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news you can trust I ** thursDAY 30 january 2020 I vol. 19, no 488

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As FG’s record N4.6trn budget deficit in 2019 shows worsening fiscal health

n 2008, Argentina’s leftist government thought cracking open the piggy bank of the country’s private pension system was a masterstroke, until it wasn’t. In need of cash to plug a gaping fiscal deficit after a global commodities bust hammered government revenue, Argen-

Babajide SanwoOlu (r), Lagos State governor; Rabiu Olowo (m), state commissioner for finance, and Moyo Onigbanjo, attorney general and commissioner for justice, during the signing of the Lagos State N100bn Series III Bond Programme at Lagos House, Alausa, Ikeja, yesterday.

tina’s President Cristina Kirchner proposed to nationalise the private pension system which had $30 billion in assets. Financial firms administered funds in the private system and it was generating about $5 billion in new contributions annually. The global economic downturn in 2008 was a rough year for investments and the government sensed a weakness.

President Kirchner told Argentines that the move to nationalise private pension funds was aimed at protecting investors from losses resulting from the global market turmoil. But economists said the motive behind the move was a growing financing need for the country caused by reduced prices of its commodity exports such as soybeans.

3M 0.00 3.35

0.00 3.61

0.00

10 Y -0.03

30 Y -0.10

10.09

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NGUS jun 24 2020 365.37

Argentina’s failed pension grab holds lessons for Nigeria LOLADE AKINMURELE

fgn bonds

Treasury bills

The commodity rout was exacerbated by unbridled government spending which created a funding gap of $10 billion to $11 billion in required debt payment between 2008 and 2009. The payments were from debt restructured after a 2001 default and new debt issued locally. The private pensions then beContinues on page 38

NGUS jan 27 2021 367.48

Lagos seals N100bn bond deal for infrastructure financing … it’s a new journey toward developing Lagos, Sanwo-Olu says JOSHUA BASSEY & SEGUN ADAMS

agos State government on Wednesday leaped forward in its quest to bridge the state infrastructure gap, as it signed the N100.33 billion infrastructure bond to be sourced from capital market to fund infrastructure and pressing capital projects. At a signing ceremony held at the Banquet Hall at the State House in Alausa, Governor Sanwo-Olu, investors and issuing parties put the final ink on the over-subscribed Series Three Bond Issuance of N100 billion, which was issued and raised by the State under its N500 billion Third Bond Programme approved four years ago. The governor, who was visibly excited by the financial intervention, declared the moment as “historic and new journey” for the state in its drive to provide Continues on page 38

Inside

NESG outlines 12 key steps to attract investments, accelerate growth P. 2 Senators ask Buhari to sack service chiefs, declare state of emergency P. 39

Thursday 30 January 2020

BUSINESS DAY

news What happened to the internet in the last few weeks and what could we have done to prevent it?

n an age where internet connectivity is the bedrock for day-to-day activities such as banking, access to social and government services, have we considered

L-R: Laoye Jaiyeola, CEO, Nigeria Economic Summit Group (NESG); Ed Ubong, managing director, Shell; Folusho Phillips, former chairman, NESG; Asue Ighodalo, chairman, NESG; Eme Essien Lore, country manager, International Finance Corporation (IFC); Ayo Teriba, CEO, Economic Associates, and Andrew Nevin, partner/chief economist, PwC, at the official launch of the NESG 2020 Macroeconomic Outlook Report themed ‘Nigeria in a New Decade: Priority for Accelerated Growth, Job Creation and Poverty Reduction’ in Lagos, yesterday. Pic by Olawale Amoo

NESG outlines 12 key steps to attract investments, accelerate growth …economists say growth hinges on policies to boost liquidity DAVID IBIDAPO & SEGUN ADAMS

he Nigerian Economic Summit Group (NESG) has outlined specific reforms necessary for accelerated economic advancement in growth-challenged Nigeria, while business leaders say a ready private sector awaits sweeping changes by the government that would make the country attractive for capital much available both home and abroad. The recommendation by NESG follows President Muhammadu Buhari’s reaffirmation, in his New Year message, that his administration would lay the foundation necessary for lifting 100 million people out of poverty in the next 10

years and the World Bank’s warning that Nigeria could be home to one in four of the world’s poorest by 2030. At the NESG Macroeconomic Outlook 2020 themed “Nigeria in a New Decade: Priorities for Accelerated Growth, Job Creation and Poverty Reduction”, 12 specific and crucial interventions were highlighted for the government to embark on to improve the business environment, competitiveness, attract investment and accelerate growth. For quick wins, NEGS says the government must implement budget reforms, appoint credible individuals to drive reforms, halt ad-hoc policymaking and engage stakeholders, curtail activities

of non-state actors and free up redundant assets. Medium-term reforms would require power/energy sector reforms, pursue legislative reform to unlock investment, adopt PPPs in infrastructure delivery and ensure human capital development. On the other hand, longterm reforms require that the government addresses subsidy programmes – petrol, electricity and exchange rate, implement fiscal policies to retain and attract investments and implement industrialisation policies. “I don’t doubt the sincerity of the FG about lifting 100m people out of poverty but FG is not prepared to make difficult decisions,” said Andrew Nevin, PwC chief economist.

“Time is running out.” NESG projects a best-case growth rate of 3.5 percent for Nigeria in 2020 (unemployment at 21 percent and underemployment at 20 percent) if crude oil averages $75pb. Under a business-as-usual scenario, the growth rate would be at 2.6 percent (unemployment at 25 percent and underemployment at 23 percent) with oil at $62pb, while a bear-case would result in a contraction of -1.9 percent (unemployment at 27 percent and underemployment at 25 percent) should oil plunge to $44pb. Ayo Teriba, CEO, Economic Associates, said at the event in Lagos that Nigeria’s heavy dependence on oil has led to cur-

Continues on page 38

Nigeria’s oil fortunes face existential threat on low exploration OLUSOLA BELLO, STEPHEN ONYEKWELU & DIPO OLADEHINDE

he reduction of rig counts in the Nigerian oil and gas industry has exposed the sorry state of the industry which is the country’s main revenue earner, an indication that Africa’s biggest oil producing country is no longer an investment destination despite its huge potentials. Data obtained from Baker Hughes Incorporated and OPEC showed all through 2019 Nigeria’s oil rig, which depicts the level of oil production activities by operators, has been hovering around 16 rigs count, a sharp decline from a three-year high of 35 rigs count recorded in February 2018. Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector. According to OPEC’s report, Africa biggest oil-pro-

Analysis ducing country recorded 17 oil rigs in the last month of 2019, which was three rigs less of what was obtained in November 2019, an indication of decreasing exploration activities. “The logic is straightforward. When the number of oil rigs rises, it means more people can be employed; when it drops, it means loss of employment opportunities,” said Edward Diete Koki, managing director, Alliance Capital Management Ltd. Actions in the industry have been reduced to just maintenance activities by oil and gas companies despite the fact that government has over the years been saying it wants to increase its crude oil reserve to 40 billion and daily production to 4 million barrels per day production. Mele Kyari, group managing director, Nigeria National Petroleum Corporation (NNPC), said investors are

worried about investing in Nigeria’s oil exploration, a development which has led to a decline in investments in the last 10 years. “Due to lack of clarity in Nigeria’s fiscal terrain, investors are worried about their margins, most especially getting back their cost of production which is a huge concern for oil exploration,” Kyari said at the 37th Annual International Conference of the Nigerian Association of Petroleum Explorarionists (NAPE) in Lagos. Slow reforms in the power sector, absence of full deregulation in the petroleum sector value-chain, the multiplicity of exchange rates, among other factors are key downside risks that constrain investments and long-term growth, according to a global consulting firm, PricewaterhouseCoopers (PwC). Also, analysts had consistently blamed the decline in investment on uncertainty in the industry, following the delay in the assent of the Petroleum Industry Gover-

nance Bill (PIGB), and the non-passage of the remaining variants of the Petroleum Industry Bill (PIB). The government’s many failings with attracting foreign direct investment, most especially in the oil and gas sector, have meant Nigerians have grown poorer as economic growth is slower than population growth. In Africa, a host of new finds from Equatorial Guinea, Mozambique, Senegal, Mauritania, Tanzania and Uganda are looking very attractive for foreign direct investors who are willing to explore new frontiers in oil business. Equatorial Guinea is expecting $1.4 billion to be invested in the country in 2020 fiscal year, with a mix of exploration and appraisal drilling. The country has also renewed ExxonMobil’s licence in the offshore, even while the US super major is said to be in talks on a sale of its assets.

•Continues online at www.businessday.ng

ised their data to bring their content closer to the eyeballs that they serve. However, the same cannot be said of various Nigerian online-based

news Analysis

what will happen if our internet connection suddenly goes down? This recently happened across West Africa last week due to two submarine cable cuts on both the West African Cable System (WACS) and SAT-3 cable, off the coast Gabon and Congo, fibre optic cables which link countries in West and South Africa to Europe. Although other submarine cables such as MainOne, ACE and Glo were able provide backup internet capacities to the providers being served via the WACS and SAT3 cables, the impact would have been a lot less if the affected Service Providers (ISP) in these countries were inter-connected in-country and if the data required to deliver critical services in these countries were hosted in local data centres. Such interconnections are enabled by Internet Exchange Points (IXPs) that enable network carriers exchange traffic among themselves close to the markets they serve. In Nigeria, with access to the Internet Exchange Point of Nigeria (IXPN) and West Africa Internet Exchange (WAFIX), internet users were able to still access web content such as Google and Facebook amongst others during the submarine cable cut because these Global OTTs have local-

businesses and service provid-

ers who host their data offshore or who are not directly connected to local exchanges. One major benefit of hosting data and inter-connecting locally is that should service to the country be disrupted, basic services that essential for dayto-day activities can still be delivered online. Another benefit is that the latency will become far reduced as transactions are not going through Europe for completion but rather travel a far shorter distance to the website and/or transaction engine hosted locally. Furthermore, by peering at local exchanges, customers reduced internet transit costs due to the elimination of the international transit through overseas carriers. To further illustrate the benefits of internet exchange points, imagine that you live in Lagos but your email service provider has its servers only in London. If you’re forwarding an email to your neighbour, it would first go to London before it goes across the street. It would be much faster if your email server provider had its servers in Lagos and was connected to multiple IXPs within the country rather than connecting abroad first.

•Continues online at www.businessday.ng

LASG, bike-hailing firms on collision course after motorcycle ban … firms to explore all lawful means as LASG insists ban without exception JOSHUA BASSEY, ODINAKA ANUDU & MICHAEL ANI

he ban placed on motorcycles and tricycles in 15 local councils in Lagos has pitted the bike-hailing companies against the state government, with the two parties differing on the propriety or otherwise of the restriction. The Lagos State Security Council had, on January 27, announced restriction of movement of commercial motorcycles and tricycles in six local government areas (LGAs) and nine Local Council Development Areas (LCDAs) considered highly urbanised. The ban also includes 10 highways. Implementation of this order starts on February 1, but some commercial motorcyclists have stopped plying these routes for fear of being harassed by overzealous law enforcement agencies. Speaking to BusinessDay

on the controversy around the inclusion of corporate bike-hailing firms, Gboyega Akosile, chief press secretary to Lagos State governor, said O’Pay, Gokada, Max. ng and others were part of the restriction, insisting that the ban was without any exception. According to Akosile, the state government had to take the decision to save lives of Lagosians exposed to dangers of riding on commercial motorcycles on highways and bridges. “All motorcycles operating in the state are affected by the restrictions and expected to comply with the state traffic laws,” said Akosile. Gbenga Omotosho, commissioner for information and strategy, had earlier cited ‘scary figures’ of fatal accidents recorded from operations of motorcycles and tricycles to justify the ban.

•Continues online at www.businessday.ng

Thursday 30 January 2020

BUSINESS DAY

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Thursday 30 January 2020

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FG prioritises CNG as petrol alternative to address subsidy concerns HARRISON EDEH, Abuja

he Federal Government of Nigeria is working towards the production of Compressed Natural Gas (CNG) as an alternative fuel to Premium Motor Spirit (PMS) – petrol - this year. This development the government says will enable it prune down on huge payments on subsidy, popularly termed ‘under recovery’ by the current administration, which runs into trillions of naira. Minister of state for petroleum resources, Timipre Sylva, revealed this in an interview monitored by BusinessDay, saying the government is already test running the initiative with some select vehicles in Benin City, the Edo State capital. Sylva noted that although the Petroleum Industry Bill (PIB) had made several trips to the National Assembly without translating into law, this year shall be its last trip to the federal lawmakers. He based his hope in the passage of the bill on the renewed relationship between the legislature and the executive, noting that the rehabilitation of the Port Harcourt Refinery will commence in the first quarter

of 2020. Also slated for commencement this year, according to Sylva, is the construction of the Ajaokuta, Kaduna and Kano gas pipeline project, popularly known as the AKK pipeline project. The project, expected to take gas from the Niger Delta to Kano, is also targeted at feeding industries in the area with gas. He however laments that Nigeria is a very rich gas country, yet it has the lowest Liquefied Petroleum Gas (LPG) penetration in the world, saying the government is working to ensure increased LPG penetration this year. He also reveals that Nigeria has never looked for gas except the one it found from oil production. Now, according to him, the government is to begin gas exploration. “The gas sector will definitely grow. Nigeria is described as a gas territory with oil in it. Unfortunately, we have not taken advantage of our gas resources. “All the gas we have found in Nigeria has been found while looking for oil, not looking for gas. We are going to have some targeted exploration for gas. And we also want the people of Nigeria to have an alternative to PMS.

We want to see how gas can be converted to CNG. “And also we are trying to improve the LPG penetration. Unfortunately, Nigeria has the lowest LPG penetration in the world. We are very rich in gas. This year we are going to focus on this area,” the minister states. Stressing that most nations are now exiting fossil fuel for renewable energy as gas, he confirms that Nigeria was still far from joining the race for renewable energy utilisation. Meanwhile, the minister states that at the recent World Economic Forum in Davos, Nigeria was able to add its voice to the global discussion of transition to renewable energy. “Gas is a lesser source of carbon emission and we have abundant gas resource. So also the world has to take us into account of its discussion in the transition to renewables. It is also in those kinds of forum that you can put our point of view forward,” he notes. Asked to state what he has achieved so far in office as a minister, he says that he is already in the process of rejigging the PIB, noting that the sector under his watch has been able to pass the Deep Offshore Amendment Bill.

Dangote Farms commissions N2.8bn tomatoes nursery … to provide seedlings for farmers

n a bid to make Nigeria selfsufficient in tomato production, Dangote Tomatoes Processing Limited, owned by the younger brother of Africa’s richest man, Sani Dangote, has unveiled a N2.8 billion greenhouse nursery in Kano to supply the best quality tomato seedlings to Nigerian farmers. Speaking on the project in Lagos, Sani Dangote says the nursery is designed to use the automated Pat Moose planting technology, the first of its kind in Nigeria, and has the capacity to process 350 million tons of hybrid tomato seedlings per season enabling the planting of 12,000 hectares of tomato farm.

The Pat Moose process takes three weeks before proceeding to the next stage, reducing the whole process of growing tomatoes to just three months. He states that Nigeria consumes about 2.3 million tonnes of tomatoes annually and with the establishment of the nursery, “we have created capacity to triple tomato production, attaining self-sufficiency in tomato production as well as potentially exporting surplus to neighbouring countries. “Furthermore, this nursery will produce the highest quality tomato seedling available meaning that the farmers can grow the highest yield tomatoes.

