up to the convention, assured that a mix of engagement strategies would be deployed in the state government’s effort to meet the housing and other needs of Edo people in the Diaspora. According to Omo, “The Edo State Government and her partners are upbeat about the Emotan Gardens and similar housing projects coming on stream soon. It is an opportunity many of our people have been waiting for to acquire decent housing through a very transparent process devoid of encumbrances.” She explained, “The appeal of Emotan Gardens has been phenomenal, as would-be subscribers are just waiting for us to open sales. Governor Obaseki is passionate about this product and will be exhibiting it at the ENAW Convention.”

Zenith Bank clears air on alleged Rivers fraud MICHEAL ANI

enith Bank on Tuesday said it had honoured the invitation of the Economic and Financial Crimes Commission (EFCC) over the bank’s linkage to an alleged N117 billon fraud by the Rivers State government. In a document signed by the bank’s head, corporate communications, Victor Adoji, and filed on the Nigerian Stock Exchange (NSE), the tier 1 lender said, “The invitation relates to an ongoing issue between the Rivers State government and the EFCC regarding the operation of the state government’s account with their various banks of which Zenith Bank is one.” At the meeting, the bank said, “The EFCC requested information on how Rivers State government account with Zenith Bank is being operated in terms of the utilisation of funds over a period of time.” At the meeting, Peter Amangbo, its group managing director/CEO, clarified the areas of concerns with the commission. Recall that the EFCC at present is investigating the books of the Rivers government for alleged cash withdrawals totalling N117 billion in the last three years.

The anti-graft agency cited about 45 different cheques issued in the name of one person on June 8, 2015. A total of N450 million was withdrawn from the state government account in the Zenith Bank that day. Reacting to the EFCC allegations, Governor Nyesom Wike of Rivers State said no official of the state would appear before the EFCC until the commission approached the Court of Appeal to set aside the 2007 judgment barring the commission from investigating the state. “No government official will appear before the EFCC until they set aside the court judgment of Rivers State government against them in 2007. We cannot be intimidated. “They filed for leave to appeal the judgment at the Court of Appeal. Until they set aside the judgment, we will not come. We are aware of their tricks. They should not bother engaging in media trial because it will not work. This is mere political witch-hunt. “They must obey the rule of law. We have filed another action against the EFCC. Because they have been served, they are telling the press that they have started investigating Rivers State government.

L-R: Bernard Nicolaas Griesel, non-executive director; Daniel Braie, Ag managing director; Joshua Bernard Fumudoh, chairman, and Moses Omorogbe, company secretary, all of Linkage Assurance plc, during the 24th annual general meeting of the company in Lagos, yesterday. Pic by Pius Okeosisi

Private sector investment broadens knowledge drive for next generation youths KELECHI EWUZIE

ndustry experts in the education sector say continuous investment by private sector in educational development is the best solution for Nigeria to strengthen the knowledge base of the next generation youths. Tope Ashiwaju, group public relations and events manager, Dufil Prima Foods plc, says private sector involvement in education is to complement the efforts of the government in providing necessary educational tools. Ashiwaju, speaking at the donation of educational materials and cash to the Leadership Empowerment and Resource Network (LEARN)

in Lagos, says the gesture is the main thrust of the company’s corporate social responsibility activities. The LEARN programme is an initiative of the former first lady of Lagos State, Abimbola Fashola, committed towards leadership development, entrepreneurial skill acquisition, sexuality education, character development, vocational skills acquisition for young persons between the ages of 9 to 17. He opines that as a brand, Indomie is committed to the total welfare of young people adding that Young people need skills to survive in the future, and vocational education is key in developing those skills. “Indomie realised it

early enough that it can be part of that preparations for the future of young people through LEARN. Like every other year, Indomie is partnering LEARN this year to educate and create a better future for Nigeria’s teeming young persons through donations we hope will go a long way in assisting the initiative to achieve its objectives,” he said. Ashiwaju said the firm’s 11 years partnership with LEARN was to empower young people with skills needed to succeed in life. He further advised the LEARN programme participants to be serious with their learning outcomes, adding the brand was ever ready to contribute to the

total development of Nigerians in all ramifications. Ronke Oguntoyinbo, chief operating officer, LEARN, commended Dufil Prima Foods for her unwavering support the LEARN initiative in particular and youths development in general. “We are excited over this donation by Dufil Prima Foods. It shows that brands like Indomie Instant Noodles really appreciate what we are doing with LEARN. We are going to utilise these donations for the purpose they were donated for. That is the best way we can really show that we appreciate Dufil Prima Foods plc as partner in this initiative,” Oguntoyinbo said.

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COMMENT SMALL BUSINESS HANDBOOK

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

ne of the big international best-selling news events of the moment is the return to power in Malaysia of Dr Mahathir Mohamed, its former Prime Minister and undisputed “founder of modern Malaysia”. Dr Mohamed ruled that South-East Asian country as Prime Minister from 1981 to 2003. During this 22 years in power, he took Malaysia from a poor insular agrarian economy to a powerful industrialized nation, and one of the famous Asian Tigers, which some of you became professor by merely studying how they performed their miracle. Although he ruled with what many called “iron hands”, the tag of dictator has failed to stick on him, because he voluntarily resigned as Prime Minister. Dictators do not normally resign from office. They finish their terms, either self-allotted or by the terms of the elections that bring them in. Then they seek additional terms, which they finish and also ask for more. If the rules or constitution do not allow it, they amend them both (rules and constitution) and continue to rule (read the many African leaders; from Mugabe to Museveni to Kabila, name them). Mahathir Mohamad, who graduated as a medical doctor, is 93 years old. His return to power has somehow silenced those who believe that the only place for those of us who are greying rapidly or actually very old (if you are over 70) is either in the museum, as exotic African

Wednesday 29 August 2018

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Poverty generators and the challenge of microfinance (5): The value of heroes art pieces, or in “the other room”. I mean the old people’s retirement room. Anyway, without any doubt, I believe that Nigeria’s president, who has been much vilified for his age, must be having a good laugh at those “jokers” who have been speaking glibly about his age and what Nigeria has lost by electing whom they consider a very old man. They even went further to form a movement or two, just to make the hollow point that only young people have the capacity to rule Nigeria. They sound as though Nigeria has never been run by young men before. Fortunately, they met their match in the President. He quickly signed into law, all they brought in their potpourri of wishes, and more, knowing that the animal that has pursued him since he took power, and even threatened to knock him down on a few occasions, will have them for breakfast on the morning after their inaugural, assuming they survive the first lesson or round one of Nigerian politics called “Campaign Finance 101.” National sovereignty apart, I believe it may not be inappropriate if our president shakes Dr Mahathir Mohamad with two hands, if and when they meet. Age is it in Africa and President Buhari is a humble man. And if they do meet on this soil, where elders are hardly wrong but highly respected, then some country-to-country protocols may face modification. That man is much older than any of President Buhari’s old uncles in Daura. In fact, if real African protocol is followed, President Buhari, in his obvious simplicity, will most likely address Mahathir Mohamad as “my brother Prime Minister, Uncle Mahathir Mohamed; Rank Dede”. For the life of me, that man is over 20 years older than the man we call old in Nigeria. He is Buhari’s big old “uncle”.

‘ Mahathir Mohamad, who graduated as a medical doctor, is 93 years old. His return to power has somehow silenced those who believe that the only place for those of us who are greying rapidly or actually very old is either in the museum, as exotic African art pieces, or in “the other room”.

’

After many years in retirement; two prime ministers down; jailed twice, and the other, the son of another revered prime minster, grabbing dollars like a boy raise in Ajegunle, Mahathir had to come back on popular demand. That should not only substantially resolve the fears of those whose only reason for opposing the president is that his is very old, but also make us ask some questions.The man is a truly living hero of Malaysian success story. He was never corrupted by power and never allowed criminals to hide under him after committing crimes against Malaysia. He respected the laws of the land and punished anybody who abused his office. Even the successor he anointed could not escape his blind justice. I had the rare privilege of meeting Prime Minister Mahathir in 1990, as Coordinator of the Federal Government Delegation to the South-East Asian countries of Malaysia and Indonesia, led by the late Aare Onakakanfo of Yorubaland, Chief M.K.O.

Abiola and Chu Okongwu, then Minister of Budget and Planning. Dr Mohamed was like a god in Malaysia during his reign. Even today, he is still like one and continues to exude an aura that is nothing short of the esoteric. Such image is not wielded by low energy men (apologies to the Twitter King, President Trump), or strawmen of opaque character propped up by brute force and the media. His agricultural programme anchored on the farm settlement model of his Federal Land Development Authority (FELDA) is not just iconic; it made the oil palm tree (which we falsely claim to have dashed them) into a spiritual plant that became everything for Malaysia. Malaysia not only became number one in the world in palm oil production but had over 50 derivative products developed from palm oil. After over 18 days in Malaysia and Indonesia, going from one industry to another, the Nigerian delegation saw how agriculture could become a leading agent for reversing rural-urban migration. The farm settlement became the new choice residence that attracted graduates from the cities to the farms. The story of Malaysia’s agricultural miracle under Mohamad is long. Suffice it to say that we copied what we saw them doing at FELDA and on return, we proposed and Babangida approved the establishment of the Nigerian Agricultural Land Development Authority (NALDA) – a copycat of FELDA modified and improved for our needs. Dr Idachaba and my humble self, wrote the draft NALDA Decree in my office in the Federal Secretariat. But trust Nigerian civil servants, they appointed themselves directors and began to fumble with the implementation of a major technical project we developed, complete with expected annual intake of people returning from the urban centres. Soon NALDA became a multi-million naira-spending

cassava farm project for youth coppers. The rest is the usual Nigerian history. We also copied the idea of mortgage refinancing from Malaysia and recommended it for implementation. Cagamas Berhad, the Malaysian mortgage insurance corporation, was already impacting the housing stock in that country very massively at that time. Unfortunately, we could not get the mortgage corporation on stream and it took over 25 years to happen in the form of the current Mortgage Refinance Corporation of Nigeria. Malaysia became fully industrialized under Mohamad. The national car, the Proton Saga, was already well over 60 per cent homemade. Mohamad gave us a sample as souvenir for his brother President, Ibrahim Babangida. I hope my readers still recall the topic of this article. Surely, it sounds like we have gone off track but I assure you we are on point. Lack of true nationalists is a poverty generator. Mahathir came back through a new opposition party he formed specifically to challenge the ruling party he had led for 22 years. He had no access to the machinery of power. He is not rich. He won. According to him, “we have removed many of the corrupt civil servants and will recover all money they stole and then prosecute them”. Already one of the past prime ministers who succeeded him had been jailed earlier for corruption. What an affront to a “former god”. Were there no courts in Malaysia to stop government from prosecuting such a mighty man? He should have fled to Nigeria. Mahathir will spend only two years and the former prisoner may be prime minister again. He should remember to flee to Nigeria if Mahathir comes after him thereafter.

clear up somebody else’s mess. Yes, it is true one must learn to be responsible for one’s actions but I do believe a superior hallmark of responsibility is for one to correct an unacceptable situation even if one is not at fault, simply because one recognises that a dirty and messy environment affects one too. Likewise, a degenerate social order should concern all of us and if we want a change we all need to do our own little bit. It is time we began to change our nation one mind at a time, starting from our individual spheres of influence. Jesus Christ, when He lived amongst men, was all about changing the mindset of men; admonishing the virtues of selflessness over selfishness. He was all about character and that in particular stood Him out. His teachings predominantly centred on the importance of good character; and what stood all the great men of God in the scriptures out was “character.” To buttress that point, Jesus’s apostles remain reference points till today, despite the well documented educational

handicap some of them lived with. Surprisingly, good character is not the easiest thing to define but a conflation of definitions that does well to capture my understanding of it goes like this: “a person of good character must know what is good, desire good and pursue good both in private and in public. One’s emotional response, habits and actions must be in pursuit of the morally good and one must be inclined towards good through the development of virtues.” This means one’s moral compass, founded on inner virtues developed over time, would both naturally and automatically direct one towards what is morally good. This is therefore one’s default mode and never a matter of what is expedient. By guiding our children to develop virtues and the right outlook on life, we can help our children to deserve and subsequently produce the right leaders.

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As you lay your bed...

DAPO AKANDE Dapo Akande, author of the acclaimed book, “The Last Flight...a personal journey to rediscovering values”, is also the Founder of MINDS Reform Initiative, a NGO focused Character Education. Contact:dapsakande25@gmail.com

here is a popular saying that a nation gets the government (leaders) it deserves. Whilst this may not always be the case, it certainly appears to ring true here in our society. Hear that renowned philosopher, Seneca: “no man can live happily who regards himself alone, who turns

everything to his own advantage. You must live for others if you wish to live for yourself.” So what does this mean exactly? It means self-centredness, ever so pervasive in these climes amounts to inadvertently shooting oneself in the foot. As a society, attitudinal change is more urgent now than ever. Society is made up of people, therefore it stands to reason that for society to change people must first change. Is this too late for our generation? I really cannot say. Many arguments can be put forward either way. One thing I am sure about is that it is not too late for our children. We must imbibe a society centric culture in our children and adolescent. As so often is the case, “train up a child in the way that he should go and when he is old he will not depart from it” jumps to mind here. Plato, the brilliant Greek philosopher once said society is individual writ-large. This rather odd sounding term simply means society reflects the aggregate character of its citizens. To put it in another

way, each Nigerian propels the image of a mini Nigeria. If one accepts this observation to be true, then we must also accept some responsibilities for the state of our nation. Admittedly, we cannot all be held equally responsible but for one to exonerate oneself completely may not really wash. Even if one is not a primary actor in this decay one should still ask oneself these questions: “what genuine and not superficial, consistent and not occasional or haphazard steps have I taken to change this?” These are very pertinent questions. We cannot continue to rationalise that because we did not initiate the descent into the current moral morass and neither could we be accused of being at the forefront of prevalent indecorous behaviour, on the ground that it is not our problem. It affects us all. Frequently, my wife and I would tell our children off for messing the house up, as parents do, for leaving used cups on the table, leaving unwashed plates in the kitchen and so on. Their typical response would be, “it wasn’t me”. Each person would feel it was not his or her responsibility to

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Wednesday 29 August 2018

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Isa Ali “Pantami” and giant strides in the Nigerian IT sector

MOHAMMED DAHIRU AMINU Mohammed Dahiru Aminu (mohd. aminu@gmail.com; @mdaminu) wrote from Bedford, England.

t the time I wrote my essay entitled “Isa Ali “Pantami”: A Role Model of Leadership in Nigeria” published in Premium Times (August 2, 2018) and BusinessDay (August 3, 2018), I had not intended to write this follow-up essay on Dr. Pantami’s giant strides in the Nigerian IT sector. However, although the previous essay was well received, with much of readers admitting its content as true, nonetheless, there were minority opinions that argued on the contrary as to the optimum performance of NITDA—National Information Technology Development Agency—under Dr. Pantami. Ordinarily, such minority positions— if weighed on a balance with opinions of the majority—can be safely seen as statistically insignificant. But, nevertheless, it is not out of place to do this essay that focuses on the giant strides in NITDA under the leadership of Dr. Pantami, as a way of setting the records straight. For the most part, it is important to state that my previous essay was focused mostly on Pantami the man—that is, my good knowledge of him, the moral and ethical standards he stands for, and of course, his continuous resolve to stay true to these principles. Thus, the essay, I

agree, was not mainly concentrated on Dr. Pantami’s achievements in NITDA ever since he assumed leadership of the agency sometime in September 2016. From a basic perspective, development of the Nigerian IT sector—like other industries such as the finance and manufacturing sectors— was long overdue as it is significant in changing the image and potential of Nigeria both nationally and globally. The computers and internet, which represents the core of IT, have brought about the third industrial revolution in history—preceded by Britain’s economic development from textiles, coal, and iron; and the expansion of electricity, petroleum and steel; which marked the first and second industrial revolutions, respectively. It is therefore not in doubt that the IT industry anywhere in the world is a great promoter of sustainable development by profoundly changing our way of life and productivity. These suggest that the potential breakthroughs in IT is central in achieving an increased agglomeration and integration of all industry types. With a robust IT industry, the economic growth is amplified, the development modes are transformed, and the industrial upgrading is propelled. It is easy to see, therefore, that for Nigeria to march into modernity like other nations around the world are currently doing, we cannot be left out in the procedural processes of carving out IT policies that emphasizes independent innovations, open and compatible technologies, marketdriven economic approaches, and integrated and comprehensive applications across different levels of the socio-economy. Through IT, Nigeria stands to advance its industrialization by an effort that creates an industry that is characteristically Nigerian. Considering the issues afore-

‘ These efforts will no

doubt make Nigeria a country with a strong IT industry by 2020— and this is what Dr. Pantami has resolved to realize

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mentioned, and perhaps even more than that, there was a need to establish NITDA to execute vast and diverse mandates, including but not limited to: (i) the implementation of the national IT policy and to give effect to the provisions of the NITDA Act of 2007; (ii) ensuring that Nigerians are empowered with IT by making sure that a critical mass of the citizenry are IT proficient and can compete globally; (iii) to strategically partner with the private sector and international organizations to actualize the nation’s IT vision; (iv) to act as a regulator for the IT sector in Nigeria; (v) to ensure SMART—simple, moral, accountable, responsive, and transparent—governance is implemented using IT instruments; (vi) to encourage local production and manufacturing of IT components within Nigeria, in a competitive manner which creates jobs and generates earnings for the country; (vii) to advise the public sector on IT related programs and projects; (viii) to develop IT infrastructure and maximize its use nationwide; (ix) to ensure internet governance and supervision of the management of the country code top-level domain on

behalf of all Nigerians; etc. Because of the variety and multiplicity of the NITDA mandates, administrations before Dr. Pantami may not have been able to develop a strategy for a well-rounded comprehension of the issues around these mandates in the generality of it all. But Dr. Pantami had a different approach by which NITDA’s mandates could be achieved through a series of prioritized set-goals. Without set-goals, the focus might be lost; as goal setting does not only create an opportunity for a clear direction, it also provides a benchmark to determine if a person is really succeeding. I believe that it is in this context that a logical saying goes: “having a million dollars in the bank is only proof of success if one of your goals is to amass riches. If your goal is to practice acts of charity, then keeping the money for yourself is suddenly contrary to how you would define success.” Having understood this logic, Dr. Pantami carefully considered all the mandates of his agency through a series of well-defined steps that transcended the specifics of each mandate. The outcome of these considerations led Dr. Pantami to formulate goals that revolve around some key priorities for him to focus on, which are: (i) capacity building; (ii) regulation; (iii) digital job creation; (iv) government digital service promotion; (v) local content development and promotion; (vi) cyber security; and (vii) digital inclusion. It is important to state that while Dr. Pantami’s key areas of priority are well-defined, remarkably, it provides a holistic inclusion of all the key mandates of NITDA while not forgetting the encapsulation of specificity, measurability, attainability, relevance and time-bound details. The achievements of Dr. Pantami’s barely two years of leadership in NITDA are therefore enormous and

have been documented in a book form entitled “A Roadmap for Developing the Nigerian ICT Sector (2017-2020)”, which has been reviewed and adopted by ICT stakeholders and the NITDA management team. Some of these achievements include the resuscitation of NITDA as the clearing house for all IT projects and infrastructural development in the country following NITDA’s partnership with the Bureau of Public Procurement, an alliance that was made possible because of the efforts of Dr. Pantami. Also, to make Nigerian IT products viable and competitive, NITDA, under Dr. Pantami, has invested in building IT hubs, incubation and acceleration centres around the country, in partnership with private IT hubs to identify innovative IT solutions; to craft policies and guidelines to make the Nigerian environment favourable for IT businesses; and to build hardware and software testing labs for the certification of IT products before they end in the markets. In terms of capacity building, Dr. Pantami’s efforts in NITDA led to the motivation of a new generation of highly skilled personnel through various capacity building programs, as well as proper staff placements that conform to individual competencies that has led to an improvement in efficiency, innovation and productivity. While it is true that NITDA has been transformed for the better under the leadership of Dr. Pantami, at the core of the transformer’s conviction is even a stronger focus toward achieving greater international competitiveness for the next generation network and information services. These efforts will no doubt make Nigeria a country with a strong IT industry by 2020—and this is what Dr. Pantami has resolved to realize.

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Wanted: Human resources for health agenda (1) EZE ONYEKPERE Eze Onyekpere is executive secretary, Centre for Social Justice, CSJ

s we approach the 2019 elections, political parties and candidates have started regaling Nigerians with promises. It is imperative to focus the mind of the contestants to a critical area of the health sector— human resources for health. The personnel, who operate and manage the National Human System is the most important factor in the delivery of quality of health care. S/he coordinates other factors and resources needed to meet the right to health of citizens and residents of Nigeria. Therefore, one of the core questions for political contestants will be on how governance after the elections, will be used to increase the number of available human resources for health, and guarantee that they deliver optimum services in a friendly and enabling environment. Essentially, how will the po-

litical party increase the number of physicians, pharmacists and other health workers in Nigeria to match the national health priorities? The extant numbers of health personnel is not sufficient to meet the demands of healthcare in Nigeria. The National Health Policy 2016 states that there are 65,759 medical doctors amounting to 38.9 per 100,000 Nigerians; 249,566 nurses and midwives being 148 per 100,000 Nigerians; 16,979 Pharmacists at 10 per 100,000 population; 1,286 Radiographers at 0.76 per 100,000 population; 19,225 Medical Laboratory Scientists at 11.3 per 100,000 population while physiotherapists number 2,818 at 1.7 per 100,000 population. Further Community Health Officers (CHOs) are 5,986 at 3.5 per 1000,000 population; Community Health Extension Worker (CHEWs) are 42,938 at 25.3 per 100,000 population while Junior Community Health Extension Workers are 28,458 in number at 16.8 per 100,000 population. These figures are way below international standards on the ratio of health workers to the population. These ratios put a lot of demand and stress on available medical and health personnel. Experts have posited that the

availability of trained medical and health professionals and personnel receiving domestically competitive salaries is one of the indicators of availability of functional public health and health care facilities and services. Health facilities need adequate personnel to deliver effective service. The Basic Health Care Provision Fund established by section 11 of the National Health Act sets aside 10% of the fund for the development of human resources for Primary Health Care. Section 41 of the act is on the development and provision of human resources in the National Health System. It states: “(1) The National Council on Health shall develop policy and guidelines for, and monitor the provision, distribution, development, management and utilisation of human resources within the National Health System. (2) The policy and guidelines stated in subsection (1) of this section shall amongst other things, facilitate and advance: (a) the adequate distribution of human resources; (b) the provision of appropriately trained staff at all levels of the National Health System to meet the population’s health care needs; and (c) the effective and efficient utilisation, functioning, management and support of human resources within the

National Health System”. It further provides in section 43 (d): “The Minister shall make regulations with regard to human resources management within the National Health System in order to: identify shortages of key skills, expertise and competence within the National Health System, and prescribe strategies which are not in conflict with any other existing legislation, for the education and training of health care providers or health workers in the Federation, to make up for any shortfall in respect of any skill; expertise and competence”. These provisions envisage a knowledgeable and dedicated Health Minister and his team who will pilot affairs to achieve appropriate numbers and skills of health personnel. Another major challenge is the uneven distribution and spread of available health personnel as they are not equitably distributed across the federation. They are concentrated in the urban areas and there is a wide disparity between the north and south of Nigeria and across geopolitical zones. How will the party achieve equitable spread across the federation? Three examples of the disparity will be shown. For medical doctors; 9.73%, 4.06%, 8.35%, 19.59%, 14.37% and 43.9%

are in the North Central, North East, North West, South East, South South and South West geopolitical zones respectively. For Pharmacists, 19.94%, 3.8%, 7.79%, 11.74%, 12.39% and 44% are in the North Central, North East, North West, South East, South South and South West geopolitical zones respectively. Nurses – 16.4%, 11.65%, 13.52%, 15.29%, 27.75% and 15.35% are in the North Central, North East, North West, South East, South South and South West geopolitical zones respectively. Would the political party consider incentives for health personnel to work in the rural areas and certain disadvantaged parts of the country? Incidentally, the areas that attract the least health personnel seem to need them the more. Section 42 of the National Health Act states as follows: “The Minister, with the concurrence of the National Council on Health, shall determine guidelines that will enable the State Ministries and Local Governments to implement programmes for the appropriate distribution of health care providers and health workers”. How will the party, through its elected officials, put this into practice?

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Zimbabwe’s fresh opportunity

mmerson Mnangagwa retook the oathSunday, August 26, 2018, this time in his right as the elected president of Zimbabwe. He was named a presidentin November 2017 following the ouster of former President Robert Mugabe by the military. Before then, his job seemed to be on the line as Mugabe lined up his wife for the office. Mnangagwa won the July 31 elections in the southern African country. Congratulations to President Mnangagwa and the people of Zimbabwe. Mnangagwa assumed office with the promise of a new chapter or even a new book for the people of Zimbabwe. His tone was conciliatory and unifying. He stated, among others, “The vision of a new and prosperous Zimbabwe, the Zimbabwe we want, is a shared one and transcends political party lines. As your President, I pledge to act fairly and impartially, without fear or favour, as a President of all Zimbabweans. I am your listening President, a servant leader.” Leaders from neighbouring countries witnessed the inauguration. They came from South Africa, Rwanda, Zambia and Democratic Republic of Congo. Before the elections, Mnangagwa had allowed Zimbabwe-

ans to experience the freedoms the government denied them in the many years of Mugabe. He allowed free expression of political views and lifted police checkpoints across the country. Citizens felt bold enough to air those views and to vote as their conscience dictated. Unfortunately, the elections in Zimbabwe followed a familiar African script. The opposition party queried the victory of ZANU-PF. They also now allege a clampdown. Electoral observers also queried the outcome. Those from the European Union spoke of voter intimidation and lack of media coverage for opposition parties and candidates. Their counterparts from the United States alleged that the ruling party deployed the military to intimidate voters and gave out food aid only to party loyalists. The matter went to court. The justices dismissed the opposition’s case on Friday, August 24, creating the enabling condition for the swearing in of the president. They had accused the electoral commission of collusion with the government in delaying the result to allow the government inflate the tally in its favour. Opposition supporters protested in Harare, the capital but the government called out the military. They killed seven people. Later, they arrested 27 others, raided the offices of MDC and sent out an arrest warrant for the opposition leader, 40-years old

Nelson Chamisa. Even more common in the unfolding story in Zimbabwe are the allegations of the opposition. Nelson Chamisa, leader of the Movement for Democratic Change (MDC Alliance), claimed victory after the ballot. Now he alleges denial of rights. He stated,”There is freedom of expression,but there is no freedom after expression. There is freedom to vote,but there is no freedom after a vote. In the rural areas, people’s houses get burned, destroyed, on account of expressing themselves. It’s un-African, it is undemocratic, it is unacceptable. And this is the issue we must be able to resolve, because five years from now, 20 years from now, we will still have a vicious circle of disputed elections.” Mnangagwa won with a narrow 50.8percent of the popular vote. The victory earned him a five-year term. His ZANU-PF, however, won two-thirds of the seats in the 149-person parliament. The considerable majority means the party can alter the constitution at will. His success now affirmed by the courts, the new president has a fresh opportunity to write a new narrative for that beleaguered country. Much of the world looked forward to the promise of Zimbabwe following its independence in 1980. Reggae star Bob Marley waxed poetic in a song about the liberation of Zimbabwe, the former

British enclave known as Rhodesia. Marley thought the internal power struggle was a “little problem” that Zimbabweans could come together to overcome with independence. Alas. Mugabe was not the “real revolutionary” envisioned in the song. It has not happened, and Zimbabwe under long-term ruler Robert Mugabe crashed the hopes of its citizens and blacks across the world. Mugabe became a byword for sit-tight rulers, dictatorship and oppression of citizens. Poor governance resulted in poor outcomes on all indices. At a time, Zimbabwe suffered from the world’s worst case of runaway inflation. A hitherto rich country turned from a bread basket to a leaking bucket that impoverished its people even more than under white minority authoritarian rule Mnangagwa’s challenge and opportunity are to rewrite the story of Zimbabwe, to be the real revolutionary that would usher in a new era for the country. He must bring the people together. He must stop the repression that earned his country the sanctions of Western donor nations since 2002. It could be a new dawn in Zimbabwe if Mnangagwa, the enforcer of Mugabe’s bad practices over the years, can turn a new leaf. Can Zimbabwe change for better now that Mnangagwa is in office in his right? The world awaits.

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Wednesday 29 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

Lafarge leverages on rights issue to reduce loan books

Pg. 14

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

Oando eyes growth in new oil output target Cynthia Ikwuetoghu and Oghogho Edosomwan

ando Plc is looking to b o o st cr ud e oil output from 2019 as the company aims to settle its $2.5 billion debt burden mounted through the 2014 acquisition of oil and gas assets from U.S. giant ConocoPhillips. The company’s debt will be almost 90 percent lower by the third quarter (Q3) of 2019 of which the company has commenced preparation for its next stage of development. “We have purchased enough reserves and our job should really be to exploit those reserves,” Wale Tinubu, chief executive officer of Oando Plc said in an interview with Bloomberg. According to Tinubu,”Oando focused on repaying the debt after the ConocoPhillips deal to cushion the impact of the financing costs, but that came at the expense of growth. The company, listed in Johannesburg and Lagos, is now able to increase its number of rigs and reopen oil fields, taking

advantage of a recovery in the oil price.” “Oando has more than 450 million barrels of reserves following the ConocoPhillips acquisition and has interests in 14 oil exploration licenses in Africa’s biggest crude producer. Its Oando Energy Resources Inc. unit aims to grow production organically to 75,000 barrels a day by 2023 from 40,000 barrels, while also seeking “acquisition opportunities” which could help it exceed that goal”, Tinubu added. Moreover, the company sold parts of the business to focus on more profitable regions. Its disposal includes a stake in a gas distribution and power unit to Helios for $115.8 million, a partial divestment of 49 percent of the voting rights in Oando’s midstream business subsidiary, Oando Gas and Power Limited (OGP) in December 2016, majority stake in a service-station and fuel-storage and supply business. Tinubu stated that the company is focused on developing the export and wholesale of Nigeria crude oil aspect of its business. In his words, “We are focused on developing that side of our business, which is really to export Nigerian crude and

L-R: Mohammad Sani Abdullahi, APC. commissioner of budget and planning for Kaduna State; Luqman Edu, Dan Masanin Sarkin Musulmi, and Asuquo Ekpenyong, PDP, commissioner of finance, Cross River, at the launch of the 67 Million Youth Initiative in Abuja.

bring in products wholesale.” On Nigeria government cap on gasoline price below market costs hindering importation from many private retailers, “It’s not popular to increase petrol prices,” Tinubu said. “The reason we don’t have a country that is

Homeownership, job opportunities underway as Army plans N7.5bn estate CHUKA UROKO

he plan by the PostService Housing Development Limited (PHDL), a real estate investment and development arm of the Nigeria Army to develop an estate that will deliver 221 housing units is holding out hope of homeownership and job opportunities for soldiers and civilians in the area. The planned housing project estimated to cost N7.5 billion is a joint venture involving PHDL, the Otukpo Local Government Council and Betoniq West Nigerian Limited. It is to be sited in Otukpo LGA and will be financed through public and private partnership. Mahe Bashir, managing director, PHDL, who gave these hints explained

that approval for the joint venture project was given by the Chief of Army Staff, Yusuf Buratai because the housing estate would be for Nigerians. Following the directive of the COAS, the 221 housing units will be made available to both military and civilian personnel at a ratio of 50-50 but mode of payment for the houses would be made known at a later date. The estate promises modern facilities such as surface roads with asphalt cover, streetlights, water and other essential amenities. Monday Morgan, a retired Air Vice Marshal and Chairman, Betoniq West Nigerian Limited, disclosed that the housing project would be completed in 24 months, noting that construction would start with the three and four bedroom bungalows, and later include the three and four

bedroom duplexes and detached houses. George Alli, Chairman of Otukpo Local Government Council, noted that the initiative would be the first of such magnitude outside the state capital. He said apart from the subscription for homeownership in the estate being open to all Nigerians, the project would be of great benefit to the Idoma community as it would create thousands of job opportunities for their idle youths. “It would reduce crime among youths. It would create wealth because internally generated revenue will increase and IGR will also increase for the Otukpo local government as well. He commended the Nigerian Army and Betronic under the chairmanship of Morgan, who is a son of the soil, for choosing Otukpo as location for the project.

exporting petroleum products is because of subsidies. Our refineries were never repaired because they never had enough cash flow to fix them. That’s because they were always selling product at a discount.” Nigeria restricts pump

prices to 145 naira per litre ($0.46), a 67 percent hike making the country one of the 10 cheapest places in the world to buy gasoline, according to GlobalPetrolPrices.com. Last month, the CEO and his deputy Tinubu and

his deputy, Mofe Boyo were ordered to pay $680 million to Volpi in a dispute over corporate shareholdings. Oando shares have declined by 17 percent this year from N5.99 to its previous close at N5, valuing the company at N62.16 billion.

