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Beer wars: NB, Guinness lose ground to competition, weaker purchasing power T

NERC outlines conditions for electricity tariff review OLUSOLA BELLO & STEPHEN ONYEKWELU

BALA AUGIE

or the first time in decades, shareholders in Nigerian Breweries and Guinness Plc, which together have dominated the country’s beer market will have to worry about their continued dominance of the drink business in the country. Heightened competition from rival beer manufacturers, as well as declining spending power of Nigerians, which have forced many of them to seek lower priced drinks to quench their thirst, have begun to eat away market share from the two biggest players in the market. Nigerian Breweries on October 26 released its third quarter (Q3) 2018 financial report for the nine-month period ending September 2018. The results show that sales are down 11 percent. But the surprise was the first quarterly loss in a decade by the company, as Nigerian Breweries plunged into a pre-tax quarterly loss of N5.1 billion. “The results reflect a high single-digit unit volume decline arising from increased competition, particularly from International Breweries, the local subsidiary of AB Inbev. An increase in taxes, following a

change in the excise duty regime to specific from ad valorem also contributed to the year on year decline in net sales” analysts

at FBNQuest stated in a note to clients. A rise in excise duty expense by 31 percent and also market-

ing and distribution expenses which rose five percent, were not enough to compensate for the Continues on page 46

L-R : Vice President Yemi Osinbajo; Babatunde Fashola, minister of power, works and housing; Damilola Ogunbiyi, MD/CEO, Rural Electrification Agency (REA), and James Momoh, chairman/CEO, Nigerian Electricity Regulatory Commission (NERC), touring the SURA Market after the commissioning of the SURA Independent Power Project in Lagos, at the weekend. Pic by Pius Okeosisi

he Nigeria Electricity Regulatory Commission has outlined the conditions necessary for tariffs review in order to create collaborative competition in generation, transmission and distribution of electricity in the country. James Momoh, chairman of NERC, in an exclusive interview with BusinessDay, said the agency has the mandate to keep electricity tariffs constant and also review it multi-year tariff order (MYTO) regularly. But that the change in tariff has to be based on certain requirements. These requirements include taking into account the gross domestic product (GDP) and population growth rates, number of enumerated customers that are actually using electricity and meters have to be provided, so that the actual cost of power consumed, and return on investment, can be calculated with a view to ensuring that technical losses are minimised. “If you are calculating rate of Continues on page 46

Inside Deep-pocket FinTech firms ignore Nigeria in P. 2 $100bn push

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Deep-pocket FinTech firms ignore Nigeria in $100bn push ODINAKA ANUDU, Las Vegas

eep-pocket financial technology (FinTech) firms are investing over $100 billion in new products and countries this year, but the majority of them are not looking Nigeria’s way. About 11,500 FinTech firms from over 100 countries participated in this year’s Money 20/20 held in Las Vegas, Nevada, the United States, which was the largest gathering of FinTech companies in the world, with various announcements on new products and markets but their interests are majorly in Puerto Rico, Venezuela, Uganda, Burundi, the United States, Ghana, Canada, and Sweden, among others. Ryan Taylor, chief executive of Dash, a digital cash firm, told BusinessDay in an exclusive interview that Dash is expanding in Venezuela and Latin America, with a keen interest in Ghana. “We do have a market that we have higher consideration in, like the US, Ghana, Columbia. There are certain markets that are more amenable to our products and presently you can buy anything from coffee to cars,” Taylor said. He explained that the firm might consider Nigeria in the future, given the high rate of smart phone penetration in the country, but added that Dash is looking for a market where there is an immediate need for its products. Nanopay is a FinTech firm that powers multi-currency payment solutions with instant payment. Its chief risk officer, Amir Sunderji told BusinessDay that the firm’s keen interest in Africa is in the East. “Africa is booming. We are talking to banks in East Africa—Burundi and Uganda area. Obviously, we

have a keen interest in coming to West Africa in the future because the products will be good for them,” Sunderji said. More than 100 announcements were made in Las Vegas, with none concentrating on Africa’s most populous country whose mobile money transactions hit $142.8 million in 2016 as against $5 million in 2011. Some of the FinTech firms with major markets and products announcements were Endor, Accion, Alphabeta Analytics, American Express, Credit Karma, 7Chord, Dejamobile, and Experian. Others are Fundbox, Geoswift, Interstellar and Paysafe. FinTech firms use technology to simplify and automate financial transactions. A KPMG Pulse of FinTech report says that $122 billion was pumped into the FinTech sector over the last three years, with venture capital transactions exceeding 1,000 for the fourth consecutive year in 2017, while private equity (PE) deals hit 139. A PwC 2017 report says that FinTech investments are estimated to have increased by a (Cumulative Growth Average Rate) CAGR of 58 percent in Africa to $800 million between 2014 and 2016, with Nigeria and South Africa receiving a significant portion. Banking challenges and Nigeria’s population of almost 200 million provide an opportunity for FinTech firms, but slow approval of regulatory licenses hurt start-up players in the space. Funding remains a major challenge for local players, but two top executives of American FinTech firms told BusinessDay that the Nigerian market is complex and can overwhelm a new entrant. “You have to deal with regulations. The processes are long and operational cost is higher than most African countries,” one of them, who does not want his name in print, said.

Only 20 per cent of women are employed in the African power sector BUNMI BAILEY

he African Development Bank (AFDA), a regional multilateral development bank has said that only 20 percent of employees in the African power sector are women and also, less than ten percent of engineers are women. Vanessa Moungar, director of the bank’s Gender, Women and Civil Society Department, said this at a seminar for which the theme was, “Promoting Gender Equality in the African Power Sector”, organised by the bank, in partnership with the French Development Agency and Association of Power Utilities of Africa and African Network of Centres of Excellence (ANCEE). Participants at the seminar raised awareness about the interlinkages between gender and the power sector and moved towards a consensus on advocacy for reform, policy implementation and regulations, to ensure gender-equal access to energy services, as well as ways to increase women representation in the sector. “Diversity is not only nice to have, there’s a business case for it. We strongly believe that both in the public and private sector,

we must have leadership bodies that reflect the societies they live in, for better, more sustainable, long term results,” Vanessa Moungar, Director, the bank’s Gender, Women and Civil Society Department said at the seminar. The bank, which urged the power sector to capitalise on women’s capabilities, brought together 50 human resource directors from 50 power utility companies, eight directors from ANCEE and other participants from more than 25 African countries for the seminar. The participants raised awareness on the importance of developing a concerted approach to promoting gender equality in the workplace and highlighted strategies aimed to attract more women to the power sector, improve their career prospects and increase their access to management positions within utilities. Amadou Hott, the vice president for Power, Energy, Climate Change and Green Growth, noted that the power sector needs to capitalise on women’s talents and integrating gender in the power sector would create opportunities for women and strengthen

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L-R: Kennedy Uzoka, group managing director/CEO, United Bank for Africa(UBA) plc, and honorary fellowship awardee, with Uche Olowu, president/chairman of governing council of Chartered Institute of Bankers of Nigeria (CIBN), during the award of fellowship of the Chartered Institute of Bankers of Nigeria on Kennedy Uzoka in Lagos, weekend.

Manufacturing firms shaky as FG, states fail to fix age-old problems ODINAKA ANUDU

large number of manufacturing firms are shaky today as federal and state governments continue to pay little attention to age-old problems facing manufacturers. In 2014, Procter&Gamble set up a $300milliondiaperlineinAgbara,Ogun State, which was tapped as the biggest US non-oil investment in Nigeria. Four years down the line, the company has packed up, citing restructuring as its main reason. But those familiar with the company told BusinessDay that the company had to shut down its Agbara plant due to high production cost incurred at the plant. Poor road network and multiplicity of taxes are two age—old problems that are hurting manufacturers in Ogun State today, where P&G operated. Roads along Agbara/ Igbesa axis are bad and the government has refused to build them, despite collecting billions in taxes from manufacturers. Obi Ezeude, CEO of Beloxxi’s Industries, complained on February 8 this year, during a factory commissioning, that the poor state of roads in Agbara was hurting manufacturers, as vehicles and company trucks often get stuck in the mud. Government has ironically asked the manufacturers to bear 40 percent of the cost of fixing the road, while it shoulders the rest. Furthermore, 10 to 11 years after high energy cost partly sent Michelin and Dunlop packing, the issue has

remained a problem that has defied a solution for the Nigerian government. Power sector expenditure in the manufacturing sector has been on the rise since 2014 and 2015. Manufacturers spent N51.35 billion on alternative energy sources in the second quarter (Q2) of 2017; N66.03 billion in the first quarter (Q2) of 2017; N62.96 billion in H1 of 2016, and N69.99 billion in H2 of 2016, according to the Manufacturers Association of Nigeria (MAN). Average daily electricity supply in H1 of 2017 declined to five hours, from seven hours supplied in the corresponding period of 2016 and eight hours in the H2 of 2016. There was, however, a nine-hour average power supply in the second half of 2017. “It is no more news that manufacturers in Nigeria currently selfgenerate as much as 13,000MW through alternative sources of energy, in order to stay afloat. In fact, cost of alternative electricity generation alone constitutes about 40 percent of our production cost. With such high costs, made-in-Nigeria products will hardly be competitive,” Frank Jacobs, immediate past president of MAN, said at a special interactive forum on Eligible Customer Regulation of the Nigeria Electricity Regulatory Commission (NERC) in June 2018. Manufacturers have given up on power distribution companies (DisCos), prompting them to form a corporation known as MAN Power Development Company to cater to their energy needs. More so, rather than reduce,

the number of taxes payable by manufacturers across the country has come to 54 as against 37 in 2014. Multiple taxation has sacked firms such as Matna Starch from Ondo State and continues to threaten others in various states. Furthermore, policy inconsistency still remains a big issue. After promising exporters heaven on earth, the immediate past government suspended the Export Expansion Grant mid-way. RN Global and many other firms in the Kano/ Kaduna axis fell to the sledgehammer of this policy somersault. A survey conducted by MAN shows that the average interest rate banks charged manufacturers in the second half (H2) of 2017 was 23.05 percent, as against 22.65 percent in first half (H1) of 2017 and 21.4 percent in H1 of 2016. Again, the Ajaokuta Steel Complex is yet to be privatised or revived many years after, prompting manufacturers to seek steel inputs from abroad. If the complex were in operation, it would provide a big source of raw materials for steel makers and other manufacturers. “Currently, I am not sure those technologies at Ajaokuta are competitive in steel making. The world has moved on. What is required now is for the private sector to get more and more involved in the downstream and the upstream segments in the steel business,” Raj Gupta, chairman, African Industries Group, a consortium of 12 companies, including six steel plants, told BusinessDay recently.

Nigeria gets a record 79 presidential candidates for 2019 James Kwen, Abuja

resident Muhammau Buhari will be facing battle from 78 other presidential candidates in the 2019 elections who will be seeking to ensure that he does not return to Aso Rock, the country’s seat of power in Abuja, the Federal Capital Territory. Even though President Buhari, candidate of the ruling All Pro-

gressives Congress (APC), will be facing a motley crowd of candidates from many largely unknown parties, his main challenger for the position remains former vice president Atiku Abubakar of the Peoples Democratic Party (PDP), who is increasingly being tipped to win the 2019 elections. Mahmoud Yakubu, chairman, Independent National Electoral Commission (INEC) told journalists in Abuja on October 26 that

that 79 candidates have been nominated by their respective political parties to contest for the Presidency in 2019, the highest number of candidates for the country’s topmost political position ever. Other prominent presidential candidates are; Donald Duke, SDP, Obiagheli Ezekwisili, Allied Congress Party of Nigeria (ACPN),

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8 BUSINESS DAY NEWS Why we can’t reconstruct Atan-Igbesa-Agbara road - Amosun RAZAQ AYINLA, Abeokuta

overnor Ibikunle Amosun of Ogun State has given reasons hindering the state government’s plan to reconstruct Atan-Igbesa-Agbara road, saying the Federal Government’s failure to cede the road to the state seriously impedes all efforts towards reconstruction of the road. BusinessDay reports that Atan-Igbesa-Agbara road is a strategically structured economic road that serves as a link road between Nigeria and West African countries through Badagry-Seme border and Republic of Benin to the East and Iba-Alaba-Mile 2 and Apapa seaports to the West. Atan-Igbesa-Agbara industrial road that hosts 70 percent of manufacturing industries in the state was started by Shehu Shangri-led Federal Government in the early 80s, and originally tagged Badagry-AgbaraAbeokuta-Sokoto road, but has since been abandoned by successive governments and now causes perennial problems for human and vehicular traffic inbound and outbound Ogun State and Lagos State as well as Benin Republic through either Idi-Iroko border or Badagry-Seme border. It would be recalled that Governor Amosun in July 2017 signed a memorandum of agreement (MoA) with private investors in Atan-Igbesa-Agbara industrial areas, being represented by Kolapo Lawson, chairman of Agbara Estates Limited, on possible road reconstruction based on public private partnership arrangement, using concrete technology that would cost about N23 billion. Speaking on the state of the road, which has been abandoned, at a town hall meeting on 2019 Ogun State Budget held in Abeokuta on Thursday, the governor said the state government could not go beyond the present situation of the road since the Federal Government had failed to cede the ownership of the road to the state. Amosun made this declaration in response to the questions of the state branch of Manufacturers Association of Nigeria (MAN) put forward by executive secretary of the Association, Motunrayo Elegberun, adding that the noncession of the ownership of the critical road project to the state was responsible for further deterioration of the road. The governor explained that financial institutions could not grant loans to finance the road project since the Federal Government had failed to cede the road, and “this is seriously affecting progress of the road because we cannot spend up to such an amount - N23 to N25 billion on that road for now.”

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Afreximbank tasks African financial institutions on transformation of trade HOPE MOSES-ASHIKE

n its quest to facilitate African trade, the African Export-Import Bank (Afreximbank) weekend challenged all African financial institutions to collectively pursue the transformation of trade in Africa. Amr Kamel, Afreximbank executive vice president, Business Development and Corporate Banking, said this in Dar Es Salam last week. Speaking at a road show organised by the bank for financial institutions to introduce the Afreximbank

Trade Facilitation Programme (AFTRAF), Kamel, who was represented by Ademola Adeyinka, consultant on financial institutions/ trade, said Afreximbank was in a strong position to support African trade and African financial institutions and that it wanted African banks to see it as their partner of choice in international financing. “We understand African trade better than any other institution,” he said. “We were set up by African governments under a Charter that has been signed to by 50 countries, including Tanzania. We have a good credit

rating that African financial institutions can leverage on and we have the ears of 50 African heads of state. “That allows us to better understand the issues in each country, support the countries in finding solutions to trade finance challenges and resolve issues that may arise easier,” he said. Kamel emphasised that Tanzania was a key market for Afreximbank and that the bank would want to do more transactions in the country. He explained that Afreximbank came up with AFTRAF in order to create

opportunity for Africa to bridge the trade finance gap with the rest of the world, which had continued to grow. It was also to create the opportunity for African banks to enhance and complement existing trade finance lines with international financial institutions. Kamel said that, to address the challenges, Afreximbank would leverage its credit rating and supranational status to de-risk the perceived risks and unlock capital to support trade finance business in Africa. He announced that Afreximbank has onboarded about 170 Afri-

can banks and that the target was to onboard 700 banks by the end of 2019. The Bank was also in the process of appointing some African banks as Trade Finance Intermediaries, which would allow such banks to act as local administrative agents for transactions involving Afreximbank in their markets. He encouraged Tanzanian banks to take advantage of the opportunity by sending in their customer due diligence and know your customer (CDD/ KYC) documents in order to be onboarded.

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Deforestation: Edo partners NGO to regenerate 400ha of forest reserve FG’s 2.8mbpd crude oil production target achievable - DPR ment was encouraging Public our reach. We are more deter-

overnor Godwin Obaseki of Edo State says the state is committed to rolling back the effects of deforestation through mutually beneficial partnerships to regenerate forest covers depleted over the years. The governor disclosed this at the commissioning of the 1,200 trees plantation, an initiative by Association Bernadette Strebel World Peace, in Ehor Forest Reserve, Uhunmwode Local Government Area of the state. Obaseki, who was represented by the commissioner for environment and sustainability, Omua Alonge Oni-Okpaku, said the state govern-

Private Partnership (PPP) in environmental regeneration, which would provide room for more stakeholders to contribute to efforts at replenishing the state’s forest cover. According to him “Our forest has been greatly devastated and there is an urgent need for massive reforestation and protection of the little available forest. Edo State Government has high potential for forest regeneration and this government is committed to the planting of tress to restore our lost forest reserves. As a government, we will not relent in fighting deforestation and its resultant effects with all the measures within

mined now than ever to bring back our forest.” The governor said that one of the ways the state government is driving this programme is by encouraging Private Public Partnership (PPP) in forest regeneration, noting, “In furtherance of this, the state’s contribution towards the success of the One Million Trees project was the donation of 400ha of deforested land and the continuous supply of seedlings. “Since the inception of the project, Edo State Government has not relented in the provision of seedlings. Some other NGOs are also part of this great initiative.”

FRANCIS SADHERE, Warri

he Department of Petroleum Resources (DPR) says the 2.8 million barrel per day (mbpd) crude oil production target of the Federal Government is achievable. The Warri zonal operations controller, DPR, Antai Asuquo, gave this assurance weekend during the “2018 Annual Tripartite Conference of Regulators, Rig Owners, and Oil and Gas Operators” in Warri. Asuquo, who coordinated the programme, told newsmen shortly after the event that, “It is realistic

in the sense that all investors are expected to channel more resources into oil exploration and production activities with the increase in prices.” The controller advised the stakeholders to take advantage of the increase in price of crude oil at the international market and inject more resources into their businesses. He noted that the gesture would help to boost their operations and by implication attained the national goal as pertained to production. “This platform is to interact and discuss common is-

sues with emphasis on ways in which oil operations are done in a sustainable manner to benefit the investors and the nation. “We exposed the participants to new technological ideas that can enhance their operations. It is our concern that the business of oil and gas is done in a way and manner that is sustainable and the investors reap from their investment. “It is the intention of the government to increase production base, we believed now that oil price is doing well, investors will key into it and maximised their operations,” he said.

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Radical uncertainties

BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

n 1st October 2018, the retired partners of KPMG who are still awaiting their gratuity and pension were gathered in Abuja to celebrate Nigeria’s 58th Independence Anniversary as guests of President Muhammadu Buhari GCFR and also participate in the 48th Annual Conference of the Institute of Chartered Accountants of Nigeria [ICAN]. Alas, as we drove from Nnamdi Azikiwe International Airport into town, we were confronted by huge billboards of President Buhari who is bidding for a second term in 2019. However, there were other bill boards (sponsored by XKPMG and Grant Advertising Nigeria Limited) contending for space and attention: (i) Chief (Dr.) Sylvan Olisanye Ebigwe (Vice President-General, Ohanaeze Ndigbo (Worldwide); President Emeritus, Aka Ikenga; Consultant Dental Surgeon and the Iyasei Onowu (Prime Minister), Agbadagba, Okpanam, Delta State): “Nigeria is practising primitive democracy (revenge and retaliation) with some primitive minded individuals in the field. They don’t have the love of this country at heart. Why should people kill and

maim others in order to come and serve a nation?” (ii) Jeff Rich “The one thing we know about the future is that it comes one day at a time.” (iii) Dr. Chukwuemeka Ezeife, former Governor of Old Anambra State: “Nigeria is a total failure and Nigeria may be inching towards extinction the way things are going. An Igbo man has never ruled Nigeria for one day, no elected Igbo President for one day. (MajorGeneral Johnson Aguiyi Ironsi was a military leader and he lasted only six months). Therefore, if by chance Dr. Kingsley Moghalu gets it, nobody should complain. (iv) Professor Neal Hartman, Massachusetts Institute of Technology: “In this volatile, unstable, complex and ambiguous operating landscape, to survive and thrive, Nigerian leaders need to make innovative impacts in their organisations in several ways.” (v) “Daily Sun” newspaper “IMF’s timely warning” “The International Monetary Fund [IMF] recently warned Nigeria and other sub-Saharan African economies to urgently check rising debts and diversify their revenue bases. It advised that they should not delay such reforms because of rising oil prices in the international market as the ‘good times’ would not last for long. Specifically, the IMF warned the Federal Government to check the rising levels of debts and deepen diversification efforts and revenue base. Failure to heed the warning could result in serious economic crisis. This is not the first time this year that IMF has warned Nigeria of the likelihood of debt crisis, its

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Specifically, the IMF warned the Federal Government to check the rising levels of debts and deepen diversification efforts and revenue base. Failure to heed the warning could result in serious economic crisis

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latest warning came at the IMF/World Bank annual meeting in Bali, Indonesia, during which it unveiled the World Economic Outlook entitled, “Challenges to Steady Growth.” We urge the government to critically examine all the areas of the economy that the IMF has raised concerns and initiate far-reaching reforms that will stimulate sustainable growth. We agree with IMF that looming debt crisis, occasioned by frequent borrowing without deploying such funds to productive sectors, the need to enhance the non-oil revenue mobilisation and proactive banking supervision, are some of the challenges the government must quickly address. For instance, Nigeria’s debt stock reached N22.3trn as at June 30, 2018. About two-thirds of the govern-

ment’s revenues are reported to go into servicing interest payments, with the principal still awaiting redemption at maturity. In 2017 alone, N1.8trn was spent by the Federal Government on debt servicing, out of which N1.455trn went into domestic debt servicing. We recall that President Muhammadu Buhari is seeking the approval of the Senate for a fresh $2.86bn external loan for partfinancing of key infrastructure projects, and another $82.54m from the international capital market to refinance the balance of $500m mature Eurobonds. In all, the fiscal plan recorded N2.426.73trn shortfall, according to figures from the Budget Office of the Federation (BoF). The Economic Counsellor of IMF, Mr. Maurice Obstfeld, observed that the Nigerian economy and those of other sub-Saharan African nations may witness growth rebound as a result of the current high oil prices, but warned that rising borrowing levels will likely vitiate the gains. This, therefore, calls for boosting non-oil revenues and fiscal consolidation plans. Such fiscal buffers will make room for policy responses in the likelihood of the “next recession” that awaits countries that fail to plan against the ‘rainy day.’ In spite of the Federal Government’s assurances that its borrowing plan is still within the acceptable threshold as well as its commitment to diversify the non-oil sector, we are inclined to side with the IMF position that our economy is yet to receive a significant boost from policy implementations that can truly withstand the shocks that pushed it into recession a few years ago. The IMF and the World Bank had insisted last year that the fanfare that greeted Nigeria’s exit from

recession came on the heels of new foreign exchange measures by the Central Bank of Nigeria, rising oil prices, attractive yields on government securities, a tighter monetary policy regime and increased external reserves. But some of these are on the reverse gear now. No doubt, Nigeria’s fiscal challenge is about revenue shortfalls and lack of wise investments of available resources in critical projects that can stimulate growth. Borrowing is not bad, it is how such loan is deployed into productive sectors that matters. Statistics from the BoF and the Debt Management Office (DMO) show that the ratio of interest payments is rising in great proportion. Therefore, the government should be careful about issuing debts in international capital market as it is currently doing. Available statistics also support IMF position that Nigeria is still retaining higher fiscal deficits, driven by weak revenue base. Therefore, it has become imperative to enhance financial resilience through proactive banking supervision, by ensuring adequate provision for losses and improving resolution frameworks that will keep expensive public bailouts at bay and foster a financial system supportive of Nigeria’s economic growth. There is creeping concern that the forthcoming general election may make the government pay less attention to the economy. That will further slowdown growth projection which is currently 1.9 per cent. Government should heed the IMF warning and come up with measures that will stimulate economic growth.”

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No prospect of transformation without government borrowing

GREGORY KRONSTEN Gregory Kronsten Head, Macroeconomic & Fixed Income Research FBNQuest

e saw the observation by Babatunde Fashola, the federal minister for power, public works and housing, at the recent gathering of the Nigerian Economic Summit Group in Abuja that the private sector has limited capacity to cover Nigeria’s huge infrastructure gap. For the power sector alone, the annual investment requirement could well be as much as N3trn. Fashola’s realism is welcome, and underpins our view that the FGN, with partners, has to play a leading role as borrower. The latest implementation report from the Budget Office of the Federation tells us that FGN capital expenditure reached N1.44trn in 2017. The table is headed spending

as at December 2017 although the detail itemizes expenditure in 2017 as well as “2017 in 2018”. There are higher figures in official circulation, notably for the different concept of capital releases. However, we have to remember that not all the capital spending is deployed for the infrastructure, soft or hard. FGN spending is inadequate for filling the gap. The deposit money banks (DMBs) could play a transformational role. They could be said to have risen to the challenge in the sense that they are sizeable holders of FGN paper and that the FGN devoted 22 per cent of its spending to capital items in 2017 according to the budget office. Such an argument indulges the banks, however: the planners are looking for their direct lending and know well that loan books are predominantly short term in nature. In their defense, the DMBs do not have the long-term liabilities to match a major expansion of their long-term assets. There are other factors of their own making. The skills are not in place for such an expansion. We have to ask also why their take-up of the CBN’s many credit initiatives has been modest (even though the apex bank is

taking most of the risk upon its own shoulders). The monetary policy committee has long been calling for the DMBs to diversify their loan books. The calls have been made for the benefit of SMEs and productive sectors of the economy rather than the infrastructure but are nonetheless instructive. They have sought to employ moral suasion and have mooted schemes based around banks’ capital reserve requirements in an effort to change lending behaviour. The response of the DMBs has been muted. A different approach would be mandatory credit guidelines set by the regulator (the CBN). Historically this has not delivered in Nigeria. It was successfully deployed in East Asia in the 1960s and 1970s but is decidedly out of fashion. Foreign investors are would-be partners of the FGN in addressing the infrastructure gap. FDI (gross) has slowed to less than 1 per cent of GDP (or US$3.5bn in 2017), and is directed at manufacturing, telecoms and other services. FPI on the same basis amounted to US$8.5bn last year, and was on a rising trend in the New Year. The main attraction has been FGN paper. What is missing other than the FGN’s maiden sukuk is longterm and ring-fenced borrowing

specifically for the infrastructure. A possible model is KenGen, the Kenyan electricity generator that is listed on the Nairobi Stock Exchange and a regular issuer of local currencydenominated bonds. These partners have a role to play but the onus ultimately rests with the FGN. Some of Nigeria’s newer development partners such as China and Turkey have become more involved, and could become more so if the FGN provides guarantees. This cannot replace direct borrowing, however. Multilateral agencies, the international financial media and sundry commentators warn of the rising indebtedness of African governments, seen most recently on the news that the FGN has the go-ahead from the legislature to raise US$2.7bn from fresh Eurobond sales. They have identified a clear trend, and cite the extreme case of Mozambique where the debt burden is now greater than that preceding relief in the 1990s and early 2000s granted under the Heavily Indebted Poor Countries (HIPC) initiative. The warnings are valid but we should not forget that they are delivered from the comfort of the developed world where the hard and soft infrastructure are already in place.

We have to address a broader objection, not always spelt out in full, that some sovereigns such as Nigeria should cap their borrowing because the monies will be poorly deployed (or worse) and the development of the economy will go into reverse. The experience of the 1970s and the 1980s warrants this thinking. Yet the East Asian “miracles” were made possible by very heavy state borrowing to fund education and the transformation of the infrastructure. If Nigeria is to migrate in developmental terms, it has to go down this route. If the FGN was able to collect taxes equivalent to, say, 20 per cent of GDP, it would not find itself caught in this dilemma. The vice-president said last week that the ratio has improved from 6 to 8 per cent. Yet the culture of paying tax will change slowly and non-oil revenues cannot fill the vacuum in a hurry. This has been recognised in the draft 2019-2021 Medium term expenditure framework. For now, FGN borrowing has to fill a large part of the infrastructure gap, and we have to hope for a signal improvement in delivery.