Currently, the yields produced by Nigerian farmers are less than the global standard. As a result, farmers will be able to earn more income from selling higher volumes of harvests each season. “Nigeria is on a trajectory to becoming self-sufficient in rice, tomatoes and poultry production. This means that millions of jobs will be created for her citizens.” The African continent imports $40 billion of food annually despite having 65% of the world’s arable land. The public-private model on-going in Nigeria could be adopted by other African countries to also attain selfsufficiency in food production.

UBA rewards 100 customers with N10m in new ‘Bumper Account’ promo

nited Bank for Africa (UBA) plc on Tuesday, launched the ‘UBA Bumper Account,’ a hybrid account targeted at transforming the lives of its customers. The new account is in line with the bank’s mission of creating superior value for its stakeholders while encouraging saving cultures among Nigerians. The account, carefully crafted to improve the lives of the UBA customers, will offer account holders an opportunity to win cash prizes of up to N2 million. Sp e a k i n g d u r i n g t h e launch and monthly draw which was held at the UBA Head Office, in Lagos on Tuesday, the Group Head, Retail Banking, Jude Anele, said the new ‘UBA Bumper

Account’ was created with the customer in mind. Anele said, “We have in recent times deepened our focus on the most important aspect of our business – the customers we serve. Hence, our huge investment in technology to make banking easier and seamless, even as we introduce new offerings such as this Bumper Account, that will deliver improved value to stakeholders.” He explained that new and existing customers of the bank need to ensure they have a minimum deposit of N5,000 in their UBA Bumper Account to qualify for draws. According to Anele, current UBA customers are to dial *919*20*1# to migrate to the UBA Bumper Account whilst potential customers www.businessday.ng

should dial *919*20# if interested in opening a UBA Bumper Account. In the first draw, held live during the official launch in Lagos Tuesday, a total of 100 customers emerged winners as the Bumper to Bumper Crooner, Wande Coal, serenaded guests with his famous hit songs to the delight of all present. “A total of 100 customers emerged winners at the live draws which took place here today, and as you have seen, some of our customers here present were part of the lucky ones who won N100,000 each. From here on, lucky customers will win from N10,000 to N2 million each in the monthly, quarterly and targeted draws,” Anele stated. https://www.facebook.com/businessdayng

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Thursday 30 January 2020

BUSINESS DAY

news

Again, power supply under threat as electricity workers set for another strike

AfDB drives 10-year investment plan to capture $1trn food market size in Africa

JOSHUA BASSEY

resident of Africa Development Bank (AfDB), Akinwunmi Adesina, says the bank is making frantic and sustainable effort under Feed Africa Initiative to invest $25 billion in agriculture and agribusiness over a period of 10 years as part of strategic economic planning to capture and cater for projected $1 trillion size of food and agriculture in Africa by 2030. Adesina, who was conferred with Honorary Doctor of Science Degree Award at the 27th Convocation of the Federal Uni-

nless some intervention comes, power supply to the national grid risks another cut in two weeks, as workers in the sector, under the auspices of National Union of Electricity Employees (NUEE) have issued a fresh 14-day ultimatum to resume their last suspended strike. The strike had on December 10, 2019, threw the entire country into darkness for one day, as aggrieved workers shutdown power generating systems to press home their demands, chief among which was the payment of outstanding entitlements to former staff of defunct Power Holding Company of Nigeria (PHCN). The strike was suspended on December 11, 2019, following the intervention of the National Assembly, and Ministry of Labour and Employment, leading to the signing of an agreement by key stakeholders - including NUEE, Ministry of Power and management of Bureau for Public Enterprises (BPE), a Federal Government’s agency vested with the powers to midwife privatisation of public assets in the country. Joe Ajaero, general secretary of NUEE, along with the union’s president, Martins Uzoegwu, who spoke to journalists in Lagos, on Wednesday, are infuriated that seven weeks after the strike was suspended to allow for further negotiation, none of the issues raised by the union, or agreed to by the stakeholders has been implemented by the power ministry and BPE. Ajaero alleged that rather than resolving the issue of over 2,000 workers who never received their severance package following the final privatisation of PHCN in 2013, and 16 months’ underpayment of those who received theirs, as well as payment of 7.5 percent pension component, which the management of BPE fully acknowledged, the minister of state for power, Goddy Agba, has resorted to “harassment of the union”, as he demonstrated during a meeting in Abuja, last week. The union alleged that the minister shouted down labour leaders and walked out during a meeting on Monday, January 20, 2019, convened to resolve the issues captured in the agreement signed on November 11, 2019; an action the union described as “un-ministerial” just as it insisted on apologies from the minister. Ajaero said on the issue of 16-month underpayment of severance benefits as well as the 7.5 percent pension component, the director general of BPE acknowledged that this was pending and promised that modalities would be worked out on the payment, but fumed that nothing has so far been done about it.

RAZAQ AYINLA, Abeokuta

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versity of Agriculture, Abeokuta (FUNAAB) in recognition of his feats as minister of agriculture and rural development on Tuesday, advised the President Muhammadu Buhari-led Federal Government to revive moribund e-wallet system created during the administration of former President Goodluck Jonathan in order to ensure that Nigerian farmers had unhindered access to agricultural inputs such as high-yielding seeds, fertilizers, among others. The AfDB president, who spoke shortly after he was decorated with the Honorary Doctor

of Science Degree Award at the ceremony that had Governor Dapo Abiodun of Ogun State; Sabo Nanono, minister of agriculture; Edidem Ekpo Okon, Abasi-Otu, chancellor; Aboki Zhawa, pro-chancellor; Felix Salako, vice-chancellor, among others, said, “The size of food and agriculture in Africa will rise to $1 trillion by 2030. The population of Africa, now at 1.2 billion, will double to 2.5 billion by 2050. They all must eat. And only through food and agribusiness can this be achieved. “I worked hard as Minister of Agriculture in Nigeria to make

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agriculture a business. And today it a business, all across the nation. “The rice revolution which we started in Nigeria, was based on sound combination of science, technology and policy. To address the productivity gap, quality gap and competitiveness gap in rice production, we introduced high yielding varieties Faro 44 and Faro 52. They have high grain quality that matches or beats imported rice varieties. Today, these varieties are the bedrock of the Nigerian rice industry. “When the rice revolution was unleashed in northern Nigeria in 2013 - following the

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devastating floods of 2012 that led me to launch the nation’s first dry season policy - many Nigerians were not aware. They were still looking for the usual Nigerian local rice! As Nigerian local rice hit the market even importers began to bag them for sale as imported rice. “We invested heavily in integrated rice milling systems so much so that the number of integrated rice mills increased from just one in 2011 to 24 by 2014. The new rice technologies were introduced to 6 million farmers, leading to massive transformation of rice production.

Thursday 30 January 2020

BUSINESS DAY

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We will use Oyo IGR to offset all recurrent expenditure before 2023 - Makinde REMI FEYISIPO, Ibadan

overnor Seyi Makinde of Oyo State, on Tuesday, said that his administration would ensure that the state’s internally generated revenue (IGR) was able to offset its recurrent expenditure before the end of his current tenure. Governor Makinde, who made the declaration while giving a keynote address at a day Tax Stakeholders ‘Poverty to Prosperity’ Summit held in Ibadan, stated that his commitment to take the state from poverty to prosperity remained on course. While delivering his keynote address at the tax summit, the governor noted that growing the state’s IGR had become imperative to the government’s mandate to move the state from poverty to prosperity. According to Makinde, strategies have been put in place to boost the IGR of the state and that the strategies have started yielding fruits. He stated that Oyo State was able to raise the IGR from about N2 billion to N2.7 billion in November 2019, saying, “We are here today to talk about the Oyo State IGR Roadmap that will facilitate economic prosperity. The issue of Internally Generated Revenue (IGR) is very important as it is tied to how much development the state will experience, all things being equal. “Without adequate revenue,

there will be no resources to fund the budget; the state will have to resort to borrowing for recurrent expenditure or owing for overheads, which is never ideal. “Trends also show Oyo State’s IGR fluctuates; in 2014 it was N16.30bn, but dropped to N15.66bn in 2015, later increasing to N18.88bn in 2016. For 2017, the IGR figures grew to N22.45bn. While in 2018 it grew to N24.67bn. This put our IGR per capita in 2018 at below N3,000 per person. We can definitely do better. “The current trend across states in Nigeria is to see IGR as being synonymous with revenue generated from taxes, partly because other sources of revenue, especially natural resources are on the exclusive list. “Revenue generated from these natural resources goes to the Federation Account and is then shared between the Federal Government and states. A lot has been said about how this has served as a hindrance to development, and how it has made states unwilling to invest in the management of these resources. But that is only half of the story. “The other half is that it is possible to raise the IGR of the state without raising taxes. And this is the promise that we made to the people of Oyo State while we were on the campaign trail. We are determined to continue keeping that promise.

ABCON seeks to enhance BDC operations, More states reach agreement with labour on N30,000 minimum wage celebrates achievements DAVID IBIDAPO

n a sensitisation meeting with CEOs and directors of Bureau de Change (BDC), Association of Bureau De Change Operators of Nigeria (ABCON) reiterates its commitment to improve the capacity BDCs and evaluate the outcome of the assessment of the financial action task force and the central bank examination, while celebrating its achievements so far. Ac c o rd i n g t o A m i n u Gwadabe, president of ABCON, “So far, we want to celebrate a consistent four years of exchange rate stability and compliance in our operations, which is why we are here to carry our people along and to evaluate our performance in terms of compliance and going forward in order to be effective in the foreign exchange market “The way forward includes capacity building forums, as well as meetings with the regulator and other relevant agencies and training association members.” Recounting latest developments, he said the latest developments include sustained exchange rate stability. In contrast to predictions by Afrinvest that there is going to be devaluation by 20 percent in 2020, the association

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believes any devaluation, though unification of the various exchange rate is germane, but any discussion on devaluation at this critical level of the economy should be completely discouraged. “We ensure to give our cooperation to the central bank and the government in general so as to checkmate any volatility in the foreign exchange market,” Gwadabe said. Devaluation will not do any good more especially as there is a border regulation, which has improved a lot of activity in the economy, he said. The Nigerian economy is still struggles with electricity in terms of its availability and also Nigeria still remain an import dependent country while it battles infrastructure deficit, hence devaluing the naira would be distressing. “As far as the BDC is concerned the rate of the naira to a dollar is 360,” he said. Speaking on petition sent to the senate, he explained that they are forced to disclaim the petition because they were not involved. “We have a mutual and cordial relationship with the CBN and after coming a long way in terms of collaboration; we cannot start fighting with the CBN. That will not help the system the only thing is collaboration,” he also noted.

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…as deadline expires Friday JOSHUA BASSEY & INNOCENT ODOH

ore state governments have signed agreement with their respective workers’ unions to pay the new national minimum wage of N30,000, as the deadline issued by the organised labour expires this Friday, January 31. Among the states are Lagos, Kaduna, Bauchi, Kastina, Borno, Adamawa, Kebbi, Kano and Jigawa, while others are reportedly in negotiation process with their workers. Sokoto State a few days ago announced that it will commence payment by end of January 2020. About 21 other states are said to be at different levels of reaching conclusion on the consequential adjustment, while four other states are reportedly yet to commence negotiation. This is happening as the labour movement insists it is not backing down on its planned showdown with state governments that will fail to fully comply with the implementation of the new wage after the January 31, 2019 deadline. The national minimum wage law was signed into effect in April 2019, by President Muhammadu Buhari. The prescribes N30,000 as national minimum wage in Nigeria,

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below which no employer in the formal and public sectors of the economy should pay their workers. President of the Trade Union Congress (TUC), Quadri Olaleye, told BusinessDay on Wednesday, that the labour movement will not go back on the January 31 ultimatum, stressing that any state that failing to comply with the ultimatum will face the wrath of the workers. He said that the workers are fully mobilised for a showdown with the state governments. The Federal Government and the organised labour in October 2019 reached an agreement on the consequential adjustments of N30, 000 minimum wage for workers after intense negotiations. The minister of Labour and Employment, Chris Ngige, noted that enforcement of payment of the minimum wage will be done immediately and tasked all stakeholders to comply with the new minimum wage. However, some states of the federation appear to be having problems complying with the implementation and payment of the new minimum wage, which prompted the TUC to issued industrial action threat against states that may fail comply with the law.

Thursday 30 January 2020

BUSINESS DAY

Research&INSIGHT

In association with briu@businessday.ng

A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

“

Within the last ISAAC ESOWEdecades, three rice has continued to grow to become a major continental food.

08098710024

Major SomeRice RiceProducing ProducingAfrican AfricanCountries Countries

“

Major Rice Producing African Countries

Within the Guinea last three decades, 2.2 million 1.5 million rice has 800,000 continued to grow to Ivory Coast Guinea-Bissau become a 1.6 million 1.4 million major 3 million continental 255,000 99,000 Nigeria food.

4.4 million 400,000

3 million

Egypt

3 million 4.4 million 400,000 Tanzania 2.1 million

1.9 million

Egypt

Madagascar Madagascar

230,000

160,000

6.9 million

3.7 million Ghana

510,000

3 million 680,000

2.8 million

1.2 million

Tanzania

Madagascar

Guinea

2.4 million 300,000

KEYS PRODUCTIONMILLED RICE Tonnes

IMPORT QUANTITY

1.5 million Tonnes

230,000

Madagascar Madagascar SOURCE: USDA, BRIU ANALYSIS

2.2 million

TOTAL CONSUMPTION MILLED RICE Tonnes

2.1

1.9 million

INFOGRAPHICS: DAVID IBEMERE

800,000

Nigeria

Nigeria rice production outshines other African countries ADEMOLA ASUNLOYE

espite the laudable progress made in rice production, Nigeria is still the largest importer of rice in Africa. Based on the available data from the United States Department of Agriculture (USDA) in 2018, Nigeria is the largest producer of rice in Africa with a production quantity of 6 million metric tonnes

(Mt) of paddy rice while milled production amounts to the tune of 3.7 million metric tonnes (Mt). This rice output (paddy) in Nigeria outweighs that of Egypt which dropped by 23.25 per cent from 4.78 Mt in 2017 to 6.23 Mt in 2018. This decline in production quantity in Egypt is equivalent to a difference of1.22 Mt vis-à-vis Nigeria’s production. The decline in Egypt’s production can also be attributed to a significant decline in the total area were rice was harvested,

Ivory Coast

1.4 million

3.7 million 6.9 millioning year from 1.43 million ha of

which could mean that much efforts were not directed to production as it were in the previous year. The total harvested area of rice in Egypt reduced by 22.83 per cent from 762 thousand hectares (ha) of land in 2017 to 588 thousand ha in 2018. Besides Nigeria and Egypt, some other African countries have been gearing up to cut down on the importation of rice. Madagascar’s paddy was up by 18.75 per cent in 2018 to 3.8 Mt from 3.2 Mt in the correspond-

3 million

1.6 million

3 million

land to 1.45 million ha in 2018. Tanzania recorded 5.36 per cent increase from 2.8 Mt to 2.95 Mt in 2018 on the same area of land. Guinea, another country striving to jack up its production quantity, recorded quite a few increases of 3.18 per cent on the same area of land(1.1 million ha) from 2.20 Mt in 2017 to 2.27 Mt in 2018. Ivory Coast also recorded increase from 2.2 Mt from the corresponding year to 2.23 Mt in 2018; with 1.5 per cent increase in the utilised

land from 862 thousand ha to 875 thousand ha in 2018. Other countries like Ghana (850 thousand tonnes (Tt)), Cameroun, 351 Tt; Benin, 280 Tt; Guinea Bissau 165 Tt, and Togo at 140 Tt among others recorded paddy production below 1 MT. From the analyses above, even though other factors may have contributed to the decline in Egypt’s production, we cannot ignore the fact that the significant decline in the harvested area is also a major contributor.