Shell using JTF to force us to sign JIV report, community cries out Samuel Ese, Yenagoa

he last may not have been heard of the disagreement over the signing of the joint investigation visit (JIV) report of the crude oil spill that devastated Aghoro 1 community in Ekeremor Local Government Area of Bayelsa State. Aghoro 1 community has alleged that Shell Petroleum Development Company of Nigeria (SPDC) of using men of the Joint Task Force (JTF) Operation Delta Safe to force community leaders into signing the JIV report. However, both SPDC and JTF have debunked the allegation of intimidating the community leaders to sign the report which has suffered delay due to disagreement over the area impacted by the crude oil spill on the Ramos River trunk line.

While SPDC in the draft report said 1,114 barrels of crude oil spilled affected a total land area of 113.3 hectares at Aghoro 1 community, the community leaders claim that the impacted area was 1825 hectares. Victor Akamu, Chairman, Community Development Committee (CDC) of Aghoro 1 alleged that SPDC in connivance with the JTF had resorted to force and intimidation over the disagreement. Akamu had disclosed on Monday that the JTF had summoned the community leadership to Yenagoa on August 23 to force them to sign the JIV report to no avail and that the community delegation was labelled pipeline vandals and profiled into the database of the security agency. In his words: “We were taken to a room where detailed profiles of us were taken including our finger-

prints, biometric details and our photographs. We were temporarily held down for almost three hours profiling before we were eventually asked to go. I wanted to ask is it part of JTF’s job to force a community to sign a JIV report? “Shell should stop using JTF to intimidate our community; for the past 20 years, there is no history of pipeline vandalism. This leak was due to a ruptured pipeline due to corrosion, yet they called us vandals. It is unacceptable.” In his reaction, Bamidele Odugbesan, SPDC’s Media Relations Manager denied use of force to compel its host communities to sign the report saying, “Yes, there are issues with the JIV report. The representatives of Aghoro 1 community did not agree with a portion of the JIV report but we have not used force, SPDC does not coerce parties to sign JIV reports.”

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COMPANIES & MARKETS Lafarge leverages on rights issue to reduce loan books MICHEAL ANI

he board of Lafarge Africa Plc, on Monday, wrote the Nigerian Stock Exchange (NSE), announcing plans for an Extra-Ordinary General Meeting (EGM) on September 25, 2018, in Lagos, to authorize the directors to raise up to N90bn in fresh capital by way of rights to existing shareholders. The right issue is part of the firm’s effort to reduce its debt and strengthen profitability The company will also seek approval “to apply any convertible loan, shareholder loan or any other loan facility due to any person, from the company, as may be agreed by the person and the company, towards payment for any shares or rights subscribed for in the rights issue.” At the EGM, shareholders are also expected to approve the appointment of Rossen Papazov, Country chief executive officer (CEO) of La-

farge South Africa Holdings, as a non-executive director of Lafarge Africa. Lafarge shareholders had at the 59th annual general meeting on May 16, 2018, approved the raising of up to N100bn in additional capital, subject to the approval of relevant regulatory authorities. At the EGM, according to the notice signed by Adewunmi Alode, the Company Secretary, shareholders will also vote on special resolutions, including the increase of the authorized share capital of Lafarge Africa from N5bn to N10bn “by the creation of 10bn additional ordinary shares of 50 kobo each, ranking pari passu in all respect with the existing ordinary shares of the company…” According to the explanatory notes, Lafarge Africa was indebted to LafargeHolcim, its parent company (with 76.32 percent stake) to the tune of $659.2m, prior to the conclusion of the rights issue in 2017. The debt, which has since dropped to $315.2m, was said to have repre-

Experts seek Govt support for farmers on climate change Akinremi Feyisipo

overnments at all levels in the country have been urged to come up with affordable insurance policies and favourable forest regulatory frameworks to help Nigeria farming communities cope with the challenges of climate change. This was part of the conclusion of a research entitled “Integrating adaptive management strategies in coping with climate variability impacts on farming households in forest communities in Nigeria” carried out by Olushola Fadairo, Samuel Olajuyigbe, Tolulope Osayomi, Olufolake Adelakun,Nathaniel Olutegbe and Oluwaseun Adeleke,all doctorate degree holders from the University of Ibadan. At the presentation of their findings done at the Center for Sustainable development of the University of Ibadan, the researchers want government to support farmers across Nigeria with credit facilities, agric-inputs and empower the

youths to enhance sustainable adjustment to climate variability and change among the rural populace. The study, which was carried out in selected forest communities in Ogun, Niger and Cross River States,they noted that climate change was not only affecting hunting activities in Ogun and River States but also processing of farm produce in Niger state. It was discovered that rainfall quantity and duration, windstorm frequency and violence across the three regions accounted for climate change variability. This they said has caused stiffer competition for use of forest resources and nontimber products among the people. They however, noted that forest dependent communities in Nigeria are threatened by climate variability found that farmers in the research areas “have demonstrated ability to respond to changes occasioned by climate variability through mixed farming and agricultural intensification”.

Subomi Balogun, FCMB chairman, assisted by Folu Aderibigbe and Fassy Yusuf Globacom representative, presenting the second prize cheque to representatives of Balogun Shoye family which came second at the Horse racing competition at the just ended 2018 Glo sponsored Ojude Oba festival.

sented the balance of short term intercompany loans advanced by the parent company to United Cement Company, prior to Holcim Group’s global merger with Lafarge S.A., with made Lafarge Africa

assume the position of the borrower. The loan, in two tranches, was used to complete lines 1 and 2 of the 5m metric tonne per annum cement plant at Unicem’s Mfamosing plant in Calabar, Cross

River State, as well as the purchase of 15 percent equity in Unicem from Flour Mills of Nigeria Plc. As part of restructuring arrangement, $220m due to Caricement BV is to be split into eight facilities to enable

repayment by Lafarge Africa from its cash flows. The rights issue is therefore enable LafargeHolcim convert $22.2m of the loan into equity through the N90bn rights subject to shareholders approval.

Stakeholders at LAPO forum advocates new national vision Hope Moses-Ashike

takeholders at the LAPO Development Forum, a frontline development organization, on Friday advocated the formulation of a new National Vision and Agenda 2040 that would gravitate Nigeria out of poverty and engender progress, unity and greatness. This is coming as concerns are high that no meaningful efforts have been made to diversify the economy despite successive governments’ promises to that end. “The type of diversification witnessed so far is largely bypassing industrialisation as a major factor of growth and job creation”, Mike Obadan, professor of economics/nonexecutive director of the board of the Central Bank of Nigeria (CBN) said. Obadan spoke on the theme, ‘Towards Sustainable Socio-Economic Transformation of Nigeria: Options for non-State Intervention’ at Lift Above Poverty Organisation

(LAPO) forum in Lagos. He said Non-state actors are fundamental agents in helping to achieve both national and international development goals, such as the Sustainable Development Goals and those around climate change. Obadan recommended synergy between the public and private sector in the pursuit of national development and that government at all levels should change their adversarial perception of NSAs and rather see them as partners in progress. He said government should create a conducive environment for the private sector to thrive and participate in the policy and development process and complement the state in its quest to achieve socio-economic transformation of the country. On their part, he said NonSate Actors/Civil Society Organizations should make conscious efforts to address issues affecting their credibility and acceptability as partners in development such

as weak institutional capacity, lack of internal democracy, non-collaboration among themselves, limited transparency and accountability in their operations. They should forge alliances and common front to attract better funding to implement developmental activities. In his welcome address, Godwin Ehigiamusoe, managing director/CEO, said since its inception in the early 1980s, Lift Above Poverty Organization (LAPO) has remained focused on addressing the challenges of poverty with a number of mutually reinforcing, semi-autonomous institutions. These institutions include LAPO Microfinance Bank Limited, a leader in micro, small and medium enterprise financing in Sub-Saharan Africa, Micro-Investment Support Services (MISS), a pioneer in micro-leasing business in Nigeria; LAPO Institute, a centre for research and training in Microfinance and Enterprise Development and LAPO Microfinance Company, Sierra-Leone.

He said the staff strength stands at 9,159 with millions of clients accessing our range of financial, health and social empowerment products and services. (Without being immodest, our approach to combating poverty is a total package with access to finance, health and social empowerment programmes), Ehigiamusoe said. Also speaking at the forum, Osarenren Emokpae, chairman of the board, said, Lift Above Poverty Organization (LAPO) currently implements a number of programmes to address human development challenges such as economic powerlessness; gender inequity; poor health; malnutrition; social exclusion; low selfesteem; ignorance, inhuman and opprobrious traditional practices against women, especially poor women and widows. These programmes include health awareness; legal aid; financial literacy; human rights and popular participation, advocacy and the creation of access to finance and insurance services.

Wednesday 29 August 2018

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COMPANIES & MARKETS Excitement greets industry over $3.8bn Egina FPSO launch Amaka Anagor-Ewuzie

xcitement greeted the maritime industr y weekend for the first Eg i na Fl o at i ng Production Storage and Offloading (FPSO) vessel partially fabricated and integrated in Africa, and the largest vessel to ever berth in Nigeria, successfully leaving the Lagos Deep Offshore Logistics Base (L AD OL) Free Zone Sunday. The FPSO was said to have left LADOL base at about 5:40am Sunday morning to the Egina oilfield, located approximately 200 kilometres south of Port Harcourt. It is expected that the FPSO will add 200,000 barrels of oil per day to the country’s current production capacity. A statement by LADOL said that the launch of the FPSO vessel was witnessed by Nicolas Terraz, managing director of Total; AhmaduKida Musa, deputy managing director of Total, and Amy Jadesimi, managing director of LADOL. The statement disclosed that the above named officials arrived LADOL Free Zone at 4:30am while other

representatives from government agencies that have been instrumental in the completion of the vessel at LADOL, including the Nigeria Export and Processing Zones Authority (NEPZA), Nigerian Ports Authority (NPA), Nigerian Customs Services and Nigerian Immigration Services were also present when the vessel departed. “We thank President Buhari and his administration for doing away with monopoly and putting in place an ease of business regime that has ensured the successful execution and completion of this project,” Amy Jadesimi said in the statement. She stated: “At 05:00 am NPA tugs masterfully took the largest FPSO in the world out of LADOL Free Zone in Lagos Harbour to the open sea. Thank you to NPA and NEPZA for working together with us and taking giant strides forward, making Nigeria the West African Maritime and Industrial Hub. “As said during the recent visit of Vice-President Oluyemi Osinbajo to LADOL, this achievement is going to have its biggest impact on the industrialisation of Nigeria – particular in non-petroleum

sectors. By completing this work on time and on budget, she said, that LADOL and its partner have demonstrated to the world that the most complex and challenging industrial projects in the world can be completed in Nigeria. “The next step is for LADOL to work towards ensuring that the 50,000 new jobs which can be created due to the LADOL facilities are created. “With a multiplier effect of 10 to one on job creation, 90 percent of these jobs will be created outside LADOL in companies and yards across Nigeria. At least half the jobs will be created in Micro-Small and Medium Enterprises (MSMEs),” she said. According to Jadesimi, LADOL is now focused on working with government and other real private sector companies in Nigeria to help ensure that these jobs are created and that the enabling environment is extended to include policies that will keep Nigerians that worked on the FPSO employed – as well as ensure that tens of thousands more are employed in future projects.

Business Event

L-R: Omotayo George, senior manager, youth & teens segment, MTN Nigeria, Henry Ojiokpota, zonal controller, Lagos Division, NCC, Titilope Fakuade, senior manager, intelligent network and VAS planning, MTN Nigeria at the launch of MTN’s new proposition for tweens and teens mPulse in Lagos recently.

L-R : Incubator program coach, Mai Atafo, Masters of Style Showcase Judge, Celebrity Stylist, Style Infidel; group brand and activation manager,Vivian Akindele, managing director, PZ Cussons, Alex Goma; Judge, creative director April by Kunbi, Kunbi Oyelese; and Judge, fashion entrepreneur, Tolu Bally at the Masters of Style Incubator Meet and Greet event in PZ Cussons, Ilupeju, Lagos.

Life Beer to drive SMEs growth in South East

ife Continental Lager Beer brand produced by Nigerian Breweries Plc, has finalized plans to boost the entrepreneurial spirit of men and women across the south east states of Nigeria. This is following the unveiling of the2018 edition of its famous Life Beer Progress Booster in Enugu, Enugu State capital recently . The initiative, which is designed to promote small and medium-scale enterprises (SMEs), is targeted across the Southeastern states of Abia, Anambra, Enugu, Ebonyi, Imo, Delta and Rivers where the brand holds sway as market leader. Unveiling the initiative- the fourth edition in its series, the Portfolio Manager, Mainstream Lager and Stout Brands, Emmanuel Agu said in a statement, “Life Progress Booster promotion is a celebration of the essential Igbo spirit of industry, will to succeed, enterprise and passion

in the world of business. This project is, no doubt, a reinforcement of the heritage embedded in the Life Continental Lager Beer, its essence, connection and affinity with the people, and culture/lifestyle of South Easterners”. Agu further explained that like its previous editions, consumers and interested participants need to currently be operating a simple, viable, not necessarily outlandish business that he desires to take to the next level of success. “Progress Booster is a programme with the sole aim of supporting the Igbos, who have innovative business ideas, to encourage their entrepreneurial spirit. We are excited by the success of the previous three editions. We are also ready to support another set of entrepreneurs, who will benefit from this year’s expanded platform”, Agu said.

Interested participants only need to drop their business proposals at designated outlets or visit life-nigeria. comto send in their entries. Shortlisted candidates will proceed to pitch their existing businesses to a team of business experts. Successful candidates across the catchment zone will be given a grant to support their businesses. In goodwill message at the unveiling, Levy Anyikwa, South East zonal coordinator, Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) praised NB Plc and Life Continental lager brand for the unique effort to encourage and lift small businesses in the region. “SME’s are the lifeblood of industrialization across the world. This is a right step in the right direction”, he said, urging contestants to take advantage of the opportunity to put their businesses on sound footing.

L-R: Ferdinand Ozoani, chief technologist, Enugu State University, Enugu, portfolio manager, Mainstream Lager and Stout Brands, NB Plc., Emmanuel Agu, CEO, Four Seasons Bar and Restaurants, Onitsha, Martins Ezigbo, A member of Customary Court Enugu, Michael Ndubuisi, assistant brand manager, Life Continental Lager Beer, NB Plc., Rexanthony Anieke at the media unveil of Life Progress Booster 2018 in Enugu.

Edo Oil and Gas Producing Commission gets new board

he Edo State Governor, Godwin Obaseki, has approved a new board for the state’s Oil and Gas Producing Areas Development Commission (EDSOGPADEC). A statement issued by the Secretary to the State Government (SSG) Osarodion Ogie said

the appointments are in line with the provisions in Section 3 (1) of the Law Establishing Edo State Oil and Gas Producing Areas Development Commission, 2007, and subject to confirmation by the Edo State House of Assembly. The appointees are Kennedy Osifo – chairman; Omosede Obamwonyi – representing Ovia

North-East; Osamwonyi Atu – representing Orhionmwon; and Williams Dudu – representing Ikpoba Okha. Others are Rilwanu Oshiomhole – representing Edo North; Iku Ewuare Aimiuwu – representing Edo South and Emmanuel Odigie- representing Edo Central.

L-R: Henry Anokwuru, team lead, SME Channel & Collections, First City Monument Bank (FCMB); , Abiola Adegbite, Ag regional director, Sage Software Nigeria Limited; Paul Adebo, head, SME Liability, FCMB, and Funmilola Akeju, business development executive, Accounting and Payroll, Sage Software Limited, during the signing ceremony of an agreement between FCMB and Sage Nigeria in Lagos.

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Tuesday 29 August 2018

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IDEAS THAT POWER High PERFORMANCE

Making Tough Decisions BRIAN REUBEN

xecutives many times have to make tough decisions to keep the business on track. Its just the way the job is. But the toughest of decisions comes in the gray areas. These are cases where you and your team mine all the data you can, and do all the analysis you can yet the situation seems inconclusive. Under such circumstances its easy to become paralyzed and seek any available route. But it is your responsibility as a leader to judge the situation fairly and take the right decision. Your judgement is critical in moving the organisation forward. Yet your judgement is limited by your thinking, feelings, experience, imagination, and character. But by relying on five principles you can improve your chances of making better informed and effective decisions every time even with incomplete, unclear data, divided opinions and different interest. Through history leaders have found themselves in situations where they must make tough decisions. By relying on these principles they were able to make decisions that reflect the ingenuity of the brightest of minds and compassionate human spirit. Effective executives rely on them to make better

decisions and I’m sure it will help you and your team in navigating through tough decisions. When next you have a tough decision to make, don’t get upset, relax and use the following principles: i. Every decision has a net consequence ii. Your office is defined by your core obligations iii. Effective decisions must take cognisance of the world as it is iv. Every organisation must stay true to its identity v. You live with your decisions Let’s review them one after another. Every decision has a net consequence You have to understand that every decision carries a real world effect. So difficult questions are ever hardly resolved in a flash of intuition. So you need to thoroughly and analytically consider all courses of action available to you in terms of real life human consequences of each option. Let go of your presumptions, and get your team together and list all possible options, considering who will be helped or hurt, short term and long term by every option possible. This is not the same as cost benefit analysis, so you should take a broad, deep, concrete, imaginative, and objective look at

the full impact of your choices. Indeed it is difficult to predict with accuracy the full impact of any action but what’s important is that you walk from the position of love, see others the way you see yourself. Knowing that your decision on gray issues carry real life consequences which affects the lives of people and communities. So its important to take the time to open your mind, assemble the right team, and analyze your options through the lens of love. Your office is defined by your core obligations Your position as a business leader is defined by your obligations. You are obligated to both share holders and other stake holders in your business. But besides this is our moral responsibility to safeguard and respect the lives, rights, and dignity of our fellow men and women. All of us owe this to ourselves and our world. When you have a hard call to make, step out of your comfort zone, put yourself in the shoes of others especially the ones likely to be affected by your decision. How would you feel in their position? What would you react if someone else were to make this decision about someone related to you? How would you want to be treated? What would you see as fair? What rights would you be-

lieve you had? What would you consider to be hateful? You might speak directly to the people who will be affected by your decision, or find someone in your team to fish out that information. At your business school classes you were taught that your core responsibility is your company but you’ll need to understand that this is a broad statement that includes the environment, workers, government, customers and the community the company serves. You have serious obligations to everyone simply because you are a human being. When you face a gray-area decision, you have to think—long, hard, and personally—about which of these duties stands at the head of the line. Effective decisions must take cognisance of the world as it is American President, Donald Trump stated that success is knowing how the world works. He’s right! You need to consider the world as it is not as it is in Nollywood or how you wish it is. Take a real, pragmatic look at your

issue. If you want to make a decision that will empower your team, a department, or your entire organization to move through a gray area responsibly and successfully, then you will have to consider your options in the light of how the world works. Great plans can turn out badly, and bad plans sometimes work. The world is dynamic, you don’t control everything. You can hardly have all the freedom and resources you need. So you must often make painful choices. Your people will pursue their own agendas, skillfully or clumsily, except they are persuaded to do otherwise. That is why, after considering consequences and duties, you need to think about how things really work. What are the possible solutions to your problem, which is most likely to work? Which is most resilient? And how resilient and flexible are you?. To receive the rest of this article free, kindly email trainings@businessdayonline.com

Brian is an author, advisor to business leaders, keynote speaker and an entrepreneur. He has trained and advised senior executives at renowned organizations including Africa Reinsurance Corporation, UAC, United Securities Limited, BusinessDay among others. Brian is the Director of BusinessDay Training and sits on the board of a number of organizations in Africa.

This Page Is Open For Sponsorship, for details call 0708 234 5251.

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MARITIME e-COMMERCE

Cargo throughput at ports grows by 31.24% to 96.6MMT in H1, says NIMASA Stories by UZOAMAKA ANAGOR-EWUZIE

he throughput of cargo in the nation’s seaports has grown by 31.24 percent to a total of 96,626,737.96 metric tons in the first half of the year, January-June, the Nigerian Maritime Administration and Safety Agency (NIMASA), has said. This represents 31.24 percent increase from the throughput of same period in 2017 which stood at 73,628,546.62 metric tons. NIMASA attributed the growth to the reviewed freight rates benchmark for 3 percent levy billing, which took within the period. Speaking to newsmen in Lagos recently during an interactive session, Dakuku Peterside, the director general of NIMASA, who disclosed this, said that the review freight rates benchmark was done to reflect the prevailing realities in the present shipping business, based on the request made by industry operators.

R-L: Ahmadu Fidi Ahmadu, chief operating officer, African Circle Pollution Management Limited, being congratulated by Mohammed Abubakar, former President of the Nigerian Institute of Management (NIM) Chartered, shortly after the formal investiture of Ahmadu as a Fellow of NIM Chartered in Lagos...recently

To h i m, t h e re v i e w brought about positive trends in the industry leading to more patronage. “The significance of the new benchmark was that it has helped to foster harmonious regulator-operator relationship. On shipping development, Peterside said that the agency has been able

to reduce transaction time from 72 hours to 12 hours for vessels carrying dry cargo, roll in, roll out (RORO) vessels, and manifests to 6 hours for wet, gas and bulk homogenous dry cargo. “NIMASA has developed software that issues Ship Identification Number (SIN) at the manifest desk to prevent double entry and

Rivers women threaten to storm SNEPCO naked over planned relocation …Want firm to remain in Onne Port

group of women in Rivers State on Monday threatened to storm the Supply Base of Shell Nigeria Exploration and Production Company (SNEPCO) located in the Oil and Gas Free Zone, Onne, naked to stall an alleged plan by the company to relocate the supply base to Lagos. This came barely three weeks after some youths under the aegis of the Onne Youths Council (OYC), staged a peaceful protest at the SNEPCO base, asking the company to rescind its decision to relocate the Supply Base from the free zone to the Lagos port. Philip John Tenwa, President of OYC, who led the protest, said that the planned relocation would lead to the loss of more than 5,000 direct and indirect jobs. In addition to staging a peaceful protest, the Onne Youth Council also said it would send petitions to relevant authorities including President Muhammdu Buhari; Rivers State Governor Nyesom Wike; the Oil and

Gas Free Zones Authority (OGFZA); the Nigerian Ports Authority (NPA) and the Nigerian Content Development and Monitoring Board (NCDMB) to prevail on SNEPCO to rescind its decision. Similarly in Port Harcourt on Monday, Henrietta Edumoh, leader of the Concerned Community Women of Rivers (COCOWOR), said her group was concluding plans to mobilise women from all over Rivers State to storm the SNEPCO Supply Base in Onne naked in order to register their displeasure over the planned relocation. “As mothers, we cannot fold our arms and watch our husbands and children being thrown out of jobs. If SNEPCO relocates its Supply Base from Onne, it means those who work there, numbering thousands of people will lose their jobs. “It also means that our people who try to make ends meet by doing small contracts or trading around that facility will suffer. How do you want those people to cater for their families?” she questioned. Edumoh said the SNEP-

CO Supply Base relocation will not only push more people into the labour market, but may also threaten the fragile peace in the Niger Delta region. “They say an idle mind is the devil’s workshop. If people do not have jobs to do, that is when they begin to conceive criminal ideas. We do not want that to happen in our communities. So, we appeal to them not to leave Onne because Onne has been very good to them. It has been a peaceful community and has supported their business for many years,” she said. She said the planned protest will only be shelved if her members get the assurance that SNEPCO will rescind its decision to relocate. Various interest groups including workers, stakeholders and community leaders have kicked against the planned relocation of the SNEPCO Supply Base out of Onne. Recall that King John Dennis Osaronu, the Paramount Ruler of Onne, also lent his voice to the call on SNEPCO to rescind its relocation decision.

double billing. We have also improved communication with stakeholders through dedicated electronic channel,” he said. On Final Billing System for ships, he said NIMASA has restructured it payment system to ensure that within a short time of a vessels call at Nigerian ports, the final bill would have been issued

and all records reconciled. “This also allows the Agency to issue an electronic sailing clearance to vessels to improve turnaround time of vessels and reduce human interface, thereby creating transparency and efficiency in the port. On other issues, Peterside said that the Agency is working on a special foreign exchange intervention to enable ship owners to acquire needed vessel parts. The agency, he said, is working towards achieving a special loan repayment processes to enable indigenous operators compete favourably with their foreign counterparts. Peterside further disclosed that a team is currently working with the Central Bank of Nigeria (CBN) to determine how best the new policy can be implemented. This is aside working towards the disbursement of the money accumulated in the long awaited Cabotage Vessel Financing Fund (CVFF), which will give room for a full-fledged Cabotage regime with more job

opportunities created for Nigerian ship owners and seafarers. On the agency’s Survey, Inspection & Certification Transformation P ro g ra m m e, Pe te r s i d e disclosed that 3,752 Certificates of Competency (CoC) were issued in 2017 to successful seafarers, and the number represents 149 percent increase from the CoCs issued in 2016. Peterside further said that this has impacted on the confidence of stakeholders who now willingly verify certificates. He added that a total of 1,880 certificates were authenticated for stakeholders in 2017 alone, a significant rise when compared to the 1,013 CoCs verified in 2016. On other activities of NIMASA, Peterside stated that the number of Nigerian seafarers placed onboard vessels from January to June this year stands at 2,337 representing 58.9 percent increase in the number of seafarers employed. “This move has resulted to job and wealth creation.

Non-oil export through Apapa port hits N57bn in seven months …as Customs command gets new Area Controller

he Nigeria Customs Service (NCS) Apapa a re a c o m ma n d has said that a total of 343, 471 metric tons of nonoil products with Free on Board (FOB) value of N57 billion were exported out of the country in the past seven months, January and July 2018. According to the command, the products include agricultural produce, mineral resources and other exportable products. Also, the command announced that it generated the sum of N210 billion as revenue within the period under review. Jubrin Musa, outgoing controller of the com mand, disclosed this in L ag o s la st w e e k w h i l e handing over the mantle of leadership to the newly appointed controller, Abubakar Bashir. Musa said the revenue collected represents 6.9 percent increase over the

N196.7 billion generated in the corresponding period of 2017, a feat he attributed to the recently launched Customs NICIS 11 platform. “The improved revenue profile of the command within the last three months attests to the fact that NCS is at her best season in terms of revenue collection. The NICIS 11 has eliminated revenue leakages and human related errors as well as other cargo clearing abuses,” he said. Musa added that Customs has put in place different strategies including thorough documentar y checks, continuous stakeholders’ engagement and 100 percent physical examination of cargo, to enable efficient and seamless cargo clearance. Urging port users to comply with extant laws guiding export business, Musa assured that the command would continue

to facilitate export trade in line with the Federal Government effort at diversifying the economy through encouragement of nonoil export. On anti smuggling activities, he said a total of nine seizures comprising of pharmaceuticals, vegetable oil and other controlled goods including 13 containers of tramadol were arrested within the period. Meanwhile, Abubakar Bashir, has officially assumed duty as the new Controller in charge of the Apapa command. Bashir was until his redeployment to Apapa, was the controller in charge of Port Harcourt 11, Onne command. In his remarks, Bashir solicited for the cooperation of officers to enable him succeed in his mandate even as he promised to sustain and improve on the achievements of his predecessor.

BUSINESS DAY

Wednesday 29 August 2018

CityFile

Fire kills 2, destroys property in Delta

wo children have been feared dead in an early morning fire at Igbudu in Warri South local government area of Delta. The fire, which occurred at about 2 am on Monday, also destroyed property, worth millions of naira. The victims included one-year-old Wealth Enorke and four-year-old Kesiena Lucky, said to be children of two sisters, Elohor Lucky and Ufuoma. Eyewitness account said the incident might have been caused by a lighted candle allegedly put by the grandmother of the deceased children. The account further said that the grandmother, a kerosene retailer, might have purchased adulterated kerosene, which caught the flame from the burning candle. It was learnt that the woman succeeded in rescuing fourofthechildreninhercustodybeforeshe raised the alarm that attracted their neighbours. The fire was said to have spread to other parts of the building and trapped the deceased before help could come to them. Speaking on the incident, Lucky’s mother said that she left their apartment at about 1 a.m. for one Mama Sola’s apartment before she was alerted about the fire. “I later left Mama Sola’s apartment for Tuwere place and while I was still there, a neighbour alerted me about the incident at about 2 a.m. Before I got there, everything had been razed down completely,” said Elohor, who was reported to be a single mother.

Police arrest 57 suspected homosexuals

he police in Lagos have arrested 57 persons suspected to be involved in homosexual activities in the Egbeda area of the state. Edgal Imohimi, the Commissioner of Police (CP), Lagos, confirmed the arrest to newsmen. According to Imohimi, the suspects were picked up on Sunday at 2 a.m. while they were performing gay-initiation for newly recruited members. “Intelligence gathered revealed that some youths will be initiated into a Gay/Homosexual Club between 1:am and 2: am., at Kelly Ann Hotel/ Event Centre, located at 3-7, Adenrele Street, Egbeda, an action contrary to Section 1 (1) of Same Sex Marriage, Act 2014. “Consequent upon this, some operatives from the Shasha and Idimu police stations led by two police officers, Oke Olufunmilayo and Solomon Fayomi stormed the venue and met over 80 young men. “They were consuming different types of drinks including banned substances like Tramadol, Shisha laced with substances suspected to be Marijuana. “As soon as they sighted the police, they ran into different directions but the team arrested 57 of them,” he said. The CP said that investigation into the case was ongoing and the suspects would be charged to court soon. Some of the suspects, however, denied the allegations. They said that they were at the hotel to attend a wedding and a birthday party. One of the suspects, James Obialu, said that he was a dancer and had come to the party to perform before he was arrested. “I am not a gay, I am a dancer and I was there to perform before I was arrested. I am a responsible citizen and I work at the Alimosho General Hospital as a counsellor for those living with HIV,” he said. Another suspect, Samuel Olarotimi, 22, and also a graduate of Mass Communication from the Yaba College of Technology, said that there were other females in the hotel who were not arrested. “I was there for a birthday party which started late. About eight ladies were at the bar with us while some other ladies were dressing up in their rooms. I don’t know why the police refused to arrest the other females but brought us here as alleged homosexuals, “he said. NAN

300 Level Law Students from the University of Calabar embarking on an appeal walk to Cross River Government House on N5million to foot the medical bill of their colleague, Orim Peter, who is battling with liver problem in Calabar on Monday. NAN

Navy seizes 1.22m litres of adulterated diesel in Rivers ... arrest six suspected crew members SAMUEL ESE

he Nigerian Navy in Bonny says it has seized about 1.22 million litres of adulterated diesel and arrested six suspected crewmen believed to be smugglers. The suspects, who were arrested along the waterways in Rivers State, were alleged to have smuggled the petroleum products, worth about N350 million from Lagos. Ibrahim Gwaska, the acting Commanding Officer, Forward Operating Base, Bonny, paraded the eight smugglers, vessel and diesel on Monday. “The arrest followed routine patrols of one of our capital ships, NNS Okpabana, deployed on sea to stem crude oil, illegal bunkering and other illicit activities within the maritime environment. “In the course of such patrols, NNS Okpabana intercepted, MV Princehood,

over the vessel suspicious movement along the sea. Gwaska said that troops, after boarding the vessel, found out that the vessel was laden with 1.2 million litres of diesel, suspected to have been lifted from unapproved refining site. He said preliminary investigation was immediately launched and it was found out that the vessel loaded the diesel in Lagos and headed to NSDC terminal off Bonny before its seizure. “The vessel was later arrested on the grounds that her destination was inconsistent with what was captured on her manifest. Also arousing troop’s suspicion was the fact that the quantity of petroleum product on board the vessel was inconsistent from what was declared by captain of the vessel. “We later found out that what was earlier declared by captain of the vessel was at variance with what was got after

calibration test was carried out,” he said. Gwaska handed over the suspects and vessel to operatives of the Economic and Financial Crimes Commission (EFCC) to conduct further investigation and possible prosecution of the suspects in court. The officer noted that the zero tolerance policy adopted by naval authorities had led to drastic reduction in oil theft, illegal bunkering and other illicit activities on the waterways. According to him, the navy has “upped its game” with new strategies and measures to deter criminals, especially as the ember months approaches. “The Nigerian Navy has stationed its capital ships on routine patrols at sea as well as set up lots of barriers on the hinterlands to discourage criminality. “We are not relenting in our commitment to rid the nation’s maritime environment of illicit activities, for legitimate social and economic activities to thrive.”

