BusinessDay 29 Jul 2019

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L-R: Ruhakana Rugunda, prime minister of Uganda; Felix Tshisekedi, president, Democratic Republic of Congo; Macky Sall, president of Senegal; Tony Elumelu, founder, Tony Elumelu Foundation (TEF); Yemi Osibanjo, Nigeria’s vice president; Awele Elumelu, wife of the founder, TEF; Paul Kagame, president of Rwanda, and Fareed Zakaria, host, Fareed Zakaria GPS on CNN/ moderator, at the Founder’s Presidential Dialogue held at the TEF Entrepreneurship Forum 2019 in Abuja, weekend.

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

Spot ($/N)

3M

361.97 306.90

0.01 10.67

NGUS sep 18 2019 361.03

g

6M 0.04

-0.37

10 Y -0.21

20 Y 0.09

11.43

12.69

13.67

14.08

5Y

NGUS dec 24 2019 361.48

NGUS jul 29 2020 362.53

@

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Here’s what it’ll take for S&P to upgrade Nigeria for first time since 2016

Nigeria’s multi-billion naira pharma I industry shrinks as AfCFTA nears

LOLADE AKINMURELE

nternational credit ratings agency, Standard & Poor’s (S&P), announced last Thursday that it was leaving its rating on Nigeria unchanged at B,

Continues on page 46

ODINAKA ANUDU & BUNMI BAILEY

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nly few pessimists foresaw the takeover of Evans Medical plc by the defunct Skye Bank and the

Export falls 91%

presence became a mirage as prequalification, which gave it the bankers came for the jugutier-one First Bank in 2017. lar after a July 4, 2017 court The drug maker had invested hugely an opportunity to participate in order necessitated by loan on the road to acquiring the sought- international bids. But the dream Continues on page 46 after World Health Organisation’s of consolidating its international

Inside

Oando announces N7.2bn profit after tax in half-year 2019 P. 2

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news Mutual funds asset in record high of N777bn on demand for low-risk instruments

Ebenezer Onyeagwu (r), group managing director/CEO, Zenith Bank plc, and Ranveer S. Chauhan, vice chairman, Africa Business Group, Singapore Business Federation, at a dinner hosted by Zenith Bank in honour of the visiting Singapore Business Federation to Nigeria.

…as fixed income, money market, bond funds report most growth ENDURANCE OKAFOR

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Oando announces N7.2bn profit after tax in half-year 2019 DIPO OLADEHINDE

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ando plc has announced its financial results for the six months ended June 30, 2019 with a profitafter-tax (PAT) of N7.2 billion.

Oando who had its operation grind to a halt during the Securities and Exchange Commission (SEC) sanctioned siege of its head office by the Police, weathered the storm to record a 6 percent increase in revenue to N315.4 billion from N297.3 billion in comparative period of 2018.

Worthy of note is the fact that, since its acquisition of ConocoPhillips Nigeria in 2014, Oando has embarked on a proactive drive to significantly reduce its debt and liabilities.

The Group reduced its total borrowings for the period by 5

percent to N200.7 billion from N210.9 billion in FYE 2018, totaling a 58 percent reduction in debt since 2014 from N473.3 billion. At the same time as in its Upstream business reduced borrowings by 13 percent to $221.13 million compared to $255.6million in FYE 2018, totaling approximately 72 percent debt reduction from $801.6 million in 2014. The company further reduced its Reserve Based Lending (RBL) facility by a 99 percent level.

Commenting on the results, Oando’s Group Chief Executive, Adewale Tinubu said; “Half year 2019 was a positive period for us as we achieved Strong top and Bottom line earnings despite our overall performance being tempered by a one-off N14 billion charge.

Our crude oil and natural gas production grew by 15% and 8% respectively compared to

the similar period last year while we also achieved a significant reduction in our RBL facility to approximately $0.4 million from $450 million at inception- a 99% reduction.”

In the period under review, the oil sector accounted for 9.1 percent of the country’s Gross Domestic Product (GDP) compared with 9.6 percent in H1 2018. Oil export for the period was at 1.37 million barrels per day (mbd) or about 42.5 million barrels, a shortfall from the 1.47mbd or 44.1 recorded in the preceding year. In addition, the Nigerian economy advanced 2.01 percent yearon-year which was below market predictions of 2.1 percent compared with 2.4 percent growth in same period of 2018, mainly due to a steeper contraction in Nigeria’s oil sector which shrank by 2.4 percent in the first quarter of the year.

Though the country witnessed no movement in its oil production compared with same period of 2018, Oando witnessed an increase in its oil production, which was attributed to the ingenious measures put in place by the company’s management and its partners to ramp up production. During the six month period ended June 30, 2019, production by the upstream subsidiary, Oando Energy Resources (OER) increased by 8% at 40,873boe/day, compared with 37,814boe/day in the same period of 2018. Oil production increased by 15% from 14,675bbls/day in H1 2018 to 16,876bbls/day in H1 2019, and natural gas production increased by 8% from 118,866mcf/day in H1 2018 to 128,533 mcf/day in H1 2019.

•Continues online at www.businessday.ng

Access Bank’s N30bn Tier II local Bond oversubscribed by N13.6bn HOPE MOSES-ASHIKE & OLUWASEGUN OLAKOYENIKAN

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o further strengthen its funding base, Access Bank has successfully issued a Tier II N30 billion Fixed Rate Subordinated Unsecured Bond. The bond was oversubscribed by N13.6 billion, according to the bank in a statement sent to BusinessDay. The oversubscription further buttresses the confidence investors repose in the bank, it said.

Banks are required to maintain a minimum regulatory capital adequacy ratio (CAR) of 10%/15%1 (10 percent for banks with national licence and 15 percent +1 for banks that operate interna-

...as lenders brace for capital raising tionally) on an ongoing basis.

The Central Bank of Nigeria (CBN) will take into account the relevant risk factors and the internal capital adequacy assessments of each bank to ensure that the capital held by a bank is commensurate with the bank’s overall risk profile.

Ayodeji Ebo, managing director, Afrinvest Securities Limited, believes in the success of the bond, saying there are not many banks in the country issuing local bonds.

He sees the move by Access Bank as an effort to shore up its capital after it spent huge amount of money to acquire Diamond Bank. www.businessday.ng

The acquisition deal, which started in December 2018, gulped over N72.5 billion ($200 million).

The bond, which has a maturity of seven years and is callable after five years, has Chapel Hill Denham Advisory Limited as the mandated Lead Issuing House and Coronation Merchant Bank Limited and First-Ally Capital Limited as the mandated Joint Issuing Houses.

Ayodele Akinwunmi, head, research, FSDH Merchant Bank Limited, said most Nigerian banks have room to grow the Tier II capital to the regulatory requirement in order to enable them

create more risk assets to earn more income and improve their return on equity.

“We are a bank with a rigorous and disciplined capital plan and the action taken today is in line with our fiveyear strategic plan. This is to ensure a strong capital buffer at all times and support our low risk appetite,” Herbert Wigwe, group managing director/CEO, said on the bond issuance.

“Following the merger, we identified some synergies and combined with this issue, we are confident of our capacity to attain the next level of being a more efficient bank,” Wigwe said.

•Continues online at www.businessday.ng

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ncrease in investors’ appetite for the less risky mutual fund instruments has driven the asset under management (AUM) to a record high of N777.92 billion in the trading week to July 12, the latest data by the Securities and Exchange Commission (SEC) showed.

The asset managed by Nigerian mutual fund appreciated by N700.25 billion from Net Asset Value (NAV) of N77.67 billion reported in August 2011, when the industry regulator started collating the data, to N777.92 in July, fuelled by a joint 118.16 percent increase in investments into fixed income, money market and bond funds.

“These funds – which are perceived to be low-risk alternatives to other more traditional asset classes, account for over 70 percent of collective investment schemes and 25 percent of non-pension assets under management,” Agusto & Co., a Lagos-based ratings agency, said.

According to the SEC data analysed by BusinessDay, total asset controlled by the mutual fund managers ap-

preciated year-t0-date by 20.69 percent, a NAV increase by N133.36 billion from N644.56 billion in January 2019 to N777.92 billion for the month under review.

Commenting on the performance, Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers, said investment education is rapidly gaining grounds in the country which has seen many people beginning to develop investment culture.

“The surge being driven by fixed-income, moneymarket and bond funds is majorly on the back of risk characteristics of the Nigerian populace. Also, when you look at the disappointing streak of the equities market, it definitely discourages people from investing in equity funds,” Akinloye said.

Mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.

•Continues online at www.businessday.ng

MTNN creates new wealth for shareholders with N60bn interim dividend IHEANYI NWACHUKWU

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he directors of MTN Nigeria Communications plc have declared interim dividend amounting to N60 billion for the first-half (H1) period ended June 30, 2019.

The company had in the year ended December 31, 2018 paid N73 billion dividend.

In the review H1’2019, MTNN sustained a solid performance, delivering doubledigit growth in service revenue, underpinned by growth in voice and data revenue.

MTNN audited result shows service revenue increased by 12.12 percent to N566.946 billion from N505.667 billion in half-year (H1) 2018. MTNN added 3.3 million customers to its network, increasing its subscriber base to 61.5 million in the review period.

The telco’s half-year (H1) 2019 result released on Friday, July 26, at the Nigerian Stock Exchange (NSE) shows the interim dividend translates to N2.95 kobo per share. The register of shareholders will be closed from August 9 to 13, 2019. The qualification date for the interim dividend is August 8. @Businessdayng

MTN Nigeria in January 2019 adopted IFRS 16 accounting standard in line with global best practices. The company saw data subscribers increase in the period (H1’19) under review by 2.1 million to 20.7 million.

Operating profit of N190.403 billion in H1’19 against N136.501 billion in H1’18 represents 39.49 percent increase. Profit before tax (PBT) of N141.797 billion in H1’19 against N108.354 billion in H1’18 shows increase of 30.86 percent; while the company’s profit for the review period at N98.930 billion implies an increase of 34.79 percent, from N73.395 billion in H1’18.

“We made significant network investments to improve network quality and expand our 4G coverage.

Our recent work to revamp our data prices and accelerate our 4G network has put us in a strong competitive position to offer more value to our customers, supporting data and voice revenue growth which will ultimately strengthen our business,” said Ferdi Moolman, CEO, MTN Nigeria Communications plc.

•Continues online at www.businessday.ng

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NEWS

Money spent to import fuel in five years can build 14 refineries of 100,000bpd Olusola Bello

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he Nigerian National Petroleum Corporations (NNPC) spent about $42 billion (N15.21trn) on fuel importation between 2013 and 2018.

This amount could be put into various uses to increase local refining capacity and ensure a sustainable supply of refined products in Nigeria.

For instance, this amount is capable of building about 14 refineries with average capacities of 100,000 barrels of crude oil per day at an estimated cost of $3 billion if well managed,

or three of the type of Dangote Refinery, which is 650,000 barrels per day and is estimated to cost between $12 and $14 billion.

Industry operators say about $6 billion of the amount could have been used to upgrade the existing refineries, pipeline and depots infrastructure and they would have been up and running.

According to Bureau of Public Enterprises (BPE), $36.4 billion was spent on importation of petroleum products between 2013 and 2017. While the National Office of Statistics (NBS) says $6 billion

(N2.289trn) was spent in 2018.

The figures from the two agencies when put together come to $42 billion.

Alex Okoh, director-general, BPE, stated last week that the NNPC had not provided sufficient refining in the country as products were imported on a continuous basis.

Babajide Soyode, former general manager of Warri Refinery and Petrochemical Company, however, said about $6 billion of the above amount would have been enough for the rehabilitation or upgrade of the four refineries, pipelines and depots and the country

would have been self-sufficient in terms of refined products, and possibly even export to the West African sub-region.

With this level of foreign exchange, Soyode said the naira would have stabilised if it was not spent on importations and subsidy, and urged the government to remove subsidy and allow the private sector run the refineries so that they could be more profitable.

Ibe Kachikwu, former minister of state for petroleum resources, had said Nigeria allocated an average of $28 billion of her foreign exchange earnings yearly to import about

92 percent of petrol consumed locally.

On the average, the country consumes 66 million litres of petrol daily, Kachikwu stated, and also noting that 40 percent of the $28 billion import spend is used to finance its logistics.

Over the past four years, Nigeria had spent billions of money on subsidy for petrol and kerosene, and all that the country has spent could have financed a lot of investments in the downstream infrastructure.

The Federal Government in March 2019, kick started the rehabilitation of Port Har-

CBN clarifies proposed policy on FX restriction to milk importers Cynthia Egboboh, Abuja

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he Central Bank of Nigeria (CBN) has clarified its proposed policy on forex restrictions to importers of milk, stating that the policy is not aimed at placing a ban on milk importation but encouraging local production.

CBN in a statement signed

by Isaac Okorafor, director, corporate communications, CBN, reiterated its commitment to provide the needed finance to enable investors who genuinely want to engage in milk production, adding that Nigeria and the welfare of all Nigerians come first in all policy considerations.

“Being an apolitical organisation, we do not wish to be dragged into politics. Our focus remains ensuring forex savings, job creation and investments in the local production of milk.

“While we are aware that some of our policies may hurt some business interests, we are thankful to Nigerians for the buy-in and intense interest in the policies of the CBN. As a people-oriented institution, however, we shall remain focused on the overarching and ultimate welfare of the Nigerian masses,” the CBN said.

The bank in the statement stressed that the policy was made to stop further dependence on imported milk as Nigerian children and adults have been made to be depend on milk imports for over 60 years, adding that the policy established three years ago aim to encourage backward integration to conserve foreign exchange and create jobs for our people.

“Included in this policy package was the introduction of the highly successful policy which restricted sale of forex from the Nigerian foreign exchange market for the importation of some 43 items goods that could be produced in Nigeria.

“Arising from the success of the restriction policy, we approached some milk importers, like we did for rice, tomato and starch and asked them to take advantage of CBN’s low-interest loans to begin local milk production instead of relying endlessly on milk imports,” it stated. www.businessday.ng

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@Businessdayng

court Refineries with the aim of achieving 90 percent local refining capacity.

The first refinery in Port Harcourt was commissioned in 1965 to process 60,000 barrels of oil per stream day (bpsd) as well as the new plant commissioned in 1989, which has a capacity of 150,000bpsd.

Both refineries possess a combined capacity of 210,000 barrels per stream day, making it the biggest oil refining company in Nigeria. The rehabilitation would be in two phases with both the ENI and the original builders participating in the process.

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Nigerian power sector: Opportunities and threats

Bashorun J.K Randle • Continued from last week

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hat is opportunism writ large without any regard for the moral compass which the tutors, who dedicated their efforts to turning out excellent Nigerians, laboured so hard to instil in us.

Right now, His Royal Highness Muhammadu Sanusi II, the Emir of Kano, an old boy of King’s College is virtually under siege. His emirate has been carved up with the creation of four new emirates.

Added to this is the threat of deposition.

We must not prejudge matters.

Hence, we must urge the President of King’s College Old Boys’ Association to proceed poste haste to Kano and assure the embattled Emir that we are firmly on the side of justice, transparency, integrity and accountability. His Royal Highness is entitled to the benefit of doubt until the red line is crossed – beyond reasonable doubt.

We cannot insist on or proceed on the basis of guaranteed entitlement.

Rather, we must work for it. We cannot be free while millions are oppressed or condemned to ignorance and abject poverty. It was Bob Dylan who delivered the poignant vignette: “No one is free, even the birds are chained to the sky.”

What Nigeria expects from us (and it is entitled to lay a claim) is redemption by King’s College old boys (and girls) who benefitted massively before chaos and anarchy invaded our nation.

As far back as 1960 (when I was in the fourth form), Paul G. Hoffman, General Manager, United Nations Special Funds availed us of his definition of:

“An underdeveloped country” “Everybody knows an underdeveloped country when he sees one. It is a country characterised by poverty, with beggars in the cities, and villagers eking out a bare subsistence in the rural areas.

A country lacking in factories of its own, usually with inadequate supplies of power and light.

It usually has insufficient roads and railroads, insufficient social services, infrastructure and poor communications.

It has few standard hospitals and fewer reputable institutions of higher learning. Most of its people cannot read or write.

In spite of the prevailing abject poverty of the people, it may have isolated islands of wealth, with a few persons (1% or less) living in “Embarrassing Luxury”” While Lolu was delivering his thought-provoking lecture, information technology was able to provide us with a live feed of what Alhaji Aliko Dangote, the richest man in Africa was saying (real time!!) on the same subject: “POWER” at the “CBN Going for Growth Consultative Roundtable” hosted by the Governor of the Central Bank of Nigeria, Mr. Godwing Emefiele (it is not true that he is now an Alhaji!! That is fake news.) at the George Hotel, Ikoyi, Lagos which is only a short distance from here. While the Governor’s theme was: “Going for Growth” Alhaji Aliko went straight to the heart of the matter: “How do you have economic growth without power? So, no power, no growth because without power there can’t be growth.

Egypt increased its electricity by 10 gigawatts, which is equivalent to 10,000 megawatts in 18 months.

In Nigeria, we have been struggling for 18 years without adding 1,000 megawatts and we have spent about three times above Egypt, why?... I think we all need to be concerned about that.

Government needs to encourage non-oil sector growth rather than depending on proceeds from crude oil to pay salaries.

Proceeds from crude oil sale should be for major investment in the country....

no business will thrive with business owners generating power themselves.”

I have every reason to believe that Alhaji Aliko subscribes to Thomas Edison’s credo: “Genius is one per cent inspiration and ninety-nine per cent perspiration.”

We can only speculate that if Aliko had attended King’s College, he would have caught up with Bill Gates of Microsoft as the second richest man in the world. Of course, if he had boarded in Harman’s House, he would long ago have surpassed Jeff Bezos of Amazon as the richest man in the world.

What may not be known to all and sundry is that one of my classmates in the Sixth Form was from the North. He had three scholarships simultaneously – one was from his Local Government Council; the second one was from the Northern State Government; while the third one was from the Federal Government of Nigeria. His real name was Olowo (Rich man) but we preferred to call him Alhaji Too Much Money. He confided in some of us that even before he joined us, he was already looking after two wives back home!! For him, writing love letters to girls at Queen’s College, Methodist Girls School or Holy Child College was a complete waste of his time.

While we are still pondering on the genius/perspiration equation, I am tempted to share with you glorious confirmation of the triumph of will over obstacles. I am not at liberty to disclose the surname of the central character. It is sufficient that his first name is Julius and the middle name is Ayo. He belonged to Mckee-Wright’s House and he really fancied himself as a footballer. Unfortunately, even while he was in the Sixth Form, he was consigned to the Second Eleven. He refused to be discouraged.

Let us flash back to 1958. For almost eight straight years, King’s College was trounced annually by St. Gregory’s College in football. Hence, it was a foregone conclusion that the same result would recur. To make matters worse, the best player in the King’s College line up (Left half-back) suffered an injury on the eve of the match. When Julius Ayo who played

‘

Everybody knows an underdeveloped country when he sees one.

It is a country characterised by poverty, with beggars in the cities, and villagers eking out a bare subsistence in the rural areas

in the same position in the Second Eleven was announced as the replacement in the Dining Hall, the booing was deafening. The consensus was that we may just as well have conceded a walk over to St. Gregory’s College instead of exposing our team to humiliation at the mercy of the Obalende wizards who had a reputation for mixing Catholic piety with African voodoo and native Juju to score goals (or stop their opponents from scoring).

Indeed, it was P.H. Davies the Principal (Headmaster) of King’s College who overruled the Games Master and insisted that in the spirit of sportsmanship, the match must go on.

Anyway, when the referee was about to blow the whistle for the match to commence, Julius Ayo was so overwhelmed that he was perspiring profusely with nerves and trying to put on his boots properly that he almost missed the kick-off.

However, once the game took off, Julius Ayo was like a lion. He was all over the football pitch at Onikan Stadium – kicking, tackling, passing the ball and mesmerising the St. Gregory’s attack squad as well as confusing their defence line up.

At half time, the score was two goals each. By the time the game was over, King’s College triumphed by four goals to two!! It was an unforgettable experience when King’s College students trooped on to the football pitch to carry Julius Ayo shoulder high. He was undoubtedly the hero of the day and the main architect/ engineer of our triumph.

Perhaps I should add that since he was playing at Left Half-back, he was only expected to defend. However, he somehow managed to score two long range goals which he lobbed into the opponent’s net much to the consternation of the goalkeeper who later confessed that each time Julius hit the ball, he the goal-keeper saw two balls and did not know which one he should attempt to grab.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Shoot the message, not the messenger!

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e have seen a lot of negative commentary on the list of 43 names submitted by the presidency to the Senate for ministerial appointments. Once we strip away the element of party political noise that is the function of opposition, we find that some of the criticism is uninformed. It is not that the list is uninspiring, rather that it has to be put together within certain constraints.

The first is the federal constitution, which requires that each state is represented. (Thankfully, calls for further state creation appear to have been dropped.) In an act of overcompensation for the excesses of the military regime before 1999, the constitution arguably veers too far towards federalism. A second constraint is that election winners need to reward those who helped them to secure the prize, the more so in a federal environment where politicians aspiring for office have to work with an additional layer of government. This is a core requirement of international statecraft. We could criticize the small number of women on the list or its high average age but this would be to ignore societal considerations. Some of the also-rans among the presidential candidates in February were vocal on this point but could not match the fundraising of the two largest parties to pose a serious challenge at the polls.

The list, uninspiring or not, reflects the constraints we have highlighted of course but also the presidency’s obvious preference for ministers

who share its vision. The ministers are the messengers, and criticism should be directed at the underlying message and the implementation of the FGN’s agenda.

That message is not free market. We have heard some Nigerians say that the president and the vice-president are socialist. However, this is the opinion of those who have never lived in a socialist system. Where is the progressive taxation regime that marks socialism in a democratic system, for example? Where is the social safety net that such a regime funds?

It is probably said that Muhammadu Buhari and Yemi Osinbajo are socialist because they favour a role for the state in the economy. In this case we can point to the social interventions in the annual budgets and other programmes designed to fill gaps that the administration has identified. The huge infrastructure deficit is an example. The domestic banks, private investors and Nigeria’s external partners do not have the resources to cover the gap. Even if they did, they would want the FGN to make a contribution as a stakeholder. So the FGN pledges public funds to the cause, and on a scale that makes fiscal conservatives uncomfortable.

The quality of delivery is a live issue but we can say that the true diversification of the economy, which has been notionally on the agenda of every administration in the past three decades, will not materialize without a transformation of the infrastructure. We all yearn for the day when a sharp fall in oil revenues does not lead directly www.businessday.ng

to shortages of foreign exchange, a further rise in unemployment and a contraction in output across the economy.

Two widely discussed elements of the administration’s message are its support for managed exchange rates and for fuel subsidies. The first is not remotely socialist. Nigeria is not alone in its choice. Oil-producing emerging economies do not favour market-determined, let alone floating exchange rates (if such exist). We invite our readers to look at the arrangements in the Gulf states.

This particular message is not going to change in a hurry. In the local media coverage of Godwin Emefiele’s appointment for a second term as CBN governor, more than one analyst highlighted the opportunity to launch market exchange rates. This missed an obvious point: the reappointed governor has no such wish and nor do his senior colleagues at the CBN, not forgetting the presidency.

Turning to the fuel subsidies, the rationale is less socialist than “pro-poor”. However, we have little doubt that the funds deployed for subsidies, in whoever’s books they are entered, could be more profitably spent on development. The Egyptian government has recently gone down this route and encountered limited protest. It was acting within its credit arrangement with the IMF. The FGN has never borrowed from the Fund, and would have to push fuel price deregulation as its own policy.

Rather than target the messengers, we say that critics should focus on the message, which

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Gregory Kronsten we have sketched, and its delivery/implementation. In one respect, we are positive. Relations between the executive and the legislature under Buhari Two cannot be worse than during Buhari One, and should be improved with the change in Senate president.

Delivery is a challenge because of shortcomings in the training of the civil service and public agencies beyond the higher echelons. Ministers appoint special advisors, often with the relevant technical expertise, to “get the job done” but the impact is limited. If a programme is not working or a contract is not performing, the temptation is to introduce a new one rather than replace it.

Scrutiny of new governments makes for good copy but individuals can only make an impact if the policies are well constructed and they have the human resources to implement them.

Gregory Kronsten is the Head, Macroeconomic & Fixed Income Research FBNQuest

@Businessdayng

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Liquidity challenged

Patrick Atuanya

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igeria faces a paradox of internal shortage of liquidity despite a world awash with it.

Its banking sector has remained largely transactional in nature and for the most part does not embrace giving out loans outside of the most blue chip of companies or the risk free sovereign.

The banks should probably not bear all the blame for this though.

Total banking sector assets are only equivalent to 20 percent of GDP, while a Cash Reserve Ratio (CRR), a specified minimum fraction of total customer deposits, which commercial banks have to hold as reserves with the central bank of Nigeria (CBN), is elevated at 22.5 percent, soaking up much of the extra firepower banks have to create new loans.

Oil export earnings, which usually is a good source of liquidity in most oil producing economies, have slumped some 71 percent in Nigeria from a high of $140 billion in 2012 to about $40 billion in 2014, as oil prices fell from its recent peak.

At the same time Central Banks

have flooded the global economy with liquidity.

The world’s four biggest central banks - the U.S. Federal Reserve, European Central Bank, Bank of Japan and the Bank of England - have pumped around $13 trillion into the global economy since the crisis year of 2009, sharply expanding their own balance sheets of financial assets.

The surge in central bank liquidity has largely found its way into every asset class in global markets, from bonds and equities to real estate, in developed and emerging markets.

However Foreign Direct Investment (FDI) flows into Nigeria the past few years have been abysmally low, while Portfolio flows have only been attracted at a high cost of double digits interest rates.

So Nigeria has not gotten the benefit of global liquidity, while it suffers the consequences of low oil prices.

Ayo Teriba, an economist reckons that in recent years capital flows have overtaken trade flows, meaning that Nigeria cannot sit back and wait for exports alone (earned through trade), when it could aggressively court global capital/ liquidity by being innovative.

Teriba likens liquidity to the lifeblood of a system, and if that is the case, then the country should be prioritising policies that could lead to an inward surge in liquidity.

For Nigeria there are 3 major sources of external liquidity, including exports, diaspora remittances and portfolio flows.

Of the three, diaspora remittances is the largest; however it probably receives the least attention from authorities.

The CBN’s annual economic report shows that in 2018 the total revenue from oil was $18 billion, while Nigerian emigrants sent home some $25.1 billion, the highest in four years.

The importance of remittances is growing as a new normal of low oil prices takes root amid a supply glut.

While oil revenue has fallen some 57 percent from the $42.7 billion recorded in 2014 when oil prices were as high as $100 per barrel, diaspora remittances grew 20.6 percent in the same period from $20.8 billion in 2014.

The funds Nigerian emigrants send back home could even be closer to $40 billion per annum when unofficial channels are counted, according to estimates by the African Development Bank (AfDB).

Sadly, while Nigeria dissipates a lot of energy trying to boost exports, nothing much is being done in the area of portfolio flows and remittances.

Take the policy of forcing citizens sending money home through official channels to exchange at a less than market exchange rate, which serves to discourage the same flows we seek to attract.

The last CBN monetary policy committee meeting of July 23 acknowledged the problem when a part of its communique said: “The Committee also called on the

‘

Sadly, while Nigeria dissipates a lot of energy trying to boost exports, nothing much is being done in the area of portfolio flows and remittances

Bank to intensify efforts to encourage Nigerians in the diaspora to use official sources for home remittances, noting that the effort will complement other measures geared towards improving Nigeria’s current account balance. It enjoined the Bank to consider introducing incentives such as the reduction of charges on diaspora home remittances into Nigeria.”

The multiple exchange rate system and lack of commitment to privatisation of moribund and underperforming assets is also a repellent to portfolio flows.

Egypt recently unified its exchange rates and was able to boost its supply of forex as capital poured into the country.

Unlocking vast brownfield assets for private sector capital injections is a part of the solution. Everything from refineries, airports, smelting plants, steel mills and other decaying FG assets can be sold in full or parts to help raise capital.

The Nigerian Sovereign Investment Authority (NSIA), could be authorised to manage other Federal Government assets for optimal returns and could co-invest with other Sovereign Wealth Funds (SWF) to attract capital to such assets.

Nigeria must understand that the era of the commodity super cycle and the vast oil revenues that came with it is probably over for good. It’s time to think outside the box and tap into the vast global liquidity pool.

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

Nigerian code of corporate governance 2018 Principle 13: Induction and continuing education for directors

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robust onboarding programme for new Directors is imperative for a smooth integration to the Board and an understanding of the business of the Company. Principle 13 of the Nigerian Code of Corporate Governance 2018 (“the Code”, “NCCG Code”) provides that “A formal induction programme on joining the Board as well as regular training assists Directors to effectively discharge their duties to the Company.”

A formal Induction programme is a planned event to introduce new entrants into a system, place or organization.Whilst many organizations have an informal process of induction in place, it is important to ensure that such process is formalized to provide consistency in the approach and information provided to new Board members as they take up their roles. It is required that the induction should focus on familiarizing the new directors with the Company’s strategic plan, operations, business environment, Senior Management, and the Directors’ fiduciary responsibilities.

There is an assumption that “experienced” Directors do not require an induction as they have “seen it all”. For those experienced Directors, a refresher on their duties and responsibilities is always useful given the emerging trends in Board leadership and the peculiarity of regulatory requirements

of each business sector.Thus, the induction package should include a discussion on the expectations of the role, the regulatory landscape within which the business operates, the governance structure of the organization, Board policies and a high-level introduction to the business of the Company. The induction should also provide new Directors an opportunity to meet with Senior Management and where appropriate, visitsto the Company’s operational locations should be incorporated into the onboarding programme.

The Board Chair working with the Company Secretary should ensure that new Directors go through the induction process as soon as possible after their appointment.

It is good practice for the Chairman to sit through the induction programme so that he/she can provide practical guidance and insights as well as such clarification as shall be required. The onboarding session should also incorporate some informal interaction to give new Directors a “feel” of organizational culture.

The Code also recommends that all Directors should participate in periodic, relevant, continuing education programmes to update their knowledge and skills and keep them informed of new developments in the Company’s business and operating environment. This emphasizes the point www.businessday.ng

that serving as a Director for years does not obviate the need for periodic training given the dynamics of the operating environment.

Emerging trends including Cybersecurity, Artificial Intelligence, Blockchain,the future of work, etc. should remain top-of-mind for Directors and periodic training on these is imperative. The Board also needs to keep abreast of new legislation, regulatory requirements and guidelines to give appropriate context to its oversight responsibilities. Thus, it is appropriate to facilitate a targeted Board Training when new guidelines or regulations are issued that will impact the organization’s operations or processes.

The Code further recommends that the outcome of the performance evaluation of the individual Directors should be taken into account in developing Board training programmes. If effectively administered and delivered, the Board and Director performance appraisal typically identifies knowledge gaps of individual Directors or indeed the entire Board that can be bridged by specific training. The Chairman and Company Secretary are also well placed to identify the development areas of the Board and individual directors and as such recommend appropriate training. To ensure maximum participation, it is good practice to identify suitable training for the year in good time to enable Directors diarize and plan to attend.

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Bisi Adeyemi The Code recommends that Director Development programmes should be at the Company’s expense but should not be such that put undue strain on the Company’s finances. This recommendation clearly underscores the proprietary of affordability from the Company’s perspective. Thus setting a benchmark of “annual foreign training entitlement” per Director as is the case in some organizations, without due regard to the financial capability of the Company, relevance and expected outcome, is not in the best interest of the enterprise and not in sync with the Directors’ fiduciary responsibilities. The training needs of the Board and individual Directors, affordability and value addition should be primary considerations in developing a robust Director Development Programme.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. For more articles, kindly download the DCSL Knowledge Hub via this link https://www.dcsl.com.ng/index/pages/page/dkhub

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

Why Federal Government has to make the Siemens deal work

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he recent power agreement signed between the Nigerian government and Siemens, a leading German electric company on Monday, which is capable of doubling the country’s energy output represents a good opportunity to jumpstart the economy.

According to the power sector recovery programme document prepared by the World Bank and the Nigerian government, the deplorable power supply is costing the economy over $29.3 billion annually. This is about 7.25 percent of the total economy lost due to the epileptic power supply. No economy can thrive on generators.

This is why the Siemen’s deal is critical to Nigeria’s economic progress. The agreement seeks to fix transmission and distribution infrastructure by injecting $3billion in new investments.

The last time the power sector saw a proposal for an investment of this magnitude was in 2013 when the power assets were sold to private investors.

Five years later, the privatisation exercise has failed. An analysis of the 2017 financial statements of ten electricity distribution companies (DisCos) show accumulated losses or retained earnings of N713.63

billion from N288.85 billion the previous year.

Losses in the sector rose to N1trn by June 30, 2019, while payments to both the Nigerian Bulk Electricity Trading Company (NBET) and the Central Bank of Nigeria stood at N2trn. The investors who purchased the power assets during the privatisation exercise are still indebted to the banks up to the tune of N500bn.

Interestingly, the Siemens deal is targeted at helping the Transmission Company of Nigeria and the DisCos improve capacity. We believe this is a good place to start.

Nigeria’s weak national grid has collapsed over half a dozen times this year alone. Thirty percent of the power sent to DisCos often gets lost due to poor transmission lines. Lack of investments into network and power distribution infrastructure limit how much power consumers get from DisCos. However, the most critical area to reform is the market. If DisCos are still unable to ramp collections the deal will go south. The investment by Siemens is sourced from export credit agencies and it is a loan to DisCos backed by a Sovereign Guarantee from the Ministry of Finance. A default could torpedo the power sector privatisation leading to total dilution of investors’ stake in the

DisCos. It could also impair Nigeria’s credit ratings. We understand Siemens will get involved in smart metering, this is important to help DisCos raise collections above the current 60 percent threshold.

Commendably, the Ministry of Power has directed the Nigerian Electricity Regulatory Commission (NERC), the electricity sector regulator, to review tariffs to make them reflect the cost of producing power and compel operators to fulfil their performance contracts.

This should top the To-do list of the next minister.

According to the Power Sector Recovery Plan (PSRP), Nigeria should have reviewed tariff upwards by 50 percent, between 2017 and 2021. The review would have addressed accumulated deficit attributed to the sculpting of the retail tariffs under MYTO 2015. Sculpting is a policy that compels Discos to underrecovery now by charging less than the cost of producing power and to fully recover losses in the future. This plan didn’t run its course because NERC prevented a tariff increase.

The Ministry of Power further directed NERC to strengthen the market by implementing existing orders promoting competition, approve pending mini-grid applications, enforce performance agreements in operator’s con-

tracts and set up modalities to refinance accumulated debts.

The TCN was directed to progress implementation of grid expansion plans, enforce full payment of the Market Operator’s invoice in accordance with market rules and support transmission requirements of bilateral contracts with other investors to allow for more commercial use of transmission assets. These reforms should be implemented speedily.

Siemens who signed a similar agreement with Egypt in 2015 for the installations of 16.4 gigawatts (GW) gas plant and wind farm at the cost of over 8 billion euros has delivered improved power to Egypt’s 87million people. But for the project to succeed, the country was serious, reformed its power sector and even floated its currency. Today, the economy is growing at a 5 percent rate helped by improved power.

Siemens is betting that Nigeria’s power market can earn $40 billion more if it helped it reduce technical and commercial losses and expand generation capacity to 25,000MW by 2028. This is risky considering Nigeria’s cavalier attitude towards contract sanctity and lack of discipline to see through reforms. This time around the stakes are too high and everyone concerned should get their ducks in a row.

GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

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Inter-ethnic dialogue is the first step towards Nigerian unity global Perspectives

OLU FASAN

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here is a book that every politician and ethnic leader in Nigeria must read if they really care about this country’s unity. It is Dale Carnegie’s international best-selling book “How to Win Friends and Influence People”, first published in 1937. Surely, President Muhammadu Buhari must read this book to learn how to manage Nigeria’s diversity.

The truth is that President Buhari lacks the ability to manage Nigeria’s diversity.

He cannot coalesce the country’s diverse ethnic interests around a common national identity. President Buhari prefers to give orders and talk tough than to negotiate and persuade! He frequently reminds Nigerians that, as a young military officer, he fought for Nigeria’s unity during the civil war, and, thus, would brook no dissent on its unity. Which is why his reflex response is to send soldiers to quell separatist agitations in the country. But if Nigeria’s fragile unity has to be maintained through military force, the ensuing peace can only be the peace of the graveyard. Trying to get people to do something by sticking revolver in their ribs can only produce forced acquiescence rather than genuine compliance based on conviction about the rightness or legitimacy of the cause.

Thus, a key principle in Dale Carnegie’s book is that to get people to do something, you must make them to want to do it.

How? Well, as Carnegie puts it, “The only way on earth to influence other people is to talk about what they want and show them how to get it”. Surely, then, if President Buhari wants to promote Nigeria’s unity and get Nigerians to embrace that unity, he needs to follow Carnegie’s ad-

vice, namely he must become genuinely interested in what most Nigerians want and help them to get it.

And what do most Nigerians want?

Well, in relation to the unity of Nigeria, it is political restructuring. Other issues, including security, flow from that! Recently, Chief Afe Babalola, a highly respected Nigerian lawyer and elder statesman, said that restructuring is “a solution to Nigeria’s problem”, adding that it would give Nigeria a “truly people’s federal constitution” and address most of its structural defects. As he puts it, “Take it or leave it, Nigeria is a country of nations. We have to harmonise these nations and allow a Nation to evolve from the way we run the governemt”. Chief Emeka Anyaoku, another respected elder statesman and former secretary-general of the Commonwealth, also said that restructuring Nigeria, through devolution of powers, is the only way to successfully manage the country’s diversity. All the ethnic groups in the South and the Middle Belt have strongly called or restructuring Nigeria.

So, given the groundswell of support for restructuring, if Buhari were to follow Carnegie’s advice, he would accept the imperative and provide the leadership to achieve it. President Buhari himself said he recognised the need for a “true federalism” but, to date, has kept his own counsel to himself on the issue. That’s not how to unite a country. He must be seen actively to drive the agenda by initiating and leading a national dialogue on it.

Buhari can’t simply ignore the issue of restructuring if he wants to engender unity in this country.