Madagascar

2.8 million

2.4 mil

300,000

KEYS PRODUCTIONMILLED RICE

(metric tonnes)

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TOTAL CONSUMPTION MILLED RICE

(metric tonnes)

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IMPORT QUANTITY

SOURCE: USDA, BRIU ANALYSIS

INFOGRAPHICS: DAVI

(metric tonnes)

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Our addiction for Chinese loans: Only the TRUTH will set us free!

ik MUO

“

PC, however, cautioned that public debt was rising faster than both domestic and external revenue, noting the need to tread cautiously in interpreting the debt to GDP ratio. The Committee also noted the rising burden of debt services… (Communiqué of 128th MPC, 23-24 Jan, 2020). This is coming just as IMF warned that vulnerability to foreign debts is a major threat to economic growth in Africa since these debts divert funds away from developmental activities, The World Bank doubts Nigeria” ability to sustain its debts, while the Centre for Global Development, has projected that Chinese loans will put many African countries into trouble. Not too long ago, Atiku Abubakar warned that endless borrowing will lead to endless sorrowing while Prof. Tella, described President Muhammadu Buhari’s request for $29.26 billion external loans as an attempt to deliver a killer blow to the economy. But our people say that those whom the gods want to kill, they first make mad and that a bound for death will neither hear the hunters whistle nor perceive the smell of excreta. The ballooning of Nigerian debts, raises dualistic concerns. The first is that the debts are growing at an astronomical rate, retard our economic progress and may further lead us into irredeemable debt trap. The second is that most of the bilateral debts are coming from China and even a jambite business analyst knows that any business with a major supplier or major buyer has trouble waiting at its gate. This is because even if the sole trade partner continues to deliver, the company will soon become a hostage, vulnerable to its terms and unable to take independent decisions, at least in

the short term. The company may also become susceptible to all sorts of highhanded, unfavourable business antics from the key partners. Our external debts have grown by 100 percent in the past 5 years, rising from $12.6 billion in 2015 to $24.4 billion in 2018 and still counting, because a lot has happened since 2018 and the government has just secured the approval to borrow $30 billion more. Of course, when the Senate President proudly declares that any request from the president is in National interest and will receive “the ayes have it” treatment, and the Speaker says that it is better to be rubber stamps than to fight the president, what else should we expect? Anyway, I have not seen the level of developments that led to this quantum jump; even the National Bureau of Statics has not seen much. The only thing that we have seen is that debt servicing has gradually taking over 50 percent of our budget. So, we are increasingly working for our foreign debtors, for debts that were obtained without any detailed explanation to “we the people”. With the government of gerontocracy that we are running, those who plunged us into this debt quagmire and who enjoyed the resulting unholy handshakes will pass away while the future generations bear the burden. If it gets to the situation in which we are unable to pay, then we face the fate of others who failed to pay! On the China affair, the debt-romance which started with $115 million in March 2002 has blossomed to $2.5 billion (10 percent of our total foreign debts) and we are now in a situation in which China features prominently anytime Nigeria makes any official statement on finance, projects and economic growth. Beyond the worrisome dependence on Chinese loans, which is apparently, a deliberate debt-trap strategy, the positive impact of Chinese loans are hard to identify because the loans are designed to favour ONLY one party, China: the money from China pays for Chinese contractors, Chinese personnel including labourers, and Chinese materials. So the money given to Nigeria and which Nigeria must repay, stays in China, apart from the petty cash they spend on pure water and other allied items. I admit that US has its own agenda but Rex Tillerson the Secretary

of State got it right when he said that Chinese loans “encourage dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth.” Now China handles about $50 billion major contracts for Nigeria; it decides whether to give or not to grant such loans even after they had been scheduled as in the case of Mambila project, and insists that Chinese officials should come to inspect how its finances are utilised. And even after we have all seen the unfortunate experiences of our neighbours who defaulted in their Chinese loans, and other countries who looked China in the face and say “away with your loans”’, we continue going deeper and deeper, gradually giving credence to the boiling frog effect, in which a frog jumps out of hot water but when boiled gradually, will adjust its body temperature until it reaches a stage beyond its capacity and dies foolishly. This is also in tandem with the theory of escalating commitment Is China planning to recolonize Nigeria? It can’t happen to a whole Nigeria! Well, people who say “If this had happened to me, I will show them pepper” should hold their peace until it happens to them. But there was a small news item from News agency of Nigeria recently that the Igbesa and Ejila communities in Ado-Odo/Ota Local Government Areas of Ogun have called on federal and Ogun state governments to save them from the Chinese, who have encroached and destroyed 485 hectares of farmland. We need to be reminded by the hard truth by John Adams that beyond conquest, the only other way to enslave a nation is by death So, what is the truth and how does it set us free. The TRUTH is that the geometrical increase in our debts is inimical to our development now and in future. Secondly, the concentration of these loans in one source is more dangerous than the overall increment in the loans. We should engage those who are versed in the art and science of managing addictions to wean us from this malaise. We the people should also heed the advice of Thomas Jefferson that “to preserve our independence, we must not let our rulers load us with perpetual debt.” He who has ears, let

‘

Is China planning to recolonize Nigeria? It can’t happen to a whole Nigeria! Well, people who say if this had happened to me, I will show them pepper should hold their peace until it happens to them

him hear!. Other matters: Educational sector; some worrisome developments One man from your village saw a car as it sped past and exclaimed in wonderment: if this small car is running at this speed, how then will it run when it grows? I remembered that village man after reading the story of how five secondary school girls (Yes; secondary school girls) raped their biology teacher to coma in Ayetoro Itele community of Ogun State, in January of this year of our Lord, 2020. This is weird but while Igwe Chuwkemeka Ike, who “travelled” the other day titled one of his books, “Our Children are coming”, I have reason to believe that they are already here; they have already come. Unfortunately, it is in the negative realm. In November 2019, Akwa Ibom State Government suspended 71 students of Government Secondary School, Etoi in Uyo Local Government Area who had attempted to burn down the school, after subduing the security personnel, holding the principal hostage for hours and vandalising school property. They are suspected to be cultists. That same November 2019, the students of Baptist High School, Gbodofon, Osogbo, had the effrontery to engage their teachers in physical combat with cutlasses and sticks. This is reported to be a regular occurrence in which the students usually locked up the teachers in the staff room, except that this time, some bold teachers declared ‘ enough is enough’ and confronted them. There was also the viral video of a female secondary student who engaged her teacher in a physical combat in the very before of the entire school community. So, if they are filled with these fantastically negative attributes and behaviours while still in secondary school, what do we expect when they move into our universities and finally move into the society. Are we producing leaders of tomorrow or dealers and ruffians of tomorrow? What has the government done about this and what should they do about this? Our sociologists and social psychologists should be consulted to beam their searchlight in this disheartening development. I have SPOKEN. Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

The time is ripe for Lagos infrastructure development fund

t has been estimated that Lagos State will require a conservative sum of about $50 billion in five years to bridge the infrastructure gap in the State. Critical areas identified include Roads and drainages – $20 billion, power $10 billion, intermodal transportation $9.3 billion, Information and Communication Technology (ICT) $5 billion, provision of portable water $3 billion and environment N2.7 billion, whereas, the State budget for the year 2020 is N1.168 trillion ($3.2 billion). As ambitious as this may, it will take the State about 18 years to realise the goals in the aforementioned sectors if it is able to realise the proposed budget estimate, for the period. It is however surprising, that despite the huge infrastructural gap in Lagos State, Nigeria and Africa at large, and the demand for infrastructure by service users, the participation of the private sector in Infrastructure development has not been encouraging. This definitely is not as a result of low demand for infrastructure, or affordability by service users. The ability and willingness of Lagosians and Nigerian at large to pay for quality services has been demonstrated with the rapid growth of

the telecommunications sector. Also, Nigerians including Lagosians have embraced private alternative to electricity by providing individual generators and private alternative to pipe borne water, by digging private bore holes, which invariably cost more than the services provided by government. The Eti-Osa Lekki Epe Toll Road, as well as the Lekki-Ikoyi Link Bridge, has also demonstrated and proven the ability and willingness of the public to pay for quality services. What in my view has therefore been responsible for low private sector investment in infrastructure in the State and the country at large is the inability of the public sector to mobilise private sector resources and expertise for infrastructure development. What transform PPP projects from a mere concept on government wish list to a viable and bankable project is the ability of government to provide adequate information and data on pipeline projects , to enable prospective private investors take informed decisions. Consequently, there is the need for Lagos State to take the lead, by establishing an Infrastructure development fund to support prospective investors, with risk capital, to con-

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duct feasibility studies and all the required due diligence that will guide against likely pitfall and provide an outline business case that will make pipeline projects bankable. Typically, the cost of project preparation is put at between 2-3 percent of the total cost of project, for projects costing more than $100 million. As such investors are likely to take more interest in a project with an outline business case, than one where they have little information and will have to utilise their limited resources in conducting due diligence on a project they are not sure is viable. Similarly, it is not likely for the public sector to have all the required expertise or experience across all sectors. For instance Lagos State has never operated any rail system, airport or sea port but presently has pipeline projects in this sectors and may require legal, technical, financial and environmental expertise, amongst others, which may not be available in house. PPP model is also an emerging financial framework in Nigeria, as such, the public sector will still require a lot of hand holding until it becomes entrenched. In this way, the public sector will not only benefit from seeds fund to conduct viability studies,

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Abiodun Dina but also benefit from the human resources and expertise of the private sector. With this, beside prospective investors, government can also access the funds to engage project advisers to conduct feasibility/viability studies in Government’s areas of interest and engender the development of project specific procurement. The advisers will thus assists Government in carrying out the technical, legal, financial and environmental due diligence where necessary, before proceeding to the funding market. While advisers would be engaged where there are identified skill gaps, the objective, and leadership of the project still remains with Government. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dina, an Administrator and a PPP Communications expert, is the author of the book: “Evolving Competitive Public Service in Nigeria”

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Extreme ownership, the bedrock of an effective team Positive Growth with Babs

Babs OlugbemI

o leader is endowed with the grace to ignore the result of his or her team. You might not like a person, but as long his or her outcome is contributing to your deliverables and help in retaining your position as a leader, you won’t have a choice than to accept the person. However, followers can ignore result by not committing to the group’s objectives in response to the environment or the mannerism of the leaders. Leaders are, therefore, responsible for outcome irrespective of limiting factors-be it within and outside the company. The leader must win the war within to achieve the result with his or her team. Let’s use the change of baton between Jose Felix Mourhino and Ole Gunnar Solskjaer at Manchester United as an example. The same set of players that lost matches repeatedly won many games that gave the inexperienced Ole a good run of victory and landed him a full contract. What transformed the players without changes in the environment? It is the approach of the new manager that made the players take extreme ownership of the first set of matches under Ole to prove to the world that they are not average. That’s proof that the team can hold any manager into ransom. I have without repentance positioned that your team is your working tools. As a leader, you don’t throw a negative emotional tantrum to your devices without creating an intoxicating negative environment and outcome. The external influence though powerful, cannot infiltrate your team if you are a leader with positive, objective and inspiring communication. Don’t get me wrong, positive communication doesn’t take your right to discipline and remove any erring team member. It was true that external motivation

like the fanfare sent forth by the fans of Flamengo FC (in Brazil) for their players on their way to Argentina to play the River Plate FC in the Copa Libertadores helped the team to win. The effect will have been deflated if there is no extreme ownership and a strong bond between the coach and the team. To paraphrase Ralph Waldo Emerson, what lies behind your team (past good or bad performance) and what lies ahead of your team (the year 2020 mountainous target or budget) are tiny matters compared to what lies within your team. What lies within your team is the bond and emotional chemistry you create purposefully and the influence of the emotion toward achieving the goals for the year 2020. Without contemplation and writing from the standpoint of conviction, the summation of your leadership effectiveness and the result you will deliver cannot be higher than the level of the ownership mentality of your team and their commitment to you the leader. Here are my two commitments to you from last week’s article and as your leadership investor in people. What makes teams arrive at the payoff ‘all it takes’ and do all to get the result irrespective of negative influence within or outside the organisation is how the team members see you. You are either seen as someone in the race with them, or an outsider (boss) whose aim to achieve personal results through the team without any assurance of moving the members forward in their journey. One thing you shouldn’t do as a leader who is trying to build a bond and entrench extreme ownership is to condemn your budget or the decisions of higher authority for which you are part of or have access to above the team you are leading. I have seen leaders losing their credibility by criticising the organisations’ policies to get the sympathy of their team members. Let’s be rational. Once, your team sees a lack of total commitment from you in terms of belief that the task at hand can be accomplished, they doubt your desire to lead them through the red sea. The smart members among them get off at the next available bus stop. So, do not expect your team to take ownership of your result and the process for achieving it if your body overture shows the tasks is impossible.

So, a leader must own the decision once he or she agree to execute it. If you cannot defend the target before it is cast to your team, you cannot complain after that but perform with your team. There are many ways to bond and make your teams to do all it takes for you. For wanting of space, I will share just one or two bond-creating tactics with you before honouring my second commitment. In your communication with the team, be purposeful and positive toward the task and the result at hand. But as you communicate the need to achieve a result to the group either collectively or as individuals, you must connect in the process. It is the connection between you and your team members individually or collectively that drives the commitment required to think and act like the owners of the business. John C Maxwell, in his book everyone communicates, few connects defined connecting as the ability to relate to and identify with people in such a way that increases your influence with them. Connecting is by identifying with your staff personal and emotional situation, to identify them with the organisation by giving credits rather than taking all the credits and by helping them to cross the performance finish line while creating a fun-filled performance-oriented environment. I put so much energy in connecting with the members of my team by adopting a unique strategy I never learnt from the books. In my morning commendation meetings, I used to call my team members who deserve commendation or whom I have placed a demand to repeat an extraordinary feat their middle names. I used that as the common ground to tell them; ‘I know you beyond your current performance and demanding more from you’. I put them first in everything, and they can count on me to seek first their ‘performance and welfare interest’ ahead of mine. Another way to connect with your team that is imperative is to share the reward of the team’s effort with the team members. Leaders eat last, and if you eat first and fat all the time, your team will identify you as a glutton. No one voluntarily follows a glutton because they know it is all about him, not others. There are other ways of touching the hearts of your team members

‘ Without

contemplation and writing from the standpoint of conviction, the summation of your leadership effectiveness and the result you will deliver cannot be higher than the level of the ownership mentality of your team and their commitment to you the leader

to make asking for their hands more natural and effective than you would ever imagine. I will share this in the subsequent edition of Positive Growth with Babs; keep reading this column. Now to my concluding comments and lessons from the book, extreme ownership: How U.S. Navy SEALs Lead and Win. Jocko and Leif wrote this book to share leadership lessons that can impact teams in all leadership situations involving teams that strive to achieve goals and accomplish objectives. Most time, the problem with achieving our performance target is not lack of strategies for the purposes at hand but flawed executions. Poor execution is not necessarily unwillingness to take actions. However, in most cases, it is a failure to revise strategy, moderate deviations and create the right emotional atmosphere for synergy among the team members. As I have often proclaimed, there is a need for the miracle of harvest for farmers who tilled, toiled and watered their crops. That miracle is not possible in the absence of cooperation among various elements-soils; qualify of seeds, weeding including rainfall which is outside the control of the farmers. In a familiar vein, irrespective of the favourable economic outlook, no team will attain a maximum level of efficiency and outcome where the aspirations, views and perspectives of the team members are not aligned with the task at hand. Thus, unity of purpose is essential for a concentration of efforts and display of extreme ownership. Jocko Willink and Leif Babin want you as leaders to do the following; Win the war within by aligning the team objectives with the individual aspiration of the members of your team. If not all the members, let the majority connect with you and be in a movement of people that can do all it takes for you or the organisation through your influence; Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

Amendment to the SEC’s rule 42 minimum disclosure requirements

he Securities and Exchange Commission, Nigeria (SEC) reviewed and approved new rules and amendments to its existing rules and regulations a little over a month ago precisely on the 23rd of December, 2019. One of the sundry amendments made was to Rule 42 of the SEC rules by the creation of a sub-rule (6). The new sub-rule 6 deals with Minimum Disclosure Requirements by Public Companies on their websites. It is not a sector specific amendment but it applies to ALL Public companies. It wasn’t mandatory for Public companies to disclose in depth corporate governance information on their websites. However, the narrative has changed with the advent of the new sub-rule 6. The new sub-rule 6 mandates Public companies to, in addition to the corporate governance disclosures in their annual reports, disclose certain minimum corporate governance information on their websites. The corporate governance information that must now be disclosed on the website of Public companies are in respect of the following broad categories; the governance structure; the Board; the other governance process.

