BusinessDay 29 Jul 2020 by BusinessDay

businessday market monitor

Biggest Gainer Okomuoil

Biggest Loser Seplat

6.31pc N312.7

N70.5

Everdon Bureau De Change

Bitcoin

NSE

24,650.16

Foreign Reserve - $35.9bn Cross Rates GBP-$:1.29 YUANY - 55.42

Commodities -9.82 pc Cocoa US$2,298.00

Gold $1,947.84

news you can trust I ** wednesDAY 29 july 2020 I vol. 19, no 616

₦5,047,646.04 +3.76

N300

Market Buy

Sell

$-N 465.00 474.00 £-N 575.00 587.00 €-N 520.00 530.00

Crude Oil $ 43.27

FMDQ Close Foreign Exchange

www.

I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

Spot ($/N) 389.50 381.00

3M 0.00 1.21

12m NGUS jun 30 2021 420.83

0.00

10 Y 0.03

30 Y 0.12

4.96

7.73

9.72

0.00 1.82

36m NGUS jun 28 2023 494.13

60m NGUS jun 25 2025 580.20

Nigeria’s disease control agency fails own 2m COVID-19 test target ... experts say failure means country could stay longer with pandemic Godsgift Onyedinefu, Abuja

ailure of the Nigerian government to meet its own target to test 2 million citizens for Covid-19 in three months shows the country does not have the pandemic under control yet and infections may spiral out of control, experts have said. This is coming as some communities in the Federal Capital Territory and Kogi State have begun reporting more deaths from unknown cause in the last few weeks. On April 28, the Nigeria Centre for Disease Control (NCDC), in an effort to aggressively ramp up Covid-19 testing across the country, said it would vigorously expand testing to 2 million within three months. NCDC said it was setting the target considering how the World Health Organisation (WHO), experts and scientists had repeatedly stressed that testing was the only way to bring the pandemic under control. But as the NCDC deadline Continues on page 29

Inside

Fashola assures motorists of improved traffic situation on Third Mainland Bridge P. 2

L-R: Babatunde Fashola, minister of works and housing; Emmanuel Adeoye, director of Bridges and Design; Adedamola Kuti, director of Highways (South-West), and Olukayode Popoola, federal controller of Works in Lagos State, during the minister’s visit to the ongoing rehabilitation of Third Mainland Bridge in Lagos, yesterday.

Nigerian banks face biggest revenue drop since 2016 N LOLADE AKINMURELE igerian banks could see the biggest yearly decline in revenues since 2016 by the end of this year, according to estimates by Renaissance Capital and Fitch Ratings, to at least a

20-percent dip. “Banks are dealing with slow growth, fall in lending, a lack of foreign exchange in the market and asset quality issues,” Mahin Dissanayake, senior director, EMEA bank ratings at Fitch, says. Though Dissanayake expects banks’ revenues to drop at least 20 percent this year, but does

not expect any to make a loss. Renaissance Capital also expects a similar decline in bank profits this year. “We currently expect 2020 before tax earnings for the top six banks to decline by a quarter on average, year-on-year,” notes Adesoji Solanke, an analyst at Renaissance Capital.

“A decline in Profit Before Tax (PBT) by over 20 percent will be the most severe in the past five years,” Solanke says in an email. The movement in commercial bank lending rates is a factor of profitability, as interest rates tend to rise when profitability Continues on page 29

Wednesday 29 July 2020

BUSINESS DAY

news Coast clears for Adesina to return as AfDB president in August CALEB OJEWALE, Lagos, & HARRISON EDEH, Abuja

arring any unforeseen events, the coast is clear for Akinwumi Adesina’s re-election next month as president of African Development Bank (AfDB), following his vindication by an Independent Review Panel that probed his previous exonerations by other organs of the bank. If not for the coronavirus outbreak, Adesina’s re-election would have been held on May 28, until it was postponed to hold between August 25 and 27, while investigations were concluded. However, the verdict Tuesday, of an Independent Review Panel, which exonerated Adesina of any ethical wrongdoings, had cleared the path for Nigeria’s former minister of agriculture to return to the bank for another five-year term. The Independent Review Panel set up by Bureau of the Board of Governors of the bank, following a complaint by the United States, had the task of reviewing the process by which two organs of the bank - the Ethics Committee of the Board, and the Bureau of the Board of Governors - had previously exonerated him. The Independent Review Panel in its report stated that it “concurswiththe(Ethics)Committee in its findings in respect of all the allegations against the

President and finds that they were properly considered and dismissed by the Committee.” The Panel also once again vindicated Adesina by stating, “It has considered the President’s submissions on their face and finds them consistent with his innocence and to be persuasive.” The three-member Independent Review Panel included Mary Robinson, who is a former President of the Republic of Ireland; Hassan B. Jallow, chief justice of the Supreme Court of Gambia, and Leonard F. McCarthy, a former Director of Public Prosecutions in South Africa. It would be recalled that in January 2020, 16 allegations of ethical misconduct were levelled against Adesina by a group of whistle-blowers. The allegations, which were reviewed by the Bank’s Ethics Committee of the Board of Directors in March, were described as “frivolous and without merit.” The findings and rulings of the Ethics Committee were subsequently upheld by the apex Bureau of the Board of Governors in May, which cleared Adesina of any wrongdoing. The conclusions of the Independent Review Panel are decisive and now clear the way for Governors of the Bank to reelect Adesina to a second fiveyear term as President during annual meetings of the Bank scheduled for August 25-27.

Life annuity threatened as insurers take caution on new deals over falling rates, low RoI … seek for new investment widows Modestus Anaesoronye

ife insurance firms managing annuity business have become cautious in admitting new deals in their portfolio due to increasing decline in return on investment (RoI) over volatility in the environment. The decline on returns has been significant since early 2019, when average market rates dropped from 15.07 percent in January to 10.15 percent in December same year. This was worsened by the Central Bank of Nigeria’s (CBN) directive effective

October 23, 2019, excluding individuals and local corporates from investing in Open Market Operations (OMO) auctions, which has been the most attractive window for annuity investment. This also was further exacerbated by fluctuating oil prices, making it difficult for investment managers to successfully hedge against their risks, and this has impacted substantially on annuity business, according to players in the market. Annuity for life policy is a retirement instrument option for retiring employees offered by a life insurance company licensed by the National Insurance Commission (NAICOM).

As it is popularly called, it is a type of insurance contract that provides in return for a lump sum, a monthly or quarterly payment starting immediately after retirement and continuing for the rest of the retiree’s life. The contract is often purchased by retiring persons who want an income that is guaranteed to last for the rest of their lives, no matter how long that might be. Section 7(1a) of the Pension Reform Act 2014, states that an employee on retirement shall procure Annuity for Life Policy or Programmed Withdrawal. The lump sum for the procurement of Annuity

for Life Policy or Programmed withdrawal must have been accumulated through series of employer/employee contributions into the Retirement Savings Account of the retiring employee throughout his/her working career. This law opened a golden opportunity for insurers to grow their life business, and this has been so for quite some time now, but declining rates and other challenges in the environment have become source of concern for investment managers. Olabisi Adekola, executive director, Finance at African

Continues on page 29

Facebook’s subsea cable to Africa to be completed early 2024 FRANK ELEANYA

acebook’s 2Africa, one of the largest subsea cable projects in the world, is expected to be completed between 2023 and early 2024, BusinessDay reports. When completed, the project will connect Europe, the Middle East, and 16 African countries, including Nigeria. A spokesperson for the company informs BusinessDay that work has commenced on preparation for the marine surveys, including desk-top studies of the detailed routing of the cable. Facebook expects component manufacture to start by the end of 2021 while the cable laying will start in 2021. “2Africa cable landing stations will be owned and managed by 2Africa parties or, where necessary experienced local partnersmanagedbyoneof2Africapartners,”KeziaAnim-Addo, head of communications, Facebook Africa, tells BusinessDay. At nearly 37,000 kilometres long,the2Africaprojectisnearly equal to the circumference of the earth and would provide nearly three times the total network capacity of all the subsea cables currently serving Africa. Nigeria has five major fibre cable operators; MainOne

(10Tb), SAT3/SAFE (800Gb); WACS (14.5Tb); Glo1 (2.5Tb), and ACE (5Tb), with a combined capacity of 32.800Tbps. As of 2019, Nigeria had only deployed 38,000 kilometres of fibre optic cables leaving it with a deficit of 82,000 kilometres. The country requires around 120,000 kilometres of fibre network to achieve pervasive broadband coverage. When the 2Africa cable is completed, Facebook expects it to deliver an expansive internet capacity, redundancy, and reliability across Africa; supplement a rapidly increasing demand for capacity in the Middle East, and support further growth of 4G, 5G, and broadband access for hundreds of millions of people. With thrice the capacity of existing cables, Facebook would by far become the largest network operator in Nigeria and Africa. Facebook says it is working withlocalpartnersincludingChina Mobile International, MTN GlobalConnect, STC, Vodafone, and WIOCC to build 2Africa. “The 2Africa parties and Airtel have also signed an agreement with Telecom Egypt to provideacompletelynewcrossing linking the Red Sea and the Mediterranean,thefirstinovera decade,” Anim-Addo says. www.businessday.ng

Fashola assures motorists of improved traffic situation on Third Mainland Bridge … orders contractor to widen diversion point to take 4 cars at a time CHUKA UROKO, MIKE OCHONMA & JOSHUA BASSEY

inister of Works and Housing, Babatunde Fashola, has assured the motoring public that the traffic situation on Third Mainland Bridge, Lagos, will improve significantly going forward as efforts are being made to remove everything that impedes free flow of traffic on the bridge and the alternative routes. The minister, who spoke on Tuesday during a visit to the bridge undergoing a major repair that will last for six months, ordered the contractor, Borini Prono Construction Company, to widen the diversion point on the bridge by breaking the median further. He explained that this action was a response to the complaints he got on the stressful experience motorists had

using the bridge on Monday. It was really a tough time for commuters on Monday, the first day repair work started on the bridge, which is a major link between Lagos Island and Lagos Mainland, as traffic build-up characterised vehicular movements, not only on the bridge, but also on almost of the identified alternative routes across the metropolis. The bridge was closed to traffic on Friday night to enable the contractor carry out the repair work on the 11.8 kilometres long bridge. A Dynamic Test on Bridge Expansion Joints was carried out on the bridge between Friday, July 27, 2018, and Sunday, July 29, 2018, and it was done in such a way that it had minimum impact on road users. The impact of the partial closure on Monday reverberated on Ikorodu Road inward Funsho William Avenue (for-

https://www.facebook.com/businessdayng

mer Western Avenue), in Surulere, connecting Eko Bridge, just as Yaba-Oyingbo-Iddo axis to connect Carter Bridge experienced an unusual sluggish traffic, with man-hours filtered away. Thompson Osagie, a motorist, told BusinessDay he spent four hours in the traffic to reach his office on Lagos Island, coming through Surulere via Funsho WilliamConstain through Eko Bridge, which is one of the alternative routes. Chukwuemeka Ihe, who lives on Airport Road Ikeja and works with one of the frontline automobile dealerships in Victoria Island, told BusinessDay that accessing the Island on his way to work in the morning was not a problem, but lamented that he drove into high volume of vehicular traffic while exiting Osborne Road in Ikoyi, linking the Third Mainland Bridge. @Businessdayng

“As you are aware, some of the offices, including ours, are now working from 8am to 3pm instead of the extended official closing hours of 5pm, and afterwards due to the Covid-19 safety protocols, and that is the reason I decided to leave the office by this time,” he said. Patience Jakpa, a banker who also lives in Ikeja and works in Lekki, said she had to make a detour, moving towards Carter Bridge when the feedback on her Google map indicated that exiting the 11.8-kilometre bridge was not looking good. On Ikorodu Road-Funsho William, connecting Costain, the traffic situation was made worse by the usual long rows of petroleum tankers and container laden trucks making their way into Apapa. Over 650 officials of the

Continues on page 29

Wednesday 29 July 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

news

Why CBN stopped OMO issuance Hope Moses-Ashike

iger ia’s Central Bank has neither issued nor rolled over matured Open Market Operation (OMO) for the past three weeks. A couple of reasons might be responsible for this according to Olusegun Akintunde, financial market analyst at Polaris Bank Limited. First, the bill is no more sufficient as a tool to attract FX inflow from FPIs given the country’s current FX situation. Second, the use of CRR discretionary (unorthodox measure) debit by CBN to mop up cash from the system has so far replaced the need for OMO in this regard as it is cheaper for CBN. CRR debits is at zero cost to the apex bank while the use of OMO bill for same purpose comes at a cost to them. The Central Bank of Nigeria (CBN) has within the last four months precisely, April to July 2020, debited banks about N2.2 trillion for breaching its

Cash Reserves Requirements (CRR). OMO bill was last issued on the July 2, 2020 when they sold N100 billion as against N333 billion that matured. OMO bills worth N92.58 billion, N69.54 billion and N25.35 billion that matured on the 9th, 16th and 21st of July, 2020 respectively was repaid without any sale. Efforts to get the CBN to respond to this were not successful as its spokesman, Isaac Okorafor, said he was in a meeting. Analysts at FSDH research said the no OMO auctions was mainly due to low yields and lack of interest by investors. This, they said, discouraged investors to adopt a “wait and see” mode. Foreign portfolio investors are currently unable to repatriate their FX profits due to forex shortages. The FX daily turnover at the Investors and Exporters (I&E) forex window declined by 11.01 percent to $38.86 million on Monday from $43.67

million recorded on Friday last week, data from FMDQ indicated. The CBN recorded another FX reserve drawdown as FX outflows outpaced inflows. FX reserves declined by $86.69 million week-to-date to $36.00 billion. In the I&E FX market on Monday, trade volumes remained subdued due to tightened liquidity. Naira appreciated marginally by 0.06 percent as the dollar was quoted at N389.25 as compared to N389.50 on the previous day. Most participants maintained bids between N361.00 and N390.94 per dollar, a report by FSDH research stated. Naira on Tuesday weakened by N1.00k as the dollar was sold at N473 as against N472 sold last week on the black market. It was a dull day for the bulls at the OMO space on Monday as the market offers dried up due to the non-issuance of OMO by the apex bank despite the robust system liquidity available to gulp large bill sizes.

P/Harcourt soot becomes deadlier – Research Ignatius Chukwu

he sudden disappearance of soot in the Port Harcourt and the Rivers State environment, which most residents are celebrating, may be a sign of a greater danger. This is because researchers have found that the soot particles have reduced in size and have become deadlier. The research conducted by the Centre for Environment, Human Rights and Development (CEHRD) and released in Port Harcourt says soot became smaller because improved methods of kpo-fire (heating of crude oil to become diesel and fuel). As a result, the particles have become smaller and most times unseen, but now easier to penetrate the eyes and skin for greater harm. The report was presented at the Aldagate Hotel in Port Harcourt as part of studies on impact of oil spill in Ogoni and what to expect from the clean up. It was presented by Sam

...Nitrate now found in fish, cassava in Ogoni Kabari, executive director, who said the illegal refiners have since improved their heating techniques but soot still goes into the atmosphere ready to poison humans. Soot is indicated as a mass of impure carbon particles resulting from the incomplete combustion of hydrocarbons. He said illegal refining must be put to a stop because of the huge damage to humans that it causes. Kabari said: “The damage is outrageous. People are simply breathing in petroleum. Remember that the UNEP report asked that re-pollution must stop if coastal clean up must take place. The clean up must adopt a holistic approach if coastal pollution due to artesenal refining continues, the efforts would be wasted. It pollutes coastal forests. “The boys have improved a lot and the soot has gone into smaller particles these

days but more dangerous. They now burn with oxygen and this breaks it down to smaller particles the eye may not see. The result is even more deadly. There is no competent lab to test soil in the Niger Delta. The ones present give result in 0.0005 which reports that the soil is okay, whereas labs that detect in smaller granules would find out what is wrong. There should be a scientific threshold to test soil and need to have labs and experts in the Niger Delta to be able to be capable. Some think its due to the level of equipment in the labs in the region. There is need to demand that labs should report in micrograms per kilogram instead of in grams per kilogram.” Kabari said oil is found 30 cm deep in the soil, an indication that crude oil has permeated into the deeper levels of the soil in the area, a situation that may pose a challenge to contractors handling the clean up.

N60m fraud: Court jails ex-director of Niger Delta ministry Felix Omohomhion, Abuja

former director of finance in the Niger Delta ministry, Ayinla Abibu, has been sentenced to one year imprisonment. A Federal Capital Territory (FCT) High Court, which gave the judgment, also ordered that two plots of land in Kubwa and Bwari of Abuja belonging to the convict be forfeited to the Federal Government. A statement on Tuesday by the Azuka Ogugua, spokesperson for the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Abibu was charged

for embezzling the sum of N60 million from the Federal Government through the use of a front company, Zeocat Nigeria Limited, in March, 2014. Abibu was charged by the commission before Justice Olukayode Adeniyi for defrauding the government in collusion with a former principal accountant in the ministry, Kabiru Poloma, by fraudulently withdrawing money from the constituency project account of the ministry domiciled in the Central Bank of Nigeria (CBN). The 60-year-old convict was said to have used the proceeds of the fraud to acquire a house in Ogbomosho, Oyo State and www.businessday.ng

plots of land in Kubwa and Bwari in the FCT. Before his sentencing, the defence lawyer, Abiola Akinwale, pleaded with the court to be lenient with the convict by granting him a lighter sentence as the convict falls among the age vulnerable to Covid-19. The defence lawyer further told the court that a longer sentence would quicken the death of the convict’s aged parents who were 99 and 92 years old. The ICPC counsel, George Lawal, while conceding the powers of sentence to the court, stated that the grievous nature of the crime committed by the convict demanded that he be punished accordingly. https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

news

Facebook’s subsea cable to Africa to be completed early 2024 FRANK ELEANYA

L- R: Adesoji Olasoko, general secretary; Folakemi Fatogbe, board chairman; Magnus Nnoka, president, and Victor Olannye, executive secretary, all of Risk Management Association of Nigeria (RIMAN), at the association’s annual general meeting in Lagos.

Lagos to establish N10bn aquaculture centre, empowers 2,743 farmers JOHN SEYI SALAU

agos State government is to establish N10 billion Lagos Aquaculture Centre of Excellence (LACE) in Igbonla, Epe, under a Public-PrivatePartnership (PPP) arrangement. The state governor, Babajide Sanwo-Olu announced this on Tuesday at the distribution of agricultural inputs and productive assets to 2,743 farmers under the 2020 Agricultural Value Chains Empowerment Programme. The governor, who was represented by his deputy, Obafemi Hamzat, said that the centre would be located on a 35-hectare land. According to him, the project is designed to boost the growth and development of aquaculture industry in the state through direct production of 2,000 tonnes of fish annually. He said it would also ensure provision of inputs to fish farmers under the Lagos Nucleus Farms scheme, and serve as off-taker for

fish farm clusters in the state. Sanwo-Olu said the state government would also establish two food production centres in Epe and Badagry to be known as Lagos Food Production Centres, in order to sustain food production and supply. The governor added that the two centres would ensure resuscitation, expansion and stocking of agricultural production facilities in various value chains and develop agro-tourism centres in the Lagos State Songhai project in Badagry and the Agricultural Training Institute, Araga, Epe. “The experience of the past few months during the lockdown occasioned by the Covid-19 pandemic has further reinforced the urgent need to expand the state’s food production base to meet such a spontaneous increase in demand for food in the future. “In line with this realisation, and to ensure sustained food production and supply in the state, we are establishing Lagos Food Production Centres in Badagry

and Epe. “In addition, we are establishing the Lagos Aquaculture Centre of Excellence (LACE) N10 Billion project to be located on 35 hectares of land in Igbonla in Epe under a public\private partnership arrangement,” he said. According to Sanwo-Olu, LACE was designed to boost the growth and development of aquaculture industry in the state through direct production of 2,000 tonnes of fish annually. “Also, it will ensure provision of inputs to fish farmers under the Lagos Nucleus Farms scheme and serve as off-taker for fish farm clusters in the State.” Sanwo-Olu said that the agriculture sector remained a key component through which the state government would realise its dream of making Lagos a 21st Century economy, adding that it was a pillar of the government’s T.H.EM.E.S agenda. He said that the annual agricultural value chain empowerment programme was one of the

strategies designed to boost food production and supply through the provision of agricultural inputs and productive assets to farmers and other players in the value chain. “This year’s edition is quite auspicious coming at a time we need to do a lot to cushion the effects of the Covid-19 pandemic on the productive capacity of our farmers and other actors within the agricultural value chain. “Currently, our level of food self-sufficiency stands at about 20 per cent, leaving a deficit of about 80 per cent, which is mostly accounted for by supplies from other states. “Our goal is to achieve 100 per cent increase in food selfsufficiency by 2023. “We are committed to meeting this target with you as our key partner and through the implementation of our programmes, policies and projects which are aimed at maximising our comparative and competitive advantage in the agricultural space,” Sanwo-Olu said.