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This time machines may take our jobs

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

he World Bank just released its World D e ve l o p m e nt Report and it has some great insights on the changing nature of work. Humans have always lived with the fear that they will become victims of their own technological innovation, states the report in its introductory section. So far it has not happened because technology has always created more opportunities than it has taken away. The impact is that with the aid of advancements in technology, humans are living far longer than they have lived in the past, have better health and are richer than they have ever been. But then continuing advancement in technology is beginning to raise new fears that we cannot always assume that technology will always create more opportunities for humans than it can take away. Even in the past when it has given, it had always taken away but more humans have benefitted. The advent

of computers eliminated type writers and typists who could not become computer operators. But computers created new opportunities for humans than typewriters ever did. The World Bank report warns that it is important to understand that many children currently in primary school will work in jobs as adults that do not currently exist. Any father with a child in school currently should be worried about this statement. It immediately raises the question; are our children getting the right education or acquiring the right skills that would prepare them for the emerging future? The World Bank report offers some insights into the kind of skills that are increasingly needed in the work place. The skills will be a combination of “technological know-how, problem-solving, and critical thinking as well as soft skills such as perseverance, collaboration, and empathy, teamwork, and skill combinations that are predictive of adaptability such as reasoning, complex problem solving and self-efficacy.’ The report states that building these skills requires strong human capital foundations and lifelong learning. Developing countries will have to invest in education and health of their people with a ‘fierce’ sense of urgency, the World Bank said in the report. Education and health is considered the building blocks of human capital which is the key competitive edge in the knowledge economy. It is not enough to have a large population, the quality of that population will be the key differentiator in economic competitiveness in

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The changing nature of work means that the government must study with more intensity the changes in the labour market… The results of these studies should be fed back into the school system to ensure that education is adapted to create the rights skills that the job market will need

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future. The report notes that ‘In countries with the lowest human capital investments today, our analysis suggests that the workforce of the future will only be one-third to one-half as productive as it could be if people enjoyed full health and received a high-quality education.’ In line with the changing nature of work, the demand for less advanced skills that can be replaced by technology is declining. At the same time, the demand for advanced cognitive skills, sociobehavioural skills, and skill combinations associated with greater adaptability is rising, an indication of an emerging trend that is likely to grow than reversed. BuisnessDay’s cover story today (22 October) shows that firms listed on the stock exchange have

not expanded their workforce over the last nine years. Even if we give room for the fact that some companies have been delisted over the period, and that the stock market forms just a small portion of the Nigerian economy, there is still a cause for concern that quality jobs in the formal sector of the economy looks not to be growing. The lack of growth in jobs could be explained by both the fact that the economy has not expanded fast enough to create new jobs and also that companies have gotten more efficient and smarter through the acquisition of advanced technology which has cut costs and reduced the need for human labour. If it is economic slowdown that is causing the loss of jobs, then the job losses could be temporary but if it is technology, then what we are facing is a permanent loss of jobs because machines have taken the place of humans. The changing nature of work means that the government must study with more intensity the changes in the labour market. What skills are fading out and what skills are being required. The results of these studies should be fed back into the school system to ensure that education is adapted to create the rights skills that the job market will need. Young people cannot be allowed to grow only to find out that they have been locked out of the quality and high paying jobs market because they do not have the skill sets to compete. Singapore is one of the countries that is responding to the changing nature of work. Singapore, which is rated as having the best educational system in the

world, recently abolished ranking of students in their primary school system based on their performance in examinations. The focus now in Singapore will be to allow each student develop at his or her own pace and instilling in them the clear understanding that education is no longer a destination but a lifelong process. Discussions, homework and quizzes are set to replace marks and grades as the preferred method of collecting information on the performance of young primary school pupils. Also starting in 2019, exams for primary years 1 and 2 students will be abolished. Explaining the decision for the change, Ong Ye Kung, Singapore’s Education Minister was quoted as saying “Learning is not a competition.” The Ministry of Education is reported to be pushing for applied learning programmes in its schools to ‘bolster personal development and help students acquire realworld skills.’ They are also seeking to change perception and push student aspirations beyond working in banking, civil service and medicine, which are all jobs that may not exist as we know it in future. Education in the knowledge world is a lifelong process that will not end. Those who have no ability to learn will just become irrelevant in the knowledge economy of the 21st century. If Nigeria will make its population count in future, it needs to reform its education system now and as the World Bank advises, with a fierce sense of urgency.

Send reactions to: comment@businessdayonline.com

Waiver of statutory notice for board of directors’ meetings

BISI ADEYEMI Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng.

tatutorily, directors are entitled to receive fourteen days’ notice (except otherwise provided in the Articles of Association). Business exigencies however sometime require that meetings are convened with less than the statutory notice. Typically, directors are required to sign waiver of notice, where a meeting of the board of directors has been convened with less than the statutory minimum notice. Are these waivers valid? Section 266 of CAMA provides as follows: (1) Every director shall be entitled to receive notice of the directors’ meetings, unless he is disqualified by any reason under

the Act, from continuing with the office of director. (2) There shall be given 14 days’ notice in writing to all directors entitled to receive notice unless otherwise provided in the articles. (3) Failure to give notice in accordance with subsection (2) of this section shall invalidate the meeting. It can be argued that section 266 imposes an obligation to give a minimum of 14 days’ notice. Thus, waivers have no place under Nigerian company law and therefore cannot, except specifically provided for in the company’s Articles be valid. It can also be argued that directors have the right to dispense with the minimum notice and waive their right to receive notice as contemplated by CAMA. This argument is supported by Section 263(1); “The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit.” It is worthy of note that sec-

tion 266 uses the word “shall”, a word which connotes an obligation. This is in stark comparison to the word “may” in section 263(1). Furthermore, it can be argued that the obligation on the company is to “give notice”. This cannot be waived. Thus, whilst there can be no compromise as to the giving of notices, there can be some flexibility as to the length of such notices if all directors “waive” their right to the statutory minimum. In the United States of America, the Articles of Incorporation may specify the notice that is required for director meetings. The Model Business Corporations Act (MBCA) provides that notice is not necessary for regular board meetings, and that special meetings may be called with two days’ notice. In the United Kingdom, directors are expected to meet regularly, and a director can call a meeting at any time provided reasonable notice is given to the directors, unless the Articles provide otherwise. What is reasonable will depend on the type of company and precedent. To be clear, it is not sufficient that a majority of directors “agree”

to convene the meeting with less than the statutory notice period. The issue of “majority” is by way of quorum at a properly convened meeting. As the board is called to take a decision on abridging the notice required to convene a meeting, the issue of quorum does not come into the equation. Without exception, each director has to agree (waive their right to statutory notice) to convene the meeting with less than the statutory notice. This waiver has to be properly documented. It is important to note that the mere fact of attending a meeting convened without the requisite notice (or short of this notice) does not in itself preclude a disgruntled director form applying to set aside decisions taken there at. Out of the abundance of caution, some companies have amended their articles to provide that attendance at a meeting convened with less than the statutory notice period by itself constitutes a waiver. In order to avoid any challenge to the validity of meetings and decisions taken at such meetings,

it is advised that were practicable, written resolutions be signed in respect of any decision/s taken at a meeting convened and held with less than the statutorily required notice. A company should also consider specifically providing for abridged notice and waiver of notice in its articles. Since this is expressly permitted by CAMA, such an option would lay to rest any doubts regarding the validity or otherwise of meetings convened and held with less than the 14 days’ notice provided by CAMA. On Thursday, 15th November 2018, DCSL will be hosting the following events at the Radisson Blu Anchorage Hotel, Victoria Island, Lagos; • Improving the Performance of the Audit Committee ©; • Enthroning Good Corporate Governance in Microfinance Banks. For further enquiries and comments, kindly contact ntaiwo@ dcsl.com.ng or 08037699347 Send reactions to: comment@businessdayonline.com

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Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

Monday 29 October 2018

Government desperation and illegal taxation

t is not news that Nigeria is having a serious fiscal crisis, with revenues falling far short of target and majority of those revenues (about 75 percent) used to service debts alone. Consequently, the government has to borrow to run maintain operations and finance the budget. It is therefore understandable that the government is doing everything within its powers to grow its revenues, especially through taxation. It is also noteworthy that it is trying to enforce tax payment by high net worth individuals and corporate organisations who have capitalised on Nigeria’s lax tax regime to evade taxes for years. However, the way the government has been going about this suggests a serious lack of or total disregard for the rudiments of the law, taxation, fairness and equity. Fresh from the debacle of the CBN’s laughable clampdown on MTN Nigeria over so-called capital importation and the Attorney General of the federation’s usurpation of the functions of the Federal Inland Revenue Service (FIRS) to demand a payment of over $2 billion from the same organisation in unpaid taxes on foreign payments and imports,

the country’s tax man, FIRS, has become a law unto itself, levying illegal taxes on companies and compelling banks to become tax collectors by illegally deducting the levied taxes from such companies’ accounts. One of the first illegal steps FIRS took recently is directing banks to freeze the accounts of defaulting taxpayers to prevent them from drawing funds. It also purported to appoint agent banks for collection of taxes due from alleged tax defaulters. In the letters signed by Tunde Fowler, executive chairman, FIRS and issued to appointed agent banks they were instructed to set aside the tax amount due from the bank accounts of alleged defaulting taxpayers and remit same to the accounts of the relevant tax authorities (RTAs) to the credit of the taxpayers, in full or partial settlement of the tax debts. In one of the letters addressed to the banks and seen by BusinessDay recently, FIRS demanded that the commercial bank compulsorily transfer funds (up to N110 million) from a company’s account to the FIRS without due process or a court order. Sources have told BusinessDay that all companies that have done average turnover of more than a billion naira on their accounts are currently receiving

these letters which imposes these ‘arbitrary’ taxes based on the transaction turnover in the accounts. Sadly, some CEOs who were slammed billions in illegal taxes have demonstrated full compliant to tax regulations. But even after showing full compliance with all the tax laws of the country, they were still requested to ‘pay something.’ Even Nigeria’s greatest industrialist, Aliko Dangote, was not spared. He revealed that he was hit with a tax bill that was twice higher than the US$2 billion that the MTN Group got from the office of the Attorney General of the Federation. The arbitrariness of the tax bills being sent out have unsettled many companies and even shareholders especially of multinationals operating in the country. The potential impact on company’s cash flow of such debits is creating panic within the business community. Besides, it is sending negative signals to multinationals operating in the country, current and future foreign direct investors about the uncertainty, unpredictability, and general lawlessness of the Nigerian environment. Already, shareholders in the US and UK have asked the man-

agement of companies exposed to the Nigerian market to explain their exposures to the Nigerian authorities. This is because of the unexplainable tax bills that most of them are getting. We are at pains to stress that although FIRS has the authority to freeze accounts of tax defaulters, it must only do so on the orders of the court after the tax liability of the tax payer must have been established. Besides, a tax payer has the right to file tax returns which will be audited by FIRS if it is not satisfied with the returns. The turnover comes in only if companies choose not to file their returns. The action of the FIRS is raising question on “bank customer confidentiality’ a key principle in commercial banking relationship. With the FIRS asking banks to debit their customer’s accounts and also submit their customer’s bank details, that confidential relationship between banks and their customers is being broken. What is more, FIRS must exercise its powers with caution to avoid negative impact on the business environment and ease of paying taxes. The current desperation to squeeze money legally and illegally from companies is extremely short-sighted and will only bring woes to the country.

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

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Monday 29 October 2018

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Monday 29 October 2018 In Association With

Presidential praise-singers

Unwanted Beyond boomred andnotice bust?

Why Donald Trump is popular in Africa

America’s shale industry faces constraints

Most Kenyans and Nigerians like him, and not just because they like America

The limits of being an oil superpower

ONALD TRUMP has never set foot in Africa. And he has seldom been polite about the continent either, allegedly dismissing Nigerians as hut-dwellers and African states as “shitholes”. Yet he is more popular in Africa than in any other region, according to a 25-nation survey by Pew, a pollster. Some 59% of Nigerians and 56% of Kenyans believe he is a positive influence on world affairs. South Africans are less keen: only 39% express confidence in Mr Trump. But that is still 12 percentage points higher than the global median (see chart). Granted, Mr Trump is less popular than Barack Obama, whose father was Kenyan. But Mr Obama was also liked in Germany, where just 10% of respondents have taken to his successor. Can Africans really be so fond of a president who

HE HISTORY of America’s shale industry is brief and dramatic. In just a decade the country has seen the spread of innovative techniques to extract oil and gas locked inside shale rock; the lifting of a decades-long ban on crude exports; a price crash that seemed to decimate the industry— and now a price recovery. Next year the shale boom will account for the biggest surge in one country’s oil output since the International Energy Agency began keeping track. America is now the world’s top oil producer, surpassing Saudi Arabia

thinks “Nambia” is a country? Ipsos, another pollster, found that 38% of Kenyans could not name the American president, so perhaps ignorance plays a part. It is hard to take against someone you have not heard of. Richard Wike of Pew sug-

gests that perhaps Africans say they like Mr Trump because they like America. Nigerians, Kenyans and South Africans are twice as likely to hold pro-American views a s t h e av e ra g e G e r m a n . American culture is certainly trendy. “Black Panther” was a huge hit in Africa. Hip-hop and American fast-food joints are also popular. Yet perhaps there is more to it than that. “As an African, there’s just something familiar about Trump that makes me feel at home,” said Trevor Noah, a South African comedian, in 2015. He noted that Mr Trump’s boasts about his wealth, power and brains are similar to those of the late Ugandan dictator, Idi Amin. Others agree that Mr Trump’s style grates less on a continent that is used to bombastic presidents. “Somali parents like to name their sons after powerful men,” says Saddam

Hussein Adani, a logistician from Mogadishu. “If Trump were a Muslim, I’m sure you would have a few baby Donalds today.” In the pubs of Mai Mahiu, a settlement in Kenya’s Rift Valley, daytime drinkers praise Mr Trump for being tough enough to stand up to China. Kenyans prefer an Americanled world to one dominated by China by a ratio of two to one. Mr Trump has also tried to sound more conciliatory of late. “Africa is so beautiful,” he gushed ahead of his wife Melania’s recent tour of the continent. Even so, many of Mai Mahiu’s boozers prefer Mr Trump’s usual blunt talk over what they see as the insincere flattery of other Western leaders. “He’s only saying what the others think,” says Willie Wekesa, a truck driver, glancing away from the American wrestling show on the television behind him.

and Russia. America’s strides are all the more striking because they coincide with wobbles elsewhere. Output from many giant petro-states looks shaky at best. Exports from Iran are plummeting and due to sink further when American sanctions take effect next month. Venezuela’s production is in freefall. Supplies are vulnerable in Libya and Iraq. Even before the fallout over the disappearance of Jamal Khashoggi, a journalist last seen entering the Saudi Arabian consulate in Istanbul raised questions about the kingdom (see article), many analysts doubted its ability to boost production quickly. Saudi oil exports are already near their peak of the past five years. The upshot is that the world increasingly relies on American shale. In June America produced 13% of global crude oil, nearly twice the proportion of June 2008; that share will probably rise. This shift is extraordinary, to be sure, but the power it hands to America can also be exaggerated. “The United States is the dominant energy player,” Larry Kudlow, Mr Trump’s economic adviser, boasted this week, able “to cover any shortfalls”. In fact, shale is also bumping against its limits. In the short term, these limits Continues on page 19

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China v America

The way China arrested...

The end of engagement

Continued from page 18

How the world’s two superpowers have become rivals

OR THE past quarter century America’s approach to China has been founded on a belief in convergence. Political and economic integration would not just make China wealthier, they would also make it more liberal, pluralistic and democratic. There were crises, such as a face-off in the Taiwan Strait in 1996 or the downing of a spy-plane in 2001. But America cleaved to the conviction that, with the right incentives, China would eventually join the world order as a “responsible stakeholder”. Today convergence is dead. America has come to see China as a strategic rival—a malevolent actor and a rule-breaker (see Briefing). The Trump administration accuses it of interfering in America’s culture and politics, of stealing intellectual property and trading unfairly, and of seeking not just leadership in Asia, but also global dominance. It condemns China’s record on human rights at home and an aggressive expansion abroad. This month Mike Pence, the vice-president, warned that China was engaged in a “whole-of-government” offensive. His speech sounded ominously like an early bugle-call in a new cold war. Do not presume that Mr Pence and his boss, President Donald Trump, are alone. Democrats and Republicans are vying to outdo each other in bashing China. Not since the late 1940s has the mood among American businessfolk, diplomats and the armed forces swung so rapidly behind the idea that the United States faces a new ideological and strategic rival. At the same time, China is undergoing its own change of heart. Chinese strategists have long suspected that America has secretly wanted to block their country’s rise. That is partly why China sought to minimise confrontation by “hiding its strengths and biding its time”. For many Chinese the financial crisis of 2008 swept aside the need for humility. It set America back while China thrived. President Xi Jinping has since promoted his “Chinese Dream” of a nation that stands tall in the world. Many Chinese see America as a hypocrite that commits all the sins it accuses China of. The time to hide and bide is over.

This is deeply alarming. According to thinkers such as Graham Allison of Harvard University, history shows how hegemons like the United States and rising powers like China can become locked into a cycle of belligerent rivalry. America fears that time is on China’s side. The Chinese economy is growing more than twice as fast as America’s and the state is pouring money into advanced technology, such as artificial intelligence, quantum computing and biotech. Action that is merely daunting today— to stem the illegal acquisition of intellectual property, say, or to challenge China in the South China Sea—may be impossible tomorrow. Like it or not, the new norms governing how the superpowers will treat each other are being established now. Once expectations have been set, changing them again will be hard. For the sake of mankind, China and America need to come to a peaceful understanding. But how? Mr Trump and his administration have got three things right. The first is that America needs to be strong. It has toughened the rules on takeovers, to give more weight to national security. It has extradited an alleged Chinese intelligence officer from Belgium. It has increased military spending (though the extra money going to Europe still dwarfs that going to the Pacific). And it has just boosted foreign aid in order to counter lavish Chinese investment abroad (see article). Mr Trump is also right that

America needs to reset expectations about Chinese behaviour. Today’s trading system fails to prevent China’s state-backed firms from blurring the line between commercial interests and the national interest. Government money subsidises and protects companies as they buy up dualuse technology or skew international markets. China has used its state-directed commercial clout in smaller countries to influence foreign policy in, say, the European Union. The West needs transparency about the funding of political parties, think-tanks and university departments. Third, Mr Trump’s unique ability to signal his disregard for conventional wisdom seems to have been effective. He is not subtle or consistent, but as with Canadian and Mexican trade, American bullying can lead to dealmaking. China will not be so easily pushed around—its economy depends less on exports to America than Canada’s and Mexico’s do and Mr Xi cannot afford meekly to disavow his Chinese Dream in front of his people. Yet Mr Trump’s willingness to disrupt and offend has already wrong-footed China’s leaders, who thought they could count on America being unwilling to rock the boat. For what comes next, however, Mr Trump needs a strategy, not just tactics. A starting point must be to promote America’s values. Mr Trump acts as if he believes that might is right. He shows a cynical disdain for the values America enshrined in global institutions after the second world war. If he follows

that course America will be diminished as an idea and as a moral and political force. When America competes with China as a guardian of a rules-based order, it starts from a position of strength. But any Western democracy that enters a ruthless race to the bottom with China will—and should—lose. The strategy should leave room for China to rise peacefully—which inevitably also means allowing China to extend its influence. That is partly because a zero-sum attempt at containment is likely to lead to conflict. But it is also because America and China need to cooperate despite their rivalry. The two countries are more commercially intertwined than America and the Soviet Union ever were. And they share responsibilities including—even if Mr Trump denies it—the environment and security interests, such as the Korean peninsula. And America’s strategy must include the asset that separates it most clearly from China: alliances. In trade, for example, Mr Trump should work with the EU and Japan to press China to change. In defence Mr Trump should not only abandon his alliance-bashing but bolster old friends, like Japan and Australia, while nurturing new ones, like India and Vietnam. Alliances are America’s best source of protection against the advantage China will reap from its increasing economic and military power. Perhaps it was inevitable that China and America would end up rivals. It is not inevitable that rivalry must lead to war.

include bottlenecks in the pipeline infrastructure needed to get oil to market. Companies in the Permian Basin, which spans west Texas and south-eastern New Mexico, are producing more oil than they can pipe out (see article). New pipelines due late next year should help. Other problems are harder to resolve. Extracting oil from shale has become more efficient since 2014: the median break-even price for producing a barrel is $46. But costs are rising. Executives complain about a long-term labour shortage. Productivity gains in some regions are slowing as wells are drilled closer together. To blast more oil out of rock, companies are now using eye-popping amounts of water and sand. For a single well, hydraulic fracturing (fracking) can involve a total of nearly 65m litres of water, the volume of 25 Olympic swimming pools. That creates logistical and environmental demands. Pumping water back into shale formations is cheaper than carting it away, but that can cause small earthquakes. Colorado is considering new limits on fracking. Other states may decide to follow suit. International oil companies have the size and logistical expertise to cope with some of these problems. Even as many of them cut spending on complex, long-term projects, they are putting more money into shale. Costs are more predictable and the timeline far shorter than for a giant project offshore. Chevron, BP and ExxonMobil all own large swathes of America’s most productive basins. Their entry makes further consolidation likely, as shale specialists seek the benefits of scale. Those specialists that remain are beholden to investors, not to politicians bent on pursuing energy dominance. And their investors increasingly demand that shale firms earn a profit, rather than merely grow. As the industry matures and costs rise, in other words, recent leaps in output will probably become more modest. For the first time American shale companies will this year earn more from operations than they spend on new projects and dividends, reckons Morgan Stanley, a bank.

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One of Africa’s oddest places

Redemption city is the anti-Lagos What happens when Pentecostal churches become urban planners

HE NEW church in Redemption City is only half-built. Already this great aeroplane hangar of a building measures 1.5km by 1km. Compared with it, Tesla’s “gigafactory” is a poky warehouse and St Peter’s Basilica is a quaint parish church. Yet the church is not the most extraordinary thing about Redemption City. In 1983 Enoch Adejare Adeboye, a former maths professor who had become General Overseer of the Redeemed Christian Church of God, acquired a small patch of land north of Lagos, Nigeria’s biggest city. At first it was used for occasional prayer meetings. But as the church grew into one of the world’s largest under Mr Adeboye’s charismatic leadership, the prayer camp turned into a permanent settlement. Today about 12,000 people live in Re-

demption City, which sprawls over at least 2,500 hectares. The population is expected to double by 2036. Most African cities are messy, especially around the edges. Suburban roads are invariably crooked, unpaved and unsigned. Houses are plonked down wherever people can acquire land. Many homes are half-built, because their owners

have no land titles and so cannot take out mortgages. To deter scammers, some of them are spray-painted with messages like: “This property is not for sale. Beware fraud”. In Redemption City the streets form a grid. The roads are signed, with names like Hallelujah Close and Praise Close. Some have speed bumps— things that would be wholly

redundant on a normal African road. Every plot is the same size: 21.3 metres by 21.3 metres. There are few half-built houses, because the church checks that families have enough money to complete them, and sets a strict time limit. All the homes are in gated communities, numbering 15 so far. Everything tends to work. Whereas Lagos hums with diesel generators, Redemption City has a steady electricity supply from a small gas-fired power station. It also has its own water supply. “We make life easy,” says Pastor Fola Sanusi, the man in charge of Redemption City’s growth. The city also makes rules, of the kind that could never be enforced in the hurlyburly of Lagos. “No parking, no waiting, no trading, no hawking”, reads one sign. In theory, Redemption City is for members of the Redeemed

Christian Church of God. When a family wants to move away, it is supposed to sell its house to the church, which will sell it on to a suitably pious person. Each house is supposed to have a “mission room” for the use of a church worker. In practice, however, the properties seem to be finding their way onto commercial estate agents’ websites. It is an odd place but not entirely exceptional. On the road between Redemption City and Lagos, other Pentecostal churches, such as the Mountain of Fire and Miracles Ministries, are building godly cities of their own. In Lagos, the large Deeper Life Bible Church has constructed traffic lights and a bridge, and has turned some parishioners into traffic wardens. Pentecostal Christianity has already remade many Africans’ spiritual lives. Now it is remaking their cities.

How to spend it

How to plug budget holes by managing public wealth better Getting the most from government assets requires a new perspective on fiscal policy

ROPONENTS OF sovereignwealth funds like to say that returns from publicly owned assets could in theory displace taxes. In countries that have not struck oil, however, the chance of politicians building up savings rather than running up debt seems remote. Yet states may not need to save in order to enable at least some tax-free spending. Most already have plenty of assets. The problem is that they do not sweat them hard enough. Most public wealth falls into one of four categories: land and natural resources; property and infrastructure, such as ports and roads; public firms, such as utilities and state-owned airlines; and financial assets like those held by public pension funds. In estimates covering 31 economies released on October 10th, the IMF put the total stash at $101trn, or 219% of GDP. The Fund’s estimates of governments’ assets and liabilities cast their fiscal health in a new light (see chart). Several rich countries’ governments have negative net worth, partly because of massive pension obligations to retired public employees. The picture would look still worse if the estimates included state pensions and other promises to ageing populations, such as to

provide health care. Although it is rarely quantified, investors are not oblivious to such risk. The IMF finds some evidence that government-bond yields respond to the health of public-sector balance-sheets, as well as to debt and deficits. But a bigger point is that, with so many assets on the books, it would take only a small increase in yields to raise a lot of money. Dag Detter, a consultant who has co-written a book on the subject, says that increasing the return on public assets by a mere 2% would enable governments worldwide to double the amount they spend on basic infrastructure. What would it take to make that happen? The yields for society from

some assets, such as national parks, are non-monetary. Turning schools and hospitals into cash-cows seems implausible. Yet there are plenty of examples of inefficient government use, in particular of land. Mr Detter and his co-author point to Boston’s Logan International Airport, which sits on prime waterfront and could be moved inland. Even schools can be put in better or worse places. One of Rio de Janeiro’s sits on the Copacabana beach-front, wedged between pricey hotels. Putting it somewhere else and charging a market rent for the site could create new revenue for the education budget. A recent review found that 166 of the roughly 230 trusts making up England’s National Health Service report owning land they do

not need. Some countries seem to get much more from their balancesheets than others. Take financial assets. The IMF calculates that a country moving from the 25th to the 75th percentile for risk-adjusted returns would raise 2% of GDP in new revenue (it spares policymakers’ blushes by keeping the leaders and laggards anonymous). Boosting returns might involve pooling investment portfolios in order to reduce fees; charging more for being an insurer of last resort, for example for bank deposits or flooding; and using offices and other types of property better. Improving the profitability of public firms—think of post offices and the like—could raise another 1% of GDP, the IMF says. Middling government-run firms produce average returns of 1.9%, but better ones manage 4.3%—which is still only half the level of companies in the private sector. Some stateowned firms do much better. SNCF, France’s public-sector railway, earned a return on capital of 7.9% in 2017. For many physical assets, the first step is working out the value of what is on the books. That is not always easy, because governments are bad at keeping track of their

balance-sheets. Assets, such as the land on which Boston’s airport is built, often linger at historical cost rather than market value. But some countries are making progress. Since 2011 Britain has produced “whole-of-government accounts” that follow international accounting standards. They show assets of £1.9trn ($2.5trn or 96% of GDP). The government is combing through its balance-sheet to find ways to boost returns; it will report the results in its budget on October 29th.

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COMPANIES & MARKETS

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Diamond Bank remains keen on growing Nigeria’s retail industry

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C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

Cadbury rebounds to profit on a 10.6% increase in revenue ...want FG to pay over one-year accrued rights ....as industry invests over N709bn in capital market MICHEAL ANI

adbury Nigeria’s 9 month unaudited financial statement appears to have put the firm on the part of profitability after swimming in loss within the same period the previous year. The consumer goods firm reported a Profit after Tax (PAT) of N172 million in its 2018 9-month scorecard compared to the loss of N64m it incurred in the same period the previous year. This improvement was propelled by revenue growth of about 11 percent Year on Year and a reduction of 15 percent in its operating expenses. Similarly, the firm grew its revenue from N24.37 billion in 2017 to N26.96 billion in the 9month period of 2018, showing a surge in revenue of 10.6 percent. The growth in revenue was however driven by the sturdy growth of 75 percent y/y on export sales while domestic sales grew by 4 percent y/y, reflecting weak consumer spending. “Considering the weak consumer spending amidst intense level of competition in the consumer goods

L-R: Olusina Adegoke, regional operations director, Airtel Nigeria; Dinesh BalSingh, acting chief commercial officer, Airtel Nigeria; Segun Ogunsanya, MD/CEO, Airtel Nigeria; Hendric Vorster, chief technical officer, Airtel Nigeria and Gbemiga Owolabi, director, human resources,

industry, Cadbury’s forward earnings will be largely hindered by its limited product offering, Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, wholly owned subsidiary of FCMB Group Plc said. “Unless there is a significant improvement in con-

sumers’ purchasing power, the company may be forced to reduce the prices of some of its brands in a bid to attract customers who at the moment appear to be price sensitive”, Ologunro said in an emailed response to BusinessDay. Cadbury Plc has three reportable business segments

Opportunity for first time buyers as Silver Pacific launches homeownership scheme CHUKA UROKO

or first time home buyers, couples, second home seekers, smart property investors and retirees, opportunity to own landed property is knocking on their doors as Silver Pacific Homes has entered the property market with a new and innovative homeownership scheme. The new scheme, known as Hopewell Park Estate, is located in the Eleko axis of Ibeju Lekki. It offers both residential and investment opportunities, meaning that buyers who have no intention of building to live on the estate can also buy and wait for when the land appreciates in value. Even as a relatively young real estate investment and development firm, Silver Pacific Homes is known for the procurement and sale of choice plots of land in areas proven to yield the highest returns on investment.