Which brings me to inter-ethnic conflicts in Nigeria. The obvious truth is that Nigeria is a deeply divided and polarised country, and recent events have pushed Nigeria closer to the precipice. In particular, the ethnic colouration and tribal hijacking of President Muhammadu Buhari’s plan to establish rural grazing areas, RUGA, across the country, and the brutal killing of Mrs Funke Olakunri, daughter of Chief Rueben Fasoranti, leader of the Yoruba socio-cultural group Afenifere, by suspected Fulani herdsmen, could have turned those events into full-blown national crisis, with potentially very pro-

found consequences.

But this is because Nigeria’s ethnic nationalities have not embraced key principles from Carnegie’s book. As a result, Nigeria has become a ticking time bomb, prone to spontaneous explosion.

Let’s consider three of Carnegie’s principles in this context. The first is the need to put oneself in another’s position; the second is the need to be sympathetic with the other person’s concerns; and the third is the need to avoid belligerence and brinkmanship.

Take the first principle. Carnegie said that “If you say to yourself. ‘How would I feel, how would I react if I were in his shoes?’, you would save yourself irritation, for by becoming interested in the cause, we are less likely to dislike the effect”. Surely, if Northerners have put themselves in the shoes of Southerners, who are rampantly being killed by Fulani herdsmen, they would understand why the South opposed President Buhari’s plan to establish cattle colonies in Southern states, and why the Yoruba are deeply angry about the murder of Chief Fasoranti’s daughter by suspected Fulani herdsmen.

But when a so-called Coalition of Northern Groups gave Southerners a 30-day ultimatum to accept RUGA or face the consequences and when the Northern Elders Forum ridiculed the Yoruba for their justifiable anger over the killing of Chief Fasoranti’s daughter, they certainly did not put themselves in the Southerners’ shoes. Professor Ango Abdullahi, leader of the Norther Elders Forum, said “We are worried about their (the Fulani herdsmen) wellbeing”, adding: “The bottom line is that their safety is far more important that staying there”.

Clearly, the Northern Elders Forum care about the safety of the Fulani herdsmen, their people, but why do they not also care about the wellbeing and safety of the Southerners, who the herdsmen are killing? Well, the answer is simple: they couldn’t put themselves in the Southerners’ shoes.

Surely, if the Northern leaders could put themselves in the Southerners’ shows, they would follow another principle in Carnegie’s book, namely, to

‘

Trying to get people to do something by sticking revolver in their ribs can only produce forced acquiescence rather than genuine compliance based on conviction about the rightness or legitimacy of the cause

show sympathy with the other person’s concerns. According to Carnegie, there is a “magic phrase” that can eliminate illfeeling. Here it is: “I don’t blame you one iota for feeling as you do. If I were you, I would undoubtedly feel just as you do”.

Can you imagine if the Northern leaders had said to the Yoruba leaders, “We do not blame you for being angry over the activities of the criminal herdsmen, if we were you, we would feel the same way”?

That would have done a lot to reduce inter-ethnic tension between the Yoruba and the Hausa/Fulani leaders. Instead, the Northern leaders decided to pour salt in the Yoruba’s wounds, wounds that their people caused!

Which brings us to the last relevant principle of Carnegie: the need to avoid bellicosity inhuman relationships. Your belligerent tones, your hostile attitude, willnot make it easy for others to agree with you, he said. He produced a good quote from Woodrow Wilson, a former US President. “If you come at me with your fists doubled, mine will double as fast as yours”, Wilson said, adding: “But if you come to me and say, ‘Let us sit down and take counsel together, and, if we differ from each other, understand why it is that we differ, just what the points at issue are’, we will perfectly find that we are not so far apart after all, that the points on which we differ are few and the points on which we agree are many, and that if we only have the patience and the candour and the desire to get together, we will get together”.

That’s a long quote from Wilson, but the message is clear. Ethnic belligerence and brinkmanship can tear Nigeria apart.

The solution, as the German philosopher Jurgen Habermas, who introduced the phrase “Let’s talk”, suggested, lies in dialogue.

But Nigerians won’t talk unless President Buhari initiates and leads a national dialogue. Certainly, Buhari and Nigeria’s belligerent ethnic leaders have a lot to learn from Carnegie and Habermas!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Three seemingly unrelated events with some milk Milk ban ust over two weeks ago rumours started to swell that the CBN was going to add some items to its now legendary list of items banned from foreign exchange markets. Not just its own foreign exchange markets but any official markets.

Top of the rumour mill was milk. At the last MPC meeting the news was confirmed.

Milk was next in line and would soon be added to the banned list. Of course, officials were keen to point out that it wasn’t a ban as they have no right to ban stuff. Just an “incentive” to domestic manufacturers to produce more locally. Straight out of the import substitution playbook.

Does this import substitution philosophy work? It doesn’t. When you ban, or sorry incentivize, products the domestic producers win because you shut out their foreign competitors. They may produce a little more.

Maybe but not always. They probably make a lot more profits though, so now you know why they are always mostly happy with such actions. But the consumers lose. When you ban, or “incentivise”, with import restrictions prices go up, and people who consume those products must pay more even though their incomes don’t change. For the rich it is typically insignificant, but for the poor it’s a

J

big burden. Overall, the losses by consumers are almost always larger than the gains by producers. So, it’s usually a net loss and society gets poorer. Can Nigeria get richer and poorer at the same time?

Ironically, even the major milk importers and producers seem to be unhappy about this. The business of milk is a complicated one. No, you can’t just give cows water and grass and expect them to produce milk. It’s really more complicated than that. Ask the people who actually do this.

Stunting epidemic One of the most crucial periods in the lives of human beings is from when they are born until age five or thereabout. Any kind of physiological or mental damage done at this stage is usually permanent and can’t be outgrown. One of the key things at this stage is nutrition. If children don’t get enough proper nutrition at this age, then they end up with impaired growth. Some of the consequences of this include poorer cognitive ability and less potential for educational attainment. To break it down, if a child doesn’t get proper nutrition in the early stages then they are going to have a lot more difficulty learning in a way that cannot be undone. Or to break it down even further, if your pikin no chop correct food www.businessday.ng

when e small e fit no get sense, and if e no get sense e no go ever fit get sense again.

This is a condition referred to in the health community as stunting.

There are some countries with a relatively high prevalence of stunting. You guessed it.

Nigeria is one of them. As at 2015, before the last recession, Nigeria had the second highest burden of stunted children in the world with a prevalence rate of 32 percent of children under five. This 32 percent is an average by the way. In some richer states like Lagos it is probably a lot lower. But in some poorer states? Best left to the imagination.

Many northern states are at the front of this challenge. The same states where we frequently complain about poor educational attainment. In case you are unaware, there is malnutrition and stunting problem there.

Current account deficit In the first quarter of 2019 Nigeria had a current account deficit. In simple English it means more foreign exchange flowed out of the country than flowed into the country.

Two of the past three quarters have been current account deficit quarters, as opposed to almost two years of current account surpluses prior to that. This deficit occurred despite reasonably high oil prices and production and despite the CBN continuing

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ECONOMIST

NONSO OBIKILI to sell billions of dollars’ worth of its OMO instruments to foreign portfolio investors. If history is anything to go by, we know what happens when the CBN starts to feel pressure. Phrases like “we import too much” start to get thrown around and “demand management” policies start to pop up. The second quarter current account numbers have not been published but I can guess what it looks like given the CBN’s actions.

So, there you have it. Three seemingly unrelated stories. I will leave you to connect the dots. I just wish we would all be a bit more honest about the purpose of policy. Finally, let me wrap up with this simple question: can you get richer by eating less?

Dr. Nonso Obikili is Chief Economist at Business Day.

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Hot as hell

A Balkan betrayal Warning shots

Heatwaves are killing people Adapting to the effects of climate change is helping but is not enough

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N RECENT DAYS heatwaves have turned swathes of America and Europe into furnaces.

Despite the accompanying blast of headlines, the implications of such extreme heat are often overlooked or underplayed. Spectacular images of hurricanes or floods grab attention more readily, yet heatwaves can cause more deaths. Heat is one of climate change’s deadliest manifestations. Sometimes its impact is unmistakable—a heatwave in Europe in 2003 is estimated to have claimed 70,000 lives.

More often, though, heatwaves are treated like the two in the Netherlands in 2018. In just over three weeks, around 300 more people died than would normally be expected at that time of year. This was dismissed as a “minor rise” by officials.

But had those people died in a flood, it would have been frontpage news.

The havoc caused by extreme heat does not get the attention it merits for several reasons. The deaths tend to be more widely dispersed and do not involve the devastation of property as do the ravages of wind and water. Moreover, deaths are not usually directly attributable to heatstroke. Soaring temperatures just turn pre-existing conditions such as heart problems or lung disease lethal.

Heatwaves will inevitably attract more attention as they become more frequent. As greenhouse gases continue to accumulate in the atmosphere, not only will temperatures rise overall but extremes of heat will occur more frequently (see ar-

South Korea and Russia face off in the skies An aerial confrontation brings home the risks of north-east Asia’s simmering disputes

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NE HOPE behind the visit

by John Bolton, President Donald Trump’s national security adviser, to Seoul this week was that it might help patch up a row between South Korea and another close American ally, Japan. The rift, with its roots

ticle). Britain’s Met Office calculates that by the 2040s European summers as hot as that of 2003 could be commonplace, regardless of how fast emissions are reduced. Urbanisation intensifies the risk to health: cities are hotter places than the surrounding countryside, and more people are moving into them.

The good news is that most fatalities are avoidable, if three sets of measures are put in place. First, people must be made aware that extreme heat can kill and warning systems established. Heatwaves can be predicted with reasonable accuracy, which means warnings can be given in advance advising people to stay indoors, seek cool areas and drink plenty of water. Smart use of social media can help. In 2017 a campaign on Facebook warning of the dangers of a heatwave in Dhaka, Bangladesh’s capital, reached 3.9m people, nearly half the city’s population.

Second, cool shaded areas and fresh water should be made available. In poor places, air-conditioned community centres and schools can be kept open permanently (steamy nights that provide no relief from scorching days can also kill). In Cape Town, spray parks have been installed to help people cool down. Third, new buildings must be designed to be resilient to the threat of extreme heat and existing ones adapted. White walls, roofs or tarpaulins, and extra vegetation in cities, all of which help prevent heat from building up, can be provided fairly cheaply.

A programme to install “cool roofs” and insulation in Philadelphia reduced maximum indoor temperatures by 1.3˚C. It is a cruel irony that, as with other effects of climate change, the places that are hardest hit by heatwaves can least afford to adapt. In poor countries, where climates are often hotter and

more humid, public-health systems are weaker and preoccupied with other threats. Often, adaptation to extreme heat is done by charities if it is done at all. Particular attention should be paid to reaching both remote areas and densely populated urban ones, including slums where small dwellings with tin roofs packed together worsen the danger that uncomfortably high temperatures will become lethal.

Adaptation is not an alternative to cutting emissions; both are necessary. But even if net emissions are reduced to zero this century, the persistence of greenhouse gases in the atmosphere means that heatwaves will continue to get worse for decades to come. As the mercury rises, governments in rich and poor countries alike must do more to protect their populations from this very real and quietly deadly aspect of climate change.

in colonial history and wartime animosity, has brought trade sanctions from Japan. It is also jeopardising military cooperation and the renewal next month of an intelligence-sharing agreement—especially important in face of the threat from North Korea, which on July 25th was reported to have made its latest missile test. As Mr Bolton arrived two days earlier, his arguments for the importance of the agreement had already been bolstered by a vivid demonstration of the fragility of regional peace. South Korea’s fighter jets had fired 360 warning shots at a Russian military aircraft that it said had intruded into its airspace.

The details are disputed. South Korea said that Russian and Chinese planes had penetrated its self-declared Korean Air Defence Identification Zone (KADIZ), an area around its borders where it requires foreign planes to notify it of entry. A Russian spy plane then twice intruded into South Korean airspace, prompting the air force to scramble jets. Russia denied the incursion, and that shots had been fired. But it accused South Korea of “hooliganism in the air” for harassing its aircraft. The next day South Korea reported that Russia had changed tack, expressing “deep regret” and blaming the Continues on page 15

Monday 29 July 2019

BUSINESS DAY

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In Association With

Britain finds its BoJo

Ditching the gags (and his enemies) Boris Johnson claims his prize Britain’s new prime minister will lead a fragile—and potentially short-lived—government

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HE NEW prime minister’s first statement to the House of Commons on July 25th summoned the ghost of his hero. The rhetoric was Churchillian; in the absence of Nazis, “sceptics and doubters”, “negativity” and the Labour Party would have to do as enemies. His mission, he thundered, was to deliver Brexit on October 31st with or without a deal; the country would make preparations for the latter with “the kind of national effort that the British people have made before and will make again.”

Never mind that the spirit of the Blitz resonates with none but the oldest of his countrymen; once victory has been achieved, Britain will be “clean, green, prosperous, united, confident and ambitious”—indeed, he promised to make it “the greatest place on earth”.

But Boris Johnson’s ability to steer his country towards the “golden age” he promises is constrained. He will lead a fragile government, with a working majority that will fall to just one if the Conservatives lose a by-election in Wales next week, as seems likely. His promise to leave the EU by October 31st, along with a further commitment to the “abolition” of the backstop, a default position designed to avert a hard border in Ireland by keeping Britain in a customs union with the EU, make it hard to see how he can get a new deal with the EU; and yet reconciling a majority of MPs to leaving without a deal seems close to impossible.

This conundrum makes an election this autumn likely, suggest Mr Johnson’s friends and foes alike. Win it, and Mr Johnson will be remembered as a political Houdini. Lose, and he could become the answer to a future trivia question: who was Britain’s shortest-serving prime minister?

To support him in his difficult task, Mr Johnson has scooped up advisers from the two most successful phases of his political career. First came allies from his two terms as mayor of London, such as Sir Edward Lister, a local-government grandee.

Next came veterans from Vote Leave, the Brexit campaign that turned Mr Johnson into a politi-

cal bulldozer, crashing through Britain’s four-decades-old political settlement. Dominic Cummings, the cantankerous head of the campaign and a staunch critic of how the government has handled negotiations, is an adviser.

The prime minister has also stuffed his cabinet with Leavers. Priti Patel, who was prominent in the campaign, is the new home secretary. Dominic Raab, who quit in protest over Theresa May’s EU deal, heads to the foreign office. Jacob ReesMogg, a leading Brexiteer, has become Leader of the House of Commons, charged with seeing off legislative tricks that could thwart Brexit. Converts to the cause also have a role: Sajid Javid, who has become a vocal supporter of leaving, was appointed chancellor of the exchequer. He will have the tough job of making sure his boss’s limitless pledges add up.

All prime ministers rely on their teams, but Mr Johnson—a self-professed chairman rather than chief executive—is happy to let others do the work, provided he can take the credit.

Although many prime ministers have promised a return to cabinet government over the years, Mr Johnson may actually deliver it. That could lead to discord.

One adviser predicts a Tudor court in Downing Street, where rivals stab each other for the ear of the king, who sits serenely above it all.

Former cabinet ministers who left government in varying degrees of disgrace are back.

Gavin Williamson, who took a

key role in Mr Johnson’s campaign and has been appointed education secretary, was sacked for leaking details of a nationalsecurity meeting (a charge he denies). Sir Michael Fallon, another campaign stalwart, resigned for inappropriate behaviour with female journalists.

Ms Patel, the incoming home secretary, stepped down in 2017 after she was caught running diplomatic back-channels with the Israeli government.

A government dominated

by Brexiteers will have to force Britain’s departure from the EU through a much less gung-ho Parliament. Mr Johnson must woo two very different caucuses within his party. On one side sit the self-styled “Spartans”— the two dozen MPs who voted against Theresa May’s exit deal every time. By its third outing, other hard-core Brexiteers such as Mr Raab, Mr Rees-Mogg and even Mr Johnson had folded and voted for the deal. The holdouts are a tougher bunch—and, having crushed one pragmatic deal, they are unlikely to vote for a dolled-up version of the same document. On the other side sit increasingly recalcitrant Remainers. Former cabinet ministers such as David Gauke and Philip Hammond have made it clear that they will fight any attempt by Mr Johnson to leave without a deal.

It only takes one Mr Johnson’s government hangs by a thread that is easily snipped. If his majority falls to one, a single hitherto unknown Conservative MP, hardly recognised beyond close relatives,

could decide the fate of Britain by backing a no-confidence vote.

Mr Johnson’s supporters insist that tough talk about Conservative MPs being willing to bring down their own government, or cross the floor to the Liberal Democrats or Plaid Cymru, is just bluster. They point out that Labour MPs were expected to pile in and support Mrs May’s deal earlier this year; in the event, few defied the party line. But there is a difference of scale. Whereas it would have taken a squadron of rogue Labour MPs to force through Mrs May’s deal, Mr Johnson could be brought down by just a few. “You blow your career up,” admits one former cabinet minister, before adding: “Some won’t care.”

An election without Brexit being sorted would be hazardous for the prime minister, as some Tory voters switch to a surging Brexit Party. A ballot after a nodeal Brexit, with chaos at ports, livestock slaughtered en masse and medicine shortages, could be a massacre. By comparison, a vote following a successful Brexit deal could become a victory lap. Supporters predict an election this autumn regardless.

If Brexit is sorted, it would make no sense for a government to limp on without a majority, explains an aide. If Brexit rumbles on, then fed-up hardliners may bring down the man who once led them. Either way a vote is coming, which Mr Johnson will probably relish. His rhetoric is better suited to the campaign trail than to governing.

South Korea and Russia face off in the...

Continued from page 14

incident on a technical glitch.

Russia soon denied having issued any apology. But whatever the origin of the confrontation, it highlights three reasons for America to worry about northeast Asia. The first is growing military co-operation between China and Russia, which appear to have been conducting a joint patrol around South Korea. A second is the patchwork of unsettled territorial disputes. The alleged incursion took place over the waters around islands known as Dokdo by South Korea, which controls them, and Takeshima by Japan, which also claims them.

Japan also scrambled jets and has protested to both Russia (for violating its airspace) and South Korea (for firing in it). To the south, Japan and China contest the Senkaku or Diaoyu islands.

The disputes werefurther complicated when China in 2013 announced its own ADIZ, over these islands. South Korea then expanded the KADIZ. The three countries’ zones overlap.

The third worry is of an accident or misunderstanding. For two countries that have long been at peace, Japan and South Korea keep their fighter pilots busy. In the 12 months that ended this March Japan scrambled its jets 999 times in response to aerial incursions—two-thirds of them

by China over the Senkakus, the rest by Russia over yet more disputed islands to the north of Japan. South Korean pilots, too, frequently respond to Chinese forays into the KADIZ. With so much muscle-flexing in the skies, it is easy to imagine a disastrous miscalculation—especially if, as this week, shots are fired.

America must hope the incident will remind South Korea and Japan that the security threat to each comes not from the other but from North Korea and an assertive China, further encouraged by its ever closer ties with Russia; and that in response South Korea and Japan should be shoulder to shoulder, not eyeball to eyeball.

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Monday 29 July 2019

BUSINESS DAY

In Association With

Total victory

Volodymyr Zelensky clears the old elite out of parliament But will Ukraine’s comedian president be able to complete his revolution?

I

N THE HIT Ukranian television show “Servant of the People”, the schoolteacher-turnedpresident, Vasyl Holoborodko, responds to resistance against his reform efforts by shooting up parliament. After being sworn in as the real-life president of Ukraine in May, Volodymyr Zelensky, the comedian behind Holoborodko’s character, carried out a verbal massacre in the Rada, declaring his intention to dissolve it. “Our citizens are tired of the experienced, pompous, systemic politicians,” he roared.

Voters rewarded his assault. In snap elections on July 21st, Mr Zelensky’s personal new party, Servant of the People (SP), won the first singleparty majority in modern Ukrainian history. SP took 43% of the party-list vote; its candidates also won 130 of 199 first-past-the-post single-mandate districts, giving the party 254 of the 424 MPs overall. Opposition Platform—For Life, a pro-Russian force strong in the east, took second with 13%. Parties led by a former president, Petro Poroshenko, and a former prime minister, Yulia Tymoshenko, picked up just 8% each.

Golos, a new reform-oriented party founded by a rock-star, Svyatoslav Vakarchuk, squeezed in with 6%.

Some 80% of MPs are new.

Like Mr Zelensky’s victory with 73% of the vote in the presidential contest in April, the sweep of the Rada reflects Ukrainians’ disgust with their ruling elite. The oligarchs who have exercised outsize influence on Ukraine’s politics for decades feel unsettled. “Their glory days are over,” says Balazs Jarabik of the Carnegie Endowment, a think-tank.

This became especially apparent in the single-mandate districts, where money used to provide an easy path to victory. In one emblematic case, the millionaire owner of a large factory in the Zaporizhia region, who had previously been elected to parliament four times, lost to a

29-year-old wedding photographer.

Together, the two elections this year amount to a new Ukrainian revolution, this one at the ballot box.

Mr Zelensky promised oodles: to end the war with Russia in the east, revive the economy and uproot Ukraine’s rampant corruption. Over 40% of the population believes the country is heading in the right direction, up from just 15% at the start of the year.

With the Rada now on board, he will have to begin honouring those promises. Mr Zelensky’s first big post-election task will be the selection of a prime minister.

There are reasons to be bullish.

The former actor “wants to go down

in history as the one who changed everything completely,” says one senior official. Mr Zelensky does not himself appear motivated by money, unlike many of his predecessors. He says he wants a technocrat as prime minister; he has floated a respected reformer, Ruslan Ryaboshapka, as a possible prosecutor-general, a key figure in the fight against corruption. “We’re cautious optimists,” says Vitaliy Shabunin, a prominent anti-corruption activist.

Cautious is the operative word.

Mr Zelensky’s tenure has been as contradictory as it is unconventional.

Calls to bar Poroshenko-era officials from serving in government have set off alarm bells among Ukraine’s Western backers and civil-society activists, who fear that could exclude some competent reformers. So too have some of Mr Zelensky’s associated. His chief of staff, Andrei Bogdan, is a lawyer who most recently represented Ihor Kolomoisky, a controversial oligarch, in his efforts to retake control of PrivatBank, which was nationalised in the wake of fraud allegations.

The battle for PrivatBank will be a litmus test. Mr Kolomoisky, whose TV channel airs Mr Zelensky’s shows, raised a glass of vodka to celebrate Mr Zelensky’s win; he returned to

Ukraine following almost two years of self-imposed exile shortly thereafter. Ukraine’s courts, widely seen as crooked, may help him take back the bank: one Kiev judge recently ruled the nationalisation illegal. That would jeopardise the country’s IMF loans. Mr Zelensky has said that he will defend the interests of the state.

Both men have played down their ties. Yet Mr Kolomoisky now tells The Economist that he has discussed PrivatBank by telephone with Mr Zelensky; the president’s team declined to comment.

How much Mr Zelensky can challenge the old system, entrenched in the bureaucracy, the courts and the security services, depends on the team he can assemble. The president has yet to choose a defence minister, a big gap given the war with Russia simmering in the east. Although some appointees boast impressive reform backgrounds, others came over from Mr Zelensky’s production studio, Kvartal 95. Little binds the incoming SP MPs beyond the banner they ran under; Mr Zelensky may struggle to control his party. Oligarchs, including Mr Kolomoisky, are said to have their own factions inside it. As Mikhail Minakov, a political philosopher, cautions, “This elite won’t necessarily be better than the previous one.”

In the crosshairs

The regulatory woes of Big Tech multiply But the titans may yet emerge unscathed

“H

OW DID YOU go bankrupt?…Gradually and then suddenly.” Many technology entrepreneurs know this quote, from a novel by Ernest Hemingway—and often, from experience.

The words have, of late, taken on new meaning. After years during which tech’s titans could do no wrong, they are now being pulled into a vortex of regulatory woes that make headlines almost daily. Big Tech is not about to implode. But will it come out intact?

The latest burst of antitrust activity came on July 24th, when Facebook said that the Federal Trade Commission (FTC), an American regulatory agency, had launched an investigation into the company. The news came soon after the FTC released details of a much-anticipated privacy settlement with the firm.

The social network will pay a $5bn fine for violating a previous privacy deal with the FTC. But Facebook also agreed to formalise its privacy processes, for instance by creating a special committee on its board and by designating compliance officers. Its boss, Mark Zuckerberg, will also have to certify the firm’s compliance—which could make him personally liable should Facebook fail to get its act together.

A day earlier, America’s Department of Justice announced that it would look into how big online platforms have achieved market power and whether they abuse it.

The DoJ did not say which firms it had in mind, but Google is likely to be one. The department’s lawyers are reportedly already preparing to investigate it.

Trustbusters on the other side of the Atlantic—who have already fined Google more than €8.2bn ($9.3bn) in recent years—are not resting on their laurels. On July 17th Margrethe Vestager, the European Union’s competition regulator, announced that her department had opened an investigation into whether Amazon uses the data it

collects from merchants’ sales on its sites to push its own products.

Insiders expect the EU’s next target will be Apple, which stands accused of using its control of the app store on its iPhones to favour its own services, mainly Apple Music.

All this suggests that the tech titans are in trouble both in Europe and America. Some Democrats hoping to run for the presidency have called for their break-up.

William Barr, a lawyer for media and telecoms firms who became attorney-general in February, has spent years fighting them. At his confirmation hearings he agreed with a senator who said that “dominant Silicon Valley firms could use their market power...to discriminate

against rival products, services or viewpoints.”

This last point in particular worries Republicans. They view these giants as liberal bastions, which will discriminate against right-wing views in efforts to rid their platforms of extreme and hateful content. This month President Donald Trump held a “Social Media Summit” where right-wing bloggers aired their grievances. In a sign of how far critics will go, Peter Thiel, a successful tech investor and sometime defender of Mr Trump, recently speculated that Google had been “infiltrated”

by Chinese intelligence services (despite a Trump tweet promising to “take a look”, his administration later dismissed the idea).

Whether these are just acts of intimidation ahead of presidential elections next year remains to be seen. If Facebook’s settlement with the FTC is any guide, Big Tech could still emerge mostly unscathed.

The large fine and its new privacy bureaucracy notwithstanding, Facebook does not have to change its data-collection practices and is off the hook for any more claims that it violated the previous FTC settlement.

In a twist, Microsoft, the world’s most valuable listed firm, with a market capitalisation of over $1trn,

has hardly been touched by the techlash. It has learned hard lessons from going through the regulatory wringer at the turn of the century: look beyond the cash cow (Windows); rapaciousness ultimately does not pay; and work with regulators. Another Hemingway quote is less well-known among geeks: “The world breaks everyone and afterward many are strong at the broken places.

Monday 29 July 2019

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COMPANIES & MARKETS

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COMPANY NEWS ANALYSIS INSIGHT

MTNN set for second straight year of trillion naira revenues LOLADE AKINMURELE

T

he Nigerian unit of South African telec o m mu n i ca tions company, MTNN, looks set to break a record it set last year for being the first public company to post revenues in excess of a trillion naira.

According to half year numbers published by the Telco on Friday, revenues hit N566.95 billion in the first half of 2019, up 12 percent compared to last year.

Going by the half year trend, MTNN is on course to do N1.14 trillion in revenues by year-end, 9.6 percent higher than the N1.04 trillion recorded in the whole of 2018.

Despite the positives to take away from a Nigerian company posting trillion naira revenues back to back, a single digit revenue growth is hardly anything to cheer in a country with double digit inflation rate, as it is a sign of a weak economy and shrinking consumer

disposable income.

The revenue growth was driven by a 31.7 percent jump in data revenue and 21.2 percent increase in fintech revenue. Voice revenue also recorded growth, following an 11.4% rise compared to last year.

Shares of MTNN were up 1.6 percent on Friday to N127 per unit, as investors cheered what was largely impressive half year performance by the Telco.

The telco’s subscriber base was also up 5.7 percent year to date to 61.5 million while active data subscribers increased by 11.0% to 20.7 million.

An increase in smartphone penetration to 39.2% from 37.1% also contributed to the company’s higher revenue.

On the cost side, MTNN maintained its cost efficiency as the EBITDA margin came in at 53.8% in H1-19, which was ahead of consensus analysts’ estimate.

Direct network operating costs were down by 21.1 percent in the first half

period under review.

With costs largely trending downward, profit before tax in the first half of the year came in at N141.80 billion, a 31 percent increase compared to the same period last year.

Profit before tax printed lower than expected as in-

terest expense climbed on the back of a N200 billion debt secured by the Telco in the second quarter of 2019.

Interest expense rose by 45.8 in the period under review, driven by the additional debt. Gross debt rose by 68.3 percent year to date

to N295.11 billion as at Q219 as against N251.79 billion as at Q1-19.

Profit after tax rose by 34.8 percent to N98.93 billion in the first half period under review.

Since publishing its financial scorecard for the

second quarter of 2019, MTNN has announced an interim dividend of N2.90/ share, which implies a yield of 2.3 percent.

Shares of the telco has gained 28.28 percent since it listed at N90 per share on the NSE.

OIL & GAS

Oando’s profit dips 18.5% in H1’19 on increased administrative expenses OLUWASEGUN OLAKOYENIKAN

O

ando Plc, one of Africa’s largest integrated energy solution providers, posted a declined profit in the first half of 2019 driven by higher cost of sales and record-high administrative expenses.

In the first six months of the year, the oil and gas firm recorded a net profit of N7.17 billion, a 18.48 percent decline from N8.49 billion recorded in the corresponding period of 2018, no thanks to ad-

ministrative expenses that jumped 38.63 percent to N53.7 billion in the period.

Fur ther checks re vealed that the administrative expenses incurred

by Oando was triggered by its activities between April and June 2019 as expenses within the period accounted for more than 72 percent of the total administrative expenses for half-year 2019.

Besides this, despite the oil and gas company recording a 5.74 percent surge in its top line in the first six months of this

year to N315.41 billion, it spent N273.52 billion on cost of sales, representing a 10 percent increase from N246.3 billion recorded in the corresponding period of 2018. This weighed on its gross profit to N41.89 billion as against N51.01 billion recorded a year earlier.

As a result of these costs, Oando’s operating profit plunged from N13.84 billion to N1.17 billion, while its operating margin, a profitability indicator that measures how much profit

a company makes on a naira of sales after accounting for all costs, weakened to 0.37 percent in the review period from 4.66 percent.

Oando recorded a pretax loss of N17.28 billion in the first half of 2019 from a profit before loss of N2.26 billion in the same period of 2018. However, an income tax credit of N24.45 billion accrued by the firm concealed its losses, making it record a post-tax profit N7.17 billion.

Oando gained 3.75 percent on the Nigerian Stock

Exchange (NSE) Friday to close at N3.95 per share.

The company’s stock has lost 21 percent of its market value since the start of

the year amid controversy with the apex regulator of the capital market, the Securities and Exchange Commission (SEC).

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

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Monday 29 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

MARKETS

Market pessimism weighs on big investors as transaction slides 2-year low DAVID IBIDAPO& GBEMI FAMINU

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hile the Nigerian equity market has witnessed increased participation of institutional investors since the economy exited recession in Q2 2017, there has been a significant cut down in transactions by Nigerian institutional investors this year.

Domestic Institutional transactions for the first halfyear, 2019 plunged 41 percent to N285.04 billion which happens to be the lowest year on year recorded since the country’s economy exited recession in 2017.

This was on the heel of weak investors’ confidence in the economy which has caused the All share index to shed -11.17 year to date in market value as at the close of trading on Friday.

Data from foreign portfolio

investment report on the Nigerian stock exchange (NSE) show that in 2016 when the economy experienced a recession, it recorded N186.16 billion in institutional transaction, a slowdown by 36.7 percent.

However transactions picked up by 76 percent following country’s exit from recession in 2017.

The increase continued in 2018 as institutional transactions recorded a 48 percent increase to N483.65 billion but in 2019 it dropped to N285.04 billion.

Further analysis shows that decline in 2019 is 4.3 percent points more than the decline recorded in 2016, hence the biggest drop in transaction in the last 5 years.

The sharp drop has raised questions regarding the activities of the investors as many of them seem to be selling off their stakes rather than buying more to seize lower price

opportunities.

Election activities which dominated the first half of the year could be added as a contributory factor as investors sentiments weakened on election results coupled with pessimism of possible fiscal economic policies.

Doyin Salami, Chief Executive Officer, Kainos Edge Consulting said earlier in the year that Nigeria needs a high inflow of investments which will require the need to become indigenous and attractive through equity.

He added that the government needs to develop ways of increasing the inflow of investors through enabling policies and regulations as well as give adequate attention to the fastgrowing sectors of the economy.

Meanwhile, in the recently released NSE foreign portfolio investment report of June 2019, retail investors sold off stocks worth N78.33 billion against an inflow of N23.41 billion.

L-R: Igbuan Okaisabor, CEO, Construction Kaiser Limited; Oluwaseyi Ladejobi, head, employability support, Lagos State Employment Trust Fund (LSETF);Dokun Adedeji, former head of human resource, Cadbury Nigeria, and Kofo Olaosebikan, GMD, Kofsol Group, at the maiden edition of the Employer Summit under the LSETF Employability Support Programme in Lagos, yesterday Pic by David Apara

PENSIONS

Trustfund Pensions points ways to sustain pension scheme JOSHUA BASSEY

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rustfund Pensions, a leading Pension Fund Administrator (PFA), has stressed the importance of employers’ compliance with relevant provisions of the Pension Act 2014 (as amended) to sustain the growth of the Contributory Pension Scheme (CPS).

The company believes both the employers and employees take active interest in the scheme, which, according to Obiora Ozoekwem, Lagos regional manager of Trustfund Pensions, is critical to the future of employees.

Ozoekwem spoke with BusinessDay during the company’s employers’ forum in Lagos. According to Ozoe-

kwem, who put the customer base of Trustfund as at December 2018 at over 718,000, observation over time shows that some employers and employees do not give the deserved attention despite being a major leap from the old unfunded pension scheme.

“The onus lies on an employee upon securing a job to choose a PFA of his or her choice. The employer has a role to ensure that the employee pick one PFA. It is also expected of the employees to have their National Identity Number (NIN).

That is the new rule, so we encourage workers to register with the National Identity Management Commission (NIMC) and submit their NIN to their PFA because

without it, they can’t access their pension funds. If anybody retires today, PFA won’t be able to process his or her retirement benefit unless NIN is submitted to the PFA,” said Ozoekwem.

Still on employer/ employee obligation under the Pension Reform Act, Christopher Fakanlu, head of compliance unit of Trustfund, with reference to Section 11 (1), said it was mandatory for the employee and employer to contribute 8% and 10% (totaling 18%) respectively of the employee’s monthly emolument to the employee’s Retirement Saving Account (RSA), failure of which attracts severe sanctions from the industry regulator.

AB InBev shares hit 1yr high after strong half-year performance OLUFIKAYO OWOEYE

B

elgian based brewer and world’s largest brewer, AnheuserBusch InBev, AB InBev, recorded its best quarterly volume performance in over five years with total growth of 2.1%, buoyed by strong performance in Nigeria and other key markets.

Figures released for its second quarter performance shows that revenue surged 6.2% in the quarter, with revenue per hectolitre growth of 3.8percent, driven by healthy volume growth, global pre-

miumization and revenue management initiatives. In half year (January- June) revenue grew by 6.0percent, with revenue per hl growth of 4.2percent.

AB InBev said it continued to expect strong revenue and core profit growth in 2019 and that revenue per hectolitre would be ahead of inflation. The company is still weighed down by debt after its 2016 purchase of nearest rival SABMiller and has made deleveraging a priority, and over the past year AB InBev has halved its dividend and refinanced its debt maturities in order to bring them

down However, it had to shelve a planned flotation of a stake in its Asian operations, only to follow that up a week later with the sale of its Australia business to Japan’s Asahi for $11.3bn. Carlos Brito, chief executive, said the brewer has “no need” to sell additional assets after last week’s decision The company’s net debt was $104.2bn at the end of June, unchanged from the close of 2018, and its net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio dipped to 4.58 from 4.6.

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L-R: Babatunde Yusuf, dean of management sciences, Lagos State University (LASU); Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Folasade Ogunsola, deputy vice chancellor, development services, University of Lagos (UNILAG), and Muda Yusuf, director-general, LCCI, at a ‘Town and Gown’ interactive Session between LCCI and Educational and Research Organisations in Lagos.

L-R: Abdul Ibrahim, state commander National Drug Law Enforcement Agency (NDLEA), Kano Command; Auwal Sanda, permanent secretary, Kano State Ministry of Women Affairs and Social Welfare; AbasiEkong Udobang, senior manager, program implementation, MTN Foundation; Umar Abdu Madaki, director of pharmaceutical services, Kano State Ministry of Health, and Abdu Muhammed, director, training and planning, Kano State Ministry of Youth and Sports, at the State Roundtable for the MTN-led Anti SubstanceAbuse Programme (ASAP) in Kano

L-R: Oladipo Sowunmi, consultant psychiatrist, Neuropsychiatric Hospital, Aro, Abeokuta; Dotun Akande, founder/director, Patrick Speech and Languages Centre (Patricks), Ikeja, Lagos; Babajide Sipe, manager, communications and external affairs, GTBank, and Yewande Oshodi, senior lecturer, Centre for Autism and Neuro Developmental Disorder, College of Medicine, University of Lagos, at a press conference to announce the 9th GTBank annual Autism programme in Lagos. Pic by Olawale Amoo

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COMPANIES&MARKETS

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Business Event

MARKET

CBN supplies $494.2m, CNY36m into forex market in one week HOPE MOSES-ASHIKE

T

he Central Bank of Nigeria (CBN) addressed the needs of end-users in the inter-bank market and the retail Secondary Market Intervention Sales (SMIS), by injecting a total of $494.2m and CNY36m (Chinese Yuan) into foreign exchange market in one week.

A breakdown of the intervention shows that in the latest round of mediation in the inter-bank foreign exchange market, the CBN injected the sum of $284.2 million in the Retail Secondary Market Intervention Sales (SMIS).

This is in addition to CNY36.0 million in the spot and short-tenured forwards

segment of the inter-bank foreign market.

The United States dollarsdenominated transactions were to meet requests in the agricultural and raw materials sectors, while those in Chinese Yuan were for Renminbi-denominated Letters of Credit.

The forex intervention has helped to shore up the dollar liquidity as well as contributed to maintaining stability in the market, analysts opined.

Consequently, a dollar exchanged for N357 on the selling side (Bureau De Change) while it remained at N360 on the buying side (customers).

However, naira depreciated by marginally 0.02 percent to close at N361.97k per dollar on Friday compared to

N361.91k/$ traded the previous day, data from FMDQ indicated.