Building insurance, verification in focus as Here’s Yale University’s advice on how to create work-life balance Lagos partners estate surveyors Chuka Uroko

n view of the recently signed Lagos State urban and regional law 2015 as amended 2019, Lagos State government and the Nigerian Institution of Estate, Surveyors and Valuers NIESV) have indicated interest to collaborate on implementation of building insuranceandvaluationaspectofthelaw. The move is in line with the current administration’s zero tolerance to illegal structures and its whistleblowingpolicythatallowscitizensto report irregularities within the state. SpeakingduringavisitbyNIESV members recently, the Lagos State commissioner for physical and urban development, Idris Salako, said the partnershipwouldhelpregulate the activities in the built environment and would not outsource its powers to anyone. Salako, who said government was willing to work with relevant professional bodies to achieve the THEMES agenda of the current government, added that they have proposed that the issue of certifying building inspectors be looked into as omitted in the new law. “Thegovernorrecentlyassented intolawthestategovernmenturban

and regional law 2015 as amended 2019 and one critical issue in the law is insurance. So we are willing to workwithanyprofessionalbodiesto achieve the goals of the law. “We acknowledge the institution’s effort as a professional body to seek collaboration and engage with the ministry especially on the monitoring of planning approval and certifying building inspectors, which was not inserted into the law. Government will explore the expertise of private sector in this regards,” he stated. Explaining the purpose of the visit, the chairman of Lagos branch, NIESV, Adedotun Bamigbola, said the need to reduce the risk associated with building collapse and the ministry’s position on the process of implementing the newly enacted law necessitated the visit. According to him, “Economics and population are changing urban and regional planning sector in the state and so people should know the position of government on its 10 master plan as Ikeja will be terminating this year. This partnership will help create building codes and educate citizens on the importance of building insurance.” www.businessday.ng

Gbemi Faminu

sychiatric experts from Yale University have shared basic tips to create a work-life balance and cope with stress to reduce health-related problems. According to the World Health Organisation (WHO), an estimated 264 million people suffer from depression globally, stemming from overwhelming work-related activities. Charles Dike, an associate professor of psychiatry at Yale University (USA) said that creating a balance between work and daily life is necessary in order to prevent health problems however it requires discipline. Firstly, it is necessary to create a boundary between work related activities and daily life and adhere to it “when people cannot control their work activities, it violates their daily life without setting boundaries and eventually, they crash at both ends,” he said. Secondly, he said instead of focusing on disappointments and failures, wins should be celebrated, adding that failure is an opportunity to rethink your

methodology and make necessary adjustments. Thirdly, beyond creating a work-life balance, he urged that people should adopt positive coping mechanisms, stating that at a point, stress and anxiety begin to affect the efficiency and effectiveness of such a person. Adopting positive mechanisms tend to produce better results, he said. Dike noted that achieving work-life balance would require discipline and mindset, adding that negative coping mechanism like smoking, alcohol consumption, gambling etc. leads to bad decisions and simply aggravates the problem. Positive coping mechanisms such as mini-breaks, a healthy lifestyle, exercises, were canvassed as better options. Theddeus Iheannacho, another associate professor of psychiatry at Yale University also said entrepreneurs and employees should focus on things that they can control, and also engage in reading, reflecting, reviewing and strategising before making decisions.

https://www.facebook.com/businessdayng

acebook’s 2Africa, one of the largest subsea cable projects in the world, is expected to be completed between 2023 and early 2024, BusinessDay can report. When completed, the project would connect Europe, the Middle East, and 16 countries in Africa including, Nigeria. A spokesperson for the company told BusinessDay that work was commencing on preparation for the marine surveys, including desk-top studies of the detailed routing of the cable. Facebook expects component manufacture to start by the end of 2021 while the cable laying will start in 2021. “2Africa cable landing stations will be owned and managed by 2Africa parties or, where necessary experienced local partners managed by one of 2Africa partners,” Kezia Anim-Addo, head of communications, Facebook Africa told BusinessDay. At nearly 37,000 kilometres long, the 2Africa project is nearly equal to the circumference of the earth and would provide nearly three times the total network capacity of all the subsea cables currently serving Africa. Nigeria has five major fibre cable operators; Mai-

nOne (10Tb), SAT3/SAFE (800Gb); WACS (14.5Tb); Glo1 (2.5Tb); and ACE (5Tb), with a combined capacity of 32.800Tbps. As of 2019, Nigeria had only deployed 38,000 kilometres of fibre optic cables leaving it with a deficit of 82,000 kilometres. The country requires around 120,000 kilometres of fibre network to achieve pervasive broadband coverage. When the 2Africa cable is completed, Facebook expects it to deliver an expansive internet capacity, redundancy, and reliability across Africa; supplement a rapidly increasing demand for capacity in the Middle East ; and support further growth of 4G, 5G, and broadband access for hundreds of millions of people. With thrice the capacity of existing cables, Facebook would by far become the largest network operator in Nigeria and Africa. Facebook said it was working with local partners including Facebook, China Mobile International, MTN GlobalConnect, STC, Vodafone, and WIOCC to build 2Africa. “The 2Africa parties and Airtel have also signed an agreement with Telecom Egypt to provide a completely new crossing linking the Red Sea and the Mediterranean, the first in over a decade,” Anim-Addo said.

Nigeria’s food affordability dependent on smart agripreneurship - Study John Seyi Salau

recent study conducted by FarmBoy.Ng, Nigeria’s online farmers’ market, in collaboration with Manywaters Group, on food affordability in Nigeria has revealed that smart agripreneurship dimensions provide positive and significant effect on food affordability. Globally, food affordability has become a rising concern as poverty and hunger enthral millions. This seems to be causing a more elusive ideology about the possible fastest end to starvation especially in developing nations. Across Africa, almost half of all spending of household budgets are based on food affordability, with the highestburden falling on low-income households. Furthermore, a growth trend has been observed in pricing of crops produced in Nigeria from N14.86 billion in 2013, N7.18 billion in 2015 and N21.09 billion in 2017 as stated by the Nigerian Bureau of Statistics (NBS) revealing the expensive nature of home-grown foods within the country, and making affordability an illusion. “Although, the nature and depth of food insecurity has generated multidimensional approaches to hunger and food sourcing, its availability is not tantamount to food affordability,” said Ope Omodanisi, founder and lead partner, FarmBoy.Ng. According to Omodanisi, an @Businessdayng

x-ray of the smart agripreneurship dimensions revealed that all dimensions except drone agriculture provided positive and significant relations with food affordability. The study revealed further that there is a gap in knowledge between smart agripreneurship dimensions (hydroponics, geo-mapping, greenhouse farming, drone agriculture, nutrient cycling and soil analysis) and food affordability in developing economies, especially from the Nigerian context. “The outcome of his study confirmed that technology doesn’t have to be expensive to improve food security and where expensive, economy of scale has to be present so that cost per unit is low and food affordable,” Omodanisi said. According to him, smart agripreneurship is the focus of FarmBoy.Ng in promoting Africa food project towards the attainment of food security in Nigeria. He also disclosed that FarmBoy. Ng would be training 500 smart agripreneurs in a space of 10 years towards food security attainment in line with the values of the United Nations. Omodanisi noted that agribusinesses should engage more proactively as there are several opportunities in the adoption of smart agripreneurship in an environment where staple meals are less processed and the population growth is driving demand for food products.

Wednesday 29 July 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Wednesday 29 July 2020

comment

comment is free

Send 800word comments to comment@businessday.ng

Nigerian Bar Association: In whose interest?

Franklin Ngwu

s lawyers across Nigeria elect a new President of Nigerian Bar Association (NBA) today, a key question that should be asked is if the foremost association of lawyers has lived up to the expectations of Nigerians? If truth must be told, the answer is an overwhelming no. Not only is the NBA performing below expectations, its relevance and impact seem to be in continuous decline and increasingly being perceived as self-serving, divided and unpatriotic. In all the key areas of vision, mission, motto and core values, there is none that Nigerians and even NBA can really be proud of their achievements. Focusing on the mission which is “to use the law as an instrument of social change in Nigeria.” Nigeria cannot be said to be experiencing the required social change where inequality, insecurity, poverty, unemployment, moral decadence and corruption pervade and increase. A more disappointing outcome is when the Motto of NBA which is “Promoting the Rule of Law” is scrutinised visa vis the reality on ground with absence or very weak rule of law prevalent in almost all segments of our society. In the latest World Bank Governance Matters, Nigeria as usual continues in her poor performance in rule of law and other governance indicators such as regulatory quality, voice and accountability, government effectiveness and control of corruption. On the Core values of integrity, excel-

lence, courage and professionalism, the opposite seems to be the case. Not only are many lawyers lacking integrity and professionalism, courage most needed in the efforts for national rebirth and development is unfortunately disappearing from the actions and inactions of NBA. Where does one start! Rather than being a foremost professional association for a progressive and equitable Nigeria, NBA has of recent being maintaining a lamentable avoidance and ambivalence in critical national issues even when the issues at stake fall within their immediate area of intervention and leadership. With such poor performance, the question for all the lawyers that are eligible to vote and be voted for is what kind of NBA President we want as lawyers and as Nigerians. Before I provide some insights, it is important to note the following. The problem with the NBA is that it seems to be in continuous deviation of what it should be and stand for. Rather than being a vanguard of social change and good governance, NBA now seem to represent and amplify the Nigeria leadership problem. For instance, leadership of the NBA should not be reduced to your membership of the inner or outer bar. Given the peculiarities of Nigeria and expectations we have of the NBA, a tenure limit of only two years is self-defeating and unhelpful. To make any meaningful impact, it should be a minimum of four-year limit with the option of re-election for a second term. With the existing non-renewable two-year limit, the leadership of the NBA has been turned into a quick rotating platform for self-promotion of the seemingly cult-oriented inner bar. Nigerians want to learn from the NBA and expect visionary leadership from them. Unfortunately, from the way it is going, they are contributing to the inequality, unfairness, lack of consensus and inclusiveness in Nigeria. While we want them to lead from the front, they lamentably seem to be leading from the

‘

As every law student is taught in their first year, law is just a set of norms and values of a people used in moderating the society. When the law is documented, it becomes a formal law while the undocumented ones remain as informal laws. The effectiveness of a law (stating the obligation, justifying it and punishing offenders) depends on the extent to which the law is accepted, understood, internalised and complied with

back. For instance, how does one explain the existing zonal structure of North, East and West in the NBA in the present Nigeria or the zoning of five positions to specific zones while six are not zoned. As every law student is taught in their first year, law is just a set of norms and values of a people used in moderating the society. When the law is documented, it becomes a formal law while the undocumented ones remain as informal laws. The effectiveness of a law (stating the obligation, justifying it and punishing offenders) depends on the extent to which the law is accepted, understood, internalised and complied with. The success or usefulness of a law therefore starts from the way the law is stated or expressed, its believability and amenability with informal norms and values (social norms). As social norms are rules that are not officially stated or enforced by formal legal actions but complied with, the efficacy of the formal law to serve as a good deterrent mechanism immensely improves when it is used to complement social sanctions (informal norms and values). To emphasise the importance and need for synergy between formal and informal laws, Caenegem (1986: 8 &158) counsels that, “English legal development appears as a historical continuum. There is no obvious rupture, no wholesale wiping out of legal wisdom of centuries and no division of the law into a preand post-revolutionary era. In English law the present is never completely shut off from the past and its historical roots are easily perceived. Out of hard and bitter experience, Englishmen had come to learn that the remorseless, incalculable power of the past over the present was not to be dispelled by the strivings of a single generation. From 1660 onwards, England was never again entirely to forget that the secret of a nation’s strength is to have the power of the historic past behind it, not against it”. Using the above, Nigeria cannot be

said to be a good example. While an alien, misunderstood and forced formal legal system (English formal law) is used in our formal governance system, the informal legal system (norms and values) moderated our ethnic groups. Not only did we arrogate superiority to the English legal system, we rejected and denigrated our informal legal system (norms and values) in our formal governance systems. With this grave mistake, we voluntarily set our dear nation in a direction of confusion and contradiction resulting in our seemingly unachievable sustainable development and endemic corruption. As every lawyer and NBA are aware of the above, the NBA President that Nigerians want is that lawyer whether inner or outer who will be unrepentant and unquestionably courageous in pursuing the needed reforms (particularly legal) for a better Nigeria. We want an NBA President that will not be ambivalent in key national governance issues. We want an NBA President that will be a chief advocate for restructuring of Nigeria and devolution of powers starting from moving items from the exclusive list to the concurrent and residual lists. We want an NBA President that will state his position on regional security outfits such as Amotekun! We need an NBA President who will stand for the truth and tell Mr President that some of his appointments and policies lack inclusiveness and are detrimental to the unity and sustainable development of Nigeria. As law is the fulcrum upon which the progress or retardation of every society depends, we need an NBA President that will unequivocally fight for an inclusive and effective rule of law in Nigeria! Dr. Ngwu, is an Economist/Associate Professor of Strategy, Corporate Governance & Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng.

COVID-19: The increased burden of the pandemic

he novel coronavirus (COVID-19) pandemic has had far-reaching consequences; at the time of writing this article, there are over 15,000,000 confirmed coronavirus cases and deaths of about 606,474 from COVID-19 across the globe. Further to this the continent of Africa has recorded over 702,663 COVID-19 cases, and there is already a concern on the growing numbers of countries experiencing sharp rise in cases. According to available data, cases have more than doubled in many countries in Africa over the past month. Consequently, nearly twothirds of countries are experiencing community transmission. Countries such as Algeria, Egypt, Ghana, Nigeria, and South Africa have accounted for about 71 percent of COVID-19 cases in Africa. South Africa alone accounts for 43 percent of the continent’s total cases. Nonetheless with current observations in Africa, the number of cases and deaths is still quite low compared to other continents. It is still unclear whether the reason for the smaller amounts of confirmed cases on the continent is due to the lack of adequate testing capacity or that the virus is genuinely not affecting as many people on the continent as other areas in the world. The fact still remains that the low numbers on the continent continue to surge. Therefore, with the continued increase, it is hard to be pre-emptive on the economic consequences, especially since it’s a health-related issue. Nevertheless, one thing is sure: coronavirus is a significant risk to households, businesses, including the global economy. As noted, a large number of the people liv-

ing in Africa do not have access to protective material, particularly masks and adequate diet with fruits and vegetables that would ordinarily strengthen immunity. This situation will be a crucial factor in the case of a potential major outbreak. From context observation the pressing questions about COVID-19, particularly in Africa, are - how long will it last?, when are we to see the post COVID era? How many people will the virus affect before a reversal of trend is noticed? How do workers get adequate protection? – but the answer to these questions is that COVID-19 has brought about a new normal, and it’s not likely to go away swiftly. That said, COVID-19 continues to put pressure globally on nations, health care systems, and on markets and businesses large and small. In Africa, the ongoing pandemic is already causing untold human suffering across the continent and indeed strain on the health care systems. One of the most critical implications of COVID-19 is that it affects every aspect of living, economy, business, governance and regulations. Still, the severity is more on a weak economy like Africa where most of the countries are largely developing. In my opinion, the pandemic will change the world forever and will probably leave a permanent impact, particularly on households, countries, businesses and their operations. According to Ngozi Erondu, an associate fellow in the Global Health Program at Chatham House in London, asserted that it had been observed that the virus has a more severe impact on people with underlying health conditions. So, it is logical to hypothesize that Africa may see more severe COVID-19 illness, a malnour-

www.businessday.ng

ished population, malaria, and a mound of other infections. Currently, the pandemic has shattered and disrupted businesses, households, markets, and also exposed the competence and otherwise of governments across the globe. It, therefore, seems highly unlikely that the world will return to the pre-COVID-19 era. For instance, countries with technological, economic, and advanced healthcare systems, such as the US, China, the UK, Spain, and Italy are struggling to put an end to the spread of the virus at every cost. More worrisome is the situation in Africa where deficits are in infrastructure and health care systems amongst others. Therefore, as a nation, government, business owner, entrepreneur or SME operator, the concerns about the current realities and developments are key and the need to equally track the progress of the outbreak is necessary going forward. This will help in no small measure to come up with ideas to scale through the difficult time the outbreak has presented. The emergence of the coronavirus in Africa is a lousy indicator for economic performance of the landscape. The continent is currently struggling with development in all known sectors, particularly in areas identified above. Consequently, the continent is at high risk in these circumstances if the spread is not curtailed immediately. Many may lose their lives due to a lack of adequate healthcare and financial support as palliatives. With the continued spike in cases of COVID-19 in Africa, it might harm bilateral cross-border relations, health care system, inflow of Foreign Direct Investments, employments, imports and ex-

https://www.facebook.com/businessdayng

Timi Olubiyi

port trades, capital markets, industrial activity, tourism, air travels, social events, schools and more than likely it might disrupt or crash the economic forecasts and revenue estimates of the nations in Africa. Besides, in countries with weak institutions and legacies of political instability, the novel coronavirus can increase political stresses and tensions. If the outbreak grows, citizens will continually face financial difficulties, and the government will equally experience diminished tax revenues, which may exacerbate fiscal stresses caused by increased expenditures, where tax systems are weaker, and government budgetary constraints are more severe. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr. Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, Chartered Member of the Chartered Institute for Securities & Investment (CISI) and a financial literacy specialist. He can be reached on the twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com,for any questions, reactions, and comments.

@Businessdayng

BUSINESS DAY

Wednesday 29 July 2020

comment

comment is free

Send 800word comments to comment@businessday.ng

Recovery 107: Solving the challenge of financing digitisation of SMEs in Nigeria “The present has finally prevailed; the past shall not return” – Hernando de Soto (The other path) Small Business handbook

Emeka Osuji

he Nigerian economy, like many others at its level of development, is dominated by Micro, Small and Medium Enterprises (MSMEs), especially the micros that employ about ten workers. Despite untold hardship suffered by operators in the sector, due largely to failure of public services, and lack of enablers, the sector continues to grow because it provides a safe haven for all manner of people, including those seeking financial survival and economic independence. It is the economy’s backbone and serves also as a backstopper for white collar people structured out of their livelihood by the changing economic environment. The lowest hanging fruit to those who lose their jobs in the formal sector is usually to try something of their own. This could be petty trading, light manufacturing or something else in that genre, which incidentally form

the leading business areas in the Nigerian informal sector. In this way, the MSMEs provide as much as half of the world’s Gross Domestic Product and up to two-thirds of its employment. In Nigeria, microenterprises, with little or no capital, and short in critical leadership assets, constitute over 99 percent of the over 41.5million MSMEs operating in the country. Until we begin to build our own Microsoft, Google and Apple, the MSMEs remain our mainstay. And must be treated with the care they deserve. The Central Bank’s Anchor Borrower Programme is one good way of helping these entities not only to access much needed capital but also to find off-takers for their output. The programme helps the atomistic operators to form into cooperatives of members grouped in 5s, tens or any such numbers that are manageable, to be linked to a bigger company called the Anchor, for the purposes mentioned earlier, and also helping them grow and become formal entities. While those kinds of programmes, and there are quite a few of them in Nigeria, were proceeding apace, the pandemic struck, changing many of the dynamics and introducing new challenges. One of such new dynamics is the need to go virtual through digitization. For MSMEs, which lack capital and could hardly muster the needed leadership capacity to drive change, adding a process like digitization, which is undoubtedly expensive, expands the horizon of uncertainties. However, as the Peruvian economist, Hernando de Soto, said, “the present

has finally prevailed and the past shall not return”. Clearly, the word has changed for good and it is not likely to return to in-person services at the rate we knew it. Unfortunately, Nigeria is a developing country and typically not famous for efficiency of service delivery. For instance, the process of company registration, which is supposed to be one of the ways to increase the conversion of informal businesses to the formal sector, is alleged to have become a gruelling experience for lawyers trying to register companies, as the Corporate Affairs Commission enforces rules that tend to slow down company registration. The delays and several trips of lawyers to and from Abuja, add to the high cost of doing business. The MSME sector has faced productivity challenges as a result, especially in the more rural areas, despite the increasing availability of financing opportunities and funding avenues. It is likely that the transformation to digital operations will enhance productivity, if implemented. Accordingly, these small companies have little or no choice but to transform to the digital, in order to survive. How will Nigeria’s MSMEs fund their digital transformation? Where will the money come from? It is therefore likely that digital transformation will be very slow in Nigeria, with implications for jobs, consumer spending and general economic growth. We must try to reduce the challenges in this area for MSMEs. In regard to funding, there have been several funds created to help MSMEs, including one by the Bank-

‘

Certain issues continue to limit the sector, especially the fact that SMEs lack sufficient collateral and may not like to expend or mortgage them to finance digital projects, which may be more of intangible nature

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

The tragicomedy continues

here are times when we need to stop, press pause, reflect and reset. David was given such an opportunity. Second thought, compelled may be a more accurate term to use. Nathan, smart man that he was, used tact to approach his King. His mission was none other than to rebuke David for taking another man’s wife. In order to fail to prove this sinister plan, David had sent the hapless husband, Uriah the loyal army officer, to the fiercest part of battle, as this appeared to be the best way to ensure he didn’t return home alive. His plan worked perfectly. Remember, I said Nathan was smart. Nathan knew if he said the thing “gbam” like that, a second “gbam” would most likely immediately follow, and this one would be the sound of his decapitated head hitting the hard floor. Back in those days, woe betide anyone who has the effrontery to challenge his King so frontally. So, Nathan was clever enough to employ an approach which effectively gave David enough rope to hang himself with. That way David couldn’t deflect blame. He told David a story of two men in a town. One rich with plenty of sheep and other livestock and the other, miserably poor. So poor, his only asset was one lamb which he totally doted on. The rich man received visitors one day and instead of picking one of his sheep, which he had in abundance, out of sheer greed and heartlessness, he slaughtered the poor man’s lamb to prepare a feast for his treasured guests.

Upon hearing this, David flew off the handle and instantly pronounced a death sentence on this most treacherous of villains. Nathan’s job had been made easy as he didn’t have to say much more, other than to remind David of what he himself had done. Unknowingly, the king had already condemned his actions with his own mouth. He was trapped. One thing David had failed to realize when hatching his evil plan was the result of callous actions, which is that no one wins. One side just loses slowly. But eventually, they must. I’ve said time and time again that the problem with our society is not that people don’t know what the problem is. It’s that no one sees himself as part of the problem. David saw the wrong in the villain in the parable but hadn’t until that time, seen that same wrong in himself. With the theatre of the absurd currently playing itself out in plain sight of all Nigerians, regarding the NDDC brouhaha, no one really wins. The difference is that the ones who continue to suffer deprivation are painfully aware that they are losing because the development they’re entitled to still hasn’t come their way; but the ones who think they are winning by corruptly enriching themselves, are not aware that they are losing too, as their sense of humanity gradually ebbs away. A man who already has more than enough but continues to scoop more and more while watching others suffer around him has not only lost his conscience but if we check very

www.businessday.ng

well, may have lost a substantial part of his mind too. The fact that he’s not aware of it doesn’t make it less true and in fact only reiterates that distinct possibility. I once read that the ultimate wisdom is knowing you will go home one day. That portends the biggest loss of all. The “veil of ignorance” is an ethical theory proposed by John Rawls to determine the morality of one’s actions. It sounds a little bizarre but the more you look at it, the more it makes sense. It speaks to the very relevant issues of social contracts; the people’s rights and duties to the state, vis-a-vis the responsibilities of the state to the people. The theory contends that if an individual preparing to make a decision concerning his society, knowing very well what the consequences of his decision would be either way, was to put on a “veil of ignorance”, he would most likely make a just and balanced decision. This is because once the individual puts on this proverbial veil, which instantly renders him ignorant of his position in society, he would be constrained from making skewed decisions that would favour a particular group over others, since he will not for that moment know which group he belongs to. It’s like asking your youngest child to share the meat for himself and his older ones when he knows he will pick last. So, had David put on this veil, leaving him ignorant of his position as king, he would not have killed Uriah in order to take his wife, knowing such an act was punishable

https://www.facebook.com/businessdayng

ers’ Committee for equity investment in SMEs in the country. That fund is known as the Small and Medium Enterprises Equity Investment Scheme (SMEEIS). It had been alleged that the typical Nigerian entrepreneur likes to go it alone, and therefore rejects equity participation by others. Perhaps, the time has come for a review of such cultural disabilities that plague our economic transformation efforts. I believe there is now a welldeveloped supply of public financing instruments and schemes that will ensure that overall access to finance by MSMEs is improved. However, certain issues continue to limit the sector, especially the fact that SMEs lack sufficient collateral and may not like to expend or mortgage them to finance digital projects, which may be more of intangible nature. Add these challenges to the fact that operators are yet to understand the extent of the changes, which the new normal is going to bring, then the issue becomes more magnified. As companies and other entities push towards the digital, several challenges in addition to finance are bound to emerge. These challenges may initially depress revenues but may eventually become revenue props. Technology costs a lot of money to adopt and even more so to adapt. We must design new strategies to collectively address the funding challenges that will follow the effort of SMEs to digitize.