Each of the above mentioned broad areas have specific information requirements listed under them respectively as follows; The governance structure: Board Committee Charters/Terms of Reference; Responsibilities of the Board and Board Committees; Duties of the Board and Board Committees; The roles of the Chairman and the Chief Executive Officer; Directors’ Nomination and Appointment Process; Induction and Continuous Training; Annual Board Plan, Evaluation Report of the Board, Board Committees and Individual Directors; Statement of compliance with the requirements of established Codes of Corporate Governance; Organogram of the Company. The Board of the company: A tabular representation of the profile of directors containing the biography, experience, educational and professional qualifications, date of appointment, committee membership. Other governance process: In keeping to the highest standard of governance, companies would be required to disclose detailed information as it relates to internal control policy, risk management policy, staff devel-

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opment programme (training) policy, insider trading policy, communications policy, whistle blowing policy, code of ethics for directors, sustainability issues, including gender analysis. In practical terms, it would seem that most if not all the Public companies already have the information required under Category B (the profile of the Board) on their websites though the information may not necessarily be in the format specified under the new sub-rule 6. It would appear that the information in categories A and C are the major areas that would require some degree of work on the websites of the Public companies. These details are usually not displayed on the websites of Companies. Some people may even be of the opinion that the information in Categories A and C especially C, will be too much information to be displayed on a company’s website. Whatever, one’s opinion might be on the issue; the new sub-rule 6 has been made and should be complied with. The new sub-rule 6 also places an obligation on Public companies to update this mandatory information on their websites

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ULOAKU EKWEGH whenever changes occur. It is worthy to mention that penalties stipulated by the SEC for non-compliance with its rules are usually quite stiff. Therefore, it would be best for all Public companies to update their websites to comply with this new sub-rule 6 if they are yet to do so. Ekwegh is a private legal practitioner with over 15 years legal experience in law firms and as in-house counsel. She is also a fellow of the Institute of Management Consultants. Email: uloekwegh@yahoo.com

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Thursday 30 January 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Avoid Argentina’s pension management route The federal government risks impaired confidence in pension scheme

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

igeria must avoid the route Argentina trod with its pension assets and the ruinous outcome that the move fetched. In October 2008, the government of President Cristina Fernandez de Kirchner grabbed the country’s private pension assets to meet obligations as the global financial squeeze and slump in commodities prices limited its options. Argentina ran a public and private pension system. Kirchner’s government nationalised the private pensions to provide it with the cash it needed to meet debt payments and avoid a second default on its loan payments. It was at the height of the global economic crises with countries seeking various ways to manage and fight the credit crunch. The U.S. Federal Reserve bolstered money-market funds by lending as much as $540 billion to the industry. France proposed injecting $14 billion into six banks on the condition

they agreed to increase their lending. The London interbank offered rate declined. The approach by Argentina was an unusual one in economic management. It represented a novel system of handling pension assets. It amounted to nationalisation. President Cristina Kirchner justified the move then with the claim that it aimed at protecting investors from losses resulting from the global market turmoil. Financial firms administered funds in the system, which was parallel to a government pension system. The private system had about $30 billion in assets and generated about $5 billion in new contributions annually. Behind the move was a growing financing need for the country caused by reduced prices of its commodity exports such as soybeans. There was also unchecked government spending. Both factors created a gap of $10 billion to $11 billion in required debt payment between 2008 and 2009. The payments were from debt restructured after a 2001 default and new debt issued locally.

Before then, Argentina’s pension funds contributed to the pool of investible funds in the capital markets. It was the norm in Latin America. The Latin American system created a large pool of domestic savings that funded local capital markets and lent money for projects like toll roads. In Argentina, Mexico and Chile, pension funds are among the most prominent players in local stock markets, helping young companies get access to capital. The private pensions were an accessible source of funds to the government. Kirchner got two-thirds of the Congress to approve of the move. Years later, the country continues to rue the move. The country was shut out of international capital markets from 2001 up until the 2008 pension grab because it defaulted on its sovereign debt. It got worse afterwards. It took a $57b bailout from the IMF and defaulted on the loan last year. Nigeria’s mandatory contributory pension scheme has continued to grow because of the conservative approach the National Pen-

sion Commission has adopted in its management. A central feature is a restriction on investments to assets of the highest quality. Plans to grow participation in the scheme mainly by private sector firms depend on its credibility. Government meddling with the pension assets of nearly N9 trillion would impair confidence in the scheme. Nevertheless, Nigeria needs to grow its pension assets more than ever before. With reduced incomes for most people, the rate of capital formation through savings would drastically reduce. The pension scheme, because of its mandatory nature, drives capital formation. No one should affect confidence in the Nigerian contributory pension scheme. Indeed not the federal government. As the example of Argentina shows, good intentions do not hack it when it comes to managing funds. Nor does the government’s record of investments in infrastructure assets with various loans raise confidence in the possibility of effective management and return of the pension funds it is now borrowing.

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Lagos, Okada and public policy challenge in Nigeria The Public Sphere

CHIDO NWAKANMA

he transportation and security challenges of Lagos would cease from February 1, 2020. As the Lagos state government tells it, the restriction of motorcycle riders, whether two or three-wheelers, would bring about sanity in the city-state of Lagos. The state, therefore, announced on January 27, a four-day notice to the persons who provide service to their fellow citizens that they would be jobless from February 1. At the national level, the repeated failure of the federal government to meet its budgetary targets would end beginning February 1 as the provisions of the Finance Act come into effect. Chief of the clauses is the one increasing Value Added Tax on goods and services by 50 percent from 5 percent to 7.5 percent. Believe these, and you would believe anything, as the title of a novel in my teen years asserted. Okada rose to fill a gap in public transportation in Nigeria. It was a failure of governance. The ban in Lagos covers 15 local government areas and local council development areas. It is so wide-ranging it covers all the essential parts of what constitutes Lagos city. The broad sweep of the ban becomes clearer, looking at the bridges and roads affected. It comprises ten highways and 40 bridges. The highways are the arteries of the city. It would suffice to note that the bridges

are the central transport nodes of Lagos. Information and Strategy Commissioner Gbenga Omotosho asserted in a statement that the ban followed a “robust assessment” by the State government and the State Security Council. This “robust assessment” showed that the use of motorcycles is unsafe, and the casualty figures from their use are “scary”. “From 2016 to 2019, there were over 10,000 accidents recorded at the General Hospitals alone,” Omotosho said. “This number excludes unreported cases and those recorded by other hospitals. The total number of deaths from reported cases is over 600 as at date.” Institute for Health Metrics and Evaluation (http://www.healthdata.org/ nigeria) compiles data for most countries. While it does not have a state-by-state breakdown, it captures “what causes the most deaths” in Nigeria in 2017 as lower respiratory tract infection, neonatal disorders, HIV/AIDS, malaria, diarrheal diseases. Others are tuberculosis, meningitis, ischemic heart disease, stroke and cirrhosis. What causes the most premature death? They are a group of three: communicable, maternal, neonatal and nutritional diseases; non-communicable diseases; and injuries. Security is another consideration. According to Omotosho, “The rate of crimes aided by motorcycles (Okada) and tricycles (Keke) keeps rising. Motorcycles (Okada) and tricycles (Keke) are also used as getaway means by criminals.” Unfortunately, there are no figures here from the robust assessment. Security informed the ban of Okada in Magodo GRA Phase 2, Lagos in 2015. The Estate introduced buses as an alternative. They tagged drivers and assigned them to routes. Citizens joined the management in monitoring the drivers. It was also a small, close-knit community with

restricted access. Permit me to play the devil’s advocate by pointing to some areas of concern about this policy and the process. Many questions arise from the ban of Okada and Keke in Lagos. In human capital management, organisations usually give reasonable notice of at least 30 days and up to 90 days when disengaging labour. Lagos has given four days. From what HR manual did Lagos get this approach? Have we thrown up to 500, 000 people into the unemployment market? A Wikipedia entry claims 1 million bikes operate in Lagos! Is it because they are poor, not unionised and probably cannot afford a good lawyer? Could Lagos State have devised another means of tackling the dangerous aspect of Okada riding in Lagos? Doing so would require rigour in thinking, research and execution. It would mean finding out the numbers. It would entail registration and tagging. It would mean monitoring and enforcement. It would mean work, above all. The security consideration is unimpeachable. Yet. Do we cut off our legs because it aches and makes us limp? Will the security situation get better or worse when from February 1, hundreds of thousands of non-disabled men suddenly find that they cannot bring home money for amala, eba, fufu and soup? Was there any consultation and stakeholder engagement? A substantial body of citizens represents a critical stakeholder group. Did Lagos State government consult with them as they usually do when mobilising them for elections? What should happen to these persons who invested their resources in machinery and earn their living by providing a service that the state has failed to deliver? What is the alternative plan or plat-

‘

Many middleclass citizens have hailed this decision. The presence of Okada in Lagos offends their sense of the appearance of a significant commercial hub. They gripe about bikes. Okada and Keke irritate such people

form for citizens for whom Okada is the primary means of movement? Note that the Lagos State Government has acted first without providing any alternative. Neither buses nor trains or boats. Is it legal or moral to deprive a massive number of citizens of their means of livelihood? How many persons do we speak of here? Many middle-class citizens have hailed this decision. The presence of Okada in Lagos offends their sense of the appearance of a significant commercial hub. They gripe about bikes. Okada and Keke irritate such people. They do not reckon with the operations of bike taxis in Brazil, China, India, Indonesia, Mexico, Philippines, Sweden, Thailand and the niche services in London and New York. Has this pronouncement by Lagos met the prescriptions for making public policy espoused by various authorities from Herbert Simon to our own Tunji Olaopa, Ladipo Adamolekun, Pat Utomi and Ugwu I. Ugwu? More significantly, it seems to me that on the matter of Okada, the Lagos State Government has condemned itself to the curse of Sisyphus because of the failure of rigour in tackling this challenge. Sisyphus was a legendary king of Corinth condemned eternally to repeatedly roll a heavy rock up a hill in Hades only to have it roll down again as it nears the top. Lagos has frequently banned Okada. It should be clear now that the problem is more profound than what a mere pronouncement of a ban would solve. Deep thinking required. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Loan-to-Deposit ratio: Evolution of marketing in banks and reprieve for borrowers

he Central Bank of Nigeria in a bid to increase lending to the real sector of the economy set the loan to deposit ratio (LDR) in banks to 60 percent in a circular released by the apex bank on July 3, 2019 subject to a quarterly review. According to Investopedia, “The loan-to-deposit ratio (LDR) is used to assess a bank’s liquidity by comparing a bank’s total loans to its total deposits for the same period”. The LDR was soon revised upward to 65 percent in the 30th of September, 2019 circular sent to all banks with the compliance date for the new rate being 30th December, 2019. The Central Bank cited the positive result achieved in the first quarter of implementation of the policy as the reason for the increase. Gross credit was said to have increased by N829.40 billion (5.33 percent) between May and September 2019. In order to ensure that banks actually offer loans to the real sector of the economy, the Central Bank of Nigeria adopts a weight of 150 percent to compute LDR for SMEs, Retail, Mortgage and Consumer lending which should ordinarily act as an incentive for banks especially as there is a huge penalty for non-compliance. The penalty is 50 percent of the shortfall in LDR in additional cash reserve requirement. It remains to be seen if banks will be willing to take on additional risk by offering loans to companies which probably did not meet up with the minimum loan requirements set by these banks prior to the introduction of the 65 percent minimum LDR but that will be discussed later. The focus of this article is on how marketing in banks would have evolved since the LDR was increased as well as the benefits borrowers stand to enjoy under this new policy. Marketing in Nigerian banks has always involved an aggressive drive for deposits as

bank marketers and non-marketing staff alike are given unrealistic targets to bring in as much funds as possible. The deposits received are then invested in majorly risk-free assets to generate revenue by banks. This invariably means that the amount of deposit a bank generates is directly proportional to the bank’s revenue. Banks are clearly wary of borrowing to sectors or individuals where repayment might be difficult. According to CEIC, a Global Economic Data Platform, Nigeria’s non-performing loan ratio stood at 11.4 percent as at December 2018 with non-performing loan defined as interest or principal that is due and unpaid for 90 days or more. This high rate of non-performing loans partly explains banks’ apathy towards granting loan requests. Banks simply prefer investment in risk-free assets rather than exposure to the obviously higher risk of lending to the real sector. With the new LDR policy by CBN, banks are expected to lend to the real sector regardless of how risky it is. There are a few ways banks can go about this. They can simply increase the amount of loans to the SMEs and other retail and individual borrowers with the attendant higher risk or they can find a way to reduce their deposit in order to meet up with the regulatory requirement. I reckon that the latter option might be the easier of the two options for banks to adopt and this will also greatly affect the role of marketers. Marketing in banks will now most likely involve searching for customers who will not only take loans but have the capacity to repay as well. Management of banks will most likely charge Marketers to avoid bringing in new deposits as much as possible as additional deposit will put further pressure on them to increase their loan offering in order to meet up with the new regulation. This should reduce the burden on marketers in terms of the search for new de-

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posits but looking for creditworthy customers to offer loans to is no easier which means their burden only evolves. It however seems like the days of aggressive drive for deposits might be gone at least temporarily as banks try their best to adjust to the new policy. Does this have implication for the financial inclusion goal of the Central Bank? Maybe, but I won’t be looking at that in this article. Borrowers will most likely be the greatest beneficiaries of the increased LDR as banks are forced to offer attractive lending rates in order to meet up with the regulatory requirement. Borrowers who previously had no chance of obtaining loans in banks have suddenly become the bride. How quickly things can change as the stone which was once rejected has now become the cornerstone. SMEs that have struggled over the years to obtain loans from financial institutions have now become necessary for banks to meet up with regulation. Individual borrowers also stand to gain a lot from this policy through mortgage offerings which should enable a lot of them become home owners. The plethora of banks aggressively marketing and offering payday loans also confirm banks’ dire need for borrowers. These sets of borrowers are particularly important for banks as the CBN attaches a higher weighting to the loans given to them. Corporate borrowers also have the opportunity to obtain loans at a lower rate as banks are forced to reduce their lending rate in a bid to attract borrowers. The prime lending rate, which is the rate at which banks lend to their creditworthy customers, has continued to fall. According to the data released by the Central Bank of Nigeria, the prime lending rate was 15.40 percent in August, 15.15 percent in September and 15.07 percent in October of 2019. This development will reduce the interest financing cost for cor-

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PHILIP OGUNTOYE porate institutions which would have a positive effect on their profitability. Some corporate borrowers are also using this opportunity to refinance their existing loans. For instance, Flour Mills of Nigeria PLC which offered N12 billion naira in the 8th series of their N100 billion commercial paper at a discount of 11.94 percent in May 2019 were able to offer the 11th series of N5 billion at a discount rate of 8.88 percent in December 2019. Investopedia defines commercial paper as an “unsecured, short term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities”. The move by Flour Mills of Nigeria PLC should have a positive effect on their profitability in 2020. The Dangote group has also taken advantage of the receding rate to issue N45 billion commercial paper at a current yield of 7.75 percent which will also reduce their financing cost as well. The sustenance of the LDR at 65 percent by the CBN till the end of the first quarter of 2020 means an extension on the period of the reduced pressure on marketers to bring in deposits as banks struggle to meet up with the policy in order to avoid a breach which can prove costly. At least marketers can breathe a temporary sigh of relief on seeking deposits and focus on getting creditworthy customers to give loans to. Also, borrowers can quickly take advantage of this policy to obtain the loan required to expand their business, build their own home or just reduce the cost of financing their business which should help increase their profitability.