Also within last week, precisely on Tuesday, July 23, 2019, the CBN intervened in the inter-bank sector of the foreign exchange market with the sum of $210 million.

In this forex auction, authorized dealers in the wholesale sector of the market received $100 million, while the Small and Medium Enterprises (SMEs) and the Invisibles segments were allocated the sum of $55 million each.

Isaac Okorafor, director, corporate communications department, said the Bank’s management remained particularly pleased with the prevailing stability in the Nigerian foreign exchange market.

Amaka Nwosisi (m), head of human resource and public relations, Greenlife Pharmaceuticals Limited, accompanied by other senior staff members to present gift items on behalf of other workers to Obiora Chukwuka, celebrant/chairman, Greenlife Pharmaceuticals Limited, at his 56th birthday celebration in Lagos

CONSUMER GOODS

Lower borrowing cost boosts Flour Mills’ Q1 profit by most in 4 years …first quarter sales hit 5-year high SEGUN ADAMS

F

lour Mills of Nigeria, the biggest flour miller by market value grew its Q1 2019/20 profit by the most since 2016 helped by a pick-up in sales, lower tax expense and a significant cut in borrowing cost in the period.

The miller saw profit jack up by 16.11 percent to N4.24 billion compared to N3.65 billion in the same period last year. The latest performance halts a decline in the company’s Q1 bottom-line which started in 2016.

Shares of Flour Mills gained 6.07 percent to close at N14.85 per share Thursday.

Flour Mills which is bouncing back from a 19.48 decline in its first quarter profit last year is reaping the benefits of deleveraging its books by 36

percent year-on-year in the review period while sales turned the corner to a 5-year high.

The company had said it would continue active balance sheet management. “The objective is to achieve additional reduction in finance costs in the current year,” the miller said in an investor presentation on its website.

As at the end of the AprilJune period finance cost had been cut down to N4.55 billion compared to N6.20 billion last year. This follows a 30 percent cut in borrowing cost to N22.9 billion in the full year to March 2019 from N32.7 billion in the corresponding period of 2018.

Revenue growth grew 1.2 percent as the miller reversed a 10.7 percent decline in sales last year to post N134.75 billion in its recently concluded quarter.

The maker of Golden Penny range of food products and Golden Fertilizers noted a drag in its food segment which slowed some 3 percent.

Even though Support Services slowed, Agro-Allied and Sugar segments improved.

A faster increase in cost of sales than revenue rose meant Flour Mills pared its Gross Profit which shrunk for the first time in more than three years. Cost of Sales saw an uptick of about 2 percent and top-line fell to N16.47 billion.

The Miller was able to retain N12.23 from every N100 sales after adjusting for direct cost in Q1. This is marginally less than N12.98 per N100 last year.

The combined effect of a weaker top-line and increase in Selling, General and Administrative expenses trimmed operating profit by some 12 percent to N9.9 billion.

L-R: Caroline Oghuma, executive head, corporate affairs, MultiChoice Nigeria; Tunde Kelani, filmmaker; John Ugbe, CEO, MultiChoice Nigeria; Femi Odugbemi, Academy director, West Africa, MultiChoice Talent Factory; Damilola Ojuri, human resources adviser, and Mike Okolo, of Pan-Atlantic University Lagos, at the selection process into the 2nd batch of MultiChoice Talent Factory Academy at MultiChoice Head Office

L-R: Lion Olori Ayo Jaiyeola, membership director, Principal Primrose Children School, Anthony Maryland; Lion Saka Cynthia, president Lagos Apex Lions Club; Lion Vicky Bello Club director; Lion Abiola Bababunmi, secretary, and a staff of the school, at the July Activity on Environmental Protection Exercise at the school with donation of cleaning items recently.

P&G moves to reduce girls’ absenteeism in schools through training DANIEL OBI

P

rocter & Gamble Company, American multinational consumer goods corporation operating in Nigeria has moved to reduce girls’ absenteeism in schools through provision of Menstrual Hygiene Management (MHM) education.

One of such moves was a programme held at the Government Girls Secondary School, Dutse Alhaji, Abuja described as a significant intervention targeted at enhancing girls’ knowledge and prac-

tice around reproductive health through life skills training, provision of emergency sanitary kits and mobilization of stakeholders’ support for Menstrual Hygiene Management (MHM) for girls in schools.

Director, Government Relations and Public Policy Africa at Procter & Gamble, Temitope Iluyemi in her opening remarks said: ‘Study reveals that girls’ confidence drop dramatically during puberty – and their first period is the time when their confidence is lowest. Always has made it a mission to empower young girls and women

to live life without limits through various programs such as the Always Keeping Girls in School Program, to boost the confidence of young girls and inspire them to achieve their dreams.”

Speaking on the successes and learnings from the program, Countr y Director of Mercy Corps said: “We are delighted to collaborate with Procter and Gamble on the Always Keeping Girls In School (AKGIS) Project, as part of our larger Educating Nigerian Girls In New Enterprises (ENGINE) II programme, which has led to

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increased knowledge of menstrual hygiene management among adolescent girls in the Federal Capital Territory, increased access to sanitary pads and WASH facilities for girls when in school, as well as improved counselling and psychosocial support for girls during menstruation.

These in turn have led to improved attendance of girls in school and positive behavior change among stakeholders towards improved learning outcomes for marginalized girls. We hope that the outcomes of this project will lead to more interventions to

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reach other adolescent girls and provide additional support for WASH facilities to facilitate girls’ attendance and completion in school.”

As part of its Citizenship efforts to be a force for good and growth, P&G recently announced a new commitment to educate more than 23 million adolescent girls on puberty and hygiene across the Indian Subcontinent, Middle East and Africa (IMEA) region.

Since commencing operations in Nigeria in 1992, P&G has invested millions of dollars in investments @Businessdayng

including a manufacturing site located in Ibadan, Oyo State as well as a world class distribution center in Agbara, Ogun State respectively.

The ceremony at the Government Girls Secondary School, Dutse Alhaji, Abuja recently was attended by Soraya Hakuziyaremye, the Minister of Trade and Investment of the Federal Republic of Rwanda and Scholar Gbasha, Consultant to, Kebbi State Governor Abubakar Atiku Bagudu on Education Projects amongst a host of other top dignitaries and key stakeholders.

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Monday 29 July 2019

BUSINESS DAY

Monday 29 July 2019

BUSINESS DAY

25

TAIWO OLAYINKA AFOLABI

CEOINTERVIEW

Group Executive Vice Chairman/Founder, SIFAX Group

Interview with Private Sector Leaders

‘SIFAX controls a significant share of Nigeria’s logistics and transport sector’

The Nigeria’s maritime sector has recorded many giant strides in the last few years. In this interview with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU, the Group Executive Vice Chairman and Founder of SIFAX Group, Dr. Taiwo Olayinka Afolabi, one of the nation’s leading wealth creators and employers of labour, identified the challenges of the maritime sector and also explained how SIFAX Group became a leading maritime firm in Nigeria. He further suggested ways on how the full potential of the sector could be tapped. Excerpts:

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he Nigerian maritime business is governed by several laws.

From your perspective as a major stakeholder, what are the laws and policies the FG needs to put in place to make the maritime business environment friendly to operators?

As a company, we have always advocated that the maritime sector can be a major earner for the country. The sector has the capacity to contribute more to the GDP in view of the dwindling oil revenue if good policies and laws are put in place. First, there should be a strict implementation of the Cabotage Law. The implementation of this law has not been detailed. If this law is well implemented, many Nigerians and indigenous companies will be involved in several businesses in the maritime sector and this will curb the problem of huge capital flight we currently experience in the industry.

The disbursement of the Cabotage Vessel Financing Fund is also key to players in the industry. As of last year, the fund was put at about N44 billion naira. These funds will encourage and help businesses in the maritime sector grow. The government should automate many processes at the ports which are still being done manually. Several agents have to run from one office to the other to sign several documents which delay clearing process and encourage corruption in the system.

The Ports & Harbour Bill also needs to be amended to accommodate modern reality.

Not having the right industry legislation in place has made Nigeria to lag behind in being a competitive maritime hub in West Africa and beyond. Although the bill has scaled through the second reading at the National Assembly, it needs to be passed as soon as possible.

There is a need to deeply entrench the Public Private Partnership (PPP) policies in the sector to realize its full potential. When the government brought in the private sector to take charge of the daily running of the terminals, it has yielded great results in the last eleven years. There are still so many things that government needs to hand off.

For example, the provision of scanners at the ports, the management of truck parks, the provision of infrastructures, and many more.

There should also be a deliberate step towards reducing the rising port costs and charges. At the Taiwo Afolabi Annual Maritime Conference which was organized in my honour by the Maritime Forum of the University of Lagos, it was revealed that a typical shipping company debit note in Nigeria contains about nine different charges which include - shipping line/agencies charge, container cleaning/ maintenance, container deposit, MOWCA charge, NIMASA sea protection levy, MOWCA Fee, freight levy, document release, demurrage charges, NIPOST Stamp Tax and Value Added Tax (VAT), all these are some of the issues that should be worked on to make the sector more friendly and attractive.

What are the major challenges of the maritime sector and how did you overcome them?

The maritime sector is fraught with many

challenges. We are helpless against most of these challenges; we have only tried to find a way around them.

The first challenge is the payment of lease fees in dollars. When we took over in 2006, exchange rate was between N121 to N136 but today exchange rate is put at N306 to the dollar. We have through the umbrella body of the terminal operators advocated for the payment of the fees in Naira but these appeals have fallen on deaf ears. So we have to keep pushing ourselves to pay these fees.

The dilapidated infrastructures are another challenge facing the sector. There are no good roads in and out of the ports.

Transfer and moving of consignments out of the ports take weeks and even months.

We have advocated for reconstruction and declaration of a state of emergency on these roads. What we have done to overcome this challenge is to help our numerous clients take their consignments to our off docks for a token fee where they can clear them and transport them easily. As much as possible, few of our subsidiaries also do some palliatives on some portions of roads around Apapa.

The absence of scanning machines at the port is also delaying and hindering the movement of consignments out of the ports. We cannot do anything to this challenge except the government accepts our proposal. The Nigerian Customs have to do 100 percent physical examination which takes time and have increased theft at the ports. Items taken out of the containers are never complete when loading it back. We have urged the government to make the provision of scanners for the maritime sector a public-private partnership initiative where each terminal operator provides the scanners and maintain them but those scanners will be operated by the Nigerian Customs.

There is this concern that foreign players get the largest chunk of the nation’s maritime business, how best can the FG address this?

We are happy that the government has passed the local content bill. This bill was not there when the ports were concessioned which gave some advantages to foreign players. The bill has changed the face of the nation’s maritime sector by encouraging and bringing on board Nigerians who are now participating actively in the industry.

As I said earlier, NIMASA, one of the key agencies in Nigeria, needs to make sure the Cabotage Law is strictly enforced. Like we all know that securing funding is usually very easy for the foreign players, we urge that the CVFF be released to the Nigerian maritime players to enhance their productivity. The Nigerian banks are still very reluctant in the provision of supports, especially, credit facilities to players in the industry, particularly the small ones. The industry is huge and has unlimited potential but these opportunities can only be unlocked when financial institutions understand the sector and the important roles they are expected to play in the equation.

We at SIFAX Group are a best example of an indigenous company that has grown www.businessday.ng

and in some African countries. Last year, the company won a competitive concession bid for a port terminal at Warri Port. The terminal was handed to us few months back and we are currently working hard to put the facility in top shape so we could open our doors for business.

Our new subsidiary, Ocean & Cargo Terminal Services Limited will operate this new business in Warri. This will certainly increase our throughput and ultimately, in the long run, our revenue base.

We have also diversified into the financial services sector. We just birthed a new subsidiary, Sky Capital and Financial Allied International Limited. It is the financial services arm of the Group. It was established as an investment and asset management firm to offer wealth creation opportunities through a unique blend of traditional investment management and alternative investment services. We have also acquired stakes in few banks in Sierra Leone and Gambia.

Our hospitality subsidiary, Mac Folly Hospitality, is currently building a 250-bed Marriott Hotel at the heart of Ikeja. It is a multi-billion naira project that will revolutionize hospitality business in the country.

This will be completed by the end of 2019 or early 2020.

T into a big brand because we had the right investment support that has helped us grow.

At first, so many people did not believe that the business will yield results but with the insightful vision of the leadership team of the company, we now compete favourably with the foreign players.

How much of the market share of the Nigeria’s maritime business does SIFAX control?

SIFAX Group controls a significant share of Nigeria’s logistics and transport sector.

There are not many organizations in the country that offer a bouquet of services across the logistics value chain. From port terminal management, shipping, clearing and forwarding, warehousing, haulage, off dock services, stevedoring, aviation ground handling, passenger handling, cargo/mail handling, ramp handling, among others, SIFAX Group is positioned strategically to function as a one-stop multimodal company that delivers complimentary services to the delight of our clients.

What that means is that whatever the logistics needs of our clients, whether basic or complex, right from the point of origin to point of delivery locally, we have developed the capacity to attend to such demands.

This has given us a lot of leverage with our clients as we take the stress off them. They just signed into our comprehensive pack-

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age, instead of engaging different agencies and companies to handle different services. This has entrenched our company in the logistics industry as a leading player.

To answer your question, SIFAX Group has a large share of the market and the good thing is that we are not even resting on our oars as we are currently reviewing our services and processes to deliver a better value. We are currently recalibrating our vision, mission and corporate strategy to be able to stand far above competition.

What is the future outlook for the nation’s maritime business?

The future is bright for the maritime sector. We are expecting that very soon deep water seaports will begin to spring up in Nigeria so that large vessels will begin to call at the nation’s waters.

Few of them are nearing completion in Lekki and Akwa Ibom.

A key area where there is a very positive outlook is in the export business. We are beginning to see a great improvement with various policies of the present government maturing. There is a steady rise in the export of various agricultural produce and this will certainly have an impact on the maritime industry.

Investment in port infrastructure will certainly improve the fortune of the industry. There will be better revenue from the sector to the government coffers as businesses flourish again. Better infrastructure and friendly charges will attract businesses back to the industry, especially from

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neighbouring ports. Once adequate and good infrastructures are put in place, the Apapa and Tin Can ports will begin to surpass its revenue expectations.

The unique thing about the maritime sector is that there are so many ancillary businesses that help the sector functions. The sector provides vast windows of business opportunities in several maritime and marine-related activities that offer commensurate returns on investments to potential investors. But the infrastructure and friendly environment must be in place for these businesses to thrive.

The range of available business opportunities include, but are not limited to, port and terminal operation, shipping, stevedoring, ship brokerage services, marine insurance, ship supply and ship chandelling. Others are warehouse facility management, haulage and logistics, maritime law consultancy services (Admiralty), advertising and marketing, security and safety services, etc.

Where do you see SIFAX in the next five years?

We are currently embarking on a corporate restructuring which has culminated in an ambitious five-year strategic business plan. The restructuring code named “Quantum Leap” will focus on the entrenchment of a better work culture and aggressive expansion plan. We are also looking at how to achieve efficiency in our service delivery.

Our expansion plan includes exploring port terminal management opportunities both locally

With the Quantum Leap project, SIFAX Group, in the next five years, is looking at over 300% growth in revenue, more international expansion, better service delivery and more service offerings.

Profile

aiwo Olayinka Afolabi, the Chief Executive Officer (CEO) of SIFAX Group, a multinational conglomerate, was born in Ondo to the family of Chief & Chief (Mrs.) Samson Afolabi. A native of Idokunusi Ijebu in the Ijebu East Local Government Area of Ogun State, he started his educational pursuit at Ansar Ud Deen Primary School, Ondo and thereafter, proceeded to Baptist Grammar School, Ibadan, where he obtained his West African School Certificate (WASC).

His quest to attain high level of academic excellence and leadership in advocacy led him to the University of Lagos, where he obtained the degree in Law. He became a member of the noble profession when he was called to the Nigerian Bar by the Body of Benchers on Wednesday, November 4, 2009. He later obtained a Masters degree in International Law and Diplomacy from the same university.

He began his professional career with a shipping company, Nigerian Express Agencies Limited, where he distinguished himself and rose to become the Head of Operations. With the zeal of entrepreneurship burning in him, he left the company in 1988 to establish what has now turned to a big conglomerate, SIFAX Group, a business interest with diverse investments in Maritime, Aviation, Haulage, Logistics, Oil & Gas and Hospitality, among others.

From a little beginning, the company, which started as a freight forwarding agency in Lagos, Nigeria, currently operates across the world with presence in the United States, United Kingdom, Ghana, Gambia, Sierra Leone, Djibouti, etc.

Some of the Group’s subsidiaries include Ports and Cargo Handling Services Limited, concessionaire and operator of the Terminal C, Tin Can Island Ports, Apapa Lagos; SIFAX Off

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The aviation ground handling subsidiary, SAHCO Plc, which was listed on the Nigerian Stock Exchange few weeks ago, is also expanding to offer bespoke travel and tourism services.

Dock Limited, a bonded terminal operator; SIFAX Stevedoring Limited; SIFAX Haulage & Logistics Limited; SIFAX Marine Services Limited; Skypower Aviation Handling Company Plc, an aviation ground handling company, Sky Capital and Financial Allied International Limited, Mac Folly Hospitality Limited, among others.

With about three decades of rich entrepreneurial experience, Dr. Taiwo Afolabi, through the dint of hardwork, foresight, resilience, vision and knack for excellence, has emerged not only as one of the leading business icons in Nigeria, but also reckoned with across the world.

No doubt his wealth of experience, organizational prudence and business ingenuity have remained invaluable assets to SIFAX Group, which has become a leading player in the Nigerian economy. The company, alongside its subsidiaries, has generated both direct and indirect employment for thousands of eligible Nigerians.

Afolabi is a seasoned maritime consultant and a Fellow of many professional bodies including Nigerian Institute of Financial Management (NIFM), Institute of Freight Forwarders of Nigeria (IFFN), Institute of Directors (IOD), Certified Institute of Shipping (CIS) and the Chartered Institute of Arbitrators of Nigeria.

He has attended several maritime and aviation-related trainings both locally and internationally on port operations, aviation ground handling operations and management.

Due to his rich experience, Afolabi is a sought-after speaker and facilitator at various industry conferences and mentoring programmes.

Aside being renowned for his business acumen, Taiwo Afolabi has also established a reputation as a public-spirited individual. His philanthropic philosophy has driven him to

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give hope and support to many public causes.

The major focus of this philanthropic initiative is education, where many schools, from primary to tertiary level have received immense support and assistance.

Few of these interventions include a 1,000 capacity lecture theatre at Ladoke Akintola University, Ogbomosho and an 18-seater Toyota Hiace bus donated to the medical students association of the Obafemi Awolowo University, Ile-Ife, Osun State.

As a mark of recognition of his outstanding achievements and invaluable contributions to nation building, he has been conferred with various honorary doctorate degrees by four universities, including Ladoke Akintola University, Ogbomosho, Oyo state, Cornerstone University and Theological Seminary, Jerusalem, Israel and USA, European-American University, Dominica and Commonwealth University, Belize.

Dr. Taiwo Afolabi is also a recipient of over thirty individual awards from diverse organizations, including the 2014 Business Person of the Year which was conferred on him by one of Nigeria’s leading newspapers, Daily Sun. The Federal Government has also recognized the great contributions of this Ogun-state born business icon. He is a recipient of the Member of the Order of Niger (MON).

The accolades are not restricted to Nigeria alone. He is also the Honorary Consul-General of the Republic of Djibouti in Nigeria.

He is a member of the Institute of Directors Nigeria; Ikoyi Club 1938; IBB Golf Club, Abuja; the Building Committee of the Nigerian-British Chamber of Commerce and Industry, amongst many others. Dr. Taiwo Afolabi is a sports lover, who enjoys watching and playing football. He is happily married with children.

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26

Monday 29 July 2019

BUSINESS DAY

real sector watch

ALSCON set to reopen as NA places Ajaokuta concession on hold Odinaka Anudu

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he Aluminium Smelter Company of Nigeria (AL S CON ) will soon re-open as issues around the company have been resolved, Ime Ekrikpo, director of ferrous metals at the Federal Ministry of Mines and Steel Development, said.

Ekrikpo said this at the annual general meeting of the Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN) in Lagos.

He explained that after several years of leaving ALSCON in limbo, the National Council on Privatisation (NCP) engaged the parties involved and returned the facility to UC RUSAL. He said the Bureau of Public Enterprises (BPE) is monitoring the process of restart of the smelter company as technical audit has been conducted while the phase-wise rehabilitation of the plant is ongoing.

Regarding Ajaokuta Steel, he said the federal government considered the option of concession whereby it would maintain some level of ownership while being funded and operated by a private player.

He further said the procurement processes to engage

a transaction adviser is on hold following its delisting from the list of enterprises to be privatised by the National Assembly.

BusinessDay had criticised the immediate past Senate for insisting on setting aside $1 billion for the steel plant. This is because it makes more economic sense to sell or concession the plant which has gulped over $8 billion without producing a sheet of steel.

On the way forward, he advised that the pending Nigerian Metallurgical Industry Bill sitting in the National

Assembly be passed into law to ensure adequate legal and regulatory framework to guide the metallurgical industry.

“Government commits to supporting genuine investors in the mines and steel industry with virile and sustainable enabling environment through articulate policies, provision of legal and regulatory framework as well as attractive investment incentives to industry players,” he said.

Oluyinka Kufile, outgone chairman, Basic Metal, Iron and Steel, said the convulsing status of Ajaokuta Steel Complex has not helped the

condition of struggling Nigerian manufacturers as most basic raw materials for steel industry, such production of iron ore and billets, are not being produced by the company.

“Consequently, the industry engages more in downstream light transformation with moribund mining, beneficiation and rolling operations,” he said.

He pointed out that the Aluminum Smelting plant in Ikot Abasi, which had 190,000 metric tons capacity at inception, was established to produce aluminum ingots but is not doing so.

Manufacturers call for removal of industrial constraints to spike growth SIKIRAT SHEHU, Ilorin

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anufacturers say government at all levels must focus on resolving constraints hindering industries from performing optimally.

Segun Ajayi -Kadir, director-general of the Manufactures Association of Nigeria (MAN), stated this last Thursday at the 5th annual general meeting of MAN Kwara/Kogi states branch held in Ilorin, the Kwara State capital.

Speaking on the theme ‘Circular Economy: A Tool of Wealth for Manufacturers’, he said manufacturing sector needed to improve for the economy to thrive.

“If you don’t industrialise, you will always be poorer,” he said.

“We are entering African Continental Free Trade

Area (AFCFTA), where competitiveness is the key. There should be conscious effort by government to address challenges making manufacturing in Nigeria uncompetitive.

“The issues of infrastructure, multiple taxation, access credit, among others, have to be addressed.

“We have insisted that for any manufacturing to prosper with any loan facility, it has to be not more than 5 percnt because we are competing with countries where interest rate is far lower than 4 percent. So, you can see in the market if you are not price competitive, there is no way you can survive.

“So, access to affordable and competitive credit line is important so that that we are not left in a disadvantaged position in the global market.”

He commended Federal www.businessday.ng

Government efforts, just as he enjoined Nigerians to keep faith and support the government.

In his submission, Kamorudeen Yusuf, chairman of the group, disclosed that smuggling of illegal items into the nation has become a trending issue in the country, constituting serious threat to manufacturers.

He noted that stimulation of local production of various products have generated millions of direct employment of Nigerians and attracted huge investment from new as well as the existing plants in Nigeria.

“Galvanised r oofing s heets, a utomotive b atter y , furniture, cigarettes unfortunate and unpatriotic activities of the economic saboteurs have done a huge damage and devastating effect on the manufacturers with the negative conse-

Unfortunately, he said, the company has been unable to produce more than 30,000 tons, adding that the failure to effectively manage capitalintensive industries has made Nigeria still depending on importation of machinery and spare parts.

“We are therefore of the opinion that the manner and persistence of the current challenges of non-patronage and importation of all manners of steel and aluminium products for infrastructure projects and upgrade across the country could initiate and are capable of exiting the majority of our members and may consequently spell doom for the industry,” he warned.

He advocated government monitoring of the implementation of the Executive Order 003 and 005 to ensure that that both public and private companies in the construction industry comply with local patronage and local content in all their projects, where such products and contents are locally available.

“Unrestricted access to government for concessions/ waivers should be discontinued,” he said. “ M e m b e r s’ r e q u e s t s should be channelled through the umbrella of MAN, which has structured sectorial arrangement for such. In addition, protection should be accorded to all member-com-

panies in the Basic Metal and, Steel and Aluminum Group irrespective of their scale of operation and value addition.”

Kamorudeen Yusuf, newly elected chairman of Basic Metal, Iron and Steel, said he believes the federal government is determined to revive the steel industry.

He lamented that genuine investors in the country pay import tariffs to the government while smugglers flood the market with substandard goods without paying any duty.

He admitted that the Central Bank of Nigeria (CBN) makes foreign exchange available for manufacturers and supports them in many ways, but warned that nothing would be achieved when smuggling is rife.

He urged the Standards Organisation of Nigeria (SON) to stop allowing substandard steel products into the local market.

“A situation where the SON says products should not be less than 0.15mm but some flood the market with products with less than 0.12mm calls for concern,” he said.

He stressed the need to plug such leakages to save multi-billion naira investments in the country.

He pledged that he would do everything within his powers to raise the status of the steel sector in the country.

KAM Industries chairman elected MAN Basic Metals helmsman quences on our investment.

“Despite all the efforts by the Nigerian investors in various sectors of the economy to ensure full achievement of the Federal Government objectives of economy recovery, employment generation, youth empowerment and improved human capital development , t he market has continually recorded free flow of smuggled substandard products which are dumped by some countries through their cronies in the country . This is antithetical to industrial development and aspiration of Nigerian people.”

Kamorudeen , who is also the g roup m anaging d irector/CEO of KAM Industries Nigeria Limited pleaded for government intervention to savage the ugly situation to curb the negative effect as it may trickle don to citizens as well.

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Odinaka Anudu

K

amorudeen Yusuf, chairman of Kam Group, has emerged as the head of Basic Metal, Iron and Steel group of the Manufacturers Association of Nigeria (MAN).

Kam Industries, based i n I l o r i n , Kwa ra St at e, produces nails , wire mesh for concrete reinforcement, binding wires and ro o f i n g s h e e t s, a m o n g others.

The company has five factories in Ilorin and a granite quarry, and is estimated at over $300 million.

The newly elected chairman of Basic Metal, Iron and Steel, in an interview lamented that genuine investors in the country pay import tariffs to the government while smugglers flood the market with substandard goods without paying any @Businessdayng

duty.

He admitted that the Central Bank of Nigeria (CBN) makes foreign exchange available for manufacturers and supports them in many ways, but warned that nothing would be achieved when smuggling is rife.

He urged the Standards Organisation of Nigeria (SON) to stop allowing substandard steel products into the local market.

“A situation where the SON says products should not be less than 0.15mm but some flood the market with products with less than 0.12mm calls for concern,” he said.

He stressed the need to plug such leakages to save multi-billion naira investments in the country.

He pledged that he would do everything within his powers to raise the status of the steel sector in the country.

Monday 29 July 2019

BUSINESS DAY

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real sector watch Nigeria will lose out on AfCFTA if issues around ports, taxes remain unresolved — MAN DG Segun Ajayi-Kadir is the director-general of the Manufacturers Association of Nigeria (MAN). In this interview with Odinaka Anudu, industry editor, he speaks on why the association recently changed its earlier position on the African Continental Free Trade Area (AfCFTA) and how the country should position itself to benefit from it.

MAN was instrumental in stopping the federal government from signing the AfCFTA last year. But in the press release you issued two weeks ago, you said the government answered some of the questions you raised.

What did government do differently to convince you to support the AfCFTA signing? he fundamental objective of trade is to improve the economies of the traders. In any trade agreement, there has to be ‘give and take’. When AfCFTA started, we knew that it offered an opportunity for a 1.2 billion market. We knew also that if we had an environment that was good for business, we should be able to have a beneficial engagement across Africa because we are the biggest economy.

We also knew that the government would have to do a few things for us to become net beneficiaries, which is the objective of anyone going into any trade agreement. We did not just want to go into a trade agreement because there was an agreement.

When it came and there was clamour for government to sign, we felt that it was not right to just rush into doing that. First, we needed to consult widely with stakeholders, especially those whose businesses would be impacted by the agreement. Second, we felt that we should do a study that was specific on how the country would fare, how it would benefit, and the risks involved, including how the government could mitigate them. We felt that these two things were important. We did it because we had experienced the Common External Tariff (CET) and the Economic Partnership Agreement (EPA). We went into the CET without proper consultations and the fallout was that most countries, including Nigeria, resorted to self-help to be able to operate. That was why we did not have a very successful CET. Africa is significantly important for us and we needed to get it right this time. This was why we made

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it clear to the government and other stakeholders that there should consultation.

Government, in its wisdom, decided to hold on to do consultations, minding the country-specific studies.

Beyond that, government set up a presidential committee on impact and readiness assessment. The committee established many streams of technical groups that looked at all the protocols and tariffs and then made recommendations. This committee suggested that if government would do A,B,C, or D, we could go ahead and sign the agreement. MAN was part of that committee. Government, in its wisdom, said, “We know what we have to do to benefit from AfCFTA. So, it is time for us to go and sign.”

So with that background, government signed and MAN does not have any objection.

The only thing is that MAN is now highly desirous of a quick implementation of the recommendations which the committee submitted to the government. Government should set up that AfCFTA action committee that was advised in the report and relevant stakeholders, including MAN, should be involved. We look forward to that because negotiations are going on.

So, we needed to give our mandate to the negotiators; we needed to determine what the rule of origin would be, and we needed to know what the dispute resolutions mechanisms would be, including the competition laws that would govern the AfCFTA. My friend, NANS president, recently informed me that they have written a letter of protest to the government of Ghana regarding the way they undermine our traders there. Ghana is hosting the secretariat of the AfCFTA and it will be shameful for them to continue with that barbarism taking place there. It is inimical to trade and against what the AfCFTA preaches.

Is MAN convinced that Nigeria is ready for free trade?

There is a moratorium for us to get our acts right, and it www.businessday.ng

milk from accessing foreign exchange. You see, we support resource-based industrialisation, and this supports local content. But what we are saying is that it should not be done arbitrarily. You need to carry the stakeholders along. You need to do a targeted policy assessment so that you will be able to have enough information.

You cannot rush over existing manufacturers.

Segun Ajayi-Kadir

could be anything between five and 10 years. I believe strongly that if government is willing, and this president has told us that he is willing, we can mitigate those risks and manage the process robustly and become net gainers of the free trade. The only thing is that if we carry on as business as usual, Nigerian economy will suffer badly.

Can you specifically highlight some of the things you recommended to the government to get Nigeria ready for AfCFTA? Certainly, there have to be specific and targeted measures to improve our infrastructure. We need to resolve some issues very quickly, notably access to credit. We need to lower our taxes. The plan for increase in excise duties in whatever sector should be forgotten. Other countries are lowering their taxes to get set for an AfCFTA environment and Nigeria should not stay back. Ghana wiped out all taxes that inhibit productivity to get itself ready. That is what we expect the government to do. The various

levels of government that engage in multiple taxation should stop. The problem at the ports is having an unimaginably negative impact on manufacturers. There are quick wins that government can resolve. For instance, the Ministry of Finance is currently not signing off on our members importing completely knocked downs (CKDs) and unjustly so because there is no reason why they should not operate the current tariff that we have.

This happens especially to those assembling generators. It is negatively impacting on their business and they are suffering demurrage at the ports, as we speak. It is same with automobiles and this is inimical to government automotive policy.

Even our foreign counterparts have said that Nigeria must play. We must look for how to rapidly expand a process so that we can backward integrate. If you slow down a process, every other thing that is queuing behind that process gets slowed down.

Now, the CBN governor has said the bank would restrict

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Nigeria’s revenue is dwindling, but the population is growing rapidly. Salaries are not being paid by many states and debt is rising.

Will Nigeria survive in an atmosphere of free trade where a number of tariffs will be adjusted downwards or removed completely?

That boils down to why we need an action committee because one of the negative impacts the AfCFTA will have is reduction in government revenue. So, we need to be able to make up in other areas, otherwise we will be a net loser. Government needs to gain something from our productivity. Everything you will gain from AfCFTA is what you export. But the only surviving incentive for export, which is the Export Expansion Grant (EEG), is grounded now in government bureaucracy. This has to change.

Our list of 43 items not eligible for foreign exchange is still there and tariffs are being increased in several products. One would expect that with AfCFTA, some of these would have been relaxed. Do you think otherwise?

There is a bit of difference.

What the CBN governor is doing is not imposition of tariff. He is restricting access to foreign exchange.

But importers have also complained that any moment such a pronouncement is made, like in the case of palm oil, the Customs responds by raising tariff?

That is wrong. You cannot achieve with monetary poli@Businessdayng

cy, what a fiscal policy should achieve. That should not continue in our system. It shows our economy is not mature.

If you restrict access to FX, it is enough deterrent. The Customs is not empowered to regulate tariff. It is an implementing agency. It should not happen.

What lessons from the CET regime can we carry into the AfCFTA? Even though we agree there were problems, ECOWAS remains one region that has done well in terms of common tariff. I will not want to condemn what we have achieved. The only thing is that we did not negotiate the process properly, so we were left with incapacity to impose the kind of tariff needed to support our industrial aspiration. There were many other countries that resorted to self-help. Now, I think we have got our acts together and evolved a common market access offer, which we are going into the AfCFTA with.

This means we are trying to modify the CET and make it have a regional application and use it to negotiate as a bloc. We are overcoming the challenges we have. It is always a delicate issue because in West Africa, we are asymmetric in terms of our levels of development. All the industries in some countries in West Africa are not even up to the ones we have in Oba Akran (Ikeja, Lagos).

MAN has 2,500 members, so you cannot compare us with a country with one or two dozen members. We have been able to agree now and we have made progress.

What strategy should Nigerian manufacturers adopt to enable them maximise benefits of the AfCFTA? We are not competitive because of our environment. So, government has to remove roadblocks that make companies move to Ghana and other countries. I have spoken about taxes, tariffs and other areas. We are ready, and if we work with government, the challenges are not insurmountable.

28

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BUSINESS DAY

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Monday 29 July 2019

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29

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Monday 29 July 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

‘I’m not a job seeker, I’m a job creator’ MONEY MATTERS

Nimi Akinkugbe

W

e watch with pride as thousands of young people celebrate their graduation day this July. The excitement, the ceremonies, the grandeur, the sense of accomplishment after all that hard work over so many years is emotional for both parents and their wards. At last; you have reached that milestone against all odds.

There has been the silent “promise” of success if you follow this path; both your parents and society expected you to graduate and “everything will be ok.” The plan was that, with this solid foundation, armed with a degree under your belt, you could step out into the world and start to build your own future. For many young graduates however, that economic promise has not come; not for a year, two, three years and beyond; having a degree has simply not translated, as expected, into a job.

Some have applied, unsuccessfully, for hundreds of jobs; some have part-time work, or internships. There is the temptation to stay in school, if your parents can afford it; surely a masters degree should improve your chances. Today’s graduates and MBAs holders compete for entry-level jobs. The grand graduation ceremonies continue and lengthen an already long unemployment queue.

Youth unemployment is one of today’s biggest global challenges.

The bleak job prospects for educated, able, motivated, young people, has reached alarming proportions.

Many are losing hope of finding jobs, and some have stopped the search altogether as they see no path to success. This is a dangerous picture of the potential for a lost generation of young workers if the sheer scale of the unemployment situation is not addressed with a dedicated and focused effort.

We’ve all heard the old adage, “Give a man a fish and you feed him for a day; show him how to catch fish and you feed him for a lifetime”.

This proverb suggests that the ability to work is of greater benefit than a one-off handout. In the words of Mohammed Yunus : “Don’t ask for a job. Make your own.”

Many young people, especially in developing economies, turn to entrepreneurship because of the lack of job opportunities. This does offer innovative solutions for economic growth among young people who are brimming with incredible ideas. But not everyone is able to become an entrepreneur without

support. As a result, the vast majority of small businesses will fail within a short period. It is thus important to direct our educational system and philanthropy to programs that provide the required tools, vocational and skill set training, mentoring and seed capital to ensure they acquire the skills and expertise the need.

The government cannot do this alone, we must all get involved in addressing this critical issue; the consequences of not doing so can devour us all. Studies have shown that youth unemployment is associated with intense stress and depression, an increase in drug and alcohol abuse, crime and at the extreme, terrorism.

Consider setting up your own business Do you have a special skill or talent? Be creative and identify that special gift or talent that you might have ignored before now.

Is it in art, photography, public speaking, playing a musical instrument, writing, fashion design, web design, graphics design? There are endless options to put your talents to use that you can leverage upon to earn.

What is it that you are passionate about and capable of doing relatively easily and well? When you are young and free of significant financial or personal commitments such as a family, a mortgage and other debt, you have a unique opportunity to take some risk and consider establishing your own business if you are so inclined. Do you have what you consider to be a great idea that you are passionate about and doesn’t have huge start up costs? You may be surprised at what you can accomplish.

There may be comfort in numbers. Perhaps you could partner with a classmate or a friend whose skills complement your own and set up something together.

Cultivate your network Effective networking is achieved through cultivating relationships over time. Reach out to those with whom you already have a person-

al, professional or academic connection. Does everyone you know realize that you are looking for a job? Use all the contacts and connections that you have, including your parents, grandparents, aunts and uncles, family friends and so on. Make sure they know what your skills and talents are, so that they keep you in mind when they hear of any openings.

Stay in close touch with professional colleagues and actively seek to expand your network. Networking activities, provide good opportunities to gain useful insights on careers, get job leads, and for you to sell yourself. Stay in touch with former managers from internships, and part-time jobs; if you left a good impression, they might be able to help. Many great job opportunities are not advertised; they are often filled by personal contacts.

Be flexible Your CV should be truthful, flawless and perfectly tailored to the positions you are seeking as well presenting your diverse skills for any opportunity. You cannot afford to sit at home until you find your dream job. Be flexible and expand your scope; you might need to accept a job that is below your expectations given your credentials. This will boost your chances of finding something that is relevant and that will still utilize your training and abilities and enhance your skills. Do your best in whatever comes.

Consider working for free One good way to get your foot in the door with a company or organization is to demonstrate to them what you can do. By working as an intern or volunteering, you have an opportunity to impress them by showcasing your skills, commitment, and professionalism and doing something that makes a difference. This might make them want to hire you. Even if it doesn’t translate to a permanent role, you would have gained valuable experience.