Character Matters with Daps

Dapo Akande

by death. Perhaps now, we will see the futility in expecting our National Assembly members, the primary beneficiaries of lopsided government expenditure, to be the same people who will curb the perceived excesses. Let me add that Rawls’s “veil of ignorance” theory consisted of two supporting principles. One in particular, is the Liberty Principle, which says the social contract should ensure all people enjoy maximum liberty, so long as it doesn’t infringe on the freedom and rights of others. Tell that to people of the Niger Delta. Changing the nation...one mind at a time

Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. Contact: dapsakande25@ gmail.com

@Businessdayng

BUSINESS DAY

Wednesday 29 July 2020

comment

comment is free

Send 800word comments to comment@businessday.ng

Fixing Nigeria’s broken electricity value chain Chukwueloka Umeh

Nigerian proverb says that if one does not know when rain started beating him, he will not know when it stops. To engage in an informed discussion aimed at proffering a viable solution to the ailing Nigerian Electricity Supply Industry (NESI), one must therefore first get a working understanding of the “electricity value chain”. Nigeria’s current grid-installed power generation comprises approximately 81 percent thermal (primarily natural gas) and 19 percent hydroelectricity. Renewables like solar, wind, and geothermal are negligible-to-non-existent, while nuclear generation is one that we are presently unprepared for. The focus of this article will be on gas-fired generation. Nigeria’s electricity value chain, starts with gas production and culminates in the consumer. It shows energy starting from gas production to the end-user, while revenue is collected from end-users and used to pay each segment of the value chain i.e. power distribution (DisCo), power transmission, power generation (GenCo), gas transport (pipelines) and gas producer. According to the US Energy Information Administration, out of Nigeria’s estimated 200.4 Tcf natural gas deposit, which ranks 9th in the world’s proven gas reserves, only about 21 percent is used locally while about 47 percent is reinjected or flared. Nigeria was ranked the world’s 5th largest Liquified Natural Gas (LNG) exporter in 2019, but 38th in local gas consumption. This suggests that although gas export is important for generating foreign exchange for the

country, more concerted effort needs to be made to boost local gas utilisation to grow the local energy industry. For over a decade, the country has not grown above an installed capacity of 12,522MW and a sustained actual generation of less than 4,000MW, which is a meagre 31 percent of the installed capacity. In the past 3 or so years, the Transmission Company of Nigeria (TCN) has made considerable but still insufficient effort to expand our transmission network beyond its current power wheeling capacity of about 5,400MW. Finally, the eleven distribution companies (DisCos) are unable to distribute all the power sent to them and are indeed dealing with Aggregated Technical Commercial and Collection (ATC&C) losses that range anywhere from 45 percent to as much as 70 percent. This means that the DisCos are likely able to collect revenue for about 30 – 55 percent of the less than 4,000MW generated. For example, as at April 2020, the 11 DisCos received energy worth about N68 billion, but remitted only N9.8 billion to settle the rest of the value chain. There is no simple way to say this, but the entire value chain is broken. From a low gas production for local consumption to an inadequate gas pipeline network that interestingly bypasses certain industrialised parts of the country where it is needed the most, to an insufficient transmission network, and finally, to our grossly inadequate distribution network with its aged infrastructure that serves less than 50 percent of the population, the value chain is broken. According to a July 2016 PWC report titled Powering Nigeria for the Future, it is expected that Nigeria’s power generation capacity should be able to grow to at least 42,000MW by 2030. This is feasible because between 2005 and 2015, Vietnam with a population of 93.4million increased their generation capacity from 12GW to 40GW, i.e. a 236 percent increase. There is a clear rationale for why the sector needs to be prioritised over anything else in order to jumpstart the

economy towards sustainable organic growth, in favour of its current dependence on the cyclical oil industry, which accounts for 95 percent of its foreign income. The government’s decision to privatise the NESI was the correct first step to getting the moribund sector working and waking its dormant economy from its 50-year slumber. The NESI is still not working for several reasons, which will be dealt with in subsequent articles. It is time for Nigerians to get serious about thinking of Nigeria beyond oil. We have talked of mass diversification into agriculture and manufacturing for many years. Without power and lots of it, it will remain just talk. According to the Central Intelligence Agency, 50.9 percent of our 214 million people are between the ages of 15 and 54, making it potentially one of the most productive population concentrations in the world. Without steady electricity to support proper industrial growth and creation of productive work, a large part of this population will either continue to wallow in poverty, emigrate to other climes, or turn to some form of crime to survive. About 45 percent of the population has access to grid power, which is epileptic in most areas. As of 2016, the electrification rate was 59.3 percent. With the population growing steadily, and available power remaining virtually the same for many decades, it is small wonder that the access rate continues to drop steadily. There have been many proposals and interventions from the government from the Electric Power Reform Act of 2005 to the Transitional power market of 2015, and more recently much anticipated but now aborted tariff increase. Nigeria should try a different approach. The provision of electric power is not part of the government’s social responsibility to the people. Power is a consumable commodity like telephone credit, data, petroleum products such as PMS, kerosene, and diesel, etc. Since it is a buyer’s prerogative whether to buy these commodities at the price offered by sellers or not, it should not be the government’s place

‘

It is time for Nigerians to get serious about thinking of Nigeria beyond oil. We have talked of mass diversification into agriculture and manufacturing for many years. Without power and lots of it, it will remain just talk

Dr. Umeh is the Managing Director/CEO of Century Power Generation Ltd and the Group Chief Operating Officer at Nestoil Group.

The honourable minister in a dishonourable show

he third week of July, this year, spanning from 20th to 26th, was one that Nigerians are not likely to forget in a hurry. It was a week that some notable players in the political turf proved to Nigerians, especially practitioners and fans of the Nollywood industry, that the nation had long ignored their rich endowment in the thespian art of acting as they treated us to charming performances of theatre of the absurd. The week had opened with the continuation of the House of representatives’ probe into allegations of reeking graft and financial putrefaction in the activities and operations of the Niger Delta Development Commission (NDDC). While we were still squirming under the stench of a gust of unbridled sleaze and malfeasance coming out of the probe, what looked like a comic interlude, or better still, a tragi-comedy, came to the fore. The acting MD of the commission, one Professor Kerebradikumo Daniel Pondei, while being grilled by the probe committee, suddenly slumped and for a short while, passed out before being revived. It was one scene The Yorubas will describe as oro buruku tohun terin, the literal translation of which is an intractable blend of comedy with tragedy. He was instantly packaged out of the probe location. The argument has since

ensued among our compatriots whether Pondei actually fainted or was merely playing possum. Please don’t ask me my opinion on this, because if you ask me, my response will be “na who I go ask”. Just call that act One scene 1. But if Nigerians thought they had seen it all for the week, more drama, enough to make Nollywood actors go green with envy awaited them. Enter Godwill Akpabio, the Minister of Niger Delta Affairs. His engagement with the legislators was no less enthralling. The highpoint of Akpabio’s session with the probe committee was his declaration that national assembly members constituted about 60 percent of the beneficiaries of contracts by the NDDC. The minister was later challenged by Speaker of the house Femi Gbajabiamila to publish names of beneficiaries of NDDC contracts in the national assembly. No such publication has been made and a legal action has been threatened. We wait with bated breath to see where this ends. For now, we let’s just say curtain falls on act 1 scene two. Act Two scene 1 began with yet another probe by the same House of Representatives. This is where we saw another supposedly honourable minister in his most dishonourable element. The Minister of Labour, Chris Ngige, had appeared before the House Committee probing

www.businessday.ng

the operations of the Nigerian Social Insurance Trust Fund (NSITF) under the supervision of the Minister. A member of the committee, James Faleke, had raised a number of salient posers for the Minister to address. In all, eleven questions were raised by Faleke. The questions raised ranged from procedural breach in the sack of the NSITF management, to accusation of tribalism, undue interference in the running of the agency under probe and use of office of Ngige’s wife to choose an insurance broker for the agency. Rather than go straight to the issues raised and state the reasons behind the actions he took, Mr. Ngige veered off the track and resorted to a diverse form of logical fallacy to beg the question, resort to name calling and perhaps cow the committee members. He started off saying all the committee members were junior to him in age. Pray tell me, what has age gotten to do with giving account of one’s performance in a public office? Ngige later exhibited his fixation with class stratification when, in a show of rustic haughtiness, he said Faleke should not talk to him because Faleke was a ‘small boy from Mushin’ who should not talk to him, (Ngige), a Victoria Island boy. The Bible could not have been mistaken when it says from the abundance of the heart,

https://www.facebook.com/businessdayng

to set the prices. Sellers decide what the price to charge for their commodities depends on their production and distribution costs, and buyers decide whether to buy or to look for cheaper options. This is what a true willing seller willing buyer market should be. Without proper pricing, quality products, including electricity would always remain elusive. The government’s role is to create an enabling environment for the sellers to produce and sell commodities, and it should focus on its role and let private companies and investors focus on providing the commodity, steady and reliable electricity in this case. Regulations should be designed to encourage sectoral growth, but so far, they have not worked in the power sector, so it is time to do things differently. For investors to make the very large investment needed across the entire value chain, they need to be confident that the regulators will develop a workable set of regulations and stick to them, without the constant changes that render agreements that often take many months and lots of expense to generate, useless. Investors need the government’s firm assurance that agreements will be respected by all parties to them, including the government. Finally, incentive structures such as duty-free importation for power equipment, tax holidays, and some sort of liquidity guarantees that will protect investments from foreign exchange fluctuations will be key to attracting the hefty investments needed. We cannot regulate something that does not exist. Nigeria therefore should allow and support the NESI to grow organically and properly serve Nigerians, the way the telecommunication industry was allowed and supported to grow. The only way to fix Nigeria’s broken power value-chain is to create a commercial basis for the operation of the industry so each point in the value-chain is boosted to play its role effectively.

@Businessdayng

Ademola Adegoke the mouth speaketh. Has the (dis) Honourable Minister demonstrated the disdain, contempt and low esteem etched on his heart against the ordinary but hardworking people of the country as symbolised by Mushin and Ajegunle in Lagos, Kabusa and Mpape in Abuja, Upper Sokpomba and Ekosodin in Benin City , Foko and Kudeti in Ibadan, Fagge and Yankaba in Kano and many other similar abode of the underprivileged across Nigeria. These places represent the resilience and undying spirit of an average Nigerian in the face of deprivations, oppression and misrule by the elite occupants of Victoria Island, Asokoro, Bodija and Bompai in Lagos, Abuja, Ibadan and Kano respectively and other choice locations in different Nigerian cities. The Mushin man is usually not part of the pork barrel and gravy train through which many VI occupants may have acquired their choice property, yet he trudges on with life and in many instances, makes a success of it. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Adegoke is a Media & communication consultant in Lagos.

F a

Wednesday 29 July 2020

BUSINESS DAY

Editorial Nigeria: How not to fight corruption

Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Time is now for those stealing public funds to pay for it

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

Bashir Ibrahim Hassan

he probe into the financial malfeasance in the operations of the Niger Delta Development Commission (NDDC) showed little or no seriousness in the fight against corruption in Nigeria. It was a clear manifestation of how not to fight corruption. A country does not fight corruption on TV which is why the so called probe could be likened to a comic interlude. It was indeed an embarrassment to a country which prides itself as the giant of Africa. Although the efforts of President Muhammadu Buhari to order a probe of the NDDC now after about 19 years of the commission’s failure to deliver on its mandate to bring development to the Niger Delta region is commendable, we are of the view that it is not enough to just set up a panel given the weight of the allegations against the NDDC officials and the fact that cases like this are becoming the norm. The Niger Delta region, which is the path to Nigeria’s financial

prosperity since oil was discovered in the region in 1956, has been suffering since then from oil spills, pollution and many other health hazards. While Nigeria recorded an increase of over 500 percent in earnings from crude oil exports as oil sold for over $100 per barrel in 1979, the region remains grossly underdeveloped. The Oil Mineral Producing Area Development Commission (OMPADEC), established under President Ibrahim Babangida to address the Niger Delta challenges, failed after Eric Opia failed to account for N7 billion which accounted for half of the commission’s budget. The NDDC on the other hand has received, at least, N15 trillion since it was established by President Oludegun Obasanjo in 2000. Still, the region is in a poor state. This suggests that these commissions, over the years, have mainly been used as a vehicle for corruption and misplaced spending. Beyond the Niger Delta region development being an opportunity cost to the satisfaction of the greedy and inordinate desires of individuals at the helm of affairs

in these commissions, Nigeria has wasted funds that could have been deployed into more economically viable projects for the benefit of all. Now, N40 billion has been misappropriated during Pondei’s short tenure that started after he replaced Joi Nunieh. This, for us, is a terrible piece of news that Nigeria is still battling cases of embezzlements in time of a pandemic when funds are needed to ameliorate the sufferings of people. Bringing cases like this to the media and making jokes of them have become the trend in Nigeria’s recent history. By all standards and stretch of the imagination, it is not right that billions are being spent but there is nothing to show for it. Also, it is not okay that taking bribes is the order of the day among Nigeria lawmakers. We believe that it is high time those found guilty of stealing public funds pay dearly for their actions. It is also time President Buhari lived up to his promises of fighting corruption. Like other Nigerians, we have not forgotten that, as the presidential candidate of the All Progressives Congress (APC) in 2015,

Buhari said, “if you work hard to stop corruption at the polling units by voting for the APC, I can say that you are not doing me good but you will be doing yourself good. Nigerians must rise up to fight and kill corruption before it kills us.” But five years down the line, we are seeing corruption killing Nigeria daily on TV. We demand more from President Buhari in the fight against corruption, more especially in the probe of the NDDC. We believe more can come out of a president than just setting up a panel. Failure to deliver on the promises made to the Niger Delta region is an invitation to further insecurity, unrest and health hazards. The NDDC must be held accountable. Transparency must be demanded and oversight functions must be in place. Setting audits and committees without removing those in charge at the NDDC, who clearly do not have the interest of Niger Delta people at heart but use the commission as money making venture, the fight against corruption in that space will ever remain a huge joke.

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

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

OUR Core Values

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

COMPANIES&MARKETS COVID-19 impact could worsen stage 2 loans - Agusto & Co

OLUFIKAYO OWOEYE

…Banks write off N1.9trn loans in 4 years

gusto & Co says COVID-19 pandemic with its impact on businesses has elicited an increase in the volume of stage two loans. The rating agency, in its latest 2020 Banking Sector report noted that stage two loans are susceptible to adverse migrations in the face of a prolonged macroeconomic downturn. Stage two loans primarily comprise exposures with an increase in the associated credit risk compared to when the loan was disbursed. According to the International Financial Reporting Standard (IFRS) 9, approximately 23 percent of the Banking Industry’s gross loans and advances was classified in the stage two category as at 31 December 2019. As at the same date,

four out of the twenty-four banks covered in the report had stage two loans to gross loans ratios above the 23% Industry’s average. Also following the forbearance granted by the Central Bank of Nigeria (CBN) in March 2020, permitting banks to restructure loans to businesses that have been adversely impacted by the novel COVID-19 pandemic, the banking industry had restructured over 7.8 trillion (almost half ) of the loan portfolio as at June 2020 The forbearance is expected to keep the Industry’s impaired loan ratio, which stood at 7.6% as at 31 December 2019, at bay in the short term, Agusto & Co. is however concerned about the performance of these affected loans, given that the coronavirus pandemic is yet to be curtailed and a second wave may be looming.

“A further slowdown in economic activities and a total lockdown may worsen an already bad situation” the report said. “Stage two loans are a threat to the Industry’s capital base, which has come under pressure in the last three to four years owing to the adoption IFRS 9 accounting standard and the recession. The COVID-19 pandemic is a further threat to capital which could impact profitability,” the report added. The report said the Industry’s asset quality is further threatened given significant exposures to vulnerable sectors. The Central Bank of Nigeria (CBN) has granted palliatives to banks in form of permitted loan restructurings to certain sectors that have been severely affected by the pandemic and we expect this to moderate the

anticipated level of asset quality deterioration in the short term. The report noted that following the 2015/2016 recession, the Nigerian banking industry has written off a minimum of 1.9 trillion of impaired loans from its loan portfolio. “This volume of write offs has been driven by the weak macroeconomic climate and the introduction of the IFRS 9 accounting standard in 2019,” the report said. Agusto & Co. believes that the stage two loans require effective monitoring, particularly in the face of heightened macro-economic risks. The prevailing headwinds make effective monitoring of these exposures imperative to forestall significant deterioration in asset quality, subdued earnings and lower capitalisation ratios in the near term.

L-R: Mary Aworetan, head IT, Old Mutual; Alero Ladipo, executive head, marketing and customer experience, Old Mutual; Olufunke Oyetola, director, public private partnerships, Lagos State Ministry of Education, and Gbenga Adeosun, student, St. Francis Junior Grammar School, during the Old Mutual’s presentation of remote learning aid materials to students in Lagos.

TurrisFortissima new luxury Hallmark Estate to be ready Q1 2022 MODESTUS ANAESORONYE

urrisFortissima Limited, a trusted real estate firm known f o r c o n st r u c t i ng state-of-the-art facilities, has introduced yet another exceptional housing facility, called The Hallmark. The Hallmark is part of TurrisFortissima’s commitment to providing affordable, yet luxurious housing to discerning investors and home seekers within and outside Nigeria. The Hallmark Estate is nestled in the effervescent vicinity of Lekki in Lagos State – on Admiralty Way. The estate holds the promise of luxury and elegance. The best part of Hallmark Estate for many lies in its location and proximity to lifestyle centres which makes it ideal for investors and families looking for homes in the heart of Lagos. Speaking during a press briefing, Tunji Aiku, principal partner, TurrisFortissima Limited explained the unique features of The Hallmark Estate. According to him, The Hallmark Estate ticks all the marks of quality and caters to the need of luxury home seekers in Lagos. “What we aim to achieve with The Hallmark Estate like all our projects is to provide elegant and distinct real estate with convenient payment plans. The Hallmark Estate is second to none in all ramifications of affordable luxury,” he said. He further stated that the estate has been carefully planned and comes with lush gardens, trees amidst green areas, extensive walkways and timeless architecture. In the same vein, Tobi Ogunrombi, non executive director, TurrisFortissima also affirmed the company’s commitment to bridging the

deficit for luxurious yet affordable housing in Lagos, stressing that the estate is a perfect balance of urban living and classy abode for homeowners who desire luxurious and affordable homes at the same time. “It is of paramount importance to us at TurrisFortissima to meet the needs of Lagosians who do not have the time to build their desired homes from start to finish. We take the stress off them by providing well finished houses that meet international real estate standards using quality building materials,” she added. She assured that the delivery of The Hallmark would be in Q1 2022 and by then all home owners would be able to live in their dream houses in the heart of Lekki, Lagos with 24 hours of uninterrupted power supply. Tunji revealed that apart from its good serenity, adequate security and space, the estate is “a perfect place for that city homewith a touch of nature as the design seeks to preserve most of nature’s gifts within its beautiful landscape and breath-taking scenery,” he said. The Hallmark is designed to be an elegant and impressive custom-built estate structured to compliment the taste and lifestyle of every home seeker with a flair for sophisticated and elegant real estate. A 2bedroom in Hallmark Estate goes for 75 Million Naira while the 3bedrooms go for 85 Million Naira. The two flat types come with maid’s room. Recreationally, the Hallmark comes with a swimming pool, playground for children and a gym. Infrastructure in the estate includes paved road network, well-illuminated streets, pedestrian boulevard, drainage system, security network, perimeter fence and more.

CONSUMER GOODS

International Breweries’ H1 revenue slumps on lockdown impact

nternational Breweries’ revenue for the three m o n t h s A p r i l -Ju n e showed significant decline on the back of restrictions and social gatherings. The beer maker’s revenue tanked to N25.26billion from N33.53billion during the period under review. Cost of Sales declined N21.89billion from N27.79billion. Administrative expenses stood at N5.94billion from N27.79billion. Marketing and Distribution expenses reduced to N1.47billion from N2.96billion. Finance Cost reduced to N1.29billion from N1.94billion. Despite, re-

duced sales during the lockdown loss for the period stood at N3.7billion from N2.85billion. For the first six months of the year, revenue also reduced to N60.61billion from N68.63billion. Loss in the first half of the year stood at N9.35billion from N6.84billion. The beer maker recently recorded 100 percent subscription in its Rights Issue. The Rights Issue is the largest equity issuance ever in the Nigerian capital market. The company raised N165 billion on the sale of 18.3 billion units of ordinary shares of 50

kobo each at N9.00 per share offered to existing shareholders through a Rights Issue in December 2019. Prior to the rights Issue, following the completion of the merger of Intafact Beverages and Pabod Breweries with International Breweries PLC in December 2017, the beer-maker continued the construction of the Gateway Plant to address the capacity constraint that has limited its growth. The construction of the N90 billion plant was largely financed with debt, which led to significant borrowings and altered the brewer’s

www.businessday.ng

capital structure from a debtto-equity perspective. The long-time strategy by International Breweries focusing on increasing the market share ahead of bottom-line growth may have paid off as it has seen it grown market share from single-digit to double-digit, moved up as the second-largest brewer by market share in the country, displacing Diageo-owned Guinness. However, local investors continue to worry about costrelated issues around the company with many wondering for how long deep-pocket AB InBev-backed brewer con-

https://www.facebook.com/businessdayng

tinue to burn cash while profit drags. In 2016, AB InBev acquired SABMiller worldwide and by extension, their subsidiaries in Africa. AB InBev’s majority shareholding in Intafact Beverages Limited and Pabod Breweries Limited were merged with International Breweries PLC. AB-InBev, controls over 70 percent of the larger International Brewery, with direct and indirect stake of 75.1percent representing the 47.4percent held by SABMiller Nigeria Holdings BV, and 27.7percent held by Brauhaase International Manage@Businessdayng

ment GMBH. Also, Anambra State Government holds a 4.7percent stake in the beermaker, while minority holding amounts to 20.0percent. Prior to the merger, International Breweries, Pabod, and Intafact had established a strong footprint in terms of mainstream value brands in the Sout-West, South-East, and South-South regions of Nigeria respectively. Therefore, the consolidation of the three subsidiaries was a strategic move by AB-Inbev to challenge the continued dominance of Nigerian Breweries Plc (NB) and Guinness in the Nigerian market.

Wednesday 29 July 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

CONSUMER GOODS

Unilever H1 ‘20 result waves warning flag for FMCGs SEGUN ADAMS

nilever Nigeria posted its first half-year loss since at least 2013, according to available NSE records, suggesting that Fast Moving and Consumer Goods companies (FMCGs) in Nigeria may be up for a significantly challenging year, no thanks to the coronavirus pandemic. Unilever Nigeria in the six months of the year to June 30 made a loss of N519 million, an anomaly for the household brand that made over three billion profit in the same period last year. Food Product and Home & Personal Care (HPC) segments in the period came under pressure, especially the latter, as Nigerian consumers held back spending and adjusted their consumption patterns in the light of the coronavirus impact on their income. “ The second-quar ter numbers give us an idea of how bad the lockdown was and how it affected some of the players in the industry,” said Abiodun Keripe, Head of Research, Afrinvest Limited. “I am not surprised, these second-quarter numbers are worse off. I expected this.”