LASG awaits FG’s nod on Okoko-Seme expressway – Official

he Lagos State government is awaiting the Federal Government’s approval to start reconstruction of Okokomaiko/Seme border section of the Lagos-Badagry expressway. Babatunde Hunpe, special adviser to Governor Akinwunmi Ambode on environment disclosed this while speaking with journalists in Badagry. “Governor Ambode is working towards getting Federal Government’s approval for the road. “The state government plans to start

the project immediately Federal Government gives approval for the reconstruction of the road,” said the governor’s aide. Motorists and commuters have continued to experience hardship on the road due to its terrible state and ongoing rehabilitation which started 10 years ago. According to him, the governor is worried about the plight of motorists and has directed the contractor handling the ongoing Eric Moore –Okoko section to hasten the construction of the road. “Recently, Governor Ambode visited sections of the Okokomaiko-Badagry

expressway where people complained bitterly about the terrible state of the road. I was part of the entourage. “After the visit, the governor directed Lagos Public Works Corporation (PWC) to do palliative work on the road until approval is given by federal government to take over the road and start construction work,” he said. Hunpe gave assurance that work would soon begin on the OkokomaikoSeme border section of the Lagos-Badagry expressway once the state received approval from federal government. (NAN)

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BUSINESS DAY

Tax Issues Withholding Tax reconciliation: Credit loss looms …if FIRS insists on tomorrow’s deadline IHEANYI NWACHUKWU

f the Federal Inland Revenue Service (FIRS) insists on tomorrow’s deadline for the ongoing reconciliation exercise of Withholding Tax (WHT) credit position of taxpayers, taxpayers who fail to comply with the directive within the set timeline run the risk of having to accept FIRS position as final. “A lot of taxpayers sit on huge amounts of WHT receivable accounts for which they are unable to obtain tax credits because they could not get the credit notes from their customers”, Yomi Olugbenro, partner and West Africa Tax leader at Deloitte had noted. “A taxpayer that has suffered source deduction of WHT needs to obtain a WHT credit certificate from the tax authorities through its customer that deducted the tax from its income,” he added in a report “unveiling the challenges in Withholding Tax (WHT) administration in Nigeria”. The Federal Inland Revenue Service recently invited taxpayers and set August 30, 2018 deadline for reconciliation of their Withholding Tax (WHT) credit position with FIRS’ records summarised in the taxpayer’s K-Card (tax position card). This exercise became necessary to ensure that taxpayers’ records with FIRS are up to date and the “K-Cards” being uploaded into FIRS’ Standard Integrated Government Tax Administration System are error-free. Taxpayers (especially those that have overpaid taxes or have unutilised WHT credit notes) are required to: review their records to determine their tax position and any unutilised WHT credit; complete the WHT Credit Utilisation Request Sheet provided by FIRS with relevant details and submit to

FIRS along with documentary proofs of all unutilised WHT credit notes (see link to view a sample); and visit the relevant tax offices to reconcile, agree and sign-off their WHT credit positions with FIRS. A withholding tax is basically an advance and indirect source of taxation deducted at source from the invoices of the tax payer. Its main purpose is to capture as much tax payers that may have evaded tax into the tax net. Withholding tax rates are usually 10percent or 5percent depending on the type of transaction and collecting authority for the tax

(which can be a Federal Inland Revenue or the State Inland Revenue). WHT operates as an advance payment of income tax. Where no taxable income is earned, WHT would not crystallise. This principle was introduced into the Nigerian tax system more than 50 years ago. From only applying to dividend, it has been extended to cover other investment incomes (that is interest and rent/royalties), services (that is consultancy, technical, management) and all contract arrangements via series of legislative amendments to the then principal legislation

on companies income tax, petroleum profit tax and personal income tax. WHT rate has also progressed from 2.5percent in 1985 to the present maximum rate of 10percent. “This initiative is laudable as it aims to improve transparency and ensure that key tax processes are automated for both taxpayers and tax administrators. The automation will cut out inefficiency in the WHT process and ensures that taxpayers are instantly credited for source deductions. While FIRS may consider extending the timeline, we encourage companies to take advantage of the initiative to regularise their tax records and obviate the risk of losing revenue”, said Deloitte tax experts. They noted that the proposed timeline by FIRS appears inadequate “for review of the taxpayers’ records and reconciliation of the tax positions considering capacity of FIRS to handle all reconciliation exercises concurrently.” “Additionally, the possibility of losing unreconciled WHT credits raises legal and practical questions which include: whether FIRS can use a mere internal memo, to amend the provision of Companies Income Tax (CIT) Act which entitles taxpayers to carry forward unutilised WHT indefinitely; and what happens where taxpayers or their clients are unable to obtain WHT credit notes before the expiration of this period?”, Deloitte further stated in an August 22 note. Recently, Bayo Adeoku, Chief Executive Officer, Electronic Payplus Limited (Epayplus) a smart card and payment solution company told BusinessDay that the company’s withholding tax credit is up to about N350million with FIRS which “I am supposed to use to pay my corporate income tax annually but I have never been able to utilize the entire amount every year”.

Taxation of Health Maintenance Organisations in Nigeria UGOCHI NDEBBIO & BLESSING IDEM Overview arly Health Maintenance Organizations (HMO) and HMO-like institutions developed in the 1930s. It is believed that they had some intellectual root in the worker’s cooperative movement of 19th Century England. However, the term became institutionalized with the HMO Act of 1973, arising from the attempt of the United States’ Government, to control rapidly expanding medical costs. In Nigeria, HMO has its antecedent traced to the enactment of The National Health Insurance Scheme (“NHIS” or the “Scheme”) Decree, 1999, now NHIS Act 2004. This arose from the Federal Government’s effort to ensure access to good health care for every Nigerian, after attempting a few unsuccessful schemes. The NHIS Act established the NHIS for the purpose of providing health insurance that entitles insured persons and their dependents to quality and cost-effective health service. However, the effectiveness of NHIS in addressing the lingering problem of poor health care of the Nigerian populace remains questionable, as the scheme is still faced with challenges such as poor medical facilities, monitoring, implementation and funding. The NHIS Operational Guideline 2012, issued pursuant to the NHIS Act, developed various programmes to cover different segments of the society. The Formal Sector Social Health Insurance Programme is designed to be driven through the operations of HMOs, which are private or public incorporated companies, set up solely to manage the provision of health care services through health care providers accredited by the scheme. HMOs play the role of intermediary be-

tween health care providers and enrolees, under the supervision of the NHIS. In practice, HMOs maintain a pool of resources from premium paid by enrolees and indemnify these enrolees in the event of ill health, by providing health care services through select health care providers. This is similar to the operations of Insurance Companies who provide indemnity to customers, in the event of occurrence of the insured eventuality, from the pool of premium received from all customers, in line with the terms of the insurance contract. Are HMOs Insurance Companies? In view of the above similarity between HMOs and insurance companies, a pertinent question regarding the business classification of HMOs then arises – are HMOs indeed insurance companies, or are they simply health care service managers? To allay this seeming controversy, we have briefly evaluated the similarities and differences under the various captions below. This analysis will ultimately assist in determining the companies income tax regime that should apply to HMOs vis-à-vis the current practice. a. Business Model Insurance Companies operate by a resource and risk pooling principle, whereby a pool of individuals/organizations purchase insurance cover for a charge, called a premium. The business of HMOs in Nigeria involves managing the provision of health care services through exclusive network of health care service providers for fixed premiums. HMOs receive a premium/contribution from its enrolees and in turn bear the cost of health care/medical services enjoyed by the enrolees. The underlining principle that drives both the HMO and Insurance business is the ease of indemnifying affected customers/enrolees from the pool of resources received from all

customers. This is due to the fact that some insured persons never suffer any eventuality, and as such they do not have claims. Also, the premiums received from customers are nonrefundable. Consequently, HMOs operate with the same resources and risks pooling principle of insurance businesses, and could be said to be carrying out health insurance business. b. Accounting Framework The International Financial Reporting Standards 4 (IFRS 4) – “Insurance Contracts”, provides the framework for the accounting for all insurance contracts. It provides a guide for the recognition, measurement, and disclosures of insurance contracts. The standard defines an insurance contract as a “contract under which one party (the insurer) accepts significant insurance risk from another party (the policy holder) by agreeing to compensate the policy holder if a specified uncertain future event (the insured event) adversely affects the policy holder.” An analysis of the type of contracts signed between Insurance companies / HMOs and their customers (the policy holders), vis-a-vis the above definition, shows that, indeed, both companies enter into insurance contracts, hence have a common accounting framework. In practice, auditors rely on IFRS 4 in carrying out the statutory audit of companies engaged in general, life, and health insurance business. Based on the above, one could say that from an accounting perspective, HMOs are carrying on insurance business. c. Regulatory Authority The NHIS is empowered by the NHIS Act to approve and register Health Maintenance Insurance Organizations (“HMOs”). According to this Act, Health Maintenance Insurance Organizations are organizations registered with the Council to utilize its administration

to provide health care services through health care centres. The organisations are statutorily required to insure themselves and also invest the funds accruing to them from contributions received. Thus, HMOs are regulated and registered by NHIS. On the other hand, insurance companies are regulated by National Insurance Commission (NAICOM). The Nigeria Insurance Act of 2003 (“the Insurance Act”), which is the principal Act for the operation and regulation of insurance business mandates all insurance businesses in Nigeria to register with NAICOM prior to commencement of business. In addition, the Insurance Act provides for two main classes of insurance businesses; life insurance business and general insurance business. Life insurance businesses are further classified into individual life, group life and pension, and health insurance businesses. Thus, following a strict interpretation of the Insurance Act, HMOs should be registered and licensed by NAICOM, to carry out health insurance business in Nigeria. Rather, as we see in practice, they are regulated solely by the NHIS and the implied mandate for regulation of health insurance by NAICOM is muted. This then begs the question whether the continued retention of health insurance under the Insurance Act 2013, was an error on the part of the law makers, particularly since the NHIS (already in existence at the time of passage of the Insurance Act in 2003 and subsequent re-enactment in 2013), does not contemplate ceding the regulation of health insurance companies to NAICOM. Ugochi Ndebbio is a Manager and Blessing Idem is a Senior Adviser. Both are with the Tax, Regulatory and People Services Division of KPMG Advisory Services, Lagos

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How policy lapses, smuggling hurt Nigeria’s fish industry Stories by JOSEPHINE OKOJIE

he Federal Government’s policy lapses and high rate of smuggling is hampering the country’s target of achieving selfsufficiency in fish production. According to stakeholders in the sector, the development is making the sector less attractive to investors. This is evident in the country’s capital importation report by the National Bureau of Statistics (NBS). Data from the report shows that the country did not record any foreign direct investment (FDI) in the fishing subsector from January through to March 2018 compared to $1 million over the same period in 2017. “The FDI declined in 2018 is because the present administration is relaxed on the implementation of the fish policy plan,” Tiamiyu Nurudeen, vice president, Tilapia Aquaculture Developers Association of Nigeria (TADAN) told BusinessDay. “The previous Jonathan administration banned the importation of Tilapia and Catfish into the country and placed a quota on importation with the promise that it will be reduced yearly; with this a lot of people started investing in the subsector but with the current high rate of importation and smuggling, which investor will want to invest in an industry you cannot get good prices for your products?” Nurudeen asked. Nigeria’s total annual fish

demand is put at 3.5 million metric tons (MT), while the country produces only 1.1 million MT, leaving a gap of 2.4 million MT annually, according to data from the Federal Ministry of Agriculture. This yawning gap is filled with fish imports of N225bn (US$625m). For the first time, the world is eating more fish from farms than from the open sea, spurring billions of dollars of investments as companies seek to capitalize on rising demand. Ni g e r i a’s p e r c a p i t a f i s h consumption is 11kg, which is significantly lower than the global average of 21kg and just less than the estimate of 13.5kg for Côte d’Ivoire. In 2014, the Jonathan

administration introduced the backward integration policy for importers of fish to start making investments in the sector before they can be issued permits to import. Under the policy, an annual baseline fish import figure was set at 700,000 tons for 2014 which reduces the allowable quantity of imported fish to 500,000 tons for the year, with a promise of a further reduction annually. “The backward integration policy has failed and has been exploited to the detriment of Nigerians. This has made the fishing subsector investment environment unpredictable making it unattractive to investors,” Oloye Rotimi Olibale, national president, Catfish and

Allied Fish Farmers Association of Nigeria (CAFAN) said in a telephone interview. “There is no proper monitoring by the government on the backward integration policy and the import quota. We are now having more imported frozen fish in the country than we had before and this has continued to make the industry less attractive for investments,” Olibale said. Responding to BusinessDay’s questions on the issue, Mohammed Muazu, director of fisheries, Federal Ministry of Agriculture and Rural Development (FMARD) said the government increased the import quota to 800,000MT to satisfy the huge fish demand and supply gap

in the country. “We have been able to boost local production to 1.1 million tons but it still cannot satisfy the country’s needs and this is why we allowed importation. We had to increase the import quota to 800,000 metric tons for importers as fish remains the cheapest animal protein in the country,” Muazu said. The issue is not the importation of fish but the high rate of smuggling of tilapia and catfish through the land borders into the country. This issue is beyond our control because it is the Nigerian Customs that has the mandate to stop smuggling. “The ministr y has setup a committee to look into the issue of smuggling through the land borders and the backward integration policy is still very effective,” the director added. Nigeria’s aquaculture industry is largely untapped and beset with a combination of worsening piracy attacks, poor access to credit, lack of the requisite technical skills, unavailability of good quality and moderately priced fish feed, as well as lack of direct investment. Nurudeen who was earlier quoted urged the government to provide conductive environment to attract investments and develop a specific funding model for the fish industry. “The financing for aquaculture is different from financing of crop production. Aquaculture should have a specific funding system different from crop farming,” he said.

HarvestPlus introduces 200,000MT of vitamin A maize into the Nigerian market

arvestPlus, global biofortifier of nutritious crops says it has introduced about 200,000 metr ic tons (MT ) of vitamin A maize into the Nigerian market to help address issues of malnutrition. Paul Ilona, country manager, HarvestPlus disclosed this during a recent media briefing in Lagos. According to Ilona, the introduction of maize variety biofortified with vitamin A will is a critical step in addressing the deficiency of basic nutrients in children’s health development across the country. “We have introduced about 200,000MT of vitamin A maize i nt o t h e Nig e r i a n ma rke t t o address the country nutrition issues,” Ilona says. “Micronutrients malnutrition will lead to increased pressure

on national health budgets and a weak labour force which can be addressed with the adoption of biofortified crops,” he adds. He noted that nutrition in an essential building block for g row t h a n d d e v e l o p m e nt i n Nigeria, saying that vitamin A is identified among the three micro nutrients by the World Health Organisation (WHO) as most lacking in diets globally. Maize which is high in carbohydrates and also rich in phosphorus, magnesium do not contain vitamins for improved visual function, he says. According to Ilona, the vitamin A maize introduced into the countr y has two comparative advantages; it is long term cost effective and it has the ability to reach the underserved rural population of the country. The country manager says that

the long term consequences of insufficient amounts of essential micronutrients in human diets are devastating as it plays a crucial role in human development. He adds that its deficiency can cause birth defects, permanent physical and mental impairment, as well as increased risk of death. According to the United Nations International Children’s Emergency Fund (UNICEF) about 2.5 million children under the age of five are malnourished and have stunted growth in Nigeria. Maize crop serves as a key input in many manufacturing companies and the poultry industry. Also, the country manager said that HarvestPlus will be holding its forthcoming nutritious food fair in Lagos on the 7th – 9th of November, 2018 at Landmark event Centre, Victoria- Island.

Wednesday 22 August 2018

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Kenaf farmers unhappy with FG agric policies AKINREMI FEYISIPO, Ibadan

enaf Producers, Processors and Marketers Association of Nigeria (KEPPMAN), has said that Kenaf farmers across the country were not happy with the agricultural policies of the Federal Government. “Farmers in the country are not happy with the way things are going. A situation where farmers are being given seeds only cannot take us anywhere. We should move from manual production to modern and commercial farming. The use of manual will not take us anywhere. In this twenty first century, we cannot achieve anything with manual farming,” Kunle Amosu, national secretary, KEPPMAN. Amosu said this at the farmers’ empowerment for Kenaf production in Oyo, Osun, and Ogun states, sponsored by the Federal Ministry of Agriculture and Rural Development and held at Institute of Agricultural Research and Training (IAR&T), Ibadan recently. The national president who said Nigeria’s agriculture cannot move forward with the use of manual

equipment noted that farmers’ empowerment and intervention programmes should be beyond seed distribution but the creation of a workable synergy between farmers and government at all levels. Amosu while urging governments

Nigeria has weak climate change mitigation strategy, researchers say AKINREMI FEYISIPO, Ibadan

team of researchers from the University of Ibadan have said that the country has a weak climate change mitigation strategies and adaptive capacity to protect her rural populations. The researchers, working under the Education for Sustainable Development in Africa (ESDA) project - Next G eneration of Re s e a rc h e r s ( N G R ) ca m e u p with the findings in a research work titled ‘Integrating adaptive management strategies in coping with climate variability impacts on farming households in forest communities of Nigeria.’ The researchers noted that the Nigerian rural populations are highly vulnerable to the negative impacts of climate change, and called for a participatory approach with agricultural workers the most vulnerable category of people. The research work which was done in three agro - ecological zones of Nigeria, namely; rainforest, savannah and mangrove, was undertaken by Olushola Fadairo, Samuel Olajuyogbe, Tolulope Osayomi, Olufolake Adelakun, Nathaniel Olutegbe and Oluwaseun Adeleke. Presenting their findings at a research uptake seminar, which took place at the Centre for Sustainable Development (CESDEV) of the University of

Ibadan, the young researchers identified poverty, poor housing conditions and unemployment as some of the negative impacts of climate change on Nigerian rural communities. Speaking further at the research uptake seminar declared opened by Olanrewaju Olaniyan, a professor and director of CESDEV’s and chaired by O.B. Oyasola, the researchers declared Nigeria has a weak climate change adaptive capacity and mitigation strategies despite the fact that the country is seriously threatened by this phenomenon. “The magnitude and direction of climate change impacts on agriculture as the main rural livelihood and other ecosystem components in Nigeria is largely comparable and have both positive and negative consequences on rural sustenance,” the researchers stated. The researchers, therefore, suggested that there must be a p a r t i c i p a t o r y a p p ro a c h i n climate change protection and adaptation, with the formulation of area - specific locally relevant and culturally appropriate interventions. “Support in forms of affordable insurance policy, credit, agric - inputs, favourable forest regulatory framework and youth empowerment would enhance sustainable adjustment to climate change variability and change among the rural people,” the researchers recommended.

at all levels to invest in mechanise farming rather than the current ways of distributing seeds to farmers, added that “giving out seeds to farmers without proper training and monitoring will be tantamount to wastage.”

Au d u O g b e h , Mi n i s t e r o f Agriculture and Rural Development, who was represented by Ogunwale Joseph Adeniyi, the southwest regional director of the ministry, commended the organisers for keying into the agricultural revolution of the

present administration. According to Adeniyi, the robust re-engineering of the agricultural sector of the federal government to boost agricultural productivity, reduce our dependency on food importation, revive rural economy, expand export earning, agro-chemicals and training of stakeholders and as well as other sacrifices is yielding positive result in our economy today.” James Adediran, a Professor and the executive director of Institute of Agricultural Research and Training (IAR&T), in his welcome address, said Kenaf has proven to be a potential crop for import substitution for the country, thus saving Nigeria huge foreign exchange committed to importation of jute bags. He noted that in an attempt to promote production of Kenaf as raw materials for the production of jute bags in Nigeria and possibly other countries in Africa, the country’s ministry of agriculture is collaborating with IART for development and dissemination of appropriate production, processing and utilisation technologies for crop across the country.

Cocoa production receives boost as Ondo establishes ijugbere plantation YOMI AYELESO, Akure

s part of efforts to boost cocoa production in Ondo State, Ondo state has established another cocoa plantation in the state at Ijugbere in Owo Local Government Area. Governor Rotimi Akeredolu, w h o d i s c l o s e d t h i s re c e n t l y during his visit to the cocoa plantation, said the establishment of the plantation became imperative to reposition the state as one of the best cocoa growers in the country According to the governor, the project which was cited on a 35 hectares land was designed to specifically produce improved cocoa seedling. He said more than 450,000 seedlings also have a seedling are

ready to feed the plantation and ready for distribution to young graduates who are interested in farming and cocoa across the 18 local government areas of the state. Akeredolu reiterated the c o m m i t m e n t o f t h e p re s e n t administration in the state to leverage on the agr icultural potentials of the state to ensure that youths are productively engaged for them to begin to live a better life. The governor also assured that the Cocoa Revolution Project of the present administration would be worth investing in, in view of the fact that its improved seedlings have eighteen months period to maturity, saying his administration is prepared to return the state to where it used to be as the leading producer of Cocoa.

He commended the federal government for its interest in supporting the state government on its agricultural policies which are aimed in creating jobs for the unemployed and to ensure food security for the state, saying “Ondo State would soon take its rightful position in the production of Cocoa.” Akeredolu assured that work would soon begin on the farm road so as to make their farm produce easily accessible to the nearest markets. ”our five cardinal programs are clear and job creation is there and we say we are going to do that through agriculture,” Akeredolu said. “This project is a major one for us. We use to be the leading Cocoa Producer in at least, Africa, if not the world. But something had happened to us in Nigeria and our fortune has really dwindled. ”President Muhammadu has always felt that there must be a Cocoa revolution so that we can really try as much as possible struggle to be where we use to be as the leading Cocoa Producer in the world. “So, when he gave his words and he’s to come here for Cocoa revolution, we decided to look for a site and we got this Ijugbere area so that we can have several hectares of Cocoa plantation. We are looking at the possibility of bringing the President to see, you see we have been to the nursery and it’s well done,” the governor added.

BUSINESS DAY

Wednesday 29 August 2018

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Renewed interest in banking sector lending seen in CBN’s RSSF The banking sector is expected to have renewed interest in lending to the real sector of the economy following the recently introduced Real Sector Support Facility (RSSF) by the Central Bank of Nigeria (CBN). HOPE MOSES-ASHIKE

ver the years banks have reluctantly played their financial intermediary role of lending to key sectors of the economy such as agriculture, manufacturing and Small and Medium Enterprises (SMEs) due to high level of risks in these sectors. From the latest report by the National Bureau of Statistics (NBS), banking sector credit to the private sector declined by 1.69 percent to N15.34 trillion in the second quarter (Q2) of 2018 from N15.60 trillion in the second quarter of (Q2) 2017. The credit allocation to key sectors of the economy including Agriculture, Industry, and Services showed that the Oil and Gas sector with 30.57 percent of the total credit had the highest allocation of N4.69 trillion inclusive of both service and industry bound credit. The Monetary Policy Committee (MPC) said at it last meeting in July that the CBN should continue to encourage deposit money banks (DMBs) to increase the flow of credit to the real economy to consolidate economic recovery. The Committee believed that a heterodox approach to reform the market in order to strengthen the flow of credit would be appropriate at this time. To achieve this objective, the CBN last week, released the guidelines for accessing the RSSF through Cash Reserve Requirements (CRR) and Corporate Bonds (CBs) with the maximum facility pegged at N10 billion per

project. Giving further clarifications on the guidelines on Thursday, August 23, 2018, Isaac Okorafor, the CBN’s acting director of corporate communications, said that the Bank hoped to achieve the flow of credit to the real sector of the economy as deposit money banks (DMBs) would henceforth be incentivized to direct affordable, long-term bank credit to the manufacturing, agriculture, as well as other sectors considered by the Bank as employment and growth stimulating. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, stressed the need for more soft funding for these sectors to boost growth. “This is in line with our expectations that the economy needs expansionary policy to boost growth”, Akinwunmi added. However, it is important to understand some of the dictates of the guideline. The aim of the new funding initiative is to increase the flow of credit to the real sector of the economy in order to consolidate and sustain economic recovery. There are two types of facilities in the programme, which include Differentiated CRR (DCRR) and Corporate Bonds (CBs) Program. The DCRR shall comprise of loans to greenfield or expansion projects using CRR with emphasis on new projects. It has a minimum of seven years tenor with two years moratorium. The participating financial institution (PFI) shall bear the credit risk. Refinancing of existing loans is prohibited for funding under this pro-

gram and any attempt to falsify information shall attract severe sanctions from the CBN. CBs are financing instruments issued by corporates and that meet eligibility criteria as specified by the CBN. Its tenor is specified in the prospectus by the issuing corporate but not below seven years and the moratorium is also specified in the prospectus by the issuing corporate. The maximum facility is ₦10 billion per project at an all-in interest rate/ charge of nine per cent per annum. Repayments shall be amortized and remitted on quarterly basis to the CBN. Only CRR contributing deposit money banks are eligible to participate under the DCRR, while for CBs, all Financial Institutions and general public are eligible to participate in investing in Corporate Bonds. A borrower shall be an entity incorporated in Nigeria under the Companies and Allied Matters Act of 1990. Such borrower must

not have a non-performing facility with any financial institution. Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), said this is a positive development. He said over the years as MAN president, he has been pushing for intervention funds at the lowest interest rate for manufacturers so they can perform their role meaningfully by contributing to the Gross Domestic Product (GDP) and creating employment. Jacobs was concerned that the facility is coming at an interest rate of nine percent, which he said is higher than five percent he requested for the association. He also raised concern on the amount saying it is limited and hoped that the CBN would increase the amount of the facility as time goes on. The move underscored the Apex bank’s intention to increase the flow of credit to the real sector of the econo-

my, in order to consolidate and sustain the nation’s economic recovery. Johnson Chukwu, managing director/CEO, Cowry Asset Management limited, said that the N10 billion is quite substantial and sufficient for operators in the real sector of the economy to leverage. “It provides liquidity relief to operators in the manufacturing and agric sectors of the economy but does not completely de-risk the sectors”, Chukwu told BusinessDay by phone. The guideline stipulates the responsibilities of the stakeholders, which include the CBN and the Participating Financial Intuition (PFI). The CBN is expected to articulate and review the guidelines for the implementation of the facility, review the CB for investment, invest in CBs issued by corporates, determine the limits of DCRR and CB investments, appraise, monitor and evaluate projects and the facility, render

periodic reports on performance, and the CBN shall disburse funds to projects through DMBs in agreed tranches. The PFI shall undertake due diligence based on normal business consideration, forward an initial credit request on the proposed project to the CBN for pre-funding assessment/ approval-inprinciple to proceed, forward final approved requests to CBN for funding after meeting all conditions precedent to disbursement of the facility, disburse funds to obligors through their DMBs in agreed tranches based on disbursement schedules submitted by DMBs to the CBN within five working days of release from the CBN, render periodic returns as specified by the CBN from time to time, monitor the projects, comply with the guidelines of the Facility. Reacting to the development, Uche Joe Uwaleke, professor of finance and capital markets/chair, banking and finance department, Nasarawa State University, Keffi, said, “Judging from the experiences of countries like China and Lebanon, the differentiated CRR promises to impact positively on the real sector of the economy. According to him, N10 billion per project financing in Agric and manufacturing sectors at single digit interest rates should help lower production costs and free up resources for research and development purposes leading to improved competitiveness. It will also lower inflation rate in the medium term and open up job opportunities. But all these depend on how the policy is implemented.

Wednesday 29 August 2018

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Pension Today

BUSINESS DAY

In Association with

Ahead final whistle, what’s your pension plans?

omeb o dy said dur ing a conversation! I am thinking about my retirement. This fellow we later understood was not talking about how he is going to spend his accumulation (saved funds) in retirement, but was talking about how late he realized that he should have planned. Too bad! Don’t be like those who have pension problem on their head. A story was said of one Mr Aluko who worked in the Nigerian Railway Corporation and because he relied totally on his pension from his employer, got disappointed when the pension was not coming. That was the old pension scheme. So, he had the pension problem on his head and at the end he died with it. While you rely on your pensions today from your employer or as a contributor in the country’s Contributory Pension Scheme (CPS), which no doubt guarantees reasonable level of sustenance depending on your contribution level, that is, the amount being contributed by you and your employer, it is important you take other factors into consideration. While also is certain that your case is not going to be like that of Mr Aluko if you are part of the CPS because this is relatively a new scheme, you could do something that makes you have a more enjoyable pension payouts. Here, the best bet for you is to make additional contribution through your employer. But if you are not part of the CPS, don’t lose hope

the National Pension Commission (PenCom) has recently released a draft guidelines for take-off of the micro pension scheme. This will enable those who are not covered in the existing scheme to have an opportunity to build their pension purse. Discussing on the success factors for retirement, Egbuta Ibekwe, lead consultant, Ages Nigeria Limited and author ‘Thinking of your Retirement’ had said there were key success factors for retirement including – financial independence, good health, living accommodation, functional relationship, absorbing inter-

est and philosophy among other factors. Ibekwe noted that even if you are part of CPS, make additional efforts for financial independence including voluntary contributions. But if you are not part of CPS, then open your eyes and plan now before it is too late. Financial Independence He said if you want to retire and depend on people to take care of you, then, you are a gambler. “If your town people, family and friends or NGO must come to your rescue for medical or hospital there is aproblem. These emphasizes the importance

RC634453

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

of financial independence. As a worker, you need to know how you earn, how you spend and how you save, and if you do not look at these factors, you are not likely to achieve financial

independence. “Today’s generation of youths are more interested in consumption, always eager to live like the next door neighbor without recourse to level of income” and this

It is important that you do what will interest you while in retirement. What this means is that you must start to think of what you will be doing to keep yourself busy while in retirement

Ibekwe said would backfire in the long run. So, do your income profile, review you expenditure and measure your net worth and with these you will know where you are, Ibekwe advised. Good health: On good health, he said keeping good health is a responsibility you owe not only to yourself, but also to the whole world. “If you are not healthy, you are a problem to everybody, so good health is a project we must take seriously for all of us to have a healthy retirement, he advised. Sustainable living accommodation: For you to enjoy pleasurable retirement, you must as a matter of importance have your own accommodation so that you do not continue to pay rent in retirement. And this you need to settle before your retirement clock rings, Ibekwe said. Functional Relationship: Nobody is an island, and so you must learn to live and associate with other people and this is most important in retirement, because you would have left your work environment and need to live in a new environment altogether with new set of people. Absorbing interest: It is important that you do what will interest you while in retirement. What this means is that you must start to think of what you will be doing to keep yourself busy while in retirement. But it has to be what you have passion for. Though, it must give you some income no matter how small, but it has to be what gives you joy doing.

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

BUSINESS DAY

C002D5556

Wednesday 29 August 2018

E-mail: insurancetoday@businessdayonline.com

Market shapes out on new capital regime Stories by Modestus Anaesoronye

eries of activities lined up this year, both at industry level as well as individual companies to drive penetration and growth in the insurance sector are shrinking out. This is following the recent regulatory pronouncement by the National Insurance Commission (NAICOM) on new capital regime (Tiersolvency capital levels), expected to commence January 1, 2019. A lot of attention is shifting to understanding the new development and strategizing on how to remain relevant in the business. Now, issues of rebranding that was the talk in town, retail development through micro insurance, p ro d u c t d i s t r i b u t i o n through and budgets for human capital development are getting less attention, analysts have said. Across board, most of the CEO’s are confronted

with getting their firms play in top Tier, with companies having emergency board meetings to review their situation and also look at available options – new capital raise, mergers or acquisition.