Try to avoid having significant

‘

We must all be mindful of the loss of incredible talent and skills as a generation of youth are unable to put their knowledge and capabilities to good use contributing to economic growth

gaps of unemployment in your CV to have to explain in interviews. A future employer will be impressed that you did not just sit at home doing nothing but you kept yourself occupied gaining experience and new skills.

Continue to develop yourself Never stop learning. By developing additional skills such as a new language, IT skills or other skills will broaden your job options and keep you current and engaged. Whilst no learning is wasted, becoming an eternal student gathering every available qualification may not necessarily give you that edge. Be strategic about your choices and seek relevant continuous training and experience that can directly support any chosen career path.

The hard reality is that being a graduate never guaranteed anyone immediate employment. As you await that “right” job, open yourself to various opportunities and experiences. Even amidst the uncertainty, try to maintain a sense of optimism and resilience.

A supportive group of friends that encourage and support you is important. Despair and depression will only make you less attractive to a potential employer.

It is that strength of character and self-confidence that will make you stand out and help get you through an employer’s door or even the door of your own small business.

We must all be mindful of the loss of incredible talent and skills as a generation of youth are unable to put their knowledge and capabilities to good use contributing to economic growth. This poses a serious threat to our economic, social and political welfare. Take just one young person under your wing, talk to them, mentor them, give them a job if you can, support them and be there for them. Our youths are our future.

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

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

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Monday 29 July 2019

BUSINESS DAY

31

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

Top Gainers/Losers as at Friday 26 July 2019 LOSERS

GAINERS Company

Closing

Change

SEPLAT

N525

N490

-35

DEALS (Numbers)

0.5

OKOMUOIL

N55.8

N52

-3.8

N3.95

0.15

INTBREW

N13.8

N12.5

-1.3

VOLUME (Numbers)

N1.18

N1.29

0.11

DANGCEM

N171

N170

-1

N2.24

N2.3

0.06

CCNN

N12.45

N11.6

-0.85

Closing

Change

MTNN

N125

N127

2

FO

N17.5

N18

N3.8

NPFMCRFBK STERLNBANK

OANDO

Company

ASI (Points)

Opening

Opening

VALUE (N billion) MARKET CAP (N Trn)

27,918.59 2,749.00 130,845,494.00 2.641 13.606

Global market indicators FTSE 100 Index 7,549.06GBP +60.01+0.80%

Nikkei 225 21,658.15JPY -98.40-0.45%

S&P 500 Index 3,022.03USD +18.36+0.61%

Deutsche Boerse AG German Stock Index DAX 12,419.90EUR +57.80+0.47%

Generic 1st ‘DM’ Future 27,154.00USD +58.00+0.21%

Shanghai Stock Exchange Composite Index 2,944.54CNY +7.18+0.24%

OTC: Fixed income, currency markets turnover down 6.70% to N19.12trn Stories by Iheanyi Nwachukwu

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he turnover in Fixed Income and Currency (FIC) markets for the month ended June 30, 2019 was N19.12trillion representing 6.70percent (N1.37trillion) monthon-month (MoM) decrease against the turnover recorded in May 2019 (N20.49trillion).

Though, year-onyear (yoy) the record FIC market turnover represents 10.93percent or N1.88trillion increase from N17.23trillion recorded in June 2018.

FMDQ OTC Securities Exchange monthly report shows Treasury Bills (TBills) and FX product segments remained the major contributor to turnover in the OTC market, jointly accounting for 70.72percent of the total OTC market turnover in June 2019 and represent-

ing a 1.75percent increase on their joint contribution in May 2019 (68.97percent).

On the FX Market, the total FX market turnover in June 2019 was $16.78billion (N6.05trillion at $/ N360.74), representing a 10.16percent ($1.90billion) MoM decrease. The analysis of FX turnover by trade type indicated MoM

decrease across all categories, with Member-Clients trades recording the highest MoM decrease at 14.35percent ($1.75billion). Also, the analysis by product type indicated that the MoM decrease in FX turnover was driven by the 23.15percent ($2.47billion) MoM decrease in FX Spot, despite the 7.13percent ($0.57bil-

lion) MoM increase in FX Derivatives turnover.

In June 2019, the 36th Naira-settled OTC FX Futures Contract (NGUS JUN 26 2019) with total open contracts size of $529.10million matured and was settled, bringing the total value of OTC FX Futures Contracts offered and settled on the Exchange since the in-

troduction of the product to circa $16.74billion, with a total of $25.86billion in open contracts.

Further, in addition to the new 12-month contract (NGUS JUN 24 2020) introduced in June at a price of $/N362.38, a newly introduced contract, the 13-month contract (NGUS JUL 29 2020) with futures price of $/ N362.53 was also listed in June 2019 to enable market participants obtain a full 365-day hedge on their FX exposures, which was not possible under the previous existing market structure.

In June 2019, the CBN Official Spot rates and the average exchange rate of the Naira against the US Dollar at the I&E FX Window appreciated from the rates recorded in May 2019 by $/N0.05 and $/N0.09 close at $/ N306.90 and $/N360.64 respectively, while the average parallel market rate remained constant at $/N361.

Fixed Income Market (T.bills and FGN bonds): In June 2019, average OMO bills outstanding was N14.96trillion, representing a MoM increase of 2.86percent (N420billion) from N14.54trillion recorded in May 2019.

Conversely, average T.bills outstanding recorded a MoM decrease of 0.89percent (N20billion) from N2.58trillion in May 2019 to N2.56trillion in June 2019.

On the other hand, average FGN bonds outstanding recorded a MoM increase of 1.12percent (N100trillion) to close at N8.84trillion in June 2019 from N8.74trillion in May 2019.

Trading intensity, representing the ratio of turnover to outstanding amount for FGN bonds increased from 0.17 in May 2019 to 0.18 in June 2019 while it remained unchanged for T.bills. Trading intensity in the T.bills and FGN bonds markets YtD stood at

Flour Mills Q1 result shows good start to year 2019 NSE’s investors’ relations data pack to enhance lour Mills of Nige- prove operational efficiency dropped by 27percent. ria Plc has released and implementing cost conRevenue, for the most issuers, stakeholders’ engagement

F

its unaudited first quarter (Q1) results for 2019, recording volume growth of 7percent. Key highlights of the results of the leading integrated food business and agro-allied group show Profit Before Tax (PBT) grew to N5.5billion, compared to N5.2billion in Q1 2018, which implies 6 percent year-on-year (YoY) growth.

The group’s Profit After Tax (PAT) at N4.2 billion in Q1 compared to N3.6billion in Q1 2018 represent 17percent YoY growth. The company’s finance cost decreased to N4.5billion in Q1’19 compared to N6.2 billion in Q1’ 2018.

The results for the first quarter reveal an improved performance as the group continues to make significant gains with its strategy to im-

trol measures across its operations.

The Group’s deleveraging strategy achieves desired results as finance cost drops by 27percent. The group’s earnings of N134billion compared to N133billion recorded in Q1’ 2018 represents 1percent year-on-year growth. Deleveraging and active balance sheet management strategy achieved significant reductions in finance costs which

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part, remained stable, even in the light of strong economic headwinds and depressed consumer demand.

Sales volumes appreciated by 7percent while gross margins remained largely in line with figures from the previous year at 12.2percent.

The group’s turnaround in the agro-allied division remained on track with Profit Before Tax at break-even. This was largely due to significant improvement in Premier Feeds and robust growths recorded in Golden Fertilizer.

After the recently concluded restructuring and optimization of the agro-allied division, the businesses are now properly positioned to pursue value accretive opportunities which we envisage will continue to yield positive results in the year.

T

he Nigerian Stock Exchange (NSE) has launched the NSE Investor Relations (IR) Data Pack, an innovative and dynamic webpage integrated with key market data, corporate news and disclosures, for corporate issuers.

NSE Investor Relations Data Pack is designed to reduce burden on issuers, by providing them with an intuitive investor relations webpage which can easily be integrated to their existing corporate websites. Hosted in the cloud, it features enhanced interactive functionalities with 99.5 percent uptime. The IR Data Pack was created with an easy-to-use, secure, and customizable interface to boost access and

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adoption.

Commenting on the launch of IR Data Pack, Jude Chiemeka, Head, Trading Business, NSE, noted that “NSE Investor Relations Data Pack is a necessary tool required by issuers to improve their engagement with investors. We came up with the IR program to provide value-added service to our issuers and make their daily market statistics available to investors in a realtime. It is a tool that will enhance their communication and outreach strategy to investors, analysts and other stakeholders”.

“As an Exchange, we remain committed to bridging the information gap between the Exchange and @Businessdayng

market participants, knowing that the stock market thrives on information. The delivery of the IR Data Pack and associated services is an essential building block in The Exchange’s strategy as it seeks to improve market participation and transparency, and facilitate informed investment decision making”, Chiemeka added.

On his part, Oscar Onyema, Chief Executive Officer, NSE, said, “We are delighted to provide a solution that enables adequate exposure to capital market information. Issuers can now drive a more robust market interaction on their corporate websites and potentially position themselves to attract more investors.

32

Monday 29 July 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Rising replacement cost dents quoted insurers’ underwriting profit BALA AUGIE

I

nsurers’ results reflect lower profitability of underwriting Quoted insurance and reinsurance companies have reported their results for the first quarter of the year, revealing dented underwriting profits, as the cost of replacing asset continues to mount.

Rising replacement cost brought by a high inflationary environment and spiralling total expenses due to the cost of doing business has continued to undermine underwriting results.

A slump in underwriting profit and weak investment returns have failed to drive profitability, raising concerns about insurers deteriorating margins, but experts have said that there could be an improvement in earnings if firms pay more attention to the retail side of the market.

14 largest quoted insurers quoted on the floor of the bourse recorded a combined underwriting profit of N6.71 billion in March 2019, a 27.16 reduction from N9.21 billion recorded last year.

While cumulative average combined ratio improved to 99.22 percent in the period under review from 109.81 percent the previous year, the most current figure of 99.21 percent is close to the 100 percent threshold.

The combined ratio is the addition of underwriting /operating expenses and claims expenses, divided by net premium income and a ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.

Analysts note that the harsh and unpredictable macroeconomic environment and low consumer purchasing power in the aftermath of a fuel hike and incessant devaluations

means revenues are growing at a slow pace, which is why shareholders returns have been waning.

An industry expert, who spoke to BusinessDay on the condition of anonymity said that improved underwriting discipline can be only achieved if management and board of directors embark on cost cuts, but he added that cost of diesel fuel, training and development expenses and professional fees have contributed to bloating total operating expenses.

A breakdown of the figure shows AIICO Insurance Plc recorded an underwriting loss of N3.12 billion in March 2018, from a loss position of N90.21 billion the previous year, despite a 50.21 percent increase in net premium income.

However, the largest quoted insurer by total asset and premium saw combined ratio fell to 95.80 percent in March

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2019 as against 120.60 percent the previous year.

NEM Insurance’s underwriting profit increased by a mere 1.14 percent to N1.53 billion in the period under review as against N1.52 billion as at March 2018.

The insurers’ combined ratio fell by 85.10 percent in the period under review as against 89.10 percent the previous year.

AXA Mansard Plc, the largest insurer by market capitalization, bucks the trend as underwriting profit was up 44.37 percent to N1.57 billion in March 2019 from N1.09 billion the previous year.

The company’s combined ratio fell to 109.60 percent in the period under review from 121.80 percent the previous year.

Wapic Insurance Plc’s underwriting profit increased by 61.73 percent to N1.25 billion in March 2019n from N772.60 million

the previous year while combined ratio fell to 108.20 in the period under review from 137.40 percent the previous year.

Mutual Benefit Assurance’s underwriting profit was up 12.95 percent to N1.78 billion in the period under review as against N1.58 billion the previous year.

Mutual Benefits combined ratios dipped to 94.51 percent in March 2019 from 99.10 percent the previous year.

Analysts have been saying that for years that insurers are not liquid enough to invest in investment securities such as bonds and equities, but the recent jerking of capital bases of firms by regulators could add impetus to balance sheet strength.

In Europe, the United States, and Asia, investment income or returns are a major driver of profit since rising claims-brought on by catastrophic eventshave eroded underwriting profit.

Insurers beset by a mirage of challenges lag their peers in Sub Sharan African in penetration, but stakeholders noted that compulsory could offer a gateway to wider penetration.

Nigeria, with a population of 200 million people, has a penetration rate of 14 percent, this compares to Ghana 2.50 percent, and South Africa, 14 percent.

Experts have unanimously agreed that cost-efficient distribution channels, such as bancassurance, internet or mobile-phone distribution will be key to selling insurance to a larger share of the population.

Nigeria’s insurance industry remains heavily concentrated around Lagos.

Digitalised channels have the potential to overcome the challenges involved in selling products in rural areas.

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ON THE MONEY

Vacationing on a Budget this Summer

W

ith the summer period comes heightened travel activities and the desire of many individuals to explore the world or a different part of the country.

To this end, many families would have been saving up to make this summer vacation a memorable one. According to Travelstart, the total number of travellers who passed through Nigerian airports in 2017 was 13,394,945. Of those passengers, 9,458,521 were domestic travellers, while 3,936,424 were international travellers.

During a period like this, most companies in the travel industry offer significant savings on rental cars, flights, hotels, and other travel packages. It is not difficult to save a bundle on your next trip by following these simple steps: Set a Travel Budget: Booking travel without any set budget in mind can be dangerous. It’s hard to avoid getting tempted by cheap fares, online hotel reviews, and various attractions – but you could end up overspending without realising it. By looking over your current personal budget and taking your savings, fixed expenses, and variable costs into consideration, you can see where you have a little room (if any) for a vacation.

Plan Shorter Trips: Whether you’re travelling for relaxation or exploration, you don’t need to jet off for weeks at a time to get the experience you want. Shorter travel blocks offer the same benefits as longer vacations, and they can cost much less.

Book Last-Minute Deals: If you’re not in a financial position for a lengthy trip, go for a long weekend or nab a lastminute deal for hotels, flights, and attractions. It might require a little more flexibility on your part, but last-minute trips can make travel a lot lighter on your bank account.

When planning for that lastminute deal, remember that sometimes price wins over

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the destination. Therefore, this approach works well if you want to go on a vacation but aren’t picky as to where.

Define Your Travel Priorities: Before you start leafing through brochures or browsing online, you first must define your travel priorities. If you’re not willing to accept anything but a top-notch experience, you’re probably going to have to save up before you go for that trip or started planning a year before. On the other hand, if your main priorities are to experience a different culture, learn more about history, or even just take a few days to relax, you can likely accomplish such goals on a budget.

Get A Travel Insurance: There is no better way to protect yourself from unplanned expenditure resulting from impromptu and devastating events than to have your trip insured. While travelling is fun, misplacing a priced possession, or experiencing a delayed flight or having a medical emergency, to mention but a few, will not only ruin your holiday but can wipe out your savings from the unplanned expenditure. Travel insurance is designed to take over the expenditure on your behalf should any of these events occur.

If travel is something you and your family love to do, it’s always a challenge when your budget bites back. However, by adjusting your priorities, being willing to compromise, and rethink the objective of your trip, you might be able to find a little room in your finances. For more financial education on this topic, you can call Old Mutual on 01-2719393 to arrange a free financial education session for your team, or on a one-onone basis. Our financial advisers can help you with the right kind of financial and insurance advice. For more information, visit your nearest Old Mutual branch or go to www. oldmutual.com.ng. We look forward to helping you with your money matters.

Monday 29 July 2019

BUSINESS DAY

insurance today

33

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E-mail: insurancetoday@businessdayonline.com

Insurance industry post recapitalization will be stronger, resilient, and more able to absorb economic shocks - Oluyemi Patrick Olatunji Oluyemi is the managing director/CEO, Tespauruth Consulting Limited (TCL), a finance and management consulting firm, providing services to a wide range of industries and economic sectors with particular focus on SMEs, but primarily having insurance industry companies on its client list. In this interview with Modestus Anaesoronye shares his thought on current developments in the Nigerian insurance industry, recapitalization exercise and how his firm can help position these companies for growth and sustainability. Excerpt: Insurance companies in Nigeria were recently mandated to increase their paid-up share capital by more than 200 percent. Do you think this capital increase is necessary at this time? eaving for a moment the precise meaning of ‘paid up share capital’, I would like to consider first of all what prompted the regulator, The National Insurance Commission (NAICOM) to issue the directive for recapitalization, at this time. See, the industry is confronted with a two headed monster which if not addressed at this time, would likely lead to systemic failure of Nigeria’s insurance industry within the next few years. I do commend NAICOM for its timely intervention, at this time.

In the first place, there is a persistent over-supply of insurance service. By this, i mean, there are simply too many players jockeying for the insurable assets and exposures in Nigeria’s pretty shallow insurance market. This has led to a fierce scramble, with price competition being almost the sole factor of competitive advantage in the industry- this is what the players refer to as ‘price cutting’, but which simply is a reflection of marketplace economics.

Inadequate premiums charged have led to a sustained stunting of industry growth. For example, while industry gross written premium in 2013 was N285 billion, it was N400 billion in 2018. When the figures are deflated for inflation over the intervening period, real premium growth has been very slight indeed. Projected insurance industry top-line growth in 2019 is 10 per cent, with inflation presently (July 2019) being about 11.5 percent. There is an obvious stagnation in industry revenues collected.

This stagnation in revenues works its way through the insurance companies’ operating accounts to reflect in unimpressive returns on investment. 2018 industry Return on Equity (ROE) averaged 9.5 percent, while return on a risk-free asset class such as Treasury Bills ranged between 13-14 percent in 2018. It would be difficult to say that the Nigerian insurance industry is at

L

this time a preferred investment destination.

So you think NAICOM’s intervention is needed at this time?

I think it is needed, and indeed is timely, as I have indicated above.

Given the above scenario, how do you think insurance companies can meet this new capital requirement and what should they do?

The figures speak for themselves. With the insurance industry return on investment being as it is today, I think the industry as a whole would encounter difficulty in attracting fresh local capital.

Local alternative asset classes offer returns significantly superior to what may be obtained in the insurance industry. However, a limited number of international players may consider this to be just the right time to take a position and, anyway, the capital requirements in Nigeria’s insurance industry are relatively modest by international standards.

The reality is that more than 85 percent of insurance companies’ quoted stocks on the NSE are priced below 50 kobo. Effectively, these are penny stocks, and may look attractive in particular to the discerning foreign investor with patient capital. But we expect most of the activity to be in the realm of mergers and acquisitions (M and A). TCL, of course, expects to play a significant role in the expected flurry of activity.

If you suggest mergers and acquisition, how can your firm help out?

We are already discussing with some individual players, in match-making exercises. We will assist in a range of interlocking activities, details of which we may not go into here. We expect to record significant success in our efforts in this area.

How would you characterise the structure of Nigeria’s insurance industry today, on the eve of recapitalization and consolidation?

By turnover, you have a tight pack of about six firms, all well ahead of the rest in revenue generation. At the top of the pack is the industry giant, recording in recent times, a much reduced rate of revenue growth. www.businessday.ng

Patrick Olatunji Oluyemi

This company essentially relies on very low pricing to generate huge volumes. The result is that almost all its profit before tax is obtained from investment income, as it has a truly large portfolio of investment assets. It is easy to see that this operating model is not a sustainable one, long term.

Even its shareholders enjoying dividend pay-outs today will one day ask this question: If we are an insurance company, why are we unable to make a profit from our underlying insurance operations? Perhaps they should talk to TCL about re-jigging their operating model! (Laughs). Next is a truly impressive player that in the last three years has grown premium at a compounded annual growth rate of about 16 per cent, and this with large underlying premium figures, to start with! It continues a steady, sustained growth of both operating profit and investment income.

Little wonder that its stock, in excess of N6, is the highest priced, by far, among the insurance stocks quoted on the NSE. Impressive. That firm must be doing

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something that other players are not doing! Of the remaining four firms in industry lead by turnover, a number have bank affiliationsit seems clear that having a large affiliated bank customer base is a source of competitive strength, today. Next are a group of about ten companies with turnover between N6 billion and N18 billion.

Most of these corporations continue to record slight turnover and profit growth. The third and final category (where the largest number of insurance companies are located) – with turnover less than N6 billion- can be divided into two segments. There are a number that are breaking-even or recording slight premium and profit growth. And then, there are some companies in a distressed or near-distressed state.

It is clear that the ability to generate large volumes of premium, sustainably, is the most important factor of competitive advantage in Nigeria’s insurance industry today (July 2019).

We would like you to look into your crystal ball and hazard a guess as to the emerging market structure, post-recapi@Businessdayng

talization?

A detailed review of the market players suggests that we will have no more than 21 insurance companies standing post recapitalisation. The smallest number will be life only insurance companies. Although the prospects of growth are still largely untapped in this market segment, most players are yet to build the necessary digital and direct sales platforms that will harvest the undoubtedly abundant potential returns in this sector.

Also, a limited number of nonlife insurance only companies will remain in operation. But, the market will be dominated by a handful of composite insurance companies (those that underwrite both life and nonlife insurances), probably about seven companies. The large advantage that composite companies have today in cross-selling their offerings can only increase in tomorrow’s market. It will be a much stronger industry, much more resilient, and more able to absorb the shocks from Nigeria’s economic cycle.

Can we have a final word from you, sir?

I think the capital adequacy challenge of the industry will be effectively addressed in the immediate, at least, by the ongoing recapitalization. I think the industry requires to have emplaced as quickly as possible an integrated, effective and comprehensive Enterprise Risk Management (ERM) model, that will guide the actions of individual players, and with which the regulator may more effectively direct the industry. I think that the twin challenges of stunted revenue growth and unsatisfactory returns demand that Nigeria’s insurance industry admit that the presently dominant model of enterprise management is inadequate in several respects, and adopt a tested, flexible, dynamic, new model of enterprise management and corporate transformation. Happily the TCL enterprise transformation model meets all the demands of all the ticked boxes. The insurance industry, and indeed other industries and sectors of the economy, certainly will hear more about this new model in the weeks and months to come.

34

Monday 29 July 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Questions hiring managers want you to answer ART MARKMAN

I

nterviews have an outsize influence on whether you land the job you want. Even though your application materials reflect your lifetime of experience, a few hours of interaction with a recruiting team often end up being the determining factor in whether you actually get hired. So, clearly you need to stand out.

To do that, it helps to be mindful of what recruiters and hiring managers are trying to accomplish with the interview. Below are three of the questions they want answered.

— WHAT WILL IT BE

LIKE TO WORK WITH YOU? You want to demonstrate to your prospective employer that you will be a valuable colleague and someone with

whom they will enjoy interacting. If you treat your interviewer the way you would a trusted colleague — smiling, talking in a friendly way and making

eye contact — they will begin to think of you as someone who belongs at the organization too.

— CAN YOU LEARN? You probably have the

basic skill set required to do the job for which you are applying, but you’ll also need to learn as you go. How can you demonstrate that you’re willing and able to learn? One way to show that you intend to keep expanding your knowledge is to ask about continuing education opportunities. Inquiring makes it clear that you are interested in further development.

— DO YOU TAKE INITIATIVE? Interviewers want self-starters who take initiative (so much so that it’s become a cliché). The best way to demonstrate your effort and commitment is to arrive completely pre-

pared. You should have a very clear idea of what the company does, its history, its strengths and its weaknesses. If you know people who work for the company (or have worked there in the past), ask them for inside information.

Ultimately, the best way to stand out in interviews is to think carefully about what prospective employers really want to know about you before you are hired. From there, you will be able to address concerns before they even have them.

• Art Markman is a professor at the University of Texas at Austin

New versions spread differently than entirely new products DASHUN WANG

P

redictions about how products spread are usually based on the assumption that a few early adopters encourage an increasing number of people to start using a product. But our research shows that when a product simply updates or replaces an existing product, the growth curve is very different.

A better formula follows a power law, with rapid adoption in the beginning followed by much more gradual takeoff as users make individual adoption decisions. This model generates more accurate predictions about adoption and, in turn, more realistic expectations.

To study the adoption

of replacement innovations, we examined four areas: mobile phones, cars, apps and scientists’ research focus. In each of these areas we documented the early growth of replacement innovations “following a power law with non-integer exponents.” (This means that

when the product was introduced, it had a singular growth momentum that was fundamentally different from its growth in the rest of sales periods.)

Consider what happens when Apple releases a new iPhone. There may well be lines of early adopters outside the

store for the device’s release, but the next waves of adopters will have to decide that they’re ready to replace their current phones. The slower, more deliberate decisions they make help to explain why replacement innovations grow more slowly.

We identified three mechanisms that are primarily responsible for the observed replacement dynamics: (1) recency, or how recently the new innovation has been introduced; (2) replacement propensity, as some products are more “fit” to replace original versions than others are; and (3) popularity, since more successful products are more likely to attract more new users.

A model that combines these three mechanisms enables us to explain the growth patterns of replacement products and to identify three parameters associated with this growth. These parameters are: fitness (how fit your product is to replace others), anticipation (initial excitement among potential users) and longev-

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Make this summer your best one ever With any of our FirstBank cards, you can enjoy a flexible summer in over 200 countries worldwide Visit any FirstBank branch for the issuance of your Summer Cards

ity (how long before the product may become obsolete). To understand intuitively how sales will go, ask yourself about each of these variables. The more recent or popular the innovation, or the better the product-market fit, the higher the sales.

If you’ve been applying the traditional adoption model to what could be considered replacement products, you’re likely underestimating the initial excitement about your new product while overestimating the overall speed and size of adoption. This could mean wasted opportunities, unrealistic expectations and misallocated resources.

•Dashun Wang is an associate professor at Northwestern University

Monday 29 July 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

35

In association with

Preparing for Global Internet Access JIM CASHEL

S

ince the World Wide Web was popularized with the launch of the Mosaic browser 26 years ago, only about half the global population has gained access to the internet. According to the United Nations’ State of Broadband report, 49.2% of people were online by the end of 2018 with reliable, affordable access. Regions vary greatly: Europe is 80% online, Africa only 22%.

Technology firms recognize this issue and have started experimenting with innovations to provide broader internet coverage.

It is reasonable to predict that, in the next three to five years, most of the planet will have some access to broadband. The business community should consider this emerging market with astonishment, if for no other reason than its vast size. It will present challenges in terms of economics, geography,

language and demographics.

Specifically, businesses should prepare in four areas: — DISTINCT POPULATIONS: Communications will need to be localized. Half the people on the planet speak one of five languages (Mandarin, Spanish, English, Arabic and Hindi). But the billions of

people coming online could be speaking one of 7,000 languages. Communications will need to be driven by local partners who bring both cultural awareness and linguistic skills.

— BUSINESS MODELS: Because many new consumers will be located in low-income countries and have limited re-

sources, business models will need to adapt to their needs. In many cases a “pay-go” model, where consumers pay a bit each month from online accounts, can be effective.

— PLATFORM STRATEGY: If past experience holds true, new markets coming online will quickly be dominated by a small

number of global platforms, especially Facebook. Because of Facebook’s dominance, every business considering online expansion needs to factor in its stature. In some regions this may mean, for example, abandoning plans for separate webpage communications and using Facebook for company information, communications and transactions.

— AUDIO AND VIDEO COMMUNICATIONS: A large portion of the populations gaining access to the internet may be illiterate. Communications may be further challenged as many will speak regional languages.

Under these circumstances audio and video communications will be particularly effective.

Global broadband expansion represents an opportunity that can’t be ignored. Businesses that recognize the speed and magnitude of this transformation will be best positioned to take advantage of unprecedented opportunity.

•Jim Cashel is chairman of Forum One, a digital agency

How to tame ‘Automation Sprawl’ will need to assist in adopting, monitoring and improving automation technology. If they suspect that they are being targeted for automation-driven layoffs, they are unlikely to cooperate.

Automation technologies will surely continue to sprawl.

It is time for firms to establish the capabilities needed to harness this to their advantage.

THOMAS H. DAVENPORT

O

ne of the generally unheralded trends in enterprise information technology is the proliferation of automation tools. Dozens of vendors offer systems to automate tasks and processes. Many of these tools have begun overlapping, or sprawling, over time. It’s clear that one aspect of the future is more sprawl.

“Automation” is an old term that has been used to describe virtually every type of computer system. More recently, it’s been focused on workflowrelated capabilities.

The focus of automation tools was at one point to automate structured, predictable workflows, typically within a specific domain. But robotic process automation, or RPA, has by now become the generalized tool for executing structured workflows, particularly for processes that involve data from multiple information systems.

One indication of the ex-

• Thomas H. Davenport is a professor at Babson College and a research fellow at the MIT Initiative on the Digital Economy

panding sprawl is that RPA and several other automation tools are now going after dataintensive decision tasks that are made within those structured workflows. They are either adding machine learning capabilities themselves or making it easy for customers to use other vendors for them.

It’s clear that everybody is moving into each other’s territory and rapidly adding new

functionality. What should you do about it? One answer is to look for generalized automation tools that can perform a variety of task types. For many companies, that increasingly leads them toward RPA. Another approach is to create a classification system for different automation types. One global consumer products company, for example, created a system that

includes content recognition, task automation and process monitoring, and a set of technologies including RPA and artificial intelligence to support each category.

Finally, in managing sprawl it’s important to let employees know what the plan is for the technology. Smart automation raises obvious concerns about the future of human employment. Human workers

Brought to you courtesy of First Bank Nigeria

36

Monday 29 July 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: July 26– August 2, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

2.01

Q1 2019 — lower by 0.38% compared to 2.39% in Q4 2018

Broad Money Supply (N’ trillion)

34.89

Decreased by 0.77% in May’ 2019 from N35.17 trillion in Apr’ 2019

Credit to Private Sector (N’ trillion)

24.86

Decreased by 0.13% in May’ 2019 from N24.89 trillion in Apr’ 2019

Currency in Circulation (N’ trillion)

2.11

Decreased by 2.22% in May’ 2019 from N2.16 trillion in Apr’ 2019

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

11.22

Decreased to 11.22% in June 2019 from 11.40% in May 2019

Monetary Policy Rate (%)

13.5

Adjusted to 13.5% in March 2019 from 14%

Interest Rate (Asymmetrical Corridor)

13.5 (+2/-5)

Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million)

45.04

July 23, 2019 figure — a decrease of 0.01% from July start

Oil Price (US$/Barrel)

64.52

July 26, 2019 figure— an increase of 3.43% from the previous wk

Oil Production mbpd (OPEC)

1.86

June 2019 figure — an increase of 7.47% from May 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

26/07/19

19/07/19

27,918.59

27,919.50

(0.00)

13.61

13.61

(0.00)

Volume (bn)

0.13

0.27

(52.28)

Value (N’bn)

2.64

2.84

(7.11)

NSE ASI Market Cap(N’tr)

Change(%)

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

Change

(%)

(%)

(Basis Point)

26/07/19

19/07/19

Indicators

26/07/19

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

1-week Change

YTD Change

(%)

(%)

64.52 2.23

3.43 (2.19)

0.09 (27.03)

2445.00 100.15 64.10 12.02 495.75

(0.77) (7.87) 2.96 3.35 (0.30)

26.29 (23.08) (17.29) (21.59) 14.36

1418.81 16.44 271.25

(1.40) 0.67 (1.56)

7.68 (4.36) (17.25)

OBB

21.86

11.93

993.0

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N

23.21

12.64

1057

Tenor

CALL

21.05

12.45

860.0

30 Days

10.81

10.84

(3)

90 Days

11.96

11.45

50.9

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

26/07/19

19/07/19

26/06/19

Official (N)

306.90

306.95

306.90

Inter-Bank (N)

361.91

361.46

360.77

0.00

0.00

0.00

360.00

360.00

361.00

BDC (N) Parallel (N)

Friday

Change

(%)

(%)

(Basis Point)

26/07/19

19/07/19

9.34

(44) 31

6 Mnths

11.16

11.25

(9)

9 Mnths

11.59

12.02

(43)

12 Mnths

11.98

12.37

(39)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Index

0.00

0.00

0.0

13.00

13.09

(8.8)

YTD return (%)

7-Year

13.69

13.55

13.9

YTD return (%)(US $)

10-Year

13.41

13.87

(45.7)

13.79

14.10

(31.5)

14.10

2

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

19/07/19 10.30

3-Year

14.12

26/07/19 10.61

5-Year

20-Year

(Basis Point)

3 Mnths

Mkt Cap Gross (N'tr)

30-Year

Change

(%)

8.90

AVERAGE YIELDS Friday

Friday

(%) 1 Mnth

BOND MARKET Tenor

Friday

Mkt Cap Net (N'tr)

Friday

Friday

Change

(%)

(%)

(Basis Point)

26/07/19

19/07/19

3018.97

2992.21

0.89

9.05

8.97

0.86

5.81

5.74

1.13

22.90

21.81

1.09

-32.89

-34.00

1.11

TREASURY BILLS (MATURITIES) Tenor 91 Day 182 Day 364 Day

Amount (N' million) 5,849.03 26,600.00 74,598.13

Rate (%) 9.74 10.75 11.139

Date 17-July-2019 17-July-2019 17-July-2019

Global Economy US retail sales climbed in the month of June, pointing to strong consumer spending, according to a report released by the Commerce Department. The Commerce Department said retail sales rose 0.4% in June as households stepped up purchases of motor vehicles and a variety of other goods. Data for May was revised slightly down to show retail sales increasing 0.4%, instead of increasing 0.5% as previously reported.

The report showed a continued increase in sales by motor vehicles and parts dealers, which climbed by 0.7% for the second consecutive month. Excluding the continued auto sales growth, retail sales still rose by 0.4% in June after climbing by a downwardly revised 0.4% in May. In a separate development, the European Central Bank (ECB) left its interest rates unchanged and altered its forward guidance to signal that they will be reduced in future, and that policymakers are planning a comprehensive stimulus package. The ECB President stressed the need for significant stimulus for the euro area economy as policymakers assessed that the outlook was getting worse, especially in manufacturing, which is a crucial sector for the big economies in the bloc.

Citing recent data, the ECB chief said that growth is set to slow in the second and third quarters, mainly due to global trade tensions, and hence, a rebound in the second half of the year is less likely.

Elsewhere, Japanese manufacturing contracted for a third straight month in July, albeit at a slower pace, as domestic and export demand remained depressed, a preliminary business survey has shown. The Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) edged up to a seasonally adjusted 49.6 from a final 49.3 in the previous month, but stayed below the 50.0 threshold that separates contraction from expansion for a third month. Factory output, total new orders and new export orders again contracted, though at a slightly more modest pace compared with June.

Local Economy The Central Bank of Nigeria (CBN) concluded its July meeting last week. The committee members voted to retain the Monetary Policy Rate (MPR) at 13.5%, Asymmetric corridor around the MPR at +200/-500 basis points, Cash Reserves Ratio (CRR) at 22.5%, and Liquidity Ratio (LR) at 30%.

The MPC decided to hold all rates in order to evaluate the impact of the recent regulatory directives enacted by the CBN. Largely targeted at stimulating credit growth to the real sector, these directives include, among others, the prescription of a minimum loans-to-deposit ratio for deposit money banks to Deposit Money Banks (DMBs). In other news, the Nigerian Stock Exchange (NSE) published its monthly Domestic & Foreign Portfolio investment report for June 2019. The report revealed that the total transactions at the nation's bourse increased by 34.42% to N297.25 billion from N221.13 billion recorded in May 2019. In June 2019, the total value of transactions executed by domestic investors significantly outperformed transactions executed by foreign investors by 34%. Total domestic transactions increased by 39.36% to N200.51 billion from N143.87 billion in May 2019.

Likewise, total foreign transactions increased by 25.22% from N96.74 billion to N77.25 billion between May and June 2019. Total domestic transactions which is split into retail and institutional investors revealed that retail investors outperformed institutional investors by 54%. Total retail transactions soared by 228.43% to N155.12 billion in the reference month from N47.23 billion in May. In contrast, the institutional composition of the domestic market dipped by 53.04% to N96.64 billion in June 2019 from N45.38billion in May2019.

Stock Market Nigeria's equities market closed largely flat, albeit with bearish tilt as the benchmark index dipped by 0.91 week-on-week to 27919.5. Similarly, Market capitalization closed at N13.61 trillion, barely changed from last week. We expect cautious trading to persist in the absence of a positive catalyst. However, the market may get a boost as investors take position ahead of the release of H1 corporate scorecards.

Money Market Money market rates remained elevated in the week ended July 26th, 2019 as a result of thinning system liquidity. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 21.86% and 23.21% from 11.93% and 12.64% respectively last week. The 90-day NIBOR also rose albeit marginally to 11.96% from 11.45% the previous week. This week, we expect rates to remain elevated as system liquidity remains pressured by wholesale Secondary Market Intervention Sales FOREX auction which holds this week.

Foreign Exchange Market The local unit remained majorly stable across most markets except at the NAFEX window where it witnessed a slight depreciation of 67 kobo to close at N361.91/$. The official window saw a slight appreciation as it ended N306.90/$, a 5 kobo gain from the prior week. The parallel market remained unchanged at N360/$. The relative stability of the local currency continues to be supported by the intervention of the apex Bank.

This week, we expect the naira to remain around prevailing levels, boosted by the Central Bank's sustained supply of liquidity to the market.

Bond Market Bullish sentiments on the medium and long end of the curve resulted in average yields dropping in the week ended July 26th, 2019. Yields on the five, ten- and twenty-year debt instruments ended lower at 13.00%, 13.41% and 13.79% from 13.09%, 13.87% and 14.10% respectively. The Access Bank Bond index closed higher by 0.89 points at 3,018.97 points from 2,992.21 points the previous week. This week we envisage bond market to remain bullish as investors potentially reinvest coupon payments expected later in the week.

Commodities Market Oil prices rallied following a large crude inventory draw of over 10 million barrels, continuing a string of weekly declines, according to the Energy Information Administration. Bonny Light, Nigerian benchmark crude settled at $64.52 per barrel last week, 3.43% higher than the previous week.

Precious metal prices went in varying directions as gold prices dipped while silver prices climbed up.

Gold prices dropped due to profit taking from the shorter-term futures traders and following some upbeat U.S. economic data. Consequently, gold price closed at $1,418.81 per ounce, down 1.4% from the previous week's close. Silver prices edged up to $16.44 per ounce compared to $15.33 per ounce the prior week due to increase demand.