On March 31, 2020, the president announced a total lockdown of economic activities in Lagos, Abuja and Ogun states in order to combat the COVID-19 pandemic. The lockdown was gradually eased starting from May 4. During that period (April and May), 38 percent of workers stopped working due to disruptions across sectors of the economy, the National Bureau of Statistics (NBS) estimated. The poorest households formed the highest of workers that stopped working (45 percent) but the rate was also high for the wealthiest households (39 percent). The middle-class saw a rate of 42 percent, the second-highest. The impact of the COVID-19 pandemic had a negative effect on Nigeria households’ total income, as a high rate of households reported income loss since mid-March. 79 percent of households reported that their total income decreased. The performance of Unilever “continues to reflect the challenging operating conditions as pressured consumer wallet continues to impact sales, while weaker exchange rate, poor FX liquidity and rising inflation continue to impact input and fixed costs,”

said analysts at Cordros Securities. The analysts, however, noted the company-specific issues like unsustainable high marketing and admin expenses, as well as its management plans to sustain investment behind their brands in order to boost volumes. Consumer analysts like Ayorinde Akinloye at Lagosbased CSL Stockbrokers are looking beyond the pandemic lockdowns to the agelong issue of product elasticity in the sector. “Home and Personal care products are highly competitive now with several alternative brands,” Akinloye said. “For example, Unilever themselves alluded to this when they stated that the consumer market is developing a 4th tier.” Also, the underwhelming q2 performance of Unilever wiped its q1 2020, thereby affecting its half year (H) performance. It recorded a 35.9 percent decline in revenue to N27.3billion from N42.7billion in H1 The lockdown of economic activities in Nigeria had a negative impact on Unilever Nigeria Plc, a Fast-Moving and Consumer goods company revenue in the three months period ended June 2020.

MAX.ng representative (2nd l), Rhoda Gyamfi donating parasols to market traders in Ibadan on behalf of MAX.ng to protect against harsh weather.

Funke Adepoju (r), executive secretary, Lagos State Water Regulatory Commission (LSWRC), and other members of the commission, at the quality control and enforcement to Banana Island water treatment plant in Lagos.

Ariston Thermo Group takes a global campaign on sustainable comfort to Nigeria KELECHI EWUZIE

global leader in thermal comfort solutions for domestic, commercial and industrial spaces, Ariston Thermo Group has premiered its global campaign ‘The Ariston Comfort Challenge’ in Nigeria. Th e c o m p a ny w h o s e global mission is to bring sustainable comfort, even where it seems impossible to find says the success of the Ariston Comfort Challenge ‘Greenland Mission’ is another proof of its core value of superior quality products, which could be seen in the efficiency of the output of the product even in the extreme weather condition. Gaurav Bisaria, director, Central Africa, Ariston Thermo Group while speaking during a virtual media parley held in Lagos explained that a safe and sheltered house, heated and provided with hot water for the maximum comfort

even during Polar winters would have not been possible without our commitment to quality. Bisaria noted that the campaign launched on the 90th anniversary of Ariston Thermo testifies of the company’s commitment to product quality in the quest of bringing comfort to everyone, even where it seems hard or impossible to find. According to Bisaria, “Our new breed of water heaters introduced into the Nigerian market will help us embrace a completely new and different way to bring our purpose and mission to you” The director, Central Africa of the company further explained that in order for the team of scientists to carry through their mission of collecting and examining samples in Disko Island, they needed an innovative infrastructure to act as a stable base against the icy island. “Ariston rose to the challenge and selected three of the best installers from all over the world, who acwww.businessday.ng

cepted to dive together into the unknown to deliver and assemble a warm and innovative modular home specifically developed as an energy-efficient, sustainable solution able to endure the most extreme climate conditions,” he said. He stressed further that through the Challenge, Ariston sought to demonstrate how through its dedication to product quality Ariston Product’s continue to meet the demanding expectation set them to even in the harshest conditions. “The Ariston Comfort Challenge – Greenland Mission has been entirely filmed from the beginning to end in the form of a web-series”. “The six-part documentary narrates the story of the three hero installers and their demanding trip to complete the challenge. It not only shows their adventures in reaching the destination but also the people and cultures that live in the stunning icy landscapes of Greenland,” Bisaria said.

L-R: Gbolabo Olaniwun, senior special assistant to Lagos State governor on agriculture; Gbolahan Yishawu, member, Lagos State House of Assembly, representing Eti-Osa 2; Abisola Olusanya, acting commissioner for agriculture, Lagos State, and Olayiwole Onasanya, permanent secretary, ministry of agriculture, during the official flag off of Eko City Farmers Market, Ileya edition at Ikoyi Falomo in Lagos.

L-R: Bruno Zambrano, Finance Director, International Breweries plc (IB Plc.); Michael Ajukwu, In-Chair IB Plc. and Muyiwa Ayojimi, Company Secretary IB Plc. during the 43rd Annual General Meeting of International Breweries Plc. in Lagos.

https://www.facebook.com/businessdayng

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Covid-19 protocols up-beat as Abuja-Kaduna passenger train services resume today ...Decontaminates stations, rolling stock

sit on their allocated seats. There shall be no changing of seats. There shall be no movement/loitering while on board except for use of the conveniences while there will not be any catering on board the train at present. NRC Janitors will be available to clean and disinfect the toilets immediately and whenever they are used while on board and the railway authorities has also warned that defaulting will not be tolerated in order to safeguard other train users. To ensure maximum compliance, NRC have equally deployed more law enforcement personnel on board the passenger trains.

n our everyday driving, the condition of brake pads greatly affects the effectiveness of the driver’s braking pattern. In order to guarantee occupant’s safety, this mechanical part must be checked in time. And for the purposes of this piece, here are some tips and advice to anticipate and to control the wear of your pads. Brake pads: a key role The braking action activates the caliper which pushes the pads coming to grip the brake disc. The latter reduces the rotation of the wheel, which causes the vehicle to slow down. Pad wear therefore creates a malfunction on the entire brake system. What are the signs of wear on the brake pads The first sign to take into account is the warning light. Wear is indicated by an indicator light which is triggered during braking. In this case,

even longer braking distance. How t o check t he brake pads Contact between the pads and the disc causes them to lose material. This thinning is an indicator of wear to be measured. The brake pad is located in the brake caliper which is located around the disc. To check the pads, the wheels are removed and the thickness of the template is assessed. The minimum required is 2 millimeters. Whentoreplacethepads The frequency of change depends on the type of driving, vehicle; environment in which the vehicle is driven. The brake pad has faster wear than the brake disc. It therefore requires a more frequent change. Generally speaking, checking the pads is recommended from 30,000 kilometers. Replacing the pads then requires a running-in period of 300 to 500 kilometers during which the pad adapts to the shape of the disc. During this step, you should avoid

you no longer drive safely and the brake pads must be replaced immediately. Other sound signals can put you on the ear: deaf noises, whistling when braking … Also pay attention to jerks, vibrations of the brake pedal or

hard braking and press the brake pedal for too long. Regular maintenance and inspection of the brake pads does not exempt you from taking out good car insurance: the best ally of a driver who takes to the road.

MIKE OCHONMA

MIKE OCHONMA Transport Editor

ith the resumption of passeng e r t ra i n services on the Abuja-Kaduna rail corridor, the Nigeria Railway Corporation (NRC) has put in place a number safety guidelines and necessary protocols to be observed by all passengers. The NRC has also decontaminated all train stations and rolling stock. NRC says there will be strict adherence to the use of face mask at all NRC facilities especially while on board the trains. Face masks must be appropriately worn at all times throughout the duration of the journey. All passengers must come with their own alcohol-based hand sanitizer(s). The percentage of alcohol must be up to 90 percent. Management reminds commuters that neither the federal nor the Nigeria Railway Corporation will provide sanitizers for the passengers. Furthermore, all persons at the NRC facilities must observe social distance of minimum of two metres even while on board the train. There must be social distancing on board. Hence sitting arrangement has been reviewed. Passengers must

Brake pads: Everything you need to know

These include the Police, Nigerian Civil Defense and Security Corps (NCDSC) Man-O-War (MOW) on board to enforce strict adherence to the new protocols especially the use of face mask and maintaining social distancing at all times. For many years, the Abuja-Kaduna road has become notorious for several cases of kidnapping of many travellers and some killed after collecting ransome in the process, thereby forcing many Nigerians to prefer traveling by train along the corridor. The train schedule for today, Wednesday July 29, 2020 according to series and

frequencies are as follows: Abuja to Kaduna (1) 7am, Kaduna to Abuja 6.40am (2), Abuja to Kaduna 9.50am (3) Kaduna to Abuja 10.35am (4) Abuja to Kaduna 2.20pm (5), Kaduna to Abuja (6) 2pm, Abuja-Kaduna (7) 6pm and Kaduna to Abuja (8) 6pm. A wave of abductions in the country has continued to raise fear across the country. Unlike kidnappings which take on political dimensions such as those involving militants who agitate against oil companies in the south, or Islamic group Boko Haram in the north, this wave spans every region, and is driven largely by economic hardship.

N70m new Mercedes SUV arrives local dealerships ….flaunts luxurious exterior, larger than life features MIKE OCHONMA

ercedes-Benz GLS, positioned as the brand’s largest and most luxurious all-new sport utility vehicle (SUV) is now in Nigeria. Since first introduction in 2006 as the GL, the current GLS has dominated markets in the large-sized luxury SUVs all over the world. It offers more of everything in terms of space, comfort and luxury. With a whopping starting price tag of N70 million from any of the accredited Mercedes-Benz showrooms under Weststar Associates franchise in the country, the new generation GLS pushes the bar even higher, living truly to its title as the S-Class of SUVs.

It stands out with highlights like EQ Boost, an allnew 4-matic that ensures great agility on the road and strong performance off the beaten track, and key comfort features like; the Mercedes-Benz User Experiwww.businessday.ng

ence (MBUX), electrically adjustable seats throughout as standard and a generous amount of space especially in the second row. Exterior is luxurious and larger than life; with a more superior presence in com-

parison to its predecessor, thanks to a larger wheelbase at 3135 mm. Impressive proportions and the long bonnet also underscore the power and presence of the new GLS. The nearly upright radiator grille, prominent chromed skid plate, and the bonnet with two power domes are key features of the unique exterior design. Inside, the elegant aesthetics are highlighted with leather appointments as standard with instrument cluster and media display (2 x 12.3inch as standard) housed behind a shared continuous glass surface to form a large free-standing screen. There is a touchpad in the center console controlling many vehicle functions, even as its ambient lighting impressively illuminates the

https://www.facebook.com/businessdayng

dashboard, with optical fibers coursing throughout the cockpit.Four rectangular air vents are prominently embedded in the trim element. Typical of off-roaders, there are two prominent grab handles on the center console trimmed with ARTICO man-made leather. There is also a new sport steering wheel with a striking, sculptured spoke design. Its longer wheelbase means there is more space, especially in the second seat row, which can furthermore be electrically adjusted front and back by 10 cm. More leg room exists in both the second and third seat rows. The easy-entry function makes it easy to get into and out of the two individual seats in the third row. All versions are for the first time equipped with ful@Businessdayng

ly variable all-wheel drive (torque on demand, TonD), which regulates the torque split between the front and rear axle from 0-100 percent depending on the selected drive mode. With the optional OffRoad Engineering Package, a likewise fully variable allwheel-drive system with low and high range is available. This makes the GLS more offroad capable than ever. Mirko Plath, CEO, Weststar Associates Limited says; “The GLS is a superstar in the SUV segment, and we are proud to unveil the 2020 edition to our customers here in Nigeria. With highlights like EQ Boost, the updated 4matic all-wheel drive and Mercedes-Benz User Experience (MBUX). We are certainly in for a treat”.

Wednesday 29 July 2020

BUSINESS DAY

INTERVIEW ‘Stallion Group, Bajaj aligns for tricycle market dominance’

Soon the tricycle business will see a boom following the latest acquisition of the Indian Bajaj dealership by Stallion group. While MANISH ROHTAGI, managing director, Stallion Auto Keke Limited in this interview with MIKE OCHONMA, is optimistic that, the Indian 3-wheeler brand will soon change the narratives of the market segment, he is also calling on Nigeria’s policy-makers to focus more on greener transportation system in Nigeria.

hat gave rise to the acquisition of the Bajaj franchise by Stallion group For over 50 years, Stallion has successfully navigated the Nigerian terrain and has become a timetested conglomerate that has its presence across the Nigerian economy. Stallion Group’s vision is to adopt global best practices and localize it to develop scalable, impactful and sustainable business that is committed to improving the socio-economic conditions of the communities. Stallion brand is now a household name in Nigeria touching lives everyday with its products like rice, fish, steel or auto sales, distribution and assembling. It employs 4000 people directly and indirectly; it is one of the foremost conglomerates that hugely invested in the country gaining respect and trust of the community. Bajaj Auto on the other hand is a world leader in the intra city vehicle space. Loved in 70 countries, the brand stands for integrity, dedication, resourcefulness and determination to succeed and empower. With similar brand ethos, we believe that this alliance will go a long way in empowering Nigerians to be self-reliant and improve the interests of the stakeholders be it employees, dealers, distributors, vendors, mechanics, unions, logistic operators or bankers. You have managed other Tricycle (Keke) brands, what is your attraction in switching over to the Bajaj franchise With years of experience in multiple countries including Nigeria, I foresee the opportunity that Bajaj has vast potentials for growth in the Nigerian market. Bajaj is the dominant tricycle brand with over 70% market share in populous countries like India, Argentina, Columbia and many other Asian and Latin American countries. So the Nigerian success story is a matter of time. The right approach and service to the dealers and consumers to bring out the USPs of the product and essence of the brand will add strength for it to become the market leader. Other competing brands like the TVS controls larger market share, how are you positioning the Bajaj especially in the South-south and South-east regions. Bajaj is the world leader and market leader in the north, central Nigeria and many states in the east with dominant market share of over 85 percent. Our focus

Ade Adefeko

Manish Rohtagi

has always been in keeping our employees and dealers satisfied. The core of our strategy in non-leading markets would revolve around our channel partners. The Nigerian customer is much evolved and well informed, and they have a keen eye for value for money and support by the company. We are committed to bring this to them. With the downtown in global economies, are you considering any form of financing package to prospective customers. The downturn in global economy has had a lasting impact on many industries. Our customers are the ones who are most impacted by the pandemic as a lot of them are daily wage earners. Owning a tricycle in these times could be impossible if not supported through micro finance banks (MFBs) and nonbanking finance companies that come forward to support them through hire purchase. In terms of financing packages, we have many MFB’s and financing partners who are committed to support their purchases on best viable terms. How well equipped will Stallion dealership be in areas of after-sales and spare parts back-up. Aftersales and spare availability has been the backbone of Stallion Group flagship brands like Honda, Hyundai, Nissan, Changan, Ashok Leyland, KYC, Skoda, Volkswagen, Audi and Porsche. Service is one of the core strengths and the investment in state-of-the-art sales and service facilities to support the topical requirement justifies the commitment towards the customers. www.businessday.ng

We have well established processes which are laid down by Bajaj auto based on experience on product and customer requirements. We will have a dedicated network of service and spares which will be handled by highly trained Nigerian engineers and technicians. Highest level of craftsmanship is what one can see in our dedicated team of engineers and technicians. Can you estimate the value of the 3-wheeler business in Nigeria Due the lack of formal accredited market information entity, it is difficult to estimate the actual market size. But based on the data for importation, it should be around 150,000 per year. There are about 400,000 tricycles (Keke) on Nigerian roads and there is potential of 2 million tricycles in the country. The 3 wheeler market in in the country has high potential for growth as it serves two fundamental needs, one that of intra-city commute and the lack of available options for public transport and employment generation. The mode of commute is fuel efficient and least polluting in comparison to any Tokunbo public carriers. With federal government’s support, Bajaj can also provide LPG and CNG options in the future. Stallion can bring it into the country. We are confident that, with the help of policy makers, we can make public transportation more affordable and cleaner. Even if we estimate around 10 Keke per 1000 Nigerians, there is a potential to have 200,000

https://www.facebook.com/businessdayng

tricycles on the roads that can provide affordable transportation to this country. The policy makers should focus on greener transportation system. Ruggedness of Bajaj tricycles on Nigerian roads compared to other brands Bajaj Keke is known for its durability, speed and manuverability. We have actively sought customer feedback to drive innovation, product and service improvement. With Stallion, we run a very de-centralised operation with quicker decision making which will help drive our operating efficiency. The RE- Keke model and the load carrier category called Maxima Cargo is expected to grow at a much faster rate as Stallion will actively push for the adoption of Cargo tricycles by existing partner and customer ecosystem. Bajaj is the pioneer brand of tricycles in Nigeria loved by millions across the countries and the partnership with Stallion further adds to the strength. In the last two years, I have travelled round the country to engage with customers and seek their feedback. I have observed that Bajaj is a dominant player in markets in north like Kano, Kaduna, Abuja, Sokoto, Kebbi, and in all these places and the hinterlands, the road severity is very high in comparison to the South Eastern parts of the country. So, if is stands the test of those markets which are affected by severe harmattan, heat and poor infrastructure than the product is definitely our USP. It’s the most durable and rugged product with great performance. In fact, there have been attempts to convert those customers to other brands, but they remain steady with the Bajaj brand because of the faith and returns on investment by customers. The right communication and dealer engagement will be my primary objective in markets like Lagos and East and it will be a game changer. To what level would you like to take Bajaj brand under Stallion franchisee in the next 5 years Our immediate task is to establish and forge long term partnership with our dealers and channel ecosystem across the country. Through these fulfilment partners, we envisage providing employment opportunity to five million Nigerians directly and indirectly over the next five years. Bajaj has always been a trusted and admired brand in the country, so is the case with Stallion, the synergy is going to take market by storm. @Businessdayng

How competitively priced will the new entrant be compared to other brands Our pricing policy will be in line with the philosophy of increasing customer’s prosperity. For us, return on investment (ROI) and profit is important, and we will ensure that our pricing decision is aligned to it. Price is an outcome of happiness of employees, dealers and customers and we will ensure that the thought resonates with all our stakeholders ubiquitously. What are customers’ expectations from the redesign and remodeling imputs and marketing push to in the face of coronavirus pandemic Some of those affected by the coronavirus scourge are our customers; the economic slow-down has resulted in sparse incomes for their household exposing them and the passengers to the vagaries of managing while potentially exposing them to the virus. Over the last two to three months, we have reached out to our dealers and they in turn to the riders. We have started distributing palliatives through the charitable arm of Stallion Empowerment Initiative. Since the businesses are getting back following the lock-down, we are taking proactive and preventive measures to make sure, contact between the Keke operator and the passengers behind are minimized to control the spread of the disease. A flexible separator is designed to keep the passengers and driver away and we are going to distribute it at no cost to our dealers. Apart from this, we are also preparing a specilaised kit that will include mask and sanitizers for both the drivers and commuters. When consumers are in distress and the economy is bad, we will not increase our prices because of Naira devaluation against Dollar. We will have one fixed selling price throughout the pandemic period and will remain on it especially during this pandemic period. Going forward during our service campaigns, we will be conducting a health check, this will be mandatory in our service approach. Why these innovativeness in your business model We need to have a very strong people approach as the business is by them and for them. We have to first take care of people and their livelihood. Based on this philosophy, we are working with our stakeholders to take care of consumers and drivers.

Wednesday 29 July 2020

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Companies must invest in training of their employees if they want the best out of them - CIIN president Muftau Oyegunle, new president of the Chartered Insurance Institute of Nigeria (CIIN) during his investiture last week unfolded a six point agenda with the Theme: Reinforcing Professionalism and Ethics in Insurance Industry. In this exclusive interview with Modestus Anaesoronye shared his vision for the Institute and how to key into the new world order. Excerpt: You are now officially the 50thPresident and Chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN), what does this mean for you in your career? feel indeed privileged. I must acknowledge, that I am alive, healthy and have inner peace is by the grace of God. In addition, I am who I am today because I have the priviledge to be close to some quality people along the way. To have the priviledge to lead the Chartered Insurance Institute of Nigeria after 35 years in the Industry is to me an accomplishment for which I thank God. Given the enormous responsibility and task attached to this office, how prepared are you to deliver on the expectations of insurance professionals? After serving the Institute in various capacities for the past 25 years and having worked closely with not less than 5 Presidents in addition to my personal training and exposure, I guess I am well equipped to serve. Luckily for me, all the Presidents I worked with are very much around to support. I can only take so much from the wisdom they have amassed from leading the Institute and equally as Insurance professionals. It is a resource and knowledge I am grateful to have the privilege to draw from. What is the theme of your Presidency and what is the driver? Reinforcing Professionalism and Ethics in the New Order.We are all aware post Covid – 19 era is bringing about a new world order. While we are not sure of how everything will play out, we know that some industries are dead, some are making money and some can only survive learning new skills. For us as Insurance Professionals, we must quickly dimension where we are and prepare our Associates for what it takes to survive in the new world. While IT has become the survival skill, it has also made learning easier, practically everything is now available online and our people must benefit from it. What will be your key priorities when you become the president? I am lucky that the past 3 Presidents had given the Institute a facelift and invested in IT. The immediate priority is to upscale our IT to ensure our members need not come to the office since they can achieve their needs online, make e-library available for learning and start online examination by 2021. You will notice that both the Institute and the College are already organizing courses and programmes online and we are looking to upscale this to make it the order of the day. With technology you can do so much and as an organization focused on taking forward steps we are focusing on improving the quality of our services to ensure member satisfaction. The Covid -19 pandemic has created a new world order including workculture, skill demand and human capital develop-

Muftau Oyegunle

www.businessday.ng

‘

It is still difficult to predict how the current and last quarter will play out because not only Covid 19 now but the Oil market that is seriously depressed. Nigeria is expected to go into recession around September, however CBN is struggling to see what they can do to avert it or reduce the impact

https://www.facebook.com/businessdayng

‘

ment, how is the CIIN going to respond to this? As said earlier, we are already attune to the new reality and only need to upscale. The Institute’s calendar is largely driven by trainings and events. In the current clime where social distancing is the order of the day, how will the Institute continue to carry out its functions? It is the new reality which we must all get used to. Last Thursday, 9th July 2020, the CIIN / LSB Annual Seminar was held online. We are working on how to hold our Education Seminar and Professional Forum. If gatherings are practicable by then, fine, if not it shall be online or a combination of both. During your tenure, how do you intend to partner with government agencies to drive insurance awareness and equally improve the stake holding and perception of insurance as a profession and as a service offering? Apart from certification, the other core responsibility of CIIN is awareness at all levels and ensuring that all stakeholders are getting value. My Predecessors started some programmes which we can fine tune but more importantly, we need to get closer to the government to assist the industry to grow. With necessary legal frameworks, the Country will develop a robust insurance industry. I am sure you are aware of NICOM – Market Develop-

ment and Restructuring Initiative (MDRI – 4 pillars) and joint market publicity; these are noble programmes that we must support to take to the next level. Looking at the business environment, how would you rate the insurance industry in the first half of 2020, and what is the expectation for the rest of the year? First quarter was good and as are you aware, there were very little activities in the second quarter. It is still difficult to predict how the current and last quarter will play out because not only Covid 19 now but the Oil market that is seriously depressed. Nigeria is expected to go into recession around September, however CBN is struggling to see what they can do to avert it or reduce the impact. So, let us just hope for the best. There are assumptions in some quarters that there is a hesitancy by the Institute to wield the big stick in terms of meting out capital punishment to members who have violated its code of ethics and professional conduct. If true, why is there a hesitancy to do this? If not, how do you intend to change this perception? That may not be totally correct. The Institute has Investigation Committee and Disciplinary Committee and to the best of my knowledge, they are active and chaired by respected leaders. The problem is the reluctance of people to report cases of infraction. I can assure you that any case reported shall be investigated and appropriate disciplinary actions shall follow. For impression, I guess we shall give more publicity to cases handled going forward. What is the biggest challenge facing the CIIN today, and how do you plan to tackle it? Becoming an online organization with ability to satisfy all stakeholders and reach out to the world. As said earlier, this is priority for us and we shall mobilize the necessary support and fund to ensure we achieve this. What is your opinion on the recapitalization exercise being carried out in the insurance Industry and how would you rate NAICOM’s initiatives to ensuring that the process is as seamless as possible? Recapitalization is necessary in terms of depreciation of Naira over the years but the economic situation in the Country makes it very tough. Good that NAICOM has restructured compliance and hopefully many companies shall scale through. You know we are all in it together as Investors, Professionals and Practitioners. Your charge to the Insurance Industry and Professionals… The world has become knowledge base, So Companies must invest in the training of their employees if they want the best out of them. Smart employees now know those Companies that do not train cannot be their bus stop. For my professional colleagues, Professionalism has gone beyond ethics and knowledge to include speed, agility and digitalization. That is the new World.