The company also has a track record of making home ownership simple. “From the Lekki Cooperative Villas to Southern Atlantic Villas in Ibeju Lekki, Silver Pacific Home has successfully sold affordable real estate investment solutions”, Samuel Ikoje, the company’s CEO explained to BusinessDay. Hopewell Park Estate is the latest addition to the pool of pocket-friendly real estate investments and projects portfolio of the real estate investment company which is a division of Silver Pacific Technologies Limited duly incorporated in Nigeria. Situated in the heart of Ibeju-Lekki, Hopewell Park Estate is strategically within the neighbourhood of various private and government landmark projects in the area such as the Lekki deep sea port, Dangote Refinery and the Lekki free trade zone. The estate comes with a verifiable government approved excision and promises to be a smart city with state-of-the-

art facilities such as security, perimeter fencing, portable water, sports centre, health care facility and many more. “We have initiated a 10-month installment mortgage plan to make ownership to the project easy, convenient and accessible to buyers; the site layout has been designed to maximise space while adequate allocation has been made for planned estate facilities”, Ikoje assured. Beyond the issue of access and affordability, Silver Pacific Homes also boasts safety, high level security and style as part of the advantages the Hopewell Park Estate offers. “With the Dangote refinery set to be completed in 2020 and other projects in Ibeju Lekki set to be completed in 2025, investing in Hopewell Park represents a huge return on investment with potential ROI of 150 percent upon completion of the refinery and prevailing prices at neighbouring states such as Mayfair Estate and Lakowe Estate.

which includes the refreshment brevages segment that is in charge in the manufacturing and sales of Bournvita and Hot Chocolate; the confectionary segment, in charge in the manufacturing and sales Tom Tom, Buttermint, Clorets and Tridents; finally Intermediate Cocoa Prod-

ucts segment, involved in the manufacturing and sales of Cocoa powder, Cocoa butter, Cocoa Liquor and Cocoa cake. The firm makes its greatest sales from its beverage segment with revenue from the segment up 10.2 percent N15.67 billion from the

N14.13 billion in the previous year. The firm made N7.14 billion and N4.25 billion from its confectionary and intermediate cocoa product segment respectively. The company has two reportable geographical segments comprising sales from its domestic market (within Nigeria) and those outside of Nigeria mainly in Africa and Europe. Sales in the Nigerian market accounted for the larger chunk of the total sales with N22.92 billion, while export sales returned only N4 billion of the total sales. Earnings Per Share also increased from 3 kobo in Q3 2017 to 9 Kobo in 2018. The firm with a market cap of 17.843 billion has its Shares trading at N9.40 on the floor of the Nigerian Stock Exchange, Wednesday 24 october. Ologunro noted that the stock of the firm has retreated from its 52 week high of N18.40 and it is currently trading slightly above its 52 week low of N9.05. “This further highlights investor’s apathy towards the stock. At current levels, I consider the stock to be overvalued given its P/E ratio of 33.1x compared to NSE consumer goods average of 19.45x”.

Fidelity Banks 9-months PBT grows to N20bn

idelity Bank Plc has posted an impressive financial performance for the 3rd Quarter of 2018 and is on course to finishing strong in the 2018 financial year. Details of the 9-months results for the period ended September 30, 2018, released at the Nigerian Stock Exchange (NSE) showed a double-digit growth in revenues and profitability. Gross Earnings grew by 6.9 to N139.0 billion from N130.1 billion reported in the same period in 2017 whilst profitbefore-tax soared by 23.6 percent from N16.2 billion to N20.1 billion. In other indices, total assets grew by 21.9 percent to N1, 680.8 billion from N1,379.2 billion in the same period last year. Total deposits; a measure of customer confidence, increased by 27.3 percent to close at N986.8 billion from N775.3 billion in 2017 We are delighted with our 9 months financial performance with the continuing execution of our medium-term strategy which has further yielded positive results, leading to impressive growth across key performance indices including profitability, total deposits

and balance sheet size etc, said Nnamdi Okonkwo, chief executive officer, Fidelity Bank Plc According to him the bank has continued to grow its market share driven by significant traction in its chosen business segments such as Corporate, Commercial, SME and digitally led Retail Banking. “Gross earnings increased y-o-y by 6.9 percent to close at N139.0 billion primarily driven by the growth in earning assets by 19.2 percent which led to a 9.1 percent increase in interest income to N120.4 billion”, he explained. Over the years, Fidelity Bank has differentiated itself from its peers by continuously introduc-

ing customer – focused digital products to grow its market share and mobilize cheaper funds. Attesting to that, its savings deposits increased by 12.9% to N201.7 billion leading to the fifth consecutive year of double-digit savings growth whilst low cost deposits, now account for 73.6 percent of total deposits as shown in the results. The growth in deposits is further complemented by its digital banking push with has resulted in having over 40 percent of its customers enrolled on the mobile/internet banking products and recording over 80 % of total transactions on digital platforms.

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Monday 29 October 2018

COMPANIES & MARKETS Diamond Bank remains keen on growing Nigeria’s retail industry …grows SME loan book by over N1bn in Q3 DAVID IBIDAPO

re c e n t re p o r t released by Diamond bank on Friday revealed the bank’s keen interest in growing the retail industry of the Nigerian economy through credit extension to Small and Medium scale enterprises. According to report, the bank recorded a landmark figure in the value of funds disbursement of over N1 billion to small business owners under the cash flow-based SME lending scheme in partnership with the Women’s World Banking (WWB). Diamond bank however has been seen by KPMG in its annual banking industry customer satisfaction survey (BICSS) as one of the customer focused banks thereby ranking the bank fifth (5th) lagging Zenith bank, GTBank, FCMB and Access bank in 2018. Uzoma Dozie, chief executive officer, Diamond Bank explained that,“our digital-led retail strategy has remained robust. Through this strategy we have been able to continue scaling up by reaching a wide pool of customers both cost effectively and efficiently. As a result of our network and digital infrastructure, during

Q3 we reached the N1 billion mark in total loans disbursed to Small and Medium Enterprises (SMEs)”. “We are investing more in businesses in the middle market because we see entrepreneurs as a key driving force for economic growth. This focus is in line with and supportive of our own recovery and return to profitability” he added. Despite the challenging trading environment, the bank’s Contribution of noninterest income to profit increased by 10.81 percent from N24.66 billion (Q3 2017) to N27.32 billion (Q3 2018) while Impairment charges down 24.21 from N33.21 billion (Q3 2017) to N25.17 billion (Q3 2018). Interest expense up 18.32 percent to N41.26 billion year-onyear, but it has continued to decline in-line with guidance, falling by 15.36 percent from N14.83 billion (Q1 2018) to N12.56 billion (Q3 2018) and 2.89 percent year-onyear increase in operating expense to N66.20 billion (Q3 2018). However, cost containment measures are underway with the digitization process contributing to quarter-onquarter gains with OPEX declining 0.36 percent from N22.07 billion (Q2 2018) to N22.15 billion (Q3 2018). Customer deposit

L-R: Modupe Onabanjo, chairperson, education, printing, and publishing, Lagos Chamber of Commerce and Industry (LCCI); Sola Oyetayo, vice president, LCCI; Adebunmi Adekanye, representing the deputy governor of Lagos state; Leonard Mary, student, Festac Girls Senior Secondary School/winner of the 2018 LCCI Secondary School essay competition; Serah Sosan, former deputy governor, Lagos State, and Olusola Kehinde, dean of agriculture, Lagos State University/chief examiner, at the LCCI prize giving ceremony of the competition in Lagos. Pic by Olawale Amoo

dropped by 8.0 percent yearon year to N1,107 billion due to re-pricing and non-rollover of high priced maturing deposits, and migration to government securities while Liquidity position remains strong as current and savings account balances increased from 77.4 percent (FY2017) to 78.08 percent of total deposits in September 2018. According to diamond bank’s press release, they expect economic headwinds to continue driven by emerging situations in developed econo-

mies as well as our domestic political realities. Hence, reassuring stakeholders of further decline in non-performing loans (NPLs) going forward. According to Uzoma Dozie, “our investors can expect a further decline in NonPerforming Loans (NPLs), a further increase in our digital footprint and completion of the sale of the UK subsidiary. “Through these actions we remain optimistic about the medium to long term outlook of Diamond Bank and its return to strong profitability”

TFN partners Babcock Cost efficiency boosts Ecobank’s earnings by 31% on capacity building DAVID IBIDAPO & JEREMIAH MBATA

ecently released nine months ended September 2018 financial report of Ecobank has shown a justified boost in its profit by 31 percent from N57.7 billion recorded during same period in 2017 to N75.5 billion. BusinessDay analysis revealed that the significant increase in earnings this season was a resultant effect of a significant decline in impairment losses on financial asset, loans and advances during the period. Impairments losses on other financial asset for nine months ended September 2018 declined significantly by 74 percent from N16.9 billion to N4.4 billion contributing largely to decline in total impairment losses for the period. Total impairment losses on financial asset declined by 26 percent from N89.3 billion in 2017 to N66.4 billion. Ade Ayeyemi, group chief executive officer, explained that “The initiatives we took

in phase-one of our 5-year strategic plan are starting to show results in our financial and business performance. “The risk profile of our credit portfolio is improving; we are increasingly becoming leaner and more cost efficient; and thanks to our digitisation strategy, broadening our products and services to include the unbanked. “Thus, we are seeing encouraging growth in trade loans, remittances, cards and E-banking, and foreign exchange and fixed income sales in some of our regions. Despite a marginal increase of 2 percent in deposit by customers into the bank, loans and advances to banks and customers declined by 17 percent and 8 percent respectively. “Loan growth, however, has been tepid, despite the fact that we are seeing strong deposit generation in all of our businesses and regions, largely because we are seeing limited credit opportunities that meet our risk appetite” Ayeyemi concluded.

JOSEPHINE OKOJIE

each For Nigeria (TFN), a non-profit organisation focused on improving the quality of education, has partnered with Babcock University to offer post graduate training to teachers without a degree in education who have already emerged as TFN fellows. TFN recruits outstanding graduates and young professionals from diverse academic backgrounds into its fellowship program; a two-year, full-time paid commitment designed to build a movement of leaders who will work towards eliminating educational inequity by teaching in underserved schools in low-income communities across Nigeria, a statement made available to BusinessDay states. “In ten years we hope to have our fellows and alumni in the six geo-political regions of Nigeria, deploying creative solutions to improving access to quality education for every Nigeria child,” Folawe Omikunle, CEO, TFN, and an alumnus of Babcock University said in a statement. “The post graduate diploma in education will not only make the fellows more effective in their classrooms but also make them qualified to take up leadership roles within the public educa-

tion system and continue to make meaningful impact after their Fellowship tenure is over,” Omikunle said. The partnership with Babcock University will ensure that TFN fellows without a background in Education get a solid academic grounding in the discipline to deliver better learning outcomes for their pupils, the statement said. Eligible fellows will enrol and complete the post graduate training programme which will run concurrently with the two year TFN fellowship programme, the statement added, noting that upon completion, successful Fellows will be awarded a PGD in Education. According to the TFN, the fellowship programme will ensure that all TFN alumni have the requisite qualification to continue an impactful career in the education sector post-fellowship. “We are proud of the good work that TFN is doing to address the very critical issue of education inequity in Nigeria. This is why we have partnered with them to further equip their Fellows to deliver impactful lessons that will positively alter the trajectory of their pupils’ lives,” Professor Ademola Tayo, president and vice chancellor, Babcock University said.

he added. According to report released by Diamond bank, cost containment measures are underway with the digitization process contributing to quarter-on-quarter gains with OPEX declining 0.36% from N22.07 billion (Q2 2018) to N22.15 billion (Q3 2018). Year-to-date analysis of Diamond bank shows that share prices of the bank is currently down 8 percent with a closing price of N1.44 on Friday. “As we move into the final

quarter of the year, we expect headwinds to continue driven by emerging situations in developed economies as well as our domestic political realities. Despite this, our investors can expect a further decline in Non-Performing Loans (NPLs), a further increase in our digital footprint and completion of the sale of the UK subsidiary. Through these actions we remain optimistic about the medium to long term outlook of Diamond Bank and its return to strong profitability.”

NPDC achieves 100% local content in gas handling facility development HARRISON EDEH, Abuja

he Nigerian Petroleum Development Company (NPDC), an upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC), has achieved a 100 per cent local content input in the development of Oredo Integrated Gas Handling Facility. Maikanti Baru, NNPC group managing director, confirmed the development during a tour of the NPDC’s Oredo Flow Station, Oredo Gas-to-Pan-Ocean Facility, Oredo Integrated Gas Handling Facility (IGHF), as well as the Oredo LPG Dispensing Facility, all in Edo State. Commending NPDC on the feat, Baru said in a statement on Thursday that he was proud that a world-class facility was being put in place by a Nigerian engineering contractor in conjunction with another Nigerian company, the NPDC. “From engineering, construction to erection of the various units, we feel very encouraged by the huge man-hours which you are putting in here, day and night, with full local content,” Baru told over 500 workers at the site. The IGHF is currently at 80 percnt completion. When completed in December, it will make provision for dehydration of

gas and liquid extraction. It is expected to also produce both Liquefied Petroleum Gas (LPG) and Propane, in addition to dry gas to the Escravos Lagos Pipeline System (ELPS). He described the Oil Mining Lease (OML) 111, where the gas projects are located, as one of the most significant assets of the NPDC because it is where the corporation’s staff and their contractors design, build and operate facilities hitherto operated by the International Oil Companies (IOCs). “You could see that right from the well-design through to reception of the various liquids to the processing and disposal of the various outputs, it is fully indigenous. So, it cannot be better than this,” he added. He said as a National Oil Company (NOC), the corporation was using this to showcase its ability to intervene, stressing that “we are not just a player, we are also building capacity that can enable us intervene by taking over any assets whenever any contractor decides to opt out,” he added. Baru stated that the project’s funding constraints would be addressed soonest, stressing that NNPC was considering alternative means to support and complete the project.

Monday 29 October 2018

COMPANIES & MARKETS Business Event

L-R: Mike Ogor, head of marketing, Spectranet 4G LTE; Ajibola Olude, executive secretary, Association of Telecommunications Companies of Nigeria (ATCON); and Ajay Awasthi, chief executive officer, Spectranet 4G LTE, during the presentation of 4G LTE internet service provider of the year award to Spectranet at the companyâ&#x20AC;&#x2122;s head office in Lagosâ&#x20AC;Śon Friday.

L-R :Simon Curtis VP, Global Sales, EMEA, Terragon Group, Adebisi Shonubi MD, Nigeria Inter-Bank Settlement System (NIBSS), Elo Umeh CEO, Terragon Group, at the Terragon Fireside Chat for Financial Service Institutions in Lagos recently

L-R: Charles Nnochiri, head, marketing, PZ Cussons Consumer; Ejiro Ahusimere, brand manager, Morning Fresh; Alex Goma, managing director, PZ Cussons Consumer, at the relaunch of Morning Fresh in Lagos. Pic by Pius Okeosisi

L-R Stefan Traumann, consul general of Germany in Lagos; Hakeem Fahn, commissioner for science and technology, Lagos State; Olayinka Oladunjoye, commissioner for commerce and industry, representing the Lagos State governor; Jean Marc Ricca, MD, BASF West Africa and Michael Gotsche, vice president, market area, Africa BASF, during the official opening of the company office in Lagos .. Pic by Pius Okeosisi.

BUSINESS

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Monday 29 October 2018

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Monday 29 October 2018

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Monday 29 October 2018

Access Bank Rateswatch Market Analysis and Outlook: October 26 - November 2, 2018

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion)

25.28

Increased by 1.68% in Sept’ 2018 from N22.27 trillion in Aug’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

22.56 1.928 11.28 14 14 (+2/-5) 42.34 82.03 1.75

Increased by 0.40% in Sept’ 2018 from N22.56 trillion in Aug’ 2018 Decreased by 0.12% in Sept’ 2018 from N1.926 trillion in Aug’ 2018 Increased to 11.28% in September’ 2018 from 11.23% in August’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% October 25, 2018 figure — a decrease of 3.82% from October start October 26, 2018 figure— no change from the prior week September 2018 figure — an increase of 1.51% from August 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

26/10/18

19/10/18

32,907.33 12.01

Change(%)

32,841.69 11.99

0.20 0.20

0.28

0.21

31.83

Value (N’bn)

1.96

1.46

34.69

MONEY MARKET NIBOR Friday Rate

Friday Rate

Change

(%)

(Basis Point)

26/10/18

19/10/18

OBB

10.33

12.67

O/N CALL 30 Days

11.42 15.29 14.09

90 Days

14.16

Friday

YTD Change

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

(%)

82.03 3.14

0.00 (0.95)

27.26 2.75

2218.00 122.20 77.19 13.90 493.75

1.88 0.16 (0.72) 0.65 (3.47)

14.57 (6.14) (0.40) (9.33) 13.90

1236.07 14.68 271.40

0.66 0.20 (1.79)

(6.18) (14.60) (17.21)

13.33 13.50 13.51

(191) 179.2 58

Tenor

13.66

49.3

1 Mnth 3 Mnths

13.22 13.27

13.43 13.11

(21) 16

6 Mnths 9 Mnths 12 Mnths

13.52 14.40 16.10

13.35 14.50 15.48

17 (10) 63

Friday

1 Month

(N/$)

Rate (N/$)

26/10/18

19/10/18

26/09/18

306.55 362.55

306.50 362.54

306.35 360.81

BDC (N) Parallel (N)

363.50 362.00

362.99 362.00

362.99 361.00

Friday

Change

(%)

(Basis Point)

19/10/18

3-Year 5-Year

0.00 14.91

0.00 14.77

0.0 13.8

7-Year 10-Year 20-Year

15.15 15.20 15.23

15.03 15.04 15.20

12.1 15.2 3.5

Indicators

(Basis Point)

19/10/18

Friday

Change

(%)

(Basis Point)

26/10/18

19/10/18

2,678.76

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.66 5.43

YTD return (%) YTD return (%)(US $)

9.05 -46.56

2,677.94 8.65 5.44 9.02 -46.57

0.03 0.03 (0.24) 0.03 0.01

TREASURY BILLS (MATURITIES)

Disclaimer

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

Change

(%)

Index

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

Friday

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS Friday

Friday 26/10/18

BOND MARKET

26/10/18

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

Official (N) Inter-Bank (N)

Tenor

26/10/18

(234.0)

FOREIGN EXCHANGE MARKET Market

Indicators

(%)

Volume (bn)

Tenor

Global Economy The US economy expanded by 3.5% quarter-on-quarter in Q3 2018, 0.7% lower than the 4.2% reported in Q2 2018. The economy was boosted by gains in personal consumption expenditures (PCE), private inventory investment, state and local government spending, federal government spending, and nonresidential fixed investment but was partly offset by negative contributions from exports and residential fixed investment. In the Eurozone, the European Central Bank (ECB) left its benchmark interest rate at 0% in its recent meeting held on October 25th 2018. The Central Bank noted that it will continue to make net purchases under the asset purchase programme at the new monthly pace of €15 billion until the end of December. ECB Committee members expect the anchor rate to remain low till the end of 2019. Elsewhere in India, the Reserve Bank of India held its key policy rate unchanged at 6.5%, after a 25 basis point increase in its previous meeting. Policy makers said the decision is in line with a deliberate tightening that aims to achieve a 4% +/- 2% inflation target and support growth.

91 Day 182 Day 364 Day

Amount (N' million) 5,849.03 29,245.17 112,535.64

Rate (%)

10.96 12.69 13.449

Date 17-Oct-2018 17-Oct-2018 17-Oct-2018

Domestic Economy The Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of September 2018 revealed that transactions at the nation's bourse declined by 2.79% to N130.20 billion from N133.84 billion recorded in August 2018. Total foreign transactions increased by 18.82% to N84.33 billion from N70.97 billion the previous month. However, total domestic transactions continued to decline for the second consecutive month, decreasing by 42.79% to N45.87 billion from N62.87 billion in August . A breakdown of foreign transactions showed that there was an increase in foreign inflows in the month under review by 10.58% to N40.54 billion from N36.66 billion in the prior month. Similarly, foreign outflows edged up by 27.60% to N43.78 billion in September from N34.31 billion in the preceding month. The cumulative transactions from January 2018 to September 2018 increased by 21.23% to N2.007 trillion compared to the same period in 2017 (N1.655 trillion). Stock Market Last week, indicators at the Nigeria Stock exchange remained positive for the second consecutive week as more positive Q3 scorecards were released. The market was driven by gains in the industrial goods sector, finance and oil & gas sector. The All share Index (ASI) advanced slightly by 0.20% to 32,907.33 points from 32,841.69 points the prior week. Similarly, Market Capitalization increased by a similar rate at 0.20% to N12.01 trillion from N11.99 trillion the prior week. This week, market might come under pressure from profit booking as investors cash out profit from the recent rally, driven by Q3 numbers released so far.

Secondary Market Intervention auction refund and Paris club payment estimated at over N550 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 10.33% and 11.42% from 12.67% and 13.33% respectively the previous week. In contrast, Longer-tenured interbank rates, such as the 30-day and 90-day NIBOR increased to 14.09% and 14.16% respectively from 13.51% and 13.66% the prior week. This week, the rates are expected to trend around prevailing levels as OMO maturity of N382 billion hits the system, however we expect the sum to be mopped up. Foreign Exchange Market The naira was relatively stable against the greenback across most markets last week. At the interbank and parallel window the naira remained steady at N362.55/$ and N362/$ respectively last week. The official rate settled lower at N306.55/$ compared to N306.50/$ the week before. The relative stability of the local currency continues to be supported by the intervention of the apex bank. This week, the naira is expected to trade around current levels, as the CBN continues to support the local unit. Bond Market Bond yields closed on a bearish note as investors sold off bonds in order to rebalance their portfolios and buy at the bond auction that held last week. The market also re-priced to reflect the expectations of higher yields as the OMO rates went as high as 14.5% last week. Yields on the five-, seven-, and ten- and twenty- year debt papers closed at 14.91%, 15.15%, 15.20% and 15.23% from 14.77%, 15.03%, 15.04% and 15.20% respectively the previous week. The Access Bank Bond index declined by 11.67 points or 0.44% to close at 2,678.76 points from 2,677.94 points the previous week. This week we expect the yields to trend upward as the investors' price in expectations of higher yield. Commodities Oil prices declined after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of US sanctions on Iran. Accordingly, OPEC basket price, dropped $3.21or 4% to $75.04 per barrel. In contrast, bullions are on a roll as prices increased for the fourth consecutive week as a rout in global equities boosted the precious metal's safe –haven appeal. Gold rose 0.66% to $1236.07 an ounce, silver also closed higher by 0.2% to settle at $14.68 an ounce. This week, oil prices might come under pressure due to negative sentiment from investors as the market projects lower oil demand stemming from weaker global economic growth. Precious metals might continue its bullish run as trade dispute, global equity sell off and USSaudi tensions continue to support more demand for safe haven assets. MONTHLY MACRO ECONOMIC FORECASTS

Money Market Cost of borrowing at the money market settled in varying directions in the preceding week as short-dated placements declined while longer dated tenors ticked higher. Market was awash with liquidity due to inflows from OMO maturities, Retail

Variables

Oct’18 Nov’18

Dec’18

Exchange Rate (Official) (N/$)

363

364

365

Inflation Rate (%)

11.30

11.32

11.45

Crude Oil Price (US$/Barrel)

77.00

78.00

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

Monday 29 October 2018

BUSINESS DAY

Monday 29 October 2018

LegalPerspectives

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With

BUSINESS DAY

Odunayo Oyasiji

Case Review

Engineer Samuel Diden Yalaju-Amaye V. Associated Registered Engineering Contractors Ltd. & ORS. (1990) LPELR-SC.198/1986

hat to note: This is a case that was determined at the Supreme Court of Nigeria. It is a very popular authority in Company Law with regards to matters relating to the position of a director in a company. Summary The appellant is an engineer. He came up with an idea to start a company and to achieve this he involved the 3rd to 5th respondents. The 1st respondent (Associated Registered Engineering Contractors Ltd) was then incorporated as a company. It was expressly stated in the Articles of Association of the company that the appellant is the Managing Director while the 3rd to 5th respondents are directors in the company. The board of directors elected the 3rd respondent as the Chairman. Later in 1975, the 2nd and 6th respondents joined the company as directors and shareholders. The appellant held 16.6% of the shares in the company while the 2nd to 6th respondents held the remaining 83.3%. The 2nd respondent became more active in the affairs of the company as he was elected the chairman the same year he became a director (1975). The appellant and the 2nd respondent had a disagreement during the board meeting in August 1979. The disagreement was on who (whether the appellant or the 2nd respondent) should be in charge of the supervision of a particular project. The other directors backed the chairman. The directors claimed that during the disagreement, the appellant orally resigned his appointment as the managing director and expressed his intention to dispose his shares. In the light of the foregoing, a letter was written to the appellant (signed by the 2nd respondent) informing him that an extraordinary general meeting was held and his oral resignation as managing director was accepted and his decision to dispose his shares was also accepted. The appellant protested and denied ever making the representations in the letter. The appellant claimed that he hasn’t been allowed to participate in anything related to the company since the letter was written to him. He further claimed that his remunerations as the managing director was stopped and he wasn’t paid any dividend based on his shares in

the company. The 2nd respondent was appointed as the managing director of the company thereby making him the chairman and managing director. The appellant instituted an action at the Federal High Court, Benin against the 1st to 6th respondents. The High Court gave judgement in favour of the plaintiff/appellant while judgement of the Court of Appeal was in favour of the respondents. The appellant being dissatisfied appealed to the Supreme Court. Issues for determination The court was not satisfied with the issues formulated by both parties and came up with the issues below“1. Whether the Court of Appeal was in error that the Federal High Court had no jurisdiction to hear and determine the claim by the plaintiff against the defendants in respect of his removal as managing director of the 1st defendant company. 2. Whether the resolutions by the 2nd-6th defendants purporting to accept an oral resignation of the plaintiff from his position of managing director, and director of the 1st defendant company, and his interests in the 1st defendant company is valid. 3. Whether the plaintiff can maintain action against the 2nd-6th defendants in respect of wrongs done by them against the 1st defendant company. 4. Whether the Court of Appeal was in error in setting aside the general damages awarded to the plaintiff.” Submission/Argument Learned counsel to the appellant contended that issue relating to the competence of the plaintiff/appellant to institute

the action at the Federal High Court was not an issue between the parties as same was not raised in their pleadings at the High Court. He further argued that section 175(6) of the Companies decree allows a director that was wrongly removed to bring a claim for compensation and damages. Furthermore, the appellant’s counsel submitted that the appellant was named as the managing director by the article of association of the company and that the implication of the nonadoption of articles 88-96 of Table A of the First Schedule to the Companies Decree 1968 is that the power to remove a director is not available to the company. Therefore, the appointment of the 2nd respondent as the managing director is void and ultra vires the memorandum and article of association. The position of the counsel to the respondent is that the Federal High Court does not have jurisdiction over the matter. This is because the issue of the removal of the appellant as managing director of the 1st respondent is a master and servant issue which is a matter meant to be determined by the High Court of a state. He further noted that the removal is a matter that the majority should have control over-rule in Foss V Harbottle. In this case, the 2nd to 6th respondent controls 83.3% of the shares and this entitles them to remove the appellant. Judgement Karibi-Whyte JSC held with regards to the majority rule in Foss V Harbottle canvassed by the counsel to the respondent that - “The rule in Foss v. Harbottle, as I understand it,

comes to mean no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere majority of the company or association is in favour of what has been done, then cadit quaestio.Thus the company or association is the proper plaintiff in all actions in respect of injuries done to it. No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the Company see Birch v. Sullivan (1957) 1 W.L.R. 1247. And finally where a resolution requiring a qualified majority has been passed by a simple majority see Edwards v. Halliwell (supra). These last mentioned circumstances are the generally recognized exceptions to the application of the rule in Foss v. Harbottle (supra).” It was further held with regards to power to appoint the 2nd respondent as managing director that – “It is necessary to advert to the legal position that the power to appoint a director is exercised by directors by virtue of enabling provisions in the articles of association. The articles of association of the 1st defendant company has omitted the provisions of articles 94 and 95 of Table A of the First Schedule thus depriving the board of directors of the power to appoint directors. Hence the appointment of 2nd defendant as a managing director is ultra vires the board and therefore void.” On the issue of the power of memorandum and article of association of a company, it was held that the – “The memorandum and articles of association of the 1st defendant/ respondent company bind the company and the plaintiff/ appellant. The documents constitute a contract between them.

see s.16. But the articles of association of the company are alterable by the company by special resolution subject to the conditions contained in its memorandum of association see s.12(1). Accordingly the 1st defendant has power to alter its articles of association even if this results in a breach of contract see Shindler v. Northern Raincoat Co. Ltd. (1960) 2 All E.R. 239. The 1st defendant has not altered any provision of the articles under which plaintiff/appellant relies; rather it has appeared to maintain it.” The court agreed with the counsel to the appellant on the issue of award of damages and held that – “the Court of Appeal was wrong to have regarded the claim as one for wrongful dismissal of a servant by a master and for holding that the companies decree did not provide for damages in actions for wrongful dismissal of directors or managing directors. That damages could be awarded is clear from the provisions of section 175(6) of the Companies Decree… This provision enables the award of monetary damages in actions founded on the removal of director, or managing director. Decided cases abound in support of the proposition that pecuniary damages may be claimed and if proved awarded in actions for wrongful dismissal of director or managing director.” The court held that the Federal High Court has jurisdiction over the matter as jurisdiction is determined by the plaintiff’s claim. The claim in this case is on the declaration of the plaintiff/appellant as the managing director of the company and the purported acceptance of his oral resignation. The appointment and removal of a managing director or director is covered by section 172 and 175 of the Companies Decree 1968. Therefore, this matter falls within the jurisdiction of the Federal High Court. In the light of the foregoing, the Supreme Court determined the matter in favour of the appellant. Conclusion It is best to always follow proper procedure with regards to matters on removal and appointment of the managing director or director of a company. Provisions of articles and memorandum of association form a vital part of the running and administration of a company. Professional advice should be sought when needed.