This week, oil prices might climb higher as further declines in crude inventory are expected. For precious metals, we expect prices might trend lower following bullish comments from the ECB and a softer than expected German IFO Business Climate Index figure MONTHLY MACRO ECONOMIC FORECASTS Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Sep19

362 11.4

361 11.5

65

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

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

www.businessday.ng

Aug’19

https://www.facebook.com/businessdayng

@Businessdayng

67

Oct’19 362 11.5

67

Monday 29 July 2019

BUSINESS DAY

Start-Up Digest

37

In association with

Ehigiator: Entrepreneur creating unique printing services Josephine Okojie

I

n today’s Nigeria, a lot of efforts go into providing solutions to societal problems.

Peter Ehigiator, the brain behind Orasopee Communications, is one of the entrepreneurs creating innovative solutions to societal problems.

With his Orasopee Communications, he provides design, printing and IT services.

Ehigiator was inspired to establish Orasopee Communications out of his love for designs and graphics as well as the need to provide value- added services for businesses.

“My love and passion for designs inspired me as well as the need to create added value services to Nigerian businesses,” he says.

“Orasopee Communication is a closeknit but flexible business that specialises in the provision of design, printing, and IT solutions.”

He explains that the business also conducts entrepreneurship trainings for operators of small businesses.

He registered this business in 2006 but commenced operations in 2018 with an initial start-up capital of N100,000.

The initial start-up capital was spent on acquiring an office space and procuring some essential office accessories.

The entrepreneur says he was able to raise the money from his personal savings, adding that the business has grown and is still growing since starting, as client base continues to increase.

Peter Ehigiator

He tells Start-Up-Digest that he currently has four full-time employees and several part-time staff members depending on the nature of project being executed.

Orasopee Communications plans to establish state-of-the-art digital printing solution hubs across the country. It also eyes expanding its entrepreneurship train-

ing centres across the country.

“Our dream is to set up state-of-the-art digital printing solution hubs across Nigeria. We also look forward to taking our human capacity development programmes to other parts of the country,” he says.

Evaluating the Nigerian digital printing industry, Peter says the space is growing

rapidly., noting that the industry is huge with lots of potential yet to be harnessed.

“The success of any business organisation, whether in the private or public sector, lies in the quality of its human resources.

“The organisations that know and recognise the importance, invest greatly in the employees who can only perform better through the acquisition of skills, knowledge and ability from training programmes,” he adds.

On challenges limiting his business, the young entrepreneur says that the huge infrastructural gaps in the country remains the major issue hurting Nigerian enterprises.

“The depleting state of infrastructure across the country is a major challenge facing our business,” he says.

“Irregular power supply has shot up our production cost because we rely daily on generators to run our business,” the promoting designer says.

He identifies lack of finance as another key issue facing the business.

He urges government at all levels to provide key infrastructures to aid growth and development of the economy as well as reduce overhead cost for businesses.

He adds that the government should make single-digit interest rate credit available to businesses.

He notes that despite the challenges, the business has successfully trained 150 youths on entrepreneurship and digital printing within its six months of existence.

On his advice to younger entrepreneurs, he says, “Stay focused, stick to your dreams and pursue it with every resource you have at your disposal.”

How Kweek Social uses digital marketing skills to empower SMEs CHUKA UROKO

D

riven by the need to put Nigerian small business on a global scale, an innovative start-up company aimed to fill the export service gap in the society has been launched into the Nigerian SME market.

The startup company known as Kweek Social is part of a group which includes Kweek Prints and Kweek Loans.

George Omoraro, founder and CEO of The Rage Group and Kweek, explained to BusinessDay that the company was aimed to assist small businesses in every way possible, adding that they were out to provide small businesses with a pocket-friendly marketing budget they needed via social media.

Omoraro is of the view that marketing should not come at a cumbersome cost to entrepreneurs which is why, with as little as N28,500 (amidst other packages), entrepreneurs that want to leverage the biggest marketplace in the world and convert their platforms to cash cows can leverage the services offered by Kweek Social.

“The seamless process of delivery from Kweek Social is commendable. The company promises to deliver the desired content in seven days and if the subscribed plan allows, they would place the content to reach the target audience the brand needs and also grow the client’s social media page and drive sales,” he explained.

It is noteworthy that since the launch of

the company, clients have been enjoying its offerings such that a particular company Abuja has attested how the company has been able to uplift her brand and help her business. Recently, the authorities of the company upgraded its plan with Kweek Social so that they could enjoy the full range

of benefits the company offers.

Kweek Social enjoys watching SMEs appreciate the value they provide because it is an objective-driven communications agency, profit is not the measure of its success but the number of brands that have become successful through the brand’s services.

George Omoraro

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Omoraro noted that every start-up has challenges, “but it is how they bounce back from these challenges that define the rest of their growth. For Kweek Social, the adoption rate for the company has been good so far but it could be better if the company did not have to always explain their services so much, despite all attempts to simplify it in order to get a client”.

He disclosed that even with this minor setback, the company had been able to get so many customers. “Despite the odds, we were even oversubscribed in the first month of our launch,” he disclosed.

Omoraro sees a very promising future for the company, pointing out that he would like to have employed over 1500 individuals in 3 years into a virtual workspace that he is preparing Kweek Social to be. He also wants to develop the platform to be a seamless digital ecosystem that links the client to the creativity they need.

“We hope to partner with the actual social media platforms to give some form of credence on the global space for his brand; we also plan to export the services Kweek social offers to other parts of Africa and the world at large,” he said.

He hopes that in the next five years, he should have cut through language barriers and have Kweek Social services offer five different language options for clients with Chinese at the forefront. He also advices start up brands not to neglect the positive effect of social media for their brands and to employ the services of Kweek Social if they want a head start in their chosen fields.

@Businessdayng

38

Monday 29 July 2019

BUSINESS DAY

Start-Up Digest How DrugStoc answers the drug quality question ODINAKA ANUDU

G

etting quality medicines is not always easy in a developing country like Nigeria.

For a long time in the country, rich patients suffering from serious aliments sought drugs abroad because of issues around unavailability and poor quality. The poor who could not afford good medicines either developed complications or died.

The situation is, however, gradually changing with the entry of DrugStoc, a multi-channel, cloudbased platform with over 7,000 highquality drugs.

The platform exists to empower healthcare providers fulfil their mandate for a healthier Africa.

DrugStoc seeks ways to improve access to pharmaceutical products and services. It believes in working together with industry players to eliminate counterfeit drugs and the hassles of getting proper and good quality medication at affordable rates.

Chibuzo Opara is the managing partner and co-founder of DrugStoc.

He says the company exists to solve the problems of fragmented supply chain market, counterfeiting and in-transparent pricing.

“Oftentimes hospitals have challenges obtaining quality drugs at affordable rates. This leads to issues

Chibuzo Opara

for patients. So, what we do is to work with the providers to bring them good products,” he says.

The firm was founded by Opara, a medical doctor and health economist, and Adham Yehia, an expert in health facilities management. Both of them met in the Netherlands while doing their post-graduate studies.

Yehia already had a background in managing healthcare facilities in Nigeria, so it was easier for the two to start.

But something generally motivated Opara to think of setting up DrugStoc.

“By the time I got back to Nigeria, I had already met my partner.

We started doing management consulting for a group of healthcare facilities and found out that sourcing quality medication and medical consumables was not optimised for the health provider. It was a lot of work finding and sourcing the right medication these facilities requested,” he says.

“Back then, sourcing for medication for the facilities we managed proved challenging. If you asked us the difference between this and that drug, we would be unable to give you

the assurance regarding the quality of the drugs. This was unacceptable to us, but we decided to take on the challenge head on,” he recalls.

Sourcing drugs from DrugStoc is a simple process: You go on the platform, place an order and within 24 hours the products will be supplied, according to Opara.

The platform offers a myriad of payment, credit and financing solutions which are adapted to the realities of the pharmaceutical supply chain in the country.

The drug firm works with over 800 pharmacies and with the Association of General and Private Medical Practitioners of Nigeria, which has over 2,000 registered members.

The company also works with all the big drug manufacturers in Nigeria.

It is ISO 9001-2015- certified for quality management services.

“Whenever you come on our platform, all the processes are consistent,” Opara boasts.

He explains that the company’s philosphy revolves around empowering healthcare providers to provide the best services to Nigerians.

“Providing services in Nigeria is very tough in any industry. So, you do not want the healthcare providers to be bothering themselves about how to access the supply chain.”

The firm deploys artificial intelligence (AI) and blockchain technology to enhance its track and trace capability with a view to sanitising

Business Opportunity

Talent Empowerment Programme moves to support children with disabilities

Why recycling is multi-billion naira business …Zeugnis to duscuss recycling on August 24

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eugnis International Limited will expose opportunities in waste recycling in Lagos on August 24. Venue is the Lagos Chamber of Commerce and Industry, Ikeja.

The firm promises to reveal secrets in making wealth from waste.

Handled by Luther Kington Nwobodo, a PhD student and CEO of Zeugnis International Limited, the training will teach participants how to recycle waste nylons, PET bottles and other plastics to bricks and interlocking stones, the firm said. It will also enable Nigerians to learn opportunities in waste, including how to improve the environment through recycling it added.

“On daily basis, Nigerians consume lots of pure water and soft drinks in PET plastic bottles which are thrown away to litter our environment,” Nwobodo said.

“Plastic wastes are increasing day by day and our environment is not spared from pollution. These plastic wastes being thrown away are not really waste as we term them, but can be effectively recycled into useful various industrial materials. Hence, with adequate knowledge and recent technology, these non-degradable materials can be recycled into high strength bricks or interlocking stones that possess thermal and sound insulation prop-

erties and reduce the overall cost of construction,” he explained.

“High-density polyethylene (HDPE) and polyethylene (PE) bags are cleaned and added with sand and aggregate at various percentages under intense heat to produce high quality and durable bricks/interlocking stones which are relatively cheaper to concrete types.

“Also, colouring agents can be

added to the mixture to attain desired forms or shapes. This technology is not new as it has been in existence in some African countries such as Uganda and Tanzania, among others, but new in our clime,” he said.

He added that adopting this recycling process in Nigeria would not only reduce the amount of waste in the environment but create jobs to

Luther Kington Nwobodo www.businessday.ng

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the system.

“What we do is to streamline the whole area by offering them value in terms of being able to get access to quality drugs,” he says.

The growth of the company has been tremendous since 2017. So far this year, the amount of prescriptions through hospitals and pharmaceuticals that the firm serviced in the first three months of this year was equal to what it did throughout last year.

Opara reminds Nigerians that DrugStoc’s products are not expensive because of the firm’s advantage of doing huge volumes.

“Healthcare market is a human related industry,” he says.

“As you know, we have a huge population of people in the country that want to have good healthcare system. It is one of the markets you cannot charge premium prices, so you have to provide value,” he adds.

Today, the firm’s products are in several hospitals, pharmacies and in the hands of hundreds of healthcare providers.

He says that there are lots of regulations around manufacturing of drugs, stressing that NAFDAC has done well on its regulatory function.

“I would say that we need fewer regulations there, not more regulations,” he recommends.

“This is because the people who are in the limelight are over- regulated. So, it is the people who are not in the limelight who get to do whatever they like.”

reduce high unemployment situation estimated at 23.1 percent.

It would also reduce the huge cost of construction— that is government spending on construction of roads and other major projects that require bricks.

In the forthcoming training next month, Nwobodo and his team would be discussing recycling processes and conversion stages, including acceptable outcome of recycled wastes such flakes, and pellets, the firm said.

“A detailed process of converting waste plastics into interlocking stones and blocks will be unveiled, including machine sourcing and sources of raw materials,” he said.

He explained that return on investment is over 100 percent and participants will be introduced to partners.

“Anyone who wants to go into this business needs this training because it will reduce unnecessary waste of resources in machine sourcing and enable them to understand the difference in PET materials and be able to produce standard PET flakes,” he said.

He further encouraged those seeking lucrative businesses to invest in to give the training a try and learn the secrets of making money from waste. Interested investors are advised to contact the organisers on 08032810868 @Businessdayng

Josephine Okojie

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alent Empowerment Programme (TEP) has launched a movie and book to raise funds to support children living with disabilities and the less privileged.

The movie titled ‘Iye’, which was adapted from the book ‘Mother’, is focused on redressing family values in the country.

“We are trying to redress domestic violence in the Nigerian families and trying to tell people about the importance of forgiveness in relationships,” Julie Omeike, lead initiative, TEP said during the launch in Lagos recently.

“Iye, which means ‘mother’ was chosen as the title because mothers play a very sensitive in our upbringing and when you talk about mother what comes to your mind is affection and caring altitude,” she said.

“We want to identify with mothers globally. Proceeds gotten from the sales of the movie and book will be used to support children living with disabilities in orphanages and less privilege children,” she added.

She stated that TEP provides free master classes in script writing, content writing, cinematography and directing to talented actors identified in communities. Also, TEP trains women in liquid soap and cake making.

Monday 29 July 2019

BUSINESS DAY

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cityfile Truck driver to die by hanging for crushing man to death

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n Abeokuta High Court on Friday sentenced a truck driver, Monsuni Waidi, to death by hanging for killing a passenger.

Delivering judgment, Abiodun Adeyemi convicted Waidi on the two counts of reckless driving and murder. Akinyemi held that the prosecution proved its case beyond reasonable doubts.

He held that the evidence presented by the prosecution was tenable and therefore, sentenced Waidi to death by hanging The state prosecuting

counsel, Adekunle Sodeide, said the convict committed the offence on May 22, 2012 at Elepa village, along Papalanto Sagamu road in Ogun.

Sodeide said the convict was who was drunk, drove his truck recklessly and hit the motorcycle transporting Mutiu Oluwasegun, the deceased.

The offence, he said, contravened the provisions of sections 316, and 319 of the Criminal Code, laws of Ogun 2006. The convicts, who had been standing trial since 2012, had pleaded not guilty to the charges.

Akeredolu’s wife leads march against rape

Collapse building as result of flood and windstorm at Wus village in Dass LGA, Bauchi State

Ayade to revive moribund projects to promote export MIKE ABANG, Calabar

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overnor Ben Aya d e o f Cross River State has said that the revamping of the moribund Obudu honey factory, proposed Bakassi deep seaport, 247km superhighway, rice city and other initiatives of his administration are aimed at promoting export of Nigerian goods to other

countries.

Ayade said this, weekend, during a one- day export finance forum which held in Calabar, the state capital.

The governor, who was represented by his deputy, Ivara Esu, said the rice city project and cocoa factory among others had been conceived to encourage export.

“Our industrialisation efforts will soon yield tan-

gible result and benefit the people of the state and country at large,, Godwin Ekpe, head, Calabar Free Trade Zone (CFTZ), said participants at the forum tagged “accessing export finance and incentives options for non oil export development,” noted that Nigeria Export Processing Zones Authority (NEPZA) and Nigeria Export Promotion Council (NEPC) were the

key platform for Nigeria non-oil alternative.

As a matter of fact, no investor will afford to miss the free zone incentives (tax waiver) and to miss Export Expansion Grant (EEG). That is why the two sister agencies are working round the clock to ensure that Nigeria economy is diversified from oil dependent to non oil dependent,” said Ekpe.

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ife of O ndo State governor, Betty Anyanwu Akeredolu, has called for legislations that would ensure stiffer penalties for rapists, child abusers and predators. Akeredolu spoke in Akure, when she led a protest “walk against rape” to raise awareness on the increase in rape cases in Nigeria.

The awareness walk w h i c h b e ga n f ro m t h e Deji’s palace at Oja Oba to a divisional police station in Akure, had women from the state ministry of women affairs and some nongovernmental organisations in attendance.

The governor ’s wife, who was represented by the commissioner for women affairs and social development, Titi Adey-

emi said all hands must be on deck to nip rape in the bud.

She noted that the sensitisation programme should serve as a deterrent to perpetrators of the social vice in the state saying the office of the first lady is ready to bring all cases of rape in Ondo to a logical conclusion.

The Deji of Akure, Aladetoyinbo Aladelusi also assured of partnership with the government a n d r e l e v a n t n o n g o vernmental organisations to check rape and child defilement in the state.

The special assistant to the wife of the gove r n o r o n m e d i a , To b i Fademi said the awareness campaign was held simultaneously in all the 18 local government areas of the state.

Oyo to adopt play-based learning initiative for development REMI FEYISIPO, Ibadan

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yo State is to adopt playbased learning initiative from pre-primary to primary two children to boost educational development in the state.

In line with this, the state government has promised to train all preprimary school teachers in order to inspire standard practice in the education sector as well as grow teachers’ self esteem during teaching.

This was disclosed by the chairman of Oyo State Universal Basic Education Board (Oyo SUBEB),

Nureni Adeniran during a visit by the chief executive officer of Early Childhood Development Initiative, (ECDI), Canada, Patricia Eno Falope to his office in Ibadan.

Adeniran informed his visitors that the state government also intends to embark on various other measures to get more from teachers, as according to him, the gains in training teachers more on early childhood education would be to the benefits of the teachers and the society.

He maintained that if initiatives targeted at teachers’ capacity improvement and development were adwww.businessday.ng

opted, the state could then boast of providing quality education.

“Oyo State government would key into this laudable initiative of Early Childhood Development Centres, across the state to get more in return to achieve the ultimate dream of having success through students’ performance, as the input through the teacher will surely reflect in the final result seen in students’ performance in public examinations. “ W h i l e m o n i t o r i ng schools across the state, I noticed we do not have enough ECDs. This is disheartening. But be

rest assured that the Seyi Makinde-led administration would rectify these anomalies. We will ensure training for all preprimar y teachers and we will increase the ECD centres”, he ascertained.

Adeniran noted that state-wide enactment of Early Childhood Development Centres would bring about a paradigm shift in the education sector.

He therefore pledged the state government’s readiness to harness the early childhood development and training-thetrainer initiatives for a superlative transformation of the sector.

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He thanked the team for contributing its quota to the educational development of both teachers and pupils which he said has helped birthed the initiative in Oyo State.

On her part, Eno Falope said that Oyo was the only south-west state that has keyed into this initiative, assuring of the vibrant running of the pilot study.

Sh e d i s c l o s e d t hat the initiative has study partners such as Ryerson University and ECDI, Canada, while Oyo State government through the State Universal Basic Education Board, United Nations Children’s @Businessdayng

Fund (UNICEF), National Commission for Colleges of Education, University of Ibadan and UBEC were partners in the initiative.

She further revealed that the development initiative already had 24 preprimary school teachers undergoing training in Ogbomosho North and Ido local government, while 271 pupils were benefiting from the pilot study.

The three-year long study was targeted at measuring the impact of play-based learning on children’s educational outcomes from pre-primary to primary two in public primary schools in the state

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Monday 29 July 2019

BUSINESS DAY

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

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

From ECoBank to Unilever, guidance to last week’s half-year results BALA AUGIE AND SEGUN ADAMS

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arnings season kicked into high gear last week and expectations were low as procrastinators expect second quarter earnings to capitulate to economic uncertainties.

Investors are at the edge of their seats while directors of companies, like archer-men, are notching and drawing the arrows to be sent in the air hissing.

But the question is ‘will the arrows hit the target to the delight on investors’?

Following the stomach-churning performance of stocks since the start of the year, as the All-Share Index (ASI) fell below the 28,000 psychological mark to settle at 27,918.59 points, year to date losses widened to 11.17 percent.

Banks margins are expected to be squeezed as the central bank has raised the loan to deposit ratio of lenders to 60.0 percent effective

September.

The consumer goods firms continue to grapple with low consumer purchasing power and decrepit infrastructure that have hindered them from delivering higher returns to shareholders.

Cement makers are thriving amid a slowing economy as Lafarge Africa recorded profit after tax of N9.0 billion in June 2019, from a loss of N3.90 billion, thanks to cost reduction and a steep drop in interest payment obligation, as the company strategic decision to dispose of a beleaguered South Africa unit to the parent company to raise cash and settle its debt has paid off.

Cement Company of Northern Nigeria (CCNN) has been leveraging on its efficient transportation channel to magnify revenue. The company’s net income surged by 180 percent to N7.28 billion as at June 2019.

EcoBank Transnational Incorporated’s net income was up 15.15 percent to N59.49 billion in the period under, thanks to an uptick in fees and commission income and gains on

foreign exchange revaluation reserves that help compensate for the slow growth in revenue.

First City Monument Bank (FCMB)’s net income was up 32.15 percent to N7.53 billion in June 2019 from N5.72 billion the previous year.

Wema Bank’s net income was up 43.12 percent to N2.24 billion in the period under review from N1.56 billion the previous year.

The consumer goods numbers are unsurprisingly disappointing because they are the hardest hit from the idiosyncratic risk and policy uncertainties undermining economic growth.

Unilever Nigeria’s net income dipped by 32.15 percent to N1.944 billion as at June 2019, but Flour Mills Nigeria bucked the trend as net income increased by 17.12 percent to N4.20 billion in the period under review from N3.60 billion the previous year.

The miller attributed the impressive performance to a deleveraging exercise that resulted in a reduction in interest expense while total debts dipped.

Companies’ Half Year Net Income

Earnings of the largest palm oil producers have been falling since the introduction of a new foreign exchange regime in 2017 paved the way for the importation of the product, hence creating intense competition.

Okomu Oil’s net income fell by 37.25 percent to N1.55 billion in the period under review from N2.46 billion the previous year.

It was the end of free money for downstream oil and gas firms when Nigerian National Petroleum Corporation (NNPC) became the sole importer of petroleum product.

Total Nigeria’s net income was down 98.12 percent to N129 million in June 2019 while Mobil Nigeria’s profit after tax dipped by 23.14 percent to N4.17 billion in the period under review as against N5.67 billion the previous year.

Oando Nigeria Plc’s net income slumped by 41.15 percent in the period under review as the company continues to grapple with rising costs and spiralling debt.

Telecommunications companies have maintained their earnings momentum as they recorded doubledigit growth in at the top and bottom lines.

For the first six months through June 2019, MTN Nigeria’s sales increased by 12.12 percent to N566.12 billion, while Airtel’s sales were up 2.2 percent to N112.64 billion in the same reporting period.

Despite the sustained capital flows to the Nigerian economy, the equity segment of the capital market continues to bleed over policy uncertainty and growth concerns as investors remain pessimistic about a possible revival of the domestic bourse.

Figures sourced from the Nigerian Stock Exchange (NSE) showed foreign portfolio deficit, which is a foreign portfolio inflow less outflow, worsened 12 percent to N42.84 billion in the first half of 2019, from N38.41 billion similar periods last year. This is the lowest in the last five years.

Only These 3 stocks have outperformed bonds in the last 4 years IFEANYI JOHN

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he last five years has been bad for the Nigerian economy but things have been even worse for 99% of Nigerian equity investors as only 3 stocks managed to outperform the 5 Year FGN Bond since 2015.

BusinessDay analysis of capital gains on 91 most liquid stocks on the Nigerian Stock exchange show that

only three stocks have earned more in capital gains than the compounded return on the 5-year government bond based on its bond yield in May, 2015.

Dangote Flour, NEM and Okomu Oil were the only three stocks to have outperformed the compounded riskfree yield on the 5-year bond of 15.54 percent in 2015 returning 346.25 percent, 153.66 percent and 93.68 percent respectively.

C&I leasing which had earned the highest return of 550 percent largely

due to a reverse stock split which cannot be considered as capital gains as it did not translate to actual cash for investors.

A combination of weak corporate earnings growth and erosion of investors confidence which was precipitated by a slowdown in economic growth since 2015 has cost investors trillions in the Nigerian stock market as the index declined 18% since May 29, 2015 and 37% lower than its level in January 15, 2018.

“Good governance helps build in-

vestor confidence and even though a good number of Nigerian companies are performing better than they were 5 years ago, the market selloff may likely continue until the outlook on the economy improves. Implementation of policies that would take the economy to pre-2015 growth levels is what investors are waiting to see.” Obinna Uzoma, a Lagos-based economist explained.

The market closed at 27,918.59 on Friday 26th July, returning -11.17 percent since January 1, 2019.

P.E

SHORT TAKES N24.95 trillion

The continuous borrowings by the Federal Government of Nigeria from domestic sources sent the country’s total public debt portfolio to N24.95 trillion in the first quarter of 2019, 2.3 percent more than N24.39 trillion in the preceding quarter.

$2 trillion Global debt rose by a hefty $2 trillion in the first three months of 2019 buoyed falling interest rates in the face of substantial easing in financial conditions. At $246 trillion which equates to almost 320 percent of world Gross Domestic Product (GDP), global debt is just $2 trillion away from the all-time high of $248 trillion reached in the previous corresponding quarter last year.

11.22% Headline Inflation slowed to 11-eleven month low of 11.22% in June 2019 driven by decline in food prices and moderation in core inflation.

Composite food index stood at 13.56% in June from a year earlier compared with 13.79% recorded in May.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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BUSINESS DAY

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MARKETS INTELLIGENCE Dividend yields on Zenith, UBA, Cutix and Total outperform Treasury bill Ifeanyi John

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n the constant search for yield, risk averse investors who look for higher yields to compensate for more risk can look into four company stocks on the Nigerian Stock Exchange: Zenith Bank, UBA, Cutix and Total at current prices have a dividend yield greater than 12.53 percent which is the yield on the 1-year treasury bill in Nigeria.

As broad market prices continue to trend downwards, cheap stocks have become cheaper and dividend yields on companies have become more attractive. The Price to Earnings ratio of these stocks also give a hint of underpricing as the top four dividend yield had an average earnings yield of 24 percent.

The earnings yield refers to the earnings per share for the most recent 12-month period divided by the current market price per share.

The earnings yield (which is the inverse of the P/E ratio) shows the

percentage of how much a company earned per share.

Tochukwu Okafor, Lecturer in

Banking and Finance department at Covenant University explained that “the selloff in the market has

MTN and Airtel scramble for market share BALA AUGIE

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he two listed telecoms giants in Africa’s largest economy have just released their half year results that showed they recorded double digit growth earnings.

But investors are not interested in those catchy headlines and press release written in rosy languages.

Instead they are more interested in numbers because these figures show them the true financial position of a going concern.

Undoubted, Nigeria is a cashcow for MTN Nigeria and Airtel Nigeria Plc because of the country’s robust young population that crave for smartphones.

For the first six months through June 2019, MTN Nigeria’s sales increased by 12.12 percent to N566.12 billion, while Airtel’s sales were up 22 percent to N112.64 billion in the same reporting period.

Both firms recorded expansion in margins, as they have become cost cutters, which is why they are able to maintain earnings momentum amid a harsh and unpredictable macroeconomic environment.

Airtel operating margins, other-

wise known as earnings before and interest and tax margin rose to 38.86 percent in June 2019 as against 17.71 percent as at June 2018.

MTN Nigeria’s EBIT margins increased to 33.58 percent in the period under review from 27 percent the previous year.

Airtel’s Earnings before interest taxation depreciation and taxation (EBIDTA margin) increased to 53.30 percent in the period under review as against 45.90 percent the previous year.

MTN Nigeria followed the same growth trajectory as its EBITDA margins increased to 53.80 percent in the period under review from 44.60 percent the previous year.

Gleams of the books of teleco giant show they have increased speding on the acquisition of property plant and equipment to drive revenue than peer rival.

Airtel Nigeria’s capital expenditure for the first six three months through June surged by 285.10 percent to N19.15 billion from N4.93 billion as at June 2018.

MTN Nigeria capital expenditure (CAPEX) increased by 63.80 percernt to N105.80 billion in the period under review from N96.10 billion the previous year. The largest carrier by subscriber has plans

opened avenues for cherry picking. Low risk portfolios can be created by selecting stocks with

high dividend yield and low PE ratio. This investment strategy is similar to picking value stocks trading at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors.”

Zenith Bank led the companies with the highest dividends yields with 15.13 percent and a PE ratio 3x, United Bank of Africa followed with 14.92 percent and a PE of 2.48.

“These stocks, to a trained eye, almost guarantee definite returns as these two banks will almost certainly post higher returns and pay a higher dividend next year. Buying these stocks represents value and maybe it’s a good place for risk averse investors to start entering the Nigerian equities market.”

Okafor added.

The remaining companies with high dividends and relatively low PE include, Cutix (13.33%, 6x), Total (13.33%, 5.44x), Eterna (11.94%, 4.32x), Dangote Sugar (11.84%, 5.79x), Lasaco (11.43%, 3.55x) and Julius Berger (11.11%, 3.92).

London Stock Exchange in talks to combine with Refinitiv to embark on more CAPEX spend as it plans to expand its 4G network.

Telco companies are awash with cash, which means they have the financial strength to reward owners in form of dividend payment, settle debts, and fund future expansion plans.

Those companies together generated close to N40.63 billion in of cash flow from operations, but they may have to tap the market to raise more funds to underpin working capital.

However, there operating cash flow margin has been shrinking, which means they have to expand their assets to create long term value for shareholders.

MTN Nigeria’s cash margins fell to 4.57 percent in June 2019 from 16.57 percent as at June 2018. The company had planned to raise N200 billion to expand its market across Africa.

Airtel Nigeria cash margins reduced to 36.27 percent in the period under review as against 40.40 percent as at June 2018.

Some analysts prefer the operating cash flow margin as a measure of efficiency and profitability because it cash is used to generate revenue, and, moreover, unlike profit, it is difficult to tinker with cash.

Deal would create exchanges and data powerhouse 18 months after sale by Thomson Arash Massoudi, Javier Espinoza and Bryce Elder in London and James Fontanella-Khan in New York, FT

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he London Stock Exchange Group is in talks to combine with Refinitiv in a deal that would create a global exchanges and data powerhouse, according to multiple people briefed on the matter.

A deal for all or large parts of Refinitiv, carved out of Thomson Reuters only last year in a deal with Blackstone, would also transform the LSE into the main rival to billionaire Michael Bloomberg’s financial news and data empire.

A transaction may be announced as soon as next week, two of these people said. These people cautioned that there was no certainty that an agreement would be reached.

The LSE has a market value of about £19.3bn and a net debt of about £1bn. Refinitiv, whose Eikon terminals are the main rival on trading floors around financial centres to Bloomberg, was valued at $20bn

last year.

It was bought by a private equity consortium led by Blackstone, which acquired a majority of the business from Thomson Reuters, the news and data group.

The exact price that LSE would be paying for Refinitiv and the structure of the deal could not be learnt. However, it is believed to have already begun sounding out debt markets to raise funds for the transaction.

If consummated, the deal would instantly transform the LSE, which is best known for running stock and derivatives exchanges, into a more diversified market data and analytics leader under David Schwimmer, the former Goldman Sachs banker.

Mr Schwimmer was named chief executive of the LSE last April after a multi-month search to replace Xavier Rolet, the Frenchman who ended his eight-year run at the group following a governance crisis. The talks come at a time when London’s role as a global financial centre is facing questions, with the UK preparing to withdraw from the EU under its new prime minister Boris Johnson.

US economic growth cools to 2.1% in second quarter Peter Wells and Colby Smith in New York and James Politi in Washington, FT

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S economic growth cooled to a rate of 2.1 per cent in the second quarter, supporting the Federal Reserve’s move towards a historic onenotch cut in its main interest rate at a pivotal policy meeting next week.

The slowdown in US gross domestic product growth was significant compared with the 3.1 per cent pace of expansion in the first quarter of the year.

However, the decline was not as deep as economists were expecting.

The report’s components showed that strength in US consumer spending was sustaining the expansion even as businesses curtailed their investments.

Donald Trump, the US president, renewed his attacks on the Fed in the wake of the data. Mr Trump has criticised the US central bank for tightening monetary policy last year, and is demanding deeper, swifter rate cuts than Fed officials are envisaging.

“Q2 GDP Up 2.1% Not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck. Almost no inflation.

USA is set to Zoom!,” Mr Trump wrote on Twitter.

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Monday 29 July 2019

BUSINESS DAY

news Nigeria’s multi-billion naira pharma industry...

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If Nigeria’s local pharmaceutical industry were bed of roses, Swiss Pharma would not sell its assets to Biogaran-Servier in March 2017. Those familiar with the company before its exit said the sale to the French company was based on financial crisis.

These two examples reflect the challenges facing Nigeria’s N400 billion drugmaking industry in the face of the imminent African Continental Free Trade Area (AfCFTA) deal.

In 2014, companies like Emzor, GSK, and a number of others earned $7.708 million from export of medicines to the African market, according to the International Trade Centre (ITC). Four years later, however, the companies made only $708,000. Naira had weakened from N199/$ in 2014 to N360/$ in 2018 (80.9 percent), but export earnings fell by 91 percent.

With population growth and decreased drug export, drug importers raised their game, bringing in all forms of medicines into the economy, with imports standing at $513.9 million in 2018, as against $397.8 million in 2014 and $492 million in 2016.

Okey Akpa, chief executive of SKG Pharma and former chairman of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), had said that increased import of medicines jeopardises Nigeria’s drug and national security.

“Local companies in the pharmaceutical industry are struggling to remain in business and some have gone into extinction. And to meet the shortfall in demand, import increases,” Gbolahan Ologunro, a research analyst at Lagosbased CSL Stockbrokers, said.

Neimeth International Pharmaceuticals plc made a loss of N139.2 million for the fourth quarter of 2018. It later posted only N5.45 million profit after tax in the second quarter of 2019.

The Agbara, Ogun Statebased Pharma Deko suffered 36 percent drop in revenue in 2018, from N1.593 billion in December 2017 to N1.023 billion in 2018. It suffered loss after tax of N265.26 million.

“The Federal Government placed a ban on the importation and sale of any pharmaceutical product that contains codeine phosphate. The ban affected the company’s sale of the flagship product – Parkalin Cough Syrup,” the company said in its financial statement ended December 31, 2018.

May & Baker, Fidson and a few others are in top performance due to factory expansion, new partnerships and deals, but a lot of unlisted

companies have their feet in the waters.

Tomisi Akinyemi, a pharmacist at HealthPlus Limited, said local pharmaceutical companies are shutting down in Nigeria while more importers are coming up.

“Most people now say that they don’t want chemical drugs but herbal supplements.

Demand for herbal supplements is on the increase. Now, most companies import natural herbal supplements than the chemical ones,” he said.

One major crisis that hit pharmaceutical industry badly in 2016 was the Common External Tariff (CET) which provided for 5 percent to 20 percent tariff for importation of pharmaceutical raw materials and excipients but allowed finished medicines to enter into any country in the sub-region at no duty.

This happened amid dollar shortages caused by drop in crude oil sales, which shut down 54 manufacturing firms in 2016, according to the Manufacturers Association of Nigeria (MAN).

Capacity utilisation in the industry is below 50 percent, according to industry players, who complain that lack of a reliable petrochemical industry in the country means most raw materials are imported.

Nigerian manufacturers suffer from poor infrastructure and low patronage, which make them un-competitive in both local and global market.

Access to credit remains a major problem with lending rate to the manufacturing sector averaging 22.21 percent in 2018 and 22.84 percent in 2017, according to MAN. “Many pharmaceutical companies are scaling down their operations because they cannot have access to funds.

The industry is a sensitive one and needs a specialised funding scheme to save those still thinking of remaining here,” one senior manager in a pharmaceutical company said.

Ayo Akinwunmi, head of Research at FSDH Merchant Bank, reasoned that Nigeria is majorly an economy with little export drive.

“We don’t even produce enough to feed ourselves and we do not have competitive advantage in production,” Akinwunmi said.

Johnson Chukwu, CEO, Cowry Asset Management Limited, differed, saying the demand for local consumption of drugs is on the rise and the factors responsible for that are increase in population and improvement in terms of access to medical services.

Nigeria recently signed on to the African Continental Free Trade Area (AfCFTA), with the country’s pharmaceutical firms expected to rival those of South Africa and Morocco, which produce most of the drugs for their citizens.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Toyin Ashiru, MD/CEO, Tricontinental Group; his wife Adenike Asiru; Segun Ogunsanya MD/CEO, Airtel Nigeria; Brent Omdahl, commercial counselor, United States Mission to Nigeria/celebrant; Olabintan Famutimi, chairman, Tricontinental Group, and Adenike Akande, former president, Lagos Chamber of commerce and Industry (LCCI), at the send- off dinner in honor of Brent Omdahl organised by Tricontinental Group in Lagos, at the weekend.

Pic by David Apara

Here’s what it’ll take for S&P to upgrade Nigeria for first...

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with a stable outlook.

A “B” rating is two levels below investment grade, and is where S&P has put Nigeria since 2016.

The rating is the same as the one assigned by the other big two ratings agency, Fitch and Moody’s, who have B+ and B2 ratings, respectively, on Africa’s largest oil producer.

It comes as a surprise that Nigeria hasn’t earned a credit upgrade despite the country’s improving macro-economic indicators. GDP growth has swung positive since 2016’s contraction, oil prices and production are up some 20 percent and the country’s external reserves have almost doubled. Inflation is also down to 11 percent from as high as 18 percent.

For S&P, however, the biggest macro-economic indicator is GDP per capita and there has been no improvement since a contraction in 2016. That’s because economic growth has been too slow to match population growth rate. There’s no relief in sight for Nigeria, which Moody’s said last month was stuck in a “low growth cycle”, and the IMF expects GDP per capita to shrink for the fourth straight year in 2019 and four more years after.

“Nigeria would need to see stronger GDP per capita growth and overall GDP growth in the range of 5-6 percent before we consider an upgrade,” said Gardner Rusike, associate director, sovereign ratings at S&P. “Public finances would also need to improve and we must get a strong sense that the economy is well on the path of diversification away from its overreliance on hydrocarbons,” Rusike told BusinessDay on the sidelines of the S&P Nigeria conference last Thursday.

Nigeria’s economy would probably expand 2.5 percent in 2019, according to consensus estimates. The Federal Government expects growth will be even stronger going by its 2.7 percent target.

However, both estimates are hardly enough to cheer because it means the economy will still grow at a rate too little to absorb a rapidly growing population this year.

Nigeria’s average annual population growth rate of 2.6 percent means on average some 5.2 million Nigerians are born every year or 14,246 daily, each one needing hard and soft infrastructure from power to education and healthcare.

Economic growth in the region of 2 percent is hardly enough to cater to those needs, paving the way for more Nigerians to slip below the poverty line. Shrinking GDP per capita means the economy is not growing fast enough to create economic opportunities like jobs for its people and that is a recipe for poverty.

In 2018, the Brookings Institution published a report that said Nigeria had beat India to become the poverty capital of the world, despite being less than a quarter of India’s population. Nigeria wrested the crown from India by having a little short of 100 million people living below the poverty line.

To put the numbers in context, that’s only 10 percent short of the population of Ethiopia, Africa’s secondmost populous country, and is equal to the population of South Africa (the 6th most populous in Africa) and Kenya (7th) combined.