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

BANKING What monetary, fiscal authorities can do to curb FX pressure HOPE MOSES-ASHIKE

he banking and financial market is currently facing foreign exchange liquidity challenges, leading to weakness in the value of the local currency. Nigeria’s Naira has been under pressure at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) and the black market since March, due to declining external reserves and falling crude oil prices occasioned by the outbreak of Covid-19 pandemic. As of Monday, dollar sold at N472 on the black market and around N388 at the Investors and Exporters (I&E) foreign exchange window. But in 1980, Naira exchanged at 80 kobo per dollar. Nigeria was then far more productive in 1980 than it is today, say analysts. In 1980 also, Africa’s biggest economy was a net exporter of refined petroleum products, but it imports all its refined petroleum products today. Nigeria’s citizens then rode in locally assembled cars, buses and trucks. Peugeot cars were assembled in Kaduna, and Volkswagen cars in Lagos, among other contributors to strong economic growth at that time. In his inaugural address after assuming office as the governor of the Central Bank of Nigeria (CBN) in June 2014, Godwin Emefiele indicated that his mandate would be to ensure that the CBN was more people-focused, as its policies and programmes would be geared towards supporting job creation and fostering inclusive growth, in addition to key macroeconomic concerns such as inflation and exchange rate stability. Since then, the apex bank, under his leadership, has shown strong commitment towards supporting measures that would wean the nation off dependence on imported goods, create wealth and jobs for youths, and promote a more stable and resilient financial system. Assessing the efforts of the monetary and fiscal authorities in maintaining the key macroeconomic indicators - inflation rate, interest rate and foreign exchange rate, Uche Uwaleke, a professor of capital market at the Nasarawa State University Keffi said, “I would rate the CBN high with respect to ensuring stability in key macroeconomic indicators within the purview of the apex bank such as inflation and exchange rate”.

Godwin Emefiele, CBN governor

Zainab Shamsuna Ahmed, minister of finance

From a high of over 17 percent in January 2017, he said the CBN had been able to ensure, using available monetary policy tools, that it moderated to current level of below 13 percent, although it was still higher than the CBN’s upper threshold of 9 percent. In relation to exchange rate, this has remained relatively stable since 2017 owing in part to the introduction of the Investors and Exporters Window sometime in April 2017. The stability in exchange rate can also be attributed to the demand management strategies of the CBN, including the restrictions to the forex market with respect to 44 items that can be produced in Nigeria –which were constituting a drain on foreign reserves. That measure, Uwaleke said, helped in no small measure to decrease import of the affected items thereby reducing the pressure on the forex market amidst dwindling crude oil revenue. Also, as part of its development finance function, the CBN has contributed to growth in the country’s real GDP through the various interventions, especially in the agriculture value chain. Without doubt, its Anchor Borrowers’ Programme in particular is largely responsible for the country’s near-self sufficiency in rice production, he said. Furthermore, some of the policies of the CBN such as the Loan to Deposit Ratio have led to increase in credit to the real sector of the economy. The Monetary Policy Committee (MPC) had, at its meeting last week, commended the CBN Loanto-Deposit Ratio (LDR) initiative to address the credit conundrum as www.businessday.ng

the total gross credit increased by N3.33 trillion from N15.56 trillion at the end of May 2019 to N18.90 trillion at the end of June 2020. These credits were largely recorded in manufacturing, consumer credit, general commerce, information and communication and agriculture, which are productive sectors of the economy. Uwaleke said the fiscal authorities had also fared well in the area of growing the economy in spite of the recession that hit the economy in 2016. The economy was already on the path of recovery and actually grew by 2.55 percent in the fourth quarter (Q4) 2019 before the outbreak of COVID’19. The progress being made in the area of infrastructure, especially roads and rails, have supported economic growth. However, he said the sore thumb remained the issue of high unemployment rate and insecurity that were negatively affecting food production and by extension food prices. These, he said, should be the focus of the government going forward. After reviewing the efforts of the CBN in maintaining the soundness of the banking and financial services sector of the economy, the MPC urged the apex bank to continue to give particular attention to its mandate of exchange rate stability, given the recent volatility in the international financial system, to avoid excessive demand pressures hitting in the foreign exchange market. The MPC expressed the utmost need for both the monetary and fiscal authorities to collaborate, for the optimal synergy, on measures

https://www.facebook.com/businessdayng

targeted at reviving the economy. On what can be done to stabilize FX and conserve foreign reserves, Ayodeji Ebo, managing director, Afrinvest Securities Limited, said Nigeria needed to begin to add value to her raw materials before exporting. This, he said, would increase its export proceeds as well as lower demand for FX to import. This means the Federal Government needs to create the right atmosphere for the private sector to set up more processing companies to boost productivity. This will also generate significant employment opportunities and reduce insecurity. “We would need to be deliberate in providing conducive environment for these companies by closing the infrastructure gaps in the country to lower cost of operations and production. For instance, we export crude oil and import petroleum products at a higher cost,” Ebo said. Analysts at FSDH research said the recent upward adjustment of the Naira was expected to have positive implications on government revenue and, in turn, reduce pressure on the exchange rate in the short term. However, the analysts said other markets were expected to adjust accordingly. They said the move would translate into higher pressures in other markets like the parallel market, raising speculative concerns in coming months. With the reserves at $36 billion and relatively stable oil price, there appears to be a considerable amount of firepower to intervene in the markets. But as economic activities improve, higher imports @Businessdayng

and lower foreign investment inflows relative to 2019 will add pressure on the reserves. Despite the adjustments, the CBN will continue to intervene to maintain exchange rate stability and prevent large FX fluctuations, FSDH analysts said. The CBN early this month adjusted exchange rate in the Secondary Market Intervention Sales (SMIS) – a window where importers access foreign currencies – from N360/$1 to N380/$1. As contained in the Economic Sustainability Plan (ESP), which was launched in June as government’s response to the COVID-19 pandemic, part of the monetary measures to support the economy was the unification of exchange rates to maximise Naira returns to Federation Account Allocation Committee (FAAC) from foreign exchange inflows. This is expected to be implemented in the first 12 months, according to the ESP. Uwaleke noted that the major challenge to forex was the country’s huge import bill. “We need a law that mandates the patronage of locally made products by all government establishments with stiff sanctions for violation. An Executive order is not sufficient to address the problem,” he said. On the supply side, he admitted that non-oil export promotion held the key. This would involve increased investment in the agriculture value chain as well as solid minerals. According to him, there was equally the need to create conducive environment for foreign investments, including through upgrading infrastructure and tackling insecurity.

Wednesday 29 July 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

How to get people to actually use Contact-Tracing Apps Chiara Farronato , Marcin Bartosiak and Luca Ferretti

ost platforms fail because they never build a critical mass of engaged users — think Google+ or Apple’s music social network iTunes Ping. Unless we fundamentally rethink how COVID-19 contact-tracing apps are being designed, launched and scaled, most will suffer the same fate. A mobile contact-tracing app can track whom each user has been in proximity to and can then alert all affected users when one of them confirms positive for infection. Some contact-tracing apps can also warn users when an infected person is nearby, preventing possible infection, or even track whether an infected user is following social-distancing guidelines. But to be effective, apps need to be nearly ubiquitous. They are characterized by strong network effects, meaning that their value to any user depends on how many other people download the app and use it regularly. If only a small proportion of people a user comes in contact with are using the app, the app is worthless or even harmful: The app’s indications will be inaccurate and could even instill a false sense of security. Some have estimated that for contacttracing apps to stop contagion, adoption would need to involve at least 60% of the population — a tall order. And for apps to be individually reliable — i.e., ensuring that each user is accurately informed about all of her contacts rather than just a few of them — adoption would have to be much greater. Privacy concerns present a major challenge in driving adoption: The higher the perception that user privacy is protected, the more people will adopt a contact-tracing app, but stronger privacy protections place limits on the effectiveness of the tool in tracing the spread of the virus, thus slowing the diffusion of the app. For example, it would be helpful if an app warned users that individuals with whom they were thinking of getting together were infect-

ed. But many countries have chosen not to include this kind of functionality to protect individuals’ privacy. One way to drive adoption is to mandate the app’s use — an approach that has worked in China . But in most countries where adoption is voluntary, the uptake has been low. For example, in Singapore, which guaranteed that adoption would be voluntary and that it would respect individuals’ privacy, only 35% of the population are using the app. In Iceland, the first country in Europe to launch its app (in early April), the adoption rate is still less than 40% as of July 8. And the adoption rates have been even lower in other European countries — despite the European Union issuing recommendations in April for a coordinated approach to design secure, protected and interoperable contact-tracing apps. When adoption is voluntary, contact-tracing apps present the “cold start” problem experienced by any platform seeking strong network effects: They have virtually no value until they reach a critical mass of users. The way you launch platforms matters a lot in overcoming this problem. And the best launch strategy is often counterintuitive. www.businessday.ng

Google launched Google+ indiscriminately to all users of Gmail and did not reach critical mass even with millions of users. Apple did the same when it launched iTunes Ping to all iTunes users; engagement was negligible. Without a focused launch strategy, even giants fail. Instead of launching COVID-19 tracing apps broadly and indiscriminately, we should be deploying them in highly focused, contained, related communities, where they would be instantly useful: families, religious communities, workplaces, schools, bars and restaurants, beaches, hotels, trains, airplanes and so on. In this way, the apps would have value immediately, and adoption within each small community might approach 100%. Once they gain critical mass in small communities, the apps can gradually be scaled and connected at the regional or national level. The interoperability recommended by the European Union could even allow for cross-country connections. Stakeholders in many communities have strong interests in tracking contagion to slow it down, because that would mean opening schools, workplaces and social gathering places. Some communi-

https://www.facebook.com/businessdayng

ties could effectively mandate adoption; others could strongly encourage it. College dorms could ask students to download the app before moving in. Families could ask all members to download the app before attending family gatherings. Airlines could ask passengers to set up the app before getting on the plane. As each community gains critical mass, the app would gain instant engagement, and with some careful, persistent execution, we would gradually connect the networks and scale adoption to the point where most of the population will have downloaded it. The contact-tracing app should be designed so it is instantly valuable to anyone in the targeted community who downloads it. One way is for it to provide information on local contagion so users know the risks. Another is to include a symptoms-tracking function so users can enter their symptoms and be told when to seek medical help. But the best way, of course, is for the app to be able to trace as many relevant contacts as possible. A good first step is the Apple-Google protocol, a result of Apple and Google’s joint efforts to create the most privacyconscious standard for contact@Businessdayng

tracing apps. The protocol is currently set to record proximity only between individuals who have already downloaded the app. But in principle, the protocol could do this for anybody who has updated his or her iOS and Android operating systems to the one containing the protocol. Then, when a user downloads a contact-tracing app, it would be able to provide useful information about contacts who had previously downloaded the app. Finally, managing users’ expectations is crucial to drive adoption. People are likely to adopt the app if there are concrete expectations that they will be tested quickly and without additional costs should they receive a notification that they have been exposed to the virus. (Even in Europe, where access to the health care system is free in most countries, people can’t necessarily get tested quickly.) A commitment by a country’s national health service or a community (e.g., an employer) to provide individuals using the app with quick, cheap (or free) testing might lead to rapid adoption and use of the app. Contact-tracing apps can and should be a crucial factor in fighting the pandemic. What we need is a massive, carefully coordinated strategy between national governments and local communities, emphasizing focused, systematic, local adoption and instant impact. Coupled with extensive testing capacity and a rational, thoughtful approach to the trade-offs between health and privacy, contact tracing apps could give us a fighting chance of bringing the pandemic under control. Chiara Farronato is an assistant professor at Harvard Business School, where Marco Iansiti is a professor of business administration. Marcin Bartosiak is an assistant professor in the Department of Economics and Management at the University of Pavia, where Stefano Denicolai is professor of innovation management and Roberto Fontana is an associate professor in applied economics. Luca Ferretti is a senior researcher at the Big Data Institute of the Nuffield Department of Medicine at the University of Oxford.

Wednesday 29 July 2020

BUSINESS DAY

AGRIBUSINESS

In association with

ag@businessdayonline.com

Transition to greener economy is key driver of economic growth, job creation – Amal-Lee Amal-Lee Amin is the first climate change director of CDC’s Group. She is in charge of catalysing impact investments for Africa and South Asia’s zero-carbon &climate-resilient development. In this interview with JOSEPHINE OKOJIE, she spoke about climate-smart investing and CDC’s strategies in tackling issues of climate change. Can you tell us about CDC Group’s programme in Africa and the work it has done in the last 70 years? DC is the world’s first impact investor, w ith over 70 years of exp er ience of successfully supporting the sustainable, long-term growth of businesses in Africa. Since being founded, we have grown to become the largest private equity investor on the continent, where we are currently invested in over 700 businesses. Our main priorities are fighting climate change, empowering women and creating jobs and economic opportunities for millions of people. We can invest across all sectors, but we focus on those that help further development such as healthcare, infrastructure, agriculture, manufacturing, and financial services. We are proud of the transformative impact we’ve achieved over the years. Our investment in Celtel in the 1990s, for instance, helped catalyse mobile phone use across Africa. We also played a key role in creating a $20 billion pool of private equity to grow the continent’s most promising businesses and we were instrumental in boosting the private equity industry in Nigeria in the mid-1990s when we helped African Capital Alliance establish its first fund, focused on SMEs. Since then, the firm has raised an additional three private equity funds and a real estate fund for a total of more than $1.2 billion.

You recently joined CDC after serving as the chief of the climate change division a t t h e Int e r-A m e r i c a n Development Bank (IADA). How will this experience shape your approach in leading CDC’s new climate strategy in Africa and Nigeria in particular? I am delighted to have joined CDC at such an important time ahead of the launch of our new climate change strategy later this year. My time at the Bank taught me three important lessons that I think are highly relevant to the way CDC approaches climate-smart investing. Firstly, stronger collaboration

amongst development finance institutions and w ith the pr ivate sector needs to be promoted to support countries transition to net-zero emissions and climate-resilient economies. Countr y platfor ms that draw in differing areas of comparative advantage are needed to: enhance upstream policy and regulator y incentives; accelerate project pipelines and investment opportunities, and finance for new business models and financial instruments to transform markets and scale up investments at a greater pace. Secondly, climate change needs to be integrated across all social and economic sectors, particularly to ensure the transition is a just one for workers and communities. However, there is a particular urgency to ensure decisions we make around infrastructure – as long-lived assets – are consistent with countries’ objectives under the Paris Agreement on climate change, otherwise they risk becoming stranded assets. Thirdly, as climate impacts are already being felt, it is urgent to ensure all investments made now are resilient to climate impacts, and also scale up the investments that are designed to build resilience to future climate-related threats. To what extent would you say CDC has contributed towards solving climate change issues? Combatting climate change is a vital priority for CDC because it affects so much of what we strive to achieve, whether in terms of poverty alleviation, economic growth or building a sustainable future. It’s the greatest threat we face in the 21st century. CDC has been committed to climate action for many years and we have been implementing a deliberate climate policy over the last five years. We work closely with our investee companies to improve their resource efficiency, help them transition to a lower-carbon future and become more resilient to climate change. For instance, we’ve been working closely with Jacoma Estates in Malawi to make its farms more climate-resilient through an irrigation scheme for farms and surrounding smallholder www.businessday.ng

– through 14Trees, a joint-venture that aims to accelerate the production a n d c o m m e rc i a l i s a t i o n of Durabrics. These are environmentally friendly, affordable alternatives to traditional clay burnt bricks, w h i c h a re m a d e u s i n g wood-fired kilns and are associated with widespread deforestation. We are actively looking to partner with more businesses and other private sector players to scale our response to climate change.

Amal-Lee Amin

farmers. We have also been ramping up our commitments to clean power generation, which reached $500 million between 2017 and 2019 – equivalent to a quarter of our annual commitments. We need to build on these experiences to ensure climate change is considered in every investment that we make. What is cl imate-smart investing? Climate-smart investing relates to investments which result in mitigation of or adaptation to climate change. For CDC, climatesmart investing represents a tremendous opportunity to invest in a way that contributes towards the transition to netzero emissions and climateresilient economies, while also generating returns that we reinvest for sustainable development impact. Last year, we invested the equivalent of $12.5 million in PEG, a leading distributor of off-grid solar home systems in West Africa. The investment will provide a clean, reliable source of energy to an additional 200,000 predominantly rural, low-income households over the next three years. We have also made a $17.5 million commitment to Mettle Solar Investments, a pan-African commercial and industrial solar company. The investment will enable the company to expand its provision of cleaner and cheaper sources of electricity

for business into Nigeria and several other African countries. Ho w do e s CD C s cre en investment relating to climate change and how can the public sector mobilise the private sector in the fight against climate change? CDC takes a future-facing and holistic approach to climate change. We look closely at the climate risks and opportunities of each potential investment to ensure they are aligned with our climate change strategy. We look at climate change through the lens of opportunity and are actively exploring investments in new and emerging business models or technologies designed to accelerate the transition to a more sustainable future, while also creating jobs and stimulating economic growth. We will be publishing a new climate change strategy later this year, ahead of COP26 in Glasgow, which will provide even greater clarity on how we are supporting the fight against climate change. Collaboration between the public and private sectors is vital. Climate change complex, multifaceted challenge that affects us all and requires concerted and coordinated action from all stakeholders. Since 2016, we have been working with LafargeHolcim – one of the world’s leading building materials manufacturers

https://www.facebook.com/businessdayng

Partnership with the business community is very critical to achieve the Sustainable Development Goals (SDGs). How do you see the role of top executives in advancing the climate change cause? Business is a vital stakeholder for achieving the SDGs and successfully combatting climate chang e and its impacts. Top executives around the world wield considerable power in the climate sphere because of the size of their companies, their businesses’ impact on climate change and the potential solutions they can create and scale. Many CEOs are taking this responsibility seriously and working hard, both through their initiatives and with groups such as the We Mean Business Coalition, which gathers over 1,200 companies with a market capitalisation of almost $25 trillion. Over the last few years, CEOs of financial services titans have also played an increasingly important role by committing to financing the low-carbon, climateresilient economy required to limit global warming to well below 2 degrees Celsius. Others have gone a step further and said that they will avoid investments in companies that present a high sustainability-related risk. These are encouraging developments and proof that there is significant momentum building within the business community. When it comes to getting major companies to act on climate change, CEOs increasingly list pressure from their shareholders, their customers, and their employees. How can they @Businessdayng

handle such pressures? It’s becoming increasingly clear that the only way to respond to these pressures is to act. Companies that fail to address concerns around climate change from their key stakeholders will face shareholder revolts, customer boycotts or dissatisfied workforces. Climate change tends to be viewed as a risk to businesses. I disagree. The Global Commission on the Economy and Climate concluded in 2018 that ambitious climate action does not need to cost much more than business-as-usual growth. Bold action on climate change could yield economic gains of $26 trillion and generate over 65 million new low-carbon jobs around the world by 2030. Businesses that get a head start today will reap the rewards tomorrow. There have been a lot of dis cussions about how industries across all sectors should be working towards carbon neutrality - and with buildings responsible for nearly 40% of global emissions, how can the construction industry mitigate it? The bulk of these emissions come from operations emissions, primarily the energy used to heat, cool and light buildings. The remainder – about 11percent of total emissions - comes from embodied carbon emissions associated with materials and construction processes throughout a building ’s lifecycle. Operational emissions can be reduced by introducing technologies with higher performances, implementing intelligence sensing and control strategies that improve the efficiency of building operations and lower the demand for energy. In terms of embodied emissions, the construction industry is moving towards designs and materials that reduce the carbon footprint of buildings and infrastructure. For instance, the use of Durabrics – the environmentally friendly bricks produced through o u r j o i n t-v e n t u r e w i t h LafargeHolcim – saves up to 14 trees per built house relative to more traditional materials.