Insurance regulator, the National Insurance Commission (NAICOM) has introduced new capital requirement for underwriting companies in Nigeria. The new capital re-

AIICO Insurance positions for agric value chain

n response to the dire need for adequate insurance in protecting investments in agricultural sector, AIICO Insurance Plc is taking strategic position to be a major player in offering Agriculture Insurance in order to deliver the much needed protection to the different players in the agricultural value chain. Having recently ob-

Edwin Igbiti

tained approval of the National Insurance Commission (NAICOM) as an agriculture underwriter, AIICO Insurance is uniquely positioned to offer Agriculture Insurance to Nigerian farmers at all levels, as well as investors looking to tap into the huge potentials of the sector, through its valuebased insurance propositions. The company’s competitive edge is hinged on its understanding of the exact needs of farmers through the application of knowledge and expertise in this line of insurance business. Commenting on the company’s readiness to play in this space, Edwin Igbiti, managing director/ CEO confirmed that “NAICOM’s approval underscores the regulator’s confidence in the Company’s capacity and competence to support the Agricultural sector”. With an average contribution of 24 percent, ag-

riculture has remained a significant contributor to Nigeria’s GDP. Being the provider of employment for over 60 percent of the population, agriculture is pivotal to economic development, and more of the efforts to revive the economy, and reduce significantly the level of poverty, should be devoted to energizing the agricultural sector. The agricultural sector is exposed to extremely high degree of risk arising from natural factors like weather conditions, pests and diseases and other environmental forces. AIICO Insurance Plc., a leading life insurer in Nigeria, commenced operations in 1963. It provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

quirement classified in three tier levels, which will commence 1st January 2019, is a compliment of the industry risk based supervision framework started in 2009, targeted at making the insurance

industry optmise its potential and contribute maximally to the Nigerian economy. In the new Tier-Based Minimum Solvency Capital released by NAICOM in Lagos yesterday, companies will be classified based on their 2017 financial accounts. In this vein, Tier 3 companies are those that falls within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business. Companies in this category will be limited to underwrite only risks in life business in the following areas - Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas - Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing

minimum capital. For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for non-life, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Suretyship Insurances. Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances. Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.

Anchor Insurance looks to stronger bottom-line at year end

he Management of Anchor Insurance Company Limited is positive of a stronger bottom-line by year-end given the successes already recorded in its projection in the current year. “With the trend of results already being achieved by the company in the current year, the Management was hopeful of delivering a much better bottom line to the owners of the company at the end of the year, management said in a statement. The Company also announced the approval of its audited financial statement for the year ended 31st December, 2017 by the National Insurance Commission (NAICOM). Ebose Augustine, managing director/CEO of the company, quoting NAICOM’s letter which conveyed the approval details, said “approval is granted after a confirmation that you have substantially complied with our regulatory

requirements.” He explained that the company’s financial statement was approved as submitted without any form of query from the regulatory body, noting that “this outcome was a fallout of the company’s culture of getting things right the first time.” Ebose disclosed part

Ebose Augustine

of the highlights of the accounts to include N2.22bn gross premium written as against N2.05bn written during the corresponding period of 2016, an indication of 8 percent growth over the earlier result. He further highlighted that the total assets of the company during the period was N6.24bn and shareholders’ fund was N5.07bn with its solvency margin standing at N5.12bn. He noted that the company paid a total claim of N540.3m to its affected genuine policyholders during the period of 2017 as against the N268.2m in 2016, stating that “it demonstrates our strength to accommodate any volume of genuine claims reported.” He explained that with the trend of results already being achieved by the company in the current year, the Management was hopeful of delivering a much better bottom line to the owners of the company at the end of the year.

Wednesday 29 August 2018

C002D5556

BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

What’s up the rebranding campaign? Stories by Modestus Anaesoronye

rebranding campaign in the nation’s insurance industry had commenced on 1st July 2018 with the strategic objective to change the mindset of larger population of Nigerian’s about insurance. Nigerian insurers currently sell insurance by persuading people and individuals to buy their product, and what they get in return is reluctant purchase, and at rates not favourable to them. And that is why insurance density against the population of 180 million people is ridiculously low, and the industry contributing very marginally to the GDP of an abysmal 0.4 percent. The campaign was therefore targeting to make people appreciate the benefits of insurance; why they need it so that without being persuaded they will go for it and willingly pay for it as long as they can see the company they can trust. When this happens, we hope to see a situation whereby people on their own volition without being compelled by any regulation go to buy insurance because they realise the

benefits, as a means of risk management and wealth protection. The implication of this on the larger population is that people would have become able to manage their risks, wealth will be created, poverty reduced and standard of living enhanced. Nigeria economy in the other hand would have by this attain greater success in minimum development goal of enhanced social and economic welfare, where mortality rate would have reduced and people are able to live healthier, engage in sustainable enterprise, economic power and enhanced social status. For operators in the insurance industry, growth in premium income will come naturally; there will be value creation for shareholders, job creation for Nigerians and increased contribution to GDP. For these to happen, the rebranding campaign should focus on making individual Nigerians embrace and see insurance as a veritable financial tool that they require to protect their future and that of their families. It must make the Nigerian public; all over Nigeria know that the industry has got the capacity to provide effective risk

management that is needed to help the economy attain economic growth and development. The campaign must also reassure Nigerian’s that the industry has got the capacity to meet claims obligation when they arise, and will be ready to assist those who run into difficulty address their challenges. According to the pub-

STACO takes to e-payment to increase consumer access

n a bid to bring Insurance closer to her consumers, STACO Insurance Plc has invigorated an e-portal platform having secured the approval of the National Insurance Commission (NAICOM) for the company’s e-payment portal. The Company said in a statement that the Commission has confirmed a ‘No objection’ endorsement for her to introduce e-payment portal into the Nigerian Insurance Market. The company’s e-payment portal is a web based transactions solution. It operates twenty-fours round the clock payment system and utilizing an automated insurance online real time service technology platform. The portal enables ease of business transaction, offers convenience, speed and seamless method of payment of premium by the company’s clients especially for third party motor insurance and

personal protection plan products. The solution has the feature of issuing digitalized insurance policy certificates and eliminates the syndrome of issuance of fake certificates by fraudsters. The introduction of the transaction and e-payment platform into the Nigerian Insurance market is in line with the company’s commit-

ment to boost exceptional customer experience and reduce turnaround time for customer service delivery, while responding to the technological needs of the sector. It is hoped that the system will create loyalty from existing customers, attracts additional clients to the company as purchase of insurance policies would become easier.

licity sub-committee of Nigerian Insurers Committee, the campaign being handled by Alder Consulting targets to change the mindset of Nigerians on the business of insurance; ensure the public understands the importance, values and benefits of insurance. The project was also going to showcase the advancement made in de-

livering efficient services within the insurance sector, to encourage more Nigerians take insurance. It is also to sell insurance as the engine that drives key sectors and keeps them in business. While it is appreciated that corporate institutions understand the benefits of insurance and use it to protect their businesses, it is

imperative that individual Nigerians to come on board for the impact of insurance to touch on the society. “Insurance today has reached a saturation point, so growth will not come unless individuals embrace services of insurance, that is why this N300 million rebranding campaign, now hanging on the balance is creating worries.

Embrace insurance for effective risk management - experts tell Nigerians

xperts have charged Nigerians to embrace insurance services for effective risk management. The experts stated that contrary to the belief that insurers don’t pay claims, they said, claims settlement in insurance industry is actually growing on a yearly basis. Pleading on the people to adopt insurance, Jide Orimolade, managing director, Law Union & Rock Insurance plc, said, such adoption will give peace of mind to policyholders, even as the policies are not expensive. “When you have insurance as a family head to cater for your needs, I can tell you at the end of the day if something happen to the head of the family, the wife and other dependants will feel very comfortable and they will be happy that the man has been able to provide something,” he stressed. Promising policyholders of prompt settlement of

claims when insured risk occurs, he added that insurers are now paying claims as the volume of claims paid in the last three years has been impressive. “In 2014 for general business (non-life business) N51 billion was paid; for life business, we paid N85.9 billion. Combined together, in 2014 insurance industry paid N87 billion. In 2015, N87 billion increased to N105 billion and in 2016 it further increased to N119 billion meaning that insurance industry do pay claims,” he stated. In the same vein, Yetunde Ilori, director general, Nigerian Insurers Association said said, life itself is a risk and that risk is uncertainty of the outcome of an event that has whether two or more possibilities. “This can involve life or possessions that we hold and we hold very dearly. Something that happen could be uncertainty of the risk that we face and could

lead to a loss. This loss can be financial, emotional, psychological or sentimental,” she pointed out. Olayinka Odutola, director general, Enterprise Risk Management (ERM), while stating that the religious nature of the country also has a great role to play in undermining insurance, he said, the Christian and the Muslim folks will always say ‘God Forbids’ when insurance is introduced to them. If insurers want to make a difference, Odutola charged them to take the gospel of insurance to churches and mosques where there are millions of religious followers nationwide. “As insurance operators, we must go to the market places, churches and mosques, organise road shows in Oshodi; Ojuelegba; Ikotun, among others and address the retail market where people are densely populated to sell insurance ,” he said.

28 BUSINESS DAY

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Leadership

Wednesday 29 August 2018

Shaping people into a team

NewTV is the antithesis of a lean startup. Could it work? Steve Blank

ewTV, a new company focused on short-form video, just raised $1 billion. That’s on top of the $750 million that its parent company, WndrCo, has raised for the venture. NewTV is the creation of Jeffrey Katzenberg, whose track record includes head of production at Paramount, chair of Walt Disney Studios and co-founder of DreamWorks. Katzenberg recently hired Meg Whitman, the ex-CEO of HP and eBay, as CEO of NewTV. Their idea is that consumers will want a subscription service for shortform entertainment for mobile rather than full-length movies. The plan is to create 10-minute programs; think YouTube meets Netflix. It’s an almost $2 billion bet based on a set of hypotheses. Will consumers want to watch short-form mobile entertainment? Since NewT V won’t be making the content, it will be licensing from and partnering with traditional entertainment producers. Will these third parties produce something people will watch? NewTV will depend on partners like telephone companies to distribute the content. But NewTV doesn’t plan on testing these hypotheses. With fewer than 10 employees but almost $2 billion dollars in the bank, it plans on jumping right in. It’s the antithesis of the lean startup. And it may work. Why? Because the amount of customer discovery and product-market fit you need are inversely proportional to the amount and availability of risk capital. DOT-COM CRASH

Most students entering college today don’t remember the dot-com crash of 2000. In fact, most of them were born that year. As a reminder, the dot-com crash was preceded by the dot-com bubble, a five-year period from August 1995 to March 2000 when there was massive wave of experiments on the then-new internet, including ventures in commerce, entertainment, social media and search. All of a sudden risk capital was available at scale via initial public offerings. Tech IPO prices and subsequent trading prices were disconnected from revenue and profits. As Carlota Perez has so aptly described it, all new technology industries go through an eruption and frenzy phase, followed by a crash, and then a golden age and maturity. Then the cycle repeats with a new set of technologies. Given that the stock market was buying “the story and vision” of anything internet-related, inflated expectations were more important than traditional metrics like customers, growth, revenue or profits. Startups wrote business plans, generated expansive five-year forecasts and executed the plans. The mantra of “first-mover advantage,” the idea that the winners are the first entrants in their markets,

became the conventional wisdom in Silicon Valley. First movers didn’t understand customer problems or the product features that solved those problems. These bubble startups guessed at their business model, launched their business prematurely and had extremely high burn rates — all predicated on the idea that an IPO would raise more cash. To be fair, in the 20th century there really wasn’t any other model for how to build startups. Then one day it was over. IPOs dried up. Startups ran out of money. Most startups born in the bubble died in the bubble. THE RISE OF THE LEAN STARTUP After the crash, venture capital was scarce to nonexistent. Angel investment, which was small to start with, disappeared, and most corporate VCs shut down. The idea of the lean startup was built on the rubble of the dot-com crash. With risk capital at a premium and the public markets closed, startups needed a methodology to preserve capital and survive long enough to generate revenue and profits. And to do that they needed a different method than just “build it and they will come.” They needed to be sure

that whatever they were building was what customers wanted and needed. And if their initial guesses were wrong, they needed a process that would permit them to change early on in the product development process when the cost of changes were small — the famed “pivot.” The lean method started from the observation that startups were not smaller versions of large companies; large companies executed known business models while startups searched for them. Although startups had plenty of tools for execution, they had none for research. So entrepreneurs built them. It helped that, in the period that followed the crash, startups and VCs were amenable to new ideas. Startups founders developed the lean method as the business model/customer development/agile development solution stack where entrepreneurs first map their hypotheses about their business model; test these hypotheses with customers in the field (customer development); and use an iterative and incremental development methodology (agile development) to build the product. This allowed startups to build minimal viable products and put them in front of a large number of customers to get immediate feedback. When founders discovered their assumptions were wrong, as they inevitably did, the result wasn’t a crisis; it was a learning event called a pivot — and an opportunity to change the business model. The result? Startups now had tools that sped up the search for customers, reduced time to market and slashed the cost of development. SEIZE THE CASH

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

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Every startup is in a race against time. A company has to find product-market fit before running out of cash. Being lean makes sense when capital is scarce and when you need to keep burn rates low. Lean startups were designed to inform the founder’s vision to operate at speed. Today memories of frugal VCs have faded, and the structure of risk capital is radically different. The explosion of seed funding means tens of thousands of companies are getting funding, likely two orders of magnitude more than the Series A funding received during the dot-com bubble. Mobile devices offer a platform of several billion viewers. And corporate funds, sovereign funds and even VC funds have capital pools of tens of billions of dollars — all looking for the next Tesla, Uber, Airbnb or Alibaba. Most of them are willing to bet on someone with a successful track record like Katzenberg, who has a vision of disrupting an entire industry. In short, the lean strategy was an answer to a specific problem, one that most entrepreneurs still face. It’s a response to scarce capital, and when that constraint is loosened, it’s worth considering whether other approaches are superior. With enough cash in the bank, Katzenberg can afford to create content, sign distribution deals and see if consumers watch. And if not, he still has the option to pivot. And if he’s right, the payoff will be huge.

Steve Blank is an adjunct professor at Stanford University and a lecturer at the University of California, Berkeley.

BUSINESS DAY

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Wednesday 29 August 2018

High input tax dents foreign loco makers’ viability Page 31

BA to end flights between London and Tehran

Oman expands travel, tourism horizons

Page 30

Abuja Airport metro rail extends free ride services Page 31

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Ford, Toyota, VW, Honda go past sales mark … Global half year vehicles market growth continues

From Left; Tunji Itiola, head of sales; Navin Chander, general manager; Funmi Abiola, Marketing Manager, and Kunle Jaiyesimi, deputy managing director, all of Massilia Motors Limited, and during the press conference to celebrate Mitsubishi Motors Heritage in Nigeria held recently at Mitsubishi showroom, Victoria Island, Lagos.

he world car market continues to be on the rise, as global unit sales went past 44 million for the first time in the first six months of 2018. New car sales worldwide are up by 3.6 per cent, with China, the United States and Japan being the largest markets. According to figures released by Jato Dynamics, car sales were up by 3.6 per cent compared to the first half of 2017, which saw 42.49m sales between January 1 and June 30 last year. China was the largest market as it saw 12.23m sales between January and June which was a 3.9 per cent increase on the same period last

Massilia Motors balance sheet looking up on 13% market share

….As Mitsubishi marks 101 years of brand heritage Stories by MIKE OCHONMA

rom a market share of 7 percent the previous year to an improved customer loyalty that has shored its market share to 13 percent, with not less than 1000 units sales since last year of its registration in Nigeria as an automotive business, things appears to be taking shape at Massillia Motors which is joint venture collaboration between the CFAO group and Kewalram Chanrai group in Nigeria. Massilia Motors is a joint automotive dealership joint venture between the CFAO group and Kewalram Chanrai which is celebrating what it called Mitsubishi Motors 101 years Heritage in Nigeria. Standing in for Thomas Pelletier, managing director of Massillia Motors, Kunle Jaiyesimi, deputy managing director of the dealership stated that, the company is gradually passing through the ddifficult formative stages of the partnership to a venture whose operations has been a very successful one.

The deputy managing director stated that, prior to the marriage of convenience between CFAO group and Kewalram Chanrai group, the Mitsubishi model line-up in Nigeria has been struggling to register its presence and strong market share, but that, as at today, it has become a thing of the past. According to the deputy managing director; ‘’That has been a thing of the past. Since we started this operation about two years ago, it as really evolved we have seen increased market share, business outlook has been positive’’. Accompanied by Nar vin Chander, general manager in charge of sales and marketing, Funmi Abiola, marketing manager and Olatunji Itiola, head of sales, Kunle Jaiyesimi said the ultimate thing for Massillia Motors is living even up to the expectation of its corporate, institutional and individual customers by working tirelessly to meet up with their with their needs. He stated that, the dealership has invested so much into aftersales service network expansion with huge investment in uplifting

the existing facility of Mitsubishi Motors dealer showroom and workshop at the Ijora, Lagos. Moreover, the aftersales service team and other categories of staff have undergone a lot of training and certification from the manufacturers by attending several kinds of training both locally and internationally. He identified aftersales as the key points have made the dealership have its heads above troubled waters since the coming on board of the joint partnership. It would be recalled that last week, Massilia Motors, announced the commencement of celebration of the rich Mitsubishi Motors heritage in style which started last Monday and will end this week Friday at its Victoria Island, Lagos as its showrooms on Adeola Odeku Street, is transformed into a maze, taking visitors on a journey to celebrate the different milestones of the brand. According to Navin Chander, the company’s showroom will be open to the many happy Mitsubishi users, auto enthusiasts and invited guests. Activities lined up for the week

year, while the United States include masterclasses, panel (8.62m) and Japan (2.69m) discussions, and album listen- were the only countries to ing, cocktail night, among others. surpass the two million sales The Heritage week will feature mark. SUVs were the most Canon and renowned photographer Emmanuel Oyeleke, ASPIRE popular cars available, with Luxury Magazine, Chocolate City the built-up models making Rapper - MI Abaga, Zaron Cos- up 34 per cent of worldwide metics, Johnnie Walker (Diageo sales. Compacts (16.7 per Nigeria) and Tinsel actress/Jazz cent) and sub-compacts (12.3 artiste - Tomi Odunsi, amongst per cent) were the second and third most popular segothers. Chander also stated that; “We ments respectively. The world’s best-selling are also rewarding our existvehicle in H1 was the Ford Fing Mitsubishi Motors clienSeries range of pick-up trucks, tele through online giveaways. which were sold 534,827 Visitors can also stopover at the showroom daily to view historic times in the first six months images of Mitsubishi car models of 2018, while the Toyota Cofrom time past and also register rolla (478,122), Volkswagen online to participate in some of Golf (431,836) and Honda the activities open to the public”. Civic (412,664) were the only In 2017, Mitsubishi Motors other models to get past the celebrated its 100th anniversary, 400k sales mark. The Ford Fholding the title of Japan’s old- Series and Toyota Corolla are est car manufacturer. The first both customer favourites in series production passenger car, the United States. The largest increase in the Mitsubishi Model-A, was sales in the top 50 cars was for developed by Mitsubishi Shipping Company in 1917. It was the Volkswagen Tiguan Allthe first car to be adorned with space, which saw sales up by the three-diamond emblem and 183 per cent, while the Jeep was the first mass production car Compass also saw a large increase of 140 per cent. in Japanese history.

30 BUSINESS DAY

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MTravel

Wednesday 29 August 2018

odern

BA to end flights between London and Tehran

...Cites commercial viability as reasons

Stories by MIKE OCHONMA

r itish A ir ways has announced it will be suspending its flights between London and Iran, citing a lack of “commercial viability”. British Airways currently operates six flights per week in either direction. The last outbound flight from London to Tehran will depart on 22 September, and the last inbound flight from Tehran will depart on 23 September. The duration of the suspension period remains unknown. British Airways made the fol-

lowing statement to The Independent: “We are suspending our London to Tehran service as the operation is currently not commercially viable. “We are sorry for any disruption this may cause to our customers’ travel plans and we are in discussions with our partner airlines to offer customers rebooking options. “Alternatively, they will be offered a full refund or the opportunity to bring their flights forward.” British Airways suspended the same service in October 2012 due to political instability in Iran, resuming the route in September 2016. The decision follows Dutch

carrier KLM, which announced last month that, it would suspend its Tehran flights due to “negative results and financial outlook”. UK tour operator Wild Frontiers is making alternative flight arrangements for its Iran-bound customers. Jonny Bealby, Wild Frontier founder, described the suspension as “a massive shame”. “We have sent over 1,500 people to Iran without incident over the last 10 years. The great thing about travel is it breaks down borders and transcends geopolitical disputes. Time and time again our clients return saying the Iranian people were the friendliest they had ever met. The Persian hospitality is legendary,” says Bealby.

Oman expands travel, tourism horizons …As an ideal global business meeting hub

s the Middle Eastern destination is gaining immense popularity, Oman is now aiming to expand the horizons in terms of travel and tourism experiences for family, solo travelers, women travelers as well as MICE. The exotic and historic Oman offers the most authentic Arabian experience to its visitors. As the Middle Eastern destination is gaining immense popularity, Oman is now aiming to expand the horizons in terms of travel and tourism experiences for family, solo travelers, women travelers as well as MICE (Meetings, incentives, conferences and exhibitions). Visa policy: For any country’s tourism to flourish the key word is visa leniency and that’s what Oman has mastered really well. And how easy is the visa policy? Well, it might not be a breeze, but if you have valid visas for the United States of America, Canada, Australia, United Kingdom, Japan and Schengen States, you are in. Otherwise, having valid documents won’t deter you from getting entry into the sultanate.

Muscat Airport; If you need to get that meeting done yet kindle the traveller in you, Muscat would be your best bet. Muscat being the capital of Oman is the hub for most businesses. Also the new Muscat International airport has increased passenger capacity to 20 million- up from the previous 12 million passengers recorded in 2017. Why is MICE tourism on the rise; There has been an increase in MICE tourism with the recent launch of the ‘Oman Convention and Exhibition Centre’ in Muscat. The convention Centre supportsinternational and local

organizations in hosting large events. Also, many new international hotel chains that have recently opened in Oman have increased the number of rooms and venues in the country. For business travellers, accommodation is one of the most important part. Not just a good stay, the travellers want some good incentives as well. Fret not, there is Shangri-La’s Barr Al Jissah Resort and Spa, the Al Bustan Palace- a Ritz-Carlton Hotel, Grand Hyatt Muscat, Kempinski Hotel Muscat, Crown Plaza Muscat, Sheraton Oman hotel, which are preferred by this lot.

WTA to celebrate hospitality elite in Durban

frica’s leading events and entertainment facility is stepping up to host the elite of the travel industry at the World Travel Awards Africa & Indian Ocean Gala Ceremony 2018. Durban International Convention Centre will welcome travel and tourism figureheads from across Africa and the Indian Ocean for the red-carpet gala ceremony on October 6th. The evening marks the sixth leg of the World Travel Awards Grand Tour 2018 which is an annual search for the finest travel and tourism organisations in the world, which is celebrating its 25th silver jubilee anniversary this year. Enviably located moments from Durban Beachfront, the world-class Durban ICC is a state-of-the-art events and entertainment venue. This is World Travel Awards’ third visit to the iconic facility, which also hosted ceremonies in 2008 and 2009. The neighbouring Hilton Durban will form the networking hub for the weekend. The landmark five-star hotel offers unrivalled accommodations in a supreme location, just moments from the Durban ICC and Durban’s

beachfront. All rooms offer panoramic views of the city or the Natal coastline, with easy access to Durban’s beautiful beaches. World Travel Awards is partnering with Hilton Durban to offer exclusive accommodation rates to attendees of the gala ceremony. Graham Cooke, founder, World Travel Awards, said: “I am honoured that the beautiful city of Durban is forming part of World Travel Awards silver jubilee anniversary celebrating and rewarding excellence in travel. With its amazing beaches and fascinating Afro-Indian culture, Durban is one of South Africa’s essential destinations. “We are delighted to partner with the Durban ICC. Opened by Nelson Mandela in 1997, this incredible facility has successfully staged some of the world’s most prestigious events. I look forward to welcoming all of our nominees here on October 6th.” Cooke said. As part of the Grand Tour 2018, World Travel Awards is also hosting ceremonies in Ras Al Khaimah (UAE), Athens (Greece), Hong Kong, Guayaquil (Ecuador) and Jamaica, with the winners progressing to the Grand Final in Lisbon (Portugal).

British Airways flies four million passengers in August

ritish Airways has conveyed four million passengers as at this month, BusinessDay checks has revealed. During British Airways’ busiest ever summer, which saw it scheduled to carry over four million customers across its network in August alone, the airline has revealed some of the most popular holiday destinations for travellers. In the list are long-haul destinations such as New York, Los Angeles, Dubai, Singapore and Hong Kong. Short-haul destinations like Malaga, Nice, Amsterdam, Edinburgh and Glasgow also featured, thanks no doubt to soaring domestic temperatures. Customers have been getting in the summer holiday spirit, this year more than ever, with 212,000 bottles of wine consumed across all British Airways flights in July, up three per cent on last year. Meanwhile, those in Club Europe or Club World and First looking for something extra-special to kick-start their trip consumed 105,000 bottles of Champagne, again up five per cent. British Airways offers customers

the option to pre-order from a range of 13 complimentary special meals for specific dietary requirements. Over 360,000 special meals were pre-ordered in July, of which nearly 37,000 were vegan meals – up 32 per cent on the same period last year as more customers looked to cut out meat and dairy. On top of this nearly 5,000 meals were low-calorie. Sean Doyle, British Airways director of network and alliances, said: “This year British Airways is offering its largest network schedule for ten years, with flights to 211 destinations across more than 75 countries. “Next year we’re confident new additions to the British Airways route map like Pittsburgh and Nashville, alongside Santiago, where we’ve recently increased the number of weekly flights, will be among our most popular destinations, as well as some of the traditional hotspots we’ve seen this year.” With flights available 355 days in advance, customers can already begin planning their next summer getaway.

Wednesday 29 August 2018

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Local and global rail news as it breaks

High input tax dents foreign loco makers’ viability

Abuja Airport metro rail extends free ride services MIKE OCHONMA AND JAMES KWEN Abuja

CTA had granted one month free train services on the Abuja airport metro passengers service a day after the commissioning of the project last July 12 which ended August 13, 2018. Meanwhile, Secretary, FCTA Transportation Secretariat, Kayode Opeifa earlier announced fares as approved by the Administration for Abuja train services from one point of the stations to the other with effect from August 13, signalling the end of one month commercial free ride. Opeifa had stated that, the fare for Abuja Metro to and from the Airport Station is N1000 for adults and N700 for children and the physically challenged passengers. He also disclosed that the fare for Abuja Metro to and from Idu Station, and Idu Station to and from Airport Station is N500 for adults and N300 for children and physically challenged passengers. According to the FCTA Transport Boss, TRIP specific ticket purchases will be done electronically at the Departure Lounge of the Nnamdi Azikiwe International Airport and at all the operating stations in Abuja Metro, Idu and Airport stations from ticket dispensing Kiosks, Ticketers and pro-

vided POS Machines. Opeifa further explained that payment verification system is also provided at all the stations to control and count passengers after payment have been made. He also appreciated residents of the Federal Capital Territory and visitors who patronised the train services during the one month free train ride services provided by the administration to commute through MetroIdu- and Airport Stations of the Abuja Rail Mass Transit Services. The FCTA Transport Secretary who said many Federal Capital Territory residents, visitors and tourists alike utilised the opportunity to savour the beauties of train services enjoined the public to cooperate with it for the payment innovation being deployed for the train services in the FCT. But when Business Day visited the Abuja Metro Station days after expiration of the free ride period, passengers were still boarding without paying the approved fares. One of the operating staff at the Abuja Metro Station who craved for anonymity told correspondent that FCTA has extended the free ride to a period not known to the staff. Reasons for the extension could not be established at the time of this report as the staff declined

knowledge while the FCTA Transport Secretariat was yet to respond to questions raised on the subject. Meanwhile, movement of humans and goods in Abuja and environs is easier since the commencement of the Abuja Rail Mass Transit services. Since the flag off on July 12, the rail mass transit conveys no fewer than 500 passengers daily from the Abuja metro station at the Central Business District via Idu Station to the Airport Station. Out of the 12 stations in the phase 1 comprising lots 1A and 3, only three stations are running with three coaches which move passengers from the Metro Station in Central Area to Idu Station where passengers are transferred with the National Rail line linking Kaduna and Abuja and others joined to the Airport. The train currently runs two schedules of 10am and 2pm thro and fro for a maximum of 40 minutes each and there are no classes in the train. But sources hinted that there are plans to increase the schedules of the train to at least four times a day to take care of early morning and late evening passengers while business and other classes would be later introduced in the train. Buses and taxis are always available particularly at the Metro station con-

veying passengers to the Federal Secretariat, Area one and other destinations while traders and food vendors do businesses at the stations. Business Day while on an inspection ride observed that hundreds of passengers both young and old on board were in a state of ecstasy while the villagers trooped out to catch glimpse of the train as it passed en route their settlements. According to the Secretary, it has started, “integrating the social, political and activities between the satellite towns and FCT. Stimulate economic growth, job and wealth creation and reduce traffic congestion in FCT. Link people in the satellite towns to the city, promotes tourism and improves quality of life and it would be tourist delight”. Meanwhile, the Lot 1B of the Abuja Light Rail phase 1 would also be soon completed to link areas such as Gwarinpa - Jabi - Eagle Square. The remaining 48 coaches would start arriving Nigeria in batches in the next 15 months and called for private partnership to complete the other lots and possibly extend the rail system to neighbouring states.

estrictions for the railways sector under the goods and services tax (GST) regime could leave global locomotive manufacturers running out of steam in delivering pledged projects in a timely manner. This is because input tax credit has piled up for these companies because most feeder products are taxed at 18-28% under the GST, while railway locomotives fall under the 5% tax bracket. Recently, the Make-inIndia programme of the railways drew investments from multinational engineering firms such as General Electric (GE), Canada’s Bombardier, and French company Alstom. The aggrieved companies, faced with rising input costs, have lobbied with the finance ministry to reduce tax on raw materials, according to a report by The Economic Times. Input tax credit has piled

up for these companies because most feeder products are taxed at either 18 percent or 28 percent under the GST, while railway locomotives fall under the 5 percent tax bracket. This disparity in the tax structure has truncated the locomotive manufacturers’ profit margins. Agreements signed by many multinationals under the Make in India scheme predate the rollout of GST. The finance ministry grants a refund on input GST if manufacturers are taxed under an inverted tax structure. However, there are only few precedents of refunds being issued to companies in the railways sector. Locomotive manufacturers are hoping that a similar relaxation granted to the fabric industry will be extended to railways as well. The companies involved did not furnish an estimate on the surplus tax amount levied.

IR details damage, restoration work on floods

hree of Indian Railways’ Southern zones have been severely affected by flash floods, land slips and rockfall as a result of extreme weather in the state of Kerala. Almost 400 people have died and millions displaced by Kerala’s worst floods in a century. The Thiruvananthapuram railway division was hit hardest by the unprecedented rainfall, according to India’s Ministry of Railways. Across its zone, water level rose above danger level at 11 bridges, track was submerged at three locations, embankments washed away at another three and earth slips occurred at seven sites. Meanwhile across both the Palakkad and Madurai railway divisions, water rose above the danger level at 10 bridges, track was submerged at one location and earth slip and falling boulders impacted another six locations. Efforts to restore and re-

build Kerala are in full swing, and last week, the Ministry of Railways announced that normal traffic was set to resume for the majority of services thanks to the colossal efforts of its staff. More than 500 railway staff worked around the clock through heavy rainfall and adverse conditions to restore tracks and reinstate connectivity in the state. Nine track machines and seven special boulder-carrying trains were drafted in to assist with the efforts. Indian Railways, which is known to recruit sportsmen and women into its ranks, dispatched 10 employees who are also professional swimmers to help with rescue operations in the district of Pattanamthitta for five days. In addition, Indian Railways has assisted with the wider relief effort by transporting water and food without charging for consignments.