It also means if Nigeria’s poor people came together to form a nation, it would be the fourth most populous nation in Africa. The large number of Nigeria’s poor people and the threat of a socio-economic implosion make poverty reduction a key target for Nigerian policymakers, who have their work

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cut out, as they must seek to achieve economic growth of around 7 percent.

Some can argue that a socio-economic implosion is already happening, given the rising crime rate and kidnapping in the country.

This makes it all the more imperative for Nigeria to act quickly by borrowing a leaf from the playbook of countries that have succeeded in reducing poverty and averting a socio-economic crisis.

There’s no scarcity of country case studies pointing the way for how Nigeria can curtail rampant poverty.

The common thread in all those case studies is that economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries.

Growth can generate virtuous circles of prosperity and opportunity. Strong growth and employment opportunities improve incentives for parents to invest in their children’s education by sending them to school. This may lead to the emergence of a strong and growing group of entrepreneurs, which should generate pressure for improved governance. Strong economic growth therefore advances human development, which, in turn, promotes economic growth.

It is why a successful strategy of poverty reduction must have at its core measures to promote rapid and sustained economic growth.

Asian countries provide overwhelming evidence of that.

Take China, which has contributed over 70 percent of the poverty reduced across the world, according to the United Nations, making itself a country with the most people lifted out of poverty globally.

According to the $1.9 poverty line, from 1981 to 2015, China lifted 850 million people out of poverty, with the percentage of people living in @Businessdayng

extreme poverty falling from 88 percent to 0.7 percent.

Since the start of farreaching economic reforms in the late 1970s, growth has fuelled a remarkable increase in per-capita income.

China’s per capita income has increased fivefold between 1990 and 2000, from $200 to $1,000. Between 2000 and 2010, per capita income also rose by the same rate, from $1,000 to $5,000, moving China into the ranks of middle-income countries, a target Nigeria’s Vice President Yemi Osinbajo says he has set for Nigeria.

Beijing’s success was delivered by reforms that were a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension.

The whole reform programme is often referred to in brief as the “open door policy”. True to the name of the reform programme, China pursued trade liberalisation and opened up to foreign direct investment.

It also improved its human capital, opened up to foreign trade and investment, and created a better investment climate for the private sector.

The Chinese government also worked hard to reduce the inequality of health and education outcomes. The Chinese government shifted its policy in recent years to encourage urban migration, fund education, health, and transportation infrastructure for poor areas and poor households.

China’s poverty reduction also involved reforming land laws and allowing farmers, who formed the bulk of its poor people, to keep more of their profits.

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POLITICS & POLICY YP releases guidelines ahead Kogi, Bayelsa guber polls JOSHUA BASSEY

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he Youth Party (YP) has released its guidelines for aspirants wishing to contest the November 16, 2019 Kogi and Bayelsa States governorship elections on the platform of the party.

A statement from the party signed by Helen Attah, deputy national publicity secretary of YP, also announced dates for the collection and submission of nomination form as well as conduct of its primaries to select candidates for the elections.

According to YP, the decision of its National Executive Council (NEC) to issue the guidelines falls in line with the Electoral Act 2010 (as amended) and the Independent National Electoral Commission (INEC) guide-

lines on the gubernatorial polls.

“In compliance with the

Electoral Act and INEC guidelines, the timetable and schedule of activities

Victor Adoji, banker and communication guru left, collecting the PDP governorship nomination form for the forth coming gubernatorial election in Kogi state.

Alaibe advocates blue economy for Bayelsa Samuel Ese, Yenagoa

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imi Alaibe, a former managing director of Niger Delta Development Commission (NDDC), said he would give more attention to blue economy in order to improve the internally generated revenue profile of Bayelsa State if elected governor.

Alaib e state d this on Wednesday in Yenagoa while addressing members of the Nigeria Union of Journalists (NUJ), Bayelsa State Council as part of his ongoing consultations with stakeholder groups in the state as he seeks the People’s Democratic Party (PDP) governorship ticket.

He promised to harness all the marine resources within the state to create wealth just like the Philippines with the same marine environment as Bayelsa used it to create a sustainable economy for the

for the conduct of the 2019 governorship primary elections in Kogi and Bayelsa are

country.

Alaibe pointed out that though Bayelsa State that has crude oil and gas resources lacks tank farms and no oil vessels are moored in the coast due to the absence of seaports and promise to develop the proposed Agge and Brass seaports.

He assured that he would not use the blue economy as excuse to mess up the ecosystem saying that he would do it in a sustainable way and also open up the three senatorial districts to the Atlantic Ocean.

Alaibe said he would use private sector capital to develop the blue economy, create wealth and advocated a 25-year development plan for the state after implementing his government’s short term plans and also, use private sector capital to address critical infrastructure including flooding, erosion, tourism and skills acquisition.

On the insure of security,

he assured that his administration would end insecurity in the state within the first six months of his government and that the violence is not caused by outsiders, but unidentified youth within the environment.

He also promised to address the issue of youth unemployment, tackle drug addiction by demobilising, rehabilitating and reintegrating addicts into the society.

Alaibe told journalists that he has both private sector and public sector experience and that he would no longer crisis-cross political platforms as in the past assuring that as he has picked the PDP expression of interest and nomination forms, he would also submit them.

On his scorecard at NDDC, he said he took the Bayelsa West Senatorial Road to Toru-Orua from where incumbent, Governor Seriake Dickson took it to Aleibiri and Ekeremor saying he would then take it to Agge.

as follows: “Sale of forms will commend from July 15 to August 12, 2019. Screening will start from August 14 to August 25, 2019 while appeals will commence from August 26 to 31.

The governorship primaries will take place on September 2, while appeals arising from primaries will be heard on September 3, 2019.”

Candidates for the elections, the YP said, would be expected to pick up nomination forms at the national secretariat from July 15 to August 10, 2019,” the statement noted.

The party also disclosed that while the expression of interest form will cost aspirants N100,000, the nomination form will be available for N1 million.

It assured that the primary would be conducted on the basis of One Member

One Vote (OMOV) and there would be “no delegates or super delegates” while voting will be affordable and convenient for all eligible members of the party.

The party further stated its commitment to expanding the democratic space by providing a level playing ground for all aspirants on its platform.

“We encourage anyone who aspires to contest in free and fair primaries to join the party. Likewise, persons interested in voting for a candidate of their choice in a party primaries without fear or favour, are encouraged to join the party. The party preaches transparent political leadership and followership that frowns at money politics, bribery, violence, ‘short termism’ repression, and corruption,” it said.

Police, IPAC meet on peaceful elections in Bayelsa Samuel Ese, Yenagoa

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he Bayelsa State Police Command has met with the leadership of the various political parties in the state under the aegis of Inter-Party Advisory Council (IPAC) on the need for peaceful and violence-free local government and governorship elections.

Bayelsa State is expected to hold local government elections on August 10 at the end of a month-long campaigns that started on July 8 and expected to end on August 8, two days to the elections.

Th e rea f te r, t h e st ate would also hold gubernatorial primary elections before the governorship elections on November 16 this year and the police hierarchy urged peaceful polls.

Commissioner of Police, Uche John Anozia told party

chairmen at the Police Officers Mess in Yenagoa on Friday that as the current police boss, he would not want to record any violence in the forthcoming elections.

Anozia regretted that he is not impressed with the activities of hoodlums in the state saying that politicians use the youths for criminal activities and warned that he will not tolerate lawlessness during the elections as law would take its full course.

According to him, elections in the state are characterised by bickering, interparty issues and thuggery and stated that the meeting was to inform them on what they are expected to do and what they are not expected to do during the elections.

He stressed that when laws are obeyed, there is peace and that lawlessness always leads to chaos pointing out that “if you

want to use youths to assist you, they should assist you lawfully.”

Anozia urged the party leaders to have confidence in the police assuring that they would provide security as the elections are going on and that he was free to talk to them 24 hours daily.

Various political leaders queried the absence of the two key political parties at the meeting while noting ways in which the police could improve their performance during the forthcoming elections and how to protect lives and property in the state.

They also condemned the inability of the police to withdraw their officers attached to top political figures while also stating that the frequent transfer of police commissioners to the state did not augur well in the fight against insecurity in the state.

Retired perm sec, academics, ex-lawmakers on Makinde’s commissioner - nominee list REMI FEYISIPO, Ibadan

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he Speaker of Oyo St at e Ho u s e o f Assembly, Adebo Ogundoyin released the names of wouldbe-commissioners with four former lawmakers, academics and one retired permanent secretary making the list.

On the list read on the floor are a former speaker, Oyo State House of Assembly, Kehinde Ayoola; Ojemuyiwa Ojekunle, Adeniyi Farinto and Funmilayo Orisadeyi, the only female from Ibarapaland Others are former council chairman, Wasiu Olatubosun, Seun Asamu, who is the 32-year-old lawyer son www.businessday.ng

of Senator Monsurat Sunmonu; Director General of Seyi Makinde Campaign Organisation, Bayo Lawal; Daud Shangodoyin, who headed the Omituntun Initiative in Diaspora, Oyelowo Oyewo, Adeniyi Olabode Adebisi.

Also included are Muyiwa Jacob Ojekunle, Lasunkanmi Ojeleye, Bashir Abio-

dun Bello and Akinola Ojo as well as former governor Rashidi Ladoja’s personal lawyer, Biodun Abdulraheem.

The submission of the list coming close to two months after Makinde was inaugurated has not been easy especially dealing with nomination as it relates to coalition parties.

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The African Democratic Congress (ADC); Zenith Labour Party (ZLP); Social Democratic Party (SDP) and others had endorsed Makinde of the People’s Democratic Party (PDP), against Adebayo Adelabu of the All Progressives Congress (APC).

It was gathered that some of the earlier listed names, @Businessdayng

particularly from the coalition parties, were replaced principally as a result of the clash in local government of origin/federal constituency of origin or power play within the coalition.

But some of the earlier listed individuals who were later dropped from the list sent to the lawmaker may be given other appointments.

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NEWS Suit challenging Buhari’s qualification: Appellants drag Buhari to S’Court Felix Omohomhion, Abuja

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alu Kalu, Labaran Ismail and Hassy El-Kuris, who were appellants in the dismissed suit challenging the qualification of President Muhammadu Buhari for the 2019 presidential election, have taken their grievances to the Supreme Court.

They want the apex court to nullify the candidacy of President Buhari in the just concluded presidential poll.

A Federal High Court, Abuja, and the Court of Appeal sitting in Abuja had earlier dismissed their suit on the ground that it was statute barred.

They ruled that because the suit was filed out of time their hands were tied to hear the suit on its merit.

However, not satisfied with the judgments, the appellants approached the Supreme Court, seeking that Buhari’s nomination and subsequent victory at the February 23 presidential election to be nullified on the ground that President Buhari lied on oath in his form 001 he submitted to INEC for the purpose of clearance for the presidential election.

In the notice of appeal marked: CA/A/436/2019, they

are asking the apex court for an order to set aside the judgment of the Court of Appeal and hear the matter on merit and grant the reliefs sought in the originating summons.

The court of appeal in a unanimous judgment delivered

by Justice Mohammed Idris, had on July 12, 2019, held that the singular fact that the suit was filed outside the 14 days provided by the law robbed the court of jurisdiction to entertain the suit.

The suit was accordingly dismissed for being incompetent and lacking in merit.

In the notice of appeal dated and filed July 24, 2019, the appellants through their counsel, Ukpai Ukairo, presented 12 grounds for the setting aside of the judgment of the court of appeal, Abuja, among which are; that the “Learned Justices of the Court of Appeal erred in law in relying on a preliminary objection withdrawn and struck out by the court of appeal in striking out and dismissing the appeal.

“The Learned Justices of the court of appeal erred in law and breached the right of the appellants to fair hearing by relying on a Preliminary Objection, withdrawn by the second respondent and struck out by the court, thus being a case www.businessday.ng

not made out or relied upon or abandoned by a party in entering a decision in a judgment.

“The Learned Justices of the court of appeal erred in law in holding that “the failure of the registrar to sign the originating summons is fatal and goes to the issue of jurisdiction” and thereby struck out the originating summons.

“The Learned Justices of the court of appeal erred in law in holding that the cause of action for the purpose of calculating the 14 days provided for in Section 285(9) of the 1999 Constitution, (4th Alteration) Act, 2017 within which to file an action under Section 31(5) of the Electoral Act arose on the day the 1st Respondent submitted his Form CF 001 to the third Respondent.

“The Learned Justices of the Court of Appeal erred in law in holding that the appellants did not put a date as to when the cause of action arose”, among other reliefs.

According to Ukairo, the appellants in the brief of argument distilled two issues for determination, (i). Whether the Learned Trial Judge was right in relying on the processes filed by the 1st defendant through a law officer in the Ministry of Justice?

WHO urges Nigeria, others to make hepatitis testing, treatment accessible Onyinye Nwachukwu

… says Africa records 200,000 deaths annually

he World Health Organisation (WHO) has called on Nigeria and other African countries to invest in a public health approach to make hepatitis testing and treatment accessible and affordable to achieve its elimination from Africa by 2030.

Matshidiso Moeti, WHO’s regional director for Africa, in a message to commemorate the 2019 World Hepatitis Day, said despite the availability of diagnostic tools and effective treatment, less than one in 10 of the 71 million people with hepatitis B or C in Africa had access to testing.

Moeti said more than 200,000 die each year due to complications like endstage liver cirrhosis and liver cancer.

Moeti, while stressing the need for member states to invest in a public health approach towards elimination of viral hepatitis B and C in Africa, specifically urged countries to invest in hepatitis B vaccination for all newborns and integrate hep-

atitis interventions as part of health system strengthening.

“This includes building on existing laboratory capacities for HIV and TB, embedding hepatitis surveillance in the national health information system, and securing supplies of affordable medicines and diagnostics,” he said.

The director recalled that the WHO had in June developed the first hepatitis scorecard to track progress across the Region. The scorecard, according to Moeti, shows that the highest burden of hepatitis B infection in children less than five years is seen in countries without hepatitis B birth-dose vaccination in combination with suboptimal coverage, which is fewer than 90 percent of the childhood pentavalent vaccine.

“Testing and treatment as a public health approach remains the most neglected aspect of the response,” he stressed, noting that hepatitis testing and treatment services as part of universal health coverage is a cost-

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@Businessdayng

effective investment.

He further noted that the 2019 theme, “Invest in Eliminating Hepatitis,” was a timely reminder that the disease could be eliminated by 2030 with adequate resources and strong political commitment.

To this end, he called on partners and pharmaceutical companies to reduce the cost of hepatitis B and C diagnostics and medicines.

“Together with the research community, we can collectively explore ways to simplify testing and treatment, and promote innovation towards a cure for hepatitis B and a vaccine for hepatitis C,” he said.

He said, “Governments and partner efforts, civil society and people living with viral hepatitis should continue playing a central role in raising community and political awareness.

WHO will continue to support collaboration across Member States.

“This is what is needed to reach the goal of elimination of viral hepatitis by 2030.”

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Inclusion of Land Use Act, NHF in 9th Senate’s agenda raises hope for housing sector, economy CHUKA UROKO

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ope is in the air for Nigeria’s struggling housing sector and the wider economy that the obsolete Land Use Act and the largely elusive National Housing Fund (NHF) are included in the legislative agenda of the 9th Senate for intervention.

Expectation is that a review of the Land Use Act would free land for housing and other economic activities, including agriculture and industrialisation, while the NHF would ensure more people would be able to get mortgage to build or buy houses, leading to increase in the country’s GDP. Senate President Ahmed Lawan, speaking through Ashiru Oyinlola, a senator, who represented him at the ongoing Abuja International Housing Show (AIHS), was optimistic that with this intervention, all other policies required to get Nigerians closer to their dreams, especially housing, would be achieved.

“The importance of housing cannot be over-emphasised.

Our needs are enormous while resources are lean. But the best thing about the future is that it comes one day at a time. Today presents us with the opportunity to consolidate on what we have built and to start new projects where necessary,” Lawan said.

AIHS is an annual housing event organised by Fesadeb Communications Limited, a housing sector promotion and advocacy firm. The show, now in its 13th edition, is arguably the largest gathering of housing sector stakeholders in Africa. This year’s edition has as theme ‘Driving Sustainable Housing Finance Models in the Midst of Global Uncertainty’.

In a veiled reference to this theme, Lawan noted that concerted efforts were required to think of the multiple ways of funding housing development in a way that it would not only lead

to the provision of homes, but to the growth of the economy.

“I am aware that there are critical areas that require legislative intervention like the Land Use Act, the National Housing Fund (NHF), housing regulations, and many more enabling policies. It is in the legislative agenda of the 9th Senate to see to it that all policies required to get us closer to our dreams are achieved,” he said.

The Land Use Act, enacted by the military government under Olusegun Obasanjo in 1978, is an obsolete land law that has overstayed its welcome and outlived its usefulness. The Act, which was aimed to ease access to land for housing, industrial and other economic purposes invested land ownership on state governors.

But the governors have, more or less, bungled the Act with its implementation. Land has now become a political tool in the hands of the governors. It is used for political patronage or victimisation, depending on which side of the divide the prospective beneficiary stands.

Every attempt to amend or review the Act has failed because amending it requires legislative action, which, in turn, involves expunging it from the constitution that only the National Assembly can do.

This is why the assurance of legislative intervention on the Act by the Senate President is something to look forward to with expectations of positive impact on both housing and other productive activities.

The NHF is another Federal Government intervention in the housing sector whose implementation has defeated its good intentions. The NHF, established in 1992 to aid the demand side of housing, was aimed to provide single-digit, 6 percent, interest rate to a subscriber to the fund seeking mortgage loan with repayment tenor of 20-30 years, depending on the age of the subscriber.

Osinbajo, Kaberuka, Muhtar, others for DBN lecture series

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ice President Yemi Osinbajo, African Union High Representative for the Peace Fund, former president/ chairman, African Development Bank, Donald Kaberuka, and former finance minister, Mansur Muhtar, among other dignitaries are scheduled to speak today (Monday) at the maiden edition of the Development Bank of Nigeria (DBN) annual lecture series.

While Osinbajo will speak as the special guest of honour, Kaberuka will be delivering the keynote address at the lecture, which will hold at the Congress Hall of the Transcorp Hotel, Abuja, on the theme, Surviving to Thriving: MSMEs as the Key to Unlocking Inclusive Growth in Africa.

Also scheduled to speak as panellists at the event are the renowned professor of economics and former director general, West Africa Institute for Financial and Economic Management, Akpan Hogan Ekpo. Others include, NdidiNwuneli, founder, LEAP Africa; Peter Bamkole, director, Enterprise Development Centre, Pan-Atlantic University; Amal

Hassan, Founder Outsource Global and Yemisi Iranloye, MD/CEO, Psaltry International.

The lecture series is a thought leadership initiative of DBN, which provides a platform for a robust exchange of ideas to meet the challenges and opportunities that exist in the MSME segment of the economy.

According to the managing director, DBN, Tony Okpanachi, the lecture series is one of the ways to further strengthen the economy by ensuring that MSMEs are adequately empowered to continually contribute effectively to the Gross Domestic Product (GDP) of the nation.

In his words, “MSMEs in any clime is the backbone for inclusive economic growth. In advanced economies, small businesses have been seen to be the driving force in achieving growth in all sectors of the economy they operate.”

“The central objective is to broaden the understanding of the challenges and critically examine practical steps to resolve some of the obstacles that constrain growth within the segment,” he said. www.businessday.ng

L-R: Timilehin Adeyokunnu, marketing manager; Anthony Atuche, CEO, and Sinan Sosay, chief operations officer, all of Hubmart Stores, at a news conference on the activities of Hubmart Stores in Lagos.

NNPC’s federation account remittance falls to 13-month low … as subsidy gulps N206bn in first two months of 2019 STEPHEN ONYEKWELU & DIPO OLADEHINDE

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nother round of fiscal distress may be brewing between the Federation Account Allocation Committee (FAAC) and Nigerian National Petroleum Corporation (NNPC) as decreasing remittance reduces available funds to states to 13 months low of N32.4 billion.

NNPC’sfallingremittancetothe federation account in 2019 would harm state governments in two ways. An increase in the budget benchmark of crude oil to $60 per barrel means that if oil prices trend below this the states will get less in terms of revenue. The other implies difficulties in paying the minimum wage of N30,000, due to lack of funds.

The frosty relationship between the 36 states of the federation, the Federal Capital Territory (FCT) and the management of NNPC since

March 2018 has continued to deteriorate,witheverydayNigeriansand civil servants taking a hit without understanding what has hit them.

Latest data from the NNPC show that as of February 2019 the state corporation’s remittance to FAAC shrank with total payment standing at N32.4 billion, an 83 percent decrease compared with N189 billion allocated in February 2018.

A further breakdown shows the NNPC is still unable to reach the N205 billion remitted to FAAC in March 2018, as monthly remittance declined to N175.7 billion in November,whichfurtherdecreased to N174.9 billion in December 2018, while January 2019 and February 2019 remittances stood at N51.6 billion and N32.4 billion, respectively.

Dwindling revenue into the federation account would make it harder for state governments to effectively execute their budget, especiallythecapitalexpenditureside, according to Paul Uzum, managing

NCAA audits AirPeace’s fleet, says its aircraft are airworthy IFEOMA OKEKE

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igeria Civil Aviation Authority (NCAA) has completed audit on AirPeace fleet, and says the airplanes in its fleet are airworthy.

It will be recalled that on Tuesday, July 23, 2019, at about 10.28am an Air Peace B737-300 aircraft with Registration Marks 5N- BQO had an incident on landing at Murtala Muhammed International Airport, Lagos.

The Accident Investigation Bureau (AIB) is currently carrying out an in depth investigation into the incident to determine the immediate and remote causes responsible for it as required by International Standards stipulated in International Civil Aviation Organisation (ICAO) Annex 13. The Authority awaits the conclusion and report of the AIB. In a statement sent by NCAA, signed by Sam Adurogboye, public relations,

NCAA, it said, “NCAA has just completed a thorough technical audit of the airline and its fleet of aircraft with a view to ensuring the airline is in compliance with extant Nigeria Civil Aviation Regulations (Nig. CARs), and to mitigate the re-occurrence of the incident. “ This technical audit was not limited to this recent incident. The airline operational, technical and safety performance in the last 12 months were also scrutinised.

“It revealed that all the operational aircraft on the fleet of Air Peace Limited are airworthy.”

This audit is to assure the flying public that all the aircraft on the fleet of NCAA authorised Air Operators Certificate (AOC) holders operating in Nigeria are air worthy, the authority said, saying, “The Authority shall continue to ensure only airworthy aircraft are permitted to operate.”

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director, Nigerian Capital Management Limited.

While NNPC’s remittance to FAAC seems to be declining the reverseisthecaseforsubsidy,another name for under-recovery.

Despite spending N730.9 billion on subsidy in 2018, Africa’s biggest oil-producing country has spent N206 billion in the first two months of 2019, an amount which wouldhaveincreasedtheeconomic growth or standard of living of its over 180 million people.

“There are many fundamental issues that are wrong with how the subsidy is being managed in this country;there iseverylikelihood we might hit N1 trillion before the end of 2019,”Ademola Henry,team lead at the Facility for Oil Sector Transformation (FOSTER), said, noting, “FAACwillalwaysmakethenormal noise and go home; they can only bark but they can’t bite.”

Last year, FAAC’s representatives, consisting mainly of CommissionersofFinanceandAccountants

General, refused to share the revenue made available by the NNPC as statutory allocation for the three tiers of government for June 2018.

Although no member of the committee explained why they refused to share the available revenue, then Minister of Finance, Kemi Adeosun, said the deadlock was as a result of the “unacceptably low” revenue remitted by the NNPC for sharing.

Over time, states are contending that the NNPC, as the greatest revenue generator, has no justifiable reason to declare a shortfall in the amount it pays into the federation account every month, especially when the international crude oil price had trended above the $60/barrel economic benchmark pegged by the government for 2018 fiscal year.

They have also called on the corporation to make full disclosures of its earnings, stressing that the usual disagreementswereadirectproduct of transparency deficiency.

Benin elders back Obaseki’s proclamation letter to Edo Assembly ... hail him on development, caution political actors against undemocratic actions

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ommittee of Benin Elders has thrown its weight behind Governor Godwin Obaseki’s proclamation letter for the inauguration of the seventh Edo State House of Assembly.

In a press release, Emmanuel Emovon, a professor, and other members of the Committee, said: “The members of Committee of Benin Elders note with dismay the political crisis arising from the Edo State House of Assembly involving some political leaders and the Executive Governor.”

They explained that they are aware that the Governor has issued a proclamation letter and forwarded same to the Clerk of the House of Assembly.

“Under the relevant provisions of the Constitution of Nigeria 1999 (as amended), such proclamation once made remains effective. This should be distinguished from the inauguration of members of the House, which in our view is the responsibility of the Clerk of the @Businessdayng

House. Any dispute arising from inauguration can be resolved by resort to the Judiciary in line with proper democratic practice, which process we are informed, is already ongoing,” they said.

According to them, “In the circumstance, this Committee feels that the intervention by the House of Representatives at this stage is premature and unwarranted. This is more so when it is clear from the express wording of Section 11 (4) of the Constitution that any intervention in the affairs of any State House of Assembly should be by the joint action of the two Houses of the National Assembly.”

The elders hailed Governor Obaseki’s giant strides in ensuring growth and development in the state, stressing that Governor Obaseki has been performing creditably in terms of infrastructural development, educational advancement, economic innovativeness and the maintenance of peace across the state since his assumption of office.

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NEWS

AMCON determined to recover N5.5trn from 350 obligors ODINAKA ANUDU

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sset Management Corporation of Nigeria (AMCON) is determined to recover N5.5 trillion from 350 Nigerians who owe the corporation, Ahmed Kuru, chief executive and managing director of AMCON, says.

“Only 350 obligors, out of the 12,000, account for more than 80 percent of the N5.5 trillion. That is why it is very sad and for us at AMCON, they must pay back this money,” Kuru promised at the breakfast meeting organised by the Nigerian-American Chamber of Commerce (NACC) in Lagos.

He said the corporation

... stresses need to go back to Failed Bank Act

initially invested N320 billion to restructure a number of businesses but only recovered about 5 percentofthemoneyduetoglobal economic crisis and poor attitude of owners of the business owners.

The corporation is no longer interested in reviving businesses as the Act establishing it only makes provision for take-over, he said.

He, however, disclosed that AMCON was working with the judicial arm of government to go into alternative conflict resolutions such as arbitration and mediation, as the best solution to defaults was to go back to the Failed Bank Act, which held

Lagos, UAE to partner on security, traffic management JOSHUA BASSEY

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agos State Governor Babajide Sanwo-Olu has declared his administration’s readiness to partner the government of United Arab Emirates (UAE) in the areas of traffic management and security.

The governor disclosed this when he received the ConsulGeneral of the UAE Consulate in Nigeria, Abdulla Al-Mandoos in Alausa at the weekend.

Sanwo-Olu noted that UAE, in the last decade, had become a choice destination for Nigerian tourists and businessmen. This, the governor said, should deepen the existing bilateral agreements between Nigeria and UAE. “As a government, we have several things to learn from the story of UAE’s transformation.

Dubai, which is the country’s commercial hub, shares so many similarities with Lagos. This is why I am elated to receive Almandoos and we welcome him.

“Let me disclose that, Lagos is ready to deepen the relationship between the two countries and we are working on collaborations in traffic management and security,” the governor said.

Sanwo-Olu said there would also be collaborations in harnessing Lagos cultural potential to expand local tourism business.

He expressed optimism that the envoy’s visit would deepen trade and yield positive results for both countries.

“We are hoping that in your tenure, we shall further expand and grow the relationship of the two countries,” the governor said.

On his part, Al-mandoos said the aim of his visit was to get cooperation and support of Lagos government on various areas of interest between Lagos and UAE. The diplomat promised there would be collaborations in the areas of security and education, noting that the partnership would assist the state to improve its tourism potential.

He said: “It’s my pleasure to meet the Governor of Lagos to consolidate our cooperation and good friendship over the years.

My government is looking at supporting Lagos in several areas, which include education and security. This partnership, we believe, will promote businesses and stability of our countries.”

Al-mandoos leveraged the meeting to push the consulate’s land request to the governor to build its office and a cultural centre.

The envoy said the proposed cultural centre would assist the two countries to build a strong socio-cultural bond, which would further strengthen their relationship.

FBN Holdings holds innovation week

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s part of its thought leadership agenda and continuous strategy to innovate, FBN Holdings plc, one of the leading financial services Groups in West Africa, has announced its Group Innovation week. The week has been designed to provide opportunities for staff across the FBNHoldings Group to develop and sustain an innovative culture that will enhance its overall business performance.

The Group Innovation Week is billed to hold between July 29 and August 2, 2019, and will culminate in the launch of an innovation platform.

Schedule of events include panel discussions with industry innovation thought leaders such as Gbenga Agboola, co-founder and CEO Flutterwave, Odunayo Eweniyi, co-founder and CEO Piggybank and Funlola JideAribaloye, CEO Reliance HMO; a demo fair featuring tech giants Microsoft, Oracle and The Ter-

ragon Group; workshops and an open house at the FirstBank Digital Lab. The weeklong event provides a platform for “Cultivating an Innovative Mindset” for staff to become familiar with internal structures and tools available to support an innovative culture.

According to U.K Eke, group managing director, FBN Holdings, “There is a new emerging economy, driven by changes in technology, demographics and the environment. As a Group, we have taken the decision to welcome these changes and harness opportunities from serving our large base of customers by leveraging technology and pushing frontiers in an effort to extend our leadership in the market.

“The innovation week is therefore a platform to work as a Group and across the aisle as we seek creative ways of leading the change in the financial services sector across Middle Africa.” www.businessday.ng

operators responsible.

“If there is any letdown on credit discipline, somebody has to be responsible,” he said.

“There is an abuse and noncompliance of the credit policy approved by the banks themselves,” he regretted.

According to Kuru, he does not support extending the lifespan of AMCON beyond 2014, as doing that would encourage indiscipline, adding that the corporation has saved jobs in excess of 15,000 in the banking sector and provided liquidity for those banks because they were not in the position to lend money.

“Out of the 12,000 accounts,

we have restructured more than 3,000 and we have able to get over 1,000 obligors out of the positions they were before,” he stated.

He advocated for putting depositors into consideration while setting up another intervention scheme like AMCON in the future.

“During the global financial crisis in 2009, the Non Performing Loans (NPLs) rose to almost an excess of N2.6 trillion while the national budget was less than N1 trillion. The banks that were bad accounted for almost 80 percent of the total NPLs in the industry at that time.

“The ratio of the NPL to

the total loan was more than 60 percent and the regulatory threshold was supposed to be five percent and because of that most banks were not able to borrow and with no liquidity to support their operations.

AMCON purchased more than 12,000 loans from 23, paying N1.7 trillion to purchase loans worth N3.3 trillion. AMCON also provided N2.2 trillion to eight banks as financial accommodation to bring their net book value to zero,” he recalled.

Oluwatoyin Akomolafe, president, Nigerian-American Chamber of Commerce, said given the current circumstances,

and particularly with regard to the national economy, the issue of financial system stability had moved into the focus of public attention, adding that sound financial and reporting frameworks are essential in policy objectives.

“Despite the fact that the global financial system is edging toward greater stability, governments must deal with differing regional and national needs.

The same reason is why some nations are trying to discontinue unconventional monetary policies installed to cultivate recovery, while others are expanding their scope and scale,” he stated.

African presidents, global leaders tackle job creation, youth empowerment at 2019 TEF Entrepreneurship Forum SEGUN ADAMS

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t the recently concluded 5th edition of the Tony Elumelu Foundation (TEF) Entrepreneurship Forum, five African presidents and thousands of young African entrepreneurs converged at the most influential gathering in the African entrepreneurship ecosystem. Job creation and youth empowerment were the key themes tackled at the Forum.

The Tony Elumelu Foundation, which has been at the forefront of advocating for entrepreneurship as the catalyst for the economic transformation of Africa, convened the two-day Forum on the 26th and 27th of July at the Transcorp Hilton Hotel, Abuja, Nigeria’s seat of government.

The event convened over 5,000 participants from 54 African countries, including representatives of the 7,521 beneficiaries of the Tony Elumelu Foundation Entrepreneurship Programme.

More than 60 global speakers from the public and private sectors across three continents participated in interactive masterclasses, plenary sessions and debates geared towards generating ideas and defining concrete steps Africa must take to empower its youth and accelerate the continent’s development. Guests interacted directly with young budding entrepreneurs from across the 20 African UBA-present countries who exhibited their innovative products and solutions at the UBA Marketplace, powered

by Africa’s global bank, United Bank for Africa (UBA).

Moderated by American journalist and host of CNN’s show, Fareed Zakaria GPS, the presidential debates, which formed the highlight of the twoday event, focused on charting the way forward towards the eradication of poverty in Africa through job creation.

The public sector leaders on the panel include Rwandan President Paul Kagame, President Macky Sall of Senegal, President Félix Tshisekedi of the Democratic Republic of Congo (DRC), Nigeria’s Vice President Yemi Osinbajo, and Ugandan Prime Minister Ruhakana Rugunda, representing

…150 African SMEs exhibit at UBA Marketplace President Yoweri Museveni.

Healthcare played a dominant role in the conversations as healthcare leaders in the public and private sectors tackled this theme on the plenary session ‘The Role of Healthcare in Economic Transformation’.

Speakers on this panel included Dr. Awele Elumelu, trustee, Tony Elumelu Foundation and founder/CEO, Avon Medical Practice, Nigerian First Lady

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Aisha Buhari, Guinean First Lady Djena Kaba Condé, Malian First Lady Keïta Aminata Maiga, WHO Director-General Tedros Adhanom Ghebreyesus, Gilles Carbonnier, vice president, International Committee of the Red Cross (ICRC), and Oulimata Sarr, regional director, UN Women Central and West Africa.

At the Forum, Tony Elumelu, founder of the Tony Elume-

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lu Foundation, reiterated the urgency in creating jobs on the continent to catalyse Africa’s development.

“Extremism is a product of poverty and joblessness.

Poverty anywhere is a threat to everyone everywhere. If our leaders understand the reason and rationale for our youths to succeed, they will do everything they can to support them,” he said.

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NEWS

Ikpeazu lauds Diaspora Nigerians for contributing to national development GODFREY OFURUM, Aba

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overnor Okezie Ikpeazu of Abia State has thanked Nigerians in the Diaspora for their relentless contributions to national development through their various activities in their countries of residence.

This is as Abians in the Diaspora announced plans to launch the “Abia Diaspora Educational Endowment Fund,” which would provide annual scholarships for 60 students, drawn from across the state, later this year.

Ikpeazu hailed them for their commitment to critical issues at home, stressing that remittances and returns from Nigerians in the Diaspora were key elements in national development.

The Abia State governor made this known last week, when he received a delegation of Diaspora Nigerians that paid him a courtesy visit at the Governor’s Lodge, Abuja, as part of the National Diaspora Day organised by the Nigerian in the Diaspora Commission (NIDCOM), held in Abuja.

He particularly hailed Abia indigenes in the Diaspora for keeping faith with his administration, through the creation of critical linkages through which different kinds of assistance come home.

He recounted with delight, the various donations of medical equipment from Abians in the Diaspora, which had helped to

boost health care delivery in the state, and appealed to them to move a step further and invest in human development, by giving scholarships and grants to bright and indigent students at home.

He promised that his administration would continue to create strong partnerships with Abians in the Diaspora with a view to providing additional channels for meaningful cooperation.

Ngozi Ogbonna Erondu, leader of the delegation, had earlier told the governor that they were in Nigeria for their Diaspora summit, which provides a platform for Nigerians living in different parts of the world to come home and rub minds on issues of development with a view to expanding their capacity to get more involved in development activities back home.

Erondu, who is also a special adviser to Abia State Governor on Diaspora Matters, announced that Abians in the Diaspora would, later this year launch the Abia Diaspora Educational Endowment Fund, which will provide annual scholarships for 60 students drawn from across the state.

She stated that the scholarship would cover every single fee from JS1 to SS3 and thereafter to tertiary institutions, noting that the process for the selection would be competitive and worked out in conjunction with the State Ministry of Education.

China’s first used cars export debuts at Guangdong TELIAT SULE

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igerians and other citizens of the developing countries now have the options of buying certified used cars following the commencement of the used cars export business in China. The maiden used cars export was launched on July 17, 2019 at Nansha Port, Guangzhou, People’s Republic of China, an indication that the country’s automobile industry is ready to take its rightful place in the global vehicle export business.

According to available reports, Nigeria expends $8 billion annually on vehicles importation.

Guangdong is the major province of automobile, with a mature market and sufficient cars for export, according to a release from GAC Motors

Nigeria. Guangdong Good Car Holdings and Guangdong Junweilong purchased the first batch of used cars for export in China and smoothly went through the formalities for ownership transfer at Guangjun Motor Vehicle Registration Service Station of Vehicle Administration Office of Guangzhou Municipal Public Security Bureau. This fully reflects the efficient and quick vehicle ownership transfer registration service of Vehicle Administration Office of Guangzhou Municipal Public Security Bureau.

In the last few years, users of uncertified used cars have experienced a lot of discomfort manifested in regular breakdowns of their vehicles because those vehicles were not worth the price placed on them which forced unsuspecting car users to hold more cash

for precautionary purposes.

“The first batch of 300 used cars will be exported, with the total value of $2.5 million.

The brands mainly include Land-Rover, Toyota, Hyundai, Volkswagen, GAC Motor Trumpchi, King Long, Yutong, Zhongtong, and WOHO. The used cars will be sold to customers in Cambodia, Nigeria, Myanmar, Russia, etc. They will be shipped in batches from the container terminal and ro-ro terminal at Nansha Port and via China-Europe Railway Expressfrom Shilong, Dongguan. The ports of destination include Cambodia (Sihanoukville Autonomous Port), Nigeria (Lagos Port), Myanmar (Rangoon Port), and Russia (Vorsino and Port of Saint-Petersburg)’, according to GAC Motors Nigeria.

The certification of the used cars before export involves

Delta deputy governor faults destruction of illegal refineries by security agents Francis Sadhere, Warri

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eputy Governor of Delta State, Kingsley Otuaro, has faulted the way and manner the military deployd to the Niger Delta region destroy illegal refineries and their products, saying their action was polluting the environment and putting the lives of the locals in danger.