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Week Ahead

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ECONOMY

Banks record profit growth amid low yield enironment BALA AUGIE

anks have recorded growth in profit even as a precipitous drop in short term government securities undermined interest income, signalling end of free money. The lenders are: Zenith Bank Nigeria Plc, Access Bank Nigeria Plc, and United Bank for Africa (UBA), First Bank Nigeria Plc, Guaranty Trust Bank Nigeria Plc, Fidelity Bank Nigeria Plc, Sterling Bank Nigeria Plc, Stanbic IBTC Holdings Nigeria Plc, and Diamond Bank Nigeria Plc. The cumulative net income of the 9 largest banks quoted on the floor of the exchange increased by 16.70 percent to N603.79 billion in September 2018 from N517.36 billion the previous year, thanks to an uptick in fees and commission income and foreign exchange revaluation gains. However, the relatively lower yield environment had a profound impact on the performance of these banks as combined interest income grew at a slow pace at it increased slightly by 5.24 percent to N1.98 trillion in the period under review as against N1.90 trillion as at September 2017. Analysts fret that a drop in Treasury bills signals end of free money and they expect future earnings to

take one or two punch. Most players in the industry remained significantly profitable and well capitalized as evidenced in a strong return on equity (ROE). On average the nine banks under our coverage saw combined deposit to customers grow by 10.81 percent to N15.53 trillion in the period under review from N14.02 trillion the previous year. Asset quality improved generally with loan loss provisioning witnessing further moderation in relation to the upstream oil sector, which might have resulted in a significant amount of w rite- backs. A breakdown of the figures shows Zenith Bank’s net income increased by 11.56 percent to N144.18 billion in September 2018 from N129.23 billion as at September 2017. However, interest income fell by 6.28 percent to N339.06 billion in September 2018 from N361.78 billion the previous year. GTBank’s net income rose by 13.25 percent to N142.22 billion in September 2018 from N125.57 billion as at September 2017. However, interest income was down 4.31 percent to N237.54 billion in September 2018 from N248.27 billion as at September 2017. First Bank Holdings Plc’s net income by 1.94 percent to N44.94 billion in the period under review as against N45.84 billion the previous year. Interest

igerian Breweries Plc’s disappointing third quarter result shouldn’t come as rude shock to investors that have been paying close country’s macroeconomic environment, most especially, the consumer goods industry. On a quarter on quarter basis and based on

the nine months ended September 2018 financial statement posted on the website of the exchange, the firm recorded a loss of N3.65 billion, the first in more than a decade as the brewer succumbed to a mirage of challenges such as stiff competition, low consumer spending, and decrepit infrastructure. Year on Year sales were down 6.51 percent to N238.06 billion in Sep-

P.E

SHORT TAKES 15 pct Nigeria’s central bank is asking a Lagos court to make South Africa’s MTN pay 15 percent annual interest on the $8.1 billion it claims was illegally moved abroad, according to court documents seen by Reuters. The bank also asked the court to dismiss MTN’s case seeking to stop the monetary authority’s order for the telecoms firm to repatriate the funds back to Nigeria, the documents showed.

N3.9trn

income increased by 5.47 percent to N375.58 billion in September 2018 from N356.07 billion the previous year. UBA’s net income was up 1.27 percent to N61.69 billion in the period under review as against N60.92 billion the previous year. Interest income moved by 12.95 percent to N268.93

billion in September 2018 from N238.09 billion the previous year. Fidelity Bank’s net income was up 23.57 percent in the period under review as against N14.45 billion the previous year; driven largely by fees and commission income as the lender continues to consolidate on its internet

baking. Sterling Bank’s net income grew by 38.95 percent to N8.20 billion in the period under review as against N5.90 billion the previous year. Interest income increased by 19.87 percent to N93.59 billion in September 2018 from N78.63 billion the previous year.

company if it refuses to invest in new products. Expectedly, these challenges took its toll on margins and operating per-

formance, as the firm was unable to turn each unit of sales into higher profit.

Could this be the fall of the King Brewer? BALA AUGIE

Monday 29 October 2018

tember 2018, while net income dropped by 38.40 percent to N14.78 billion in the period under review from N24.01 billion the previous year. Nigerian Breweries have been facing intense competition from peer rival International Breweries, in a recent beer war that has kept the industry busy. In short, Nigerian Breweries could lose its market share to the latter

The Federal Government has generated N3.9 trillion in tax revenue this year, according to Tunde Fowler, the Chairman, Federal Inland Revenue Service. The Chairman, who spoke at the meeting of the African Union High Level Panel on Illicit Financial Flow from Africa in Abuja on Thursday, said the generated revenue is higher than the N2.9 trillion realised in the same period of 2017. According to the FIRS boss, the improvement was due to the organisation efforts at recovering all monies due to the government and the insurance of tax notification to companies not complying with Company Income Tax. So far, a total of 2,672 demand notices have been issued, out of which 653 of the companies are now filing their returns and paid N2.98 billion already.

36% The Nigerian National Petroleum Corporation on Thursday announced total crude oil and gas export sale of $416.07m for June 2018, which was 35.78 per cent higher than what was recorded in the previous month. Details of the figures contained in the just released June 2018 edition of the NNPC Financial and Operations Report also indicated that the crude export sale contributed $274.95m, which translated to 66.08 per cent of the dollar transactions compared with $244.72m contribution in the previous month. The gas export sale for the month was $141.12m, the report stated. It added that the corporation recorded some ruptured pipelines that supply gas to thermal electricity generating plants across the country.

Continues on page 33

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: SAMUEL IDUH )

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

Monday 29 October 2018

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Markets Intelligence ECONOMY

Diamond Bank shares reverse gains as bank disassociate from capital injection rumours DAVID IBIDAPO

hare prices of Diamond Bank plc, a tier 2 Nigeria deposit money bank declined by -3.36 percent on Friday after the bank refuted information through a memo released on the NSE on capital injection rumours into the bank. On Friday, price of diamond bank’s shares reversed by 3.36 percent from N1.49 to N1.44 losing about N2.08 billion in one day. YTD analysis revealed that the bank stock is down 8 percent however outperforming the market which is down 15 percent. This report was targeted to earlier report by Reuters stating that banking sources told Reuters on Wednesday that the lender was in talks with new investors while its chairman Oluseyi Bickersteth and three other directors resigned with immediate effect. As a result, according to Reuters, shares in Nigeria’s Diamond Bank had risen to a four month high on Thursday, a day after the bank said four of its directors have resigned, in a move that could pave the way for the mid-tier lender to attract new investors. On Friday however, the small and mid-tier lender dismissed media reports concerning new equity in-

vestment in the bank which was said to result to a continuous rise in the stock prices of the bank reaching a 4 month high. According to a press release to the Nigeria Stock Exchange (NSE) by Diamond bank, “We wish to notify the Nigerian Stock Exchange (NSE) and the General Public that these reports are far from the truth. Diamond Bank is not in talks with any party, global or

otherwise, for any capital injection. “While previous communication from the bank has highlighted a need to shore up the Bank’s Capital Adequacy Ratio (CAR), the preferred option is an internal capital management programme that has been explained in detail to analysts and investors. “While we recognize the need to expand our options in the short term, we have no concrete new develop-

ment to report and will notify The Exchange once there is any”. BusinessDay analysis of half year performance of Diamond Bank revealed that earnings of the bank declined by 78 percent from N8.02 billion in H1 2017 to N1.79 billion in H1 2018. YTD, shares are down 10.8 percent reaching an all-time high of N3.57 and lowest price of N1.09.

Could this be the fall... Continued from page 32

Quarter on Quarter, gross margins fell to 28.49 percent in September 2018, from 34.41 percent in September 2017 and 45.98 percent as at the second quarter of 2016, according to data gathered from Bloomberg. It is the brewer’s smallest margin in 10 quarters. Nigerian Breweries Earnings before Interest taxation depreciation and amortization (EBITDA) margin declined to 6.25 percent (Q/Q) in September 2018, this compares with 15.28 percent and 29.40 percent recorded in September 2017 and 29.40 percent the second quarter of 2016. Net margins, another measure of efficiency, stood at (5.57) percent in the period under review, this compares with 0.35 percent and 10.79 percent recorded in the third quarter of 2018 and second quarter of 2017.

Nigerian breweries as at close of trading on Friday was down 34.77 percent YTD with a closing price of N88 from 135.05 recorded in January. The macroeconomic environment has been tough for companies operating in the country as more Nigerians are getting poor,

which means their wallets are shrinking. According to a recent World Bank data, 92.10 percent of Nigerians live at below $5.50 a day. The reality is that most people cannot afford to buy a packet of Spaghetti or protein. Nigeria with a population of

180 million people has 87 million people, nearly half its population, in extreme poverty as high inflationary environment has eroded the purchasing power of the few that has steady income. Nigerian Breweries has plans to survive the beer wars as it aims to consolidate its market share in

the country. The company revealed plans to grow volumes in the premium lager segment using sales push of recently-launched Tiger Lager. The bottle will be offered in 450ML sizes (in contrast to the commonly available 600ML bottles) at pocket-friendly prices.

BUSINESS DAY

Monday 29 October 2018

BUSINESS DAY

REAL SECTOR WATCH BUSINESS DAY

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Monday 29 October 2018

Nigeria per capital paint consumption among lowest globally

…industry to hit $377million by 2025 JOSEPHINE OKOJIE

espite its large popul at i o n a n d huge construction sites, Nigeria’s paint per capital consumption still ranks low when compared with other countries of the world. According to the Paints Association of Nigeria (PMA), the country’s per capital paint consumption is less than 1 kg per head, which is very low when compared with countries such as Brazil, 8kg per head; Venezuela, 7.5Kg per head; Japan and West Europe 15kg per head; and United Sates and New Zealand, 25kg per head, among others. “ Nig er ia paint con sumption is still among the lowest in the world, at

less than 1kg per person,” Chris Kiwamu, managing consultant and chairman, Advisory Board of Kirsten Turner Consulting, said

during his keynote address at PMA 2018 annual general meeting held in Lagos recently. “If we can grow our

paints consumption to 3kg per head in the mediumterm perspective, it will positively affect the fortunes of virtually all market

participants in the industry,” Kiwamu said. He noted that the target of 3kg per head in the country is not a very ambitious projection as countries such as Bolivia, Paraguay and Venezuela of relatively poor economies have already attained and surpassed the target. He stated that the industry is currently estimated at $268million and projected to grow to $377 million in 2025 with increase in per capital consumption. He also added that despite the industry growing fast in the last few years, rising costs and high rate of importation have affected the profit margins of local paints manufacturers. He identified high cost of energy, raw materials and haulage as well as high rate of adulteration and counterfeiting as factors responsible for the rising

costs of manufacturers. “Ou r a b i l i t y t o s u rmount and overcome these challenges will bring the industry to the desired state.” “The current low per capital consumption of paints in Nigeria offers tremendous opportunity for paint practitioners in the country,” he says. Also speaking during the annual meeting, Rotimi Aluko, chairman of PMA and managing director of Voda Nigeria Limited, said that the provision of critical public utilities is critical for the development of industrialisation in the country as well as for economic growth. “The problem of infrastructural deficiencies of roads and public utilities still poses a serious challenge to the survival of the paint industry and the Nigeria economy,” Aluko said.

How SON, Customs agents plan to fight substandard goods ODINAKA ANUDU

he Standards Organisation of Nigeria (SON) has partnered the Association of Nigerian Licensed Customs Agents (ANLCA) to checkmate the menace at the point of entry. Osita Aboloma, directorgeneral, SON, said ANLCA was one of its strongest allies that could help to reduce the preponderance of fake and substandard goods in the country, explaining that SON would intensify its engagements with operators in the maritime industry through sensitisation programmes in a bid to combat the menace of substandard goods. Aboloma, at a stakeholders meeting with members from ANLCA in Lagos, said with this move, the agency would also be creating an enabling environment for businesses to thrive while also protecting the lives of the unsuspecting Nigerian consumers. He, however, stated the agency was working relentlessly to fully automate its process to reduce the level of human interface, stressing that this would help to eradicate the use of touts to get access to its services while also ensuring seamless port

operations for stakeholders in the maritime industry. “We are appealing to the operators in this industry to be forthcoming in their declaration of goods so that they do not take advantage of the lacuna involved in the clearing processes. They have agreed to work with us in all sincerity while also keying into our processes to create an enabling environment for operators. We are trying to fully automate our processes to make it seamless. This would help to tackle some of the corrupt practices operators experience at the ports. When you automate, you have less human interface, there will be no more need to patronise touts for accessing our services. “The fight against substandard goods starts from beyond

Osita Aboloma

the shores of Nigeria and that is why we have put SONCAP in place to verify the quality of products coming in. We still have to follow products that we suspect are substandard and even in the markets. Importers must insist on doing the right thing and imbibe the culture of standardisation and quality assurance so that people will have confidence in their products or services. Do the right thing to save cost and lives so that we can continually improve the lives of Nigerians through standards and quality assurance,” Aboloma said. Also speaking at the event, Kayode Farinto, national vice president, ANLCA , commended SON for its relentless efforts aimed at tackling substandard goods while also restating its commit-

ment to support the agency in its quest to rid Nigeria of substandard goods. “We have stated the challenges that we face in the course of carrying out operations at the ports, but the directorgeneral is very proactive where most of their processes are automated and it has so far helped us to achieve seamless operations at the ports. The onus now lies with us to sensitise importers on the negative effect of dealing with substandard goods on the economy. We are also going to work with SON to ensure that any good that does not conform to international best practices, we will make sure that we discourage our members from clearing them at the port. Honestly we are impressed with the level of work done by the agency especially in the area of automation of their processes. Our members have been able to enjoy seamless operations at the ports,” he added. Obiora Manafa, director, compliance, stated that the association played a big role in ensuring the safety of Nigerians and property, pointing that the SON would continually engage stakeholders to sensitise and the general public on the harmful effects of substandard goods to lives and the economy at large.

L-R: Taiwo Ubany, quality assurance manager, OK Foods Limited; Osunbunmi Olaitan, brand manager, biscuits category, OK Foods Limited, and Stanley Ohenhen, managing partner, Laureate Consults Limited, during the presentation of Africa’s Most Outstanding Premium Quality Biscuits Brand to PureBliss Biscuits, a brand of OK Foods, in Lagos recently

Quality propels Pure Bliss as product wins African award ODINAKA ANUDU

ure Bliss biscuit has been awarded Africa’s Most Outstanding Premium Quality Biscuit Brand of the year 2018 at the African Quality Achievement Awards (AQAA) event which took place in Lagos recently. Africa’s Quality Achievement Awards recognises organizations, brands & personalities that have embraced the quality culture and integrated seamlessly best in class quality management practices as an integral part of their journey in achieving overall objectives. The short-listing and se-

lection of awardees were done by a group of International quality professionals from across Africa including officials of the Standards Association of Nigeria (SON), Ghana Bureau of Standards, Uganda Bureau of Standards (UNBS), Africa Organisation for Standardisation (ARSO) & Pan African Quality Organisation. Within a span of two years, Pure Bliss has become one of favourite biscuits for Nigerians with over 400 packs being consumed every minute. Pure Bliss is available in three variants – Pure Bliss Milk Cream Wafer, Pure Bliss Rich Cocoa biscuit & Pure Bliss Premium Milk Cookies.

Monday 29 October 2018

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BUSINESS DAY

REAL SECTOR WATCH Why Nigeria needs functional paper mills Stories by ODINAKA ANUDU

igeria had three functional paper mills in the 1980s and 1990s, but the mills are almost redundant today. The three paper mills of the 1980s were: Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company ( N N M C ) L i m i t e d , O ku Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State. Today, only the mill at Iwopin is working at below 30 percent capacity. Studies show that Nigeria loses N180 billion annually from non-performance of these paper mills. Each year, newspaper houses and publishing firms import newsprints and papers running into billions of naira, despite the country’s luscious trees whose barks can be used for paper production. Nigeria spends N50 billion on the import of papers annually, data from the Raw Materials Research and Development Council (RMRDC) say. The history of Nigeria’s

paper and pulp industry has been a telltale of woes. In the 1960s and 1970s, the federal government established the three paper mills for the purpose of producing bond paper. The NPM produced 40,480 tons of kraft paper by 1985 and 42,960 in 1986, representing 62.3 percent and 66.17 percent capacity utilisation respectively. The NNMC performed well and operated profitably, as the volume of newsprints in the company rose from 28,927 tons in 1989 to 37,581 tons in 1990.

Owing to the optimal utilisation of the mill, imp or tation of ne w spr int fell drastically to 17.5 percent in 1986 and 12.5 percent in 1987. But this was short-lived as the third mill NNPMC was abandoned in 1983 when the mill was at nearly 85 percent completion. Privatisation put the paper mills in the hands of investors who were accused of sabotaging the country’s dreams by importing papers from their countries rather than developing functional mills locally. Though this

is speculative, former staff members of these mills believe that those who took over the management of the mills did not put enough efforts to revive them. “The co-investor that bought the NigeriaPaper Mill (NPM) Limited did not buy it to help Nigeria,” said Samson Ololade Ogundele, ex-senior manager, NigeriaPaper Mill Limited, Jebba, Kwara State in Lagos, said at a stakeholders’ forum in Lagos in 2016. “I know it was valued at about N30 billion in Nigeria as at 1995, but this same

mill was given to the investor at N334 million in 2008. The aim of the government in handing over the mill was to create jobs and improve the economy. The majority of Nigerians working in Nigeria Paper Mill –both junior and senior— are all casual,” Ogundele disclosed, adding that the Federal Government must re-visit the privatisation in spite of the fact that it is the only paper mill working at the moment. In March this year, the federal government handed over the Iwopin Paper Mill in Ogun to the core investor, Beulah Technical Company Limited. Abimbola Ogunwusi and Peter Onwualu, director and former director-general of the Raw Materials Research and Development Council (RMRDC) respectively believe that the integrated pulp and paper mills established in Nigeria were privatised as a result of lack of adequate funds to import requisite raw materials and generally because of their non-performance. The major problems the mills continue to face is the dependence on imported long fibre pulp and chemicals. Experts say there is a need to deepen the local pulp market. Oluwadare Oluwafemi,

a professor in the department of agriculture and forestry, University of Ibadan, identified the inability to source long fibre trees as one key reason for the nonperformance of the mills. Oluwafemi lamented the abysmal fund devoted to research institutions, while also calling for the establishment of pulp and paper institute to save the country from these humongous losses. “It is unfortunate that 90 percent of papers used in Nigeria are imported,” Oluwafemi said, while presenting a paper entitled, ‘Long Fibre Pulp Production in Nigeria: Prospects and Challenges’, calling for the reversal of the privatisation process which he said was faulty. Private companies such as Onward Paper Mill Limited, Epesok Paper Mill and NIXIN have come into the industry to tap into the growing opportunity in it. But with almost 200 million and growing need to educate under-25 population who are more than half of the population, experts believe the country needs a number of paper mills locally to reduce pressure on foreign exchange and reduce cost of operations for many struggling media houses.

$464.7 using Chinese prices, which means that Nigeria imports roughly 7.1 million metric tonnes of steel annually.The number could have been one to five million metric tonnes lower had Ajaokuta been producing and expanding operations since 1979, experts say. Ajaokuta and Delta Steel were incorporated the same year—1979. But the latter has, by far, dwarfed the for-

mer. After a successful handover of Delta Steel to Premium Mines and Steel by the Asset Management Corporation of Nigeria (AMCON) in 2014, the company’s rolling mills section is today working, employing roughly 160 people. Analysts say it costs Nigeria an average over N5 billion annually in real terms to maintain Ajaokuta, wondering why the government should not sell the behemoth to an interested private firm. They believe that government should follow the Delta Steel model to revive Ajaokuta and othermoribund and badly managed facilities such as Ajaokuta Steel Complex, Aluminium Smelter Company, Nigeria Paper Mill, Nigerian National Paper Manufacturing Company, Federal Superphosphate Fertilizer Company and National Steel Raw Materials Exploration Agency, among many others.

Speedy privatisation seen reviving Ajaokuta Steel

igeria needs to speedily privat i s e A j a o ku t a Steel Complex and stop pumping money into the plant. Ajaokuta Steel Complex was established in 1971 to develop Nigeria’s steel sector and stimulate the exploration of God-given natural resources, especially iron ore. Luckily for the country, large iron ore deposits were found in Itakpe, Ajabanoko and Oshokoshoko all in Kogi State two years after. This was supposed to be good news for Ajaokuta as the ore was meant to serve as a raw material for the complex. The Ajaokuta Steel Complex and Delta Steel Company were subsequently incorporated in 1979 as limited liability companies. Between 1980 and 1983, the then federal government stated that it had achieved 84 percent completion of Ajaokuta Steel plant, having completed the light mill sec-

tion and the wire rod mill. It was also widely reported that erection work on equipment reached 98 percent completion around 1994. Ever since then, Nigerians have been made to believe that Ajaokuta is 98 percent completed. Despite being unproductive, government after government has continued to pump billions into the complex. Government records show that successive administrations have pumped $8bn so far into the complex since 1979. The current government of Muhammadu Buhari has joined the party of spenders on a government facility that needs to be in private hands. In a move that shocked economists and finance experts, the federal government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the moribund Ajaokuta Steel Company, despite an earlier business case in the

last administration showing that the complex could only work if properly privatised. Kayode Fayemi, current Ekiti State governor, was the man in charge of Ajaokuta as minister of solid minerals development. One of Fayemi’s failures is the inability to hand over this behemoth to the private sector to manage, analysts say Bu s i n e s s D ay c h e c k s show that Ajaokuta Complex

has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. An average of steel products such as standard plates, hot-rolled coil, cold-rolled coil and rebar is estimated at

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Meet Kaamil Kalejaiye, entrepreneur with passion to feed 180m Nigerians ODINAKA ANUDU

s there anyone who will ever survive without food? This sounds like a rhetorical question, but Kaamil Kalejaiye is ready to provide an answer through his Fakholt Agro, a firm that specialises in general agriculture. Kamil has two other partners, who conducted a research together with him in 2013 before setting up Fakholt that year. Kamil and co are in the business of poultry, cassava, rice and pepper. He and his partners have also planted tomatoes and citrus in Epe, Lagos State. But it is the poultry and citrus farms that are doing fairly well now. “After a lot of research, we found out that it is agriculture that we could do,” Kaamil tells Start-Up Digest. “Everybody has to eat. Once you have the technical know-how, you can do a lot in agriculture. We went for training at a place called Animal Farm. We also visited a lot of farms, talking to farmers, learning from their experiences and failures in order to avoid them,” he says. Kaamil and co started with 1,500 birds but today, this number has increased to 6,000, thanks to the grace of God and hard work. His aim is to provide food to over 180 Nigerians. “Poultry farm is capital inten-

Kaamil Kalejaiye

sive. You may be spending up to N10 million on 3,000 birds. Even though you have the money, you need the technical know-how. Animals behave like human beings. They eat three times in a day. They are like babies. If you serve them in the morning, you must serve them in the afternoon and evening/ night,” he counsels. He says that many poultry farms fail because managers do not treat

animals like they do human beings. “If you treat them like animals they won’t respond positively. Let me cite an example. Last time, a neighbour of mine had a poultry farm, but he did not feed them the way human beings were supposed to be fed. They did not lay eggs and he had to sell all of them. Any animal business you do, you have to make sure you treat them like humans. The water you cannot

drink, don’t give it to the birds. Any water that is not healthy for human beings is not healthy for the birds. If you have a cold, the birds can also catch a cold,” he discloses. “Unfortunately, they cannot talk but can only react. And their reaction is losses for you. They may not produce eggs or could start dying,” he adds. The entrepreneur says the easiest aspect of agriculture that anyone can start is a vegetable farm. He, however, points out that the big problem is the market. “Finding a market is generally a problem associated with agricultural products. Last year, I did maize. It was good but nobody was ready to buy,” he says. He explains that there is a need for entrepreneurs to know their markets before starting a farm. Another good business is fish production, he discloses, urging farmers to first sell to their neighbours. He laments that Nigerian governments at all levels do not give farmers sufficient support. “The problem in Nigeria is that government does not support farmers. In other countries, government buys off and sells to the middlemen. But here, the farmer has to sell to the middleman and in the course of it loses a lot of money.” He regrets that a lot of farmers are ready to convert cassava into

starch, but that government agencies frustrate such efforts. “Pharmaceuticals need starch. If you want to convert your cassava into starch, the agencies you need to meet will be more than 10. At the end of the day, you find out it is not worth it,” he says. Kaamil says that one of the biggest issues facing Nigerian entrepreneurs is the attitude of employees. “In fact, we used to send them away regularly, and since then, things have improved. At some point, we found out that there was theft happening at the farm.” He urges farmers to expand operations regularly in order to attract corporate buyers. “The bigger your farm, the lower the cost of production. The market is there already. Spa, Shoprite and co buy from farms directly. There is a certain size you have to grow your farm to attract such corporate buyers,” he reveals. Kaamil, who is a product of Lagos Chamber of Commerce and Industry Mentoring Programme, explains that there is usually egg glut when students are on vacation. In spite of the challenges, the entrepreneur says agriculture is worth doing. “Because everybody has to eat, whether poor or rich, the business is good. You can’t survive without food.”

Developing social capital for business growth

everal professionals have considered the entrepreneurship option at one time or the other. For some, the risk involved is just too high. Some even ventured into entrepreneurship and failed. While a couple of business failures are attributable to the harsh business environment, poor infrastructure, wrong business model, inadequate access to funding, regulatory somersault, and extreme competition from the large players, one silent business ‘killer’ is the absence of a strong social capital (key contacts and networks) by the entrepreneurs or business leaders, or what people generally refer to as the ‘who you know’ strategy. Research in the social capital arena has confirmed that entrepreneurs with higher social capital achieve better business financial performance. Such studies support the need for entrepreneurs to focus on developing their social capital base to enhance their business success. Entrepreneurs often place reliance on narrow scope of networks, such as relatives or friends or neighbours. This can be disastrous as any little disagree-

ment with the key contact easily leads to a negative business impact, especially due to the African cultural issues. Social capital is usually acquired through networking, since networking is about the development and nurturing of relationships. However, the social capital concept is not limited to ‘networking’ with other professionals or business leaders. It involves the entire process of identifying key people that can provide access to resources (financial, people, knowledge and experience) with a focus on developing a strong relationship with them. Hence, the concept of social capital includes the resources available through an entrepreneur’s personal and business networks, including ideas validation, business advisory, leads generation, financial management, operational risk management and business transactions and opportunities. Business leaders need to move beyond trade and professional networks and evaluate which groups they need to nurture to achieve a strong social capital base. For example, entrepreneurs

in the road transportation or haulage business might require a good network of senior officers in the local government councils and police commands around the communities where they operate. Sometimes, business leaders overlook the strength of their alumni networks (from their secondary schools, military schools, and including post-graduate schools), neighborhood and community networks, networks on social media platforms, investment and entrepreneurship clubs, and the various business groups, including those being hosted by religious organisations. In order to determine the appropriate networking group to join, business leaders are expected to identify their strengths and weaknesses as regards the required skills for leading their type of business. Consider both formal and informal networking groups. While you may need that professional association or trade group, don’t neglect that town’s union. Ensure that you aim to connect with people from diversified backgrounds and experiences, even on social media platforms. You can’t imagine what

you’ll probably need in the nearest future. Once you have developed the necessary networks and connections, maintain regular contacts without the expectation of always benefitting from the relationship. Remember, it should be a symbiotic relationship. Do you remember the birthday or wedding anniversary of that special mentor that has been supporting you? When last did you also invest in him or her? Your social capital requires a strong investment of time and resources for you to nurture it adequately. While the entrepreneur needs to have a mastery of his or her business model, market structure and competition dynamics, a strong network of contacts will definitely enhance the business. Start building and nurturing your social capital from day one. Don’t wait until you actually need something before attempting to build or nurture your social capital. If you build the right networks, then you’ll have a pool of resources to draw from whenever you need it. Entrepreneurs or business leaders who aspire for business success without social capital are like camels trying

to pass through the proverbial ‘eye of the needle’. Wole Oluyemi is a chartered accountant and business advisor, with special interests in SME businesses, strategy, finance and tax. He is also a doctoral researcher at Cranfield University (UK) with research focus on corporate political strategy. He can be reached at @WoleOluyemiCo on Instagram, Twitter and FaceBook.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Joel Samson Graphics

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Monday 29 October 2018

Start-Up Digest How creativity, courage lifted Adesola’s bakery business JOSEPHINE OKOJIE

ith the rise o f Ni g e ria’s middle-class, the catering industry is experiencing an increased demand and consumption. As a result, the industry is becoming attractive to thousands of young entrepreneurs who have learnt the science, art and skills of baking to meet the huge demand. Adesola Ajayi, founder of Loise Bakery and Confectionary, is one of such entrepreneurs. She established Loise Bakery and Confectionary to provide amazing cakes for clients to celebrate birthdays, weddings, anniversaries, graduation, promotion, retirements and dozens of other special moments. Adesola, who was a fund administrator in one of the

top pension fund organisations in the country, had to quit her job to pursue this passion. She was inspired to establish Loise Bakery and Confectionary in 2017 owing to her love and passion for the art of baking. “I was inspired to establish my business owing to my love for the art of baking and decorating. I love to take an idea and make into a cake. This love and interest inspired the business,” she says. In turning her idea to action, Adesola had to embark on more baking training despite having over six years’ experience in it. Apart from attending a master class on baking, the young entrepreneur also took up training classes on the internet. “I first learnt baking in 2011 in church and afterwards, I attended a master class on mix and

Adesola Ajayi

bake. Also, I took a lot of courses online and watched a lot of YouTube videos on baking and designs,” Adesola says. Adesola started little and

constantly works hard to grow the business. She notes that during her working days, she regularly bought different pieces of equipment at the end of

each month after receiving her salary. “While working, after collecting my salary each month, I would buy a particular piece of baking equipment and, gradually, I had enough to kick-start when I finally resigned. This made it easier for me as I did not require much capital any longer to commence operation,” Adesola recalls. After doing that for over five years, she spent the little she had on getting an office space and buying other accessories. The economist-turnedentrepreneur says her business has grown quite well since she starting. She explains that the business sources its raw materials from local markets across the country. When asked about the challenge confronting her business, Adesola tells Startup Digest that huge infra-

structural gap in the country remains the biggest issue. She urges the federal government to provide key infrastructures such as stable power supply and motorable roads to reduce cost of doing business in the country for entrepreneurs. Adesola plans to diversify into other confectionaries and have baking outlets across major cities in the country. The entrepreneur says she will tell her younger self to be open to identify problems around and turn them into values that could be exchanged for income. “I would tell my younger self to start early. Follow your interest and passion early, stay focused, pray and preserve and, in time, the seeds you have planted would start bringing forth fruits. In time, your passion develops into success,” she says.