Wednesday 29 July 2020

BUSINESS DAY

criminal liability of banks Strict criminal liability of banks under the Suppression of Piracy and other Maritime Offences Act Echefu Ukattah

Introduction s no countr y is self-sufficient, interdependence by countries becomes necessary for stable and constant economic growth. Consequently, countries rely on the importation of goods and natural resources they are deficient in producing. The most common form of transporting these much-needed goods and resources is through sea travel and as such, maritime transportation plays a major role in global trade and economic growth. The safe transportation of these resources and goods by sea is, therefore, pertinent to the success and growth of global economy and trade. The suppression of piracy and other maritime offences act 2019 On 24 June 2019, the Suppression of Piracy and Other Maritime Offences Act 2019 (SPOMO Act/the Act) was assented to by the President of the Federal Republic of Nigeria, thus making Nigeria the first country in West and Central Africa to have a dedicated anti-piracy law. Prior to the enactment of the Act, the prosecution of parties suspected of sea piracy was stultified in Nigeria as there was no domestic statute which defined the crime or ascribed punishment for it. The Act criminalises the offences of piracy, armed robbery at sea against ships, aircraft and other maritime craft, however so propelled, including fixed and floating platforms, cargo theft and other related maritime offences crimes in Nigeria and the Gulf of Guinea, and aids the fight against the malaise at seas on a global scale. The Nigerian Maritime Administration and Safety Agency (NIMASA), under the supervision of the Minister of Transportation, is saddled with the responsibility of coordinating all maritime activities under the Act and the provisions of the Act are to be enforced by the country’s law enforcement agencies. In rela-

tion to prosecution of offences, the Act provides that the powers to prosecute offences under the Act are vested in (x) the Attorney General of the Federation (AGF); (y) any law officer so designated from the AGF’s office; and (z) NIMASA, with the consent of the AGF, whilst the Federal High Court is vested with exclusive jurisdiction to hear and determine any matter under the Act. The liability of banks under the act Section 4 of the Act lists eighteen (18) maritime offences and unlawful acts at sea, which include armed robbery at sea and acts other than piracy within the Nigerian Maritime Zone. Specifically, section 4(g) of the Act addresses the liability of financial institutions for the receipt of funds connected with piracy or other unlawful acts at sea. The Act prohibits the receipt of proceeds of the crime of piracy, armed robbery against ships and other maritime offences at sea by any person or institution (inclusive of financial institutions). By the provision of section 4(g) of the Act, it is immaterial that the financial institution had no knowledge that the funds lodged with it are the proceeds of or connected to an act of piracy or maritime offence under the Act; receipt of such funds suffices for purposes of holding the financial institution liable. Thus, it www.businessday.ng

seems that the Act imposes strict liability on financial institutions with respect to the receipt of funds connected to maritime crimes. This view is bolstered by the fact that other provisions of the Act, such as Section 4(n)(i) and (ii), and (o), criminalising certain acts expressly require some element of ‘knowledge’ on the part of the offender before such person could be held li-

‘

The Act criminalises the offences of piracy, armed robbery at sea against ships, aircraft and other maritime craft, however so propelled, including fixed and floating platforms, cargo theft and other related maritime offences crimes in Nigeria and the Gulf of Guinea, and aids the fight against the malaise at seas on a global scale

https://www.facebook.com/businessdayng

able for such acts. No doubt, this provision has the effect of exposing Nigerian financial institutions and their directors to significant liability with the attendant deleterious effect on the country’s banking sector and ultimately the Nigerian economy at large. Generally, under Nigerian criminal jurisprudence, there must be the concurrence of the “actus reus” (the guilty act) and the “mens rea” (the guilty mind) before a person can be held liable for an offence. The only exception to this rule is strict liability offences, which do not require the mens rea of the offence to be established, which applies to section 4(g) of the Act. An argument could be made that the imposition of strict liability by the Act on banks for receiving tainted funds is unconscionable. This is because the provision, as currently phrased, makes a financial institution liable for a criminal offence even without having the mens rea for the offence, notwithstanding that the Act failed to expressly outline the circumstances under which receipt, whether directly or indirectly, would lead to culpability. The foregoing said, it is pertinent to note that the justification for the strict liability imposed on financial institutions under section 4(g) of the Act may be hinged on the fact that banks and other financial institutions operate in a @Businessdayng

strictly regulated sector under the regulatory purview of the Central Bank of Nigeria (CBN). There are some CBN regulations and circulars, which require financial institutions to have adequate policies and procedures to counter the risk of being used as a front to conceal proceeds of crime, and implement anti-money laundering and counter terrorism financing measures adopted in progressive economies. Further, the Money Laundering (Prohibition) Act 2011 (MLPA), imposes a duty on financial institutions to conduct detailed customer and beneficial owner identification when establishing a business relationship or carrying out transactions. Again, there is also a duty on financial institutions to report in writing any single transaction, lodgment or transfer of funds in excess of N5,000,000.00 and N10,000,000.00 or their equivalent made by an individual and body corporate respectively to the Nigerian Financial Intelligence Unit in accordance with section 10 (1) of the MLPA. Conclusion There is the need for financial institutions to exercise commercial judgment and take a risk-based approach to the Know-Your-Customer (KYC) requirements. Financial institutions should put in place robust and effective screening solutions to monitor and flag suspicious activities as failure to do so could be inimical to their reputational and commercial interests; in addition to exposing them and their directors to criminal liability.

Dr Echefu Ukattah is the Team Lead, Dispute Resolution ; Olaniwun Ajayi LP

Wednesday 29 July 2020

BUSINESS DAY

feature

How poor regulation is hurting Nigeria’s small businesses In Nigeria, a company’s CEO and his gatekeeper both have a side hustle. The woman who cleans your house probably runs a catering service on the side. Their greatest threat is government rules that seem better suited for the stone age, writes ISAAC ANYAOGU.

hey have been giving him the runaround for over a month. Each document must be notarized – but he learns about it only after he had come for submission. Then he needs a referee. He must climb down a flight of stairs to submit a teller at Accounts and take it back to the sixth floor to have it signed at Registration. The elevator stopped working in 1992. The reception has a creaking fan, a side of the sofa has caved and there were five people seated. It was meant for three. His shirt clung to his skin, he joins the queue with a dozen people before a gumchewing clerk behind a plexiglass taking time-out from Facebook to play civil servant. Ibukunle Ayoola, a 40-year old attorney who had the bright idea to set up a cooking gas business was going through the motions of registration and seeing firsthand how Nigeria’s creaking civil service grinds at a funeral pace. When Ayoola completed the necessary paperwork to file for a license, he received a rude shock. The Department of Petroleum Resources (DPR), the government agency that regulates the oil and gas sector has toughened the rules. The DPR now requires applicants to include land tiles in their application and no longer approves siting plants in a gas station. To open a Liquefied Petroleum Gas (LPG) plant, operators pay fees for town planning approval (N200,000), fire service approval (N100,000), police report (N50,000) and Environmental Impact Assessment done for two seasons (wet and dry) for around N2million. Ayoola is merely setting up an LPG skid on a space of land you would need to park a saloon car. Securing a land title will put him out of business before he even started. This is the fate of thousands of Nigerian businesses at the mercy of the next brainwave by a government official. Whether it is opening a restaurant or running a logistics company, government rules, it seems are designed to test the limits of your sanity. It was the mind-numbing traffic situation in Lagos and the rampant crime by ‘Okadas’ that led to the bright idea of ride-hailing services for motorcycles. The growing popularity of the scheme invited government’s interest. It began talks to formalise operators in early 2019. Operators like Max.ng raised $7 million in a funding round led by Novastar Ventures and Japanese manufacturer, Yamaha, in June 2019. Gokada raised $5.3 million in funding from Rise Capital in May 2019. Then, on February 1, the Lagos state government banned the use of motorcycles for transportation. Thousands of livelihoods were destroyed. Some resilient ones found a use for their motorcycles by converting them for delivery service but soon after, NIPOST published new rules mandating them to pay N1million

as licensing fees for a motorcycle. Regulating for a bygone era The flaw in many government regulations is that they are not responsive to changes in the economic, social and technical conditions surrounding them. They also do not take into account linkages between regulation and innovation. In developed countries, regulations follow developed markets and act as powerful stimulus to further innovation, as seen in the case of Ford T model vehicle where the need to enlarge markets and achieve growth necessitated regulation. In Nigeria, regulations are firmed before markets are fully developed getting in the way of innovation. “This is why regulations continue to fail in Nigeria, because you have regulators who don’t even have a developed market to regulate, said Efosa Ojomo, Senior Researcher, Forum for Growth and Innovation. An era of price controls and government choke-hold on private businesses has given way to collaborative regulation. The failed power sector privatisation demonstrates the futility of regulating pricing and subordinating markets to political interference. Even closed China know enough to open its markets. To make matters worse, regulators rarely update their knowledge, seeing foreign training as an opportunity to shop. Yet still, private interests and nepotism often influence public regulations. Securing land titles, accessing foreign exchange, clearing goods from the ports and moving them across Nigeria have been unduly complicated by poor regulation. Regulating for the slow lane Sometimes, regulations move at snail speed. For Lekoil Plc, a local oil and gas exploration and production company, navigating through the maze of regulatory approvals in Nigeria represents its biggest challenge in taking its Ogo fields valued at over $1billion, offshore Lagos, to www.businessday.ng

production. “The single biggest challenge we have faced as a company has not been technical, it has not been money, it has been regulatory approvals,” said Lekan Akinyemi, Lekoil’s CEO. “We have the Ogo consent which has been pending for three years and this is an asset we have spent over $100million of our money and the other entity we bought has spent $100million so between us there is over $200m spent but still there is no regulatory approval so we cannot move forward,” Akinyemi said. Renewal of oil leases and organising licensing rounds are routine processes in other countries, but they suffer undue complications in Nigeria. For over a decade, Nigeria has been unable to enact a comprehensive petroleum sector law. “Without the law, new investors are not clear on how to proceed,” Chuks Nwani, an energy lawyer said. Yet, for operators with expired leases, waiting on renewals, it is even worse. Their bankers are threatening foreclosures to recover loans due to lack of clarity over the future of the assets. One operator compared the situation to driving without a license, in a car that is not yours. A decentralised approval process will hasten the process. A marginal field operator drilling 1,000 barrels of crude daily in Otuoke, does not need approval from Abuja to conduct soil tests when the state capital is thirty minutes away. The result is several assets lie fallow, in a country aching for investments. Over regulation What is even worse than slow pace of regulation, is multiple and often conflicting regulations/regulators. Here’s why it is dangerous. While Saudi Arabia spends less than $10 to produce a barrel of crude oil, Nigeria spends close to $30. Operators say the multiplicity of regulators with contradictory regu-

https://www.facebook.com/businessdayng

lations is the main culprit. Operators in Nigeria’s oil and gas sector answer to at least 36 different regulators with overlapping functions . The DPR, the Federal Ministry of Environment, National Oil Spill Detection and Response Agency (NOSDRA), Nigerian Maritime Administration and Safety Agency, (NIMASA), Nigerian Nuclear Regulatory Authority (NNRA), Niger Delta Development Commission (NDDC), Nigerian Electricity Regulatory Commission, Nigerian Content Development and Monitoring Board spew different regulations. Others are ministries of Health, Power, Niger Delta, Petroleum Resources, Transportation, Mines and Steel development, Science and Technology all have different rules for operators as the Inland waterways, Port authorities and at least half of Nigeria’s 36 state governments. Even Nigeria’s president directly controls the Petroleum ministry and his Chief of Staff is on the NNPC board. This raises cost for operators, creates ambiguity, distorts project timelines, stifles investments, fosters inefficiency and leads to poor utilisation of manpower. The many regulators notwithstanding, environmental pollution in the Niger Delta continues and the sector has not become any less opaque. “These agencies often issue directives outside the law setting them up, they prescribe offenses and penalties that are not in the act setting them up and they even refuse approvals granted by another agency over the same project,” said Carol Antaih, general manager Safety, Health & Environment, ExxonMobil Nigeria at conference in Lagos some years ago. In 2013, a protracted dispute over statutory charges and levies led NIMASA to block the Bonny River channel and detain the vessels belonging to Nigerian LNG (NLNG) leading to a loss of $525 million to NLNG as a result of @Businessdayng

blockade of shipment of LNG from its export terminal. This pattern of regulation continues today. Different government agencies stipulate different Environmental Impact Assessments (EIA) for the same project insist operators use their distinct template, and pay their own fees. Regulators depend on the regulated to fund their monitoring activities creating room for corruption. This is different from the Norwegian system. Regulations for resource management in the petroleum sector are under the jurisdiction of the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate. The regulations are divided between Acts, Royal Decrees and NPD Regulations. Roles and functions are clear and operators have a process to seek redress. It’s really not difficult to see why it does not make sense that the National Agency for Food and Drug Administration and Control (NAFDAC) does not accept tests/ approvals issued by the Standards Organisation of Nigeria (SON). And why it costs more to move goods from China to Nigeria, than from Apapa to Sagamu. Good regulations pay Nigeria’s telecommunication sector privatisation was a huge success largely because the government was willing to tax the proceeds rather than ruin business. They gave them free hand within bounds and the sector blossomed. LPG adoption in Nigeria has risen from a mere 70,000 Metric Tonnes ten years ago to nearly 900,000 Metric Tonnes due to forward looking regulatory policies. These include the removal of 5 percent VAT on the product and 30 percent import duty waiver LPG equipment and appliances by the government and increased advocacy. This led to a 30 percent reduction in the cost of infrastructure development and set up an industry now ripe for taxation.

Wednesday 29 July 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Third Mainland Bridge: NIWA deploys floating jetties, opens new routes to ease passengers’ movement amaka Anagor-Ewuzie

etermined to ease passengers’ movement to and fro Lagos Island areas due to the partial closure of Third Mainland Bridge for repairs, the National Inland Waterways Authority (NIWA) said it has deployed 40-feet floating jetties to help bring water transportation closer to commuters throughout the six months of repairs. The authority also flagged off four new water transportation routes located at Adekunle, under the Third Mainland Bridge outward Oworoshonki from Yaba, Lekki Phase One by NIWA police post, Oyingbo and Oworoshonki, in bound the Island. Two of the four new routes, Adekunle (Yaba) and Lekki Phase One have been opened for immediate use while the remaining two at Oworoshonki and Oyingbo will be put to use after minor dredging of the waterfront ambiance. Sarat Lara Briamah, La-

Sarat Braimah (l), area manager, niwa, Lagos, behind her, Lawal Saheed, Lagos chapter chairman of atbowaton, during the flag-off of new water transportation routes in Lagos on Friday.

gos Area manager of NIWA, who disclosed this in a statement, said the effort which is subject to review throughout the duration of repairs on the bridge, was to bring succour to over 33,000 commuters who ply the link bridge in and out of the Island to work and other sundry businesses.

“This alternate transportation services certainly will help reduce traffic flow, save users of the bridge expected stress, loss of valuable man-hour and also ease vehicular movement of goods and services out of the Island, not foreclosing the health benefits of using water transportation,” she

said during the flag-off on Friday in Lagos. Braimah note d that the intervention was well thought out as the effort will not only bring water transportation services closer to Lagos communities but will provide the needed data for initiating a blanket floating jetty proj-

ects across the vast Lagos inland waterways under the watch of NIWA. She said this will bring a revolution on water transportation as a solution to the unexplainable traffic situation in Lagos. “Our managing director, George Moghalu mandated us in Lagos to be futuristic and proactive in the discharge of our obligations in order to bring an inclusive response to the partial closure of Third Main Bridge. He wants us to also open up certain waterfronts not just as temporary response but as strategic plan to make every part of Lagos accessible by water,” she said. On security and usage of the floating jetties, Briamah assured that security will be provided round the clock at the identified take off points by NIWA police and sister security agencies while the organised boat operators in Lagos will man the daily operation at the new jetties. “We are collaborating with the Lagos chapter of the Association of Tourist Boat Operators and Water Transporters (ATBOWA-

TON) and their chairman, Lawal Saheed has assured of 100 percent buy-in on this project,” Braimah further explained, adding that all categories of water transportation services will be monitored to avoid any mishap or sharp practices. According to her, NIWA is determined to make it work despite lean resources at a time like this. “We expect Lagos residents to embrace the effort and to make the new routes popular, we have done radio jingles and likewise, printed hands bills to be distributed at strategic points to motorists and other commuters who will be encouraged to park their vehicles either at home or at the designated jetty areas and take to the waters for ease of doing business even after the bridge is fully opened to capacity operations,” she stated. Already, the big boat transportation services outfits such as Tarzan boats, Texas Connection, Sea lift and Sea Coach, have signified readiness to deploy their boats to the routes in order to boost the initiative.

African Day of Seas: Experts frown at dumping of plastics, waste on African waters …Seek review of environmental laws, recycling and human capacity devt amaka Anagor-Ewuzie

orried by the indiscriminate dumping of waste on the sea, experts have called on African countries to review environmental laws by putting in place legal framework that would protect the seas from unhealthy dumping of waste on waters. Speaking at a virtual conversation themed ‘Innovation for Sustainable Ocean,’ put together by the Ocean Ambassadors Foundation and Mundus Maris ASBL, to mark 2020 African Union Day of Seas and Oceans, Kayode Akiolu, House of Representatives member, Lagos Island II Federal Constituency, charged Africa to take part in making the Blue economy a reality as it is one of the United Nations Sustainable Developmental Goals and also an integral part of

the African economy. He stated that over 3 billion people depend on maritime for livelihood, adding that most of the proteins humans consume come from water bodies. According to him, Africans need explore the humongous potential of the oceans by harnessing the emerging sectors of marine biotechnology, deep-sea mining, offshore renewable energy and eco-tourism among others. Akiolu, who pledged to expend his resources towards fashioning better legal and regulatory framework for seas and oceans, pointed out the need to review environmental laws and practices of African States. “Courts are beginning to hold fossil fuel producers accountable for the damage their products cause on environment by ensuring that they remedy the harm they caused by paying for damages,” he said. www.businessday.ng

Kayode Olubiyi, senior lecturer, Federal College of Fisheries and Marine Technology, who frowned at indiscriminate dumping of refuse on sea, said the way the ocean was being treated in Africa was not healthy. According to him, waste – both liquid and solid from land – pollutes the ocean and led to serious damage. He however called for an end to the use of plastic bottles or polythene and end to dredging. “If Africa can manage the various resources emanating from the ocean such as wildlife, beaches, movement of materials and goods from one country to another, in a sustainable way, it will be to its advantage. There is need for adequate understanding of the worth of the oceans because that would ensure that its $24 trillion worth of resources would be well utilised,” Olubiyi said. Olubiyi further called for be a better way of waste

disposal through recycling because bad waste disposing method ends up killing living organisms in the water. He called on Africans to see ocean as commonwealth that must be protected and utilised to generate power. Alban Igwe, director, Council for Regulation of Freight Forwarding in Nigeria (CRFFN), who spoke on “Sustainable Supply Chain: Linking the African Coastal States,” said that Africa is strategically placed by nature with logistics advantage. He said the continent is suffering from lack ability to integrate and harness existing resources. “We have not been able to explore the sea for our collective gains and we have not explored the intra African connection whether by air, sea or land. We need to make progress by also investing in human capital, defining competitive strategy and setting realistic timelines and action plans,” he said.

https://www.facebook.com/businessdayng

Igwe called for the development of the Blue Economy Roadmap, creation of a regional blue centre in Kenya (East), Nigeria (West), Morocco (North) and South Africa (South) to help utilise the opportunities. Violet Williams, founder of Ocean Ambassadors Foundation, said that in line with the African Union agenda of African Integrated Maritime Strategy 2050, the foundation joined in celebration as a way to create awareness for the future generation to know about the wealth of in the oceans and how best to sustain it. She pointed the need for federal and state governments to partner with NGOs in order to realise the wealth of African oceans. Stella Williams, Vice President, Mundus Maris ASBL, said there was need to teach young Africans to understand the ocean using bottom-up approach. Jean Chiazo-Anishere, @Businessdayng

Continental President, Women in Maritime (Africa), said that the first step for African countries to take would be integrating skill development strategies into development plans. Chiazo-Anishere, who spoke on the topic: “Building on Human Resource Capital for the Future of African Maritime Economy,” said that the maritime industry played a prominent role in any economy and, when handled wisely, could reduce poverty, lead to skills acquisition and other benefits. “Education is critical to building human capital; investing in it will lead to productivity. There is need for continuous review of educational system to ensure relevance, and curriculum alignment. We need industry-owned training institute, and private sector participation in education to complement government efforts,” she said.

Wednesday 29 July 2020

BUSINESS DAY

Live @ The Exchanges Stocks fail to sustain gains as investors sell Seplat, Total, MTN, others Microfinance banks seek new

N250bn to support MSMEs

Iheanyi Nwachukwu

igeria’s stock market closed in the red on Tuesday July 28 as investors chose to take profit on preceding days gains. The market lost N70billion due to lower buy-side activities on the Bourse. The record dip in shares of Seplat, Total, MTN N, Julius Berger and GTBank aided the negative close. Looking ahead, the performance of stocks will be largely dictated by the quality of half year (H1) results released into the market. Currently, many bellwether stocks are yet to release their financial scorecards. The market benchmark performance indicator (NSE All Share Index) closed lower by 0.54 percent to 24,650.16 points, from preceding day high 24,783.61 points. Also, the value of listed stocks decreased

L-R: The National Association of Microfinance Banks’ (NAMB’s) Board of Trustees Chairman, Sidi Bamali, Outgoing President of the association, Rogers Nwoke, handing over the instrument of office to the newly elected President, Yusuf Gyallesu, during the NAMB 10th Annual General Meeting in Abuja at the weekend.

to N12.858trillion from preceding day high of N12.928trillion. The market’s negative return yearto-date (YtD) increased to -8.17 percent. Seplat dipped most after its share price moved from

www.businessday.ng

N312.7 to N282, down by N30.7 or 9.82 percent. Total Nigeria decreased from N97.5 to N87.8, losing N9.7 or 9.95percent. MTNN was also down from N120 to N118, after shedding N2 or 1.67percent. Julius Berg-

er decreased from N16 to N15, losing N1 or 6.25 percent while GTBank dipped from N23.3 to N22.6, losing 70kobo or 3percent. In 3,780 deals, investors exchanged 150,398,795 shares valued at N1.977billion.

https://www.facebook.com/businessdayng

he National Association of Microfinance Banks (NAMB) at the weekend asked the Central Bank of Nigeria (CBN) to provide a special N250 billion intervention fund for Micro, Small and Medium Enterprises (MSMEs) in the country to support ongoing economic recovery agenda of the government. The outgoing President of the association, Rogers Nwoke, made the call during the association’s Zoom-powered 10th AGM held virtually in Abuja. Nwoke, who commended the apex bank on its sundry measures to fast-track the nation’s economic recovery from the impact of the COVID-19 pandemic, pointed out that since the N50 billion intervention fund now being disbursed by NIRSAL MFB cannot adequately meet the needs of MSMEs nationwide, the need for additional funding for the enterprises had become imperative.

@Businessdayng

The chartered banker said in view of the critical roles MFBs on the MSMEs and micro development of the country, the proposed N250billion should be disbursed through qualified MFBs. He said: “The role of government in microfinance is to provide an enabling environment for private capital to thrive and where government chooses to intervene in funding; such intervention should be appropriately distributed to critical stakeholders. “Let me use this opportunity to renew our request for a N250billion to MSMEs to be disbursed through qualifying microfinance banks”, the NAMB President added. This is even as he urged the CBN to suspend MFBs’ capitalisation deadline to year 2023, by which time the apex bank will be in a position to properly appraise the level of capital that support the operations of all MFBs in the country.

Wednesday 29 July 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Republicans unveil $1tn stimulus plan cutting jobless benefits White House-backed proposal would reduce emergency unemployment insurance by two-thirds James Politi

enate Republicans set the stage on Monday for a clash with congressional Democrats by unveiling a White House-backed plan for $1tn in new stimulus that would cut emergency unemployment benefits by two-thirds. The move on the coronavirus relief package came after weeks of hesitation by party conservatives wary of more government spending. It reflects rising concern among Donald Trump’s allies about the deterioration in US economic prospects fewer than 100 days before the November election. “We have one foot in the pandemic and one foot in the recovery. The American people need more help,” Mitch McConnell, the Republican Senate majority leader, said as he introduced the plan, which was structured as a series of bills. Democrats in the House of Representatives, who approved $3tn in additional government aid for the economy two months ago, said the Republican proposal fell short of what is needed as the recovery faces new setbacks because of surging Covid-19 cases in many states. Republicans have argued that the Democratic bill discourages work by maintaining emergency jobless benefits at $600 a week. Under the Senate plan, enhanced unemployment insurance would be continued — but at just $200 a

Mitch McConnell, the Republican Senate majority leader, launched the pandemic aid package to criticism from both Republicans and Democrats © Bloomberg

week in September. From October, workers would receive 70 per cent of previous wages. $16bn Funds set aside for coronavirus testing under the stimulus plan Ron Wyden, the top Democrat on the Senate finance committee, said: “The Republican proposal is a punch in the gut and a slap in the face for the 30m Americans relying on lifeline unemployment insurance benefits. It adds insult to infection.” In addition to the jobless benefit extension, Americans would get a new round of direct pay-

ments from the US Treasury, worth $1,200 for most adults, in addition to the amount they received in April. Congress would also set aside additional funding for loans directed towards the hardest-hit small businesses. The legislation does not, however, provide for significant aid to cash-strapped state and local governments, compared with the $900bn proposed by Democrats. Nancy Pelosi, the Democratic speaker of the House, called on Republican leaders to immediately begin negotiations on a

compromise. Most policy analysts and congressional aides are not expecting a deal to take shape before early August, in a best-case scenario. “Time is running out. Congress cannot go home without an agreement,” she said. Chuck Schumer, the Democratic leader in the Senate, added on Twitter: “The American people have been waiting 10 weeks for the Republicans to get their act together!” The fate of the US stimulus is being closely watched by economists, including at the Federal Reserve, who are worried that failure

to reach a deal, or an agreement on a deal with limited support, could stunt a recovery already being hit by rising Covid-19 cases in many states. The Republican plan also includes $16bn for coronavirus testing and $105bn in federal funding for schools that reopen amid the pandemic, which has been strongly encouraged by the Trump administration. Other provisions would shield businesses from liability related to Covid-19 — a proposal strongly supported by corporate America. “The clock is ticking and there is no time for the traditional Washington games ; we urge Republicans and Democrats to come together now and enact the relief American workers, families and employers need,” said Neil Bradley, chief policy officer at the US Chamber of Commerce, the business lobby group. One provision in the Republican plan, worth $1.75bn, provides funding for the renovation of the FBI building in downtown Washington, which had been pushed by Trump administration officials. The US president’s flagship hotel in the US capital is nearby. In addition, a provision pushed by Lindsey Graham, the Republican South Carolina senator, would create a domestic purchasing requirement for personal protective equipment to fill the domestic stockpile and a $7.5bn tax credit for companies that produce medical supplies such as gowns and masks.