32 BUSINESS DAY Financial Inclusion

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Wednesday 29 August 2018

& INNOVATION Banks should ensure their products meet the need of women Supported by:

BALA AUGIE

here has been an improvement in the number of people with a bank account compared to what was obtainable a decade ago, thanks to the proliferation of mobile phones the formulation of policies by the central bank. Nowadays people carry out transaction using a mobile application without having to go the banking hall, a welcome development that is adding impetus to the attainment of a cashless economy. However, there is financial inclusion gender gap between the men and the women as the later are poorer and susceptible to economic downturn. Only one-third of Nigerian women own a bank account, compared with more than half of Nigerian men, according to a recent research report by the Women and Foreign Policy program in partnership with Council on Foreign Relations. The gap between men and women in develop-

ing economies remains unchanged since 2011 at 7 percent. Ironically, the female gender hardly default on loans, but there are factors hindering them from being included in the financial architecture. Experts have identified such factors to include- the inability to travel to bank branches, limited financial

literacy, and inadequate proof of identification. Experts are of the view that financial institutions have a role to play bridging the financial inclusion gender gap as experts have urged them to design products that meets the need of women. They need to better understand the needs of women and create product

that serve them. Women are likely to seek credit from financial institution for the welfare, feeding and education of the children while men borrow to fund capital projects. Some Nigerian banks have launched products to make it easy for women to open a bank account. One of such innovative

financing tool is the digital BETA savings account. Launched by Diamond Bank in partnership with Women’s World Banking in 2013, BETA savings accounts relieve customers of needing to go to a physical bank branch to open and operate an account. Rather, “BETA Friends” – female bank agents – attend open-air markets with

mobile devices, enabling women to setup accounts and make deposits and withdrawals without having to leave their stalls. Significantly, women can open BETA savings accounts without documentation or minimum b a l a n c e re q u i re m e n t s thanks to Nigeria’s tiered Know Your Customer Requirements (KYC), which enables Diamond Bank to open low-value accounts with basic personal information. Since its launch, BETA has reached more than 275, 000 clients. Following the success of BETA, Diamond Bank launched BETA Target Savers Accounts – another innovative digital product designed to increase women’s financial inclusion. These accounts enable women to save for specific goals, such as financing child birth or a child’s education, likewise employing BETA Friends to facilitate the process for women. Diamond Bank also permits women to take out loans without having to provide collateral through the BETA Kwik Loan, a service that operates via BETA technology.

SANEF’s race to capture 40 million unserved Nigerians ABDULLATEEF ENIOLA-GIWA

n the quest to bring in the unbanked and bridge the financial inclusion gap in Nigeria, the Shared Agent Network Expansion Facility (SANEF) is ramping up its pace to include 40 million financially unserved Nigerians. The number of mobile agents under SANEF has since grown from 50,000 providers to 70,000 providers in 6 months which represents a 40 percent increase but with a target of 500,000 agents in the next 28 months the growth should be a lot faster. BusinessDay analysis revealed that 40 percent increase every six months will lead to a shortage of over 100,000 agents by 2020 and the race to capture 40 million unserved Nigerians would yield less than adequate results. The growth of providers

needs to increase by an extra 10 percent every 6 months to attain the proposed target, as compiled from BusinessDay calculations. In accordance with the 80 percent inclusion target, this initiative is geared towards the use of a previously agreed pool of banking funds, five per cent of their respective profit after tax to improve the participation and impact of SMEs and create a vehicle to lend at single digit interest rates to these businesses in order to foster financial inclusion through a renewed agent network arrangement. SANEF is a project engineered by the Central Bank of Nigeria, Deposit Money Banks, Nigeria Inter-Bank Settlement Systems, Chartered Institute of Bankers of Nigeria, licensed Mobile Money Operators and Shared Agents with the pri-

mary objective of accelerating financial inclusion in Nigeria. The SANEF project seeks to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight,

Godwin Emefiele

consumer protection and interoperable systems with limited concentration risk. It aims to create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Ni-

gerians. The SANEF sign connotes an acceptance of basic financial services such as opening of accounts, cash deposits and cash withdrawals, funds transfer and bills payment. The SANEF project will

see new product design that will help deepen financial inclusion such as a savings account bundled with an array of features (insurance, pension, micro credit). This will create a pull factor to attract the financially excluded into the system. The initiative would specifically reduce transaction costs, create convenience and increased adoption of digital financial services. “Banking industry is now more determined to come out best and support the economy and that is the drive behind the initiative. We must be careful not to be preyed upon, particularly, by those who only see value to be ripped off and not to be developed. We want our own experts to develop and benefit from their hard work, not to be overtaken by foreign mercenaries,” Victor Etuokwu, executive director, personal banking, Access Bank Plc.

Wednesday 29 August 2018

BUSINESS DAY

PrivateEquity & fundraising 34

BUSINESS DAY

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Private equity dry powder reaches record $1.1 trillion in August

Wednesday 29 August 2018

COMPANIES & MARKETS

Nigerian fertilizer plant gets second investment from EAIF Endurance Okafor

Emeka Ucheaga

rivate equity investors can’t seem to find deals as fast as they have been raising cash in recent years. In the last six years dry powder in PE firms rose from $560 billion in 2012 to $1.1 trillion in August this year, marking a growth of almost 100 percent according to data compiled from Bloomberg. Dry powder dry powder refers to assets that have been raised, but not yet invested. The amount of dry powder surpassed $1 trillion to a record $1.03 trillion as at the end of 2017, a 24% increase from the end of 2016, when it stood at $829 billion. However, growth has stalled this year as funds are now been diverted to the public markets where the S&P 500 have been rallying throughout this year. In August, 2018, dry powder reached a record $1.1

trillion which is roughly more than twice the size of Nigeria’s economy. The search for yield drove investors to the private equity arena where yields are typically higher than in other markets due to sometimes excessive use of leverage which in all fairness is the nature of its business. But the need to avoid risky markets have blocked flow of capital into some frontier markets in recent times. As at year end 2017, private equity industry managed more than $3.06 trillion holding as much as 33 percent of the fund as dry powder. “Strong fundraising in recent years paired with a challenging deal environment has resulted in dry powder levels reaching a record,” said Christopher Elvin, Preqin’s head of private equity products, in the forward to the firm’s private equity and venture capital quarterly update. “While buyout deal activity did not outpace Q1 levels,

the quarter nonetheless saw strong deal flow with KKR’s $9.9 billion acquisition of Envision Healthcare the largest deal announced in the quarter.” Bain & Company, one of the world’s biggest advisor to PE investors, reported earlier this year that it had observed a surge in fundraising as limited partners (LPs) continued to recycle distributions into new capital commitments. Returns also had another strong showing, continuing to outperform public markets by a sizable gap over both short-term and long-term time horizons. Global buyout activity, on the other hand, declined amid a challenging deal-making environment. Preqin, data and intelligence providers on alternative assets, reported this year that the number of private equity funds has continued to grow, with a record 3,037 funds on the road at the

start of the third quarter targeting $948 billion, a 52% rise in the number of funds raising capital compared to the same time last year, and a 40% increase in aggregate capital targeted. Forty-four percent of all funds in market are targeting investment opportunities in North America, seeking 49% of all institutional capital targeted. The number of Asia-focused funds in the market has soared 159% to 985 funds in the third quarter from 380 funds during the same period in 2017, with aggregate capital targeted also up 63%. It is yet to see how much of the dry powder will eventually flow towards frontier markets like Nigeria when political sanity and steady economic growth is restored in Africa’s largest economy. However, experts say for now the environment in the country just isn’t conducive to attract PE capital.

ndorama Eleme Fertiliser & Chemicals (IEFCL) has gotten yet another investment of 11-year $35million (N12.6 billion) loan from Emerging Africa Infrastructure Fund (EAIF) aimed at doubling IEFCL’s output to 2.8-million tonnes a year. The transaction as disclosed on Wednesday 22nd of 2018 is part of the financing of a $1.1billion expansion of IEFCL’s existing fertiliser plant at PortHarcourt, Nigeria. “Nigeria has enormous potential to achieve agricultural self-sufficiency and food security. This is evident from the multi-fold increase in domestic fertiliser consumption after the start of Indorama’s first plant. Nigeria has also become a major hub for urea exports,” Manish Mundra CEO of IEFCL said in a statement on Wednesday. Meanwhile, EAIF had previously provided loans of $48.8-million towards construction of IEFCL’s first Port Harcourt fertiliser plant, which is now operating at full capacity. The new plant which the recent investment is made for is to be built alongside the existing facility and is expected to increase the production of the fertilizer manufacturing company’s output. “I am delighted that EAIF is again assisting us in growing our business and that IEFCL and EAIF are helping power Nigeria’s economic development,” the Chief Executive Mundra disclosed. An additional 11 km of new gas pipeline that serves the IEFCL facility had already been added to the 84 km installed capacity when the existing plant was built. “A successful and productive agriculture sector is essential to Nigeria’s future. The new plant for Indorama Eleme can benefit farming communities across Nigeria, which will help combat poverty, stimulate employment and improve the resilience of the Nigerian economy. Projects like IEFCL’s PortHarcourt expansion are of fundamental strategic importance and of exactly the type [EAIF parent company Private Infrastructure Development Group and its companies are there to support,” Patrick Crawford chairperson of EAIF said. The construction of the new facility is however expected to take up to 37 months to complete. Meanwhile, the project directly supports the Nigerian government’s initiative to eliminate the importation of urea and to meet rising local demand for urea fertiliser and, 3 830 people are to be hired to build the new plant while 608 people will have permanent jobs when it comes on stream.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: samuel iduh ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 29 August 2018

PrivateEquity & fundraising

COMPANIES & MARKETS

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BUSINESS DAY

Insight: Why Union Bank should be on guard as Atlas Mara’s shareholder revolt DIPO OLADEHINDE

nvestors in Nigeria’s Union Bank are expected to be vigilant as London-listed Atlas Mara Limited who owns up to 49 percept stake in the tier-two lender’s bank is going through some internal crunches. Ahead of its general meeting today August 29, Bob Diamond is facing a critical moment as Chairman after two influential shareholder adviser groups raised red flags over corporate governance issues at London-listed Atlas Mara, an Africa focused investment vehicle. Glass Lewis the shareholder advisory group has recommended that investors should vote against Bob Diamond’s election as chairman because as a co-founder of the firm he is not considered independent. “The UK code states a chairman should meet the code’s independence criteria upon appointment,” Glass Lewis said. “We strongly believe

the company should appoint a qualified non-executive director, who was also independent on appointment, as chairman.” Fellow adviser group ISS has raised similar concerns and recommends that investors abstain from the vote on August 29. The organisations are urging shareholders to vote against three non-executive directors including Michael Wilkerson, chief executive of Atlas Mara’s largest shareholder Fairfax Africa, arguing that he is not independent. The other two directors are former Bank of Ireland chief executive Richie Boucher and Hisham Ezz Al-Arab, chairman and managing director of the Commercial International Bank of Egypt. Both groups also oppose a motion that would allow Atlas Mara to sell 15 per cent of its shares without first offering them to existing investors. Although it seems the internal issues might be resolve quickly however analysts are concerned that the recent

revolt against Bob Diamond will affect the vision of the Africa focused investment vehicle who have over the years remain committed to Africa. “Although, it’s still at a controllable situation however when a company like Atlas Mara who owns 49 percent in another company is having internal issues, we have to study the scenario carefully very well,” a financial analyst told BusinessDay. Recall, two months ago that Atlas Mara under the chairmanship of Bob Diamond acquired an additional 1 percent stake or 280,956,166 shares of Union Bank. “Atlas Mara will issue 2,360,032 ordinary shares to fund the acquisition,” the company said in a statement on its website in June this year. Union Bank closed at N5.85 on Tuesday trading session on the Nigerian Stock Exchange while its price to book ratio was 0.59 times. Results for the half year ended June 2018 show gross earnings increased from N72

billion in 2017 from N83 billion in 2018. Profit before tax increased from N9.4 billion in 2017 to N11.8 billion in 2018. Profit after tax increased from N9.2 billion in 2017 to N11.4 billion in 2018. Diamond, who resigned from Barclays at the height of the Libor-rigging scandal in July 2012, founded Atlas Mara in 2013 and has been chairman of Atlas Mara since October 2016.The Company has over 1600 employees, an asset base of $2.5 billion and operations in 7 African countries namely Botswana, Zimbabwe, Tanzania, Mozambique, Rwanda, and Nigeria “Atlas Mara is committed to high standards of corporate governance. The Board and its committees have been conducting their duties thoroughly and with rigour. In particular, the Independent Non-Executive Directors have provided critical insight and support since the Company’s inception,” Atlas Mara said on its official website. Founded in 1917, Union Bank is one of Nigeria’s old-

est commercial banks. The Asset Management Company of Nigeria (AMCON) injected N239 billion as capital into the bank in 2011. Nigeria’s fragile economic recovery is showing up in the results of the country’s banks who are returning to profit after a torrid 2016, when the economy slipped into recession, its first in 25 years. An improvement in unpaid loans, higher interest income from holding government debt and a rise in profit has helped lenders bolster their capital buffers. The gross domestic product of Africa’s largest oil producer expanded 1.5 percent in the first second quarter of 2018, capping five straight quarters of expansion after a 1.6 percent full-year contraction in 2016. An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.

CDC Group taps Andrew Alli & Dolika Banda as new non-executive directors

K’s development finance institution, CDC Group has appointed two new nonexecutive directors, Dolika Banda and Andrew Alli, who will bring extensive African experience to the board. The decision which was taken to expand the size of the board and diversify the breadth of expertise, will see Dolika Banda joining as an additional member to the Board while Andrew Alli will replace Valentine Chitalu as Chair of the Audit and Compliance Committee, who is step-

ping down in January 2019 after serving the maximum of three, 3-year terms. “I am delighted that Andrew and Dolika have chosen to join CDC’s nonexecutive team. As well as bringing an impressive wealth of experience in finance and development finance, both will play an important role in bringing the voice of African business right into the heart of CDC’s governance as we seek to accelerate economic development on the continent,” Graham Wrigley, CDC Chairman, said.

Private equity word for the week Dry Powder Dry powder is a slang term referring to marketable securities that are highly liquid and considered cash-like.

Both appointments are subject to regulatory approval by the Financial Conduct Authority, wrigley added CDC Chairman also thanked the outgoing Valentine Chitalu who has given years of dedicated service to CDC. “His depth of knowledge of CDC and the way we can have the most impact in Africa has been invaluable as we sharpened our strategic focus on the continent. I know that his dedication means that he’ll continue to give his best to CDC until his departure,” he added. Dolika Banda is CEO of African Risk Capacity Insurance with experience in similar roles on the boards of Ecobank Transnational and the UK’s Department

for International Development (DfID)’s Financial Sector Deepening Africa programme. She is a Zambian national with more than 25 years in international finance and banking, and has worked in Africa, Europe, Latin America, the Caribbean and the US. Banda has also held a senior position at Barclays Bank Zambia and holds a Master’s degree in International Business from Schiller University. Alli spent more than a decade with the International Finance Corporation (IFC), where he was country manager for Nigeria and South Africa. Andrew Alli was, most recently, the President and CEO of the Africa Finance Corporation, a multilateral

financial institution focused on improving Africa’s critical infrastructure. A financial professional with over 30 years’ experience in both developed and developing countries, he is currently a Non-Executive Director for the Development Bank of Nigeria, where he chairs the Audit Committee. He spent over a decade with the International Finance Corporation (IFC), where he held senior positions including as Country Manager for Nigeria and South Africa. A dual citizen of the UK and Nigeria, Andrew is a Chartered Accountant and has a BEng in Electronics and Electrical Engineering from King’s College, University of London and an MBA from INSEAD.

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Fiscal certainty, peace in Niger Delta major determinants to additional 510,000bpd - report OLUSOLA BELLO

igeria’s expectation to add over 510,000 barrels per day (bpd) of oil production capacity by 2025 will depend on fiscal certainty and relative peace in the Niger Delta region, according to research and consulting firm, GlobalData. The report asserts that almost half of the expected additional capacity still lacks a final investment decision (FID), with the field operators expected to make a decision by 2020. This will be greatly influenced by prevailing market conditions and security around the planned projects. It states that Nigeria is set to lead in the Africa region with 11 planned projects, followed by Angola with eight. Other countries include Ghana, Mozambique and Uganda. Nigeria

has her Capital Expenditure (CapEx) outlook projection that is put at $17.3 billion between 2018 and 2025. A total of 43 crude and natural gas projects are expected to start operations in sub-Saharan Africa by 2025, of which 31 are crude and 12 are natural gas, GlobalData says. Joseph Gatdula, GlobalData’s senior upstream analyst, explains: “The region will experience investment delays across a wide scope of projects. However, developments will continue to come online in the mid-term, including fields which started development prior to the downturn in prices and those which demonstrate break evens at or below today’s current oil prices.” Tullow Oil plc and Total S.A. will lead the region in terms of operatorship with five planned projects each. Of the 10 projects the two companies are expected

to operate, nine are crude and one is natural gas, with Chevron Corporation occupying third place in terms of development with its three planned projects. Key planned projects in the sub-Saharan region are expected to contribute 1.1 million bpd to global crude production in 2025, and 7.7 billion cubic feet per day to global gas production. In regards to capital expenditure (capex), around $153.5 billion is expected to be spent between 2016 and 2025, with Mozambique leading the region with a capex of $70.4 billion. Almost all of this will be spent on the Rovuma Area 1 Complex and Rovuma Area 4 Complex projects. Jonathan Markham, GlobalData’s Upstream Analyst, notes: “Progress on the liquefied natural gas (LNG) projects in Mozambique has slowed over the last few years due to financ-

ing issues and regulatory uncertainty. The operators are expected to start with relatively small-scale developments, such as Eni’s 3.4 million metric tonnes per annum (mmtpa) floating liquefied natural gas (FLNG) solution. “Reduced investment is likely to lead to a slower build-up of the projects than initially planned, only reaching an estimated combined capacity of 30 mmtpa by 2025. A final investment decision (FID) for the FLNG development is expected in 2016, while approval for the onshore facilities is likely to be delayed until 2017 and LNG exports from Mozambique are projected to start at the end 2021.” Among companies in the Sub-Saharan region, Eni SpA will have the highest capex spending, with US$21.3 billion on key planned projects over the next 10 years.

Osun signage agency threatens to prosecute politicians pasting campaign posters BOLADALE BAMIGBOLA, Osogbo

sun State government has threatened to prosecute anyone found pasting campaign posters of governorship candidates contesting the September 22 governorship poll. The threat was contained in a statement issued by the Osun Signage, Hoarding and Advertisement Agency, signed by its executive vice chairman, Dupe Ajayi-Gbadebo. The government explained that the contravention of this directive would lead to the cleaning up of such posters, the prosecution of such offenders and the refund of expenses for the cleaning up by them. Though it insisted pasting of campaign posters was outlawed, government however explained that there was an alternative to the pasting of posters by candidates,

their parties or representatives whenever they contact the Osun Signage, Hoarding and Advertisement Agency. The agency also expressed concerns over erection of billboards by governorship candidates in different parts of the state without authorisation, and warned that such actions were acts of criminality. According to the statement, in some cases, approval would be sought and granted for certain numbers of billboards for specified locations, only for those concerned to increase the number and extend the erections to areas where approval were not sought for in the first instance. Describing such actions as dubious and unexpected of people desiring to lead the state, the government warned that the agency would soon start to reel out the names of all candidates and parties involved in the impunity soonest.

Esan Youth Coalition, APC leaders rally round Obaseki, condemn attack

L-R: Ifedayo Abegunde, secretary to the state government of Ondo State; Rotimi Akeredolu, governor, Ondo State; Femi Akintunde, managing director, Alpha Mead Group, and Damola Akindolire, executive director, real estate and infrastructure development, Alpha Mead Group, during the official signing of a concession agreement for the full management and operation of The Dome International Event Centre, Akure, between Ondo State government and a subsidiary of Alpha Mead Group, Alpha Mead Development Company.

Wednesday 29 August 2018

eaders of Esan Youth Coalition, a sociocultural organisation, have joined thousands of Esan political and thought leaders as well as professional groups in condemning the recent unprovoked attack on Governor Godwin Obaseki’s convoy after a political meeting in Irrua, headquarters of Esan Central Local Government Area of the state. In a statement jointly signed by John Illegbenosa (Esan West, Ekpoma) national deputy president; Cyril Odiboh (Esan South East, Ubiaja) national secretary; Ikhile Alfred, Igueben Local Government Area coordinator; Inedegbor Oyakhilomhen, Esan North LGA coordinator; Oriabure Ediale, Esan West LGA coordinator; Ose Eromosele, Esan Central, Irrua coordinator, and Patrice Odiboh, Esan South East coordinator, the organisation said, “The attack has left

a sour taste in the mouth of well-meaning Esan youths, leaders and elders.” A separate statement entitled ‘A Letter Of Unreserved Apology’ issued by leaders of the All Progressives Congress (APC) from Esan Land, described the attack as “disgraceful, a taboo and totally unacceptable.” Also, David Imuse, a retired colonel; Austin Omofuma; Elder Sam Eboigbe; Anslem Ojezua; McCall Shaka-Momodu; Thomas Okosun; Victor Edoror, deputy speaker; Anthony Ikuenobe; Betty Okoebor; John Inegbedion; Golden Oribhabor; Justin Okonobo, all honourables, who signed the letter, apologised to the governor for “the unfortunate incident.” They stressed, “This disgraceful act is totally unacceptable to us and our people and does not represent our culture, but rather a taboo in Esan land.

‘National security consistent with, not exclusive of Rule of Law’

TCN says three new additional transformers to improve grid capacity

ccess to Justice says President Muhammadu Buhari speech at the annual general conference of the Nigerian Bar Association (NBA), that the rule of law must be subject to national security, is a misrepresentation of the relationship between the rule of law and national security. “Nigeria’s President misses the mark when he gives the impression that national security and rule of law are competing or exclusive notions or that a State must prioritise one over the other. “National security and the rule of law do not contradict one another, neither are they mutually exclusive concepts. The rule of law embodies the

HARRISON EDEH, Abuja

principle of governance that all persons, institutions and entities, including the state itself, are bound by duly made laws, including laws on national security,” the Access to Justice Media Advisory says. In a press release jointly signed by Daniel Aloaye, programme officer, and Joseph Otteh, director, Access to Justice, it says a state of war or emergency may be legitimate grounds for limiting the exercise of some human rights, but even then, the limitations have to be imposed in accordance with the law. “There is, therefore, no conflict between the two notions. In any event, no state of emergency has been declared in Nigeria, neither is the coun-

try in a state of war with another country. “The President’s remarks come against the background of his government’s persistent disregard of court orders and judgments, repression of media freedom, gross human rights abuses by security and law enforcement agencies, intimidation of, and interference with the functions of other branches of government. “National security did not require the government to behave the way it has done in all of these cases, and clearly did not require security forces to commit large-scale extrajudicial killings, or for the police to arrest and imprison female protesters for protesting,” they say.

n line with its policy on incremental power, the Transmission Company of Nigeria (TCN), under its Transmission Rehabilitation and Expansion Programme (TREP), has completed the installation of 100MVA, 60MVA and 60/66MVA, 132/33kV power transformers in three different transmission substations. The new power transformers, TCN said had increased transmission capacity from 200MVA to 300MVA in Ejigbo substation, 60MVA to 120MVA in Bida substation and from 80MVA to 140MVA in Ado Ekiti transmission substation. In a statement signed by Ndidi Mbah, general manager

(public affairs), TCN, said on Tuesday that the newly installed transformers in Ejigbo, Bida and Ado Ekiti were an addition to the several power transformer projects executed in the last one year in various substations across the country. Prior to the installation of the three transformers, the Ejigbo substation had 100MVA, 60MVA and 40MVA transformers, Bida had two units of 30MVA transformers, while Ado Ekiti had two units of 40MVA transformers. According to the statement, the installation of the new transformers is pursuant to the present administrations policy aimed at transforming the power sector for economic development and growth of the

Nigerian economy. The new 100MVA power transformer in Ejigbo has increased bulk electricity to Ejigbo Substation for Ikeja Electricity Distribution Company (IEDC) to distribute to its customers in Ejigbo, Egbe, Oke-Afa, Shasha, Ikotun, Ijegun, Idimu Town and Lagos airport. Also, the additional 60MVA 132/33kV transformer in Bida has equally increased bulk power supply to Abuja Electricity Distribution Company (AEDC) and by this, AEDC now has more power to distribute to households in Bida Town, Lemu, Army barracks, Dogo, Agaye Kacha and Kutigi through AEDC’s injection substation connected to this substation.

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Election budget: INEC adjusts proposal to N143bn

L-R: Zainab Ishaq Musa, CEO, Strategy, Operations and Partnerships, and Al-Amin Ishaq Musa, Product Design and Development, during the 5th week pitch at the Accelerator of the HultPrize, which took place at Ashridge Castle, UK, recently.

KEHINDE AKINTOLA & OWEDE AGBAJILEKE, Abuja

Nigeria in FDI push plans talks with investors in Singapore LOLADE AKINMURELE, Singapore

… as Africa Singapore Business Forum begins

igeria will leverage the ongoing Africa Singapore Business Forum to organise a country-specific investor engagement session on Thursday, August 30, where government officials will sell Nigeria to Singaporean and other investors, in a push for badly needed Foreign Direct Investment (FDI), which slumped to a decade-low in 2017. According to state statistics agency, the National Bureau of Statistics (NBS), FDI inflows to Nigeria fell to $981.7 million in 2017, less than a third of South Africa’s $3.2 billion FDI inflow and seven times less than the $7.4 billion flows mustered by Egypt, the continent’s top FDI destination that year. That gives Nigeria an FDI per head of $5.4 million, compared to Egypt’s $77.8 million and South Africa’s $58 million, given the three countries’ 180 million, 95 million and 55

million population respectively, underscoring the need for increased foreign investment in Nigeria, projected by the United Nations to be the world’s most populous nation after India and China by 2050. As part of its mandate to promote investment into the country, the Nigerian Investment Promotion Commission (NIPC) is attending the two-day ASBF 2018 conference in Central Singapore in hunt for foreign investment and will hold Nigeria-specific discussions with private investors on Thursday. Started in 2010, the biennial Africa Singapore Business Forum (ASBF) 2018 is the fifth edition of the event which has grown into a recognised platform to foster investment, trade and thought leadership between Asia and Africa. To date, the event has brought together 3,000 high level business leaders and government officials from 30 countries.

“We will have discussions around Nigeria on Thursday, where we plan to tell investors about our Economic Growth and Recovery Plan and convince them to take advantage of the investment opportunities in the country,” Aisha Wando, deputy director, overseas relations at the NIPC, told Business Day on the sidelines of ASBF 2018. BusinessDay confirmed that Yewande Sadiku, executive secretary of the Nigerian Investment Promotion Commission (NIPC), and Darius Dickson Ishaku, governor of Taraba State, will be speaking at the Grand Corpthorne Waterfront hotel in central Singapore, on the day. Sectoral investment opportunities to be highlighted at the Nigeria-specific conference will range from infrastructure, agribusiness and manufacturing, to real estate and

consumer goods, among others. “We will be targeting Singaporean investors, but we will also be engaging other Asian and global investors in attendance,” Wando said. Singapore does have a thing or two to teach Nigeria about effectively tapping foreign investment to boost economic growth, having itself tapped same to grow its economy upon independence from Malaysia in 1965. Faced with a flailing economy and high unemployment rates, the small Southeast Asian country of 5.6 million people established the Economic Development Board in 1961 to spearhead an investment drive that made the country an attractive destination for foreign direct investment. Real GDP would average 8 percent from 1960 to 1999 as foreign capital poured in while unemployment rate went from 70 percent to less than 3 percent.

UK’s £70m deported loot increases fund for infrastructure OGHOGHO EDOSOMWAN

he United Kingdom has returned £70 million recovered from a Nigerian convicted of fraud in an Italian court, according to British high commissioner to Nigeria, Paul Arkwright, while addressing reporters in Abuja. The addition of this fund is expected to increase capital for the Federal Government to fund more infrastructure. This follows the memorandum of understanding (MoU) on repatriation signed between Nigeria and Switzerland that provides check mechanisms to ensure the monies are not squandered. The agreement ensures that the repatriated funds

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from Switzerland would be used to fund government projects that would be closely monitored by the World Bank and the Swiss Civil Society Organisations in the country. Meanwhile, Arkwright said, “There was an Italian court case with a particular person involved. A portion of the fund has been in the UK and that was the portion that was returned recently from the UK to Nigeria. So, it is in that context that the £70 million was returned.” The envoy, however, refused to disclose the identity of the convicted Nigerian, saying more funds would be repatriated as the UK was working with the Nigerian government to hasten the legal process of returning looted money.

“The British government has no intention of keeping one kobo of Nigerian funds in the UK,” he said, saying, “It all must come back to Nigeria. “Just as in Nigeria, the UK feels that the judicial process is important, and we have to go through those processes before the money can be returned.” Over the years, some countries have made efforts to repatriate looted funds, especially that of the former military ruler, Sanni Abacha. Liechtenstein returned $227 million in 2014, while Jersey, reportedly returned €149 million by November 2003, with another tranche of €315 million by December 2014. Also, Luxembourg authorities publicised that $630 million of Abacha’s money

had been identified and frozen in eight bank accounts. Furthermore, the US had in August 2014, announced seizure and return of $480 million Abacha loot to Nigeria. However, Kemi Adeosun, Nigeria’s finance minister, in April 11, 2018, confirmed that Switzerland had fulfilled its pledge to return another $322 million, in addition to the first amount of $700 million that was fully repatriated by December 2012. Switzerland, a destination of choice for Nigerian looters, has an existing partnership with Nigeria for the repatriation of looted funds identified in the country. It was based on the strength of this partnership on asset repatriation between both countries that the $322 million was recovered for Nigeria.

ndependent National Electoral Commission (INEC) on Tuesday adjusted its budget for the 2019 general elections from N189 billion to N143 billion. This is in compliance with directive from the National Assembly Joint Committee on INEC, which rejected the N189 billion proposed by the Commission and urged it to revert to the initial N143 billion earlier submitted by President Muhammadu Buhari. Speaking with journalists at the end of a closed-door meeting on Tuesday, chairman of the joint committee, Suleiman Nazif, confirmed that the electoral body had submitted a new budget document reflecting the sum of N143 billion as originally re-

quested by President Buhari. Nazif revealed that a sub-committee had been established to look into the details of the new budget submitted by INEC. According to Nazif, the sub-committee is expected to complete its assignment on Wednesday. Also speaking with newsmen, a member of the committee and Senate spokesperson, Aliyu Sabi Abdullahi, assured that the committee was determined to urgently complete work on the election budget. He denied allegations that the committee was deliberately slowing down the process to frustrate moves to make the National Assembly reconvene, saying part of the reason for setting up the subcommittee was to speed up the legislative processes for the election budget.

Court warns parties against impeachment of Senate president FELIX OMOHOMHION

ustice Nnamdi Dimgba of Federal High Court, Abuja, Tuesday, warmed against any action that would jeopardise a case pending before him, which sought to restrain those behind moves to impeach Bukola Saraki as Senate president, to shield their sword until the determination of the suit. Senator Rafiu Adebayo (Kwara South) and Senator Isa Misau (Bauchi Central) had approached the court to restrain the Attorney General of the Federation and Minister of Justice, the Inspector General of Police and the Department of State Security from aiding

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the forceful removal or impeachment of the Senate president from office. They also prayed the court for an order of substituted service of court processes on the defendants. When the matter came up Tuesday, plaintiffs’ counsel, Emeka Etiaba, informed the court that he had a motion ex-parte dated August 27, 2018, and filed same day. Etiaba pleaded with the court that in the event the court was constrained to grant reliefs 1, 2, and 3, “Our alternative prayer is for the court to make preservatory orders in order to protect the (subject matter) of the suit.”

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This is to confirm that some of my documents/credentials, bear the name S.B. Bobmanuel, Sokeipirim Bobmanuel, Bobmanuel Sokeipirim and Bobmanuel S.B. That I now wish to be known and addressed as Sokeipirim Bennett Bobmanuel. All former documents remain valid. General Public please take note.

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Insurers shocked by NAICOM new minimum... Continued from page 1

director, Supervision Directorate on behalf of the commissioner for Insurance announced the take-off date as now 1st October 2018.