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Thursday 30 January 2020

BUSINESS DAY

cityfile A’Ibom pledges to complete on-going projects ANIEFIOK UDONQUAK, Uyo

A Lion Ajayi Ahmed (1st r), Club President; Lion Odupe Tunji (3rd l), Club Secretary; Lion Akamo Lookman, region chairperson, and other club members, during the Relieving Hunger Project of the Club, Ikorodu Metro Lions Club held at Child Life Line Homes in Ibeshe, Ikorodu recently.

FG to accelerate pace of construction works on Lagos-Ibadan Expressway … as more buildings to give way

irector of Federal Highways, South West, Funso Adebiyi says the Federal Government will be accelerating the pace of the ongoing construction works on the Lagos-Ibadan Expressway, taking advantage of the dry season. Adebiyi, who led a team of engineers on inspection of the highway, also said that more buildings obstructing the right of way of the project will be demolished to pave way for expansion. According to him, 75 buildings were earlier marked for demolition around the Redeemed Christian Church of God axis but more are expected to go down. He, however, assured that adequate compensations will be paid to owners of properties affected before any demoli-

tion exercise begins. “We are taking advantage of the weather to fast track the construction process and we are making significant progress. “We’re not leaving any stone unturned. As a matter of fact, on some of our sites, we are now working 24/7 to ensure we make significant progress before the rains come. “Those around Lotto should bear with us, if you see your house marked for demolition, it does not mean the end has come, we will not demolish the houses until all compensations are paid. Even if we are to relocate pockets of communities we will do our best to ensure we move them to a better place,” he said. He assured that the Federal Government is committed to the reconstruction of highways across the country, including the

Lagos-Ibadan Expressway. The director appealed to road users to bear the temporary discomforts, as the ministry is working hard to deliver the project and thus end the gridlocks being experienced on the corridor. He explained that different layers of quality materials go into the foundation of the construction up till it gets to the final layer of 600 mm thickness for durability. “This layer is the macadam but we are still building to add more layers to get to this drain level to ensure water does not remain on the road. All together the cross section is about 600 metres thick,” he said. He assured of adequate traffic diversion and enough funding for smooth completion of the project, and appealed to residents around Lotto to endure the gridlock challenges. He said that almost

20 kilometers have been completed out of about 43 on section one which spans from Ojota in Lagos to the Sagamu Interchange representing 42 per cent completion.He said that 45 kilometers have been completed out of 84 kilometers on the section two of the project which spans from Sagamu Interchange to Ojo in Ibadan representing 45 per cent completion. The Federal Controller of Works in Lagos, Adedamola Kuti speaking on the section between Berger and Kara under construction assured of completion by February. Kuti said that materials have been moved close to the 600 metres stretch to ensure speedy completion using the clemency of weather. “The February date for that portion is sacrosanct and we are sure we are delivering it,” he said. NAN

RRS to go after more extortionists of motorists in Lagos JOSHUA BASSEY

he Rapid Response Squad (RRS), an anti-criminal outfit of the Lagos police command, says it will be combing the state for more extortionists of unsuspecting motorists on Lagos roads. Olatunji Disu, a Deputy Commissioner of Police (DCP) and commander of the RRS, told BusinessDay on Wednesday that this has become imperative in view of the alleged increasing

number of persons now involved in illegal arrest and extortion of money from motorists on the roads. This followed the successful apprehension of some criminals allegedly working in conjunction with local government officials to extort unsuspecting motorists under the guise of enforcing traffic laws in the state. Operatives of the RRS on Monday, January 27, arrested five suspects, who specialised in arresting and extorting motorists www.businessday.ng

along the LASU-Igando Expressway, posing as local government traffic officers. The susp e cts, who claimed they were on contract with the Ikotun-Igando Local Council Development Area (LCDA) in Alimosho local government, were arrested on Monday afternoon after receiving complaint from one Abdulraham Olayiwola. The suspects include the gang leader, Taiwo Falodun (48), Mukaila Atanda (48), Adedire Olaniyi (40), Chibuzor Eze (26) and

Akinseye Alex (48). The suspect had last week extorted N41,000 from Olayiwola for not speeding on the expressway. Olayiwola, who is professor, according to investigations, was heading for Igando from LASU when the suspects, operating on Keke NAPEP forced him to park for not speeding. He was forced to drive to their hideout on LASU-Igando Expressway. It was here, his vehicle was impounded and made to pay N41,000

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kwa Ibom State government has promised to complete all on-going road projects by the time the tenure of the present administration comes to an end in 2023. Ephraim Inyangeyen, commissioner for works gave the assurance, saying the government’s promise reminded sacrosanct. Speaking during the inspection of the ongoing 19.6km Anua-Mbak- Issiet Road, Inyangeyen expressed displeasure over the erection of buildings on the right way of the road which in effect has prevented the contractors from doing their job. The commissioner, who ordered the demolition of the structures, warned that rushing to build and putting up tombstones on roads marked out for construction by the state government as a ploy to demand compensation, will be disappointed. He noted that while the

ministry was working hard to get contractors deliver on Governor Udom Emmanuel’s promise on road infrastructure, it is worrisome and condemnable that, some people would interfere by starting new buildings on the right of way, thereby preventing the construction companies from executing the project without hindrance. He stressed that legitimate compensation claims will be met by the state government and charged the people to cooperate with contractors and support the state government’s efforts to speedily develop the state. Inyangeyen expressed satisfaction at the pace of work on the equally on-going 3.5 km Ring Road 2 project, even as he urged the contractors handling the project to double up efforts to deliver the project according to specification and on time. Also inspected was the 14. 5km Uyo/Airport junction and Okopedi Okobo Road phase 1.

Police nab 5 kidnappers, rescue 7-year boy in Katsina

atsina State police command has arrested one Suleiman Sani, 23, and four others for allegedly kidnapping a seven-year boy in Safana local government area of the state. The command’s public relations officer, Gambo Isah, disclosed this to newsmen on Tuesday in Katsina. He said that the suspects were arrested on Sunday, following a tip off. “Nemesis caught up with the hoodlums when one of the suspects, Suleiman Sani, 23, of Runka village, Safana local government, was accosted by the joint operation of police and repentant bandits. In the course of investigation, the suspect confessed

to have masterminded the kidnapping of a seven-year boy, Abdurrahman Samaila at Runka village. “Other suspects arrested were Jazuli Ayuba, 26, Abubakar Aminu, 30, Jibrin Saidu, 28, all of them live in Kadanya village of Safana local government area of Katsina State, and Haruna Sale, 26, who live in Runka village. “The suspects demanded for the payment of N3 million as ransom, but after negotiations, they agreed and collected N28,000 from the parents of the boy as ransom,” he said. Isah said that the police recovered one dane gun in the possession of the suspects. The suspects will be prosecuted after full investigation.

before the vehicle was released to him the following day. Over 15 private vehicles and two commercial buses were discovered to have also been impounded by the miscreants and their tyres deflated, at the time of their arrest. Some of their victims described the activities of the suspects as illegal. One of them, who declined to mention his name, said that the suspects demanded N30,000 from him for his vehicle not to be towed to Badagry, where he would be made to pay N75,000. Investigations revealed

that many private car owners were paying cash and through a POS allegedly owned by one of the suspects. According to Falodun, one of the suspects, a dismissed spy policeman and three teams operate for Ikotun-Igando LCDA. He claimed they were engaged to work for the local government council on contract. He confessed that the gang remits N20,000 weekly to the local council. Recovered from the gang were payment tickets issued to their victims ranging from N25,000 to N41,000 and one tri cycle.

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Thursday 30 January 2020

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

INDUSTRIALS

CAP’s Q4 revenue surges 10% amid plans to capture more African markets OLUFIKAYO OWOEYE

aint maker Chemical and Allied Products plc CAP’s full-year revenue surged 10percent from N7.6bn to N8.41bn in 2019. Profit for the year however dropped to N1.78bn from N2.02bn, as selling and distribution expenses ballooned to N584.23m from N262.51 million, while administrative increased to N1.35bn from N1.14 billion. The cost of sales during the year also increased slightly to N4.43bn fromN4.03bn. Revenue from the sale of paints stood at N8.51bn from N7.75bn in 2018. Marketing, communication & entertainment ballooned to N393.87m from N137.22m, while

Tour and traveling expenses stood at N51.57m from N48.15m. While the Nigerian paint industry is faced with a myriad of challenges and harsh operating environment, the paint-making subsidiary of United Africa Company (UAC) of Nigeria plans to create a solid base for its business by investing massively in information technology (IT), not only to overcome the challenges but also to deepen its footprint in the African marketplace. David Wright, managing director CAP plc in a recent interview with BusinessDay said following the restructuring exercise, the company will be investing heavily in the coming year which would probably begin to yield some significant gains towards the end of 2020.

The managing director mentioned some specific investment plans such as an upgrade of CAP’S IT systems to SAP HANA in the cloud. “This gives us access to our business systems and from any location, which means we can then implement Point of Sale data capture,” he said. The investment in IT structures will also be supported by some investments at the distribution end. CAP will be increasing the number of its Dulux colour sensors from 25 to 27 just before the end of this year. But that’s not all, its target is to add at least 12 more Dulux colour sensors in the year 2020. While CAP aims to lead the Nigerian paint market, there are plans to also tap into the African market by exporting its Dulux and Caplux brands

into its export territories in sub-Saharan Africa before the end of 2020, and perhaps expand into other regions in Africa

over the coming years. CAP plc is the technological licensee of Akzonobel for Nigeria. It was established original-

ly as Imperial Chemical Industries ( ICI) investments limited in 1957, but became ICI Nigeria Limited in 1965.

Abraham Olusola- Niyi, coordinator, NIPR Fellows in Lagos; Constantine Akinfolarin Akinyele, late Chief Alex Akinyele’s son; Adewale Adeniyi, vice president, NIPR, Comptroller; Akinrinmola Akinyele, first son of the late Alex Akinyele; Nkechi Ali-Balogun, council member, NIPR, and Yomi Badejo–Okusanya, president, African Public Relation Association (APRA), at the Night of Tributes for the late Chief Alex Akinyele organized by Body of Fellows of the Nigerian Institute of Public Relations (NIPR), Lagos State Chapter in Lagos

AVIATION

Cabo Verde chooses NAHCO as ground handler for its operations IFEOMA OKEKE

h e nat i o na l a i rline of Cape Verde, Cabo Verde Airlines, has chosen foremost West Africa ground handling operator, NAHCO, to handle its operations in Nigeria. Cabo Verde is a passenger and cargo airline based in Cape Verde. It connects four continents w ith non-stop flights from its hub at Amílcar Cabral International Airport on Sal Island. The airline will experience nahco aviance’ unparalleled professional services which has seen the ground handler corner the handling of all European airlines that ply the Nigerian route. Cabo Verde which flies four times into Lagos Airport at the moment will join the list of other African airlines who had partnered nahco aviance for seemless operation in

Nigeria. The list includes Kenya Airways, RwandAir, Egypt Air, Ethiopia Airlines, ASKY, Air Peace, Royal Air Maroc and Cronos, to mention but a few.

Cabo Verde’s increasing network includes flights to Washington and Boston in USA, Dakar, Senegal, and more than four destinations in Brazil, including Foraleza,

Porto Alegre, Recife and Salvador. The airline also flies to Lisbon, Portugal and two ports in Italy: Milan and Rome; and to Paris, France.

L-R: Ibilowo Afolayan, vice president; David Majekodunmi, immediate past president; Temitope, president, and Tunde Daramola, chairman, board of trustee all of Fs Club, at the Swearing in ceremony of new executive officers of the Club In Lagos

Olatokunbo Fagbemi, the group managing irector/chief executive officer of NAHCO, expressed delight with the new business pointing out that the Company has upped the ante in ground handling operations in Nigeria. According to her, “We are doing everything right to please our customers who continue to rely on us to excel. Our unmatched investment in human capacity development continues to be the key to our soaring profile.” Fagbemi said her team of dedicated and wellmotivated staff will continue to go the extra mile to support the Company’s business partners. The Nigerian Aviation Handling Company Plc (nahco aviance) is West Africa’s leading ground handling ser vice provider with presence in all major Nigerian Airports. Founded in December

1979, the Company has since grown into a multi - billion naira company with diversified investments in energy, logistics and development of a free trade zone. This has led to the establishment of Nahco Free Zone (NFZ), Mainland Cargo Options Limited (MCO) and Nahco Energy Power and Infrastructure (EPI). The Company has a vision to be the leading service provider, continuously innovating and reshaping our chosen markets. NAHCO’s core values are: Safety, Integrity, Innovation, Reliability, Respect and Empathy. The Company offers a number of services at more than ten airports across Nigeria. These include aircraft handling, cargo handling, passenger handling, crew transportation, passenger profiling, training and fueling services.