Otuaro said the menace of spills from vessels with illegal oil allegedly destroyed by security agentsrequirednationaldiscourse for solution, as such activities had caused frightening effects on the aquatic environment.

Otuaro, who chairs the Delta StateAdvocacyCommitteeAgainst Vandalism of Oil and Gas Facilities, made these observation on Wednesday last week after embarking on a helicopter-driven aerial view of sites impacted by spills from destroyed vessels in WarriNorthandWarriSouth-West LGA of the state.

“The Delta State Advocacy Committee Against Vandalism of Oil and Gas Facilities, set up by Governor Ifeanyi Okowa has the mandate of ensuring that the oil production environment is safe.

“We heard complaints that the securityagentshavecontributedto environmentaldespoliationresulting from spills via their destruction of illegal crude oil vessels.

“I was at Olero and Macaraba areas and what we saw is worrisome. It is an ill wind that blows nobody good,” Otuaro said, while speaking to protesters who had heard of his coming and ambushed him at a stopover at Okerenkoko in Warri South-West LGA. The Deputy Governor said, “The statutory responsibility of

the security agents is to protect the oil facilities and prevent illegal bunkering. Their alleged destruction/explosion of illegal crude oil vessels in the waterways with concomitant despoliation of the environment that supports livelihood of the people has worsened environmental hazards and the style does not conform to global best practices.

“I think the security agents alleged to be exploding these illegal crudeoilvesselsthinktheyhaveno choice or alternative to what they are said to be doing. But I think the solution would require a national discoursethatwouldinvolvethem.

“The practice is unacceptable.

But I urge you to be patient as government prepares to find a resolution to this environmental problem.Weneedtothinkthrough this problem that has obviously endangered and pauperised the people.”

Some inscriptions on placards carried by the angry protested include; “Military, Stop the Burning (of illegal crude oil badges)”, “Our environment Is No Longer Safe for Healthy Living”, “Stop Pollution of Our Environment”, “Our Environment Is Our Pride”, “Federal Government Save Our Environment”, “We Need Freedom”, “Government, Intervene In Our Environment”.

Speakingoneffectofspillsfrom explosions of illegal oil vessels, Ebiasuode Aramisi, a 65-year-old woman, said: “The burning of the illegal oil vessels have greatly affected us by way of polluting the rivers beyond normal. We can no longer fish. We are hungry as our source livelihood is destroyed/ polluted. Federal Government save us.” www.businessday.ng

the Ministry of Commerce, Ministry of Public Security and the General Administration of Customs with supervision provided by the Guangdong Provincial Party Committee as well as Guangdong Provincial Government. Others involved are the Guangdong Provincial Department of Commerce, Guangdong Provincial Department of Public Security, Guangdong Branch of the General Administration of Customs and the tax authority.

These institutions were all supported by Guangzhou Municipal Government, Guangzhou Municipal Commerce Bureau, Guangzhou Municipal Public Security Bureau, Communications Commission of Guangzhou Municipality, Guangzhou Nansha Customs, Nansha District Government and Nansha Port, among others.

R-L:, Babajide SanwoOlu, governor, Lagos State, with Abdulla Almandoos, consulate general of the United Arab Emirates (UAE) in Lagos, and Imam AbdulHakeem Kosoko, during a courtesy visit to the governor at the Lagos House, Alausa, Ikeja, on Friday.

‘Transparency, accountability essential ingredients for corporate governance’ CHUKA UROKO

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or organisations and businesses to be successful and sustainable, they need good corporate governance and the essential ingredients that will make that possible are transparency, accountability and communication, experts say.

As a system put in place by which organisations and businesses are directed and controlled, or how they are managed in the best interest of all stakeholders, short term, medium term and long term, corporate government is always difficult to build and, according to the experts, in Nigeria, it is twice as hard as anywhere else.

The experts, who gathered for the Association of Chartered Certified Accountants (ACCA) ‘Power of Connections Executive Breakfast Meeting’ in Lagos recently, point out that corporate governance starts with a personal commitment that will be

replicated in any organisation or association.

“For corporate governance to be sustainable, it must become a culture within any organisation. Developing a culture is at the heart of ensuring that everyone in an organisation behaves in the right way. Whatever achievement is gotten without ethics and corporate governance operates on borrowed time,” Taiwo Oyedele, West Africa Tax leader at PwC, notes in his opening remarks at the meeting.

The breakfast meeting was organised by ACCA in collaboration with Financial Reporting Council of Nigeria (FRCN) - the regulating agency of the Federal Government charged with promoting trade and investment in Nigeria by ensuring high quality financial reporting and promoting high standard of corporate governance in the public and private sectors.

The breakfast meeting was aimed to introduce the ACCA

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members to the new code of corporate governance and to highlight opportunities and challenges for the accounting profession, to drive an appreciation of, and an adherence to ethical conduct and practices.

Thomas Isibor, head of ACCA Nigeria, explains in his introductory speech that, in line with the theme of the meeting, ‘The Power of Connections,’ it also seeks to create wider opportunities for the accounting profession and ACCA members to set the standards that others follow and harness the power of connections.

“The world is going through changes, which are very rapid.

A few years ago the talk was on globalisation and then it evolved into a global village. Today, the talk is on localisation and social community. However, the issue of Trust remains constant and consistent.

“For the corporate and business, trust is about the sustainability and protection of busi@Businessdayng

ness. For individuals, it is about security, safety and data protection. Trust is sacred to ACCA and its members who are the heart of the business and economic management processes. ACCA supports any code of ethics, legislation, and code of corporate governance that enforces trust,” Isibor assures.

Daniel Asapokhai, executive secretary/CEO of FRCN, explains that the national code was about corporate governance, disclosing that the FRCN believes that true connections would create wider opportunities and move the world forward.

“The quality of corporate governance regulation affects the supply of capital to the real economy. It also influences how the capital is used by individual companies. Corporate governance regulation impacts key policy objectives of government such as the level of investment, productivity, growth, business sector dynamic and financial stability,” Asapokhai notes.

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FINANCIAL TIMES

World Business Newspaper JAMES POLITI IN WASHINGTON

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ay Powell is this week widely expected to announce the first cut in US interest rates for more than a decade, as the Federal Reserve chairman seeks an insurance policy against a weakening global outlook and rising trade tensions.

If he follows through with the move, it would be the first reduction in the federal funds rate since 2008, the aftermath of the global financial crisis. It would represent a remarkable reversal from the tightening cycle Mr Powell pursued last year.

Swap contracts imply that investors have priced in a more than 80 per cent chance of a 25 basis point cut at the Fed’s monetary policy meeting on Wednesday, with nearly 20 per cent likelihood of a larger cut.

This comes despite the fact that the US economy is experiencing its longest-running growth streak since at least 1854, enjoys near-record low unemployment and record-high equity markets.

Behind the move lie four pivots in emphasis and thinking among Fed officials, each of which have contributed to the central bank’s change of direction.

Risk assessment When Mr Powell signalled that the Fed was pausing its tightening cycle earlier this year, the bank stressed that its posture was one of patience. Any future

Powell prepares to launch pivotal interest rate cut Monetary policy pivot towards easing driven by four shifts in US Fed’s thinking

© FT montage

change in policy would be dictated by incoming data — if it turned out to be stronger than expected, the Fed might return to increasing rates, while if economic indicators weakened it

might resort to cuts.

Since then there have been some signs of a slowdown, with second-quarter growth coming in at 2.1 per cent, a big drop compared to 3.1 per cent in the

first quarter.

The GDP showed substantial softness in business investment.

But other parts of the economy are holding up. Consumption remains strong, as is the labour

market which experienced solid employment growth in June.

What has changed is that the Fed’s evaluation of the risks to the economy is weighing more heavily than it did before. As a result it is set to act pre-emptively because of fears of the impact that trade tensions could have, rather than as a reaction to the actual fallout.

Global factors US officials have always framed their thinking on trouble in the global economy — and markets — in terms of its spillover effects.

They could analyse and model the risks of contagion from problems in the rest of world, and make a determination as to the likely impact on the US economy. But there was always a sense that the US could operate as a distinct ecosystem.

By contrast, at a speech in Paris earlier this month, in his last public remarks before the upcoming FOMC meeting, Mr Powell showed that he is perhaps more attuned than his predecessors to the importance of “global factors”.

Hong Kong official warns protests EU decision on equivalence set to are hurting economy heighten UK post-Brexit fears Tear gas fired as territory hit by third consecutive day of mass demonstrations NICOLLE LIU, PRIMROSE RIORDAN AND JOE LEAHY IN HONG KONG

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senior Hong Kong government official has warned that mass demonstrations in the city over the past two months are taking their toll on its economy, as the Asian financial hub was hit by a third consecutive day of protests on Sunday.

Riot police on Sunday fired tear gas at protesters near Beijing’s main representative office in the city, a day after they engaged in some of the fiercest clashes yet seen in Hong Kong’s current political crisis in an outlying district of the territory.

Late into the night, police were pursuing protesters around the edge of Hong Kong’s financial district, home to global banks such as HSBC. The demonstrators responded by lighting fires and throwing objects. Some of the protesters were chased through streets crammed with expensive bars and restaurants, as shocked diners and tourists looked on.

Earlier, Paul Chan, Hong Kong’s finance secretary, wrote

in a blog post: “Many retail and catering operators have said that their recent business volume has dropped sharply.

“For foreign companies and tourists, Hong Kong seems to have become turbulent and insecure, affecting their desire to travel, do business and invest in Hong Kong.”

The protests, sparked by an extradition bill that would allow suspects to be sent to China for trial, have precipitated the territory’s worst political crisis since its handover from the UK to China in 1997.

While the government initially backed down by putting the extradition bill on hold, pro-democracy groups have criticised authorities for not agreeing to any further demands such as for an independent inquiry into police conduct.

They come at a sensitive moment for Hong Kong’s economy.

The territory, a financial and services centre, is grappling with the fallout from Beijing’s trade war with Washington as well as an economic slowdown in mainland China, which grew at its slowest pace in almost three decades in the second quarter. www.businessday.ng

Some market access rights of Canada, Brazil, Singapore, Argentina and Australia to be withdrawn JIM BRUNSDEN IN BRUSSELS

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russels will this week strip five countries of some market access rights, in a move set to heighten British fears that the system the City of London will rely on to serve EU customers after Brexit fails to offer a stable and permanent regime because it can be withdrawn.

According to a document seen by the Financial Times, the European Commission will deem that Canada, Brazil, Singapore, Argentina and Australia no longer regulate credit rating agencies as rigorously as the EU does, removing a status that made it possible for European banks to rely on those ratings.

The move marks the first time that such access rights, known as equivalence provisions, have ever been withdrawn, although some temporary permissions for Switzerland were allowed to lapse earlier this year.

About 40 equivalence provi-

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sions are scattered throughout different EU financial regulations and are intended to make sure that trading platforms, brokers and other companies based in non-EU financial centres can serve European clients, so long as they are subject to strong regulation and supervision. The provisions are used by more than 30 countries.

Valdis Dombrovskis, the EU commission vice-president in charge of financial regulation, told the FT that the decision on rating agencies set “some kind of a precedent for monitoring adherence”.

“We had extensive dialogue with those countries, so they knew there was an issue and they knew there may be consequences,” he said. “If they, during several years, chose not to update their legislation, then we had to take the decision to withdraw equivalence.”

Brussels has insisted the UK will have to rely on equivalence for market access after Brexit, when the financial sector will @Businessdayng

lose the right to seamlessly offer services across the single market. The EU rebuffed attempts

by Theresa May, the former UK prime minister, to secure a more comprehensive and permanent access regime.

Mr Dombrovskis signalled that UK fears were unfounded because the process showed how careful the bloc was about curtailing access, noting that the EU had waited six years to act. “We are doing so after a long process and actually a long negotiation which lasted several years,” he said.

The move relates to EU legislation from 2013 that reflects the bloc’s frustration that agencies such as Standard & Poor’s and Moody’s deepened the sovereign debt crisis by downgrading countries such as Greece and Portugal at sensitive moments.

The law restricts when such decisions can be published and sets ownership rules for rating agencies that are intended to prevent conflicts of interest. But few other countries have followed Europe’s lead.

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Investors plot their own extinction rebellion Boardrooms are told they must take action if the planet is to remain hospitable ATTRACTA MOONEY

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s Extinction Rebellion protesters blocked streets in cities from London to New York this spring, a quieter revolution was happening in the boardrooms of the world’s biggest businesses.

In polite but firm letters to company chairs and in hard-hitting conversations with directors of businesses from food producers to chemical-makers, longterm investors demanded that large groups drastically increase preparation for a low-carbon economy.

One such investor is Natasha Landell-Mills, head of stewardship at Sarasin & Partners, a British asset manager. Ms LandellMills has been tasked with leading engagements with chemical companies on behalf of Climate Action 100+, a group of investors with $33tn in assets.

“We are saying to these companies that [climate change is everyone’s] problem. Every company, and its directors, needs to think how they will be affected,” she says. “We view acting on climate change, given that boards know the impact on the world, as the duty of directors.”

For years, large parts of the global £85tn asset management industry have turned a blind eye to climate issues, favouring traditional investment goals.

This has changed as concern mounts over the financial risk, with pension funds and other clients pushing asset managers to help mitigate the risk of a less hospitable planet.

The Paris accord of 2015 — where 200 countries agreed to limit the rise in average global temperature to below 2C compared with pre-industrial levels — hardened investors’ focus.

Much of the initial effort has been on the oil, gas and coal sectors. Investors with $9.38tn in assets, including university endowment funds, pension funds and asset managers, have at least partially committed to divest from some fossil fuel groups.

Shareholders were also instrumental in pushing Royal Dutch Shell to set carbon emissions targets and to link these to executive pay last December, and they have lobbied for similar steps at other oil groups.

Now other sectors are in their sights.

Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change, a European membership body, says: “There is still a big focus on oil and gas but we need to pay even more attention to the demandside sector. We will see more work from our side on autos and on harder-to-decarbonise sectors like cement and steel.”

Ms Pfeifer is a member of the global steering committee for Climate Action 100+. The group, set up in late 2017, has widened investor focus to industry in general and is urging the world’s largest corporate greenhouse-gas emitters, including businesses such as Nestlé and Rolls-Royce, to take action.

Vicki Bakhshi, director of governance and sustainable investment at BMO Global Asset Management, the $259bn asset manager, says:“A lot of the media attention has been on the engagement with the oil and gas companies. But as investors, if we only speak to the coal, oil and gas companies, that won’t be enough.”

Not all investors worry about global warming but those that do fear that climate change could rapidly alter industries, whether through physical, regulatory or consumer change. The concern is that ill-prepared businesses will struggle to compete, so hitting returns.

A 2015 study, used to assess the global total stock of manageable assets at risk due to climate change, estimated that losses could range from $4.2tn to $43tn between now and the end of the century.

Andrew Howard, head of sustainable research at Schroders, the UK-listed asset manager, says: “Climate change in all its forms will affect every industry to a greater or lesser extent and that is becoming more understood.”

This month, a group of investors with $2tn in assets, which was brought together by Climate Action 100+ and the IIGCC, wrote to the chairmen of construction companies CRH, LafargeHolcim, HeidelbergCement and Saint-Gobain to outline the measures they expect companies to take.

These include cutting carbon emissions to “net zero” by 2050 and setting hard targets to reach that goal. The investors also want business to comply with the recommendations of the Task Force on Climate-related Financial Disclosures, a framework established by the international Financial Stability Board, as well as to assign specific responsibility for mitigating climate change to a board member or committee, and be transparent about any lobbying to water down action on global warming.

In other sectors, demands differ. Mike Everett, governance and stewardship director at Aberdeen Standard Investments, the UK asset manager gives the example of oil and gas companies, where the focus is often on tackling emissions, while a listed asset manager that takes a wrong step faces a risk to its reputation or a hit to its returns. www.businessday.ng

Police officers detain protesters during a demonstration in the centre of Moscow © AP

Police arrest 1,400 in crackdown on Moscow pro-democracy rally Hardline stance signals Kremlin’s recent tolerance of popular unrest has ended HENRY FOY IN MOSCOW

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ussian police detained almost 1,400 people in a violent and sustained crackdown on prodemocracy protesters in Moscow over the weekend, in a sign that the Kremlin’s recent tolerance of popular unrest has ended and it is seeking to quell growing opposition movements.

Riot police in helmets and body armour beat crowds of protesters with batons and dragged scores into waiting police trucks in a brutal response to a rally called to protest against a decision not to allow opposition candidates on the ballot for upcoming local elections in the country’s capital.

Arrests began earlier in the week with midnight raids on activists’ homes, and by Sunday morning 1,373 people had been detained, according to OVD-Info, a monitoring group — the highest number for a Russian demonstration for at least a decade.

Most were only temporarily detained but 150 remained in custody on Sunday afternoon.

The rally came after months of rising anger at President Vladimir

Putin, and following a series of decisions by the Kremlin to bow to protesters’ demands, including releasing investigative journalist Ivan Golunov in June after drugs charges against him were dropped.

But that tolerance appeared to have snapped on Saturday, with riot police barricading roads, beating back protesters trying to join the demonstration and hunting groups of activists as they retreated.

Mr Putin, who has not commented on the protest, chose Saturday to take a submarine dive in the Gulf of Finland as the crackdown began. The president’s Human Rights Council told local media on Sunday that it would prepare a report for him on the demonstration and the police action.

The US embassy in Moscow said the crackdown undermined citizens’ rights.

“Detention of over 1,000 peaceful protesters in Russia and use of disproportionate police force undermine rights of citizens to participate in the democratic process,” Andrea Kalan, an embassy spokeswoman, said on Twitter.

“Free elections and peaceful

assembly are guaranteed in the [Russian] constitution and Universal Declaration of Human Rights.”

Videos posted to social media websites showed scores of riot police bearing down on protesters before hitting them with batons, groups of officers snatching individuals who were watching the protest and beating away those that tried to prevent detentions.

Activists had called the rally outside Moscow’s city hall on Saturday afternoon to protest against the barring of opposition politicians from taking part in the September elections.

While the ballot is not critical in Russia’s wider political scene, it has become a lightning rod for wider dissent towards Mr Putin’s regime, whose popularity is sliding because of economic gloom, higher taxes and a rise in the retirement age.

Attempts to crush the demonstration began on Wednesday when opposition leader Alexei Navalny was sentenced to 30 days in prison for urging people to attend. Five more activists were detained on Saturday morning, hours before the protest began.

ICBC becomes troubled Chinese bank’s top shareholder China steps up support of struggling lenders as country’s biggest bank backs Jinzhou DON WEINLAND IN BEIJING

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hina’s biggest bank has stepped in to become the largest shareholder of a troubled Hong Kong-listed lender, the latest sign that the state is increasing its financial support for struggling banks across the country.

Industrial and Commercial Bank of China said on Sunday that one of its subsidiaries would invest up to Rmb3bn ($436m) in Bank of Jinzhou, taking a stake of about 10.82 per cent.

Investors have grown concerned over the health of the Chinese bank-

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ing system in recent weeks following the government takeover of Baoshang Bank, the first such incident in nearly two decades.

Large state institutions are often expected to swoop in to save troubled companies or banks if it is feared they present a larger risk to the financial system. ICBC said in a statement on Sunday that the investment in Jinzhou was intended to serve “national supply-side reform”.

The bailout of Baoshang, which was once controlled by kidnapped tycoon Xiao Jianhua, has left investors and money market traders @Businessdayng

questioning whether more troubled lenders, such as Jinzhou, would receive similar treatment.

“Talks of potential restructuring of Bank of Jinzhou has reignited contagion fears and concerns about the health of China’s financial system,” Barclays analysts said in a note to investors on Friday, before the ICBC investment was announced.

Based in China’s northeastern rust belt province of Liaoning, Bank of Jinzhou has not published 2018 annual results as required by disclosure rules in Hong Kong, where it listed in 2015.

Monday 29 July 2019

BUSINESS DAY

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Sajid Javid to release over £1bn for no-deal Brexit planning

Funding comes as Tory rebels prepare campaign to stop UK ‘crashing out’ of EU

ROBERT WRIGHT IN LONDON

T

he UK chancellor of the exchequer, Sajid Javid, is preparing to announce more than £1bn in increased funding for a no-deal Brexit after Michael Gove, the minister in charge of no-deal preparations, said such an exit was a “very real prospect”.

A person familiar with Mr Javid’s thinking said that, while the exact figure remained unclear, the extra funding for no-deal preparations would be “over £1bn”, adding substantially to the £4.2bn allocated to no-deal planning under Philip Hammond, the previous chancellor.

However, Tory MPs opposed to Boris Johnson’s stated commitment to leave the EU by October 31 with or without a deal, are stepping up their own preparations to try and prevent the UK crashing out without an agreement.

The government is working on the assumption that the UK will leave the EU on Halloween without a deal. That contrasts with Mr Johnson’s comments during his successful Conservative leadership campaign that such an exit was a “million-to-one chance”.

On the no-deal spending plans, Rishi Sunak, chief secretary to the Treasury, told Sky News that it was “absolutely right” to prepare for a no-deal Brexit.

“We must be able to leave on our own terms,” he said. “We can’t be subject to the decisions of other people.”

In a column for the Sunday Telegraph, Mr Javid said “all necessary funding” would be made available for no-deal Brexit planning. He said, among other initiatives, the money would help cover hiring a further 500 UK border force officers, help for Britons living abroad and support for small businesses and new infrastructure around ports.

The clearest signal of growing discontent over the direction of policy came from Ruth Davidson, the leader of the Scottish Conservatives.

“I don’t think the government should support a no-deal Brexit and, if it comes to it, I won’t support it,” Ms Davidson wrote in the Mail on Sunday.

However, a person familiar with the thinking of Conservative MPs organising opposition to a disruptive exit without a deal said efforts were under way to ensure a grouping of anti-no-deal figures was organised before parliament returns on September 3. The grouping is expected to mount a publicity campaign to counteract the government’s own campaign publicising its preparations. It is also expected to recruit a polling expert and to seek funding from business figures.

London Stock Exchange confirms $27bn Refinitiv takeover talks Acquisition will create exchanges and data powerhouse 18 months after sale by Thomson Reuters ARASH MASSOUDI, JAVIER ESPINOZA AND BRYCE ELDER IN LONDON AND JAMES FONTANELLA-KHAN IN NEW YORK

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he London Stock Exchange Group has confirmed that it is in advanced talks to buy Refinitiv in a $27bn deal that would turn it into a global exchanges and data powerhouse.

The statement came after discussions between the parties were revealed by the Financial Times earlier on Friday.

The acquisition of Refinitiv, carved out of Thomson Reuters only last year in a deal with Blackstone, would transform the LSE into the main rival to billionaire Michael Bloomberg’s financial news and data empire with annual combined revenues of more than £6bn.

In a statement issued after Friday midnight in London, the LSE said it would pay for the transaction entirely with the issuance of new shares. That will result in Refinitiv shareholders owning about 37 per cent of the combined group, though they will have less than 30

per cent of its voting rights.

The LSE closed on Friday with a market value of about £19.3bn and a net debt of about £1bn.

Refinitiv, whose Eikon terminals are the main rival on trading floors around financial centres to Bloomberg, was valued at $20bn last year. The group was bought by a private equity consortium led by Blackstone, which acquired a majority of the business from Thomson Reuters, the news and data group.

The consortium used a large amount of leverage to pay for the deal, with net debts at Refinitiv standing at about $12.5bn at the end of last year. At an enterprise value of $27bn, that means the LSE plans to issue about $14.5bn in new shares or more than £12bn to pay for the deal.

If consummated, the deal would instantly transform the LSE, which is best known for running stock exchanges and clearing derivatives, into a more diversified market data and analytics leader under David Schwimmer, the former Goldman Sachs banker. www.businessday.ng

Prime Minister Boris Johnson, left, and chancellor Sajid Javid during the cabinet meeting on Thursday © AFP

Danish delay threatens Nord Stream 2 progress Russia could miss deadline to open pipeline unless construction permit is soon approved NASTASSIA ASTRASHEUSKAYA AND HENRY FOY IN MOSCOW

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ussia could miss the deadline to begin pumping gas to Europe through the controversial Nord Stream 2 gas pipeline, unless Denmark approves construction in its waters in the next few weeks.

The €9.5bn link that will carry gas from Kremlin-controlled Gazprom to Germany has received authorisation from several of the Baltic Sea nations whose waters it will cross, but not Denmark. Permit applications with the Danish Energy Agency for two different proposed routes have been pending for months, throwing the planned year-end launch date into doubt.

“If we do not get approval from the Danish in the next few weeks then we will not make the deadline,” a senior official close to Nord Stream 2 told the Financial Times. A second source close to the project said the next month would be critical. “It is almost August and that creates concern if not panic,” the person said.

Any delay would be another blow

for a project designed to double the capacity of the first Nord Stream pipeline, fully launched in 2012.

Nord Stream 2 is designed to allow Gazprom to reroute the bulk of the gas volumes so far running through Ukraine. The launch of the pipeline was due to coincide with the expiration of an existing gas transit contract through Ukraine on December 31.

However, Poland and the Baltic states have sought to block construction of the export pipeline, saying it will increase Europe’s reliance on Russia, while President Donald’s Trump administration in Washington has threatened to sanction the project. Moscow insists the link it is a purely economic venture.

Nord Stream 2 is fully owned by Gazprom but part-financed by five European energy companies: Shell, Engie, OMV, Wintershall and Uniper.

Viktor Zubkov, head of Gazprom’s board of directors, insisted last week that the company’s timeline remained on track. “[Denmark] should give us the permit in October, and then we can complete by the end of the year the imperative project that is commercial and that Germany

supports,” he told Interfax, a news agency.

Alexei Miller, Gazprom chief executive, said last month that the 130km Danish leg of the pipeline would take a maximum of five weeks to complete.

But experts say that testing and filling the pipeline would lengthen the process. “Not only do they have to lay two strings of the pipeline, each of which takes about a month plus weeks of testing and commissioning, but also take into account the decreasing pipeline laying speed due to worsening weather conditions in the Baltic . . . and possible force majeure situations,” said Danila Bochkarev, senior fellow at the Brussels-based East-West Institute think-tank.

He noted that Gazprom had been pumping record volumes of gas into underground storage tanks in Europe, which signalled that the company would enter the peak demand period without either the Ukraine transit route or Nordstream 2. “The company is preparing for the worst but still trying to ensure customers are supplied throughout the winter,” Mr Bochkarev said.

Pfizer and Mylan set to merge off-patent drugs businesses Stock deal will create large seller of products including former blockbusters Lipitor and Viagra HANNAH KUCHLER IN DETROIT AND JAMES FONTANELLA-KHAN IN NEW YORK

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fizer is expected to announce on Monday that it will combine its offpatent drug business with Mylan, the generics drugmaker with a market value of $9.5bn, according to people familiar with the matter.

The US drugmaker is expected to spin-off the new unit to create a much larger seller of off-patent and generic medicines, including former blockbuster brands Lipitor and Viagra.

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Mylan shareholders will hold just over 40 per cent of the new venture, and Pfizer would also receive close to $12bn in proceeds from the sale of debt, the people said. The deal is expected to be all-stock.

The plans would also see Mylan’s chief executive Heather Bresch depart, after leading the company for seven years.

Big pharma has been increasingly turning to mergers and acquisitions in recent years to either sell non-core assets or buy innovative drugmakers as their own products are close to lose patent protection. All @Businessdayng

major companies are focusing on becoming one of the top three in whatever category they operate.

Pfizer’s transaction with Mylan is the latest in a wave of large pharma and healthcare deals this year, including BristolMyers Squibb’s $90bn acquisition of biotech Celgene, Roche’s $4.8bn takeover of gene therapy company Spark Therapeutics and Johnson & Johnson’s $3.4bn acquisition of surgical robotics specialist Auris Health. AbbVie last month signalled its intention to buy Allergan, the maker of Botox, for $63bn.

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ANALYSIS

FT

The hidden hell of hot-desking is much worse than you think

Penny-pinching ploy that casts people out to the noisy, chaotic wasteland of shared work spots PILITA CLARK

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ew aspects of office life are more dispiriting than hotdesking, the penny-pinching ploy that strips people of their own desk and casts them out to the noisy, chaotic wasteland of shared work spots.

But not that long ago, I discovered an even more troubling side to this irksome practice.

It happened when I was invited to hear an HR boss from a large global company give a private talk in London about the benefits of “agile working” in her office. I accepted at once, keen to hear more about the baffling concept of “agile”, an adjective that has morphed into a corporate jargon noun with a multitude of meanings, especially in the world of HR. There, fans use it to describe a way of working that empowers employees to work when and where they feel like it as long as they get stuff done: at home, in cafés, anywhere around the office. But it can also save on office space and I have long had a lurking suspicion that for many companies, going agile simply means hot-desking.

The woman I went to hear confirmed that personal desks had

indeed disappeared at her firm after an office move, as is so often the case.

A small alarm went off in my head as she began to list the alleged benefits of ditching dedicated desks: employees could “work fast and more agilely” to give a “better experience to customers”. The alarm grew louder when she revealed the phoney slogan her company had used to describe the new system. “We didn’t call it agile working, we called it ‘fresh working’.” Most regrettable of all, though, were signs of a mentality I can only describe as correctional.

Hot-desking apparently goes cold when workers try to cling on to a desk by sticking a family photo on it or draping a coat over a chair, moves she described as “signs of encampment”.

Rules had been brought in to stem such practices. Anyone away from their desk for more than a couple of hours was supposed to “clean and clear” it. When the coat problem had worsened in winter, “we had to have facilities going around with a gentle reminder”.

Disciplinary action was also taken when workers grumbled about the loss of roomy personal cupboards or shelves to stash their stationery and work papers.

Boris Johnson isn’t Donald Trump, he’s Ronald Reagan The UK prime minister’s sunny optimism brings to mind ‘Morning in America’ FRANK LUNTZ

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rom the moment the British political elite realised that Boris Johnson might end up running their country, there has been a mad scrum by politicians and journalists to undermine his reputation and his career. Their latest line of attack is to say he is just like US president Donald Trump.

Having known the new UK PM on-and-off for more than three decades, and having observed Mr Trump during those same years, the comparison is laughable, inaccurate, and malicious.

Let’s start with personal presentation. One has been on first name terms with the entire UK since serving as London mayor. Nobody in America would dare call the other “Donald”.

One rattles off lines from great literature and has the vocabulary of an Oxford don. The other, not so much.

True, both individuals have personalities so large that they overshadow their policies. Both have taken positions that contradict previously drawn red lines. And both have survived and thrived politically despite the doom and gloom of their detractors.

But that’s where the similarities end.

I have conducted focus groups in the US and UK for 30 years. Mr Johnson is singularly the most difficult politician to label or categorise because there really isn’t anyone like him on either side of the Atlantic.

Trump voters say the president speaks like them and for them. Nobody in the UK thinks Mr Johnson

speaks like they do, and that’s his advantage. They think he’s better — better than them, and better than the career politicians.

Politically, both men appeal to populist-leaning voters, but again, that’s where the similarity ends.

Whereas Mr Trump is visceral and rooted in the here-and-now, Mr Johnson is intellectual, effortlessly traversing history to make his case.

And while Mr Johnson is not above the occasional attack or insult (which, as often as not, backfires), his message has a much more positive, hopeful, uplifting tone. He is one of the most effective speakers of our time.

The correct US analogue for Boris Johnson is not Donald Trump. It’s Ronald Reagan.

The limitless optimism that Reagan spoke of in the 1980s as “Morning in America” could just as easily be articulated today by Mr Johnson.

Much of his Brexit messaging wasn’t anti-Europe. It was pro-UK. He talked about restoring the strength and confidence that last existed when Reagan and Margaret Thatcher together ruled the free world. And as he himself has said, if he can rise as far as he’s come, so can anyone.

On a personal level, I have never met someone in politics who is so obviously talented and surprisingly humble, yet so underestimated and dismissed by his critics because he doesn’t conform to their expectations. There is only one Boris Johnson. He is the same in private as he is in public — and that hasn’t changed since we met during our days at Oxford. www.businessday.ng

Citigroup: pressure builds for strategic shift The bank’s shares trail its two biggest rivals, prompting calls for a change in direction. But can CEO Mike Corbat deliver?

ROBERT ARMSTRONG IN NEW YORK

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ike Corbat took over as chief executive of Citigroup just as the dust from the financial crisis was settling. Even then, in 2012, it was clear that the post-crisis landscape in the US would be dominated by three huge, diversified banks, each with big investment banking, commercial and retail operations.

JPMorgan Chase, Bank of America and Citi had all put the bulk of their crisis-era mergers and restructurings behind them.

Markets and the economy were robust. At the beginning of that year, JPMorgan had a market value of $133bn and Bank of America $59bn. Citi sat between the two, at $83bn.

Since then, the first two banks have seen an increase in value of roughly $225bn each. Citi’s increase? Under $80bn.

Despite a recovery in its share price this year from a brutal 2018, and better performance in key businesses, that yawning gap in long-term share performance is a stark reminder of how much remains to be done at Citigroup.

A dissident group of large investors, analysts and even some inside the bank say that slowand-steady improvement is not enough, and that Mr Corbat and Citi’s board need to be bolder in changing the bank’s strategic direction.

That sentiment has become more urgent since the arrival of ValueAct — the activist investor behind shake-ups at large companies including Microsoft — which began building up its stake of more than $2bn in Citi shares last year.

“Is it [the] business model, execution or both? It can’t be the market not understanding all these years,” says one former senior Citi executive of the valuation gap. “Either they are not getting the job done, or the model is broken. It’s one or the other.”

Mr Corbat, 59, a Citi lifer, re-

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ceives good marks from investors and executives for leading the bank through a period of recovery and stabilisation, despite some missed targets along the way. He has taken out costs, made peace with regulators and returned capital to shareholders.

Citi, unlike its rivals, was still exiting businesses as late as 2016, which the bank’s defenders say helps explains the performance gap. Yet even after epic rounds of post-crisis divestments, Citi remains an unusual collection of businesses, some dominant, others subscale and in need of investment, and many with little strategic connection to one another. It begs the question of whether it is time to sell some, and double down on others.

“There is always a good reason to stay in business X, Y or Z,” says a senior figure at a top 10 Citi investor. But the argument for keeping the current collection “relies on the notion that those businesses can all be run optimally. Citi hasn’t shown that yet.”

Among the businesses seen, by investors, as ripe for restructuring or offloading are the equity sales and trading business, and the Mexican and Asian retail operations.

“There’s a disappointment the company hasn’t got higher ambitions,” says one person involved in the bank’s strategic planning, citing the company’s tendency to prioritise incremental targets over investing in, for example, technology to fuel future growth. Mr Corbat is “not trying to be a hero, he’s just trying not to screw it up”.

The pressure on Mr Corbat to act is intensifying. Even if the bank hits its 2020 target for return on tangible common equity of 13.5 per cent — and investors and analysts increasingly believe it can — that is still far short of JPMorgan’s 20 per cent and BofA’s 16 per cent.

Just hitting the 2020 targets is unlikely to satisfy ValueAct. Though the fund’s $2.2bn stake is only just over 1 per cent of the bank’s total, it has a reputation for rallying big, institutional shareholders behind its ideas for @Businessdayng

companies from Adobe to 21st Century Fox. At Microsoft, where ValueAct owned less than 1 per cent of the shares, it is credited by many for precipitating the resignation of chief executive Steve Ballmer.

ValueAct cannot take a seat on Citi’s board as long as it has a representative on the board of Alliance Data Systems, a Citi competitor but the fund has an “information sharing agreement” with the bank giving it access to its books and board members.

A 2018 ValueAct letter to investors praised Citi’s core institutional banking operations and management, but said that in the future “the winners and losers [in banking] will be decided by strategic focus, customer centric innovation and capital allocation, as opposed to product breadth”.

The enthusiasm for a “tight focus on core franchises” is not an obvious fit with Citi today. The question is whether ValueAct will eventually demand that Citi more closely follow this model. ValueAct declined to comment.

Citi’s asset mix makes it a “freak of nature”, says Tom Brown, an investor and analyst. This is largely a function of its history.

Founded in New York 200 years ago, state regulations limited the bank’s ability to open branches elsewhere until the 1980s. It focused instead on its big corporate customers and international operations. This helps explain both the bank’s global character and its small US retail footprint, with $180bn in domestic deposits, just over a quarter of the amount at JPMorgan and BofA. The bank’s structure changed radically when it merged with Sandy Weill’s financial conglomerate Travellers in 1998. This brought together investment banking (Salomon Brothers, which Travellers had bought a year earlier and where Mr Corbat had his start), wealth management (Smith Barney) and insurance (Travellers).

It also brought an attitude one Citi alumnus describes not at all admiringly: “They were cowboy entrepreneurs.”

BD Money

Monday 29 July 2019

BUSINESS DAY

PERSONAL FINANCE

Investing

COVER

Policy

Easy ways to solve 10 biggest money problems people have (2)

What NSE’s 5% VAT charges mean for your stock investment

Want to buy a car? Here are 8 reasons why a Toyota Corolla is a smart buy

Will Buhari’s announcement of ministers revive the Nigerian equity market?

A BD money survey revealed eight reasons why a 2005 Toyota Corolla model is one of the best options available for a mid-career professional looking to buy a car that will be more of an asset than a liability.

Prior to the February 2019 general election, analysts positioned that the performance of the Nigerian equity market post-election is largely dependent on whoever wins the presidential poll.

Money makes the world go around but earth scientists might disagree. Notwithstanding, money problems are part of what everyone experiences at some point in time.

Following the expiration of the Value Added Tax (VAT) waiver on commissions of transactions done on the Nigerian Stock Exchange (NSE) July 24, 2019...

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Monday 29 July 2019

BUSINESS DAY

Personal Finance Easy ways to solve 10 biggest money problems people have (2)

SEGUN ADAMS

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oney makes the world go around but earth scientists might disagree. Notwithstanding, money problems are part of what everyone experiences at some point in time.

Whether it is making more cash or spending wisely, money is such a big deal and rightly so. People, however, do not necessarily have to earn more to afford things they want.

Understanding typical money problems and knowing how to address them might save you from a headache when needs arise.

In a recently published article under a similar title, BusinessDay identified four problems confronting people: setting up a financial plan, paying (children’s) school fees, buying a car, and saving too little or nothing.

Although the money problems confronting people are not limited to the ones addressed in the article, the other set of problems discussed below are pertinent.

Planning a wedding Wedding ceremonies have a sentiment value in the Nigerian society-as in almost every other part of the world.