“In the exercise of the powers conferred on the Commission under extant laws, it hereby issue this circular for the introduction of the Tier– Based Minimum Solvency Capital Requirements, for assessment of capital adequacy and solvency control levels of all insurance companies in Nigeria, with effect from October 1, 2018,” the circular said. The circular further reads that, all insurance companies are required to ensure strict compliance by formally directing their staff to comply. “Only companies that meet the respective Tier requirements shall lead on new businesses in those categories with effect from October 1, 2018. Any case of violation shall attract penalty equal to the sum of the advised gross premium involved and in addition, the CEO and other relevant Officer(s) of the insurer shall be penalized as the Commission may “determine.” Some insurance operators who

responded to BusinessDay telephone enquiries yesterday said, they were shocked since receipt of the circular on Monday. “We were expecting a guideline as agreed and promised by the Commission,butwhatwasreleasedisacircular.” According to one of the operators, we were not against the route NAICOM was going, but we had agreed with them to allow companies work around the clock, either for merger or acquisition, fresh capital raise or other options within this year to enable them play in the Tier of their choice.” The operator however said “I think NAICOM will need to interpret the circular because we are not very clear where they are going.” Meanwhile, a call BusinessDay made to Bareneka to confirm the true interpretation of the circular was not successful as his phone was switched off. But another official at the Commission who did not want to be mentioned said, “What you find in the document is how it is, it’s not a one day exercise.” The circular further said that companies shall be assessed in the first instance on their approved financial

statement for 2017, and/or audited half year accounts for 2018. However, where a company is yet to obtain approval for its 2017 financial statement, its last approved audited accounts will be used for the assessment. “Where the audited half year accounts are presented, any improvement in the solvency assessment values must be substantiated by the insurer and duly certified by the CEO and the external auditor, subject to the satisfaction of the Commission.” The circular further stated that, all insurers shall be informed individually and by way of an advice, of the Tier-Based Solvency Capital that apply to each, on the basis of the result of its solvency test on the last approved audited accounts, at the time of raising the Advice. “Where in the event of an assessment failing below higher Tiers, such that an insurer does not meet the commensurate capital requirements, the insurer shall continue to service the obligations on the existing policies of the higher Tiers which are yet to expire, orariseonrisksunderwrittenuptoSeptember 30, 2019 or until all obligations on them are exhausted, except in the case of annuity or other life businesses.”

•Continues online at www.businessdayonline.com

Abubakar Bukola Saraki, president of the Nigerian Senate (l), with Tomiwa Idowu, director, Gilead Global, when the latter paid a courtesy visit to the Office of the Senate President, recently.

lion, more than twice the estimated

average normal consumption of 33 million litres per day. In March 2015, three months before the President Muhammadu Buhari administration took over power, NNPC data shows fuel consumption for that period stood at an average of 32 million litres per day, less than half of what it is currently. The sharp increase in consumption has been blamed on smugglers. However, the volumes of petrol exported outside Nigeria over a threeday investigation carried out by our reporter under the guise of surveying the Sokoto-Niger border for business opportunity to sell poultry products, reveals that smuggling operation carried out is still rudimentary with products moved in a cart bearing 25-litre jerry cans, storage compartments built under trucks and modified fuel tanks of salon cars to carry over 80 litres of petrol. There were also many stalls selling petrol in 1-litre bottle water containers in makeshift stalls to people in the town of over 150,000. “I have been carrying petrol across the border for a long time,” said a motorcycle operator who gave his name as Hassan, in response to the reporter’s hesitance in engaging him to move eggs across the border. “There’s nothing there,” he assured,

How Nigerian bank almost lost $400m to cyber... Continued from page 1

N144 billion. Sources tell BusinessDay that the crime was discovered by an IT administrator in the bank, who noticed that a certain email server was changed so as to prevent notifications to be sent after international

transfers were done. The criminal act was notified to the cyber security team who confirmed that this was a similar hack to one that successfully targeted the Bangladesh Central Bank. In that case a Bangladeshi central bank official’s computer was used by unidentified hackers to make payments via SWIFT, and carry out one of the biggest-ever cyber heists. The hackers sent fraudulent messages, ostensibly from the central bank in Dhaka, on the SWIFT system, to the New York Federal Reserve seeking to transfer nearly $1 billion from Bangladesh Bank’s account there. Most of the transfers were blocked but about $81 million was sent to a bank in the Philippines. It was moved to casinos and casino agents and much of it went missing. In the case of the Nigerian, sources say drastic measures were immediately put in place as the international operations team were urgently called in to do an audit which revealed that the sum of $400M had been drained from the bank without trace. The international payments settlement network of the bank was immediately contacted and as luck would have it, the siphoned funds had not gotten to its destina-

tion and all funds were recovered. Various stakeholders in Nigeria’s Information Technology (IT), and financial institutions continue to blame loose security agencies and a more than liberal judicial system in the country for the incessant record of cybercrime fraud. They say that both the judicial system and security agencies in Nigeria have shown utmost laxity in implementing and prosecuting fraudsters who have successfully divulged and compromised information systems of individuals and organisations. The most popular of cybercrimes in Nigeria is phishing and instances of malware attacks. Cyber security experts have predicted that “80 percent of Africa’s PC’s are infected by viruses and malicious software.” This is especially concerning considering that 67 percent of traffic was generated by PCs in 2015 and this amount will increase to 21 percent by 2020.” Technology has increased exponentially over the past 10 years and as a result, it has contributed to vulnerability to cybercrimes. Other crimes were perpetuated in the past but cybercrimes require a networking infrastructure to succeed. While the attempted hack on the Nigerian Bank did not succeed, sources tell BusinessDay that a fortification of the bank’s IT systems could have prevented the situation, but top management stalled on this because of the system downtime required and its potential short term impact on the business.

Is 15% inflation harmful to Nigeria’s... Continued from page 1

could lead to a decline in eco-

NNPC’s fuel smuggling claims at borders don’t... Continued from page 1

Wednesday 29 August 2018

“I find them something and I move on,” he said referring to border agents. Besides Hassan, there are a handful of others who push carts laden with petrol in 25-litre jerry cans across the border. They are usually stopped by stern looking Nigerian Customs officials whose palms are greased upon each request for passage. A back of the envelope estimate of the volumes moved over the three-day period at Ilela border in Sokoto showed that less 2,000 litres were smuggled from fuel supplied at border town filling stations. Meanwhile, the NNPC had said that 16 states, having amongst them 61 Local Government Areas with border communities, account for 2,201 registered fuel stations with 149.9million litres storage capacity. It further said that eight states with coastal border communities spread across 24 LGAs account for 866 registered fuel outlets with combined petrol tank capacity of 73.4million litres. While there are some petrol stations on the road to Ilela, there are actually two functional petrol stations within a shoutingdistancefrom theborder post, namely:NuraKureandBaharazawaInternational.Twostationswithinthearea had been abandoned and another was being constructed. It is not clear, if they were all captured by the NNPC data. To move the volumes the NNPC is ascribing to smuggling will entail a

large-scale operation involving over 750 trucks with 33,000 litre capacity to move over 25 million litres daily out of Nigeria. The entire Nigerian petrol trucking operation is undertaken by less than 2000 trucks indicating that taking out 750 will leave a yawning gap. BusinessDay also inquired from sources in border posts in Katsina and found that similar scenes play out even if the operations were nuanced. Experts say more volumes are smuggled outside Nigeria from southern borders but no one is willing to bet that hundreds of tankers are allowed to smuggle fuel out of Nigeria daily. While security at the Ilela border post appears lax for pedestrians, vehicles were subjected to intense searches. Trucks stay in queue for weeks until they are granted egress, but there were no petrol bearing truck seen leaving the border. BusinessDay inquiries did not confirm any such movement. However, the sale of illicit Nigerian petrol has become widespread across the West African sub region helping to oil black markets and distorting price mechanisms of these countries. Nigeria’s retail price peg of N145 ($0.40) per litre puts it among top 10 cheapest places to buy petrol in the world, due to petrol consumption subsidy, and is hurting investments in the downstream sector and fuelling smuggling.

•Continues online at www.businessdayonline.com

nomic growth. According to the authors, “attainment of inflation threshold of 14% would boost the economy and bring it to a steady path of growth.” This argument seems to hold at first glance when bringing the most recent economic recessions into context. In the last 30 years, Nigeria has witnessed only two recessions, the first was in 1991 and the second occurred as recent as 2016. In both recessions inflation rate exceeded the limit recommended in the study. In 1991 inflation rate was 23 percent and in 2016, inflation stood at 18.55 percent according to data obtained from CBN Statistical Bulletin 2017. In both periods, national output declined by -0.55 percent and -1.58 percent as rapidly rising price levels led to an economic contraction in the country. However, the argument breaks down when further analysis of the behaviour of economic growth was studied during periods when inflation exceeded 15 percent. In the 33 years between 1985 and 2017, Nigeria experienced 11 different periods when inflation exceeded 15 percent and economic growth was negative only in 2 out of the 11 years. This means that the probability of Nigeria entering a recession if inflation exceeds 15 percent is 18.1 percent. For a research finding or economic prediction to have statistical significance in economic theory, it must have at least 95 percent probability chance of occurrence. With the chance of a recession only 18.1 percent of the time, it erodes con-

fidence in the research findings of Okoroafor et al. In fact in 1988 and 1989 when inflation level was 61.2 percent and 44.7 percent, the economy grew by 6.23 percent and 6.66 percent respectively according to data obtained from CBN. Furthermore, as recently as 2003 and 2008, inflation level was at 23.8 percent and 15.1 percent respectively yet the economy still expanded by 9.5 percent and 7.2 percent respectively in those years. This is not to say that a high rate of inflation is healthy for economic growth. Numerous academic studies have shown that the economy tends to grow at full potential when inflation levels are low. But the argument that the appropriate threshold for inflation is 15 percent is not supported by historical data, according to BusinessDay analysis. Henry Okodua, Associate Professor of Economics at Covenant University told BusinessDay that “while the logic of the study in obtaining the inflation threshold is correct, the methodology used to obtain the results is incorrect. The appropriate estimation technique for such an analysis considering the nature of the data would have been the linear regression analysis. On the contrary, the authors used Autoregressive Distributed Lag Model (ARDL) when conditions for using such a technique were not met. This error in the analysis could lead to a spurious result and misleading conclusion.” Still, it can’t be ignored that the only recessions Nigeria has experienced in the last 30 years were during periods when inflation exceeded 15 percent which still gives a bit of credibility to the research finding.

Politics & Policy Wednesday 29 August 2018

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Suspension of illegal taxes: Group accuses Umahi of dishonesty

. . . Demands prosecution of criminal tax collectors

he Movement for Greater Ebonyi, a good governance advocacy group in Ebonyi State, has described as hypocritical the recent announcement by Dave Umahi, the state governor, that illegal tax collection in the state has been suspended. The group said that the governor only made the statement in an unfortunate frantic bid to hoodwink the residents of the state into voting for him in the build up to the 2019 general election. The group questioned why the governor is feigning ignorance of the plight of Ebonyi people, who have been reeling under the weight of several criminal taxes and levies that he slammed on them since assuming office in May 2015. “This is absolutely ludicrous,” said Silas Nworie, leader of the group, “many Ebonyi well-meaning Ebonyi people had begged him to stop his penchant for using unruly thugs to extort scarce money

Dave Umahi

from innocent Ebonyi residents in the guise of taxes and levies, but all pleas fell on deaf ears.”

Benue 2019: Majority leader joins guber race, consults elders BENJAMIN AGESAN, Makurdi

he factional leader and member of the Benue State House of Assembly representing Makurdi South State Constituency, Benjamin Adanyi has joined the Benue State governorship race. He is currently consulting elders of some political zones ranging from, Minda, Sankera and Jemgbagh, a political bloc of Benue State over his intention to run for the 2019 governorship race in the state. In Minda, members of the forum thronged the residence of the lawmaker where they accepted his request, while showering encomium on the legislator whom they were convinced could rescue the state from what he termed “its messy condition of unfavourable governance”.

Addressing the Mimda elders, Adanyi stated that today is not too far away for him to consider taking up a huge responsibility of fixing a broken wall of steel before them because God had made it so. He recalled that a lot had happened to the All Progressives Congress (APC) and acknowledged that most of the irregularities which greeted the party were unexpected considering the manner in which they did, stating that the hitches which seemed precarious have made the party more intact and prepared to clinch power in 2019. He said that the core members of the party from the defunct Action Congress of Nigeria (CAN) have never been wavered because they upheld the party’s ideologies and made sacrifices they could not afford to fulfil.

Nworie said that it is regrettably shameful that Umahi could be so funnily condescending on Ebonyi

people that he thinks they can’t see through his deceptive antics, adding that Ebonyi people are not deceived. “What he should do now is to urgently arrest and prosecute those criminals that squeezed money out of people,” a resident who have been harassed by the illegal tax agents told journalists in Abakaliki, the State Capital. “But we know he cannot do it because those people are his men; they were acting on his instructions. Ebonyi people know this. They are not deceived.” A prominent indigene of the state who is close to Umahi’s administration and who spoke on the condition that his name would not be mentioned, said that the issue of illegal taxes, non-payment of pensions and gratuity to retired civil servants in the state, and so many other draconian policies of Umahi, were some of the reasons that made Sonni Ogbuoji, a senator from the state, to move to APC.

“I was in several meetings at which Senator Ogbuoji tried to prevail on the governor to stop the illegal taxes and levies. He always told the governor that such levies amounted to suffering the already poor masses,” the resident said. “But the governor always insisted that it was his own idea of boosting the IGR (internally generated revenue) of the State.” Benjamin Ogbonna, the youth leader of APC in Ebonyi State, said that the governor has created an Ebonyi where suffering is rampant. “People are forced to buy “environmental basket” for N8,000, whether they already have or not,” the youth leader said. “Monthly refuse collection fee is N400 per shop, but neither collection nor disposal never happens.” “These and other numerous oppressive acts of the governor are the reasons for the public outcry that forced the governor to indulge in his recent unsuccessful sham move,” Ogbonna concluded.

`Youths are the agents of change, need to be guided right` SIKIRAT SHEHU, Ilorin

udu Musa, Kwara State coordinator, World Health Organisation (WHO), has said that to achieve a better Nigeria tomorrow, the youths have vital roles to play in the nation`s political situation. Musa, an indigene of Koro in Ekiti Local Government Area of Kwara State, stated this when he received members of National Association of Kwara State Students (NASS) who paid him a courtesy visit in Ilorin the state capital. According to him, “youths are agents of change, when given proper access to social, political and economic opportunity to do so.” He further said that if young people are positively nurtured, assisted and accorded adequate support, they turn their energy and creativity towards solving present and future

challenges. Musa said: “It is obvious that you have a big role to play in the political situation in Nigeria and I believe together we can elect the best leaders. “I believe by God’s grace through this great association and others come 2019, we can provide our leaders from the lowest to the highest levels. You can decide who will be your counselor, to the governor, senator and to the president. “I want to charge you to vote right for aspirants that have people in their hearts and good plans for the country so that within shortest period of time, Nigeria will be one of the greatest countries in the world.” He, however, commended NASS for its struggles and innovative programmes especially the fight against drug abuse in the society. Musa, had while assuring his unflinching support for the association, he advocated for more

investment in the Nigerian youths to foster economic and political development in the country. “I state or nation that has a very good youths which translated to students of course has a great state or nation in the future. “I want to invest in the future. When you invest in youths, you invest in future so, youths are my priority because Nigeria today, we want to grow better than what we are now and the only way we can grow a better tomorrow is to invest in the youths and by so doing, our nation will be one of greatest countries in the world. “I will not only be helping the youths of Kwara but also youths in Nigeria at large. I want to encourage well to do Nigerians to let us emulate our past leaders, the likes of Tafawa Balewa, Nnamdi Azikwe, Ahmadu Belo and late Olusola Saraki in Kwara.

CPC, ANPP are not reckoned with by the governor as APC members. “He rather embraces and accommodates core PDP members who are now in Aketi group in his government.” Olorunfemi added that the “Aketi group saga has further disintegrated the party in the state” and over 75 per cent of APC members in the state would have deflected to other opposition parties if not for the love they had for President Buhari. “This is one of the major reasons

why Governor Akeredolu has been seriously mobilising against the direct primary for the forthcoming party primaries,” he said, attributing it also to his insistence on APC former chairman, John Odigie-Oyegun’s tenure elongation. The group urged the National Chairman, Adams Oshiomhole to urgently intervene into the intra-party crisis in the state so that it will not lead to the loss of the party and President Buhari in the 2019 elections.

2019: APC group accuses Akeredolu of working against Buhari’s victory YOMI AYELESO, Akure

political pressure group within the All Progressives Congress (APC) in Ondo State - Rescue Mandate, has accused Governor Oluwarotimi Akeredolu of working against the chances of the party and President Muhammadu Buhari in the forthcoming 2019 general election. The convener of the group, Michael Olorunfemi, while address-

ing a press conference in Akure , lamented that the Akeredolu-led administration is allegedly marginalising members of the party. According to him, “It is evidently clear to all and sundry in Ondo APC that anybody who is not a member of Aketi group within APC is not a bonafide member member of Ondo APC. “This has gone a long way to create unnecessary opposition and division within the party in the state. As it is observed that virtually all the

secretly elected Congress members in Ondo APC are all members of the so-called Aketi group.” He noted that the governor, as applicable in other climes, failed to unite the party and other aspirants after the controversial September 3, 2016 primary election of the party in the state. The convener, who stressed that “all these are centred on Mr. Governor’s selfish interest,” stated that “80 percent of core APC members from ACN, CPC,

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Central Europe: Running out of steam

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World Business Newspaper

Theresa May sets out goal for UK to be Africa’s biggest investor

Prime minister seeks ‘new partnership’ with continent’s biggest economies Joseph Cotterill

heresa May said the UK aims to be Africa’s biggest foreign investor within four years as she began the first visit by a British prime minister to the continent in half a decade. Mrs May is visiting South Africa, Nigeria and Kenya this week to tout a “new partnership” with sub-Saharan Africa’s biggest economies as the UK leaves the EU. “By 2022 I want the UK to be the G7’s number one investor in Africa, with Britain’s private sector companies taking the lead in investing the billions that see African economies growing by trillions,” Mrs May said in Cape Town, the first stop on her visit. CDC, the UK governmentowned private equity group, will invest £3.5bn in African projects in the next four years as part of the pledge, she added. African countries are already home to about $55bn of UK investment, slightly less than from the US. Mrs May’s pledge will also pit the UK against France, whose president, Emmanuel Macron, has visited the continent several times since last year. Outside the G7, western links to Africa are being rivalled by China, with Beijing deepening ties though infrastructure investment. The visit by Mrs May, who is accompanied by a delegation of 29 business figures including Standard Chartered chief executive Bill Winters, is intended to showcase opportunities for a “Global Britain” after Brexit, even as terms of exit from the EU remain in the balance. En route to South Africa Mrs

May said the prospect of no deal with the EU, and reverting to WTO terms, would “not be the end of the world.” Her comments undermined Philip Hammond, the chancellor of the exchequer, who last week warned that a no-deal Brexit could reduce UK gross domestic product by 7.7 per cent over 15 years compared with a status quo baseline. The UK and South Africa, Britain’s 25th biggest trading partner, will carry the terms of an existing EU trade deal with the region into a transitional bilateral arrangement after Brexit, Mrs May said. She announced that the UK would “radically expand” its diplomatic presence on the continent, and would expand missions in west African states. She added that the UK’s foreign aid strategy would shift to helping the private sector “take root” and foster job creation in African economies. “I want to see strong African economies that British companies can do business with in a free and fair fashion,” Mrs May said. “It is not about extending geopolitical influence or creating lopsided dependent relationships, it is about the UK working more closely with the more than 50 nations of Africa to deliver our shared prosperity and security,” she said in remarks that will be seen as aimed at the Chinese state-led model in Africa. While Mrs May described South Africa, Nigeria and Kenya as “key partners” for the UK on the continent after Brexit, their combined nominal GDP — about $770bn according to the last fully revised data — barely reaches that of the Netherlands.

French environment minister Nicolas Hulot resigns Activist hits out at President Macron for taking only ‘small steps’ on green issues in government Harriet Agnew

rench environment minister Nicolas Hulot has quit President Emmanuel Macron’s cabinet, citing frustration at making only “small steps” in changing the government’s green agenda. The departure of the high-profile activist and television presenter is a blow to Mr Macron, who had made a transformation of France’s energy and environmental policies a centrepiece of his reform pledges. Mr Hulot, one of Mr Macron’s first ministerial appointees who also oversaw energy policy, agreed

to join the government after turning down offers from previous presidents. But he acknowledged “an accumulation of disappointments” during more than a year in government. “I have a little influence but I have no power,” he said. He announced his resignation during an interview on the France Inter public radio channel, saying he had not warned Mr Macron or Edouard Philippe, prime minister, of his intention. “I don’t want to lie to myself any more, or create the illusion that we Continues on page A2

Trump pledges to address Google’s ‘leftwing media bias’

President accuses search engine of producing ‘rigged’ results Naomi Rovnick

onald Trump has fired a broadside at what he perceives to be the leftwing bias of Google News, accusing the search engine’s influential news aggregation service of being “rigged, for me and others,” against the political right. In a series of early morning tweets, the US president claimed that 96 per cent of all news searches about him gave results from “National Left-Wing Media,” which he described as “a very serious situation” that he promised “will be addressed!” “Google search results for ‘Trump News’ shows only the viewing/reporting of Fake New

Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD,” the president tweeted. The president said that CNN, the television news service referred to as “Fake CNN” in Tuesday’s tweets, was “prominent”. He also claimed that the “Republican/Conservative & Fair Media is shut out.” The president has taken a supportive stance towards Google in the past, however. After the EU fined Google a record-breaking €4.3bn for abusing the dominant market position of its Android mobile phone operating system, Mr Trump came out in the company’s defence. In a July 19 tweet, Mr Trump

said: “The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!” Intriguingly, the president’s tweets also came ahead of Google, Facebook and Twitter returning to Congress early next month to testify on suspected Russian meddling in the 2016 US election. Last year, Google said it had found evidence that Russian agents bought advertisements that appeared on its search and display advertising services and that may have been used to spread disinformation and sow division during the election that Mr Trump won.

Modern slavery campaigners turn to online exploitation Challenge of fighting misleading and exploitative recruitment on social media Aliya Ram

aw enforcement agencies struggle to combat traffickers’ use of social media Online companies under pressure to remove misleading job advertisements Campaigners warn a crackdown could send trafficking underground Locuri de munca in strainatate — or “jobs abroad” in Romanian — is one of several widely followed Facebook pages that target workers from eastern Europe with adverts for jobs in the UK, Germany, the Netherlands and France. The page’s profile picture shows a woman in a shower cap carrying a pallet of strawberries; its cover photo depicts two men in hard hats measuring rebar on a construction site. With almost 17,000 followers, the page demonstrates the growing use of social media to recruit migrant labourers. But it also highlights the increasing challenge for authorities fighting misleading and exploitative recruitment online.

“If you go on Facebook, you have a lot of interest groups, migrant workers, sharing information about jobs or workers, trying to recruit each other through the internet,” said Klara Skrivankova, UK and Europe programme manager at Anti-Slavery International, the campaign group. “But there is very little information on rights, recruitment fees or deceptive recruitment.” A recent report co-ordinated by the International Trade Union Confederation and funded by the EU cited the Locuri de munca in strainatate page for featuring adverts that raised concerns about potential risks to workers. It said job ads that promised unrealistically high pay, offered no address for a recruitment agency or only shared a general description of work were “common red flags” for potentially exploitative recruitment. But the Facebook page and the website linked to it continue to feature such adverts. One advert for a tin worker from Romania to work in France provides

no job or salary information, saying only that the benefits of the work include a stable working environment and a long-term mission. When contacted by the Financial Times, the recruiter hung up the phone. Social media companies ‘have a responsibility’ Phillip Fishman, a senior adviser at the International Labour Organization, a UN agency dealing with labour problems, questioned whether social media companies should “expect a certain amount of truthfulness and responsibility in job advertisements”. “I do think they have a responsibility,” he said. “For example, if Facebook knows that there is an entity targeting a Nepalese audience to go work in the Gulf and promising $50,000 to $60,000 [a year], the question for Facebook is how much responsibility do they have to take to ensure that the advertisement is connected to reality?” In a speech at the World Economic Forum in January, UK prime minister Theresa May criticised tech companies for failing to do more to prevent trafficking.

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FT French environment minister Nicolas Hulot...

Argentina finds it harder to stick to IMF bailout plan

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Macri government’s targets in jeopardy after emerging market turmoil hits peso

are facing up to [environmental] challenges,” Mr Hulot said. “I have therefore decided to leave the government.” Mr Hulot said when he accepted a ministerial role that he believed France’s “new political situation offers an opportunity for action and I cannot ignore that”. The 63-year-old had previously declined to serve in the administrations of Jacques Chirac, Nicolas Sarkozy and François Hollande. “It was a personal victory for Macron to have poached France’s most-loved ecologist as a minister,” says Denis Florin, of Lavoisier Conseil, a management consultancy. “He’s going to be hard to replace.” Speaking at an event organised by Medef, France’s largest employers’ federation, on Tuesday, Mr Philippe said the government had “made progress” on environmental issues. He said the government was determined to take account of the “imperative of ecological transition”. The resignation comes at the end of a difficult summer for Mr Macron, after film emerged of one of his bodyguards beating protesters during a May Day rally. The president’s approval ratings declined in August for the fourth consecutive month, to a record low of 34 per cent. As France returns to work after the summer break, Mr Macron is aiming to implement reforms in other politically sensitive areas such as the pension system, healthcare, central public administration and local government. Mr Hulot’s departure comes as France tries to make a belated shift from nuclear power, which generates almost three-quarters of its energy, to renewables. Mr Hulot, a vocal critic of nuclear power, inherited a target to cut the proportion of energy generated from nuclear to 50 per cent by 2025 but was forced to postpone the target to 2035, acknowledging that a speedier shift would risk power shortages and could even push up carbon emissions. Shares in state-owned nuclear group EDF gained as much as 2 per cent on the news of Mr Hulot’s resignation and later were trading 1 per cent up on Monday’s close. A more detailed outline of the plan to cut the use of nuclear power is due later this year. Mr Macron last year pledged to “make our planet great again” — a tongue-in-cheek response to US president Donald Trump’s decision to withdraw his country from the global Paris climate accord. However, Mr Hulot said the government had achieved only “small steps” on environmental issues since his arrival, criticising political inertia in areas such as cutting pesticide use. Marc-Antoine Eyl-Mazzega, director of the Centre for Energy at Ifri, a Paris-based think-tank, described Mr Hulot as the “green credentials” of Mr Macron. His resignation shows that “it’s one thing to have ideas, strategies and objectives but to deliver them has proven so far not to work,” Mr Eyl-Mazzega said. He added that Mr Hulot “was in fundamental disagreement with the government over the role that nuclear energy should play. He saw nuclear as a burden, not as a strategic asset.”

Colby Smith and Charles Newbery

Trump’s Nafta deal with Mexico puts pressure on Canada US president warns Ottawa new levies could be imposed amid trade dispute James Politi

n the Oval Office on Monday, Donald Trump was flippant as he discussed the prospect of Canada joining the revised Nafta trade agreement that he had sealed with Mexico a few minutes earlier. “If they’d like to negotiate fairly, we’ll do that,” the US president said, with the cameras rolling. “With Canada, frankly, the easiest thing we can do is to [impose a] tariff [on] their cars coming in,” he quipped. Mr Trump’s posturing — and his warning that new levies could be looming on the Canadian auto industry — seemed designed to apply maximum pressure on Ottawa to accept the terms of the deal agreed with Mexico, or face an escalating trade dispute with the US. Washington is also trying to force its northern neighbour’s hand in terms of timing. To ensure that outgoing Mexican president Enrique Peña Nieto signs the deal before departing office in No-

vember, the US Congress must be formally notified about the Nafta agreement by Friday. Trump officials have vowed to do so with or without the Canadians. “We’ve been painted into a corner, Canada is in a bind,” said Peter Mackay, a former conservative Canadian foreign minister working on trade issues for Baker McKenzie, the law firm. If no deal is reached and Canada is left out, “the US will pay a price, but we will pay a bigger price”, Mr Mackay added. Chrystia Freeland, the Canadian foreign minister, was set to fly to Washington on Tuesday in an attempt to rescue a trilateral deal, cutting short a trip to Europe. Her presence will mark Canada’s return to the Nafta talks after weeks on the sidelines following a vitriolic spat between Mr Trump and Canadian prime minister Justin Trudeau, at the G7 in Québec in June. After the Canadian leader attacked US tariffs on steel and aluminium as “insulting” to Canada, because they were motivated on national security

grounds, the US president retorted that Mr Trudeau was “very dishonest and weak”. The freeze in trade relations between Ottawa and Washington gave an opening for the bilateral deal with Mexico to be hatched, even though Canadian officials have insisted they have been kept in the loop on many aspects of the agreement. On Monday afternoon, Mr Trump and Mr Trudeau spoke by telephone, in a conversation described by the Canadian prime minister as “constructive”, signalling that a real thaw could be in store. Any possible deal with Canada would be likely to hinge on a satisfactory compromise on agriculture, and dairy in particular. The US, along with other nations, has often called on Canada to open up its dairy market to greater competition, but been rebuffed. Canada may also seek some tweaks to provisions on investor dispute settlement and new rules of origin in car production, which could affect its own auto sector.

Europe’s banking union lacks the key element of deposit insurance A guarantee scheme is crucial, writes economic advisor to German government Isabel Schnabel

reaking the direct link between eurozone countries and their banking systems is the major goal of the European banking union. But the risks borne by governments and banks continue to be closely connected, as recent events in Italy have shown. Two key elements of the banking union are still missing: a European deposit insurance scheme and a system of regulation for banks’ sovereign exposures. Unfortunately, the political situation in Italy could slow down eurozone reform. But allowing that to happen would be a big mistake. The deposit guarantee programme was at least mentioned in the final statement that emerged from the EU summit in June. This was surprising because it is one of the most controversial issues relating to banking union, especially in Germany. The strong opposition to it there is mostly the result of the lobbying of German banking associations, who have managed to establish the misleading narrative that such a scheme would misuse the money of German savers to

rescue European banks. The truth is that existing deposit insurance schemes give banks in Germany a competitive advantage that they are reluctant to give up. Credible deposit insurance is crucial for financial stability. Depositors in more solvent countries in practice enjoy better insurance and higher financial stability than depositors in less solvent countries. But in a currency union, instability in one country is likely to spill over to others. This is what we saw during the eurozone crisis that began in 2010. A well designed European deposit insurance scheme would help to break the vicious circle of bank and sovereign risk. It would reduce the need for government intervention through the bundling of funds within the eurozone and decouple deposit insurance from the solvency of any single country. It would also foster financial integration by allowing customers to choose more freely among banks across the eurozone as a whole, without forgoing high-quality deposit protection. Cross-border bank mergers would also be encouraged under

such a scheme. This would improve risk-sharing, since domestic shocks could be buffered more easily by pan-European banks. The benefits for the eurozone as a whole, as well as for individual savers in eurozone countries, would be considerable. There is a connection here to a more contentious issue: the regulation of banks’ sovereign exposures. Currently, this benefits from regulatory privileges, being exempt from capital requirements and large exposure limits. The result is high volumes of sovereign debt on banks’ balance sheets, with a strong bias towards domestic bonds. Under the deposit insurance scheme, sovereign default risks would be shifted to the European level. But despite its importance, the regulation of sovereign exposures is not on the political agenda. The European Commission has kicked it into the long grass. And the issue is not mentioned in either the June summit statement or the letter sent just before that meeting by Mário Centeno, head of the eurogroup, to Donald Tusk, president of the European Council.

rgentina may have reluctantly fallen back into the embrace of the International Monetary Fund, but the biggest aid package in history has not managed to inoculate the country from an onslaught of market pain. Many investors felt reassured when Argentina received a $50bn credit line from the IMF in June and President Mauricio Macri followed through on mandated reforms to slash the fiscal deficit and tame inflation. Yet the recent turmoil in emerging markets has since muddied the outlook and called into question how Argentina will meet its $82bn financing needs for this year and next, while navigating a looming recession and rising consumer prices ahead of a presidential election in 2019. While most investors believe that policy continuity is crucial if the economy is to normalise, the turbulence roiling emerging markets adds additional hurdles to an already-treacherous obstacle course, according to John Baur, a portfolio manager at Eaton Vance. “With the external environment and the uncertainty about where the [Argentine] peso is going to end up, it’s just too hard to say if they can meet their IMF targets,” he said. Argentina’s currency has weakened more than 9 per cent against the dollar since the start of the month, cementing its position as one of the biggest losers in the broader EM rout triggered by the Turkish lira’s tumble. The Banco Central de la República Argentina (BRCA) moved quickly to shore up the peso last week, hiking its benchmark overnight interest rate five percentage points to 45 per cent. “It was a necessary move,” said Stuart Culverhouse, chief economist at Exotix, a frontier-market boutique investment bank. “As the currency weakens through this contagion, it’s going to put the country further at risk of not meeting the IMF’s inflation target.” In July, consumer prices rose 3.1 per cent, bringing the 12-month inflation rate to 31.2 per cent, about 10 percentage points above the IMF’s 2019 target. “Without the ability to arrest inflation,” added Mr Culverhouse, “Argentina won’t have credibility with investors.” The country’s short-term debt obligations pose another problem. Between this year and next, Argentina has roughly $50bn of peso and dollar-denominated debt coming due. The bulk are peso-denominated Lebacs, which are fixed-rate bills issued by the central bank with yields as high as 52 per cent. Following monetary tightening in December 2015, investors piled into these instruments, which have maturities as short as 35 days. At its peak, the amount of Lebacs in circulation exceeded $60bn. Although the market has since shrunk to about $21bn, rolling over this debt has become a major source of market anxiety as investors gauge each auction’s success.