Thursday 30 January 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

INSURANCE

Court, shareholders approve Continental Reinsurance Scheme of Arrangement SALAU JOHN

Federal High Court sitting in Lagos has approved the restructuring arrangement of Continental Reinsurance Plc following the approval of the Company’s shareholders at a Court Ordered Meeting held in the last quarter of 2019. By this approval, shareholders of the Company are free to choose among the three options provided in the scheme even as the Company promised to ensure that the concerns of all the parties are duly addressed. It would be recalled that at the Court Ordered Meeting of the Company which was held on Tuesday October 29, 2019, over 90% of the minority shareholders approved the restructuring plan proposed by the Board of Directors. The Board had informed the shareholders that in order for the Company to favourably compete in the global reinsurance market, it became pertinent that the Company aims higher to achieve the kind of ratings that would bring more recognition and profitability. Speaking after the Court’s approval of the arrangement,

the Group Managing Director of the Company, Olufemi Oyetunji stated that the restructuring is more about repositioning and achieving the best for the Company. He affirmed that the reorganization has nothing to do with the recapitalization activities going on in Nigeria because Continental Re commenced its restructuring processes before NAICOM came up with the new capital requirement. “We have astutely read the signals in our operating environment. Universally, these signals say grow, capitalize, expand your services and innovate. We have responded by negotiating an individualized balance of all these signals,” Oyetunji said. By the scheme, the shareholders could elect to take cash, have their shares transferred to Mauritius directly or keep their shares with the Company through a nominee vehicle. “As at now, a significant number of our shareholders have made their choices. While some have chosen to collect cash, a few want their shares transferred to Mauritius and those who fall in that category are going through a KYC process. Those who want to join the nominee vehicle are being coordinated by PACE Registrar,

which is the Company in charge of that process. The good thing about this is that our minority shareholders have options,” Oyetunji said. Commenting on the reorganization, Chairman of the Company, Chief Ajibola Ogunshola explained that it will create considerable benefits and opportunities for shareholders and other stakeholders. According to him, the reorganization entails the creation of a new holding SALAU JOHN company that will be domiciled in Mauritius, which will be known as CRe Africa Investments Limited (CRe Mauritius) and capitalized by C-Re Holding Limited, the majority shareholders of Continental Reinsurance Plc, with all the Pan Africa business eventually being consolidated as subsidiaries of CRe Mauritius. While thanking the shareholders for their support to the future growth of the Company, Ogunshola noted that, “in order to consolidate our gains and reposition the Company for enhanced competitiveness, it has become imperative to restructure the Company with the aim of enhancing capacity which will drive significant business growth and profitability for the group”.

Henry Egbiki, EY regional managing partner/country leader, at the commissioning of Borehole and Water treatment equipment, in addition to refurbished and equipped Science Laboratories at Boys’ Senior Academy, Sura, Lagos Island, donated by EY Nigeria as part of its CSR school project initiatives in Lagos.

L-R: Lampe Omoyele, managing director, Nitro 121/guest speaker; Victor Afolabi, founder, GDM Group, and Steve Babaeko, chief creative officer, X3M Ideas, during GDM Marketing Innovation Masterclass to commemorate 10th year anniversary of GDM Group in Lagos.

APPOINTMENTS

Brooks and Blake appoints Onajide as Board Chairman

he Board of Brooks and Blake Nigeria Limited, a perception and marketing communications consulting firm, has announced the elevation of Olufunmilayo Onajide to the Chairman of the Board of Directors, as the company consolidates on its growth and achievements over the past ten years. Speaking on the development, Principal Partner, Brooks and Blake, Sola Fijabi expressed confidence in the appointment stating that Onajide has an incredible and diverse record of accomplish-

ment in senior leadership roles. “We strongly believe that she will provide the required leadership and direction to take Brooks and Blake to its next growth phase,” Fijabi said. Onajide has served as a Director at Brooks and Blake for three years and has brought her thirty years corporate experience to excellent use on its Board. She also sits on the Board of a number of other companies including Union Capital Markets Limited and the Advisory Board of Bridge

International Academies (Nigeria), an integral arm of the world’s largest social enterprise targeted at low fee private education in Africa and India. Onajide earned degrees in Politics and Economics from the University of Wales, Aberystwyth (1986) and an LLB (1988) from the University of Wales, Cardiff. She was called to the Nigerian Bar in 1989. Her experience over the years spans senior management positions in core banking and in Corporate Communications and Reputation Management.

L-R: Awuna Titus, Tutor, The Redeemer Nursery and Primary School; Territory Sales Manager, PZ Wilmar; Mr. Oluwatomisin Omiyale; and Chinadu okonkwo Tutor, Redeemer Nursery and Primary Schools, during the Mamador Breakfast school activation at Redeemer Nursery and Primary Schools in Abuja, recently.

interpack alliance hosts the Pacprocess Middle East Africa 2019 Fair in Cairo IFEOMA OKEKE

nterpack alliance, the global umbrella brand for the leading international packaging and processing trade fairs for food, beverages, confectionery, bakery, pharmaceutics pharmaceuticals, cosmetics, non-food and industrial goods sectors organized by Messe Dusseldorf, in cooperation with top exhibition management firms the IFP group and - Konzept exhibitions, recently organized pacprocess Middle East Africa 2019 fair - the newest addition to the interpack alliance. Held for the first time at the Egypt International Exhibitions Center in Cairo, from the 9th to 11th December 2019,

pacprocess mea capitalized on the mega opportunities present in one of the major economic hubs in North Africa - Egypt, and featured solutions for food & agriculture, beverages, personal care and household, cosmetics and beauty, pharmaceutical and medical, luxury, industrial and transport as well as point of sale packaging. Speaking on the fair, Bernd Jablonowski, global portfolio director processing and packaging at Messe Düsseldorf, stated that, strong decisionmakers with know-how for trade fairs were brought together for pacprocess MEA. This included an advisory board composed of high calibre representatives of international companies from the

food, pharmaceuticals and confectionery/pastry industries as well as from numerous Egyptian state organisations and associations – which is a first for a trade fair held outside our home base in Düsseldorf. “The establishment of interpack alliance as the umbrella brand was a logical step underlining our unified strategy. It stands for our international expertise in the packaging sector and related process industries while at the same time communicating the leading role of interpack,” Jablonowski adds. He also spoke on the fair’s progress between 2017 and 2019, stating that, as the leading international trade fair for the industry, interpack 2019 attracted 3,000 exhibitors from over 58 countries.

L-R: Femi Odugbemi, academy director, West Africa, MultiChoice Talent Factory; Denny Y. Miller, awardwinning producer; Lilian Amah Aluko, actor/producer, and Ron Mgbatogu, an actor, at the MultiChoice Talent Factory masterclass Series in Acting For Camera, at Africa Magic Studios

Thursday 30 January 2020

BUSINESS DAY

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NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,315.51 1,315.26

404.55

126.95

578.74

248.15

2,055.99

1,204.73

1,124.24

394.15

130.82

558.05

254.45

2,056.31

1,266.17

1,131.52

-2.57

3.05

-3.58

Week open (17– 1–20)

29,618.52

N15.256 trillion

2,505.46

1,180.65

734.99

Week close (24– 1–20)

29,628.84

N15.262trillion

2,520.68

1,173.97

734.99

Percentage change (WoW) Percentage change (YTD)

0.03 10.38

0.61 19.11

-0.57 1.92

0.00 0.00

-0.02 11.67

11.67

3.97

-5.87

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

2.54

0.02

5.10

0.65

-3.08

12.08

17.72

7.35

Unilever: Disappointing full year results raise fresh concerns Iheanyi Nwachukwu

nilever Nigeria continues to struggle with growing its top-tobottom line figures in an intensely competitive environment. The company, which seems to have lost significant market share to unlisted competitors with discounted alternatives to their products, recently published its full year (FY) 2019 results. After a disappointing third-quarter, the dismal full year results renew INVESTOR concerns on the business. The company reported full year revenue decline of 34percent to N60.75billion from a high of N92.025billion in 2018. Gross Income decreased by 75.7percent to N6.672billion in 2019, from N27.427billion in 2018. Consumers constantly adopt affordability as the key factor in their consumption decisions, thus Unilever’s premium brands continue to lag. The company recorded Loss Before Tax (LBT) of N8.322billion in FY 2019 as against Profit Before Tax (PBT) of N13.563billion in 2018, representing a decline of 161.4percent. Also, its Loss After Tax (LAT) came at N4.224billion against Profit After Tax (PAT) of N10.03billion, which represents 142.1percent decline. In a November 12 note,

FBNQuest Research while giving their weaker earnings outlook for Unilever along with the downside potential downgraded its rating on Unilever to underperform. Unilever continues to underperform the Nigerian Bourse broad index as its share price reaches 52-week low of N15.8 from a 52-week high of

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N47. Year-to-date (ytd), the stock has decreased by -28.2percent. Barely ninety years ago, British soap-maker Lever Brothers and Dutch manufacturer Margarine Unie merged their operations to become Unilever. Unilever is one of the world’s leading consumer goods companies, making and selling

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around 400 brands in more than 190 countries. With a rapidly increasing population, Nigeria possesses a potentially attractive consumer story. However, weak consumer disposable income and high poverty rates makes the case less compelling. Also, the country’s tough operating environment;

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dilapidated infrastructures, leaky borders, double-digit inflation and sluggish economic recovery, further compounds sector players woes as they struggle to breakeven. In the third-quarter (Q3) 2019 where Unilever revenue slumped remarkably it was linked to tighter credit terms with key distributors in a bid to minimise non-performing receivables. Recently, the Board of Unilever Nigeria appointed Carl Cruz as its new Managing Director. The appointment becomes effective from February 1, 2020. “Nigeria is an important market with exciting opportunities. Unilever Nigeria has a great team and our ambition is to satisfy consumers’ needs and make sustainable living commonplace,” Cruz had said. The new leadership, according to Cruz “reflects Unilever’s focus on strengthening its operational effectiveness and reinforces the commitment of the company to its contribution to the socioeconomic development of the country.” Research analysts at Lagosbased FSDH Merchant Bank had said in their November 4, 2019 note on Unilever Nigeria Plc third-quarter (Q3) result that their findings show “the steep revenue decline in Q3 may be partly due to the company’s decision to stop offering its trade partners liberal trade terms in a bid to reduce exposure to receivables.”

Thursday 30 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Investor’s Square

United Capital Investment Views

Equities market: Nigerian bourse recorded mixed performance

he equities market performance was mixed in the prior week as the Nigerian Stock E xchange (NSE) All Share Index (ASI) added 3basis points (bps) to close at 29,628.8 points. Investors gained N142.5billion as market capitalisation settled at N15.3trillion and year-todate (YtD) returns closed at 10.4percent. In terms of activity the average value traded declined by 14percent and average volume traded declined by 40.7percent. The market closed negative on two days out of the five trading days. The performance of the sectors under our watch was mixed as three sub-indexes out of the five closed on a positive note. Starting with the gainers, the oil & gas sector (+2.5percent) led advancers, driven by TOTAL (+9.4percent) and SEPLAT (+2.9percent). In like manner, the insurance sector (+3percent) followed on AIICO (+3.9percent) and Ma n s a rd ( + 1 . 4 p e rc e nt ) . The industrial goods sector (+5.1percent) also gained

on the back of BUA Cement (+5percent) and Dangote Cement (+2.8percent). On the flip side, the banking sector (-2.6percent) declined due to losses in GTBank (-4.2percent) and UBA (-2.8percent). The consumer goods sector (-3.6percent) trailed with Nestle (-6.1percent) and Unilever (-5.1percent). Investors sentiment improved as market breadth increased to 1.3x from 0.4x in the previous week. Specifically, 28 stocks gained while 21 stocks declined. This w e ek w e exp e ct reactions to the gradual publication of unaudited earnings report (following the

recent SEC directive) to drive performance. However, the recent decision of the CBN to increase CRR for bank to 27.5percent is a downside risk. Money Market: Treasury bills yields rose 8bpd to 3.53percent In the previous week, liquidity levels remained significantly buoyant, as naira injections in form of Bond coupons (N67.8billion), OMO maturities (N433.8billion) and FAAC inflows (c.N340billin) w ere par tially offset by outflows via OMO auction (N340.3billion). As a result, average interbank funding rates remained in the single-digit region, ticking up by 57basis points (bps) week-on-week (w/w) to 4percent. Analysing primary market activities, the CBN was in the OMO market, auctioning N300billion across three tenors. Eligible investors went aggressive on the 180-day and 362-day, with bid to cover at 1.5x and 2.0x. Also, stop rates were reduced further, with the 180-day at 11.67percent and 362-day at 13.11percent. In all, average yield on

NTbills rose by 8bps w/w to 3.53percent. In the same vein, the total value of NTBills traded declined by 32.3percent w/w, to N52.4billion. For the OMO market, excess demand at the auction filtered into the secondary market, causing average yield to dip by 34bps w/w to 12.77percent. How e v e r, va l u e s t ra d e d dipped w/w, by 6.4percent to N858.8billion. This week, with sizable OMO inflows (N495billion), NTBills maturities (N229.6billion) and Bond coupons (N49.6bn) scheduled to hit the system, we expect the CBN alongside the scheduled NTBills auction to mop up some of the liquidities

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at relatively low rates. Also, following the surprise decision by the Monetary Policy Committee to increase Cash Reserve Ratio (CRR) by 500bps to 27.5percent, we could see short term spikes in interbank funding rates. Bond Market: Declining oil prices fuelled bearish outcome at the Eurobond market At the bond market, heavy funds flowed into the Jan-2020 bond auction as local investors remained hungry for doubledigit yields. While N155billion was offered across the 15-year, 10-year and 30-year bond, total demand was significant at N624.5billion (total bid to cover: 4.0x). On average, stop rates edged lower compared to the previous auction, down 82bps, with the 5-year at 9.85percent, 10-year at 11.13percent and 30-year at 12.56percent. Overall, in line with the DMO’s plan to aggressive borrow in Q1-20, a total of N410billion was sold, versus N155billion offered. At the secondary market, buying interests were observed, as average yield on bonds declined by 41bps w/w to 10.05percent. Also, total value of bonds traded increased 29.4percent w/w to N441.9billion. For Eurobonds, interests in Nigeria’s sovereign instrument were lacklustre, following the huge decline in oil prices (-5.9percent to $61/barrel). As a result, average yield moved up by 13bps to 6percent. Eurobonds at the corporate segment reported a divergent performance, as average yields dropped by 4bps to 5.1percent. This week, we expect positive sentiments in the Eurobond market to remain capped amid our expectation for crude oil prices to remain volatile. For the domestic bond market, we expect the continued buoyant level of liquidity to keep rates moderated in the bond market, despite the recent increase in CRR by 5percent. Currency Market: Dollar reserves reverse previous gain The performance of the naira was mixed, across the three main FX windows under our watch. The local unit shed points at the CBN Official window, depreciating by 2bps to close at N306.95/$1, the I&E FX window rate followed, down 25bps to N362.75/$1.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

Economy & Markets

ASHON sues for policy consistency

orried by inconsistency u s u a l l y associated with government policies in Nigeria, the Association of Securities Dealing Houses of Nigeria (ASHON) has urged the federal government to sustain the current policy on Open Market Operations (OMO) for enhanced attractive investment in the capital market. At the weekend, the A l l -s ha re In d e x ( A S I ) , a measure of corporate gains increased by 37.55 absolute points on The Nigerian Stock Exchange, representing a growth of 0.13 percent to close at 29,628.84 points. Also, the Market Capitalisation, value of listed securities was up by N19.34 billion, a growth of 0.13 percent to hit 15.26 trillion. Generally, investors have been smiling to their banks as the market has largely been on bullish run since the beginning of the month. The apex bank recently announced the exclusion of non-bank locals (individuals and corporate) from participation in OMO at both the primary and secondary markets, implying that only Deposit Money Banks (DMBs) and Foreign Portfolio Investors can participate in this juicy financial instruments. The new policy which crashed interest rate on Treasur y Bill, trimmed yields on bond prompted investors and fund managers to shift focus from the money market, and stage a comeback to the capital market with massive demand for equities. Co m m e nt i ng o n t h e development, ASHON chairman, Oyinyechukwu Ezeagu explained that the new policy on OMO had been very beneficial to the stock market. He noted that the fall in interest rate created opportunities for higher Return On Equity (ROE) and the investors are taking advantage of the inverse relationship between the money market and capital market. Ezeagu, however expressed concerns