Ayodeji Babatunde: Empowering young Nigerians to become superpreneurs RAZAQ AYINLA

espite her degrees in Biological Sciences and Commerce, young Ayodeji Babatunde believes that Nigerians need more than academic qualifications to contribute meaningfully to the growth and development of the economy. She believes that youths should focus more on what they can contribute in terms of goods and services in order to have positive impact on the overall national income.` The entrepreneur is of the opinion that young Nigerians have what it takes to be creators of jobs rather than perpetual seekers. Little wonder she has been going round secondary schools across Lagos State to catch Nigerians young, train and mentor them on a series of entrepreneurial skills. These skills are expected to earn the students reliable means of livelihood while making them contribute hugely to the economy. Ayodele, who studied Biological Sciences at the Federal University of Agriculture, Abeokuta (FUNAAB), and Commerce at Bocconi University, Italy, is providing an enterprise empowerment and career guidance scheme for secondary school students from low-income families in Lagos State. Through a non-for-profit career development/empowerment programme for

skills that will enable them become job creators. The young entrepreneur is also deploying seamless structure for sourcing and effectively working with partners like Teach for Nigeria, JobMag, Jobberman, Uber, Careerdirect, Stutern and industry experts facilitators for Mentor-Meet Career Fair which caters for well over 1,000 young professionals, quarterly. “I have an insatiable passion to empower the youth in order to create a ripple effect that will reach

a larger community; a way to give back to the society. My professional expertise with a telecommunications company, my over five years working experience with Etisalat, now 9Mobile, has given me the needed expertise. “Now, I offer business development services to micro and small businesses through Cerchy Community, a circle of entrepreneurs across Nigeria which I aim to extend to the rest of Africa,” she says. “I am actively involved in

programmes addressing key youth development issues. As a business strategist and social entrepreneur, fully aware of the economic value of empowering a youth, I focus my professional expertise on human capacity development, facilitating business strategy sessions for SMEs through training sessions on capacity development for individuals entrepreneurs and business owners. “I also help businesses achieve and improve on their target key performance

indices through employee training programmes and employee performance reviews. I am also very passionate about finding opportunities to volunteer at community engagement projects on youth engagement and development. “I volunteer as a career and business coach at Fate Foundation’s ‘Net Economy Project network’ where I regularly mentor and train unemployed young people on career positioning. I also volunteered at the ‘Love Initiative Save a Child’ cam-

Ayodeji Babatunde with the student trainees that underwent vocational and entrepreneurship scheme held in Lagos school recently.

Ayodeji Babatunde

the youth, with a strong support from Daystar Christian Centre, Lagos, Nigeria, Ayodeji is providing students and unemployed youths tools that will enable them make sustainable income. She is particularly interested in empowering indigent students with 21st century

Shoes produced by student trainees with local fabrics and other inputs.

Student trainees were hand weaving shoes with local fabrics and other inputs in Lagos recently as part of vocational and entrepreneurship scheme. Pics by Razaq Ayinla

paign where I helped train young children in Idi Araba Orphanage Home, Lagos on self- esteem.” Ayodeji Babatunde is a lead business strategist and founder at OutliersHCD Consulting. She has served as project manager and team coordinator for CareerPlus in 2017 and a member of the youth delegation from Nigeria to Bénin République who went to celebrate the country’s 56th Anniversary in 2016. She received an award of excellence in 2015 as top one percent Nigerian executive in the telecommunication industry during her working period in Etisalat. She is a West Africa YALI Fellow for Entrepreneurship Initiative in Africa and Fate Foundation Youth Mentor and a United Nations Volunteer. When asked to offer advice on what could change the Nigerian youths’ mentality to embrace entrepreneurship and self-dependence, she says that entrepreneurship and vocational studies must be the future of Nigeria to realise a shift from the current status to better economic situation. “I am pushing for review in our current educational curricula to include entrepreneurship from the primary level where young minds are trained to be entrepreneurial in approaching immediate issues. “ I believe this will form a catalyst that will impact our future and economy”, she adds.

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Monday 29 October 2018

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The 6 fundamental skills every leader should practice RON ASHKENAS

here’s an old story about a tourist who asks a New Yorker how to get to Carnegie Hall and is told, “Practice, practice, practice.” Our research and experience have shown us that the best way to develop proficiency in leadership is not just through reading books and going to training courses, but also through real experience and continual practice. Our research also pointed to six leadership skills where practice was particularly important. These are not mysterious and certainly aren’t new. Aspiring leaders should focus on practicing these essential basics: — SHAPE A VISION THAT IS EXCITING AND CHALLENGING FOR

YOUR TEAM. — TRANSLATE THAT VISION INTO A CLEAR STRATEGY ABOUT WHAT ACTIONS TO TAKE, AND WHAT NOT TO DO. — RECRUIT, DEVELOP, AND REWARD A TEAM OF GREAT PEOPLE TO CARRY OUT THE STRATEGY. — FOCUS ON MEASURABLE RESULTS. — FOSTER INNOVATION AND LEARNING TO SUSTAIN YOUR TEAM AND GROW NEW LEADERS. — LEAD YOURSELF. KNOW YOURSELF, IMPROVE YOURSELF AND MANAGE THE APPROPRIATE BALANCE IN YOUR OWN LIFE. No matter where you are in your career, you can find opportunities to practice these six skills. You’ll have varying degrees of success, which is normal. But by reflecting

profit, or a religious organization, which are often hungry for leaders to step in and step up. Eventually, as you progress, you’ll reach a level of capability in these areas such that you’ll start seeing results. You’ll successfully make things happen through the people who work for you on your team, or in your division. You’ll have become a leader, capable of rallying an organization of people around a meaningful collective goal and delivering the results to reach it.

on your successes and failures at every step, and getting feedback from colleagues and mentors, you’ll keep making positive adjustments and find

more opportunities to learn. Don’t wait for learning opportunities to be handed to you. Seek them out and volunteer to take

them on. And if you don’t see the opportunities in your own organization, find them outside your professional work in a community group, a non-

(Ron Ashkenas is the coauthor of the Harvard Business Review Leader’s Handbook, and a partner emeritus at Schaffer Consulting. Brook Manville is Principal of Brook Manville LLC, and a co-author of the Harvard Business Review Leader’s Handbook.)

How peer coaching can make work less lonely NORIAN CAPORALE-BERKOWITZ AND STEWART D. FRIEDMAN

orkplace loneliness causes burnout, affects job satisfaction and lowers both performance and retention. Peer coaching is about cultivating a network of allies that can provide mutual support in creating positive change to improve performance. It provides opportunities for one-on-one connection and demonstrates that our inner lives are welcome in the workplace. Let’s explain a bit further three of the ways it helps: — IT CREATES A CUL-

TURE THAT VALUES CONNECTION. People develop symptoms of loneliness when they feelisolated, regardless of how much actual social support is available to them. Psychological problems increase when people have little hope for more connection in

the future. When employers help employees build peer-to-peer coaching networks, it creates a culture of connection. Employees experience being vulnerable with coworkers and begin to view lowering their walls as an asset, not a liability. — IT REPLACES SOCIAL

SNACKING WITH MEANINGFUL DIALOGUE. Communicating mostly over email or chat and then turning to social media on breaks — that’s social snacking, which gives the illusion of connection without actual nourishment. The reciprocal nature of peer coaching relationships, in which employees take turns talking about work in the context of their whole lives, is a catalyst for deep mutual understanding. By providing opportunities for individuals to talk — without pressure to deliver or impress — peer coaching can reduce loneliness more effectively than

staged social events in which people might be laughing and drinking but still hiding behind a mask they’d rather remove. — IT INCREASES PSYCHOLOGICAL SAFETY. Research shows that people who are lonely, compared to those who are not, are less able to make new connections. Because peer coaching involves repeated conversations with consistent partners, it is an effective method of creating confidants that persist over time. Once you are comfortable with the idea of doing something to deepen relationships at work,

set up a simple method for two people to try out a peer-to-peer coaching exchange. Each pair can take turns coaching each other for 20 minutes each. Peer coaching can be effective in fighting loneliness through optin one-on-one dialogues where the work of creating stronger human connections can happen.

(Norian CaporaleBerkowitz is pursuing a Ph.D. in counseling psychology at the University of Texas, Austin. Stewart D. Friedman is a professor at the Wharton School.)

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INTERVIEW ‘It is difficult for an organization to survive without an innovative leader’ Professor NEAL HARTMAN is Head of a management division at the MIT Sloan School of Management and has experience in entrepreneurship, management, intercultural communication, conflict resolution, leadership and innovation. He has consulted for hundreds of public and private sector organisations in multiple continents in North America, Asia, Europe, and Africa. He is a visiting Professor at the University of Cambridge at the CMI-Enterprises, which is part of the Cambridge-MIT Initiative, working with decision makers from the USA, Cambridge University, and other European universities to develop their innovative credentials. In this interview, he talks about skills Nigeria leaders need to impact globally and expectations ahead of next TEXEM’s training programme.EXCERPTS:

ow can a Nigerian leader make an innovative impact in his organi-

always be steps ahead of the more conservative leader who is less comfortable with change. Thus, an innovative leader will outperform competitors, disrupt the industry and achieve superlative performance.

zation? Nigerian leaders have opportunities to make innovative impacts on their organizations in several ways. Their task is to turn their organizations into innovation leaders. Leaders can make intentional changes to organizational processes and products in order to create economic value along with social and environmental benefits.

Would you consider your visit to Nigeria for this programme a necessary one and Why? There is so much opportunity and so many resources but the nation also faces remarkable challenges. If this programme is a catalyst for dealing with poverty, improving the environment, creating ways for companies to innovate and promote sustainability, create an avenue for business leaders to review their business models, improve their revenue streams and grow then it will be a most useful visit.

What skills could be acquired to achieve organizational growth?N It is critical to shift thinking from achieving short-term goals or profits to thinking long-term. Leaders must focus on developing and maintaining relationships with employees, clients, and the community. Leaders also need to explore how they can reduce waste, lower pollution, and decrease the number of natural resources they consume. The essential ingredient to accomplishing these goals is through innovation. Why should organizational leaders attend TEXEM’s training programme? TEXEM’s training programme scheduled to come up on the 14th-15th of November at EKO hotel, Lagos will offer participants the opportunity to examine in-depth the best practices of innovative and sustainable businesses and to consider what steps need to be taken to reach the potential that Nigerian companies have to become more innovative and sustainable. Through cases, discussions, and activities, the training programme will help leaders to see both the opportunities and challenges for Nigerian companies to navigate the future. Also, participants will benefit from networking with other impressive leaders and future leaders both during the executive development programme and afterwards -In addition to the steeper learning curve that participants will gain, the improved social capital is also a source of bumper return on investment. Do you think Nigerian leaders have acquired the necessary skills to impact globally? Certainly, there are wonderful examples of Nigerian leaders who are working diligently to turn their organizations into innovation leaders as well as leaders who are actively developing and promoting policies to enhance sustainability. Yet there are so many examples of the work that remains to be done, focusing on issues of poverty, education, infrastructure, the environment,

How successful can a leader be without being innovative? Leaders may be successful for a limited amount of time by providing stability to an organization, but ultimately things change. Look at the technology such as artificial intelligence, virtual reality and the internet of things that we operate with today and remember that 10, 20, 30 or 40 years ago many of these technologies did not exist. We must understand that things change and leaders need to drive much of that change.

improving their capacity to make better decisions and build successful firms that endure to name a few. How well do you consider an innovative leader valuable to an organization especially in this turbulent time? An innovative leader is extremely valuable to organizations during turbulent times. Because these innovative leaders are constantly experimenting and focusing on sustainability, their organizations are better equipped to deal effectively with scandals, employee strikes, consumer boycotts, stiff competition, disruptive technology or global recessions. Do you think that the skills acquired during this training will be of essence to these leaders? Having an opportunity to explore best practices of innovative

and sustainable leaders and companies, along with time to consider opportunities and challenges for Nigerian companies, will be extremely helpful to leaders in these dire, volatile, uncertain, complex and ambiguous time. Specifically, themes that will be covered in this programme includes: stimulating drivers’ innovation: culture, reward, structure. Inspiring, design in and driving innovative processes. Leading strategic change for optimal outcomes. Sustaining momentum and organizational focus. Aligning human capital, process and technology and communicating vision and creating urgency

food and agriculture, education, government, oil and gas, manufacturing, service industries, construction, public sector, banking and finance, and consulting.

Which business sectors would this training be beneficial too? Innovation and sustainability are critical for the success of all organizations. As we look at issues in Nigeria, this training will be beneficial to leaders from

How does an innovative skill place a leader ahead of his peers? An innovative leader is always looking forward, thinking about new ideas, and new ways of doing work, new products, and new markets. The innovative leader will

Is an innovative skill important for leaders to acquire especially in this 21st century? The world is moving rapidly in the 21st century and organizations that do not innovate and change will be left behind to disappear. Innovation is crucial for survival, growth, and consolidation. Innovation must be aligned with strategy and be a mean of unlocking stakeholder value.

How successful can an organization strive with a leader who is not innovative? It is difficult for an organization to survive without an innovative leader. The organization may thrive for a time, but without innovating products, processes, and companies become things of the past-Think about Kodak, PanAm and Compaq-The common denominator that led to the failure of all these companies is inadequate innovation. Why is innovation a skill needed at the management level? True inventive leaders want to create a culture where creativity and innovation happen throughout the organization. Ideas come from many sources and innovative companies promote ways for all employees to feel empowered to suggest new ideas. In your experience, how far do leaders with little or no innovation skill go? When one looks at leaders in top positions in all kinds of organizations, one typically finds people who articulate the company’s goals and values around change, innovation, and sustainability initiatives. Innovative leaders help their companies to be profitable, socially responsible, innovative, and sustainable.

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INSIGHT

The ‘A B C’ of Micro Pension Plan - PenCom The Commission shall approve all Programmed Withdrawals, Life Annuity and exit payouts under the Micro Pension Plan. In the case of Programmed Withdrawal, the PFA and the retiree shall jointly execute a Programmed Withdrawal Agreement, stating the terms and conditions of the contract. In the case of the Life Annuity, the insurance company and the retiree shall jointly execute the Annuity contract, stating the terms and conditions of the contract. All payments for contingent and payments of pensions shall be made only to the contributor’s/retiree’s designated bank account through channels approved by the CBN. Micro Pension Contributors shall be entitled to Guaranteed Minimum Pension provided they satisfy the provision of Section 84(1) of the PRA 2014 and the Guidelines on Minimum Pension Guarantee issued by the Commission. Where the total amount contributed is below the amount required to qualify for Minimum Pension Guarantee, the Micro Pension retiree shall be paid enbloc in accordance with the Regulation for the Administration of Retirement and Terminal Benefits. Any contribution after retirement shall be treated as Voluntary Contributions (VC).

JOHN OSADOLOR

he National Pension Commission (PenCom) has set January 2019 as the take-off date for the implementation of the Micro Pension Plan. Contributors to the plan must be above 18 years old with defined sources of income, resident in Nigeria, self-employed persons that belong to a trade, profession, cooperative or business association, according to PenCom guidelines seen by BusinessDay. Others who are eligible as contributors are self-employed persons with a business registration as a company, partnership or enterprise, employees operating in the informal sector who work with or without formal written employment contracts and other self-employed individuals. PenCom in the guidelines says “Micro Pension Plan refers to an arrangement for the provision of pensions to the self-employed and persons operating in the informal sector. For the purpose of these guidelines, the informal sector refers to employees in business entities, organizations and/ or persons that are not mandated to implement the Contributory Pension Scheme as provided in Section 2(1) of the Pension Reform Act, 2014.Selfemployed individual earns his/her income through conducting trade or business for him/herself. Micro Pension Contributor (MPC) is a person who is registered under Micro Pension Plan”.

Registration According to the guidelines, a prospective Micro Pension Contributor shall be required to open a Retirement Savings Account (RSA) by completing a registration form with a Pension Fund Administrator (PFA) of his/her choice. The PFA will assign the appropriate Nature of Business (NOB) codes for the prospective Micro Pension Contributor as provided by the Commission. The guidelines stipulate that electronic registration should be made available by all PFAs, and they shall electronically capture the applicant’s ten finger prints and must pass the Automated Finger Print Identification System (AFIS) quality requirements specified in the guidelines for the registration of contributors/ members issued by the PenCom. “Where the quality of the ten finger prints does not meet the required AFIS specification due to physical impairment, the PFA shall treat such prospective Micro Pension Contributor as physically/partially challenged and shall register such in line with the guidelines for registration of contributors/members issued by the Commission”, PenCom said in the guidelines. The registration information shall be transmitted to the Commission electronically by the PFA to enable PIN generation. The PIN generated by the Commission shall be forwarded to the PFA immediately. The PFA shall forward the PIN to the Micro Pension Contributor. Registration shall also cover the “Customer Familiarity Index” (CFI) on Micro Pension Contributor. Identification Would-be Micro Pension Contributors are to provide any following valid means of identification at the point of registration: National

Aisha Dahir-Umar, Acting Director-General, PenCom

Identification Number, Permanent Voters Card, Driver’s License or International Passport. Documentation Any of the following documentation shall be provided at the point of registration: evidence of membership of a registered association, union or cooperative society, Certificate of business registration, Certificate of incorporation, and letter of employment or Bank Verification Number (BVN) or other documentation as may be specified by the PFA. A Micro Pension Contributor may transfer his/her Retirement Savings Account from one PFA to another in line with the regulations for the transfer of RSA issued by the Commission, while contributions shall be made in Nigerian currency (Naira). Contributors may make contributions daily, weekly, monthly or as may be convenient to them provided that contributions will be made in any given year. The guidelines stated that every contribution shall be split into two comprising 40% for contingent withdrawal and 60% for retirement benefits. The amount of contribution shall be dependent on the Micro Pension Contributor’s pension aspiration and financial capacity. EFCC A most significant aspect of the guidelines is a section requiring both PFAs and PFCs to inform the Economic and Financial Crime Commission (EFCC) of any single lodgment of N5 million and above. Contributions shall be made by cash deposit, electronically, through any payment instrument/platform or other financial service agents approved by the Central Bank of Nigeria. The PFC shall immediately advise the PFA upon receipt of value of contributions. Upon receipt of notification from the PFC, the PFA

shall immediately notify the micro pension contributor. Charges PFAs shall charge a maximum administration fees of eighty naira (N80) for contributions of four thousand naira (N4, 000.00) and above while a maximum administration fees of twenty naira (N20) shall be charged on RSAs for contributions below the sum of four thousand naira (N4,000.00). There shall be no additional charges/costs other than what is specified in these guidelines. The narration of the standing order shall include the contributor’s PIN. In all cases the narration of the transfer shall include the contributor’s PIN. Contributions received from political office holders and those on tenured employments other than those on contract appointments shall be treated in line with the Guidelines on Voluntary Contributions issued by the Commission. Investment Contributions under Micro Pension Plan shall be managed as one fund known as the Micro Pension Fund (MPF). The investment of the Fund shall be treated in line with the Regulation on Investment of Pension Fund Assets issued by the Commission. Management fees shall be in accordance with the Regulation on Fees Structure issued by the Commission. Benefits The participation of the informal sector in the Contributory Pension Scheme as provided by Section 2(3) of the PRA 2014 is primarily to provide for retirement benefits. Withdrawals/accessing benefits shall be two types reflecting the flexibility incorporated in the treatment of the contributions. The Micro Pension Contributor shall be eligible to access the portion of his/her contribution available for

withdrawal 3 months after making the initial contribution. Subsequently, the Micro Pension Contributor can only make withdrawals once in a week from the balance of the contingent portion of the RSA. Contributor may withdraw the total balance of the contingent portion of his/her RSA including all accrued investment income thereto. The Micro Pension Contributor may choose to convert the contingent portion of the contributions to the retirement benefits portion at the end of every year. The timeframe for processing and payment of contingent withdrawals shall not exceed two working days. Payment shall be made only to the Micro Pension Contributor’s designated bank account. The PFA shall approve and pay all requests for contingent withdrawals. The PFA shall notify the Commission of all payments made monthly. Contingent withdrawals shall be subject to applicable tax laws in accordance with the provisions of Section 10(4) of the PRA 2014. At retirement, the Micro Pension Contributor has the option of transferring part/all of his outstanding balance on the contingent portion to his retirement benefits portion. The Micro Pension Contributor shall be eligible to access pensions upon retirement and attaining the age of 50 years or on health grounds in accordance with the Regulation for the Administration of Retirement and Terminal Benefits. The Micro Pension Contributor shall be required to fill a Standard Retirement Notification Form at retirement. The PFA shall inform Micro Pension retiree on the various options of accessing retirement benefits. The Micro Pension retiree shall decide on the mode of accessing retirement benefits either through the Programmed Withdrawal or the Life Annuity.

Deceased/Missing Persons The processing of deceased/ missing person’s benefits under Micro Pension Plan shall be in line with the Regulations for the Administration of Retirement and Terminal Benefits issued by the Commission. Conversion Conversion from Micro Pension Plan to Mandatory Contribution: the Micro Pension Contributor shall be eligible to participate under Section 2(1) of the Pension Reform Act, 2014 where he/she secures employment in the formal sector with an organization that has three (3) or more employees. The Micro Pension Contributor shall formally request for conversion, attaching all necessary documents specified in the Guidelines for the Registration of Contributors/Members issued by the Commission. The micro pension contributor shall retain his/her existing RSA. Micro pension contributor may withdraw the total balance of the Contingent portion of his/her RSA prior to conversion.Where the Micro Pension Contributor chooses not to withdraw the contingent portion, the balance of his/her contingent portion shall be merged with the retirement benefits portion of his/her RSA prior to conversion. At conversion, the PFA shall move the Micro Pension Contributor’s RSA balance to the appropriate fund under the Multi-fund Structure. Where an eligible Contributor fails/ refuses to request for conversion to the mandatory contribution after one (1) month of receiving remittance from his/her new employer, the PFA shall automatically change the status of the contributor upon receiving the second remittance. The PFA shall notify the employer of the status of the RSA of the contributor. The PFA shall forward monthly returns on conversion to the Commission. Conversion from Mandatory Contribution to Micro Pension Plan Participants in mandatory contribution shall not be allowed to convert to Micro Pension Plan.

44 BUSINESS DAY NEWS ‘Alternative building technologies, materials could save first time buyers money’ CHUKA UROKO

igeria is said to be the second most expensive housing market in African after Angola and, besides access to finance, legal processes surrounding property and land procurement, unavailability of affordable high quality building materials coupled with conventional building method is a major reason. These have made house prices too expensive and unaffordable, especially for first time homebuyers. But experts are of the view that harnessing and integrating alternative building technologies and building materials could reduce the cost of building houses and save money for first-time homebuyers. “Building houses are highly capital intensive projects and a bulk of this capital is gulped up in procuring building materials, which

alone have been estimated to constitute 60 percent of the cost of constructing a building,” Danladi Matawal, DG/ClEO, Nigerian Building and Roads Research Institute (NBRRI), says. As it is in Nigeria where the average cost of 2-bedroom apartment on Lagos Island sells for N40 million, house prices are also very expensive in UK. According to Propertywire, an online residential property portal, “on average across the UK, a residential detached house costs £1,230 per square metre to construct. That’s £82,394 for the average UK house of 67.8 square meters but once you allow for external works at another 20 percent, a 15 percent risk allowance, and a builders fee of 10 percent, the cost rises to £126,592” (about N51m). But it is believed that with modular homes, which are built with cheaper and alternative building materials,

house prices will drop considerably. Comfortable Living, which builds and delivers modular homes, points out that it can supply a property for 20 percent below this cost, resulting in a saving of £25,318 (about N11m) for the average buyer. This is why Matawal stresses that Nigeria has to opt alternative ways of building in order to reduce the cost of buying houses. According to him, besides the cost implications of undertaking high volumes of construction projects, there is also the sustainability issue, hence the need to consider alternative building materials and technologies that would be substitutes or complementary to conventional building materials. He listed conventional building materials as concrete, steel, glass, timber, etc, which take a lot of time to produced, cure and assemble and may pose a time challenge. These could be

replaced with basic alternative materials which are predominantly traditional such as thatch, mud/clay, laterite, gravel, straw, azara and raffia palm that have been in local production from historic times. The United Nations Agency on Human Settlement (UN-HABITAT), many years ago, made its declaration on housing deficit in Nigeria, which it estimated at 17 million units. The figure has remained static as if the country is a stagnant society where there is neither increase nor decrease. NBRRI has, however, faulted this, saying the figure is no longer tenable because, if anything, the population of the country has shifted. Quoting findings by Worldometer, 2017, the institute notes that from 2012 to date, Nigeria’s population has increased from 168,240,403 to 191,835,936, which is 23,595,533 additional people.

L-R: OlaotanTowry-Coker, founder of Cranium One; Lehle Balde, financial inclusion anchor, BussinessDay; Uche Uzoebo, head of merchant banking and financial inclusion at Diamond Bank; Modupe Ladipo, managing partner of Prospera Consulting and a financial inclusion expert, and Funke Shonekan of the Chris Ogunbanjo Foundation, at the Financial Inclusion and the next generation held at the in Lagos, recently.

Boost for water transportation as Lagos opens new ferry terminal JOSHUA BASSEY

agos is seeking to further strengthen its intermodal transportation system with the completion of yet another ferry terminal and access road in IlajeBariga area of the state. Ade Akinsanya, commissioner for works and infrastructure, said the ferry terminal and the upgraded road, which are ready for commissioning mid-November, would further scale up the integrated transportation initiative of the government, aimed at achieving seamless connectivity within the commercial city. Nearly all parts of Lagos are reachable through the

lagoon and the state government is trying to take advantage of the water for public transportation in what is expected to reduce pressure of road infrastructure and address the issue of congestion. In this regard, the government is building ferry jetties, rail system to connect roads such that commuters can choose any of the three for a seamless movement. Giving details, Akinsanya said: “The terminal is situated at the tail end of the upgraded Ilaje Road which provides access to the terminal from Akoka Road, facing the lagoon front of the Third Mainland Bridge. “The state-of-the-art terminal sitting on a reclaimed land area of over

2000 square meter has a parking facility that will accommodate no fewer than 150 cars and ample space for park and ride buses for those that will want to park their cars to get to their various destinations through the terminal by ferry.” According to Adesanya, ferry services will be provided from the terminal to connect other existing terminals such as Ipakodo and Badore in Ikorodu axis, Badore in Ajah axis, recently commissioned Five Cowrie Creek Terminal in Falomo, Marina Terminal, among others. He said the Ilaje terminal, in addition to a welllit surrounding, had been designed with other com-

plementary facilities such as ticketing office, passengers seating area, restaurant, mini mart, shops, toilets, seat-out area for relaxation, boat yard as well as security watch towers. On the road, he said the newly upgraded 1.1km Ilaje Road with carriageway and width of 8meters, is equipped with a bicycle lane, street lights as well as covered side drains which serves as walk way. “Transportation in Lagos is predominantly roadbased and it is pertinent to state that the administration of Governor Ambode has made concerted efforts to reduce the pressure on the roads with the aim of promoting an integrated transportation system.