Federal Reserve extends emergency lending facilities by 3 months Programmes brought in to shore up financial markets during pandemic will now expire at end of year James Politi and Colby Smith

he Federal Reserve is extending the emergency lending facilities it set up to shore up financial markets during the pandemic until the end of the year, in the latest sign of its concern that the coronavirus crisis will continue to weigh on the US economy. The board of the US central bank announced the decision on Tuesday as its monetary policymakers began a two-day meeting. The lending facilities, which were designed to support short-term funding and corporate debt markets and to offer loans to struggling midsized businesses, were due to expire at the end of September. “The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the

The Fed said the facilities had ‘provided a critical backstop, stabilising and substantially improving market functioning’ © Leah Millis/Reuters

Covid-19 pandemic,” the Fed said. The facilities had “provided a critical backstop, stabilising and substantially improving market functioning and enhancing the flow of credit to households, businesses, and state and local governments,” it added. Fed officials had signalled that the lending facilities would be in www.businessday.ng

place as long as they were needed and would not be allowed to lapse prematurely. In an interview with the Financial Times this month, Eric Rosengren, the president of the Boston Fed, had said the Main Street Lending Programme, which he is overseeing and which had only recently become fully operational,

https://www.facebook.com/businessdayng

would probably be extended as more businesses needed assistance to stay afloat. “I would think if there is a need — and my expectation is there probably will be a need — that that will be extended,” he said. Usage of many of the 11 emergency facilities, which operate under powers allowing the central bank to make asset purchases in “unusual and exigent circumstances”, have remained modest since becoming operational over the past few months. The financial recovery engineered by the Fed since March has proved to be robust enough to enable companies and other market participants to access much-needed funding through private markets. Wall Street strategists have since pared down their forecasts for the size of the Fed’s balance sheet by the end of the year to reflect this modest demand, even as they expected the central bank to maintain the facilities as back@Businessdayng

stops in the event that financial markets seize up once again. An updated consensus of analyst forecasts compiled by the Financial Times showed that the balance sheet was expected to rise to $8.5tn by the end of 2020, roughly $1tn lower than the yearend level assumed in May. The Fed’s emergency lending programmes were set up with the consent of the Treasury department and using equity from the US government, which is bearing the brunt of the credit risk. Their extension was approved by Steven Mnuchin, the Treasury secretary. “The extraordinary Federal Reserve response to the Covid-19 pandemic, supported by Treasury’s equity capital, has played a vital role in improving liquidity and restoring market function,” Mr Mnuchin said. “Through this extension, we will continue to support the flow of credit to American workers, businesses and municipalities.”

Wednesday 29 July 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

China’s newest equity market gets off to a stumbling start

Regulators hope nascent small-cap board will encourage issuers to price deals sensibly Sun Yu in Beijing

he latest addition to China’s capital markets got off to a stumbling start this week, as shares dropped on their debut just days after traders raced to snap them up. Two-thirds of the 32 stocks listed on the so-called New Third Board Select, a Beijing-based trading venue for small firms, fell on Monday. That came as a blow to many investors, who have grown used to shares surging on their first day of trading — apparently regardless of fundamentals. “I am very disappointed about [the] performance,” said Zhou Yunnan, founder of Beijing-based fund Nanshan Investment, which owns NTBS-listed stocks. “It has undermined our confidence in the market.” Government-imposed lockdowns due to the pandemic have squeezed millions of small companies in China, which accounted for more than 60 per cent of GDP and 80 per cent of jobs at the end of 2018, according to government data. Authorities have responded by relaxing controls on equity financing to help some of the biggest access capital. The new board has looser requirements for profits and revenues than China’s main stock exchanges in Shanghai and Shenzhen. Investors had high hopes for the new venue, as demand for shares in initial public offerings on the NTBS outstripped supply by more than 100 times. That was despite allegations of questionable financials among some of these companies.

One NTBS company, Shanghaibased software maker I2Finance, was denied a Shenzhen IPO last year after regulators queried its reported margins and related-party transactions. Another, Welltrans O & E Co of Wuhan, which makes video surveillance products, was allowed to list after regulators rejected an earlier IPO request due to unusually high levels of accounts receivable compared with revenue. Those matters did not initially deter investors: I2Finance’s IPO was 2,339 times oversubscribed. “There is no need to look at the fundamentals,” said Zhang Chi, a Beijing-based fund manager who was unable to secure an allocation to the company’s IPO prior to the first day of trading. I2Finance’s shares rose 6 per cent on their debut while Welltrans O & E Co dropped

9.8 per cent. The NTBS board’s performance on Tuesday was brighter, with 30 of its stocks rising. But 20 of the 32 remained lower than their IPO price. China’s retail investors — an influential force in the country’s markets — have long been enthusiastic backers of IPOs. Following a secondary listing in Shanghai earlier in July, shares in Chinese chipmaker SMIC surged 246 per cent on their first day of trading. Stocks listed on the Star Market, billed as the country’s answer to the Nasdaq, rocketed by as much as 520 per cent on their debut a year ago. Public records show that more than 95 per cent of new listings in Shanghai and Shenzhen over the past two decades have jumped on their first day of trading. “There is no easier way to profit from China’s

stock market than investing in an IPO,” said Wang Yihe, a Shanghaibased fund manager, ahead of the new market’s launch. Chinese traders have also been emboldened by a recent rally in the country’s main stock markets, as the world’s second largest economy shakes off the damage of Covid-19. “New share offerings are one of the safest and most profitable investments for Chinese retail stock buyers,” added Mr Wang. “If the strategy stops working, investors will exit the market, making future IPOs difficult.” The poor performance of NTBS suggests these companies are not worth that much even after offering a discount Zhuang Bo, TS Lombard The tradition of red-hot debuts is due partly to a government policy

that forces companies to cut the price of shares sold during an IPO in order to lure retail investors. That results in an influx of buy orders from traders who believe they are getting bargains. Critics say the practice has made China’s markets — the world’s second-largest by total capitalisation — inefficient and prone to volatility. Regulators had originally earmarked the NTBS as a testing ground for reforms, as the market has no limit on the valuations at which companies can sell shares during an IPO. But investors pointed out that some businesses still lowballed their stock prices, in an apparent effort to ensure a day-one surge. However, shares of most NTBSlisted stocks took off during the first 10 minutes of trading on Monday before reversing course. Analysts said it was likely institutional investors had tried to offload their shares to retail traders en masse, driving down prices. Investors say NTBS’s reputation may already be tarnished. “The market will become a failure if stocks don’t gain 50 per cent on the first day of trading,” said Mr Zhou of Nanshan Investment. The board’s sluggish performance has also called into question Beijing’s efforts to encourage small businesses hit by coronavirus to shore up their balance sheets by selling equity. “The government thinks it would be easier for troubled firms to sell shares by offering a discount,” said Zhuang Bo, an economist at TS Lombard. “But the poor performance of NTBS suggests these companies are not worth that much even after offering a discount.”

European regulators delay new rules on failed trades Lobby groups say planned changes will be harmful to stability of bond and exchange traded fund markets Philip Stafford

uropean markets regulators are planning a year’s delay to a new rule imposing penalties on trades that fail to settle on time, after market participants said the coronavirus pandemic had made it impossible to hit next February’s deadline. Authorities are planning to push back the regime until February 2022, the European Securities and Markets Authority said on Tuesday. That would mark a second delay for the controversial rules, which lobby groups around Europe have argued will be harmful to the functioning, liquidity and stability of the region’s bond and exchange traded fund markets. In a letter to Esma, made public on Tuesday, the European Commission noted that “stakeholders”

had complained about the tight timeline for implementation, and had argued that the choppy trading of the past few months “would have been significantly worse” if the regime had been in place. EU watchdogs are taking aim at trades that fail to complete — either because the buyer does not www.businessday.ng

deliver the funds to pay for the deal or because the seller does not supply the securities. At the moment, failed trades are settled informally between the parties. Under the new rules, trades that fail to settle — usually within a window of two or three days — would face a mandatory

https://www.facebook.com/businessdayng

“buy-in” to close the deal. The counterparty, clearing house or central securities depository will be required to buy the asset at the prevailing market price, while the institution responsible for the failure will have to pay an initial penalty, based on the value of the security — as well as any difference between the buy-in price and the original deal. Investment banks balked at the proposals, saying penalties for failures could push up the cost of trading by billions of euros a year. Big banks each have to deal with about 10,000 failed trades every day in their core European markets, according to Cognizant, a New Jersey-based provider of IT services. Critics also warned that the new regime would make buying illiquid securities more expensive and more difficult, using the market dislocations of March and @Businessdayng

April to underline their point. ICMA , the bond industr y trade association, welcomed news of the delay and urged regulators to revise the mandatory buy-in rules as “it is widely recognised that there are a number of design flaws in the . . . framework”. Regulators had already pushed back an initial launch date of November because users said they needed more time to test new IT systems. The original timeframe also clashed with the implementation of new global standards for software that carries financial messages. Last month the UK said it would not implement the failedtrade regime once it left the transition period to exit the EU, in one of the first examples of Britain indicating where its financial services laws will diverge from the bloc.

Wednesday 29 July 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

CBN introduces 11 intervention schemes for non-interest financial institutions …to increase access to finance Endurance Okafor

o increase access to finance by Non-Interest Financial Institutions (NIFI) and promote financial inclusion, the Central Bank of Nigeria has introduced eleven intervention schemes to carter for NIFI. The central bank made this announcement in a circular that was sent to all non-interest financial institution on July 21 2020. “The Central Bank of Nigeria in its efforts to increase access to finance by NIFI introduced the following intervention schemes to carter for NIFI,” the apex bank said in a circular signed by Kevin Amugo, Director, Financial Policy and regulation department. Meanwhile, a NIFI is either a bank or other financial institution (OFI) under the purview of the CBN,

which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with Shariah principles and rules of Islamic commercial

jurisprudence. Analysis of the CBN circular revealed that accelerated agricultural development scheme (AADS) was top on the list of the bank’s interventions. According to the apex

...boost financial inclusion drive

bank, the objective of the AAdS is to engage a minimum of 370,000 youths in agricultural production across the country over the next three years to reduce unemployment among the youths in the country.

The scheme according to CBN is open to Nigerian youths within the ages of 18 to 35 years. The Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS), an initiative of the Bankers’ Committee established at its 331st Meeting held in 2017, was another scheme that made the CBN list. “The Scheme supports government’s policy measures and efforts for the promotion of agricultural businesses, micro, small and medium enterprises (MSMEs) as vehicles for sustainable economic development and employment generation,” the apex bank said. Intervention in the textile sector was also another scheme that was listed in the CBN circular. According to the apex bank, its effort to resuscitate the textile industry pushed it to put in

place an N50 billion special mechanism for a restructuring of existing facilities and provision of further facilities for textile companies with a genuine need for intervention. “This was the result of the meetings between the Governor and owners of textile mills in Nigeria on August 7, and September 29, 2015. Among the resolutions reached were that the Textile Mills articulate the status of their BOI CTG Loans stating their outstanding loan balances, tenure, interest rate, interest payment and the assistance being sought from CBN,” the regulator said. Other schemes that made the CBN intervention list include Anchor Borrowers’ Programme, real sector support facility (RSSF) through CRR, credit support for the health sector, implementation of the creative industry financing initiative (noninterest version).

Stakeholders call for greater collaboration to bridge Nigeria’s financial inclusion gap in SANEF webinar Segun Adams

xperts have called for greater synergy among participants that help unbanked Nigerians access financial products and services, as the outbreak of new coronavirus brings financial inclusion into focus. Granted progress has been made in areas like use of USSD-enabled mobile banking, expansion of informal agent networks, the use of artificial intelligence in credit appraisal, and disbursement, a lot of Nigerians are still outside of the formal banking system said Aishah Ahmad, Deputy Governor Financial System Stability, CBN. “Contrary to what we might have believed in the past, a lack of identity, cash, and leveraging the banking hall still remains a vital part of this financial system,” she said. Segun Agbaje, the CEO of GTBank in his keynote address said the economy is currently being grown by 40% of the adult population due to the financial exclusion of others. This means a faster growth can be achieved by onboarding the rest of the adult population left behind.

“The wealth of Nigeria no longer lies in oil but its population and for Nigeria to obtain the kind of GDP growth that the country would like, we must bring the 60 million excluded into the formal sector,” said Agbaje, noting that countries like Italy are driven by SMEs, not big corporations. Agbaje said financial inclusion is neither mobile wallets nor “cash-in, cash-out” which do not assure growth or inclusiveness. Instead, he suggested that the excluded population have possibly free accounts that give them access to loans, insurance and pensions which can create the class of people that can contribute to national wealth. “The multiplier effect of bringing people into a system outside of “cash-in, cash-out” is what we really need in Nigeria,” he said. Also, Agbaje said collaboration to achieve financial inclusion must be anchored on core banking services and delivered through mobile technology. The CEO of SANEF Limited, Ronke Kuye during her presentation stated that SANEF has aided the increase of agent numbers and financial

access points across Nigeria to over 345,000 as of June 2020. As well as boosting Financial literacy and building capacity amongst Agents through Agent forums in geopolitical zones, SANEF also has been responsible for rolling out enabling Technology Platform that permits account opening of any bank account at any SANEF Agent location around the country. This also includes an optimized process for Dispute Resolution. Partnerships and collaborations with Deposit Money Banks, Government, MDAs, SANEF, as well as Joint roadshows and Agent Forums have been part of the positive drivers for financial inclusion according to Titilola Shogaolu, Divisional CEO, Interswitch Financial Inclusion Services Limited (IFIS). She pointed out that identity has been a critical challenge to onboarding more agents on the network and huge local government levy, high cost of marketing, and advertisement have not helped the matter. Limitations around options for liquidity management and rebalancing which results in agents lacking sufficient cash to deliver their services was an area Shogaolu called for greater

www.businessday.ng

collaboration. To spread financial inclusion wide, another panelist Isa Omagu, Director, Marketing & Sales, Unified Payments Nigeria said the success has been in going the local content route and working with people on the ground in farflung locations around the country including the North East to liaise with locals and recruit fixed location agents which can communicate with people coming to do transactions at agent points. “Collaboration with locals using staff from those locations using locations is critical in providing services in those locations,” said Omagu. Degbola Abudu, CEO, Capricorn Digital Limited said banks and large financial institutions can improve their relationship with agents to boost financial inclusion by utilizing technology in distributing products to the last mile. “We are have touch points with SMEs and we are more flexible and agile, able to figure out how these merchants and agents are able to provide income for themselves in reaching the 60 million excluded,” he said. Offering his experience in the Kenya market, Anup

https://www.facebook.com/businessdayng

Singh Partner at-Microsave Consulting(Kenya) advised that creating the right products and services to meet the use cases of the low-income and rural population will promote financial inclusion because the end-users find the relevance of those products to their lives. “The products need to be simplified and anchored around the seven key uses cases including sending, receiving, spending, saving, investing, borrowing, and protecting their money.” Anup also encouraged operators to be mindful of the digital divide, while reminded that collaboration remains vital to ensuring efficiency for operators. Robert Giles, Senior Retail Advisor, Access Bank commended SANEF for helping to hasten the pace of financial inclusion and pointed to the existence of the organization as proof of the merits of collaboration. “Looking back 10 years ago when mobile money started its first phase…historically we were all doing our own things which even though we’re right, our efforts were sub-scale, and this affected customers’ trust in agents. “We have now through @Businessdayng

cooperation been able to achieve interoperability and through wider collaboration, SANEF has allowed us to connect with 20 super-agent with very easy way of opening accounts and 75% of agents have come through the super agents.” For Toyin Adeniji Executive Director, micro agencies, Bank of Industries, financial inclusion cannot be done in isolation and government, regulators, financial services providers, development partners, super-agents, technology companies, and other players have to work in sync. “The government can play a key role by way of interventions, policies, by setting infrastructure and frameworks,” said Adeniji. “What we saw in GEEP is that having a specific program really helped to move the needle in terms of the numbers.” Paul Oluikpe, Associate Head Financial Inclusion Secretariat CBN, said the gender gap in Nigeria is higher than the global average and the apex bank is currently working to improve access of women to financial products and services. The event was moderated by Lehle Balde, Senior Associate BusinessDay.

Wednesday 29 July 2020

BUSINESS DAY

News Nigeria’s disease control agency fails own... Continued from page 1

ended Tuesday, July 28,

2020, the disease control agency has only been able to test 253,495 people for the disease within the timeframe. In total, Nigeria has only managed to test 266,323 people since February when the first case was recorded. Of the number, 40,532 came back positive, 17,374 have recovered, while 858 lives have been lost to the virus, according to data from the NCDC. Nigeria still lags behind other African countries on testing. Nigeria’s health authorities have repeatedly said the country has capacity to conduct 3,000 and even 10,000 tests daily, but tests conducted per day mostly fall below 2,000 across 59 laboratories till date. Obeche Adamu, a public health analyst, describes the performance on the target as a gross failure, compared to the country’s population of over 200 million. He warns that community transmission will continue to increase and put more pressure on the already weak health systems as well as the economy. “The number of tests conducted so far is very poor, even the set target is nothing compared to the Nigerian population. This only means that infections will surge, the economy will continue to suffer, because human development has an effect on the economy. “Also, food crisis will worsen, because if the virus worsens the agrarian sector will be directly affected,” Adamu says. Adamu further discloses that a community in Kogi recently recorded a surge in strange deaths suspected to be COVID-19, noting, “At my last visit, the residents complained that the number of burials within the last week climbed over 100, which is unusual.” Similarly, some residents of Bwari Area Council, FCT, have described the number of deaths in the last few weeks as worrisome. He says the situation will be further compounded by the

high level of ignorance among Nigerians despite all awareness efforts by government. Adaobi Onyechi, a laboratory scientist, notes that the inability of government to test enough already means they lack focus on how to manage the situation much more to flatten the pandemic curve. She states that if Nigeria does not ramp up testing, the virus will last longer and overwhelm institutions further. Patrick Dakum, CEO, Institute of Human Virology Nigeria, agrees, saying Nigeria would be in the dark as far as burden and geographic spread of the disease are concerned, which will make prevention and containment efforts difficult and escalating the situation. Chikwe Ihekweazu, NCDC director-general, however, says government has made efforts to ramp up testing, including incorporating private sector laboratories, reconfiguration of HIV and Lassa fever laboratories and conversion of GeneXpert machines to test for COVID-19 as well as doorto-door sample collection in hotspot communities. He says the test target is only a guide to enable the centre aggressively scales up testing, saying the testing in itself is not the goal, but rather to bring people into care through testing and enable contact tracing to happen for those who are positive and generally move the system along. He notes that when the target was set, some states were resisting testing, but, “We are not where we are going yet on the target, what we’ve done is to mobilise the entire country to improve response. But every state is at least coming forward to test.” According to Ihekweazu, the target gives focus on what needs to be done. Emeka Oguanuo, risk communication officer, NCDC, admits that the centre knew the target could be impossible to meet within the timeframe.

Life annuity threatened as insurers take caution... Continued from page 2

Alliance Insurance, explains that insurance companies are faced with difficulties of matching assets with liabilities at this time in business of annuity as a result of poor operating environment. She states that in the case of African Alliance, its growth in volume during the 2019 financial year was underpinned by claims from annuity, “Unfortunately, while we obviously made more sales, we paid much more claims which impacted negatively on our balance sheet.” She said. “The bulk of our claims were in annuity business, which has been affected by our operating environment vis-à-vis the average market

rate and limited investment vehicles. We all know annuity business is basically about hedging assets against contract liabilities, so when the market forces are unfavourable, returns on investment will be affected too.” Though she is positive about the firm’s ability to turn the bend going forward by its corporate strategy, but however admits that this poses a huge challenge on annuity. As at the end of second quarter, the National Pension Commission approved a total of 2,941 applications for retirement under life annuity, bringing the total number of retirees receiving their retirement benefits through the annuity plan to 68,857 from inception. www.businessday.ng

L-R: Abisola Olusanya, acting commissioner for agriculture, Lagos State; Obafemi Hamzat, deputy governor, Lagos State, and Olayiwole Onasanya, permanent secretary, Ministry of Agriculture, during 2020 Agricultural Value Chains Empowerment Programme in Lagos, yesterday.