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Oyinyechukwu Ezeagu, ASHON chairman

on sustainability of OMO policy going by uncertainties that usually characterise government policies in Nigeria. He argued that the government might decide to reverse OMO policy if banks mount pressure that it is hurting their profit margin or the CBN perceives a need to top up the nation’s external reserve. According to him, it is too early to celebrate that the current rally because of sustainability. “Our concern is always polic y uncertainty and consistency in Nigeria. This has been a major drag to the growth and development of the economy and by implication, the capital market. The new policy on OMO is making investment in the market more attractive but the question is sustainability. We operate in an unpredictable environment where there can be policy somersault at the least expected time,” Ezeagu said. La st w e e k, th e ap e x bank’s Monetary Policy Committee (MPC) increased Cash Reserve Ratio (CRR) by 500 basis points from 22.5 percent to 27.5 percent, apparently to hedge against upsurge in inflation rate which is at 11.98 percent as at @Businessdayng

December last year. The upward movement of CRR is to mop up excess liquidity in the system. However, Monetary Policy Rate (MPR) was retained at 13.5 percent, Liquidity Rate, 30 percent and Asymmetric Window at +200 and -500 basis points. The OMO polic y did not come from the blues. It is part of CBN’s financial engineering tactics to ensure that Deposit Money Banks channel credit to the real sector, to reduce crowdingout of the private sector in the area of credit. “Banks should lend money to the real sector to enhance economic growth and development. Banks are currently awashed with liquidity and this should be channeled to the real sector.” Ezeagu said. With a real GDP growth at 2.10, 2.12 and 2.38 percent in Q1, Q2 and Q3 in 2019 while the population growth is at 2.6 percent, Nigeria’s e c o n o my i s s t r u g g l i n g to find its bearing. The sluggish economic growth is further compounded by its debt burden, infrastructure deficit, acute security challenges with concomitant effects on lives and properties as well as food production. Yet, the economy dictates the tune for the capital market.

Thursday 30 January 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Domestic investors took shine off foreigners in 2019 equities transactions …exchanged N985.53bn worth of stocks …accounted for 51.11% of N1.928trn transactions Iheanyi Nwachukwu

quities transactions by domestic investors (institutional and retail) outperformed that of their foreign counterparts in 2019. Details of equities transactions in the 12 months to December 2019 show domestic investors traded N985.53billion worth of equities representing 51.11percent of the total trade valued at N1.928trillion. Domestic retail investors accounted for N477.34 billion while domestic institutional investors traded N508.17billion worth of equities in same period. In Ja nu a r y , d o m e s tic investors traded equities worth N55.23billion, February (N89.14billion), Ma r c h ( N 5 4 . 0 2 b i l l i o n ) , April (N71.99billion), May (N143.87billion), June (N200.51billion), July ( N 5 5 . 6 9 b i l l i o n ) , Au g u s t (N58.09billion), September (N47billion), October

(N59.43billion), November (N85.76billion), and December (N64.80billion). Foreign investors exchanged stocks valued at N942.55billion last year, representing 48.88percent. Foreigners brought N419.13billion into the local equities market but took away N523.42billion from the market. On a monthly basis, the Nigerian Stock Exchange (NSE) polls trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows. On a month-on-month (mom) basis, as at December 31, 2019, total transactions at the nation’s bourse decreased by 25.84percent from N172.52 billion (about $562.89million) in November 2019 to N127.94 billion (about $417.41 million) in December 2019. Over a thirteen (13) year period, domestic transactions decreased by 72.30percent from N3.556trillion in 2007 to N985billion in 2019 while foreign transactions increased by 53.08percent from N616billion to N943billion over the same

period. The performance of the current month when compared to the performance in the same period (December 2018) of the prior year revealed that total transactions increased by 1.65percent. In December 2019, the total value of transactions executed

by Domestic investors outperformed transactions executed by foreign investors marginally by 2percent. A further analysis of the total transactions executed between the current and prior month (November 2019) revealed that total domestic transactions decreased by 24.44percent from

N85.76 billion in November to N64.80 billion in December 2019. Similarly, total foreign transactions decreased by 27.22percent from N86.76 billion (about $283.1million) to N63.14 billion (about $206 million) between November and December 2019. The value of domestic trans-

actions executed by Institutional investors outperformed Retail investors by 24percent. A comparison of domestic transactions in the current and prior month (November 2019) revealed that retail transactions decreased by 24.03percent from N32.21 billion in November 2019 to N24.47billion in December 2019. Similarly, the institutional composition of the domestic market shows it decreased by 24.71percent from N53.55billion in November 2019 to N40.32billion in December 2019. Total domestic transactions accounted for about 51% of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49% of the total transactions in the same period. The actual performance referenced 2019A (2019 Actual) shows that total foreign transactions carried out year-to-date (YtD) is about N942.55 billion whilst total domestic transactions YtD is about N985.53 billion.

between 2008 and 2010 particularly notable. Within the referenced period, average negative real yield widened to -6.5percent from -1.2percent as the CBN embraced dovish orientation in response to international monetary easing aimed at combating the global financial crisis. The implied liquidity injection in the domestic market pressured nominal yields lower by as much as 600 bps (to nominal levels of c.3percent on some tenors) between 2009-2010, before a reversal in 2011 following pressures on inflation, foreign reserves, and the exchange rate. Given that the negative real yield environment is expected to coincide with economic

frailties such as rising inflation and weak fiscal position, a few market participants are projecting a reversal in yield trajectory in the coming year. To this point, we note that the downward yield trajectory is primarily liquidity driven as market players continue to price their bids higher in a market where traders are reluctant to sell. While we expect further inflows into government treasuries as investors continue to rotate out of OMO instruments in the more immediate term, we expect to see a reversal of downward yield pressures between Q2’20 and Q3’20 as the intensity of OMO maturities tapers and the effect of higher demand for domestic borrowing and inflationary concerns comes to the fore. For context, average maturities over Q2’20 and Q3’20 (N618 billion) pales in comparison to average OMO inflows of N1.5trillion since the OMO ban in October 2019. Specifically, maturities in Q4’19 and Q1’20 were elevated at N5.4 trillion and N4.7 trillion respectively. In addition to expected OMO maturities, our argument in favour of a reversal in yield trajec-

tory is also hinged on expectations that institutional investors would eventually become averse to sustained negative real yield and get more acclimatized to other alternative investments by mid-2020. Indeed, there is precedence showing that Pension Fund Administrators (PFAs) had been comfortable with high equity allocations in prior years (example 14percent in 2009 and 17.6percent in 2010) for example. In addition, the provisions of the multi-fund structure allow PFAs to have maximum exposure to variable income securities (such as ordinary shares and collective investment schemes) of 75percent, 55percent, and 20percent for Fund I, Fund II, and Fund III respectively. We appreciate that PFAs’ allocation to other investments is dependent on factors such as economic growth, company performances, and market outlook, but note that the provisions of multi-fund structure and historical precedence of higher allocations to some variable income investments suggest that another asset allocation rejig in favour of alternative investments could be in the offing.

CardinalStone Research

Nigerian Fixed Income: A tale of two markets

e expect liquidity injections from Open Market Operation (OMO) maturities that cannot be rolled over to drive a mean 350 basis points (bps) year-on-year (YoY) moderation in government bond yield by end of 2020. For bills, we envisage yields bottoming out between 4-5percent in H1’20 (versus 5.8percent currently) before a potential reversal. The aforementioned yield moderation is likely to slightly taper in second-half (H2) 2020 on lower maturity inflows and possible change in capital allocation in favour of non-fixed income instruments as negative real yield widens. Elsewhere, the interest rate on OMO, which could remain exclusive to foreign portfolio investors (FPIs) and banks, is likely to be dictated by external financing conditions, attractiveness of carry trade, and Nigeria’s economic risk profile. Our base case expectation is for yields in the OMO space to remain within +/-50bps of current level, aiding FPI participation as CBN extends liquidity support and ensures the availability of hedge instruments

for FPI’s. Huge system liquidity to paper over “macro cracks” In our view, yields moderation is likely to subsist in the near term despite sustained macro weakness, high inflation, and inadequate fiscal consolidation. Precisely, although higher inflation and wider-than expected fiscal deficit (circa 4percent of GDP in 2020E) should ordinarily have necessitated an upward repricing of government yields, bloated system liquidity level is likely to sustain the current yield moderation. Since the OMO ban, yields on Nigerian T-Bills and bonds have plummeted by 850bps and 313bps respectively, compared to an average monthly change of 41 bps and 36 bps in the prior 6 months. The liquidity impact has been pivotal in determining borrowing costs and we expect this effect to continue into the first quarter of 2020 with an additional N4 trillion worth of OMO bills due to domestic and non-bank corporates maturing. The scheduled size of OMO maturities in 2020 alone is c.2x the projected fiscal deficit for the year, with a potential N1.2 www.businessday.ng

trillion in new pension contribution likely to further magnify the liquidity glut. We believe the liquidity deluge from maturing OMOs and fresh funds (that is FAAC allocations, SMIS refunds etc.) would continue to compete for limited FG debt offering and drive yields down for most of Q1’20. However, we may see this downward trajectory in yields reverse in H2’20 as OMO maturities dry up significantly and domestic fund managers adapt to other high yielding investment options. How much lower can yields go in 2020? Nigeria has endured spells of negative real yields on government instruments in the past, with the three-year spell

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Thursday 30 January 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

Making stakeholder capitalism a reality Doug Sundheim and Kate Starr

takeholder capitalism, a popular management theory in the 1950s and ’60s that focused on the needs of all constituents, not just shareholders, has been poised to make a comeback since weaponized financial instruments brought down the economy in 2008. Now, spurred by the climate crisis and social challenges such as rising inequality, the movement is gathering additional steam. There’s a sense among business leaders that the prevailing ideology of putting shareholders above everyone else — which has reigned for the past 40 years — needs a serious update. Naysayers will call stakeholder capitalism a public relations stunt. Window dressing designed to placate protesters and pretty-up corporate images. But there are signs that it’s far more than that. This month, Larry Fink of BlackRock, the world’s largest investor, sent his annual letter to CEOs, placing long-term sustainability at the center of his investment approach. “Awareness is rapidly changing,” he writes, “and I believe we are on the edge of a fundamental reshaping of finance.” Last month, the World Economic Forum updated its Davos Manifesto for the first time since 1973 to more clearly state that businesses must be stewards of the environment, uphold human rights throughout their global supply chains and pursue sustainable shareholder returns that don’t sacrifice the future for the present. And last August, 181 multinational CEOs of the Business Roundtable revised their Statement on the Purpose of a Corporation to explicitly move beyond shareholder primacy — a stance they’ve held since 1997 — to express “a fundamental commitment to all of our stakeholders.” The list goes on. How did we get here? Shareholder capitalism has delivered economic growth with many important benefits, but it’s also left a path of environmental and social destruction for future generations to grapple with. As the economist Kate Raworth writes in her excellent book, “Doughnut Economics,” this tension lays bare an extremely uncomfortable reality: “No country has ever ended human deprivation without a growing economy. And no country has ever ended ecological degradation with one.”

This reality raises two critical questions: How can groups across socio-economic and political divides get better aligned on the crisis we’re facing? And what is the appropriate approach, including taxation and regulation strategies, to produce the economic, environmental and social outcomes we need to survive and thrive for generations to come? Business leaders need to help answer these questions. Our organizations — and ultimately the planet — depend on them. As with all change, the best place to start is locally, identifying opportunities and priorities in your own organization. Here are four suggestions: MEASURE THE RIGHT THINGS Today’s climate and economic realities require laserlike focus. If you’re not careful, you can get lost in an unending dashboard of performance indicators with varying degrees of usefulness for your organization. We recommend using the Sustainability Accounting Standards Board’s Materiality Map as an initial measuring stick to evaluate your organization’s performance against the environmental, social and governance issues that are likely to affect your industry. A deep focus on metrics that relate to day-today deliverables will support your team in successfully measuring ESG issues, even if the results, by definition, will occur in a longer time frame.

At the same time, pick your spots where you want to become an industry leader. Doing so can lead to a meaningful competitive advantage. An example is Eli Lilly, whose initial diversity efforts were unsuccessful at advancing the careers of women and people of color. Then they commissioned a detailed survey called the “Employee Journey” that uncovered deeper, personal reasons why their diversity efforts were failing and pointed to steps they could take to remove those organizational barriers. BE A THOUGHTFUL VOICE FOR REGULATION Business leaders must rethink their relationship to regulation. The widely accepted notion that regulation decreases competitiveness and is a drag on growth is simplistic. In the long term, a habitable climate and peaceful society are the bedrock of an economic system that delivers prosperity. And these things require strong and effective policy frameworks to protect them. Forty years ago, business, labor and public interest group lobbying were on relatively equal footing. Today, large corporations and their associations outspend labor and public interest groups 34 to 1 on lobbying efforts. Business’s large thumb on the scale in Washington has led to a taxation and regulatory environment that tends to serve corporate interests above broader public interest. Corporate executives are

starting to see the writing on the wall. At the 2019 New York Times Dealbook conference, eight technology executives discussed the topic and a majority agreed that the time has come for additional oversight, even if it will be difficult. Facebook founder Chris Hughes struck an optimistic tone. “We can get regulation right. We do it with airlines. We do it with pharmaceuticals. We do it with the FCC,” he said. “We have come to a cultural agreement in the United States that when private industry is crucially important in our lives, we have to ensure that it works for the people.” PAINT AN INTEGRATED PICTURE FOR SHAREHOLDERS Stakeholder capitalism can’t succeed if shareholders don’t see the value. In a stakeholder model, measurement must be a team effort. While the chief financial officer bears central responsibility for delivering financial results to shareholders, he or she will need support from other executives to also articulate how working on ESG issues affects financial performance. Research is beginning to show clear value in this approach. For example, George Serefeim at Harvard Business School has found that strong sustainability performance is translating to increased valuation premiums. Moreover, the picture painted for shareholders can’t be overly focused on short-term performance. The return on smart, sustainable business

practices isn’t measured on a quarter-to-quarter basis. The CFO needs support in shifting shareholder discussions to the longer term. Successfully doing so will give your organization the runway needed to implement the right competitive and strategic investments for the future. DON’T BE AFRAID TO TAKE SOME RISKS Your stakeholders don’t expect you to have all the answers. However, they do expect you to get into the conversation. Engage with customers, peers, employees, scientists, activists and investors about what’s happening and how it relates to your business. See the world through a variety of lenses as you determine best courses of action. Then focus on some knotty problems and begin to experiment with solutions. Successful or not, be transparent. We all must learn together. Humans have never had to deal with the challenges we’re now facing. It’s time we get serious about writing a new chapter on capitalism, before it’s too late.

Doug Sundheim is a leadership and strategy consultant and the author of “Taking Smart Risks.” Kate Starr is the chief investment officer of Flat World Partners.