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Monday 29 October 2018

Explainer

How poor storage of Oxytocin risks women’s lives at childbirth CALEB OJEWALE

hen a woman goes into labour, the World Health Organisation (WHO) recommends certain dosage of Uteritonics be administered before, during, and after delivery. In Nigeria, Oxytocin is often used for this purpose. Oxytocin is used to cause contraction of the uterus to start labour, increase the speed of labour, and to stop bleeding following delivery. However, as much as 70 percent of this important drug (in maternal mortality) is substandard in Nigeria. This is at least according to a study by the National Agency for Food and Drug Administration and Control (NAFDAC) and the United States Pharmacopeia (USP). Yet, Nigeria’s maternal mortality rate remains one of the highest in the world, with 58,000 women estimated to have died at childbirth in 2015. In Nigeria, it appears there are quality issues, arising not just possibly from manufacturers, but also in handling and storage of Oxytocin. According to Moji Adeyeye, director general, NAFDAC, “About 70 percent of the Oxytocin in the market or in the hospitals have degraded because of climatic condition in storage.” The lack of proper storage appears to be responsible for the high level of substandard Oxytocins in the Nigeria. Many health facilities and even medical practitioners appear to be oblivious to the fact that Oxytocin should be stored in a cold chain. “They think that it can be put in room temperature and it is okay. No, there has to be cold chain storage,” said Adeyeye, emphasising the need for enlightenment of medical workers that have to handle the drug (and even others). Fiona Theunissen, program manager for maternal health at Concept Foundation, corroborated this, saying the widespread belief that Oxytocin does not need to be kept in the cold chain is false.

In Nigeria for example and a number of other countries, Oxytocin is procured from manufacturers that have labelled the product store at room temperature or store at twenty degrees, store under thirty degrees. However, Theunissen stressed, “The WHO does not recognise this labelling as being correct for Oxytocin.” The misconception that the product can be left on the shelves implies there is a very good chance that it is not going to work as efficiently as it should. When this happens without the medical team being able to control bleeding and other complications that may arise, expectant mothers could end up losing their lives. The quality issues arising mostly from storage were also found in another study on Oxytocins in the Nigerian market; assessing the clinical experiences of healthcare providers. Led by Chioma Ejekam, a public health physician, who works in the department of community health, Lagos University Teaching Hospital (LUTH), some of the key findings indicated, health workers frequently experienced use of ineffective brands of Oxytocin and nothing is being done about it. Ejekam explained that one major problem with Oxytocin is degradation, especially cold storage practices in the supply chain and even the health facilities. According to her, a lot healthcare providers did not know the proper storage should be at cold chain temperature (which is +2°C to +8°C). It is possible that this poor management had translated to poor storage practices. An important finding according to Ejekam is that, even when they have experienced ineffectiveness of Oxytocin, it is never discussed, and it is not documented. As much as four times the recommended doses may be administered when a woman goes into labour. When this still does not work, things could get worse and going by statistics, in over 50,000 cases, leads to death.

Monday 29 October 2018

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BUSINESS DAY

46 BUSINESS DAY NEWS Beer wars: NB, Guinness lose ground to... Continued from page 1

drop in cost of sales and admin

expenses resulting in a N3.87 billion loss from operating activities in the third quarter. Even though the company recorded a N3.65 billion loss for the quarter, Nigerian Breweries’ profit for the first nine months of 2018 remain positive at N14.8 billion. However, this is 62 percent lower than the N24 billion profit made in the same period of 2017. Based on the third quarter results, analysts project that Nigerian Breweries will underperform their projections for full year 2018. “Following the results, we expect to see a marked sell-off on the shares and downward revisions to consensus estimates” FBNQuest stated in their notes to clients. However, Uaboi Agbebaku, the Company Secretary and Legal Adviser to Nigerian Breweries Plc, blamed the company’s performance on “the new excise duty regime which came into effect in June and the consequent effect of it, which adversely impacted the Third Quarter results”. Agbebaku added that the company

also undertook a rightsizing exercise which resulted in a substantial oneoff cost during the quarter.” Nigerian Breweries reportedly laid off about 200 of their staff, another sign of the new realities in the country’s increasingly competitive beer market. The country’s other beer giant, Guinness Nigeria Plc also released its result for the first quarter of its 2019 financial year on October 26 also showing that it is losing ground to cheaper brands, as weakening spending power forces Nigerian beer consumers to opt for lower priced brands. “Sales declined by -6% year on year to N28.1 billion. Profit before tax (PBT) surprised negatively (by c. -50%) relative to our forecast. PBT also tracks well behind consensus 2018 estimated forecast of N12.5 billion. In addition to the slow-down in unit volume growth arising from the squeeze in household wallets, increased competition, price discounting and an increase in the excise duty regime are some of the headwinds exerting pressure on sales and earnings” analysts at FBNQuest observed in their

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notes to clients. The demand is weak and competition is high and when this occurs, everybody is struggling for market share. International Breweries is gradually-through market penetrating products- taking market share away from Nigerian Breweries, according to Christian Orajekwe, equity research analyst at Cordros Capital. “Companies are operating in a high inflation environment. With the dollar stable, importers are back to the market, causing a supply glut. More worrisome is the influx of cheap and substandard goods through our porous borders, which further exacerbate the anaemic position of major players in the industry,” said Christian Orajekwe, equity research analyst at Cordros Capital. The Nigeria beer market wars heated up in April, when Anheuser-Busch InBev (AB InBev), the world’s largest beer maker launched its premium brand, Budweiser into the market to competeinthepremiumsegmentwith already established premium brands like Heineken and Guinness Stout. Even though Renaissance Capital’s consumer goods and retail analyst Adedayo Ayeni had seen the en-

trance of AB InBev as a major threat to the dominance of especially Nigerian Breweries in the market, the management of Nigerian Breweries had expressed optimism that they would be able to withstand the competition. Jordi Borrut Bel, CEO of Nigeria Breweries (NB) said the company is used to competition as Nigeria has always been a very competitive market in thepastwithNBfacingtwostrongcompetitors like Diageo and SAB and AB Inbev stepping into the market through SAB adds to that competitiveness. “In 2018 we expect the operating environment to remain challenging, although we remain confident that we have the right strategy, people, operations and brands to keep delivering value for our stakeholders and we are well placed to capture value when the economy recovers,” Borrut Bel said during the company’s conference call in April monitored by BusinessDay. Nigeria is the second largest beer market in Africa and consumes some 16 million hectolitres of beer a year, about half as much as in South Africa, the continent’s biggest beer market. The country’s per capita beer consumption is about 10 litres a year, compared to a global average of 35-40 litres, according to Morgan Stanley. Nigerian Breweries and Guinness have largely dominated the market until the recent expansion push by SAB Miller, which first came into Nigeria in 2009 when it acquired Port Harcourt-based Pabod Breweries, makers of Grand lager beer, and Ilesa-based International Breweries, makers of Trophy lager. In 2012, SABMiller established a $100 million brewery in Onitsha, which makes the Hero lager brand. Hero and

Monday 29 October 2018

Trophy are low priced beer brands. AB InBev, the world’s largest brewer, acquired SABMiller, South Africa’s largest brewer, in 2016 and is using its financial muscle to push the company’s brands in the Nigerian market. In April, the company launched a newly-completed $250 million 2.0mn hectolitres greenfield beer factory in Sagamu, Ogun State, with plan to consolidate its assets and list the three subsidiary firms (International Breweries, SAB Miller, Pabod) as one entity on the Nigerian Stock Exchange (NSE). Speaking at the launch of the plant, head of Ab Inbev’s Africa operations, Ricardo Tadeu, said that a new plant became necessary in order to address supply constraints that had limited sales of the company’s products to areas close to existing plants. Tadeu noted that 70 percent of the company’s raw materials such as cassava, millet and sorghum, as well as packaging materials are sourced locally. A report published in December 2017 by BusinessDay Research and Intelligence Unit (BRIU) titled “The Nigeria Brewery Industry Snapshot”, noted that the industry has revealed a somewhat zero-sum scenario in the last five years. According to BRIU analysis, NB shed three percentage points as its market share declined from 71.5 per cent in 2016 to 68.5 per cent in 2017, suggesting a waning position as the undisputed industry leader. Guinness Nigeria’s market share was 25 per cent in 2017 compared to 23.2 per cent in 2016, while that of AB InBev’s International Brewery stood at 6.5 per cent, up 1.2 percentage points increase relative to 2016.

Nigeria gets a record 79 presidential... Continued from page 2

L-R : Ifeanyi Agwu; CEO, BKG Exhibitions; Jelani Aliyu, DG, National Automotive Design and Development Council, and Abiona Babarinde, GM, marketing and corporate communications, Coscharis Group, at the official unveiling of the All New Ford EcoSport by Coscharis Motors during the Abuja Motor Fair in Abuja.

NERC outlines conditions for electricity... Continued from page 1

electricity and they are based on

losses and hidden costs, it is difficult to review the tariff appropriately. But if the hidden costs are identified and technical losses reduced and also the loans put into the business are factored in, all these make clear what it costs to produce one kilowatt of electricity” Momoh said. “Despite the constraints involved, it is then you simply say this is the cost per kilowatt hour. Based on this, the tariff can be reviewed either upwards or downwards if more people are paying bills.” The objective of this perquisite calculation is to put the agency in

the best position to say what could be called cost reflective tariff. With this, NERC can go further to discuss with stakeholders, with the intention of making them to buy into the new tariff. All these factors mentioned above determine the electricity tariff. This ensures there is a regulator that answers questions about reliability and sustainability of power. Momoh stated that NERC is committed to making sure the country takes the responsibility of making power available to its citizens 24 hours a day. To achieve this, NERC he said it will work tirelessly to provide policies and also enforce them and enable the objective for which the policies

Only 20 per cent of women are employed... Continued from page 2

the sector to support improved healthcare, education and entrepreneurial opportunities. “Women are game changers in the economic sphere. Therefore, human resource directors ought to develop gender policies and strategies to mainstream women in their various organisations. This way, we are taking giant steps to ensure that the Sustainable Development

Goals (SDGs) 5 can be achieved.” Basil Jones, Gender Programme and Policy Coordinator in the Bank’s Gender, Women and Civil Society Department, said to attendees. The seminar which held at the bank’s headquarters in Abidjan, reflects its commitment to strengthen its engagement with partner institutions to achieve gender equality in delivering the

are made to be actualised. “Nigeria cannot be in darkness, but to turn things around is a big challenge and these challenges have been there before now. However, we are there to make a difference. This difference is the call to order of the management of NERC every day” Momoh insisted. He said in attempt to make things work better, the agency has made provision for meter franchising through the creation of meter asset providers, which will enable customers access meters faster. It is also for this reason that eligible customer regulation was put in place, so that consumers can have alternative sources of supply, which could be solar, wind or hydro. high five on “Light up and Power Africa,” in its Regional Member Countries. The bank collaborated with the Agence Francaise De Development (AFD) and Association of Power Utilities of Africa (APUA) to provide an over $10 million grant for a three-year project to set up ANCEE. The aim of the project is to improve performance in the electricity sector and intensify regional trade by strengthening governance, technical and managerial skills.

Chris Okotie, Fresh Democratic Party (FDP), Kingsley Moughalu, Young People’s Party(YPP), Usman Muhammad, Labour Party(LP), Obadiah Mailafia, African Democratic Congress (ADC) Hamza Almustapha, Peoples Redemption Party(PRP), Hamisu San-Turaki, Mega Party of Nigeria. However, their chances to pose a major challenge in the elections are slim because they lack the financial muscle and do not have the national spread to compete effectively, political observers say. Furthermore, 1,803 candidates have been fielded for Senate elections, while 4,548 are nominated for the House of Representatives. According to the INEC Chairman, the submission of names of candidates for the Governorship and State Houses of Assembly elections is ongoing and will end on November 2, while particulars of such candidates will be published one week after, at the commission’s offices in all the states and constituencies. On the preparedness of the INEC 112 days to the general elections, Yakubu disclosed that the commission will take delivery of smart card readers, sensitive materials; ballot boxes, voting cubicles, permanent voter cards and other components for the enhancement of the smart card readers in the first week of December, as the contract was awarded while the passage of the budget was being awaited. He also revealed that electronic voting would not be possible in 2019 because of the time frame, even though INEC would implement many of the provisions of the Electoral bill recently passed by the National Assembly, if signed into law by President Buhari. The INEC chairman affirmed that, “many of the new provisions in the

bill passed by the National Assembly were actually part of the recommendations from the commission. In our discussion with the National Assembly, we have been privy to some of the provisions in the draft bills and we took proactive steps. “We took some of the bill provisions and assumed a position if eventually these provisions are passed. “Most of the provisions in the bill are things that we can immediately implement but there are provisions that we cannot implement simply because of time. For instance, full blown electronic voting is impossible to implement. “As for the procurement processes, we have already initiated action. We have been consistent with the Public Procurement Act and awarded the contract for the procurement that we needed to make, basically the sensitive materials, ballot boxes, smart card readers, the permanent voter cards, cubicles and components for the enhancement of the smart card reader. “Our hope is that by the first week of December, all these components will be delivered to the commission”, he said. Yakubu said as part of the ongoing preparations for the 2019 general elections, the register of voters in each polling unit would be displayed at the polling units nationwide for week from November 6 - 12 for claims and objections by citizens in accordance with the provision of Section 20 of the Electoral Act 2010(as amended). He also announced that INEC would conduct bye elections into Toro Federal Constituency of Bauchi State, Kankia/Kusada/Ingawa Federal Constituency of Katsina State, following the election of the former holders of the seats into Senate in August, and in Ikom II State Constituency of Cross River State, due to the death of the occupant on November 17.

Monday 29 October 2018

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BUSINESS DAY

AbujaCityBusiness

Comprehensive coverage of Nation’s capital

Presidential Panel decries N1.8bn lease agreement payment in Abuja JAMES KWEN, Abuja

hairman, Special Presidential Investigation Panel for Recovery of Public Property, Okoi Obono-Obla has declared the paltry payment of N1.8 billion for lease agreement in the Federal Capital Territory (FCT). Obono- Obla said, out of the over 300 beneficiaries of mass housing land in the FCT, only 64 developers have completed and signed lease agreement, while a whopping 79% have failed to comply with statutory requirements and payments. He also said, mass housing developers in the FCT who failed to comply with the statutory requirements for their development or defaulted in payments would soon face the long arm of the law. The Chairman, Special Presidential Investigation Panel for Recovery of Public Property who gave this indication Thursday during a working visit on the FCT Administration, revealed that the action was sequel to intelligence reports and petitions received by the Panel from concerned stakeholders. Obono-Obla expressed concern over reports of fraudulent leasing of land for mass housing development by initial beneficiaries as well as cases of non-payment of rates and fees amounting to billions of Naira, adding that reports of Civil Servants who were al-

leged to be complicit in these fraudulent deals that robbed government of billions of naira will also come under scrutiny. He explained that the panel was constituted in August 2017 by the Federal Government of Nigeria, pursuant to the Recovery of Public Property (Special Provisions) Act, CAP R4, LFN, 2004, with a mandate to investigate the assets of private persons and public officers perceived to have engaged in corrupt practices, or in anyway breached the provision of the Code of Conduct. Responding, the FCT Minister, Muhammad Bello stressed that it was good that the panel has zeroed on land

administration and by extension, mass housing, with respect to investigating what has gone wrong as well as moving to recover revenues that have been lost or under collected. Bello stated that FCTA needs every kobo that is due to it, whether uncollected or collected but not remitted, to make funds available for infrastructure development of the FCT, in line with the directive of President Muhammadu Buhari. He said the FCT Administration will help to fast track the work of the panel by making available the FCDA Conference hall because it is contiguous with all the relevant

FCT departments and has all the facilities and ambience that will make the work of the Committee much easier. While underscoring the critical place of infrastructure in the development of any modern city, Bello said, “in line with the focus of Mr. President and indeed his instruction, we have concentrated in trying to complete major infrastructural projects. “The key to Nigeria’s economic development is infrastructure and infrastructure requires massive amount of money. That is why we are very keen in giving you massive support for you to be able to discharge your mandate.”

L-R: Vice President, Huawei Technologies West Africa, Frank Lie; Deputy Managing Director, Huawei Technologies Company Nigeria Limited, Olanrewaju Odekunle; Vice President, Huawei Technologies, Mark Xui; Legal Adviser, office of the SGF, Emmanuel Akissa; Secretary to the Government of the Federation of Nigeria, Boss Mustapha, and Head of Service of the Federation, Winifred Oyo-Ita, during the signing of Memorandum of Understanding on ‘ICT Change programme’ phase II between Federal Government and Huawei Technologies company Nigeria Limited in Abuja. Pic by Kehinde Akintola

Huawei technologies pledges support for development of Nigeria’s ICT industry KEHINDE AKINTOLA, Abuja

ederalGovernment’s plan to development of the Information Communication Technology industry receives a boost as Huawei Technologies pledged support towards achieving the feat. Zhao Linxiang, Commercial Counsellor at the Chinese Embassy, Nigeria, gave the assurance at the ‘Nigeria ICT Talents Development Summit and Huawei ICT competition launch’, held in Abuja, stressed the need to unlock the huge potential in Nigeria as a leading economy in the Continent. “In an era of information explosion, ICT technology has become one of the most decisive instruments to promote the transformation and development of world economy.

“It boosts the development of economy by extracting data from all economic behaviours and restructuring all economic sectors with the principle of information. By this means, ICT technology hurricanes every corner of the world and profits every people embracing it. “I believe, Nigerian people are looking forward to a flourishing ICT industry. Firstly, as a leading-edge industry, ICT sector should be an important part of the plan of national economic diversification, which has been emphasised by senior leaders of this country frequently. It becomes a powerful engine of Nigerian economy. Moreover, a thriving ICT sector is expected to bring Nigerian people millions of job vacancies with relatively high payment, and a more convenient and modern lifestyle.

“With the largest population and economy in Africa, Nigeria possess enormous potential and advantages in developing ICT industry. Now, subject to the shortage of infrastructure and talents, the ICT market is still yet to be developed. “Although, there are more than 237 million GSM users and 94 million mobile internet users in Nigeria, the broadband network only reaches less than one percent Nigerian families. However, thanks to the large population of 200 million and economic strength, ICT industry will necessarily explode to prosperity in the near future,” he noted. While speaking on the 2018 Huawei ICT competition in Nigeria, Linxiang provides opportunities for Nigerian students to cultivate and reserve enough ICT talents to cope with ongo-

ing information revolution, just as he pledged Huawei technologies towards “cultivating enterprising young people with the nutrition of proven knowledges and techniques mastered by the Chinese world-leading ICT company.” He added that the collaboration between Huawei and Galaxy Backbone project will improve the efficiency of Nigerian government and the security of data and create more than 20,000 jobs directly and indirectly. “The China-Africa Cooperation Beijing Action Plan mentioned that, China will support Chinese companies in participating in Africa’s infrastructure development by way of investmentsconstruction operation or through other models, with focus on enhancing cooperation on telecommunications industry.

How negative traditional, societal norms threaten Nigeria’s basic education CYNTHIA EGBOBOH, Abuja

igeria’s quest for improved education is constantly being threatened by the various traditions and societal norms embraced by the people. Against this backdrop, there is a constant rise in the number of out-of -school children in the country, as it presently stands at 13.2 million from 10.5 million recorded in 2008. More so, various interventions by the government and other non-governmental bodies to curb this trend has proven unrealistic as the traditions and societal norms of the people prevails much against all interventions. Some of the key interventions of the government to curb the rising concern of out of school children include: adoption of the child rights act by the President Olusegun Obansanjo administration in 2013 and has so far been adopted by 24 states and yet to be adopted in Adamawa state, Bauchi state, Borno state, Enugu state, Gombe state, Kaduna state, Kano state, Katsina state, Kebbi state, Sokoto state, Yobe state and Zamfara state. Also the previous Goodluck Jonathan administration made efforts by introducing the Almajiri schools but it is disheartening to note

that these schools have been abandoned and left unused. However experts have raised concerns that despite all these interventions, negative traditional and societal norms are constantly posing threats to quality education in Nigeria, especially in the Northern part of the country. Azuka Menkiti, UNICEF Education Specialist, at the recent United Nation’s Children Fund (UNICEF) media dialogue titled “promoting equity in education for children”, held in Kano state, highlighted several gaps in the education sector which ranged from tradition and beliefs, gender inequality, status, residence among others. She said that the perceived incompatibility of formal education with the Islam education, contributes largely to the denial of the right to basic education for girls, stressing that some communities believes that formal (western) education corrupts the girl child and makes them incapable of raising children in accordance with the Islamic tradition. According to Menkiti, many female children are often denied education and are given out in marriage at their early age, adding that some people believed that educating a girl child is a waste of resource as they are supposed to be nurtured for marriage.

FCTA, Boundary Commission move to recover FCT borders JAMES KWEN, Abuja

ederal Capital Territory Administration (FCTA) has said it will collaborate with the National Boundary Commission to ensure that all its boundary areas that have been encroached upon are recovered and protected against future abuse. The FCT Minister, Muhammad Bello made this disclosure in Abuja on Tuesday, October 23, 2018, when a delegation from the Commission, led by its Director General (DG), Muhammad Ahmad paid him a working visit. Bello said the FCT Administration will work with the Commission to carry out projects within reasonable costs, to ensure that the boundary areas around the Federal Capital Territory are demarcated with concrete pillars, such that will be visible to even laymen. The Minister indicated that structures that are already sitting on the boundary areas around the territory would be

removed and compensation paid to deserving affected developers. He said the high rate at which the population of the Territory was expending has necessitated that steps must be made quickly to stop further encroachments. Bello decried that the FCTA had in the past unwittingly sited projects in parts of Kogi State around the Abaji boundary areas, which is not part of the Abuja land mass. He also mentioned the Karshi Ara road that extends into Nasarawa State being done by the FCTA, as well as well as parts of the FCT that are already built up that were thought to be Niger State. Bello commended the relationship between the FCTA and the Commission, saying it has enabled the Administration to have a clearer picture of the boundary. He said the FCT Boundary committee has been repositioned with the Permanent Secretary as the Chairman, the Director, Survey and Mapping as the Secretary while respected eminent personalities have also been included.

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Pension assets to rise as PenCom releases guidelines on VPC JOSHUA BASSEY

igeria’s pension assets are expected to rise further as employees in the formal sector now have the opportunity to beef up their pension savings following the release of new guidelines on Voluntary Pension Contributions (VPC) under the Contributory Pension Scheme (CPS) by the National Pension Commission (PenCom). The nation’s assets are currently over N8.14 trillion with over 8 million contributors. A breakdown showed that of the over 8 million registered workers under the scheme, the male participants comprise 5,751,902, while the number of female workers is 2,384,300. Under the new guidelines, contributions by employees in the formal sector shall be non-obligatory. The Pension Reform Act (PRA) 2014 as amended allows employees to make voluntary contributions into their Retirement Savings Account (RSA) in addition to their manda-

tory pension contributions to enhance their retirement benefits. Peter Aghahowa, head of corporate communications of PenCom, in line with the new guidelines released weekend, said the objective was to establish uniform set of rules for the operation of VPC and eligibility criteria for participation in the contributions. According to Aghahowa, the guidelines are meant to provide the procedure for making voluntary pension contributions as well as necessary safeguards and modalities for withdrawals. He noted that another objective of the guidelines was to use voluntary pension contributions for the purpose of enhancing future retirement benefits for active or mandatory contributors. He said the guideline was to encourage retirees under CPS to utilise part or all of the voluntary contributions to augment their existing pension.

Buhari, APC responsible for Nigeria’s economic woes - APC senator OWEDE AGBAJILEKE, Abuja

ranking All Progressives Congress (APC) senator, Buka Abba Ibrahim, has criticised his party and the Muhammadu Buhari-led administration for the present economic woes facing the country. The three-term senator and former governor of Yobe State also took a swipe at his party for blaming previous administration rather than fulfilling its campaign promises. While warning that the North East geopolitical zone may vote against President Buhari’s re-election in the 2019 general elections, the APC senator cautioned that ‘massive rigging’ might not save the party from imminent defeat in the forthcoming polls. The North East comprises of Yobe, Adamawa, Borno, Taraba, Bauchi and Gombe states. Speaking during the Internet Launch of his book ‘Poorlitics’ and 70th birthday celebration in Abuja on Saturday, the elder statesman who is also a founding member of the APC, said:

“When I began this process (of merger), I had in mind that progressives will be in power and will show Nigeria how to run a progressive nation. Without mincing words, as an elder statesman, I must say that my dreams and hopes have been dashed. “We have certainly not done what I dreamed we will do, and in many ways, we are no better than the PDP that we sought to displace. “As we move towards the elections, I have to give a dire warning to the APC. Things are no longer the way they were in 2015 when we road to power on a cloud of euphoria believing that things will change. Simply put, things have not changed and many things are worse and the people are bitter. We should not assume that we can win even with massive rigging. “There are just certain things that progressive parties do, and must be seen to do. We must be seen to obey the rule of law. If the courts rule we must obey. We must respect the separation of powers and let the legislature make its independent decisions.”

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Second edition of NAAA holds in Lagos

ll is set for the second edition of Nigeria Annual Automobile Award (NAAA) designed to recognise companies and individuals in the automobile industry, organised by Autosearch Magazine. According to Ogunyemi Joseph, head of the award screening committee, the award categories have been expanded more than what it was in 2017. These include: automobile Personality of the year, Automobile Friendly Governor of the year, Automobile investor of the year, Automobile truck of the year, Nigeria Automobile Insurance company of the year 2018 and Automobile Governor of the year. Others are Nigeria Automobile tools company of the year; Nigeria Haulage Transporter of the year, Nigeria Passenger Transporter of the year; Nigeria Automobile workshop of the year; Nigeria automobile tyre of the year, Nigeria Car of the year; Nigeria Agricultural Tractor of the year and Nigeria (Tokunbo) engine dealer of the year. The NAAA is slated for November 24, at Villa Angelia Hotel, Victoria Island, Lagos. According to Ifeanyi Obasi, publisher/CEO of Autosearch Magazine, for years, Autosearch Magazine has established a track record of guiding buyers in their choices, offering maintenance advice, and expert vehicle analysis from experienced automobile engineers and editors, which has resulted in significant sales by automobile and logistics companies.

“We provide exciting vehicle news, facts and information on automobile acquisition and maintenance which has made Autosearch Magazine, the no.1 choice for Nigerian automobile enthusiasts. Our solution oriented articles and exciting industry news have captured the minds of our esteemed readers,” Obasi said. Autosearch has offices and representatives in Kano, Abuja, Port Harcourt and Lagos, and has supercharged our circulation in Nigeria. The magazine is now “poised and well positioned to increase the visibility and market share of your products,” he said. Vincent Akhuetie, CEO, said the distribution of the magazine had extended to the National Assembly, major super-markets, airports/industry regulatory bodies and social clubs in Nigeria and Ghana. Some of the issues discussed at the 2017 edition included the development of automobile technology in Nigeria, prospects and challenges; ember months and road safety; how to maintain a commercial vehicle and drive it beyond one million kilometres. Omofonmwan Godwin Osaro, associate professor, Industrial Technology Education, University of Benin; Olusegun Akinyemi of Nigeria road safety, and Godfrey Abein delivered this.

A4 BUSINESS DAY NEWS Nigeria aims to resolve MTN dispute, soothe investor fears - minister REUTERS

igeria is confident of resolving a $10.1 billion dispute with telecoms firm MTN and sending a positive signal to foreign investors worried about the country’s demand for the money, its trade and investment minister told Reuters. Nigeria’s central bank on August 29 ordered the South African firm and its lenders to bring $8.1 billion back into Nigeria that it alleges the company sent abroad in breach of foreign exchange regulations. MTN also faces a $2 billion tax demand from the country’s attorney general. MTN denies any wrongdoing. Okechukwu Enelamah, a former private equity executive, said the government was talking to all parties involved and aiming to resolve the disputes soon to boost investor confidence. “We have had discussions in government and we have engaged MTN. I’m sure that the issue would be resolved,” he said in an interview in the capital Abuja. “We want to deal with it ... in a way that would be responsive to investors.” Enelamah said investors

had welcomed the government’s feedback on the disputes after officials met fund managers on the sidelines of the United Nations summit in New York last month. He declined to give details. The case involving the central bank is due to be heard in a Lagos court on October 30, while a hearing on the tax bill is scheduled at the same court on November 8. MTN’s latest troubles come about two years after it agreed to pay more than $1 billion to settle a dispute over SIM cards in Nigeria, which has one of Africa’s largest economies but has struggled with weak growth and volatile global oil prices. MTN, Africa’s biggest telecoms firm, makes about a third of its annual core profit in Nigeria. Enelamah ran private equity firm African Capital Alliance (ACA) prior to his government role. While he was at ACA, the firm held investments in MTN. Central bank officials this month held talks with MTN and its lenders to discuss the repatriation demand. The bank has said it is looking to resolve the case and has requested information from MTN, which Enelamah said had been provided.