Nigerian banks face biggest revenue drop... Continued from page 1

is constrained and vice versa. This implies that if banks record lower profits

this year it could lead to a hike in interest rates or overall slowdown in lending, which would affect access to credit for businesses and individuals. Banks have been on the receiving end of an economy tipped by the International Monetary Fund (IMF) to contract by 5.4 percent this year, the most since 1987. Central bank measures to support the naira have however worsened the burden on lenders already hit by the negative fallout from COVID-19 pandemic and the oil price shock. The central bank has pulled as much as N900 billion out of the local banking system since raising the cash reserve ratio (CRR) by 5 percent to 27.5 percent in January, according to analysts’ calculations. Bankers say the effective CRR rate is closer to 60 percent and that the CBN now sits on around N10.4 trillion of bank deposits earning zero interest in CRR. The CRR rate, which is among the highest in the world, means banks have to work harder to turn a profit in an economy that looks out of sorts and is set for its big-

gest contraction in over three decades. Some banks have already indicated they expect a hit to their revenues this year. In April, mid-tier lender Fidelity Bank warned 2020 profits would drop by 15 percent. A report by Lagos-based credit ratings firm, Agusto & Co, also noted that Nigerian banks’ earnings and profitability were expected to decline drastically in 2020. “In specific terms, banks’ earnings from their core business are projected to decline in the short term due to an expected rise in impairment charges and lower yields on their loan books,” notes Bode Agusto, the firm’s CEO. “More so, the contractionary monetary policy stance, exacerbated by discretionary Cash Reserve Requirement (CRR) debits by the CBN, is expected to affect banks’ overall performance this year,” Agusto says. Whether it is on account of implementing its CRR rule or punishing banks for not lending at least 65 percent of their deposits to small businesses, the CBN has debited banks to the tune of N2.1 trillion in 2020 alone, according to data tracked by BusinessDay. The general sentiment in the markets is that CRR debits are carried out quite close to FX auctions to prevent the banks from presenting large

Fashola assures motorists of improved traffic... Continued from page 2

Lagos State Traffic Management Authority (LASTMA) complemented by their counterparts from Federal Road Safety Corps (FRSC) mobilised by the government to man various routes could be seen making efforts to have motorists drive orderly to connect some of the alternative routes. But the general manager of LASTMA, Olajide Oduyoye, said the efforts of his men

were being made more tasking by the activities of the truck drivers on some of the routes. “The issues at the moment are trailers parked by Ijora Olopa-Costain – that is a serious link between Carter Bridge and Eko Bridge – which is affecting traffic. “It is imperative those trucks are not parked there. When you now have two trailers breaking down close to each other, it gets worse. Our officers are on ground to manage the traffic as much

https://www.facebook.com/businessdayng

ticket FX demands at auctions. Those debits however hamper wider lending, going against central bank measures of lowering banks’ loan to deposit ratios. Central bank data showed credit to the private sector in April dropped by nearly two-thirds from end-2019. Faced by lower oil prices and a 19-percent decline in its foreign currency reserves this year, the CBN has dusted its play book from 2016 by trying to suppress demand for FX to conserve its thinning reserves and protect the naira from depreciating sharply against the dollar. Critics say the strategy failed in 2016, as it worsened an already acute dollar shortage, which contributed in tipping the economy into recession, and led to eventual naira devaluation. The downsides of micromanaging the FX market have not deterred the CBN from towing the same path this year. The lack of liquidity at the official market has pushed demand to the black market, which has widened the gap between the rates in both markets to a record N80/$. While the official rate is around N380/$, the black market rate is much weaker at N460/$. The dollar shortages have taken a significant toll on banks, which announced

plans to reduce the amount customers can spend abroad using debit cards last week, as lenders try to limit foreign currency settlement risk. One of the banks planning the move, Zenith Bank, says it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200. The tier-one bank notes that “the review is in response to today’s economic realities” in a notice, advising clients to request prepaid dollar cards. “Many Nigerian banks cannot open Letters of Credit (LC)s and companies have no access to foreign currency,” a source familiar with the matter says. “There appears to be attempt to suppress demand for FX; we are headed for the rocks,” the source states. Bankers say the dollar crunch means it now takes more than six months to settle foreign lines of credit. Fitch also predicts impaired loan ratios will rise sharply in 2020, with Nigerian banks the most exposed to stress in the oil sector compared to their peers in emerging markets elsewhere. Commercial banks have written off N1.9 trillion bad loans from their books in the last four years, according to data by Agusto & Co. As at June 2020, they had written off N1.3 trillion in bad loans.

as they can in the circumstances,” said Oduyoye, adding that the enforcement of proper parking by trucks should be a concern of all stakeholders. On the barricaded Adekunle-end of the Third Mainland Bridge, officials, on Monday, battled to ensure the flow of the heavy traffic, just as some motorists who talked with our reporters lamented time lost in the build-up. But Oduyoye assured the situation was not overwhelming, noting that it should get better as motorists adjust to

the new reality and accept the fact they need to exercise patience on the bridge and all the designated alternative routes given that the bridge would remain partially closed for the next six months. It should be recalled that a traffic report on Third Mainland Bridge in 2002 estimated the number of vehicles in both directions of the bridge under a period of 12 hours was 180,902. This may have doubled or tripled after 18 years. The vehicular density may even quadruple as a result of the road closure.

@Businessdayng

Wednesday 29 July 2020

BUSINESS DAY

news

Mamman Daura breaks silence, says ‘I never dictate to Buhari’ MARK MAYAH

t last, the person considered to be one of the most powerful figures in the President Muhammadu Buhari administration, Mamman Daura, has broken his silence, saying he had never imposed his decision on the president. Daura spoke in a brief interview with the BBC Hausa Service monitored in Lagos on Tuesday. When asked about his relationship with President Buhari, Daura said the president is his uncle. “My father was their mother’s firstborn. Buhari is the last born,” he said. W h e n re m i n d e d t hat people had said he and Bu-

hari grew up together and had always been together, Daura said, “Yes...it’s true.” On whether he had been meeting Buhari and advising him on issues, Daura answered, “Yes, I do visit him to greet him. I do give him advice, but if he asked…I advise him. But I don’t go there on my own and insist I must do this or that. No. You don’t do that to the government.” Commenting on the clamour for power shift, he said it’s high time the country united and went for the most competent. “ This turn by turn, it was done once, it was done twice, it was done thrice… It is better for this country to be one…it should be for the most competent and not for someone who comes from somewhere,” he said.

Stella Immanuel’s COVID-19 treatment claim speculative, unproven - Medical directors INIOBONG IWOK & ANTHONIA OBOKOH

he Guild of Medical Directors (GMD) has reacted to video claims by Stella Immanuel, a general practitioner in the U.S. that she has treated over 350 patients of Covid-19 with combination of Hydrochloroquine (HCQ), Zinc and Zithromax, saying it is her own personal, unsubstantiated claim. In a statement signed by the president of GMD, Olufemi Babalola in Abuja on Tuesday, the doctors said “there is no scientific evidence to prove the claim.” The Nigerian-born and trained physician, has been trending on social media after delivering a speech on Covid-19 in the U.S. on Monday. She said at a news conference held by a group of American doctors under the aegis of “America’s Frontline Doctors” in front of the U.S. Supreme Court in Washington DC that the antimalarial drug- hydroxychloroquine, zinc and antibacterial drug- Zithromax, were effective cures for the coronavirus disease. The doctors held a two-day “White Coat Summit” at the Capitol Hill to address what they call “massive disinformation campaign” surrounding the virus. Immanuel, who was joined by other frontline doctors, said she had treated no fewer than 350 patients with hydroxychloroquine, zinc, and Zithromax. However, the GMD president stated that research on the efficacy of the combination of Hydrochloroquine (HCQ), Zinc and Zithromax to treat Covid-19 had yet to be concluded. He noted that “we have watched with dismay the viral video of Dr Stella Immanuel, a doctor in the United States of America. “The video has been shared all over the country and led to many people justifiably asking the question, ‘What do you think, doctor? The video was part of a news conference held in America.” Babalola stated that the group was founded by Simone

Gold, a board-certified physician and attorney, made up of medical doctors who came together to address what the group termed “massive disinformation campaign” about the coronavirus. The guild president noted that while some studies suggested that it was effective, others felt otherwise. He added that “it is true that Senegal, where HCQ is routinely used, has one of the lowest Covid-19 case fatality rates in the world at 0.64 per cent compared to 3.4 per cent in the U.S. “As we speak, a study is underway at Lagos University Teaching Hospital (LUTH) on its efficacy and safety. Subsequently, a meta-analysis of all these studies should be undertaken to pool all the results and come up with analysis which will guide clinicians. “So, until then, all anecdotal claims such as the one from Dr Stella Immanuel must be taken with a pinch of salt.” Babalola stated that HCQ may be a cause of serious complications and even death in some people, stressing that other anecdotal claims such as the herbal mixture from Madagascar had subsequently been proven ineffective. He stated that the guild of medical directors was a body of owners of private hospitals in Nigeria “and collectively, we are responsible for the management of about 70 per cent of the healthcare needs of Nigerians. “So, a lot of the burden in explaining the problem as related to the video naturally falls on us. Therefore, we feel it is pertinent to explain or clarify the issues for Nigerians. “We must reiterate that Coronavirus is real and Covid-19 is an indiscriminate killer. We know from personal experience since it has killed many doctors and nurses all over the country, including our very own Prof. Lovett Lawson. The disease is definitely not a joke.” He, therefore, condemned the politicisation of the pandemic, noting that the whole world was actively looking for an effective treatment and vaccine for the disease. www.businessday.ng

Reps summon Amaechi, Ahmed, Pantami over $500m Chinese loan for railway projects James Kwen, Abuja

he House of Representatives has summoned Rotimi Ameachi, Zainab Ahmed and Ali Pantani, ministers of transportation, finance and communications, respectively, as well as the directorgeneral of the Debt Management Office (DMO), Patience Oniha over the $500 million loan to be sourced from the Export-Import Bank of China for railway lines in the country. The ministers and the DMO boss are to provide details on the agreement signed between the federal ministry of transportation and the China Civil Engineering Construction Corporation (CCECC) in respect of some railway projects, including the Abuja-Kaduna, Lagos-Ibadan, Ibadan-Kaduna and Kaduna-

Kano railways lines. Chairman, house committee on treaties, protocol and agreements, Ossai Nicholas Ossai (PDP, Delta), who issued the summons on Tuesday in Abuja said the top government functionaries were expected to appear on August 17, unfailingly with details of the contracts concerned. Ossai said the house would need details on the agreement between the federal ministry of transportation and ZTE (Nig) Ltd in respect of the provision of community actions and signaling equipment for the Itakpe-AjaokutaWarri line. According to him, the officials are to provide details of the agreement between federal ministry of transportation and the China Railway Construction Company International (CRCCI) in respect

of the Itakoe-Abuja line/ New Port in Warri project. The committee during its sitting at the National Assembly complex raised alarm over alleged waiver of Nigeria’s sovereignty in the government concessions loan agreement on Nigeria National Information and Communication Technology Infrastructure backbone phase II project between the government of Nigeria, represented by the federal ministry of finance (borrower) and the Export-Import Bank of China (lender) dated September 5, 2018. The committee specifically cited Article 8 (1) of the agreement, which states that: “the borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto,

except for the military assets and diplomatic assets” But in his presentation, the minister of transportation, Ameachi said the loan being sourced by his ministry was a total of $500 million to complete the Lagos -Ibadan railway line, which he put at a total of $849 million, with $349 million as counterpart funding, He explained that because China, which is giving the loan, was sensitive and monitoring happenings in Nigeria, the house committee might wish to give him till end of December when the entire loan would have been received. The former Rivers State governor argued that the constant investigations by the National Assembly might give the impression that a part of the government does not approve of the loan and the Chinese government may withdraw the loan.

We’re committed to due process in public spending, says Sanwo-Olu Joshua Bassey

agos State Governor, B a b aj i d e S a n w o Olu has said his administration places high premium on compliance to due process, probity and accountability in the management of public finances. Sanwo-Olu said his government would not waiver in

strengthening processes that would promote prudence and transparency in the expenditure of public revenue. He gave the assurance on Tuesday at the swearing-in of newly appointed commissioners of the Lagos State Audit Service Commission. With deep-rooted culture of professionalism already es-

tablished in the Lagos public service, the Governor said the need to bring a corps of competent professional and thoroughbred auditors on board in all ministries, department and agencies (MDAs) could not be over emphasised. This, Sanwo-Olu said, informed the need to appoint the commissioners based on

CHANGE OF NAME

I, formerly known and addressed as Grace Ugochi Nneji now wish to be known and addressed as Grace Happy - Monday. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ms. Fatima Oludayo Akinyera now wish to be known and addressed as Mrs. Fatima Oludayo Sanyaolu. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Happy Nkanta Monday now wish to be known and addressed as Happison Happy - Monday. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Obi Chikaodi Esther now wish to be known and addressed as Eboh Chikaodi Esther. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Chisa Faith Michael now wish to be known and addressed as Mrs. Chisa Faith Merit Ekperi. All former documents remain valid. General Public please take note. https://www.facebook.com/businessdayng

@Businessdayng

their pedigrees and track records in their respective professional callings. He said the audit commissioners would be saddled with the responsibility of superintending over issues of recruitment, discipline, promotion and career management of audit staff and officers of the state government.

Wednesday 29 July 2020

BUSINESS DAY

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Valuations: Key lessons to take away BALA AUGIE

John Opubor

Aswath Damodaran

(usually stocks). A Beta greater than 1 the security price tends to be more than the market; and the higher the beta the higher the cost of equity. A key takeaway from the lecture is that in valuing firms a valuator needs to make his choice early and be consistent from the outset so as to avoid mistakes. What this means is that he should stick to one currency while carrying out the assignment. The best way to value a bank is to use the marketable securities and use the pricing of those discount factors instead of deploying the discounted cash flow model. Many equity research analysts across the globe use the dividend valuation model which discounts the expected future dividend stream to arrive the intrinsic value of a stock. Damodaran believes synergies can increase and decrease growth in mergers and acquisitions, and that he tries to look at the track record of the company. “Most of the time synergies do not just show up, you work for it and most companies do not do it,” said the professor. Another takeaway from the lecture is that we can use the government bonds as our risk free rate of returns. It is risk free because unlike companies government cannot go bankrupt, instead it can raise taxes

or sell assets. However, government can default on debt as Argentina has done so severally over the past 25 years.Also, government often choose not to print money to pay off their debt because it is better to default than to debase their currencies.

‘

Domodaran believes the inflation rate approach can be used as the risk free rate instead of government bond rates because it avoids ambiguity. “If you make a mistake in your inflation then it will show in your both cash flow and discount rate

‘

he Second edition of the Coronation Capital Masterclass which discussed “Corporate Finance and Business Valuation” with Professor Aswath Damodaran of the New York University Sterns Business School, came to end yesterday. In the four day valuation master class held on the July 20 - 21 and 27 - 28, sponsored by Coronation Capital, the astute professor taught participants the importance of consistency and the 3p valuation approach in in arriving at the value of a firm. He also explained the impact of macroeconomic condition on Business valuation. Damodaran has published several books and articles on equity valuation and corporate finance and has been featured in the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. Professor Damodaran has been voted ‘Professor of the Year’ by Stern’s graduating MBA class five times and has been awarded NYU’s Excellence in Teaching and Distinguished Teaching award; Coronation is delighted to bring him to Nigeria for a second time. During the zoom lecture, professor Damodaran opined that valuation is not a science but an act and that valuing and that asset is not the same as pricing an asset. To him a good valuation comes with a story and numbers, and that you could be wrong if you put all the right input into valuation. The cost of capital is the weighted average cost of capital (WACC) used to discount cash flow to the present value. Many business use the combination of debt and equity to finance their business, hence, WACC is the cost of various sources of finance in the capital structure of a firm. The cost of equity is driven by the marginal investors of the company, those who own a lot of stocks such as mutual funds and pension funds.These investors can diversify their risks. Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return, for assets

Of course risk free rate differs from one country to another; it is high in Zambia’s Kwacha, the Nigerian Naira and Turkish Lira; but low in Japanese yen and the United States dollars. In some currencies the risk free rate is negative. Inflation is paramount to nominal risk free rate because a country beleaguered by inflationary pressure will have a high rate. Domodaran believes the inflation rate approach can be used as the risk free rate instead of government bond rates because it avoids ambiguity. “If you make a mistake in your inflation then it will show in your both cash flow and discount rate,” The New York University professor said he does not trust the government bond rate for many countries because they can default and that with inflation rate approach you will always get it right. Globalization is paramount to valuation as the world is evolving. For instance, if you are just valuing Coca Cola, you are not valuing an American company because it generates 60 percent of its revenue outside the United States. “When l want to value a company I need the risk premium not just of the country the company is incorporated but of the rest of the world,” said Damodaran. Damodaran have warned glob-

BD MARKETS + FINANCE Analyst: BALA AUGIE www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

al investors to avoid Nigerian stocks like plague because of the macroeconomic uncertainties. Trust factor matters in valuation and managing cash as investors discount a stock whose companies have a bad history, and relying on the judgement of such executives could lead to loss of significant investment. A rational investor will not put his money in Hewlett-Packard Company or HP, as the American multinational information technology company has ran 10 failed acquisitions in the last 10 years. However, Apple Inc, one of the most valuable companies in the world, has been run with discipline. It has a cash balance of $250 billion, vey close to Nigeria’s GDP of $395 billion. Brief history of Coronation Coronation Capital is a private equity fund manager with a culture built on promoting innovation, good corporate citizenship and delivering strong returns to our investors. Coronation Capital aims to build well-positioned, well-run, cash-generative, and sustainable businesses that become significant employers and sources of growth in West Africa and across the continent. A core pillar of good corporate citizenship for Coronation Capital is utilizing education and development to positively transform our immediate environment.

leaderSHIP

BUSINESS DAY Wednesday 29 July 2020 www.businessday.ng

CEO in focus

Adewunmi Ogunsanya - Visionary behind MultiChoice success story in Nigeria DANIEL OBI

ultiChoice Nigeria Limited, a leading entertainment company and operator of DStv and Gotv is a success story that started in 1993. One of the stakeholders behind this accomplishment is the chairman of the company, 57 year-old Adewunmi Ogunsanya, a Senior Advocate of Nigeria (SAN) and an astute businessman of repute with extensive investment in other areas of the economy such as commercial real estate development, agriculture and agro allied among others. Mindful that many Nigerians have little knowledge about the company and its operations, Ogunsanya would often emphasis that MultiChoice Nigeria is a Nigerian company, registered in Nigeria with shareholders from around the globe, including Nigeria, even as he acknowledges that it has its roots in South Africa. The investor is also concerned about the classification of MultiChoice Nigeria as a monopoly. Nigeria is a free market with other investors licensed in the broadcasting industry. “How exactly is it that we suffocate our competitors? By denying them the airwaves? By denying them their license? By blocking their offices? Or is it by stopping them from coming up with ideas?” he asks rhetorically. He further explains that when the company started, it made huge investments in equipment and had very few subscribers. “We were making huge losses, but we stayed the course until our number of subscribers began to rise. Today we may be referred to as a dominant player perhaps, but not a monopoly,” he says. Ogunsanya who graduated with a law degree from the University of Kent in 1984 explains that Pay TV business is one that demands long term investment. “You cannot invest today and expect returns tomorrow. If you invest with a short-term view, you will fail”. Focus on customer satisfaction Despite challenges, the Pay TV company keeps trudging on as a business. It owes this feat to its investors and the team of management’s focus on ground-breaking innovations, complemented with deep understanding of the customer. This of course has paid off as MultiChoice, by its investments in local content and sports is a persistent firm. With the chairman and his

Ogunsanya

co-investors’ trust on the management led by John Ugbe as CEO, MultiChoice believes that customer is not only the king but reason for its sustainability and retaining its over 700 direct employees. The chairman also strongly believes that the company’s customers are at the heart of the business and they drive the management to do better on an on-going basis. According to the company’s management, it is “always on the lookout for new and exciting ways to improve our customers’ overall experiences with quality products and services. We are constantly driven to ensure that customers are satisfied with the overall quality of our services”. Under Ogunsanya’s leadership as chairman, MultiChoice rolled out owned channels in three local Nigerian languages – Hausa, Igbo and Yoruba. This

reinforces the chairman’s statement that he is a strong believer in Nigeria and Nigerian culture and he understands the power of such medium in influencing and transporting culture. He has encouraged the company’s management to introduce a low-end mass focused digital terrestrial pay TV; supported Nollywood, the country’s film industry with annual film budgets of up to $35m; supported a multi-layered talent academy, and a pan-African, Oscar-styled viewers’ choice honours event – Africa Magic Viewers’ Choice Awards (AMVCA). Today, a well-praised initiative called ‘Sabi Men’, has seen over 10,000 youth recruited and taken off the streets, in a country where over 33 percent of the youth population is unemployed. MultiChoice is not only moving with the time, which is driv-

‘‘

MultiChoice Nigeria with great support from the chairman and other investors is not only contributing to customer satisfaction by showing entertaining programmes and sports to the delight of viewers, but it is supporting economic growth through empowering content producers and investing in the economy

en, by technology, youthfulness and globalisation but it is futuristic which has continued to ensure brand loyalty. John Ugbe who was promoted to CEO in 2018, reiterates Ogunsanya’s views, saying, “For us at MultiChoice, there are certain fundamentals we don’t compromise because we know if we keep those elements in focus and stay consistent, we’ll not only survive the business environment, we will thrive. Number one is keeping the customers at the centre of all we do from both the pricing and content standpoints”. Principally, DStv packages have today become a form of succour for the middle and lowincome earners in Nigeria. Contributing to Economic growth MultiChoice Nigeria with great support from the chairman and other investors is not only contributing to customer satisfaction by showing entertaining programmes and sports to the delight of viewers, but it is supporting economic growth through empowering content producers and investing in the economy. Accenture, a top accounting and consulting firm in Nigeria, according to a statement recently measured the socio-economic impact of MultiChoice business in Nigeria between 2015 and 2019. The statement quoting the report revealed that MultiChoice Nigeria had contributed an estimated US$2.1bn (about N800b) to the Nigerian economy within the period under review. The investment within the period is apart from its huge investments since 1993 when it entered Nigeria. Accenture estimated that the company had specifically spent over $428 million in developing local creative talent, as a result of sourcing and producing local content for DStv, GOtv, M-Net, SuperSport, and Africa Magic, and investing in building local production infrastructure. This investment has greatly helped to support the Nigerian movie industry, ensuring that Nollywood movies are available across Africa and the rest of the world. According to the statement, Adewunmi Ogunsanya, chairman, MultiChoice Nigeria, said “The report illustrates MultiChoice Nigeria’s total economic impact in Nigeria, including direct, indirect and encouraged influence on the country’s GDP. The statistics provide further information on the considerable positive socio-economic impact that our operations have made in the development of the communities in which we operate.” Through its business opera-

tions, investments in technology, local infrastructure, Corporate Social Investment (CSI) initiatives and local partnerships, MultiChoice Nigeria has enriched an estimated two million lives each year through initiatives such as MultiChoice Resource Centres, MultiChoice Talent Factory, GOtv Boxing, Sickle Cell Foundation, the Let’s Play initiative, among others. MultiChoice Nigeria has spent US$34.8m in supporting these initiatives, the report further said. MultiChoice management is also a big supporter of other home grown Nigerian television content such as ‘Doctors Quarters’, ‘The Johnsons’, ‘Edge of Paradise’, ‘Big Brother Naija’ the biggest reality show in sub-Saharan Africa and ‘Tinsel’; which today is unarguably the longest-running soap opera on Nigerian television among others. From its portfolio of grassroots sporting programmes to organising award events that celebrate excellence, and diverse investments in educational and entertaining content, it is evident that MultiChoice Nigeria has evolved from being the small company that opened shop in Lagos with 30 employees in 1993, into being one of the most impactful and admired brands in the country. MultiChoice trajectory in Nigeria In Nigeria, the company started analogue bouquets of six channels from that to over 100 channels today. In its early years, it introduced a big dish which was like a status symbol among Nigerians to have but because it foresaw the importance of digital TV in the country MultiChoice in collaboration with Utel-SAT invested over $20 million to launch satellite over Nigeria which enabled it to introduce smaller dishes. In 2010, the organisation moved from the initial satellite that was launched to W-7 primarily because there is more capacity on W-7 and to reduce the incidence of rain challenges as this was one of the issues viewers always faced. Though losing signal during heavy rain is inherent with satellite technology but moving to W-7, gave it more power to reduce those incidences. Based on Adewunmi Ogunsanya’s outstanding contributions to the media, technology, and entertainment industry in Nigeria and his strong investment knowledge and trust in his management, there is no doubt that Nigerians it has contributed to the unique offerings by MultiChoice in the Nigerian pay TV industry.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.