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@ FINANCIAL TIMES LIMITED

Shipping container developments offer lifeline to small businesses Container park in Newcastle helps to revitalise city centre site Chris Tighe

n the centre of Newcastle, next to some of the UK’s finest neoclassical buildings, several dozen small food outlets, bars and shops have begun trading out of 54 former shipping containers. The £1.5m development, called The Stack, stands on Pilgrim Street on the site of the old Odeon cinema. Aimed partly at millennials, it offers an “enchanted garden” with artificial flowers and outdoor furniture under a marquee in which to drink gin and eat vegan, Mexican, Lebanese and Italian food. It is the second development built out of shipping containers to open in Tyneside in recent weeks. By the River Brew Co, on the Gateshead side of the Tyne river, is a “creative container community” that houses a microbrewery and a “hawker market” selling streetfood. Container parks are proliferating elsewhere after the first UK scheme, Boxpark Shoreditch, opened in 2011, followed by Boxpark Croydon in 2016. Roger Wade, Boxpark’s chief executive, said he was planning nine more sites, using steel-framed buildings as well as refurbished containers, in London and Brighton, and possibly Birmingham, Liverpool, Manchester, Leeds and Nottingham. He estimates

there are a hundred such parks worldwide. “In an increasingly digital age people are crying out for special places, places they feel they can come together as a community,” he says. Boxpark is, he adds, “built around the concept of eat, drink and play”. For small retailers, shipping container schemes offer a city centre location without an onerous or lengthy lease. “This is an ideal place, it’s up and coming and hip,” says Vicky Tate, co-owner of the Hungry Vegan, which has taken a Stack unit. She likes being among other independent businesses. “It gives you a real community vibe.” Tenants say the cheapest containers cost £10,000 per year plus VAT and service changes; a middle-sized unit’s rent is £25,000 a year on a three-year lease. They do not have to pay business rates. According to the latest Local Data Company data, 11.3 per cent of retail and leisure space in Britain’s towns and cities is now vacant. UK consumer spending growth is weak — down 0.9 per cent in July— and many shops and pubs are hard pressed to keep their premises open. Shipping container schemes offer an alternative location for small businesses unable to afford conventional city centre overheads.

Didi says it will prioritise safety over growth after murders Chinese ride-hailing company at the centre of controversy following two women’s deaths Jessica Dye

idi Chuxing, China’s ridehailing giant, has said it will start measuring success in terms of safety rather than scale and growth, after the second murder of a female passenger in four months sparked backlash from government authorities and users. Didi – which is the world’s largest ride-hailing platform by both valuation and riders served – issued a remorseful statement on Tuesday, saying: We see clearly this is because our vanity overtook our original beliefs. We raced non-stop riding on the force of breathless expansion and capital through these few years; but this has no meaning in such a tragic loss of life. Throughout the company we start to question if we are doing the right thing; or even whether we have the right values. There is an enormous amount of self-doubt, guilt and soul-searching. The only thing we can do at this moment of pain is to face the pain and take on our responsibility. Not a single second shall be lost in solving the problems with our full effort. To bring back what we were here for from day one, this is the only meaningful kind of condolence we could offer to the victim. It said that it will stop using “scale and growth as our measurement of success”, instead making safety “the

single most important performance indicator.” Safety products like an SOS button and itinerary sharing functions will be upgraded, and the company said it will make changes to ensure that users dialing the police can be connected as soon as possible. Hitch – the carpool service that was halted earlier this week – will remain suspended indefinitely until a user-approved safety mechanism can be added. The service’s business model will be “thoroughly reevaluated”, Didi said. Additionally, Didi said it will deepen its collaboration with law enforcement agencies, including the testing of a new self-service inquiry system for police. Didi’s red-hot growth has helped it out-manoeuvre Uber in China, and it is in the midst of an international expansion push. Its Hitch product in particular has resonated with younger users, since it is less expensive than regular Didi rides. However, it came under intense criticism after a 20-year old woman using its Hitch service was raped and killed on Friday. The death followed the murder of a flight attendant who was killed while using the service earlier this year. In both cases, Didi acknowledged it had received a previous passenger complaint of sexual harrassment involving each of the drivers.

The Stack, aimed partly at millennials, offers an ‘enchanted garden’ with artificial flowers and outdoor furniture under a marquee © Mark Pinder/FT

Facebook aims for fossil fuel-free future

Social media group plans to use only renewable energy by the end of 2020 Ed Crooks

acebook is aiming to use only renewable energy by the end of 2020, joining companies ranging from Citigroup to Ikea in embracing similar green targets. The social media giant has a rapidly growing demand for electricity because its data centres have to run 24/7 and cannot afford to lose power at night or when the wind drops. Facebook has got around this by signing contracts to buy power from wind, solar and hydropower facilities to match its consumption over the course of a year. Last year this was 2.46 terawatt hours of electricity, up 34 per cent from 2016, and more than enough to power all the homes in the US state of Vermont. Facebook has signed power purchase agreements or “green tariff ” deals with local utilities, on the understanding that those utilities will be supporting new solar, wind and hydropower capacity. In 2017, Facebook covered 51 per cent of its electricity usage

that way, and by the end of 2020 it plans to increase that to 100 per cent. This is somewhat different from the mental image that people may have of companies using “100 per cent renewable energy”, which might suggest data centres connected directly to wind farms and solar arrays. But with variable sources such as wind and solar, there is not yet a cost-effective way to provide the constant power that the company needs. Although the costs of battery storage have been falling rapidly, and it is becoming competitive for services such as reducing consumption from the grid at peak times, it is not a realistic option for providing reliable back-up power. “The realities of the grid and current storage technologies make it prohibitively expensive to directly supply 100 per cent renewables at all times,” said Adam Brandt of Stanford University. That means that Facebook’s facilities still rely on the local grid, and therefore on fossil fuels. On

average this year, about 34 per cent of US electricity comes from gas-fired plants, 28 per cent from coal and 20 per cent from nuclear. Facebook said that when it signs a contract for renewable electricity, it makes efforts to ensure that its purchases are genuinely leading to additional capacity being added to the system, not just replacing or rebadging other clean energy investments that would have been made anyway. “We want to know that the new renewable energy project is being added to the same grid that serves us, so we can be sure that it is really adding new clean energy and is displacing fossil fuels,” said Bobby Hollis, the company’s head of global energy. That effort is made easier, he said, by the fact that Facebook’s power consumption is growing so rapidly. With each new data centre representing a significant addition to electricity use in its area, the company is able to ensure that the additional demand is met by additional renewable supply.

Stocks gain after US-Mexico trade breakthrough Dollar stuck near 4-week low while bonds tread water and oil prices ease Alice Woodhouse and Michael Hunter

entiment on stock markets has received a boost from a revived US-Mexico trade deal agreed on Monday. European stocks are higher, after gains over much of Asia and another run of record closing highs in the US. Wall Street’s S&P 500 is extending its record closing high with a further gain of 0.2 per cent. The dollar index is 0.3 per cent weaker and down at levels last seen in early August. The Mexican peso pulled back 0.4 per cent to 18.8367 a dollar, after rallying on news of the trade deal. The trading pattern follows a breakthrough over the Nafta trade agreement between the two countries, but it remains unclear if Canada, Nafta’s third partner, would join the deal, which US president Donald Trump said would be renamed the US-Mexico trade agreement. The two countries agreed stricter rules for Mexican car exports to the US with measures designed to discourage manufacturers from moving factories to lower-wage Mexico,

while tariff-free trade for farm products was maintained. Robert Carnell, ING’s chief economist and head of research for Asia Pacific, said the deal should be viewed as a result of “sheer negotiating muscle” rather than a “more reasonable attitude to trade” and that the agreement offered no hope for a US-China trade deal. “There is, right now, no visible interest from the US administration in pursuing talks with China over trade, and there will probably not be either unless China proposes some farreaching changes to issues such as intellectual property protection and forced technology transfer,” he said. Equities London’s FTSE 100 is up 0.5 per cent as it returns from a long weekend break. Frankfurt’s Xetra Dax is 0.2 per cent higher, while the Europewide Stoxx 600 is also up 0.2 per cent. Italian assets are underperforming in line with political uncertainty relating to negotiations between the country’s populist coalition partners ahead of the government’s first finance bill. Milan’s FTSE MIB is down

0.3 per cent, led downwards by banks but off earlier session lows. Hong Kong’s Hang Seng index added 0.3 per cent to its highest level since August 10. Japan’s Topix gained 0.8 per cent to an almost three-week high. That positive mood failed to translate to China’s domestic markets, with the CSI 300 down 0.2 per cent. Australia’s S&P/ASX 200 added 0.6 per cent, with the financials and basic materials stocks up in tandem. Overnight on Wall Street, the S&P 500 ended up 0.8 per cent at a fresh record high, while the Nasdaq Composite rose above the 8,000-point mark for the first time. Forex The euro is up 0.2 per cent at $1.2909, with the pound 0.1 per cent higher at $1.2901. The yen is 0.2 per cent weaker at ¥111.06 a dollar. Fixed income The yield on 10-year US Treasuries, which moves inversely to price, is flat at 2.85 per cent. The yield on 10-year German Bunds is down 1 basis point at 0.368 per cent.

BUSINESS DAY

C002D5556

Wednesday 29 August 2018

ANALYSIS Uber chief preaches growth over short-term profit Khosrowshahi lowers the temperature and raises group’s sights as it heads for IPO Shannon Bond

Central Europe: Running out of steam After 20 years of growth, labour shortages threaten to shake up the region’s economic model James Shotter

hen Jan Wroblewski was scouring the market for staff for his string of hotels across Poland this year, a company approached him with an unexpected proposal: why not fill the gaps with workers from the Philippines? At first the idea of shipping in staff from almost 10,000km away seemed “weird”, Mr Wroblewski recalls. Yet now he is hoping to strike a deal. “We started to analyse it . . . and it turned out that maybe the difference between Polish people and people from the Philippines is not so great. They are Catholics, so we think they will integrate into local society better,” he says, referring to two societies that are predominantly Catholic. “Now we are thinking about bigger contracts.” Mr Wroblewski’s experience is an example of the strains emerging in central Europe’s booming economies as unemployment hits record lows and labour shortages start to bite. Since they joined the EU in 2004, Poland, Hungary, the Czech Republic and Slovakia have made huge economic gains by matching capital from multinationals with cheap, well-educated local workers. The transformation of a region scarred by 40 years of communist mismanagement has been one of the EU’s biggest successes. Yet as the dearth of workers becomes more acute, that model is becoming harder to sustain, and the region is approaching a crossroads. “The previous growth model took advantage of the reserves of labour that were available, and which should have been employed better. The communists were so wasteful that it has taken almost 25 years to fully re-employ the human capital that we have,” says Witold Orlowski, chief economic adviser to PwC in Warsaw. “But now the central European countries are by and large all facing this problem [of labour shortages], or are slowly approaching it. And that means that they will need to change their growth model. That is clear.” The upside of a successful shift in economic model would be considerable: higher wages for populations who have looked on in envy at the standards of living in western Europe. But the risk is that if wages rise faster than productivity, the region will not attract the foreign investment that has buttressed its economies for two decades. Even to talk of labour shortages in central Europe will come as a surprise to many in the rest of the EU, which has seen an influx of migrants from the region in the past decade and has watched many central European leaders strenuously oppose plans to house more refugees . The large number of workers in the UK from countries such as Poland was one of the key underlying issues in the Brexit referendum.

Yet the labour shortages rippling through central Europe are the result of demographic decline and economic success. Having peaked in the late 1990s, the region’s population is now shrinking, wizened by emigration and tumbling birth rates. The trend is likely to worsen. According to UN projections, the combined population of Poland, Hungary, the Czech Republic and Slovakia — known as the Visegrad Four, or V4 — will fall from about 64m in 2017 to just 55.6m by 2050, or about 13 per cent. Over that period, no region in the world will experience a faster decline — although some countries, such as Japan, will see even sharper drops. Meanwhile, economic growth in the region has accelerated, powered by surging private consumption, rock-bottom interest rates and billions of euros of funding from the EU. Lured by the prospect of faster growth rates than in western Europe, foreign investors have flocked to the region, with state of the art factories, steel-and-glass office blocks and sleek new shopping centres springing up from Gdansk to Gyor. For now, the V4 continues to boom. Its economies are set to expand by around 4 per cent this year. JPMorgan and Standard Chartered are planning new offices in Warsaw. Britain’s biggest carmaker, Jaguar Land Rover, will shift production of its Land Rover Discovery to its vast new factory in western Slovakia. German rivals Daimler and BMW are working on new plants in Hungary. However, the region’s ability to supply workers to keep those factories ticking over is approaching its limits. In the three months to June, 86.6 per cent of industrial companies in Hungary said labour shortages would limit their output in the coming quarter, according to Eurostat. In Poland the figure was 49.7 per cent, and in the Czech Republic it was 43.2 per cent — in both cases roughly double the level two years ago. These pressures are fuelling a furious battle for staff. Labour costs in Hungary in the first quarter were 10 per cent higher than a year earlier. In the Czech Republic, they were up 9 per cent, in Slovakia 8.5 per cent, and in Poland 8 per cent. In some sectors, the competition has become so ferocious that it is beginning to disrupt business. Katarzyna Jaeger, of the Dutch logistics group Raben, which is active across central Europe, says clients have told her of cases where drivers from other companies did not turn up for work, after being offered better wages elsewhere. “We were getting calls from customers asking whether we had any available resources because the trucks they had ordered just hadn’t appeared,” she says. In other sectors, executives fear even worse consequences. Dariusz Blocher, chief executive of Budimex, Poland’s biggest construction group

by revenues, says he deals “every day” with subcontractors struggling to complete projects on time because of staff shortages. In some cases, he says, the combination of surging wages and material costs and the stringent terms on public contracts could force companies out of business. “Due to the low unemployment rate people have a lot of opportunities to find work with an incredible amount of money, because companies are desperate and they are offering sometimes to double your salary if you change job . . . There is huge pressure for wage increases,” he says. In the short term, the countries in the region are trying to boost their labour supply. Hungary has attempted to do this largely by providing incentives to increase participation levels in the workforce. “We believe that if you rely on your own population . . . your own identity-environment . . . it is going to be an economic advantage,” said Zoltan Kovács, a spokesman for Hungary’s prime minister, Viktor Orban, adding that the government does not intend to use immigrants either “as a demographic solution and/or as a solution in the labour market”. The other members of the V4 are increasingly looking abroad for relief. Poland — the region’s biggest economy — has gone the furthest. Last year, it issued 1.7m special shortterm work registrations to citizens from its eastern neighbour. It is on course to issue even more in 2018. Businesses estimate that between 1m and 2m Ukrainians are now working in Poland, in what has become one of Europe’s biggest, yet least visible, migrations. “If it wasn’t for the Ukrainians we would be in big trouble,” says Maciej Witucki, chief executive of Work Service, a staffing group active throughout central Europe. Most Ukrainians in Poland are only there temporarily. But with businesses pushing for them to be allowed to stay longer, the government is now working on an immigration overhaul that would allow Ukrainians — and selected other foreigners, mainly from eastern European countries — to come to work in Poland for longer. It is also pondering the more radical step of easing rules for workers from some Asian countries, such as Vietnam and the Philippines. However, in a region that includes some of the EU’s most ethnically homogenous countries, and where politicians routinely seek to earn political capital by railing against foreigners, even small changes can be controversial. Krzysztof Bosak, vice-president of Poland’s far-right National Movement, said in June that any government that made immigration part of its socio-economic system would be “a government of national treason”. “Better depopulation and slower development than immigration and population transformation,” he tweeted.

ara Khosrowshahi has spent the last year pitching to the public and regulators a more responsible and better behaved Uber as the car-booking company seeks to move on from a tumultuous series of scandals and boardroom drama. Entering his second year as chief executive, Mr Khosrowshahi has to tell a new story to a different audience. As Uber gears up for what is expected to be one of the tech world’s biggest public flotations, its leader says he will focus on demonstrating the long-term value of a business whose investors will be asked to shoulder big investments and hefty losses for the time being. “I think the real trade-off is going to be between profitabil-

eye-popping valuations from private investors while remaining shielded from pressures to translate outsized revenue growth into profitability. Mr Khosrowshahi said he was confident Uber had a “compelling” story: ploughing money into bets beyond carbooking will pave the way for a portfolio of multibillion-dollar businesses, from food delivery to bikes and scooters to freight brokerage, that the market will deem “very valuable”. Dressed in a dark sweater over a plaid collared shirt, the bearded 49-year-old is relaxed by typical corporate standards but still a bit formal among the casually clad population of Uber’s open-plan main office. The former Expedia chief’s measured tone suits the role he was hired for last summer: to calm the waters after 2017’s turbulence culminating in the

Dara Khosrowshahi: ‘I think the real trade-off is going to be between profitability and growth, especially as a public company’

ity and growth, especially as a public company,” Mr Khosrowshahi said in an interview at Uber’s San Francisco headquarters. “The fact is, because of the addressable market here, there’s been a huge amount of capital invested in this space. That investment is going to have to come with return over a period of time,” he said. The key phrase is “over a period of time”. Mr Khosrowshahi, whose mandate upon joining Uber included setting a timetable for an initial public offering, must now convince investors that delaying profits in order to ramp up investments will result in an even bigger pay-off down the road. Silicon Valley entrepreneurs frequently complain that public markets are too focused on short-term profits at the expense of long-term prospects. Uber’s anticipated public debut will break a long streak of big tech companies that have achieved

ousting of Travis Kalanick, his predecessor and one of the company’s founders. Uber fundraising chart Mr Khosrowshahi has notched some notable achievements in the past 12 months, including filling holes in Uber’s top management team, pulling out of lossmaking markets, winning back its licence to operate in London, and settling a messy lawsuit with Alphabet’s Waymo. He finalised a big investment led by SoftBank, undertook sweeping governance changes on the oncefractious board, and recruited a seasoned executive, Ron Sugar of Northrop Grumman, as independent chairman. He has also taken steps to heal deep fissures inside the company after allegations of a sexist and toxic culture under Mr Kalanick. The company is paying $10m to settle pay discrimination claims from hundreds of current and former employees, including $1.9m earmarked for harassment allegations.

BUSINESS DAY

C002D5556

NEWS YOU CAN TRUST I WEDNESDAY 29 AUGUST 2018

Opinion

President-for-life? OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

he candidate of the ruling All Progressive Congress (APC) in the recent Senatorial bye-elections in Bauchi South constituency, Alhaji Lawal Yahaya-Gumau campaigned explicitly on a platform of working towards a constitutional amendment to enable President Muhamadu Buhari become president-for-life. Gumau who one may safely assume is of sound mind being a two-term and current member of the House of Representatives representing Toro federal constituency of Bauchi State and who is clearly not a novice regarding constitutional matters declared that he was interested in going to the senate â&#x20AC;&#x153;to protect Buhariâ&#x20AC;&#x2122;s interest.â&#x20AC;&#x153; In the new senator-electâ&#x20AC;&#x2122;s own words as reported by Punch Newspaper

in its online edition of August 11, 2018, â&#x20AC;&#x153;I, Lawal YahayaGumau, want you to know that the mandate that will be given to me Saturday is to go and protect Buhariâ&#x20AC;&#x2122;s interest in the senate. This is the only mandate that I will be going to the Senate with, having fulfilled every other mandate to the best of my ability while in the House of Representatives for eight years. By Godâ&#x20AC;&#x2122;s grace, we will amend Nigeriaâ&#x20AC;&#x2122;s constitution to allow Buhari to be president for the remaining years of his life. Obasanjo tried all his best for the constitution to be amended to allow him go for a third term, but God didnâ&#x20AC;&#x2122;t approve of it because of its (sic) lack of sincerity. What is now needed in Nigeria is to protect Buhariâ&#x20AC;&#x2122;s interest and that is what we will do.â&#x20AC;? Lawal Yahaya-Gumauâ&#x20AC;&#x2122;s statement was clear, explicit, unambiguous and categorical. His statement was articulated in clear English, and was coherent and internally consistent. He expressed clarity about the historical context and distinguished his mission from Obasanjoâ&#x20AC;&#x2122;s earlier failed attempt to amend the

1999 constitution to enable Obasanjoâ&#x20AC;&#x2122;s own third term. In Gumauâ&#x20AC;&#x2122;s articulation, which you may understand was carefully directed at the â&#x20AC;&#x153;clericalâ&#x20AC;? audience and may resonate therein, the reason Obasanjo failed was because â&#x20AC;&#x153;God didnâ&#x20AC;&#x2122;t approve of itâ&#x20AC;? predicating the chances of success of this particular Buharian attempt at a third and infinite term on â&#x20AC;&#x153;...Godâ&#x20AC;&#x2122;s grace.â&#x20AC;? Gumauâ&#x20AC;&#x2122;s affirmation has not been disputed by anyonenot by Buhari, his spokespersons, his party the APC or his government. Alhaji Gumauâ&#x20AC;&#x2122;s Bauchi South constituency has duly granted him the mandate he requested, clear in the knowledge of the purpose for which he sought the office, and he will soon be sworn-in as Senator to pursue his mission of amending the constitution to enable Buhari become president-for-life! We can expect him to be joined by many others when the time comes! By the way, there are some people whose sole logic for urging us to re-elect Buhari rests on the expectation that after Buhariâ&#x20AC;&#x2122;s second-term, power can be â&#x20AC;&#x153;rotatedâ&#x20AC;? to the

South-West where presumably, they expect to â&#x20AC;&#x153;inheritâ&#x20AC;? the office. What is shocking is that no one, not a single voice has been heard questioning Gumau on the appropriateness of his very clearly defined and communicated mission! Meanwhile President Buhari himself declared in Abuja on Sunday August 28, 2018 at the opening ceremony of the Annual General Conference of the Nigerian Bar Association (NBA)-Nigeriaâ&#x20AC;&#x2122;s largest congregation of Lawyers (!)

In effect, Buhari and persons acting on his behalf and in his â&#x20AC;&#x153;interestâ&#x20AC;? are by words and actions presenting Nigerians with a de facto campaign platform based on entrenchment of life presidency and dictatorship, and discarding the rule of law in favour of martial law

that â&#x20AC;&#x153;the rule of law must be subject to the supremacy of the nationâ&#x20AC;&#x2122;s security and national interest.â&#x20AC;?The presidentâ&#x20AC;&#x2122;s declaration was not inconsistent with the way his administration has behaved since he came into office in 2015-disobeying court orders it disagrees with; arresting and detaining journalists and political/sectarian opponents without trial; and executing hundreds (or perhaps thousands) of Shite and Biafran protesters without regard to the rule of law. In Buhariâ&#x20AC;&#x2122;s conception (and evidently those of his legal advisers who now appear to include Festus Keyamo SAN; Professor Itse Sagay SAN; in addition to Attorney General Abubakar Malami SAN), the determination of â&#x20AC;&#x153;national security and national interestâ&#x20AC;? is to be made by the president and executive arm of government without reference to the judiciary! The regime has already demonstrated its disdain for the legislature as it seeks to humiliate and suppress its leadership and independence; and the judiciary, the homes of whose justices it sent armed and masked DSS

officers to invade in dead of night and whose judgments it ignores when it deems them contrary to â&#x20AC;&#x153;national security and national interest.â&#x20AC;? In effect, Buhari and persons acting on his behalf and in his â&#x20AC;&#x153;interestâ&#x20AC;? are by words and actions presenting Nigerians with a de facto campaign platform based on entrenchment of life presidency and dictatorship, and discarding the rule of law in favour of martial law. It should by now be clear to right thinking Nigerians that if Buhari succeeds in his second term ambition, our nation is very likely to lose its democratic and constitutional character-fundamental human rights, a free press, electoral term limits, free and fair elections, parliamentary integrity, an independent judiciary and the rule of law would be in significant jeopardy. They are implicitly and explicitly defining this agenda and we can no longer claim to be unaware! I have never seen a people voluntarily give up their freedoms and knowingly walk into servitude and oppression. I pray Nigeria after 2019 may not provide such a case study.

Affordable housing strategies: mixed income policies (Part I)

AMAMCHUKWU OKAFOR Okafor Â is Â a Â policy Â researcher Â and Â strategist. Â He Â can Â be Â reached Â via Â amam.okafor@gmail.com

rban societies are typically a mix of diverse people and interests that are often interdependent. It is therefore pertinent that urban housing strategies account for social integration of these varied interests. But the â&#x20AC;&#x2DC;affordabilityâ&#x20AC;&#x2122; of housing seems to be an ambiguous subject matter. Definitively, affordability should capture the average income of the people, the design and material costs of building, the underlying costs of lands, maintenance costs and other associated costs that determine the price per unit of the housing structure. In Lagos where the prices of lands, materials and designs are comparatively high, the final price per unit of a decent housing development turns out to be above the average wage of the people and thus a luxury for the low-middle income groups. A realistic price for low-income resident should derive from the prevailing average income, ranging therefore between N18, 000

and N50, 000. The inflated cost of lands is due mainly to a combination of factors including inflexible land tenure system, land speculation, land grabbing and high incidence of fraud. The result is the manifestation of inequality and segregation in settlement pattern â&#x20AC;&#x201C; for which mixed income/class policies are possible solution. Mixed income/class housing is a strategic co-location of both social housing and market housing designs in an area with shared access to infrastructure in order to ensure social inclusiveness. Given the housing situation in the country, market motivated strategies only worsen inequality and social exclusion. The time is now to grease the stiff necks of the government, call the attention of private developers and community stakeholders towards mixed income/class alternatives. We must build political consensus on housing as a necessary human need for the rich and poor alike. Challenges to mixed income/class housing policies r .B SL F U N F D IB O J T N where the government has failed to provide the basic infrastructures that ensure social inclusiveness and lacks policies against gentrification of cities, private developers step in to fill the gaps however with a selection strategy that maximizes profits. For instance, if the underlying land

In Lagos where the prices of lands, materials and designs are comparatively high, the final price per unit of a decent housing development turns out to be above the average wage of the people and thus a luxury for the low-middle income groups is auctioned and developed under market process like in Banana Island, a decent unit in the eventual development becomes too expensive for the common man. r 4 P D J B M D P T U T N J Y F E strategies imply that low income earners live in the same neighbourhood as the wealthy where infrastructures are available. But these infrastructures and utilities such as energy carry costs that may exceed the income levels of the poor. Also, because prices generally tend upwards, the activities of wealthy may drive up prices â&#x20AC;&#x201C; of foods, schools â&#x20AC;&#x201C; such that the poor may sort themselves out. Example, Amuwo-odofin, FESTAC town. r4FDVSJUZ UIF HSPXJOH EJTparity between classes has dy-

namic implication on behavioural patterns and environmental expectations for both classes. This for the wealthy class manifests in perception of insecurity around the poor and class tension. For the poor, it could mean oppression and intimidation. Policy proposals: case study Studies show that inclusive, equitable cities are more sustainable. In particular, two international case studies in Vienna, Austria and Maryland, USA show interesting outcome and could serve as guide in the approach to mixed housing strategies. In Vienna, the government drives the construcUJPO PG NPTU OFX BQBSUNFOUT land is sold to the winning developer at a subsidized rate, under low interest financing and long-term loan repayment schemes. In conformity with the stipulated design standard, ecological considerations, the developer must then rent half of the new apartments to low-income residents at prices regulated by the government. Today, Vienna is adjudged the worldâ&#x20AC;&#x2122;s most liveable city. In Maryland, the policy sets aside 15% of housing units over 50 units for affordable housing, of which one third goes to the Public Housing Authority for subsidized low-income housing, while two third goes to the modest income class. Two approaches were compared thereof in

UIJT DBTF TUVEZ JO .DLFOESFF development, the affordable residences were clustered in one area where there are high income residents as well. There were no shared facilities or community spaces, and maintenance was left to the individual residents. In Timberlawn development, the affordable units were dispersed around the city with the market-rate residences. The units also had shared facilities which were centrally maintained. Comparative surveys showed more satisfaction in Timberlawn than in Mckendree. We can draw lessons from the successes in the international case studies. Policies can be designed to address the challenges that hinder the implementation of social housing programs across Nigeria. In Lagos for instance, a mixed housing policy could stipulate that 20% of estate development greater than 5 hectares have to be allotted for constructing affordable housing. Of the 20%, 15% may be reserved for moderate income class while 5% would be reserved for the low income category such as artisans, housemaids, and petty traders. These affordable units would be sold only to cooperative groups so as to avert the incidence of speculative reselling â&#x20AC;&#x201C; at market values. However, members of the cooperative societies may sell or transfer

their block or shareholdings to existing or new members. Rental price in the lower income segment may be a fraction, say 20% of their estimated average income. Government involvement is necessary to keep prices stable. The design guidelines should follow the distributedtype mixed housing, proximity to social infrastructures such as schools, healthcare centres, parks and markets should be considered. Given the electricity situation, buildings should be at most, 5 storeys with navigable stairwell â&#x20AC;&#x201C; without elevators. Kitchen, toilets and bathroom may be shared by optimum number of room/ occupants. Designs should adopt simple parameters such as cross ventilation, double roofing and roof overhangs in order to boost environmental performance and reduce maintenance costs. However, these policy suggestions are not conclusive. They are simple, practical steps towards inclusive housing policiesand are open to debate and further discussions. It attempts to call the attention of private and community developers, governments and other stakeholders to the possibilities in creating social housing. rÇ&#x201D;JT BSUJDMF JT CBTFE PO UIF SFQPSU "DIJFWJOH .JYFE BOE *OUFHSBUJWF )PVTJOH JO -BHPT CZ )FJOSJDI #Ă&#x2022;MM4UJGUVOH BOE "SDUJD *OGSBTUSVDUVSF

Published Â by Â BusinessDAY Â Media Â Ltd., Â The Â Brook, Â 6 Â Point Â Road, Â GRA, Â Apapa, Â Lagos. Â Â Ghana OIĂ&#x20AC;FH Business Â Day Â Ghana Â Ltd;Íž Â ABC Â Junction, Â near Â Guinness Â Ghana Â Limited, Â Achimota Â â&#x20AC;&#x201C; Â Accra, Â Ghana. Â Tel: Â +233243226596: Â email: Â PDLO#EXVLQHVVGD\RQOLQH FRP Â Â Advert Â Hotline: Â 08034743892. Â Subscriptions Â Â 01-Â2950687, Â 07045792677. Â Newsroom: Â 08169609331 (GLWRU $QWKRQ\ 2VDH %URZQ. Â Â All Â correspondence Â to Â BusinessDAY Â Media Â Ltd., Â Box Â 1002, Â Festac Â Lagos. Â ,661

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 29 August 2018

C002D5556

BUSINESS DAY

FEATURE

Lighting Africa: Tackling energy poverty, one household at a time Page 5 finance people appointments

L-R Yakubu Lawal, GM communications , Niger Delta Holdings; Ahmadu –Kida Musa, conference chairman/deputy managing director, Total E&P Nigeria, and Olatunde Dodondawa, chairman, Association of Energy Correspondents of Nigeria (NAEC) during the award presentation at the 2018 NAEC conference with the theme, PIGB: Emerging issues and concerns in Lagos recently. Pic by Pius Okeosisi

Debrief

Botched Aramco IPO typifies how some oil-rich countries struggle with reforms South African watchdog approves Glencore’s bid for Chevron assets Page 6 OPEC weekly basket price DAY

PRICE

24/8/18

72.09

17/8/18

70.36

10/8/18

71.88

3/8/18

72.61

27/7/18

72.81 Source: OPEC

FRANK UZUEGBUNAM

audi Arabia has formally put the initial public offering (IPO) of Aramco, its giant oil company, on hold while it focuses on buying a strategic stake in local petrochemical group SABIC for as much as $70 billion. Aramco will raise funds from banks and international bondholders to buy a controlling stake in the petrochemical group. That money will go into the coffers of the kingdom’s sovereign wealth fund, which currently owns a 70 percent stake in SABIC. That will replace at least some of the money the Public Investment Fund had been expected to receive from the Aramco IPO. Khalid al-Falih, Saudi Arabian Energy Minister, denied media reports that the kingdom had

cancelled the planned IPO. “The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum,” Falih said in a statement. “This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition which the Company will pursue in the next few months, as directed by its Board of Directors,” he added. However, Saudi Arabia has dismissed the financial advisors it had hired to work on the IPO. Aramco had hired several Wall Street banks including HSBC Bank Plc, Morgan Stanley and JPMorgan Chase & Co., who have been working for months to prepare the IPO. However, Aramco has also formally communicated to some but not all of its ad-

visers on the IPO to suspend work for now. The Aramco IPO has been a centerpiece of Crown Prince Mohammed’s reform program to diversify the country’s economy away from oil, known as Vision 2030. Saudi officials said they hope to raise a record $100 billion by selling a 5 percent stake. Riyadh had valued the state energy giant at $2 trillion. The decision to shelve what was billed as the biggest share sale ever is seen as a major blow to the credibility of Crown Prince Mohammed bin Salman and typifies how difficult it is for some of the extractive resourcerich countries to see through reforms. It also raises doubts about the management of the process as well as the broader reform agenda, sapping the momentum generated by Prince Mohammed’s

dramatic 2030 Vision announcement in 2016 that helped propel him to power in the world’s top oil exporter. “The more it gets delayed and the more there is no clarity on why it is getting delayed and what the issues are, the more it undermines confidence,” said James Dorsey, a senior fellow at Singapore’s S. Rajaratnam School of International Studies “The reform process has to be judged on its entirety and over a period of years but this will negatively affect perceptions of its credibility overall, considering that the IPO was promised in such high-profile terms,” said Richard Segal, senior analyst at Manulife Asset Management. The IPO process started in January 2016, when the crown prince said Riyadh was considering selling shares in Aramco, kicking off a deal set to be the world’s largest-ever flotation.