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NAMA restores air services to Osubi airstrip as operator pays N31m debt IFEOMA OKEKE

he Nigerian Airspace Management Agency (NAMA) has restored its services to Osubi airstrip consequent upon the payment of N31 million by Shoreline Oil Services Limited, operator of the airstrip. The N31 million is said to be part payment of accumulated charges for the provision of air traffic services at the airstrip by NAMA. The payment leaves Shoreline Oil Services with a debt balance of N566,422,000.50 as of October 28, 2018. It would be recalled that NAMA took the decision to withdraw air traffic services to Osubi airstrip after Shoreline Oil Services persistently refused to pay financial obligation to NAMA despite several entreaties. However, BusinessDay has earlier reported that the operator had refused to pay because they saw the costs as exorbitant and not justifiable when compared with the services NAMA provides.

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PDP chieftain, Tony Anenih is dead at 85 Army: How Shiites attempted to steal our ammunition

hief Tony Anenih, a former minister of works and chieftain of PDP, is dead. He was aged 85. He died yesterday afternoon at the Cedar Crest Hospital, Abuja, where he had been on admission. Anthony Akhakon “Tony” Anenih, was born August 4, 1933, a Nigerian politician who was appointed minister of works and housing in 1999. He was born in Uzenema-Arue in Uromi. In 1951 he joined the Nigeria Police Force in Benin City. Working at home, he obtained secondary school qualifications, and attended the Ikeja Police College, and was selected for further training in the Bramshill Police College, Basingstoke, England in 1966, and the International Police Academy, Washington DC in 1970. He served as a police orderly to the first Governor General of Nigeria, Nnamdi

Azikiwe. He worked as an instructor in various police colleges, and in 1975 was assigned to the Administrative Staff College (ASCON), Lagos. He retired from the police as a Commissioner of police. In his early political career, he was state chairman of the National Party of Nigeria (NPN) between 1981 and 1983, helping Samuel Ogbemudia become elected as civilian governor of Bendel State. However, the gov-

ernorship was cut short by the military takeover of December 1983. He was national chairman of the Social Democratic Party from 1992 and 1993, when he assisted in the election MKO Abiola as president. He was a member of the Constitutional Conference in 1994. Anenih was a member of the PDM until early April 2002, when he transferred to the PDP. Anenih was said to have masterminded the 26 April 2002 declaration of President Obasanjo at the International Conference center Abuja. He was deputy national coordinator of Olusegun Obasanjo’s campaign Organisation in the 1999 and 2003 elections. Chief Anenih was appointed Minister of Works and Housing in 1999. He subsequently became Chairman of the Board of Trustees of the PDP.

Obasanjo blames ECOWAS leaders for non-establishment of single currency in West Africa RAZAQ AYINLA

ormer President Olusegun Obasanjo of Nigeria has blamed West African leaders who form decision makers in Economic of West African States (ECOWAS) for the non-establishment and implementation of single currency for the West African market to ease economic encumbrance hindering the trade in the West African subregion. Obasanjo, who visited the two former Presidents of Republic of Benin, namely, Nicephore Soglo and Boni Yayi in Cotonou on Wednesday, declared that the lack of single currency has been a major impediments and economic barriers that seriously affects commerce, especially trans-border trade and movement of the traders, saying it was high time ECOWAS leaders worked on

introduction of single currency that for improved economic activities in West African states. He said, “It is our responsibility to call on our leaders in West Africa to come up with our one currency. They have already taken the decision in Togo, the Headquarters of our region, so, what is happening? We should ask them. We should tell them that enough is enough. “I should be able to leave Abeokuta on a Sunday, come to Cotonou and have lunch and return without any hindrance. At Idiroko this morning, I have to submit my passport for entry, but, should this be so? “If colonialism made it so about 50 years ago, should we still continue to do it in this century and age? “The single currency will help to trade better within ourselves. If their are others who does not want us to trade with a single currency,

we should also stop trading into their hands, if they are not ready to support us in his direction.” Speaking on the heinous impacts of the old slavery and slave trade for which the West subjected Africans to before and during colonialism, Obasanjo joined his counterparts in Republic of Benin, Soglo and Yayi to push for the adoption of an annual work free day to celebrate history of slavery and slave trade on the African continent. Obasanjo, who held a parley in Cotonou as follow-up to the conference on peace, security and stability in Africa earlier held in Tokyo, Japan last month, said that the move for the recognition of a day of slavery and slave trade in Africa could best be described as a “passionate move” that should be rigorously pursued in order to avoid the mistakes of the past.

Sekibo canvases poverty reduction through support for SMEs, agriculture HOPE MOSES-ASHIKE

inancial institutions and the three tiers of government have been called upon to support agriculture and small and medium scale businesses to fast track the nation’s quest to move from poverty to prosperity. Ifie Sekibo, managing director, Heritage Bank plc, who made this call says evidence has shown that countries of the world that support Micro, Small and Medium Enterprises (MSMEs) are successful in reducing poverty. Speaking on the sidelines of the just concluded 24th Nigerian Economic Summit, cosponsored by Heritage Bank and tagged “Poverty to Pros-

perity: Making Governance and Institutions work,” Sekibo said more needed to be done by the government and financial institutions in the areas of entrepreneurship because it was an agent of development. According to Sekibo, “We in Heritage Bank have been supporting various small scale businesses especially through our reality show, “The Next Titan,” which is driven by our faith to give young entrepreneurs the opportunity to contribute to the economic growth of the country. “One of our major cardinal point as a bank is supporting micro, small and medium scale businesses and our strong desire to see young men and women succeed

in any area of their business. This will help the society and economy to grow, thereby moving the nation from poverty to prosperity.” Speaking further, he noted: “One of the areas where government and financial institutions can move this nation from poverty to prosperity is through the development of agriculture. “One of the cardinal points to economic growth of the nation is through mechanised farming. Government and financial institutions must do everything they can to support the growth of the sector. We cannot talk about moving from poverty to prosperity without taking Agriculture every seriously in this country.

STELLA ENENCHE, Abuja

he Nigerian Army said its troops, over the weekend, frustrated attempts by members of the Islamic Movement in Nigeria (IMN), to cart away its ammunition and missiles. The Commander of Army Headquarters (AHQ) Garrison, Major General James Myam, made the disclosure in a statement on Sunday in Abuja Myam said the incident occurred at the Zuba Bridge, in the Federal Capital Territory (FCT).

According to Myam, the attempt by the Shiites, apart from resulting in confrontation, also led to the death of three protesters, while two soldiers sustained injuries. In the statement, Myam explained that the troops were escorting the ammunition and missiles to Army Central Ammunition Depot in Kaduna, when they encountered an illegal roadblock erected by the protesting Shiites. “Troops of Army Headquarters Garrison on official duty, escorting ammunitions and missiles from Abuja to Army Central Ammunition Depot in Kaduna State were

attacked by some members of the Islamic Movement in Nigeria (IMN) sect at Zuba bridge, of the Federal Capital Territory (FCT) at about 3.00pm on Saturday 27th October 2018. “They (protesting IMN members) also attempted to overrun the escorts to cart away the ammunition and missiles the troops were escorting,” he said. Besides the roadblock, which disrupted free flow of traffic on the axis, the protesters were said to have pelted troops and other road users with stones and other dangerous objects.

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Analysts question FG’s claim on population growth hindering ERGP implementation MICHEAL ANI

ast week, Nigeria’s acting finance minister, Zainab Ahmed, claimed that the country’s increasing population growth was one of the greatest challenges confronting the successful implementation of the Economic Recovery and Growth Plan (ERGP). According to Ahmad, the Federal Government has been engaging critical stakeholders like traditional and religious leaders to advise their members on child spacing - a measure she said will help curb the country’s escalating population growth. Economic experts and analysts have expressed disagreement over the minister’s statement, saying a high population growth if utilised properly can lead to increase demand, which in turn, will spur growth across all sectors

in the economy. “We do not think the rising population should pose a threat to the growth of the economy, considering the vast amount of natural and mineral resources the country is endowed with, majority of which are still untapped,” analysts at CSL Stockbrokers, a subsidiary of First City Monument Bank Group, said. “In fact, a growing population provides a nation with robust human capital needed for productive purposes as well as a large market for goods and services produced. However, where it is not harnessed or utilised effectively, as is the case of Nigeria, it becomes detrimental to the growth and development of the nation,” the stock broking firm said. Nigeria’s population is estimated at 198 million, according to data from the National Bureau of Statistics (NBS), putting Africa’s larg-

est oil producer on the seventh spot on the global ranking, behind China (1.5bn), India (1.4bn), USA (327m), Indonesia (277m), Brazil (211m) and Pakistan (201m), who sits on the first to sixth positions, respectively. It is inconceivable that Nigeria has now taken over as the nation with the highest number of extremely poor people, despite having a lower population (198m) relative to that of India (1.324bn people). With an annual population growth rate of 2.6 percent, total fertility rate (the average number of children per woman over the course of her lifetime) in Nigeria stands at 5.8 births per woman. The United Nations predicts that the country’s population could reach 410 million by 2050, which will make the country the third most populated in the world after China and India. “Nigeria’s teeming population in itself is not the chal-

lenge; rather, the primary problem is that the country’s infrastructural development, food production and economic growth rate are not catching up with its population,” CSL said in an October 24 note to clients. Ayodeji Ebo, MD, Afrinvest Securities Limited, said, “As long as our economic growth rate continues to lag the population growth, development will be hampered because the available resource is pressured.” The World Bank knowing the importance of investing in human capital development (education and health) as a means of improving the lives of its younger generations, approved seven projects to support Nigeria’s investment in nutrition, access to electricity, states’ fiscal transparency, polio eradication, women’s economic empowerment, public finance and national statistics and reducing vulnerability to soil erosion.

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NCC, UK government to partner on digital inclusion, bridge access gaps JUMOKE AKIYODE LAWANSON

n what is seen as a major step towards bridging access gaps in the country, the Nigerian Communications Commission (NCC) and the Government of the United Kingdom (UK) have agreed to collaborate on digital inclusion, cyber security and capacity building. This was disclosed at the weekend by Umar Garba Danbatta, executive vice chairman/CEO of NCC shortly after a meeting with Alessandra Lustrati, senior private sector development adviser and head, digital inclusion at Department of Foreign and International Development (DFID) led highpowered delegation from the UK, who paid him a courtesy visit in Abuja. “This delegation is here to explore how the UK government can channel a significant intervention to

the tune of £1.2 billion to create wealth and posterity in selected countries around the world. And this creation of posterity will leverage on the power of ICT to provide access to unserved and underserved areas in the country. The intervention is also on cyber security and capacity building, three key areas,” Lustrati said. Earlier, Danbatta had told the delegation that there were 200 access gaps in Nigeria and the Commission was looking at different rural technology solutions to plug them in 2 years, as against the 20 years projected. “With the right rural technology solution, we can do it faster, because at the rate we are plugging the gaps, it will take us about 20 years to conclude. These gaps deprive 40 million Nigerians of access to telecommunications services, out of 190 million.

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A10 BUSINESS DAY NEWS ‘Why I was chosen to serve my community’ INIOBONG IWOK

ewly chosen Eze of Dim Ihejiofor Au t o n o m o u s Community in Oru Local Government Area of Imo State, Goodluck Obi, says his track record of humanitarian service and years of contributing to the development of his community endeared him to the people. Eze Goodluck Obi, who was officially presented has the Eze-elect of the Autonomous Community to the council chairman, Ogbuehi Udemba Obi, has their first Eze-elect in an elaborate ceremony at the local government headquarters at Mgbidi. The presentation was held in a colourful atmosphere and attracted members of the Eze in council, the community development association, youth’s groups, women, and the elderly and traditional dancers. President-general of the Autonomous community,

Eugene Enwerem, urged the council chairman that the Community had agreed to choose Prince Obi as their monarch, stressing that the community choose Obi based on his track record of humanitarian services and exemplary leadership. Enwerem further stated that the community had the belief that reign would bring good development, more progress and put the community in the limelight than other communities in Imo state. “I hereby present Prince Goodluck, our Eze- elect to you for your blessing”. Responding, the Council chairman, congratulated the Autonomous community and the Eze-elect promising to always keep in touch with the community through Prince Obi anytime the need arises. The Dim Ubulu Ihejiofor Autonomous community was carved out from Etiti Ubulu and Autonomous community in Oru West in 2017 since the community had been pushing the process and proce-

dure to have a monarch. The procedure includes a visitation by the chairman Imo House of Assembly committee on Autonomous Community and chieftaincy affairs, Hon Arthur Egwim and his members to the community in October 2017, followed with the appearance of the community leaders and the Eze-elect before the House of Assembly on 18th. This was preceded by a long process of choosing the Eze-elect, during which he emerged unopposed after several other nominees withdrew in favour of Obi. During the visitation of the committee members to ascertain the people’s claim and confirmed the geography and topography of the place. And the present of infrastructures such as; primary and secondary schools, football field, market, churches pipe- borne water, among other requisites for the recognition of an Autonomous community and the emergence of Obi.

Chief Emeka Ilozurike, secretary of the autonomous community (m), presenting Goodluck Obi (r), to the executive chairman of Oru Local Government Area, Ogbuehi Udemba Obi.

Stakeholders task CBN, banks to do more in driving financial inclusion BUNMI BAILEY

takeholders at an event hosted by the Chris Ogunbanjo Foundation and Cranium One called on the Central Bank of Nigeria (CBN) and banks to intensify effort towards deepening financial inclusion in Nigeria. The event, themed “Financial inclusion and the next generation,” discussed the importance of financial inclusion and the benefits of adopting it as individuals and an organisation. Modupe Ladipo, a managing partner, Prospera Consulting and a financial inclusion expert, suggested ways that could bridge the

gap of financial inclusion in Nigeria. “Nigerian banks should research on the needs of their customers, regulate their policies and requirements to accommodate all citizens and help them understand the benefits of saving their money in banks. “Some of these factors that have caused some many Nigerian adults to be financially excluded are a high level of illiteracy among Nigerian adults, distance of banks from prospective customers, unemployment, fear of inaccessibility of funds in case of emergencies, gender gap and bank charges,” Ladipo said. The event, attended by the family foundations,

financial institutions, next generation, nongovernmental organisation and the social sector, was anchored by Olaotan Towry-Coker, the Foundation’s head of private enterprise and founder of Cranium One. Nigeria lagged behind its peers in terms of financial inclusion. According to the World Bank Fintech Database 2017, financial inclusion in the country declined in the last four years to 39.4 percent in 2017 from 44.2 percent in 2014 while SSA countries on average gained across the region as the number of bankable people increased to 42.6 percent in 2017 from 34.2 percent in 2014.

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A’Ibom to renovate Wellington Bassey barracks ANIEFIOK UDONQUAK, Uyo

kwa Ibom State government has disclosed plans to renovate the residential quarters of the Wellington Bassey Barracks in Ibagwa, Abak local government area, of the state. Governor Udom Emmanuel who was led on a tour of the facilities by the commander 2 Brigade, Brigadier General Abdu Hassan in company of some of his cabinet members, said his coming was to fulfil the promise he had made at an earlier visit; to commit N200 million into upgrading the residential quarters at the barracks. The governor said he was moved by the living condition of the men and women who are saddled with the responsibilities of defending the nation and particularly with those of wives and children who have to grow up in that kind of environment. Governor Emmanuel who described the army as “partners in progress”, acknowledged the contribution of the soldiers at the barracks to the maintenance of peace and the security of lives and properties in the state; adding that in the circumstance, there was need for collaboration. “Our intention is borne out of concern for the residents of the barracks especially women and children. The fund for the project has been budgeted for. Give us a month or two and we’ll see what we can do,” Udom said. It would be recalled that Udom had a fortnight ago, during a courtesy call by GOC 6 Division, Major General Jamil Sarham, stated his readiness to redeem his earlier pledge to commit N200 million to the renovation of facilities at the barracks.

Man bags 10 years for armed robbery

27-year-old man, Jeremiah Dogo has been sentenced to 20 years imprisonment by an FCT High Court for armed robbery. Justice Peter Kekemeke, who sentenced Dogo, said the prosecution proved its case beyond reasonable doubt. Kekemeke said that the evidence of a single witness believed by the court could establish a criminal case even if it was a capital offence. “The prosecution has proved beyond reasonable doubt that the confessional statements were not made as a result of oppression. “It is therefore my humble view, and I so hold, that the prosecution has proved its case against the defendant beyond reasonable doubt. “Consequently, the defendant is found guilty as charged and is hereby convicted.” The judge held that human life was precious and that the defendant did not take life and no one was shot. According to him, the world is revolving, the society is dynamic, the community from whom he robbed and the victim may not celebrate if he was sentenced to death. “They will rather want to see that they are not robbed again. In this circumstance, sentencing him to a term of imprisonment can also serve that purpose. “The death sentence prescribed is anachronistic in the intant case and does not conform to the reality of our time, human life is precious. “He has learnt his lessons, he is remorseful, the defendant is sentenced to 10 years imprisonment on the first count, and another 10 years on the second count, to run concurrently from the date of judgment.” The police had charged Dogo to court on a two- count bordering on armed robbery. The prosecution said that Dogo on July 5, 2014, at Gidan Mangoro, Abuja, in company of two others now at large, armed with one AK 47 rifle and other dangerous weapons robbed one William Ishaya of his valuables. NAN

Williams Akporeha (m), national president of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), and his National Administrative Council members (NAC), during a courtesy visit to Maikanti Baru, group managing director of the Nigerian National Petroleum Corporation (NNPC), and his management team at the NNPC Towers in Abuja.

Miners tackle Edo govt over closure of sites IDRIS UMAR MOMOH, Benin

icensed sand burrow pits owners have kicked against the closure of their sites by the Edo State government. In a letter of protest sent to the south-south zonal office of the federal ministry of mines and steel development in Benin, the pits owners, appealed for the intervention and assistance of the Federal Government. Joseph Enaruna, spokesperson of the operators and managing director of Jose Sharp Sand, noted that the closure of their sites have negatively affected their businesses as well as those of their employees. Enaruna argued that the state government acted out of it jurisdiction, as the business of mining is within the purview of the Federal Government. Recall that the state government had on September 11, 2018, announced the closure of 10 illegal burrow pits in Benin with immediate effect, citing health and environmental concerns. The statement signed by Omoua Alonge Oni-Okpaku, the commissioner for environment and sustainability, said the closure was a renewed drive to safeguard the state’s environmental integrity. Enaruna in the protest statement con-

tended that the 1999 constitution of the Federal Republic of Nigeria as amended, prescribes mines and mining activities in the exclusive legislative list. “In line with the provision of the constitution 1, the Nigerian minerals and mining Act, 2007 vested the control and governance of mines and mineral resource development activities in the ministry of mines and steel development. “There is no doubt that the state, local governments and host communities are critical stakeholders in the development of the nation’s mineral resources. It is in recognition of this that the Mining Act prescribed the establishment of the Mineral Resources and Environmental Management Committee (MIREMCO) to serve as interface between the federal, state and local governments for addressing conflicts of interest arising from conduct of mining activities in states of the federation,” he said. He also noted that as a result of the provision of the Nigerian Minerals and Mining Act, 2007 and ancillary regulations, the state government has no jurisdiction in regulating mining activities and such has no power to close down any licensed mining site in the state without recourse to the provision of the act. When contacted, Omua Oni-Okpaku, the commissioner for environment and sutain-

ability, said the closure of the burrow pits was not intended to raise any constitutional question on the control of mining activities as being erroneously believed nor to contest the authority of the federal ministry of mines and steel development to issue license. She added that the temporary closure of the pits was based mainly on environmental concerns. According to her, “Edo State is faced with a number of ecological issues especially gullies. These gullies did not just occur overnight. They are consequences of actions that were taken in time past. Such actions include improper termination of drains, abandoned and over-used burrow pits among others. “These gullies are making a huge chunk of the state’s resources once they start developing. The state government was forced to take this pro-active measure to look at the impact of these activities on the environment and identify those that have become imminent threat. Some burrow pits are located at less than one hundred feet from the road. “The purpose of the temporary closure of the pits is to enable the State government verify that these pits have the proper permit from the federal ministry of mines and steel, development and that they are operating with due regard to the future of our environment,” she added.

Jigawa: Flood destroys 100,000 hectares of rice farms

damu Maigoro, chairman, Rice Farmers Association of Nigeria (RIFAN), Jigawa chapter has disclosed that the recent flooding in the state destroyed over 100,000 hectares of rice farms. Maigoro, who spoke with newsmen in Hadejia area of the state, also said that over 10,000 registered members of the association were affected by the flood. “The 10,000 figures captured only the dry season rice farmers, who were supported with farm inputs earlier in the year. If you are asking about the entire rice farmers affected, the figures will definitely rise up to over 50,000 farmers,” he said. The chairman listed areas hit by the

flood to include; Ringim, Taura, Miga, Jahun, Auyo, Kaugama, Mallam-madori, Hadejia, Guri, Kirikasamma, Gwaram, Buji, Birnin kudu and Kazaure. Maigoro appealed to government at all levels to support the affected farmers who were still struggling to cope with the heavy loss caused by the flood. “Though, government had assisted our members, we are still appealing to them to do more because rice farmers are still battling with the shock of the worst flooding in recent times,” he said. He also expressed concern over the delay in the completion of Hadejia Valley Irrigation Scheme by the Federal Government saying: “The first phase of the project, starting from Auyo to Hadejia,

began 30 years ago but as I speak, it has not been completed. “Phase two of the project is supposed to continue from Hadejia to Yobe. Though, this administration has shown interest in completing the project and even expanded it, there is an urgent need to complete it, if truly government wants to end rice importation. “We are very passionate about this because Jigawa has the potential to meet the entire nation’s rice demand,” Maigoro said. It would be recalled that fewer than 21 persons died in the September flooding, which affected thousands of farmers and washed away over 100,000 hectares of farmlands in Jigawa.

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Ferragamo death marks end of era for Italian business dynasties

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Janet Yellen on Trump, Fed politics and nurturing recovery

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Pittsburgh shooter told police he wanted ‘Jews to die’

Charges against Robert Bowers filed as list of 11, mostly elderly, victims released SAM FLEMING AND KADHIM SHUBBER

he man accused of murdering 11 congregants in a Pittsburgh synagogue told police he wanted “all Jews to die”, authorities alleged on Sunday as the names of those killed in the deadliest attack against Jews on US soil were released by medical examiners. Robert Bowers, a 46-year-old Pittsburgh resident, was apprehended at the scene, and an affidavit filed by Pittsburgh police said Mr Bowers told the officers who apprehended him that he was motivated by “his hatred for Jews”. “Bowers made statements to [police] that he wanted all Jews to die and also that they [Jews] were committing genocide to his people,” the affidavit released on Sunday stated. The shootings have focused attention on rising anti-Semitism and rightwing violence in the US as the country prepares for midterm elections next month. Last week, more than a dozen mail bombs addressed to prominent critics of President Donald Trump were uncovered. Among the targets was George Soros, the Jewish Hungarian-American billionaire, who has been a focus of Republican attacks during the campaign. The president’s opponents have accused him of contributing to the hostile climate with inflammatory rhetoric, a notion Mr Trump’s aides have denounced. Vice-President Mike Pence rebuffed the idea that there is any link between Mr Trump’s words and the acts of violence. He told NBC News that people on both sides of the political aisle were using strong language but that “I just don’t think you can connect it to acts or threats of violence.” On Sunday however Jeh Johnson,

the Homeland Security secretary under Barack Obama, warned of a “toxic environment” being worsened by inflammatory language by political leaders. “This particular president has a particularly large voice and a large microphone, and Americans should demand that their leaders insist on change, a more civil discourse, and a more civil environment generally,” he told ABC News. Jonathan Greenblatt, the chief executive of the Anti-Defamation League, said on NBC his organisation had seen a 57 per cent surge in acts of harassment, vandalism and violence directed at the Jewish community last year. “Whether you’re the president of the United States or the president of a university or the president of your PTA, I would expect leaders to lead,” he said. “We would hope and we should all demand that those in

No ‘white knight’ for banks in no-deal Brexit, EU regulator warns Moves from UK to eurozone cannot simply be ‘letterbox’ relocations, says Elke König

JIM BRUNSDEN

urope’s top official in charge of winding down failed banks has urged the industry to press ahead with preparations for a no-deal Brexit, saying lenders should not expect regulators to help them cope with any upheaval caused by the UK’s departure. Elke König, the head of the eurozone’s Single Resolution Board, told the Financial Times in an interview that banks should not expect any leeway in meeting a key regulatory standard set by the agency. “I’ve told the banks that for now you can’t hope for the white knight to come along so rather look at it, be prepared,” Ms König said. She also warned that any banks moving to the EU to retain access to the bloc’s market could not carry

out “letterbox” relocations and would have to move “real people” — so regulators could effectively take charge of the institutions in times of crisis. “It needs to be an entity within the group where we have an understanding of what, if something goes wrong, will happen, and how do we get control,” she said. Both the EU and the UK have stepped up their general no-deal Brexit preparations as talks on an exit agreement drag on. With an exit agreement, the SRB’s concerns would not immediately arise when Britain leaves — but many matters affecting the financial sector would be left unresolved by a no-deal Brexit. Ms König referred to rules requiring banks to issue a minimum amount of unsecured debt and Continues on page A14

elected office won’t just, you know, give platitudes after the fact. But they will help ratchet back the rhetoric right now.” Mr Trump condemned the attack on the synagogue as “anti-Semitic” and said the “vile hate-filled poison of anti-Semitism” must be confronted. “There must be no tolerance for antiSemitism in America or for any form of religious or racial hatred or prejudice,” he said in a speech in Indianapolis. The charges against Mr Bowers comprised 29 federal counts including using a firearm to commit murder and hate crimes and 36 counts brought by state authorities. Federal prosecutors said they were treating the case as a hate crime rather than domestic terrorism and that, if found guilty, Mr Bowers would face the death penalty. In addition to the 11 fatalities, six people were injured, including four

police officers. Authorities told a news conference the victims ranged in age from 54 to 97, with most of them over 70. They included a married couple in their mid-80s and two brothers in their mid-50s, said Karl Williams, the Allegheny county chief medical examiner. Robert Jones, the special agent in charge of the FBI’s Pittsburgh field office, said victims were found in three areas of the synagogue and that the crime scene would take a week for investigators to fully process. Mr Jones said Mr Bowers used all of the weapons he brought to the synagogue: an AR-15 assault rifle and each of his three Glock .357 handguns. Mr Williams added: “Lots of shots were fired, there were cases everywhere”. Over the weekend Mr Trump told

reporters the perpetrator should face the death penalty and said an armed guard in the synagogue might have stopped the shooter. “Maybe there would have been nobody killed except for him,” he said. “They had a maniac walk in and they didn’t have any protection.” Pittsburgh mayor Bill Peduto, a Democrat, said he disagreed with Mr Trump’s call for religious groups to put armed guards outside places of worship to deal with potential attacks. “We shouldn’t be trying to find ways to minimise the dangers that occur from irrational behaviour,” Mr Peduto said. “The approach we need to be looking at is how we take the guns, which is the common denominator of every mass shooting in America, out of the hands of people who are looking to express hatred through murder.”

Financial conditions tighten as markets tumble Goldman index suggests dimming outlook for US economy JOE RENNISON

he market turmoil of the past month threatens to put the brakes on US economic growth, according to a closely watched measure of financial conditions. Conditions have tightened so sharply in recent weeks, investors are beginning to suggest that the Federal Reserve could limit the number of times it raises interest rates. The S&P 500 has tumbled over 8 per cent since the start of October — on course for its worst monthly performance since February 2009 — raising equity funding costs for companies and sending the Goldman Sachs’ financial conditions index to its highest level since April 2017. Measures of financial conditions typically factor in long-term bond yields, corporate borrowing rates, currency fluctuations and

share prices, and assess how supportive or restrictive they are for the economy. Ian Lyngen, head of US rates strategy at BMO Capital Markets, said that investors were “getting nervous that the sell-off has tightened financial conditions enough that the Fed will struggle to achieve some of its policy goals, such as raising interest rates to their ideal target level.” Investors have begun reducing expectations for future interest rate increases from the Fed. The probability, derived from futures prices, of a 25 basis point rise to the central bank’s target rate in December remains elevated at 69.2 per cent on Friday but has fallen from over 80 per cent earlier this month. They have also reduced expectations of additional interest rate increases in 2019. The Fed tightened interest rates at its last meeting in September, taking its target corridor for fed

funds to between 2 per cent and 2.25 per cent. Analysts and investors highlight that the rise in rates has increased the attractiveness of less risky investments as they now produce a more competitive return. The mood has shifted in financial markets from TINA — “there is no alternative” to risky assets such as stocks — to TIARA, or “there is a real alternative”. “I don’t think it is surprising given the Fed is now tightening that we would start to see a reversal as cash becomes more competitive and people look to take risk off the table,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. “I don’t think the volatility in equities should be surprising.” The Goldman Sachs financial conditions index enjoys particular prominence because it was first designed by William Dudley, the former New York Fed president, nearly 20 years ago.