In Nigeria however, the ceremony which lasts anything from a day to weeks, depending on the different types of white and traditional weddings, could cost up to N10million-N15 million.

Intending couples as a result often fuss a lot about balancing pocket economy with throwing the best wedding party in town.

Financial advisers often say couples looking to get married should not break the bank for a wedding. People carry unnecessary debt burden into their new families after borrowing huge sums for a wedding they couldn’t afford.

If you do not have enough to fund the wedding of your dream and your friends and family are not covering the shortfall, take time to draw a budget that would allow you make the most of what you have.

Sorry, but it is ill-advised to jeopardise your long-term financial status for short term benefits. You can go ahead with a wedding you can afford and throw a bigger one when your bank account becomes fat.

Settling debt In handling a debt situation, it is important to understand the source of the debt; is

it a result of an inability to manage your income or the debt was incurred due to some other reasons.

If you honestly think the debt situation could have been avoided if you had made proper use of your income then you should work on your budgeting skills so you avoid a reoccurrence.

To pay off the amount owed, you would need to draw a budget so you have an idea of your ability to meet your obligation. Also, in instances where the money is owed to several sources, you should try to settle the more expensive debts first i.e the ones with higher interest.

Where you don’t earn enough to offset the loan within the agreed-upon period, you could borrow from elsewhere at a lower rate to pay off the expensive debt. It would be akin to buying a cheaper debt.

Otherwise, cut down some of your monthly expenses, sell old stuff you no longer need, get a side job then pay more than the minimum amount agreed on to pay off the debt faster.

Paying for rent In Nigeria jokes about tenants running from their landlords over non-payment of rent abound. Often the jokes are funny because many people can relate.

Since shelter is a basic need, people have to get a roof over their head- whether it is their own houses or a rented apart-

ment.

Given Nigeria’s housing deficit estimated by the Presidency to be of about 20 million houses in late 2018, it is a safe bet that many Nigerian live in rented buildings. The problem is many people do not plan ahead of time to pay their rental fees.

Unless you are living in an apartment that is beyond your means, setting aside 17 percent of your monthly income throughout a year covers your rent.

If you kept 20 percent of your monthly income you would have the money for rent in 10 months. The assumption is that the cost of your apartment can be footed with two months’ worth of income- the benchmark many experts advise.

You could also exploit products from Fintech companies that allow you to save in a lock-down account.

Planning for emergencies One sure thing in life is that there would be events you never plan for. It might be an opportunity to benefit from something that springs at you or a need that arises when you least expect. One would need to be prepared for these uncertainties regardless.

Setting up an emergency fund is easier than you thought. All it requires is deciding an emergency-fund saving goal, for instance, some people try to save up the equivalent of three months of expenses which is different from their

main savings.

You should endeavour to keep the emergency fund within reach so you can use it to solve problems in real-time.

If you are at risk of being confronted by much bigger uncertain events which might cost a lot, then you could consider taking up an insurance policy as a safe bet.

Starting a Small Business Coming up with a viable business idea can be very exciting. You have discovered a way to make money while solving other people’s problems, but starting requires capital which you might not have.

In short, you need money to make money, and this a quite a problem! Common ways to pool money for your business are from friends and family and loans from banks.

But a creative way to solve this might be through crowdfunding which is simply raising small amounts of money from a large number of people typically via the Internet.

You should also explore options that allow getting capital in exchange for sharing ownership with the provider of the fund. Although this type of capital costs more than debt, this approach might require little or next to nothing from you in setting up the business.

Retirement At some point in our lives, we all plan to stop working and take long vacations to the Bahamas or somewhere as nice.

Planning one’s retirement goes beyond having a Retirement Savings Account.

To retire successfully the first step is to determine when you want to retire. Some of the factors that aid decided the appropriate timing include one’s health, financial status, terms of employment etc.

You must determine ahead what your financial need in retirement would be. For instance, some retirees would still be responsible for paying children’s school fees, rent and have dependents to cater for.

Once you have a fair idea, you must also take time to ascertain the sources of the income you can expect in retirement. It could be from Retirement Savings Account, earlier investment in stocks, bonds, real estate and other asset classes.

One could also decide what kind of activities to engage in during retirement to stay fit and also make some money in the process.

Retirees can choose to run a business, outsource their talents as consultants or freelancers.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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@Businessdayng

Monday 29 July 2019

BUSINESS DAY

67

Investing What NSE’s 5% VAT charges mean for your stock investment OLUWASEGUN OLAKOYENIKAN

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ollowing the expiration of the Value Added Tax (VAT) waiver on commissions of transactions done on the Nigerian Stock Exchange (NSE) July 24, 2019, the domestic bourse notified dealing members and other players in the nation’s capital market of a reintroduction of the VAT charges.

The 5-year VAT exemption order, which became effective July 25, 2014, was granted in 2014 by the then Coordinating Minister of the Economy and Honourable Minister of Finance, Ngozi Okonjo-Iweala, in an attempt to encourage investments and resuscitate the Nigerian capital market by reducing the cost of transactions for investors.

This waived VAT on commissions was earned on traded values of shares and payable to the apex regulator of Nigeria’s capital market, the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange and the Central Securities Clearing System (CSCS).

But with the new development, it is important for the investing public within the nation and across the world to take note of the implications of a reintroduced 5 percent VAT on commissions just before any further extensions from the Federal Government.

When an order is initiated by an investor on the NSE either to Buy or Sell some units of a particular company’s stock, some trading fees are levied on the investor depending on the kind of transaction requested by the individual.

These fees comprise the NSE Fee, CSCS Fee, Trade Alert Fee, SEC Fee, Stamp Duty and Brokerage Commission earned by the stockbroking firms mandated to execute a transaction.

No NSE fee or CSCS fee is charged on a Buy order, according to information obtained from the NSE. However, N4 is billed on each transaction as Trade Alert Fee, stockbroking firms are permitted to charge between 0.75 - 1.35 percent of the traded value of shares, while 0.3 percent and 0.075 percent of the worth of your transaction are deducted as SEC Fee and Stamp Duty, respectively.

On the flipside, no SEC fee is levied on any Sell order on the NSE. However, 0.3 percent of the traded value of shares is charged each as NSE and CSCS Fees with Brokerage Commission, Trade

Alert and Stamp Duty Fees retaining the same rates as obtained for share purchase.

The expiration of the 5 percent VAT waiver means for a broker that charges 1.35 percent of transaction value, an additional 5 percent of brokerage commission (5% of 1.35%) would be levied on the investor, bringing the payable rates on brokerage to 1.42 percent regardless

“

of whether you Buy or Sell stocks.

The VAT is not only payable on commissions earned by dealing members (brokers) of the Exchange but also payable to the NSE and CSCS, according to the NSE. This implies by NSE trading structure, no VAT is charged on NSE and CSCS Fees from the Buy side. But for the Sell side, 5 percent of NSE Fee (5% of 0.3%) and an additional 5 percent of

Anytime you attempt to buy some shares of a company’s stock, N4 would be charged as Trade Alert Fee, 0.3 percent as SEC Fee, 0.075 percent as Stamp Duty, while 1.42 percent (if your broker charges 1.35%) on Brokerage Commission including VAT www.businessday.ng

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CSCS Fee (5% of 0.3%) are billed for every transaction.

In simple terms, anytime you attempt to buy some shares of a company’s stock, N4 would be charged as Trade Alert Fee, 0.3 percent as SEC Fee, 0.075 percent as Stamp Duty, while 1.42 percent (if your broker charges 1.35%) on Brokerage Commission including VAT. But when you attempt to sell your holdings in a listed firm, N4 would also be charged as Trade Alert Fee, 0.075 percent as Stamp Duty, 0.32 percent each for NSE and CSCS Fees including VAT, and 1.42 percent (if your broker charges 1.35%) on Brokerage Commission including VAT.

By BusinessDay calculations, investors would pay 1.795 percent of their trade value on NSE charges for every Buy transaction excluding N4 Trade Alert Fee from 1.725 percent, while 2.135 percent would be paid for every Sell transaction as against 2.025 percent charged earlier. This is based on the assumption that the broker charges 1.35 percent for Brokerage Commission.

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Monday 29 July 2019

BUSINESS DAY

Monday 29 July 2019

BUSINESS DAY

Cover Story

Want to buy a car? Here are 8 reasons why a Toyota Corolla is a smart buy Lolade Akinmurele, Israel Odubola, Segun Adams

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BD money survey revealed eight reasons why a 2005 Toyota Corolla model is one of the best options available for a mid-career professional looking to buy a car that will be more of an asset than a liability.

Affordability A foreign used 2005 Toyota Corolla costs between N1.5 million and N1.7 million, depending on the car’s mileage and condition of the engine, according to data obtained from Cars45, a retail car dealership.

Given the prevailing economic climate in Nigeria, a car that costs less than N2 million is attractive.

Fuel economy The average Nigerian is very sensitive to petrol prices and has a preference for automobiles that consume less fuel.

Spending less to fuel your car is especially important with the array of expenses jostling for your cash.

Reducing fuel consumption also reduces carbon emissions, which is important to environmentally conscious auto buyers.

The Toyota Corolla has consistently provided a fuel-efficient vehicle for drivers. So, individuals who want to pay less at the pump or who just want to do their part to reduce fuel use, Corolla is a sold choice.

Impressive resale value Most people buy their first cars for very practical reasons. Fancy is not really a consideration for first time buyers and as such there could be an inclination towards obtaining a second-hand automobile.

Toyota Corolla has a strong record of retaining its resale value and as such makes for a good buy for many Nigerians.

Toyota vehicles have good frames that are resilient even when ply Nigerian roads infamous for potholes and dare-devil commercial bus drivers.

According to Edmunds, an American online resource for automotive information, Toyota had the top non-luxury resale value among automakers.

The automobile expert noted that Toyota has 53.8 percent residual value after five years.

Furthermore, the Virginia-based National Automobile Dealer Association (NADA) retained 56.8 percent of its value for its 2009 to 2013 model years. For car consumers who are buying with an eye toward the future.

Corolla is a great bet for getting some of your money back at trade-in or resale.

Reliability and low maintenance costs This quality, above all others, is likely what keeps auto consumers coming back to purchase the car type. Toyota Corolla typically has very few recalls or reported problems. Many owners report that, other than changing the oil and replacing the spark plugs and brake pads, they have few repair costs.

Another interesting thing about the brand is that obtaining the spare-parts is not difficult or expensive.

Corolla is rugged car that fits the bad state of Nigeria’s road networks without develop big faults.

For value-conscious consumers, purchasing a vehicle that won’t let you down and doesn’t have expensive repair needs is a must. The Corolla has decades.

Value Toyota guarantees value for every kobo spent. Even though Corolla are somehow inex-

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pensive, they are not cut-rate vehicles.

Toyota designers squeeze every ounce of value they can into Corolla, using quality upholstery and interior materials, adding on features and options usually found in expensive vehicles, and ensuring that the car is bullet-proof in terms of reliability.

The end result is a vehicle that offers users much for a very competitive.

Simplicity In an era where many vehicle dashboards are beginning to look like control panels for stealth bombers, the Corolla keeps it simple.

That’s not to say the Corolla is bereft of technology but new Corollas have many great electronic safety and entertainment features.

Where the Corolla differs from its rivals is in the user-friendliness of its tech options. Corolla interior take a minimalist approach to design, keeping controls and unnecessary bells and whistles to a minimum.

Whether you are a banker or a fashion designer, this car would match your need. The end result is practical technology that is easy to use and helpful to the driver and passengers.

Safety The Corollas are well known for being safe.

For instance, the 2016 model has a perfect fivestar overall crash safety test certified the American Traffic Safety Administration.

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The American Institute for Highway Safety gives Corolla its highest destination of good for nearly all crash test evaluations.

This is not the first time Corolla has emerged top, and most likely won’t be the last. Families can trust the Toyota Corolla to help them arrive safely at their destination, wherever it may be.

The Corolla Reputation The Toyota Corolla made its debut in 1966. The Toyota corporate brass had just two missions for designers of the vehicle – make it dependable and inexpensive.

Toyota designers did both, allowing the vehicle compete outside Japan in United States and other markets.

The car brand first took the crown for being the world’s best-selling car in 1974 and has regularly claimed the first spot many times since then, and Toyota continues to improve the Corolla with each design generation, while keeping the core values that fuelled the Corolla’s success in mind.

In 2018, Corolla sold 1.03 million units, up 2 percent from the previous year. The Corolla’s biggest markets are in the China and United States, accounting for 84 combined percent share

69

Five investment nuggets from Warren Buffet investors should know OLUFIKAYO OWOEYE

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merican investor Warren Buffett writes an open letter to Berkshire Hathaway shareholders, an American multinational conglomerate which he chairs every year.

The company owns nearly 10percent stakes in fortune companies such as soft drink giant, Coca-Cola, and Wells Fargo, an American multinational financial services company, just to mention a few.

Over the last 40 years, his letters have become an annual ritual read across the investing world, providing insight into how the doyen of investing and his team think about everything from investment strategy to stock ownership to company culture.

Here are 5 of the most important lessons from Berkshire Hathaway’s shareholder letters, they form wisdom nuggets from a man widely regarded to be the greatest investor in history.

Buy stocks in businesses that you would like to own yourself Warren advises investors to buy stocks as the owner and not as a speculator. According to Warren, when many investors buy stock, they become price-conscious, constantly checking the ticker to see if the prices are up or down From Buffett’s perspective, buying a stock should follow the same kind of rigorous analysis as buying a business. “If you are not willing to own a stock for ten years, do not even think about owning it for ten minutes,” he wrote in his 1996 letter.

Rather than getting too caught up in the web of price movement, Buffett says investors should think of buying into a company that makes a great product, with a strong competitive advantage, and can provide investors with consistent returns over the long-term.

“Whenever Charlie and I buy common stocks for Berkshire’s insurance companies… we approach the transaction as if we were buying into private business,” he wrote in his 1987 letter, “We look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale.”

Ignore short-term movements in stock prices For many stock investors, price is

Warren Buffet

“

Don’t choose businesses requiring knowledge outside your circle of competence, at least not until you have acquired sufficient knowledge to do so

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everything and the maxim is buy low, sell high Buffett disagrees completely with this approach. And with Berkshire’s portfolio, he is adamant that the price of a stock is one of the least important factors to consider when deciding whether to buy or sell shares in a particular company.

The company’s operations and underlying value are the only things that matter, to Buffett. That’s because the price of a stock, on any given day, is mostly dictated by the forces of demand and supply.

For Buffett, investors succeed when they can ignore these forces and his upand-down emotional states. Instead, they look at whether the companies that they are invested in are profitable, returning dividends to investors, maintaining high product quality, and so on. Eventually, Buffett says, the market will catch up and reward those companies.

Be fearful when others are greedy, and greedy when others are fearful During a market downturn, Buffett

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believes that savvy investors should continue looking at the fundamental value of companies, seeking companies that can sustain their competitive advantage for a long time, and investing with an owner’s mentality.

If investors can do that, they will naturally tend to go in the opposite direction of the crowd to “be fearful when others are greedy and greedy only when others are fearful,” as he wrote in 2004.

His reasoning is simple when others are fearful, prices go down, but prices are only likely to remain low in the short term.

In the long term, Buffett is bullish on any business that creates great products, has great management, and offers great competitive advantages.

For example, piling cash into distressed American companies like General Electric, Goldman Sachs, and Bank of America during 2008 financial crisis, Buffett reportedly made $10bn by 2013.

Don’t invest in businesses that are too complex to fully understand Relying on his “circle of competence” belief, Buffett advice that investors “never invest in a business you cannot understand.”

In other words, don’t choose businesses requiring knowledge outside your circle of competence, at least not until you have acquired sufficient knowledge to do so.

Buffett lumps factors affecting a business into categories: the knowable, the unknowable, the important and the unimportant.

If you don’t have sufficient knowledge about a company, it becomes harder to hold long-term investments and predict what the company (and its industry) will look like a few years down the line.

Stock option as executive compensation Buffett has several issues with the practice of CEOs granting themselves stock options as compensation.

There’s the problem of dilution as this increases the number of shares of a company, diluting the existing pool of shareholders and reducing the value of shareholders’ current holdings, Buffett’s beliefs that managers should work to increase the value of his share of the company.

Then there’s the corporate malfeasance possible when executives with a better understanding of their company’s value (or lack thereof) can leverage their options into undeserved wealth.

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70

Monday 29 July 2019

BUSINESS DAY

Policy

Will Buhari’s announcement of ministers revive the Nigerian equity market? rior to the February 2019 general election, analysts positioned that the performance of the Nigerian equity market post-election is largely dependent on whoever wins the presidential poll.

They maintained that the domestic bourse might rally if incumbent and All Progressive Congress (APC) candidate, Muhammadu Buhari wins, and would rally more if the former vice president and presidential candidate of the People’s Democratic Party (PDP) Atiku Abubakar emerge victorious because his policies were perceived marketoriented and investor-friendly.

Since the former military leader was reelected for a final four-year term, the Nigerian equity market continues to bleed over policy uncertainty, growth challenge and dwindling profit margin of listed companies.

Many posited that the delay of the former military leader to swiftly constitute cabinet also contributed to dampened investor sentiment.

But now that Buhari’s ministerial nominees are being confirmed by the Nigerian

mance either way.

Ologbon-Ori Taiwo, Lead Research Analyst at Cashcraft Capital Market friendly policies are part of the factors that drive bargain appetite towards investment in equities, not cabinet really. Once economic policies are good and the economy is responding, the market would react.

Cabinets are just to implement government policies. If you have the best brain in your cabinet without market-friendly policies, the market would not move. A cursory view of newly announced ministers revealed nothing spectacular but pure politics. Meaning that there would be continuity of old policies.

Chukwuemeka Nwagwu, Analyst at Axe Capital Limited Investor confidence is very low in the market right now and that is the cause of the wide disparity. Some analysts will say when the President appoints his minister the market will push up but I do not see any significant change in the current trend even if ministers are appointed.

It is only when the Federal Government are able to initiate policies that investors consider business friendly that the market can move or otherwise reduce the rates and frequency of fixed income instruments issued.

senate, will this help trigger investor appetite for naira stocks? BusinessDay consulted four analysts to get their opinion, and here are their comments.

Jerry Nnebue, Analyst at Cardinal Stone Partners Although stock market rebounded following the release of names of ministerial appointees, this news in isolation is unlikely to sustain an extended rally in near term. We expect market watchers to be more concerned about reforms and policy initiatives that could be enacted to spur growth forward.

In the interim, IMF’s upward review of its growth expectation for Nigeria is positive for equities although the quality of corporate earnings is capable of swaying market perfor-

Ambrose Omoridon Chief Research Officer, InvestData Consulting Limited Looking at the ministerial list, you cannot find a good technocrat or academician, they are all politicians. They might not be able to deliver effective policies that will boost the economy, and this problem for monetary authorities as a blend of both is needed to grow the economy.

The economy is not making significant progress as key macroeconomic indices remain muted. Moreover, the few earnings that have been announced so far are unimpressive and this is a sign to investors that GDP figure for the second quarter might turn out poor. This explains why investors show disinterest for naira stocks.

Israel Odubola

P

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BUSINESS DAY

71

Data

Federal government Eurobond Yields on Eurobonds fell by 0.13 percentage points week on week from an average of 6.26 percent when the market closed last week to 6.13 percent as buying interest improved in Nigeria’s Sovereign Eurobonds.

Corporate Eurobond For the corporate euro-debt market, yield across the tickers rose 0.19 percent from 6.25 percent last week to 6.06 percent.

FirstBank Eurobond matured last week www.businessday.ng

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BUSINESS DAY

Equities Chilli pepper: How processing to specification can secure deals with food companies Temitayo Ayetoto

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gri-businesses wondering why securing chillipepper supply deals with food processing companies in Nigeria come as a hassle might need to shift their focus to the required processing specification to succeed in their bid, experts say. There are value-addition opportunities that are being undertapped in the chilli-pepper sphere simply because farmers, aggregators and processors often ignore certain health standards and focus excessively on the volume of production and supply.

It is an error that edges local competitors out of demand, as food processing companies typically import the majority of their herbs and spices. Nigeria’s noodle’s market, for instance, has De United Foods Industries Limited, Honeywell Flour Mills Plc., and Chikki Foods Industries Limited are key players that use chilli pepper as a key ingredient for sauce. But they continue to look to India and China for the majority of chilli-pepper supply despite some local production.

What do they seek in these imports? The processors care about the produce being sound, clean and

practically free of pests’ damage. They want to ensure that abnormal external moisture and internal browning don’t occur.

They are equally concerned about the dehydration and processing facility in pathogen-reducing processes, natural steam sterilisation in addition to being able to withstand transport and handling. Adetoun AbbiOlaniyan, the chief executive officer at Thistleberry Natural Farms said non-adherence to these technical details hinders many from tapping substantially from the domestic demand available. The farmer and processor mainly attributed the challenge to the fact that Nigeria is yet to fully evolve into a process-oriented country and this continues to impact how things are handled.

For example, it would be a gross undoing for an agribusiness looking to partner a noodles producer to tender as samples, processed chilli pepper sourced from open markets.

“I’m stressing specification because there is a technical skill involved. It is not just processing chilli.

At Mile 12 market for instance where chilli peppers are offloaded when they arrive from the north, there are also some processors that have mills where they grind. Some of these already-blended ones are not 100 percent chilli pepper. You cannot take that one and say that is your sample,”

Abbi-Olaniyan explained.

She suggested that interested businesses should target these companies whose products need chilli pepper, where their input come from, get samples of what their inputs are, study it and learn how to process to specification.

“Herbs and spices are things that go into making flavours for things we eat such as ketchup, mayonnaise, salad cream. Many of them are imported. But from an agribusiness point of view, a lot of our products in Nigeria can also meet this standard,” she said.

People can also, dig ways to diversify the use of chilli pepper beyond production. Cayenne pepper value, for instance, can be used in about four ways. It can be whole Cayenne pepper. It can be deseeded, meaning the seeds has been extracted and converted to flakes. It can be with seeds and is still flakes. It can be crushed,

Week Ahead Week Ahead(Monday, 29th July – Friday, 2nd, August 2019)

meaning there is a bit of seed in it, a bit of powder and a bit of flakes in it. It can be crushed and sieved from the powder since the seed is actually where the spice is.

The product opportunities also include chilli oil, meaning chilli that has already been immersed in a carrier oil. People, who don’t like a lot of pepper but want to feel some spice, use chilli oil for pancakes, eggs, noodles. In 2019 first quarter, the EU Ambassador to Nigeria, Karlsen Ketil, said that the European Union has approved of $10million grant to support small and medium enterprises (SMEs) who wish to add value to tomato, pepper, chilli, ginger, leather and garments processing in Nigeria, stressing value-addition as the future of farm produce.

In terms of export, European consumers are becoming more familiar with ethnic cuisines, a trend expected to contribute to the consumption of chilli peppers. The European market for fresh chilli peppers is still a specialised market, which is supplied primarily by producers in southern Europe, Turkey and northern Africa, according to CBI Ministry of Foreign Affairs. Because of the strong regional competition, it is advised that opportunities are sought in specific varieties.

The chilli pepper is the fruit of plants of the genus Capsicum. Red chillies contain large amounts of vi-

tamin C and small amounts of carotene. Considerably lower amounts of both substances are contained in yellow and, especially, green chillies which are essentially unripe fruit.

Peppers are also a good source of most B vitamins, particularly vitamin B6. They are very high in potassium, magnesium and iron.

Not exact statistics, the total annual production of all pepper varieties is estimated to exceed 34 million tonnes, with an annual increase of around 2 percent. The production of chilli peppers is much smaller than the production of sweet pepper varieties.

The United States produced 668 thousand tonnes of sweet bell peppers and 192 thousand tonnes of chilli peppers in 2016, according to the United States Department of Agriculture (USDA).

India and China are major producers of chilli peppers. And the majority of the production in India and China is used to supply domestic or nearby Asian markets, as well as for drying or processing purposes.

Dried chilli peppers are most common in India. Latin America and the USA also have large production, with many different varieties of chilli peppers.

In Europe, Spain is the largest producer of chilli peppers, mostly the long type ‘Spanish pepper’.

Chart of the week Companies show mixed performance in half year

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity

Oil: Brent likely to trade between $63 and $66 per barrel in near term. Easing tensions between the United States and Iran to put pressure on prices. OPEC’s output cut extension to moderate losses.

Cocoa: Cocoa prices rose by 0.37% to $2429 MT despite forecasts of higher production from West African Producers. Prices are expected to trend upwards as Ghana and Ivory Coast ban on cocoa supplies.

Fixed Income Commercial paper with description “UBNP CPII 30-Jul-19” issued by Union Bank of Nigeria Plc, at 16% issue yield will mature on Tuesday, July 30.

A 182-day Treasury bill at the Primary market sold for N69.6 billion at 13.5% stop rate will mature on Thursday, August 1.

Currency The naira is expected trade around N360 per dollar on the Investors & Exporters window owing to the sustained intervention of the Central Bank in the foreign exchange market and aggressive OMO intervention strategy.

Data Release The Nigerian Bureau of Statistics will on Tuesday, July 30, release data on Nigerian Agriculture Sample Survey 2018/19.

Event Seplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas company listed on both the Nigerian Stock Exchange and London Stock Exchange, today announces that it will issue its Half Year 2019 Financial Results on Tuesday 30 July 2019. At 14:30pm GMT (London) and 14:30pm WAT (Lagos) on Tuesday 30 July 2019, the Executive Management team will host a conference call and webcast to present the Company’s results. www.businessday.ng

The results of companies so far in the first-half of the year show only seven out of 17 major companies covered in BusinessDay analysis to have improved from last year.

Analysts say the performance seen hints on what the half-year earnings season would look like on the Nigerian Stock Exchange. Bellwethers are expected to churn out good numbers while a mixed performance would characterise the other-with exception for a few outliers.

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BUSINESS DAY

73

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

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 232,821.23 6.55 0.76 73 1,452,264 UNITED BANK FOR AFRICA PLC 194,936.70 5.70 0.88 125 6,957,528 ZENITH BANK PLC 580,835.14 18.50 -0.27 234 12,145,980 432 20,555,772 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 201,013.64 5.60 0.90 145 7,784,230 145 7,784,230 577 28,340,002 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,585,023.16 127.00 1.60 103 5,062,648 103 5,062,648 103 5,062,648 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 -0.58 34 5,057,153 LAFARGE AFRICA PLC. 231,952.26 14.40 - 124 10,393,368 158 15,450,521 158 15,450,521 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 288,337.83 490.00 -6.67 40 135,200 40 135,200 40 135,200 878 48,988,371 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 49,603.32 52.00 -6.81 46 950,885 PRESCO PLC 44,800.00 44.80 - 7 7,675 53 958,560 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 1 10 1 10 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,320.00 0.44 -4.35 12 1,521,459 12 1,521,459 66 2,480,029 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 847.13 0.32 - 7 5,810 179.01 0.46 - 2 2,860 JOHN HOLT PLC. S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 1.00 63 4,020,688 U A C N PLC. 16,855.58 5.85 - 25 192,248 97 4,221,606 97 4,221,606 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 23,892.00 18.10 - 15 42,080 ROADS NIG PLC. 165.00 6.60 - 0 0 15 42,080 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,092.09 1.19 - 2 8,687 2 8,687 17 50,767 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 1 100 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 100,757.61 46.00 - 27 114,011 INTERNATIONAL BREWERIES PLC. 107,448.27 12.50 -9.42 8 8,696,756 NIGERIAN BREW. PLC. 479,814.12 60.00 - 36 132,178 72 8,943,045 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 89,750.00 17.95 - 250 913,255 DANGOTE SUGAR REFINERY PLC 127,200.00 10.60 - 44 259,683 FLOUR MILLS NIG. PLC. 60,890.64 14.85 0.34 88 5,401,428 HONEYWELL FLOUR MILL PLC 7,692.29 0.97 - 17 125,755 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 6 14,267 NASCON ALLIED INDUSTRIES PLC 35,899.89 13.55 0.37 13 113,352 3,321.07 12.15 - 0 0 UNION DICON SALT PLC. 418 6,827,740 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 21,411.50 11.40 - 23 136,380 NESTLE NIGERIA PLC. 1,030,453.13 1,300.00 - 22 17,117 45 153,497 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,653.14 3.72 - 15 134,431 15 134,431 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,822.86 6.00 - 21 151,661 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 16 61,910 37 213,571 587 16,272,284 BANKING ECOBANK TRANSNATIONAL INCORPORATED 155,053.71 8.45 -6.11 33 1,641,328 FIDELITY BANK PLC 46,359.68 1.60 -0.62 31 965,220 GUARANTY TRUST BANK PLC. 837,317.05 28.45 -1.04 156 5,676,479 JAIZ BANK PLC 12,374.98 0.42 - 7 237,260 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 66,217.96 2.30 2.68 24 2,515,016 UNION BANK NIG.PLC. 199,477.16 6.85 - 25 314,130 UNITY BANK PLC 6,779.82 0.58 - 2 145,000 WEMA BANK PLC. 23,916.17 0.62 4.84 21 1,257,116 299 12,751,549 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,158.12 0.60 -3.23 26 1,783,601 AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 2 1,600 CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 10.00 28 14,164,900 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 1 975 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 9 95,760 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,563.20 0.35 -2.86 4 569,000 LAW UNION AND ROCK INS. PLC. 2,019.28 0.47 - 3 44,000 LINKAGE ASSURANCE PLC 4,080.00 0.51 -1.96 6 417,000 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 17 354,640 NEM INSURANCE PLC 11,353.08 2.15 -2.27 4 201,000 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,422.15 0.45 - 5 114,468 REGENCY ASSURANCE PLC 1,333.75 0.20 - 4 400 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 -4.76 15 1,461,835 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 200 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,085.44 0.38 5.56 34 6,292,243 160 25,501,622

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 2,949.76 1.29 9.32 2 1,770,100 NPF MICROFINANCE BANK PLC 2 1,770,100 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,400.00 3.70 1.65 26 363,757 CUSTODIAN INVESTMENT PLC 35,879.37 6.10 - 2 805 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 32,674.47 1.65 -4.62 43 1,147,358 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 390,165.07 38.10 - 22 620,951 UNITED CAPITAL PLC 12,840.00 2.14 0.94 45 1,536,767 138 3,669,638 599 43,692,909 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 50 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 - 1 20,000 2 20,050 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 57 2,399,230 57 2,399,230 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 8,554.08 4.10 - 3 19,870 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,567.01 8.00 - 10 39,339 MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 2 400 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 15 59,609 74 2,478,889 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 4 2,010,000 4 2,010,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 20 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 9 1,545 10 1,565 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 3.70 15 284,284 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 2 135 17 284,419 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 5 10,862 5 10,862 36 2,306,846 BUILDING MATERIALS BERGER PAINTS PLC 1,825.89 6.30 - 8 57,757 CAP PLC 17,325.00 24.75 - 25 56,690 CEMENT CO. OF NORTH.NIG. PLC 152,464.61 11.60 -6.83 78 2,405,762 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 1 300 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 112 2,520,509 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,641.98 1.50 - 11 32,262 11 32,262 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 3 2,755 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 2,755 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 126 2,555,526 CHEMICALS B.O.C. GASES PLC. 2,110.36 5.07 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -4.55 6 747,124 6 747,124 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,104.08 3.95 3.95 30 660,334 30 660,334 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 17 21,950 CONOIL PLC 14,052.53 20.25 - 25 84,587 ETERNA PLC. 4,368.88 3.35 - 4 4,364 FORTE OIL PLC. 23,444.66 18.00 2.86 44 343,398 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 5 277 TOTAL NIGERIA PLC. 43,289.03 127.50 - 25 16,645 120 471,221 156 1,878,679 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,112.54 5.28 - 6 11,677 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 0 0 6 11,677 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 5,000 1 5,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,785.59 1.34 - 14 230,715 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 50 15 230,765 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 8 64,700 LEARN AFRICA PLC 1,080.03 1.40 - 4 10,900 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 3 23,756 15 99,356

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Company IN FOCUS

BUSINESS DAY Monday 29 July 2019 www.businessday.ng

How digital technology is transforming Africa Prudential’s operations David Ibidapo & Israel Odubola

A

frica Prudential Plc is a Lagos-based financial services provider and the only quoted registrar firm on the Nigerian Stock Exchange, which is into the business of creating client-company registers of shareholders.

Formerly known as UBA Registrars Limited, the financial services provider manages 83 clients, comprising more than three million shareholders. It has a share capital of two billion units.

The company’s business philosophy is predicated on Africapitalism, a system that asks private sector businesses to make investment decisions that will increase social and economic wealth.

The belief is that commercial activities led by these companies would create value for stakeholders and the economy, and foster development in the communities they operate.

The management team of the registration service provider is headed by Obong Idong, the company’s chief executive officer.

Prior to his appointment as the helmsman, he was the company secretary and legal adviser of Afriland Properties Plc. He previously served in the same position at Heir Holdings Limited, an African proprietary investment company and oversaw structuring of broad spectrum of oil & gas, real estate, agribusiness, financial services and health care portfolios of the company and its subsidiaries.

The Board of Directors is chaired Eniola Fadayomi, with Samuel Nwanze, Peter Elemelu, Peter Elemelu, Emmanuel Nnorom and Ammuna Ali as non-executive directors.

In terms of significant shareholding (at least 5 percent), International Equity Capital is the largest investor with 26 percent stake.

Shareholding analysis of the firm revealed that the company’s shareholders are mostly corporates with 67 percent interest.

Turnaround in digital technology segment The company at its 6th Annual General Meeting disclosed plans to include digital technology and cooperative business to its services offerings in 2019, while automating the entire registrar process, its core business segment, to penetrate to viable African markets.

At the meeting, the company says it would leverage technology to change the dynamics of digital solutions in its coverage, and would use exploit technology to develop major sectors of the Nigerian economy. This push made the service provider became member of the Financial Technology Association of Nigeria.

The company reaped the benefits of these strategic actions as receipts from digital technology skyrocketed to N73.7 million in the first six month of 2019 from N457, 000 in similar period a year earlier. Breakdown of the figures revealed that N71 million was realized in second quarter of the year.

Commenting on the stellar performance, this what Obong Idong, Managing director of Africa Prudential said in a note to investors.

“In our digital technology unit, we are strategically positioning ourselves to con-

tinuously deliver best-in-class experience to our clients through our array of innovative product offering” The company unveiled plans to introduce two products in the digital technology space to deliver value to clients within and outside the capital market, saying the products have been well researched to add value to individuals and businesses.

The company’s chief expressed optimism about better performance going forward, and that the company would continue to explore diverse opportunities in the digital technology space while further deepening their footprint in registrar business.

Digital technology drives financial performance Africa prudential kicked off the first half of the year 2019 on a good footing after the financial service company grew its net income by 4 percent to N1.02 billion, its highest profit after tax in the last seven years on the back of a 43 percent surge in its revenue all thanks to fast growth in the company’s digital technology revenue stream.

The Lagos based registration service provider saw revenue spike to N870.14 million in H1 2019 from N593.46 million in the previous corresponding year. During the period under review, proceeds from its digital technology section accelerated significantly by about 16,035 percent to N7.7

million against N457 thousand recorded in the previous year.

According to Obong Idong, the performance was one of a promise delivered to company’s investors.

However the period saw a 7 percent decline in company’s interest income as interest on loans and advances dipped 7 percent, treasury bills by 60 percent and bonds by 64 percent.

As result, total interest fell 28 percent to N1.14 billion against N1.57 billion, rendering less effective almost doubled growth of 44 percent in interest from short term deposits. The resultant effect saw the company shedding N160.59 million in gross earnings for the period when compared to H1 2018.

Over the last five years, Africa Prudential has growth at a faster rate its revenue than its net income. Analysis of the company’s annual average growth between 2014 and 2018 reveals a growth in revenue by 19 percent and 13 percent in net income respectively.

Caught between the prevalence of negative investors’ sentiment which has taken the Nigerian stock exchange market on a bearish trend causing stocks lose persistent market value, Africa prudential improved slightly its negative year to date performance to -4.39 percent.

This is thanks to investors’ positive re-

sponse to the company’s financial position upon release which saw the stock price jump 8.8 percent to N3.70 from N3.40.

At the end of trading on Friday, the company stock appreciated 1.65 percent to maintain a 3-day gain streak after profit taking saw price reverse to N3.50 as at Tuesday.

Moreso, Shareholders at the 6th Annual General Meeting of Africa Prudential Plc in Lagos, lauded the financial services firm for paying 50k dividend amidst a challenging macro-economic environment in 2018.

Africa Prudential outline growth strategies going forward In a statement by Eniola Fadayomi, the Chairman of the board of Africa Prudential Plc, she explained the company’s conscious effort to diversify its income base and insulate the company from the uncertainties and risks of depending on a single line of business income. “The company took measured steps to grow its business solutions segment,” she explained.

Obong Idiong the MD/CEO of Africa Prudential Plc informed shareholders that in furtherance of the diversification strategy of the company, to bring more and sustainable value to shareholders, the company has evolved into three main business lines; Registrars Business, Digital Technology Business and the Cooperative Business.

With a focus on providing a tech-driven financial service that aligns with the developments in the fourth industrial revolution, Africa Prudential has rolled out various products to provide seamless services to shareholders, clients and stakeholders in the market.

Going forward, Africa Prudential has intended to continue to leverage on digital transformation, product development and strategic partnership to impact the African market for the period 2019-2023.

“Beyond the current registrars products and services being offered currently, we are transiting into a cohesive and aligned data mining strategy that can ensure we become a full-fledged Technology company,” Africa prudential stated in its investor’s presentation report.

Amongst strategies to be employed by the company are, •Beyond the current registrars products and services being offered currently, transiting into a cohesive and aligned data mining strategy that can ensure becoming a full-fledged Technology company •Commence the Digital Technology Strategic Business Unit as a pivotal unit to new thinking as a Technology Company • Gaining more market share in the Cooperatives space via the use of Enterprise EasyCoop solution •Commence the E-Commerce Strategic Business Unit called “EasyCoop Mart •Converting Shareholders to Customers” through a redesigned business model been Customer handled by the Customer Fulfilment Center.

Driven by outline strategies, Africa prudential frameworks as a guide for 2019 a gross earnings of N4.8 billion, revenue from contracts to the tune of N1.6 billion, Net investment income of N3.2 billion, Operating expense of N1.9 billion, a profit margin of 40 percent, annualized ROE and ROA of 21 percent and 13 percent respectively.

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