02 BUSINESS DAY WEST AFRICA Outlook

C002D5556

Wednesday 29 August 2018

oil

Brief West Africa: Sustained refined oil products flow to Nigeria, other West Africa

he volume of refined oil products set to arrive into West Africa in September so far totals 208,000 mt, with the volume expected to arrive in August amounting to 921,000mt, data from S&P Global Platts trade flow software cFlow showed. Most of the tankers on their way to West Africa loaded in Europe are heading to Lagos in Nigeria. One medium-range tanker, the Gan-Triumph, loaded a

37,000 mt cargo in Houston on the US Gulf Coast, is due to land in Lagos around August 29, according to cFlow. Gasoline imports into the West African region remain steady, amounting to between 750,000mt and 824,000mt for August, and up to 208,000mt so far in September, according to S&P Global Platts trade flow software cFlow. Demand into West Africa continues to be sustained at its regular levels. “Demand into Nigeria is between 1 and 1.2 million mt of gasoline per month,” according to sources. However, the arrival of 208,000 mt of gasoline in the first week of September, the highest weekly total since March, according to cFlow, could indicate a possible restocking of supply.

Gambia: FAR prepares to drill Gambia’s first offshore well in 40 years

AR Ltd., a company focused on West Africa, said it plans to drill into a basin off the coast of Gambia that could hold hundreds of millions of barrels of oil. After reviewing seismic data, FAR Ltd. said it selected a final well location for its first drilling effort in the Samo prospect off the coast of Gambia. Seismic data is used to get a better understanding of the reserve potential in frontier prospects. Samo is located in the broader Mauritania-Senegal-GuineaBissau-Conakry basin and could hold as much as 825 million barrels of oil. Drilling is scheduled for the fourth quarter and last about 40 days. It will be the first well drilled offshore Gambia in 40 years. “We are very excited to

be drilling the Samo prospect, which is a large prospect along trend from the giant SNE oil field,” Cath Norman, FAR Managing Director said in a statement. “Given the nine successful wells drilled on the shelf to date in Senegal and into the key reservoirs in the Samo prospect, the geological chance of success for drilling this prospect is high for a frontier exploration well.”

Egina departs to oilfield but concerns are not over ISAAC ANYAOGU

he $3.3 billion floating production storage offloading (FPSO) vessel for the Egina deepwater oilfield departed for the oilfield on August 26 raising hopes that production will soon commence but this hardly signals that concerns over the project are over. Already, the Egina project has broken new records. Located some 130 kilometers off the coast of Nigeria at water depths of more than 1,500 meters, the Egina oil field is one of the most ambitious ultradeep offshore projects. It is billed as a project that will accelerate the pace of Nigeria’s industrial fabric and the transfer of technology. When it comes on stream it will produce 200,000 barrels of oil per day, which represents 10 percent of Nigeria’s total oil production. The detailed engineering of the project’s topsides was executed in-country after it arrived from South Korea by Sam-

sung with a consortium of Nigerian engineering companies, a boost to Nigeria’s local content development. Egina is an ultra-deep offshore project which requires specific expertise given the difficult conditions caused by high pressure and low temperatures in the area. Nigeria’s production is billed to reach about 2million barrels per day (bpd) when the Egina production comes on stream. But in an oil environment

Snapshot

200,000bpd Expected production targets from the Egina project

where OPEC seems interested in placing a cap on member nations oil production, current dislocations in global supply expected with US sanctions on Iran and Venezuela’s crises may help the project’s production find new markets. The crude grade that will be produced from the Egina project will also struggle for market share in an oil market where new crude grades are entering the market and refiners are increasing blending different crude grades to make up for a shortfall in the supply of a particular crude grade. The anticipated sanctions on Iran’s production by the US for example has seen Saudi Arabia and Russia rush to the market to produce a similar crude grade that will be out from Iran. Discovered in 2003, the Egina field is located at water depths of between 1,400 and 1,700 meters, 200 kilometers offshore from Port Harcourt. It is located in Oil Mining Lease (OML) 130. It is controlled by Total Upstream Nigeria (24per-

cent) in partnership with CNOOC (45 percent), Sapetro (15 percent) and Petrobras (16 percent). The project is based on a subsea production system connected to a FPSO (floating production, storage and offloading vessel) designed to hold 2.3 million barrels of oil. Weighing close to 220,000 metric tons and measuring 330 meters long by 60 meters wide, the Egina FPSO is the largest ever built by Total. The FPSO will be connected to 44 subsea wells, 1,600 meters deep and is expected to produce 200,000 barrels of oil per day. Considering that the project has suffered some delays including a rift with the Nigerian Ports Authority, the concern is immediately taking the FPSO to task to begin production. Projects in Nigeria are often bogged down by unnecessary delays arising from bureaucracies especially from government and regulators and there are finer points to sort out including finding market for the new crude that will be produced.

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gas

ENERGY intelligence

Cameroon: Golar eyes more Africa FLNG projects after Cameroon success

ect Cameroon has joined the likes of Algeria, Nigeria, Angola, Equatorial Guinea and Egypt as African LNG exporters. The Hilli Episeyo FLNG, a massive vessel above a subsea field that liquefies gas for further transport, was the first of its kind and is now running at commercially agreed levels, having produced its first LNG in May. Golar is now moving ahead with its portion of the BP-operated Tortue development, which straddles Mauritania and Senegal, having penned a preliminary agreement with BP in April to provide an FLNG for the project. “The FEED (front end engineering development) update is being progressed at pace; we have a couple of months to go on that and we have strong interest with lenders,” Ross told investors in a call.

Global LNG: Asian prices hit highest in over 2 months high on tight supply

sian spot liquefied natural gas (LNG) prices rose for the second straight week to their highest in over two months, buoyed by stable demand ahead of winter and as some producers curbed supply due to maintenance or disruption at plants. Spot prices for October LNG-AS delivery in Asia rose to $11.40 per million British thermal units (mmBtu) this week, up 30 cents from the week before, industry sources said. Prices for November delivery are pegged at about $12.15 per mmBtu, widening the intermonth spread, they added. Japanese importers are continuing to buy in the spot market, though purchases have slowed from previ-

WEST AFRICA

Brief

olar hopes its pioneering floating liquefied natural gas (FLNG) project in Cameroon will lead to further schemes in West Africa after it struck a deal to use the concept at BP’s Tortue gas development, Iain Ross, its chief executive said. The sixth cargo from Cameroon’s 2.4 million mt/year floating LNG facility is expected to leave a few months after the project achieved 100 percent commercial uptime in Q2 this year. Through this proj-

BUSINESS DAY

ous weeks when scorching weather had bolstered imports. Angola LNG has offered a cargo for the first-half of October in a tender that closed last week, but results were not immediately available.

East Africans sign deal for first trans-border gas pipeline …As West Africa gas pipeline struggles STEPHEN ONYEKWELU

anzania and Uganda have signed a historic deal that will give birth to the first trans-border natural gas pipeline in East Africa as the West Africa Gas Pipeline struggles to stay competitive. The multimillion dollar deal was signed, August 25, at the end of a threeday Joint Permanent Commission Summit held in Kampala, led by Tanzania’s Foreign Minister Augustine Mahiga and Uganda’s Minister for Energy Irene Muloni, according to media reports. The deal was a culmination of work that began during the first TanzaniaUganda meeting held in April last year in Arusha, in which the two agreed on a number of memoranda and co-operation frameworks. This will be the first trans-border gas pipeline in East Africa since the extraction of natural gas commenced in 2004 at the Songosongo Island in Tanzania’s southern region of Lindi. Tanzania Petroleum Development Corporation set August 24, 2018, as the deadline for submission of tender documents for the consultancy services for feasibility studies. Kapuulya Musomba, TPDC managing director told The EastAfrican that he was confident the pipeline construction would be successful given the expertise and experience gained through the construction and servicing of two pipelines - the 532km Mtwara-Dar es Salaam one and the crude

oil pipeline that is underway. He said that apart from carrying natural gas to Uganda, the pipeline will distribute the product along the route. “About 10 to 15 Tanzania regions will benefit from the pipeline that will also serve as a catalyst for oil and gas exploration”, Musomba said. Tanzania has a confirmed natural gas recoverable reserve of 57.5 trillion cubic feet. Musomba, did not reveal the source of funding for the project. The gas to be transmitted is meant for power generation for industrial and domestic use. A half of Tanzania’s power generation depends on natural gas plants to generate 684.66MW, those using diesel 125.429MW and hydro 561.843MW. The East Africa gas pipeline project might need to learn from the teething problems encountered by West Africa Gas Pipeline project.

At a recent roundtable of experts in Lagos, a big player in Nigeria’s natural gas upstream suggested it might well be worthwhile to think of privatising the West African Gas Pipeline. This follows complaints of inefficiencies regarding how the pipeline is managed. Amid these complaints, Ghana has signed a 12-year deal with Russia’s Gazprom for liquefied natural gas (LNG) supply. Privatisation will lead to energy efficiencies in the West African sub-region one of the experts suggested. Energy efficiency is critical to ensure safe, reliable, affordable and sustainable energy system for the future. It is the one energy resource that every country possesses in abundance and is the quickest and least costly way of addressing energy security, environmental and economic challenges. Nigeria has over 195 trillion cubic feet (TCF) of gas and experts have said

this is probably an underestimation. Boakye Agyarko, Ghana’s energy minister, and Kofi Sarpong, CEO of the Ghana National Petroleum Corporation, said they saved West Africa’s second largest economy over $1 billion in the new liquefied natural gas (LNG) transaction with Gazprom that will allow for the addition of up to 1,000MW to Ghana’s power supply. “The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (Scf ). I can put gas at $3 per Scf into the West African Gas Pipeline if it were efficiently managed and with an extra cost of $2 per Scf for transportation cost I can deliver gas to Ghana at $5 per Scf less than half of what the Russian gas will cost” Austin Avuru, CEO of Seplat, a Nigerian oil and gas exploration and production company said at the roundtable of oil and gas experts.

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Nigeria captures $10.1m electricity bill abroad, power grids collapse at home STEPHEN ONYEKWELU

igeria has decided to recover $10.1 million owed it in electricity bill from its neighbours, Benin and Niger republics and threatened to disconnect the two countries if they failed to comply but it fails to sustain power grids at home. Both made the payment through their respective power firms, with NIGELEC of the Republic of Niger paying $3.79m, while the Community Electric du Benin of the Republic of Benin

remitted $6.32m to Nigeria’s electricity market. Nigeria sells power to the Republics of Togo, Niger and Benin, and classifies the West African countries as international customers. Back home Africa’s most populous nation finds it tough to sustain its power grid, which collapses frequently. Inefficient management in Nigeria’s power sector has in recent times led to nationwide blackouts and generated a lot of criticism from consumers and other stakeholders. This has shown that the problem of the power sector is not only techni-

cal but also about how those entrusted with the management of the system govern it. This has reinforced calls by concerned groups and individuals saying the transmission company of Nigeria should not be left in the hands of government officials that would not mind or know the implication of their inefficient handling of situations, which impact on electricity value chains and by extension on the economy in general. Nigeria’s electricity grid collapsed twice in the last two months, once in June and another in July caused by infrastructure deficit, data obtained from the Federal Minis-

try of Power, Works and Housing show. Nigeria’s total power on the grid dropped from a high of 3,659.5 megawatts on June 7 to as low as 41.4MW on June 8. When this happened the Transmission Company of Nigeria responded. “The Transmission Company of Nigeria hereby state that as a result of gas pipeline rupture on the 15th of June, 2018, as well as technical issues at the Shell gas wells on the 16th of June, there has been a sharp drop in generation into the grid by a total of 1,087.6MW, resulting in load-shedding nationwide, necessary to maintain stability of the grid” Ndidi Mbah, general manager, public affairs, Transmission Company of Nigeria (TCN) explained in an earlier email response. This is not the first power grid collapse in 2018. On July 8, another collapse of the grid occurred as the system dropped from a high of 4,089.1MW on July 7 to a low of 92.3MW the next day. So far, no grid collapse has been recorded in August 2018. Nigeria’s power generation figures hovered between a low of 3,000MW and a high of 4,800MW in the first eight days of the month. Looking back, two days into 2018, Nigeria’s power transmission grid recorded a first major collapse, January 2nd night due to a fire incident on a gas supply pipeline leading to widespread blackout across the country, BusinessDay had reported.

Wednesday 29 August 2018

power

Zambia: Construction commences for Ngonye solar plant

he Enel Group’s global renewable energies division, Enel Green Power, has started the construction of the 34MW Ngonye solar photovoltaic (PV) plant, marking its first power plant in Zambia. The PV facility, which is located in Lusaka South Multi-Facility Economic Zone in the country’s south, is part of the World Bank Group’s Scaling Solar programme carried out by Zambia’s Industrial

Development Corporation (IDC), which awarded Enel in June 2016 the right to develop, finance, construct, own and operate the plant. “The start of construction of Ngonye solar plant is a new milestone in the strengthening of the Enel Group’s presence in the African continent, where we already are the first private renewable operator in terms of installed capacity,” said Antonio Cammisecra, head of Enel’s Global Renewable Energies Division, Enel Green Power. “Ngonye, with its clean, sustainable and reliable power, will play a significant role in helping Zambia to meet its electrification goals, demonstrating once again that renewable utility-scale power plants are the most effective solution to give access to electricity in the continent.”

Nambia: Namibia commissions $21m solar power plants

obabis, Namibia has performed the official opening of two solar power plants with a total build cost of $21 million. Ejuva One and Ejuva Two, located side by side, were constructed and managed as one project feeding an estimated 25.8GWh per annum into Namibia’s national grid. It is among the 14 renewable energy projects commissioned under the interim Renewable Energy Feed-in Tariff (REFIT) programme. The REFIT programme was initiated by the Ministry of Mines and Energy and the Electricity Control Board to establish independent power producers in Namibia. The Ejuva projects are backed by 25-year power purchase agreements with

Nampower. The local co-development partners, OKA Capital and BPI Energy Solutions, played a key role in successfully bringing the projects to commissioning. The local partners own 34 percent of the equity, while developer CIGenCo SA owns 49 percent and asset manager Mergence Unlisted Investment Managers (Namibia) owns 17 percent on behalf of its clients.

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Feature

BUSINESS DAY

Lighting Africa: Tackling energy poverty, one household at a time FRANK UZUEGBUNAM

ore than 600 million people in Sub-Saharan Africa do not have access to grid electricity. In Nigeria, sub-Saharan Africa’s largest economy, 50 million people with grid-access continue to rely heavily on fossil fuels as an alternative source of energy according to 2016 Nigeria Bureau of Statistics report. Forty-three percent of these households connected to the grid still make use of batteries and kerosene as primary sources of lighting, while 73 percent of households in grid-connected areas use rechargeable lamps, kerosene and dry cell batteries as backup, depleting natural resources, polluting the environment and contributing to climate change. And still, more than 20 million households are completely without power. Over the years, successive governments in Nigeria have made attempts to solve the myriad issues plaguing the energy sector. In its 2018 national budget, the Nigerian government allocated nearly N682 trillion (about US$ 1.8 billion) to the Ministry of Housing, Works and Energy, signaling the importance of stabilizing the power sector. The government has also expanded the country’s energy mix options to introduce renewable energy sources to the fore, and even restructured the Rural Electrification Agency (REA) to position renewable energy as a viable option for off-grid communities. While sincere, these past efforts have failed to provide a lasting solution to the extraordinary need for reliable power. With the demand for energy high and grid inconsistency a reality, the market

Some products of Lighting Africa

potential for renewable energy will only continue to grow. But African governments alone cannot provide the muchneeded solution to Sub-Saharan Africa’s energy crisis. The private sector and development institutions have a vital role to play to end energy poverty in Africa, and they are making great investments. For instance, All On, an impact investor, is providing capital to meet the scale-up needs of energy enterprises of various sizes. Also, the Africa-EU Energy Partnership (AEEP) supports wind, hydro, geothermal and biomass energy projects through the Africa Renewable Energy Fund (AREF). In partnership with the International Renewable Energy Agency (IRENA), Access Power Program provides support to lo-

cal power project developers through an Access Co-Development Facility. The African Development Bank’s Sustainable Energy Fund for Africa (SEFA), a US$60 million multidonor fund, supports small and medium scale renewable energy and energy efficiency projects in Africa. And finally, Lighting Africa, a World Bank Group initiative, works to stimulate the Nigerian economy by catalyzing a market for better, cleaner, and safer off-grid lighting and energy products to the rural and semi-urban populations with limited grid access. Unique from other initiatives, Lighting Africa works to create a commercial market for quality off-grid energy products and includes activities across numerous coun-

tries in Sub-Saharan Africa. In Nigeria, Lighting Africa works with manufacturers, distributors, retailers, and financial intermediaries to introduce quality-verified solar lanterns and solar home systems to low-income households. In the process, the entire value chain of a largely untapped, but viable commercial market is activated. Top off-grid energy players collaborating with the Lighting Africa Program in Nigeria include A4&T, d.light, Greenlight Planet, Omnivoltaic Power, Smarter Grid, Villageboom, a host of distributors and other players. Working closely with microfinance institutions like LAPO, Grooming Centre, Susu, Olive, Forward, Riverside, Agosasa, Ilishan, UNAAB, and Alekun, Lighting Africa Nigeria helps

low-income communities (majority women) access funds to purchase solar lanterns and home systems, often times, their first renewable source of energy. Lighting Africa also trains technicians across several states to provide after sales support to these solar products after the warranty period and conducts consumer education campaigns to create awareness for quality products. By providing people the option to work beyond just the daylight hours, increasing economic activities, and building a viable new industry in renewable energy, Lighting Africa is changing the shape of the nation’s energy access landscape. It is helping to light up the nooks and crannies of Nigeria in the process, bringing with it economic improvements and opportunities.

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WEST AFRICA

ENERGY intelligence

UK government proposes energy legislation changes after Brexit

finance people appointments

South African watchdog approves Glencore’s bid for Chevron assets

Brief

he UK government has issued a statement of intent for legislative changes following the UK’s separation from the European Union, in an open letter to the Energy market. The statement was made prior to government advice issued to various UK commercial and industrial sectors for arrangements in the event of the UK leaving the EU without formally agreed terms of separation. In the letter, the government proposed statutory changes in the energy sector, adding that these would be initiated sooner following exit day in the event of a ‘no-deal’ scenario. The European Union (Withdrawal) Act 2018 will legally enshrine all current EU legislation into UK law on March 31, 2019, with the announcement specifying which aspects of this legislation will be subject to amendment through the UK’s own statutory instruments. Claire Perry, Secretary of state for Business, Energy & Industrial Strategy said retained EU law will match closely the form and operation held prior to the UK’s departure, with functions transferred from EU public bodies to UK departments. However, changes are being proposed to EU directives concerning gas and power network transmissions codes in response to ‘future developments,’ amendments to definitions and reporting

Wednesday 29 August 2018

requirements under regulation on wholesale Energy Market Integrity and Transparency (REMIT), and reporting templates under the Security of Gas Supply Regulation. Little detail was offered on what form these changes would take. “The ability to update all of these is necessary to ensure the UK’s market abuse prevention mechanisms and plans and risk assessments for ensuring security of gas supply can be kept up to date,” Perry said. The statement offered no insight into how crossborder trade would work following Brexit, and stated that changes would be exercisable in parallel with the devolved Northern Ireland assembly where possible, with the UK executive to continue the process should the current political deadlock at Stormont remain unresolved. Should the UK enter into a binding agreement with the EU and enter an implementation period until the end of December 2020, the statutory instruments will be considered necessary for technical amendments, although use of new statutory instruments could be intensified in the event of ‘nodeal’. “In the unlikely scenario in which no mutually satisfactory agreement can be reached, these functions will be required soon after exit day, in the absence of an implementation period,” Perry said in her letter.

outh Africa’s competition watchdog approved Glencore’s roughly $900 million bid for Chevron’s local and Botswana assets, bolstering its chances of scuppering a rival bid from China’s SINOPEC. Chevron agreed last year to sell its stake to stateowned SINOPEC before miner and commodities trader Glencore swooped in after reaching a deal with minority shareholders, who backed it and exercised preemptive rights on the sale. At stake is a 75 percent share in Chevron’s South African subsidiary that runs a 100,000-barrels-perday oil refinery in Cape Town, a lubricants plant in Durban and 820 petrol stations and other oil storage facilities. The sale also includes 220 convenience stores across South Africa and Botswana. For Glencore, the deal would secure the trader’s

first refining asset since it ventured into downstream investments. For SINOPEC, it would mark its second major refinery investment as the company looks to expand overseas amid a saturated home

market. Both deals have now been given the green light from the Competition Commission subject to several conditions that include the preservation of jobs after the deal.

It is now up to the Competition Tribunal, which makes the final ruling on deals, to decide whether to accept the Commission’s recommendations. The Tribunal has already approved SINOPEC’s bid.

Community commends Total for resolution of Akoka fuel leak

esidents of Akoka community in Lagos State have commended the Total service station in Akoka for its swift response in tackling and resolving an accidental fuel leakage which resulted in contamination of water sources of some houses in the area. According to Segun Adesanya, Chairman, Akoka Community Development Association, the service station notified him about the fuel leakage immediately the incident occurred as well as the Lagos State Environmental Protection Agency (LASEPA). He stat-

ed that LASEPA directed Total to commence immediate clean up and remediation which has since been done by the station. In their remarks, some

landlords in the affected area confirmed that the community was free from any form of contamination, and acknowledged the swift response of the man-

agement of the service station after the leakage was reported. One of the landlords whose houses were affected, Mr. Razak Odufuwa, of No. 57, St Finbarrs College Road, Akoka, said that there was an incident of fuel leakage in the area. He commended the management of the service station for mitigating impact of the fuel leak and speed of clean up exercise. According to Odufuwa, “When the incident occurred, our water was contaminated and unsafe to drink or for any other domestic purposes.

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marketinsight

Oil rises as China demand resumes

il prices gained more than 1 percent, ending a run of weekly declines on signs that Iran sanctions may limit global supply and that a trade war may not curb China’s appetite for US crude. Brent crude oil settled up $1.09 a barrel, or 1.5 percent, at $75.82 a barrel. US crude was up 89 cents, or 1.3 percent, at $68.72. US crude rose more than 4 percent on the week, after seven consecutive declines, and Brent rose 5.3 percent after three weeks of falling prices. Concerns that an escalating trade war between China and the US could slow economic growth and weigh on crude purchases eased slightly after. Sources told Reuters that China’s UNIPEC will

resume purchases of US crude oil in October, after a two-month halt due to the fight. At the same time, concerns about global crude supply intensified with signs that US sanctions on Iran are curbing ship-

ments. The US government re-imposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal, which Washington saw as inadequate for curbing Tehran’s activities in the

Middle East and denying it the means to make an atomic bomb. Tehran says it has no ambitions to make such a weapon. Iran is the thirdbiggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to about 2.5 percent of global consumption. Traders also kept an eye on the North Sea, where workers on three oil and gas platforms plan to strike next month. Oil production will stop during the strikes. The three fields contribute about 45,000 to 50,000 bpd to the North Sea’s Forties and Brent crude streams. Hedge funds and other money managers cut their bullish wagers on US crude futures to the lowest level since mid-June.

China shipowners shunning Iranian Oil as US sanctions near

hina’s shipowners are shunning Iran’s oil, while the OPEC producer is using its own tankers to supply top customers as impending US sanctions threaten to disrupt global crude trade. All 17 ships used to carry oil from the Islamic Republic to China in July and August are owned by

the state-run National Iranian Tanker Co., according to ship-tracking data compiled by Bloomberg. By contrast, almost half the vessels that made the journey in the prior three months were owned by companies in the North Asian nation, the data show. The shift shows how trade is being affected

even before US sanctions targeting Iran’s crude exports snap back into effect in early November. The nation’s outflow has fallen after American President Donald Trump in May pulled out of a 2015 deal between the Persian Gulf state and world powers that had eased oil restrictions in exchange for curbs on its nuclear program. While Iran’s fleet of very large crude carriers, or VLCCs, and Suezmax tankers, the largest that can fit fully-laden through the Suez Canal, has always played an important role in delivering Iranian crude to customers, it is increasing as insurers and international shipping companies react to the impending renewal of sanctions. Meanwhile, China, the world’s biggest oil im-

porter and Iran’s biggest customer, is said to have rejected a US request to halt purchases from the producer, dealing a blow to Trump’s efforts to isolate the Middle East nation and force it into negotiations. Still, some other countries including South Korea and Japan are reducing shipments even before the November deadline to avoid the risk of buyers losing access to the American financial system. Oil-tanker owners are seen staying away from hauling Iranian supplies because of the risk of being cut off from the booming business of transporting crude pumped from shale fields in Texas or wells in the Gulf of Mexico. This has spurred the Middle East producer to offer its own vessels to ferry cargoes to its customers.

BUSINESS DAY

OPEC Flakes Iran says some OPEC members act in accordance with US policy

ranian Oil Minister Bijan Zanganeh said some members of oil producer group, OPEC, were acting in accordance with US policies. “Some members are interpreting the latest OPEC decision on oil output differently and are acting in accordance with the policies of the US,” Zanganeh was quoted as saying. The Organization of the Petroleum Export-

ing Countries agreed with Russia and other oil-producing allies in June to raise output from July, with Iran’s arch-rival Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers. Iran told OPEC this month that no member country should be allowed to take over another member’s share of oil exports, expressing concern about a Saudi offer to pump more crude amid US sanctions on Iranian oil sales starting in November. Washington this month re-imposed sanctions against Iran after U.S. President Donald Trump pulled the United States out of the 2015 nuclear deal under which Tehran curbed its nuclear programme in return for a lifting of most international sanctions.

Kuwait expects oil exporters to agree on mechanism to monitor supply

PEC and other oil exporting producers are expected to agree on a mechanism to monitor their crude production before the end of the year, Bakhit al-Rashidi, Kuwaiti Oil Minister said. A committee set up by the Organization of the Petroleum Exporting Countries and allied nonOPEC exporters would review their crude output

at a meeting in Algeria next month, he told reporters while touring an electricity station. “The production numbers of OPEC and (countries) outside OPEC will be reviewed at the meeting in Algeria, and before the end of the current year, there will be an agreement on a mechanism to monitor output next year,” he said. Oil markets should “remain stable” until the end of the year, he added. The committee that will meet in Algeria on September 23, known as the JMCC, is chaired by Saudi Arabia and includes OPEC members Algeria, Kuwait, United Arab Emirates and Venezuela, as well as nonOPEC members Oman and Russia.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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talking points

In association with

EXPLAINER: How Angola’s reform will make its oil sector attractive again DIPO OLADEHINDE

ith oil production of 1.4mpd still below its heights of 2016, industry experts will be hoping Angola’s oil reform under President Joao Lourenco will not only make the sector attractive again but also rid it of corruption that has plagued the sector over the years. Despite being the third-largest oil supplier to China as more than 90 percent of Angola’s revenue come from oil production, however Angola remains largely impoverished as more than two third of its population still live below the poverty line. Despite being the third-largest oil supplier to China, Angola remains plagued by depleted marginal fields, corruption that have led to foreign currency shortages and rising bad loans in banks even after its central bank devalued the currency by over half against the US dollar since December 2017. According to a 2018 International Energy Agency (IEA) Oil report, Angola’s oil fields are maturing and are nearing depletion, unless new investments are made in new discoveries, things will continue getting worse. “Angola has a number of deep-water oil fields that are more expensive to maintain than onshore ones, and their need for “continuous support” is among the reasons behind sliding output since it peaked at 1.9 million barrels a day in 2008,” IEA stated in the report. The Parisbased agency predicts the nation’s capacity to produce crude will slump to 1.29 million barrels a day in 2023. Apart from depleting marginal fields, nepotism, cronyism, and patronage pervade the oil industry. “Oil deals are shrouded by confidentiality agreements, making it almost impossible to

gauge how much money goes into SONANGOL, Angola’s state oil company,”Luqman Agboola, Head of energy and infrastructure at Sofidam Capital told BusinessDay recently. Lourenco have been taking surprising reforms steps, after he was elected to combat the massive corruption and nepotism in the country. As one of his first official acts, Lourenco fired the daughter of dos Santos, Isabel, as head of the state-owned oil company, SONANGOL. Isabel dos Santos is declared by Forbes magazine as the richest woman on the African continent. Her brother Filomeno was also a supervisory board chairman of

the country’s sovereign wealth fund for a temporary period. As a start of his project, Lourenco devalued the national currency, the Kwanza, at the beginning of the year. He also signed a new private investment law that removed the old clause, which stipulated that foreign businesses must have local partners with at least 35 percent stakes. However, this law does not apply to the oil and mining industry and the financial sector. But it is Lourenco’s way of opening the economy, which suffered as oil prices declined. For gas reserves, Angola is introducing a new legislation for gas fields outlining the

legislative and tax framework for companies to explore for, extract, and sell natural gas. Under the gas tax regime, petroleum production tax will be 5 percent and petroleum income tax 25 percent. Lourenco recently signed a decree to create a National Agency of Petroleum and Gas, expected to launch next year and be fully operational by the end of 2020. The new agency would break the almost complete monopoly of SONANGOL in Angola’s oil industry, since the state oil firm is also currently responsible for the approval, management, and holding of oil block sales. SONANGOL, the state oil group, has pledged to invest in new fields while rebuilding relations with international majors who saw Angola as a declining and difficult to operate in producer under former president dos Santos administration as major international oil company Total, recently revived co-operation with SONANGOL. Reforms by President Joao Lourenço is already yielding results as analysis from pricing group S&P Global Platts said production from Angola is expected to kick up once production from the deepwater Kaombo field starts this summer. The filed could have a peak capacity of around 230,000 bpd. Also in March this year, Italian Energy Company ENI and SONANGOL started production at their joint deepwater Ochigufu project, which would add another 25,000 barrels to current levels. The new start up comes roughly a year after ENI operations began at the East Hub project in deep Angolan waters using an offshore floating production vessel capable of generating up to 80,000 bpd. Last month, Fitch Ratings raised its outlook on the African country to ‘stable’ from ‘negative’, saying that its prospects for economic recovery have improved significantly as a result of higher oil prices and fiscal reforms.