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NATIONAL NEWS India’s plans on archipelago in Mauritius cause unease

No ‘white knight’ for banks in no-deal Brexit... Continued from page A1

other securities that can be easily written down by regulators if the institution fails. The idea behind the measure is that imposing losses on the holders of the securities helps to repair the bank’s finances. Her board determines how much of these so-called “minimum requirement for own funds and eligible liabilities”, or MREL, a bank needs to issue. The European benchmark is set at 8 per cent of liabilities. If Britain leaves the EU without an exit deal, bank bonds issued under UK law will no longer be eligible as MREL unless banks insert contractual clauses to make clear that the SRB can wipe out the securities. Failing this, banks could issue extra debt to meet their target. According to industry estimates, there is more than €100bn of MREL-eligible bank debt that has been issued under English law by European banks based outside the UK. Ms König said banks should not assume a regulatory solution and should prepare for the worst. “In principle, any issuance under UK and English law . . . will become third country issuance and will not be MREL-eligible unless it has a suitable relevant contractual clause,” she said. She said that while larger banks had been making preparations, the SRB wanted to make sure the industry was fully prepared and that smaller banks were not caught off guard. The SRB is set to publish guidance for banks in the coming weeks. Ms König said that banks relocating to the eurozone in response to Brexit would need to move enough personnel and data systems so the SRB could get access to the information it would need should the lenders get into difficulties. “We are currently in dialogue with the banks, so individual institutions get a checklist of what we expect them to do”, Ms König said, adding that the priority was to make sure that the SRB could successfully intervene if they failed. Ms König said her aim was not to “put a big fence” around the EU. Her comments reflect a broader EU stance that the financial sector itself, rather than public authorities, should lead preparations for a no-deal Brexit. EU officials believe that if they make too many contingencies, it would be tantamount to helping the UK preserve London’s valuable access to the EU single market by the back door. Valdis Dombrovskis, the EU commission vice-president responsible for financial services policy, has downplayed warnings from the Bank of England that vast numbers of derivatives and insurance contracts could be at risk if regulators did not put contingency measures in place before Brexit day. At the same time, Brussels and the ECB have indicated that more targeted steps may be needed to counter threats to some derivatives trading.

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New Delhi to extend runway and build port facilities on Agaléga DAVID PILLING

Deutsche Bank chief attacks manager excuses over bank failures Christian Sewing plays down merger talks as he seeks to reverse lender’s performance STEPHEN MORRIS

eutsche Bank chief executive Christian Sewing upbraided top managers on a call last week, saying that it was ““bullshit” to use speculation about a merger with Commerzbank as an excuse for its poor performance. Mr Sewing, who has seen shares in the German bank drop almost a fifth to a record low since replacing John Cryan as chief executive six months ago, was last week forced to plead with investors for patience as revenues continued to slide. His growing frustration over the bank’s performance was laid clear last week as Mr Sewing rebuked executives for repeatedly asking about a rumoured merger with Commerzbank. According to people on the call, Mr Sewing denied any imminent merger was on the table, adding that he would not enter any discussions while the bank’s valuation was so depressed. Deutsche is valued at little more than a quarter of the book value

of its assets. Mr Sewing, who was hosting the call to discuss the bank’s disappointing third-quarter results last Wednesday, first told an executive from New York there was no deal on the cards and to concentrate on his job, then snapped at a Postbank manager from Bonn when asked about the same topic a second time. The consumer banker told Mr Sewing the rumours were affecting morale and had become very distracting for staff and clients, who were repeatedly asking whether a combination was imminent and how they should prepare for it. Mr Sewing replied that it was “bullshit, bullshit” to use merger speculation as an excuse for not doing their job and not achieving targets with clients, prompting laughter and applause in the room in Frankfurt and among bankers watching webcasts in cities such as London and New York. The bank’s chief executive said he was focused on improving Deutsche’s performance and galvanising revenue growth, rather

than M&A. It did not make sense to think about a deal until Deutsche had its shop in order, he added. After the outburst, the moderator of the call tried to smooth things over and reminded participants “of course, no one can quote Christian on that”. Deutsche declined to comment. Speculation has been building about a Deutsche-Commerzbank tie up over the past year, especially after US private equity group Cerberus revealed minority stakes in both banks and then was hired as an adviser by Mr Sewing. German politicians and European regulators then poured fuel on the fire by voicing concerns about the travails of the country’s two major banks and extolling the virtues of a unified national champion. As a result, most bankers see the megamerger as a question of when, not if, but Deutsche executives have been adamant any M&A will have to wait until they successfully integrate the German retail arm, Postbank, and restructure the ailing investment bank division.

Tech groups step away from Gab network after shooting Accused Pittsburgh gunman posted anti-Semitic threats hours before synagogue attack TIM BRADSHAW

ech companies including PayPal have threatened to withdraw their services from Gab, a social network catering primarily to US conservatives that had been used by the man accused of killing 11 people in a Pittsburgh synagogue. The moves are likely to reopen the debate about the limits of free speech online and the potential for social networks to radicalise users. Gab was launched two years ago by tech entrepreneur Andrew Torba, who became frustrated with what he perceived as a bias against conservative views on California-based social networks such as Facebook and Twitter. His site soon attracted controversial rightwing figures, including Richard Spencer and Alex Jones, who had been suspended or banned from other social networks. Robert Bowers, who has been charged over the shooting at the Tree of Life synagogue in Pittsburgh on Saturday, was among

Gab’s hundreds of thousands of users, the company confirmed on Saturday. Mr Bowers, whose profile on Gab featured images of guns and white supremacist iconography, made anti-Semitic posts and threats on the site just hours before the shooting. “Gab unequivocally disavows and condemns all acts of terrorism and violence,” Gab said in a statement, adding that it had been working with law enforcement agencies after suspending the suspect’s account. However, since Saturday’s shooting, Gab has been accused of not doing enough to prevent free expression from tipping over into hate speech on its site. Online payments companies PayPal and Stripe, as well as hosting provider Joyent, all said they would stop Gab from using their services, citing violations of their terms of services, which do not allow hate speech. Gab slammed the moves as “direct collusion between big tech giants” against it. This weekend is not the first time that Gab has been sharply criticised for the content it hosts.

Last year, after a white supremacist rally in Charlottesville, Virginia, Google removed Gab from Google Play, its mobile app store, claiming it violated its policy on hate speech. In August 2018, Microsoft threatened to remove Gab from its Azure platform over a series of anti-Semitic posts which it said could incite violence, breaching its terms of service. Apple has repeatedly rejected Gab’s app from its App Store, due to its “objectionable content”. The latest suspensions by PayPal and Stripe could deprive Gab of the income it needs to remain functioning, as it scrambles to find alternative hosting services to keep its site online. While much of Gab’s site is free to access, it makes money by charging subscription fees for extra features, such as private groups and disappearing messages. Unlike most other social networks, it does not show advertising. A crowdfunding campaign last year raised $1m. This year, Gab has been looking to raise millions of dollars more through a blockchain-based token offering.

ndia will extend a runway and build port facilities on the Mauritian archipelago of Agaléga in what security experts say is a significant boost for New Delhi in its tussle with China for military influence in the Indian Ocean. Agaléga consists of two sparsely populated islands about 600 miles north of Mauritius, a beach holiday destination that also boasts a huge exclusive economic zone of 2.3m sq km, roughly the size of India’s. The exact nature of construction is shrouded in secrecy. However, Abhijit Singh, a former Indian naval officer and head of the Maritime Policy Initiative at the Observer Research Foundation in Delhi, said the plan was to double the length of the runway to 3,000m and build a jetty as well as a transponder system to identify ships as friend or foe. The runway extension would allow both Mauritius and India to land bigger aircraft, which would give Delhi “better maritime awareness” in that part of the Indian Ocean, said Mr Singh. In written answers to questions from the Financial Times, Pravind Jugnauth, Mauritian prime minister, confirmed that “India would be allowed to utilise the facilities in Agaléga subject to prior notification from the competent authorities of Mauritius”. Afcons, an Indian company, has won the MRs3bn ($87m) contract for the works that would be “fully funded by the government of India on a grant basis” and include “a jetty and an airstrip with associated facilities”, said Mr Jugnauth. “This project is meant to improve the connectivity with mainland Mauritius and also support economic development of Agaléga to the benefit of the people,” he added. Agalega Islands map The planned construction has however provoked opposition among many of the roughly 300 Agalégans, some of whom fear the islands could be ceded to India. In 1965, before Mauritian independence from the UK, London split another archipelago, the Chagos islands, from Mauritius, forcibly relocating the inhabitants and allowing the US to build a military base on Diego Garcia. Many Agalégans fear they could suffer a similar fate. “I and all the people of Agaléga are worried about this project because the Mauritian government is hiding many things,” said Arnaud Poulay, an Agaléga resident contacted by phone. “We are against a military base on Agaléga,” he said. “I am very frightened to be from Agaléga right now.” José Moirt, a lawyer and rights activist, said Agaléga residents could be expelled to make way for a base. “There is clearly a policy in place for them to leave the island,” he said. Mr Jugnauth denied any such threat, saying: “Not only will the people of Agaléga be able to continue living on the island, Mauritian sovereignty will not be affected.” Brahma Chellaney, an Indian expert on security issues, said using Agaléga as a “logistics hub” could help Delhi “sustain naval operations in the south-west Indian Ocean”.

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

K Budget, EU-Arab summit, Apple earnings UK Budget, US data, Apple and Facebook results

he week begins with the last UK Budget before Brexit, which follows hot on the heels of the autumn Conservative party conference when prime minister Theresa May claimed that austerity was coming to an end. In the short term, chancellor Philip Hammond can count on a significant forecast upgrade to the public finances, allowing increased public spending without extra borrowing or higher taxes. But the Budget will not take into account the kind of Brexit the prime minister is able to secure and, regardless of the Brexit process, the bills will still mount in the 2020s. The third EU-Arab World Summit also begins on Monday, when heads of state, government ministers, academics and business leaders meet in Athens for an event that organisers say will “foster interactions between two rapidly changing worlds”. The Banks of England and Japan both set out monetary policy this week, but no rate changes are expected, and the BoE also releases its inflation report. On the economic data front, non-farm payrolls and manufacturing numbers will come into focus in the US as investors gauge the health of the economy and try to determine whether the Federal Reserve will step up interest rate rises. In Europe there are a number of first gross domestic product releases. Earnings wise there are still plenty of third-quarter updates to come. Investors will pay close attention to Apple and Facebook, which both surprised Wall Street in very different ways with their quarterly reports last time around. Facebook shocked investors by warning of a slowdown in user and sales growth, and investors will hope this was just a bump in the road as the social media platform strives to hit its target of 3bn users. Three months ago Apple defied the doubters by showing continued strength in iPhone sales. Now the tech giant must prove it can maintain momentum into a new generation of iPhones. It is also expected to unveil new iPads, Mac computers and other new products at an event in New York on Tuesday. Monday UK Budget Philip Hammond’s package of measures preparing the economy for Brexit will be closely watched by both businesses and households. Theresa May wants the chancellor to abolish the budget deficit, keep debt falling and cut tax thresholds. Mrs May also said the borrowing cap for local councils wanting to build new homes would be scrapped, potentially adding to national debt. But Mr Hammond needs to find extra funds somewhere. The government has committed to finding an extra £20bn for the health service by 2023, with ministers indicating it will be partly funded by tax rises. The timing of the Budget, outlining government tax and spending plans for the financial year, which starts next April, is unusual. It is earlier in the year to avoid clashing with November’s final-stage Brexit negotiations and also starts at about 3.30pm, three hours later in the day than usual. EU-Arab summit The two-day EU-Arab World Summit gets under way with energy use, migration and culture on the agenda.

It takes place as policymakers from the Middle East and north Africa face challenges including war and political turmoil and the international furore over the death of journalist Jamal Khashoggi, while the EU says it wants to contribute to stability in the region. Mexico airport vote Mexico’s president-elect Andrés Manuel López Obrador is expected to announce the results of a nationwide consultation on the future of a partly built $10bn airport in Mexico City. Analysts fear its cancellation would ring alarm bells for foreign investors in the country. Corporate earnings HSBC (Q3) The lender reports with its Hong Kong operations facing cyclical and structural pressures, including a loss of market share among corporate customers, which may spread to the retail arm because of competition from virtual banks. Bank of China (Q3) reports with investors keeping a close eye on interest margins, bad loans, write-offs and the overseas presence of China’s most international lender. Ping An Insurance (Q3) China’s largest insurer by market value posts results amid a restructuring after a crackdown on risk in the wider financial markets. Mondelez (Q3) The snack maker behind Oreo and Cadbury is expected to post a fall in revenue, hurt by lower demand in Europe and Latin America. Economic data US consumer spending is forecast to have grown at an annualised rate of 0.4 per cent in September. The Core PCE index is forecast to edge up 0.1 per cent. Personal income is expected to edge up 0.4 per cent in September from 0.3 per cent in August. Tuesday Conte visits India Italian prime minister Giuseppe Conte will pay an official visit to India where he hopes to deepen bilateral co-operation on trade, investment and aerospace. The visit is part of celebrations to commemorate the 70th anniversary of the establishment of diplomatic relations between India and Italy. Uber court case Uber heads to court in the UK to defend its business model of treating drivers as self-employed. A march backed by several trade unions and involving cleaners, receptionists and security officers is due to take place in central London. Corporate earnings China’s third-largest lender AgBank (Q3) is likely to report modest profit growth and rising non-performing loans. The Industrial and Commercial Bank of China (Q3), the world’s largest lender, also reports. Coca-Cola (Q3) is set to post a rise in profit and organic revenue, helped by demand for Diet Coke and Coca-Cola Zero Sugar. Investors will be keeping an eye on the impact of higher freight costs and the company’s full-year revenue forecast. Ebay (Q3) is expected to report a rise in revenue, helped by more advertising on its platform and a better user-friendly format. General Electric (Q3) is forecast to cut financial targets for the year and detail a nearly $23bn writedown in its ailing power division. GE badly missed its earnings a year ago and also cut its full-year forecast.

Ryanair shareholder reignites calls to replace chairman Local Authority Pension Fund Forum demands low-cost carrier replace David Bonderman JOSH SPERO

significant shareholder in Ryanair has demanded that the low-cost carrier replace its chairman, reigniting a row the company hoped had been put to bed just over a month ago. The Local Authority Pension Fund Forum, whose members own about 1 per cent of Ryanair, said it would file resolutions at Ryanair’s next annual meeting in September 2019, asking the airline to replace chairman David Bonderman and explain how it is planning for chief executive Michael O’Leary’s succession. At the most recent annual meeting in September, almost 30 per cent of shareholders — including LAPFF’s members — voted against the reelection of Mr Bonderman, who has been in post for 22 years and who cofounded private equity business TPG. Mr O’Leary has been chief executive since 1994. The LAPFF said that a profit warning at the start of October “confirmed LAPFF’s view that poor employment practices and weak corporate gover-

nance are not sustainable in the long run”. It welcomed reassurance of progress on industrial relations but said: “Ryanair needs a new chairman to lead change at the company and ensure its business model is sustainable.” Ryanair said: “Ryanair shareholders recently passed all AGM resolutions by a large majority, including the nomination of directors and chairman. They appreciate how fortunate we are to have an outstanding chairman like David Bonderman guide the board and the airline.” Last week Ryanair reported a 9 per cent fall in pre-tax profit to €1.3bn in the six months to the end of September. At the same time, it garnered negative publicity after cabin crew failed to remove a male passenger on a flight from Barcelona who racially abused a black woman. The sizeable vote against Mr Bonderman contradicted the prediction of Mr O’Leary, who at a press conference in September had said he expected a maximum rebellion of 20 per cent. Mr O’Leary had said he hoped Mr Bonderman would be re-elected in 2019, but added: “There is a succession plan in place and that

will be revealed in the next year or two . . . There’s no fixed date, there’s no fixed names.” One senior figure with knowledge of Ryanair’s internal affairs said: “It wouldn’t have been lost on Bonderman or anybody that the vote went that way . . . We’d prefer that it was managed, rather than he was pushed.” Mr O’Leary himself is keeping his position flexible: in 2019, his five-year contract comes to an end and he has said he would prefer a rolling annual contract, while the board wants another five-year one. Union members’ strikes, compensation costs and the high price of oil led the airline to issue a profit warning at the start of October, cutting its fullyear forecast from €1.25bn-€1.35bn to €1.1bn-€1.2bn. Ryanair has suffered a summer of strikes across Europe, including five days by Irish pilots and the two days of co-ordinated pan-European action by cabin crew. The airline agreed to recognise unions in late 2017 following a rostering failure that caused it to cancel thousands of flights, but has struggled to reach terms with many of its unions.

AO World’s John Roberts: loosening the leadership grip The founder is learning how to step back from the day-to-day business operations ANDREW HILL

t the end of the tumultuous first day of trading in AO World’s shares in 2014, John Roberts was worth £542m on paper, a fortune roughly equal to that of Harry Potter author JK Rowling, reported the Financial Times. It seemed fantastical — or “just weird” — to the ex-waiter and kitchen salesman, who had founded the online appliance retailer 14 years earlier in response to a £1 bet. Watching the opening surge with him was Steve Caunce, then AO chief operating officer and chief financial officer. After about 15 minutes, they left the City of London trading floor. “We wandered around, and we were looking at each other going ‘What have we done?’” recalls Mr Roberts. They returned in a daze to Bolton, north-west England, where AO is based: “It was meant to be some, like, huge, euphoric thing, and it was the biggest anticlimax ever. We had a day off and the day after went back to work.” The stock, up 33 per cent on day one, has never recovered its early

highs. Asked if he would go through the flotation again, Mr Roberts says: “Absolutely. Ten times over I’d do it.” Four years on, though, he is no longer chief executive; Mr Caunce is. He took over the role in 2017. Mr Roberts, still only 44, now has the unorthodox title “founder, executive director”. He denies the change was forced on him. But the shift from self-diagnosed “control freak” on “the knife-edge of going bust”, to his current role has forced him to loosen his grip and change his leadership approach. It is, he says, “psychologically, one of the biggest journeys and one of the most difficult journeys that I’ve been on”. AO is short for Appliances Online, one of the web addresses available when Mr Roberts set out to shake up the white goods business. On Christmas Eve 1999, a friend bet him £1 he would not follow through on his boast that he could use the internet to “flog gear”. Mr Roberts never lacked confidence: AO’s first business plan had the grandiose mission statement: “Changing the Face of the White Goods Industry” on its front page. He and colleagues brainstormed

how to re-engineer the supply chain to deliver faster to customers ordering online. The early culture was based on “fun, and alcohol, and team building”. After the listing in 2014, Mr Roberts seemed to live up to the stereotype of the mouthy entrepreneur-founder who rubs the City up the wrong way. A year after going public, AO issued a profit warning. The shares dropped 30 per cent in a day. Shareholders are unforgiving about companies that miss expectations, Mr Roberts learnt. “Who gives a shit whether we make 16.5 [£16.5m] or 17.5? What difference does it make?” he remembers asking. “It makes no difference at all to what we’re doing, and the plans that we’ve got . . . It makes no difference. It turns out, it does actually.” Mr Roberts says he and Mr Caunce increasingly realised it made sense for Mr Caunce to take on the title and governance responsibilities of chief executive: “And one day he said it, just said the words out loud. And I said, ‘I’m not bothered, it makes no difference to me’.” He and Mr Caunce still run the business “like two brothers” and together own some 40 per cent of the listed company.

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Insight 2019: The world is warming up for Nigeria’s next elections GLOBAL PERSPECTIVES

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

he 2015 general election was conducted under the watchful eye of the world. It was such a high stakes election that the United States, the European Union, the United Kingdom and the United Nations weighed in heavily from start to finish to ensure a credible and peaceful presidential election. This was, of course, against the backdrop of apocalyptic predictions of post-election violence and the disintegration of Nigeria. In an unprecedented intervention, President Obama made a direct broadcast to Nigerians, invoking the famous civil-war slogan: “To keep Nigeria one is a task that must be done”! But, thank God, common sense prevailed. President Goodluck Jonathan conceded defeat and congratulated his victorious opponent Muhammadu Buhari. Credit must, of course, go to the dramatis personae, Jonathan and Buhari, foraverting the doomsday scenario. But no one can ignore the pivotal role that the international community played in keeping the politicians on the straight and narrow. Truth is, active domestic participation and international engagement were critical to the success of the 2015 elections. And they will be critical to the success of the 2019 polls. So far, though, while the domestic arena is abuzz with excitement and anticipation about next year’s elections, the international community has only just started warming up for the elections. But it’s understandable why the world is not as hyped up at this time about next year’s elections as it was about those of 2015. One reason is that, as I said, in 2015, the fear of a post-election violence and possible break-up of Nigeria was so acute and palpable that the outside world could not leave anything to chance and had to get involved so early. But such apocalyptic imagery is not dogging the 2019 elections. This is largely because, unlike in 2015, next year’s presidential election is devoid of the North-South divide and ethnic tension. The two leading presidential candidates, President Buhari and former Vice President Atiku Abubakar, are both from the Hausa/Fulani North. If Buhari lost to Atiku or Atiku lost to Buhari, few believe that the North would turn on itself. What’s more, the 2015 elections had set a precedent difficult to reverse. Any loser in a free and fair election would now be expected to concede defeat without a fuss. The diminished ethnic element and the precedent effect of the 2015 elections thus give the outside world some assurance that next year’s elections would not descend into a serious violence, which is why the international community is not as jumpy about the 2019 elections as it was about the 2015 race. Some have speculated that

the US may not, in any case, be as actively engaged in the elections as it was in 2015 because President Trump is more interested in counterterrorism and trade than in democracy and governance. But there is no evidence that the US would turn away if things look like going awry. Indeed, many US organisations are already exploring aspects of the elections, particularly violence. For instance, the United States Institute of Peace (USIP) recently published a special report titled “Nigeria’s 2019 elections: change, continuity and the risks to peace”. It interviewed over 200 Nigerians in 8 states and the FCT, asking what they thought might trigger a serious violence in the 2019 elections. Many respondents identified Boko Haram, the herder-farmer clashes and Muslim-Christian conflict in the North as potential sources of violence during the elections. But, interestingly,the major factor mentioned by most of the respondents was the performance of the Independent National Electoral Commission (INEC). As the report puts it: “The respondents feared that any regression from the level of performance achieved in 2015 could lead to violence because some would view the failings not as a result of incompetence but as deliberate attempts to frustrate the will of the voters”. The perception is that the Nigerian electorate is now more politically conscious, and have great anticipation for next year’s elections, as well as higher expectations for the INEC. So, notwithstanding that the two main presidential candidates are from the North, rigging could still trigger a serious violence. But beyond the questions of violence, many global think tanks and governments are busy making conjectures about the possible outcomes of the 2019 elections, assessing the likely winners and losers. In a recent paper titled “Countdown to February 2019: A look ahead at Nigeria’s elections”, researchers at

theLondon-based international relations policy think-tank, Chatham House, surveyed the Nigerian political landscape and assessed the prospects of the two main parties, All Progressives Congress (APC) and People’s Democratic Party (PDP), in next year’s elections. According to the researchers, Matthew Page and Sola Tayo, both Associate Fellows at the institute, the key factors likely to determine whether APC retains power or risks defeat next year are(1) the degree to which the party remains united behind Buhari’s candidacy and (2) the president’s performance in the last

six months of his term. As for the PDP, its chances would depend on (1) the political pedigree and popular appeal of the party’s presidential candidate and (2) its ability to unify against “a well-financed incumbent who retains a strong support base across much of the North”. Such discussions, permutations and postulations about the 2019 elections are taking place in academic, diplomatic and government circles all over the world. Recently, about three weeks

‘

Some have speculated that the US may not, in any case, be as actively engaged in the elections as it was in 2015 because President Trump is more interested in counterterrorism and trade than in democracy and governance. But there is no evidence that the US would turn away if things look like going awry

ago, I was invited to the same Chatham House to participate in what was termed “Scenarios generation roundtable on Nigeria’s elections”. The focus of the roundtable, according to the organisers, was “to consider various outcomes and scenarios following elections in Nigeria next years”, and I was invited as an “external expert” to help produce robust assessments of

the likely outcomes and scenarios. Well, I will not make predictions here about the likely outcomes of next year’s elections, but rather set out briefly the key challenges that I believe the two main parties, APC and PDP and their presidential candidates, face and must overcome to succeed in next year’s elections. First, there is a common challenge that both parties face, and that’s unity. Divided parties rarelywin elections. And going by the crisis that the APC’s state primaries have generated, with most of its governors asking the party’s chairman, Adams Oshiomhole, to

resign and accusing some national leaders, such as Bola Tinubu, of fraudulent interference, as Governor Ibikunle Amosun did recently, one must wonder whether the APC can enter next year’s elections as a united party. The earlier defections of Atiku, Bukola Saraki and other members of the R-APC from the APC will inevitably cost the party some states. The PDP seems more united, with less controversial primaries, but it can do without the rumblings in the Southeast over Atiku’s running mate, Peter Obi, and the alleged mistreatment of the deputy Senate President, Ike Ekweremadu, who had to refute speculations about his defection to the APC. These are distractions that PDP doesn’t need close to a general election, particularly in its Southeast base, where it needs enthusiastic rather than lukewarm support. But party unity apart, the two parties face different challenges. The real challenge for President Buhari is his performance. Of course, Buhari loyalists have been rolling out what they regard as the president’s achievements, most of which, in the words of George Orwell, simply “give an appearance of solidity to pure wind”. According to the Centre for Democracy and Development’s ‘Buharimeter’, “halfway through his first term, Buhari and his government had fulfilled just seven out of his 222 campaign promises and had made no progress at all on a further 96”. How many of the campaign promises would Buhari have fulfilled by the next elections? Truth is, the 2019 elections will be a referendum on Buhari’s performance, and the question for Nigerians would be the same that Ronald Reagan asked Americans when he ran against Jimmy Carter in1980: “Are you better off than you were four years ago?” But the fact that Nigerians answer “no” to that question does not mean they would elect Atiku. As I have said previously, PDP cannot win by simply criticising Buhari’s failings. It must offer itself as a credible alternative. Yet, PDP faces a huge image problem. Its sixteen years in power were associated with massive corruption. How can a party that lost power after 16 years of tarnished image regain power just four years later without a massive transformation? Unfortunately, the PDP today is very much the same as the old PDP, especially with the return of its prodigals. The perception of corruption is PDP’s Achilles heel. It does not help that the party’s presidential candidate, Atiku, is, rightly or wrongly, seen, even internationally, as having a corruption perception problem. Be under no illusion, the APC would hypocritically and opportunistically play the corruption card against the PDP, and this would resonate with a lot of people at home and abroad. But this is partly why the West is lukewarm about next year’s elections.They are not enthused by either main candidate, unlike in 2015 when they were beguiled by Buhari. Now, they see Buhari as an incompetent leader who nevertheless seems serious about fighting corruption and Atiku as a potentially competent leader but who won’t tackle graft. He must confront that perception. All said, the world cannot ignore Nigeria. It is warming up for next year’s elections if only to ensure everything goes well!

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Fascinating business facts

$100bn

outh African President Cyril Ramaphosa is seeking 100 billion dollars from foreign investors to haul the country out of recession. The former union leader, who said he was in repair mode, inherited a mismanaged economy from the scandal-plagued Jacob Zuma earlier this year, wants new investments over the next five years and has already secured pledges for around $35 billion, mainly from China, Saudi Arabia and the United Arab Emirates. South African e-commerce giant Naspers has said it would invest 4.6 billion rand ($315 million) over the next three years in its technology businesses and to fund technology start-ups. Drug maker Aspen Pharmacare also said it would invest 3.4 billion rand to manufacture sterile anaesthetics.

12%

amibia has scrapped a requirement for companies seeking mining exploration licences to be partly owned and managed by black Namibians. The policy was introduced in 2015 to increase the participation of historically disadvantaged black Namibians in some of the country’s most lucrative business projects, but critics said it threatened the diamond and uranium producer’s ability to attract investment. Mining contributed 12.2 percent to the country’s gross domestic product last year. Under the scrapped policy, the management structure of a company applying for an exploration licence was required to have a minimum 20 percent representation of black Namibians. At least 5 percent of the company also had to be owned by Namibians or by a company wholly-owned by Namibians.

$9.2bn

he International Monetary Fund says it wants assurances from the Republic of Congo’s creditors about how the nation’s debt will be restructured before it considers a bailout. The debt-laden country has been trying to secure a bailout since last year from the IMF, which has asked the government to curb rampant corruption and divulge the assets of high-level officials before providing any support. Oil-producing Congo’s economy has contracted for the past two years and it owes creditors at least 5.31 trillion $9.2 billion.

80%

ingapore’s long romance with public housing is going through a rocky patch, threatening to undermine one of the most popular government policies. For decades, the no-frills, affordable apartments have helped young couples achieve their dreams of home ownership while providing a stepping stone for getting on the private-property ladder. But now, with about 80 percent of Singaporeans invested in Housing and Development Board dwellings, these properties are losing value, widening the price discount to private condos. That’s a jolt to home owners and a political headache for a government with value of the homes falling even as prices of private dwellings rebounded over the past five quarters. Singaporeans own HDB homes worth as much as $347 billion in total.

3.5%

S consumers continue to flex their spending muscles, shrugging off higher prices at the pump and lingering trade war uncertainties to help the world’s biggest economy post another solid quarter of growth. Gross domestic product rose at an annualised rate of 3.5 per cent during the third quarter topping Wall Street expectations of 3.3 per cent. While it is a leg down from the 4.2 per cent pace recorded during the second quarter, it remains strong by recent standards, with first-quarter growth having come in at an annual pace of just 2.2 per cent.

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