Thursday 30 January 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Effects of the Finance Act 2020 on capital market practice Onyinye Ukegbu

he Finance Act 2020 signed into law, on 13th January 2020, by President Muhammed Buhari, has effected significant changes to the Nigerian financial landscape. By modifying the provisions of the country’s major tax laws: Companies Income Tax Act (“CITA”), Capital Gains Tax Act, (“CGTA”), Customs and Excise Tariffs Consolidation Act (“CETCA”), Petroleum Profit Tax Act (“PPTA”), Personal Income Tax Act (“PITA”), Stamp Duties Act (“SDA”), Value Added Tax Act (“VATA”), the changes aim to reverberate across and rejuvenate various market sectors, promoting fiscal equity, aligning domestic laws with global best practices, supporting SMEs, increasing government revenue, and incentivizing stakeholder interest in investments and the capital market. The Finance Act exempts companies with less that N25m annual turnover from paying CIT; increases VAT from 5% to 7.5% with a N25 million VAT compliance threshold; expands the scope of taxable companies to include those that have “significant economic presence” within the Nigerian digital space; requires a tax identification number for opening of bank accounts or the continued operation of an existing one; imposes excise on specified imported products; and of particular importance, provides exceptions for the application of excess dividend tax. By Section 19, the Finance Act eliminates the risk of multiple taxation by exempting dividends paid out of retained earnings that were excessively taxed under CITA, PPTA and CGTA; exempted profits/income; franked investment income;

President Buhari

and rental income received by Real Estate Investment Companies (“REIC”) for distribution to their shareholders. This is a welcome development especially to multinationals and conglomerates who for fear of the over-arching 30% tax wielded on subsidiaries and holding companies alike, were discouraged from having their headquarters in Nigeria, and as a result, Nigeria lost out on investments. This provision further bodes well for the capital market which has remained relatively quiet over the last decade. Despite the highpoints of 2019- MTN Nigeria’s $5.07billion dollar listing, Airtel’s $3.8 billion ordinary shares initial public offering, and Access Bank Plc’s N15 billion Green Bond, the first of its kind by an African Corporation, there is still low market liquidity and as in 2018, the NSE recorded a 14.6% decline. Securities lending - which involves the lending of securities by institutional investors e.g. insurance compa-

nies to mostly banks and broker-dealers - was introduced to the NSE, in 2012, to provide liquidity to the market, but is yet to do so. These transactions, which could be structured as securities loan transactions, repurchase agreements, or sell-buyback arrangements, were taxed on their legal structure instead of their economic matter, under CITA. This created the risk of multiple taxation of the same income and made securities lending transactions less desirable. The modification by the Finance Act which eliminates the risk of multiple transactions has the foreseeable effect of increasing the volume of securities lending transactions on the NSE. Taiwo Oyedele, the Partner and Head, Tax and Regulatory Services, PricewaterCoopers (PwC), says that he fully expects to see a growth in securities lending transactions and real estate investments in the next two months, even more at the close of 2020. He added that given the changing land-

scape, it is important that the legal industry is properly appraised of the nuances of these transactions. He also intimated that education of the stakeholders, including regulatory agencies will make such transactions, easier, more desirable, and thus, increase participation, which will ultimately result in the deepening of the capital market. According to the Financial Stability Oversight Council’s (FSOC) 2018 annual report, “the value of securities on loan globally reached a multi-year high of $2.6 trillion in the first half of 2018, with the U.S. share of global lending activity, also estimated to have reached approximately 55% in 2018. In the same period, the insurance industry had $55.6 billion in reinvested collateral for securities lending, up from $53.1 billion at year-end 2016. Approximately 37% of reinvested collateral was in cash and cash equivalents, while mortgage-backed securities and asset-backed securities made up a total of 17.5% of the collateral. In ad-

dition, securities associated with repurchase agreements (“repos”) and reverse repos decreased from $25.9 billion at year-end 2016 to $20.8 billion at year-end 2017.” The borrower typically initiates the securities lending process by contacting a prospective lender or its agent and asking for availability of a security. Once the availability is established, negotiations of terms, finalization of agreement, and delivery of the collateral ensues, and it is here that the legal industry will do well to be adequately prepared to receive the inflow. With appropriate legal drafting, legal opinions that give parties confidence in the market, and conversations that drive the development of what is achievable within the jurisdiction, the legal industry stands to be a strategic player in realizing an enabling environment for growth in the capital market.

Onyinye Ukegbu is an Associate with the BusinessDay Legal Business Unit.

Thursday 30 January 2020

BUSINESS DAY

THE BAR

LegalBusiness

Okeke condemns ‘derogatory’ remarks against NBA presidential election candidates ...Says no aspirant has breached electoral provisions of NBA constitution

renowned legal practitioner and a member of the Nigeria Bar Association, (NBA), Prince Ifenna Okeke has condemned derogatory comments made by some members of association against aspirants to the office of the president of the association. In an article titled ‘NBA Elections: If You Must Cry, Do Not Shed Crocodile Tears!’ Okeke expressed disappointment in these comments credited to some members of the bar, which according to him, was laden with crocodile tears. Against the undertone of the commentaries describing the aspirants as violating electoral provisions of the constitution and allegedly engaging in vote-buying, Okeke insists that no aspirant had violated the provisions of the law and those condemning the aspirants have no moral right to do so. “So far, and to the best of my knowledge, none of the aspirants appears to have breached the electoral provisions in the Constitution, and all their conducts are legally permitted. Importing morality, without more, into this is therefore a cheap attempt to muddy otherwise clear waters, especially in the face of the highly elusive and relativist nature of morality,” he said. He quoted the first commentator as stating that “The entire Nigerian political and moral systems are deteriorating fast and sickening. The forthcoming NBA national elections and intrigues by some aspirants are shameful and condemnable by morally upright lawyers. Does it mean that our conscience as a noble profession is lost? Are we getting so gullible to be bought by free dinners and concerts? Trying to buy our votes through dubious and messy programmes is silly.” In response, Okeke explained that what the first commentator considers as moral may be deemed immoral by someone else, adding that the commentator has no standing to declare

what may amount to morally acceptable standards, or what may comprise a moral system, or who may qualify as a morally upright lawyer. He insisted that questions on morality should only be raised if people can show that they comprise the moral content of clear provisions of law, noting that the first commentator woefully failed to do that. “Interestingly, the Augustine Alegeh administration and the writers of the Constitution also appreciate the moral content of law and that was why they instituted universal suffrage and electronic voting. “These were designed and introduced to eliminate the highly corrupt delegate voting system through which NBA leaders were ‘selected’ in the past. I am therefore shocked by the commentators’ amnesia. They appear to have forgotten the road we travelled before getting to this point. www.businessday.ng

They appear to have forgotten that they were active participants in the previous corrupt system. Permit me to refresh their memory: “When we operated the delegate system, it was an open secret that it was fraught with corruption. Candidates and their cronies had access to the delegate lists, targeted delegates, sequestered them in hotels, paid them monies, and literally bought their votes. “It was a disgraceful system that had to be terminated. The commentators and their folk were around when this was going on. They were complicit either directly by monetising votes or indirectly by failing to cry as they are now doing. In fact, a story has been told of a particular candidate in a previous election cycle who had sequestered delegates in a hotel (all-expenses paid) but subsequently lost the election. “The report was that the

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candidate angrily evicted all those delegates from the accommodation immediately he received news of his loss. Well, this is hearsay and I am not reporting it to assert its truth. I am only reporting it to prove that it was said and I heard it. To the readers who were around then and can assert its truth, wink,” he explained. Okeke quoted the second commentator who stated that: “When we make excuses for what is ethically unacceptable in the legal profession, I weep for our once noble profession. In the forthcoming NBA election, we as lawyers must make a distinction between those who are ready to serve and those who believe our votes can be bought by giving us appearance of being nice.” He stressed that anyone who has knowledge of the previous system must acknowledge that the past executives have made signifi@Businessdayng

cant progress by instituting universal suffrage and electronic voting and a failure to acknowledge this is clearly a medical case of amnesia. “Assuming, but not conceding, that there is any merit in the commentators’ views, how many votes can one person buy under the new system? How many lawyers can one person pay practicing fees for? How may free dinners and concerts can one person sponsor? “Assuming there is someone who has that kind of capital to risk, and indeed risks it, can that person micromanage voting as was done during the era of delegate voting? The answer to this last question is clearly in the negative,” he further inquired. According to Okeke, voting, under the new system, is a private matter conducted in the comfort of the voter’s home or office and at the end of the day, the voters are free to vote as they please. “The allegations of actual or perceived political inducement, therefore, not only fail to make any sense; they also insult the collective nous of the voters, who are all learned people and are capable of taking independent decisions that they consider most favourable for them and their professional association. “ At the very best, the actions complained about by the commentators would only result in increased voter awareness of the candidacy of particular individuals especially as voters are still free to vote as they please. The commentators’ sudden concern for the conscience of our noble profession is simply bellyaching on account of their loss of control. “They want the delegate system back at all costs, so that they can control the elections and make money off it. In fact, at the 2019 Annual General Meeting of the NBA, at least one of the commentators and their cronies were very vociferous in advocating for the re-introduction of the discriminatory, inept and corruption-laden delegate voting system,” he explained.

Thursday 30 January 2020

BUSINESS DAY

DOCKET

OGFZAA Vs Staff: Industrial court Feb. 27 for hearing

PERSPECTIVE Lagos State Transport Sector Reform Law 2018: Perspective from the bar

Felix Omohomhion, Abuja

of its Abuja office, on the grounds that he refused to comply with its letter dated Dec. 3, 2010, which had directed him to present the originals of his credentials for verification. Omosule, however, refuted the claim of the authority, stating rather that he made available to the defendant, Certified True Copies (CTCs) of his educational certificates /credentials, including GCE ‘O Level certificates and degree certificates as instructed. Omosule claimed that the originals of his credentials were misplaced in untraceable circumstances as at 2010 when the report to submit originals was made. The claimant also averred that the CTCs of his certificates submitted to the defendant were certified by the issuing institutions, which included West African Ex-

amination Council and the University of Ado-Ekiti, then Ondo State University, AdoEkiti respectively. The claimant is therefore seeking the court ‘s declaration that he was still a staff of the organisation and entitled to all the rights, privileges and benefits due to him by reason of his employment. He is praying the court for an order directing the defendant to reinstate him to the position of a director, on grade level 17, a position he claimed his contemporaries were currently. Omosule is equally seeking for the order of the court to direct the defendant to pay all his outstanding salaries, benefits and entitlement since 2011. In addition, he is asking the court to order the defendant to pay him the sum of N50m as exemplary and general damages.

Court Restrains Sacked Oyo LG Bosses, Malami, IGP From Forceful Takeover Of Councils

he Oyo State government on Tuesday secured an injunction restraining the sacked council chairmen across the 33 local government and 35 local council development authorities from forcefully taking over the council Secretariat. The order was granted by an Oyo State High Court sitting in Ibadan and presided over by Justice Moshud A.A Abbas. The four reliefs sought by the lead counsel to Oyo State Government, Dr. Akin Onigbinde, SAN including an interim injunction restraining the sacked chairmen from forcefully taking over the Local Government

Councils or taking steps capable of causing a breach of peace in the State were all granted. The orders were granted following an ex-parte motion filed by the State Government in Suit No: I/78/2020. Also restrained were the Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN, Inspector General of Police Commissioner of Police Muhammed Abubakar Adamu and the Commissioner of Police, Oyo State Command, Sina Olukolu and Oyo State APC chairman, Akin Oke. The parties and their agents were restrained from taking any step that

could tamper with the pending matters before the Court of Appeal. According to the Court, the sacked chairmen, as well as the four other defendants, their officers, agents, privies or otherwise, were restrained from taking steps that would cause breach of peace by embarking on self-help to give effect to a letter dated 14th January, 2020 with reference number HAGF/OYO/2020/ VOL.I/1 issued by the Attorney General of the Federation to the sacked chairmen and the Inspector General of Police pending the hearing and determination of the motion on notice.

The Lagos state government early this week banned the operations of commercial motorcyclists known as Okada, and tricycles (Keke) around the Lagos metropolis. This was announced by the State Commissioner for Information and Strategy, Gbenga Omotoso on Monday, January 27th, 2020. According to him, the decision was reached at a meeting of the Lagos State Government and the Lagos State Security Council. Citing the Lagos State Transport Sector Reform Law 2018, the government attributed the ban to the rising rate of crime and accidents. This move has provoked mixed reactions from residents of Lagos, including legal practitioners who question the viability of this law.

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I have a few questions about this Lagos ban on motorbikes: Did the Lagos State Government (LASG) engage the sector stakeholders, especially the more sophisticated ones leveraging on technology? At least six months before this ban? Is LASG unaware that the much celebrated SME sector’s efficiency is largely underpinned by the alternative solution bike suppliers bring to the deplorable network of unpliable roads and the horrendous traffic that cripples movement in the state? Is LASG unaware that people, businessmen have sourced international finance in millions of dollars on varying economic terms including loans to fund and resource the “bike industry”? Is LASG aware that the messaging to investors is that you can wake up one morning and have a business and the next day be indebted because policy is not reliable? Is LASG aware that the real safety is when our roads are pliable and there is security such that any form of transportation is usable? Is LASG aware that It may have created another sub-leadership of corrupt servicemen who will not enforce the policy but seek to use it to bully and extort from already impoverished riders? Is LASG aware that the wellbeing of many families who were beginning to find independence has been jeopardized because no alternative was thought of and introduced before or alongside the ban? Is LASG aware that a ban not prepared for, properly managed is like a stroke or heart attack, it’s either debilitating in its effect or even fatal? Is LASG aware that smart policies are planned and proper/extensive stakeholder engagement is critical? Is LASG coordinating its strategy across security and commerce because while artificial safety is created in the absence of bikes on the highway, which Is where they are most needed, do we have a new force of unpaid, unhappy and HUNGRY young and agile men who can resort to crime for survival? Policies must be smartly coordinated. Policies should not shock stakeholders especially where there are grave commercial distortions. Policies should portray thought, empathy and alternatives that are clearly solution providers. I would love to see @lagosstategovt explain how this would work for the SMEs who rely on them or the investors who have moved their funds, safety is key but so is balanced policy making.

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he National Industrial Court on Monday fixed February 27, to hear the suit filed by a suspended staff of the Oil and Gas Free Zone Authority Administration (OGFZAA), Funmilayo Omosule. The claimant is asking for N50m as exemplary and general damages, following collapse in negotiation for out-of-court settlement. Both OGFZA and Omosule had been locked in a legal battle to resolve the legality or otherwise of the plaintiff’s suspension, following his petition against some management staff of the agency on alleged corruption. At resumed proceedings on Monday before Justice Olufunke Anuwe, the claimant counsel, Muktar B. Usman, and that of the respondent, M. A. Ayara, sought for a date for commencement of hearing. After consultations, the court fixed February 27 for hearing. Omosule is alleging that OGFZAA had through a letter dated April 18, 2011, suspended him as the manager

Thursday 30 January 2020

BUSINESS DAY

LEGALcomic

LegalBusiness

LEGAL INSIGHT

Data protection for hotels T

Introduction he Hospitality Industry is reportedly the third most targeted Data breach/hacking sector; after the Retail and Financial Services Sectors who come first and second in regard to this menace. The significance of the above data breach-risk is highlighted by the recent global massive Data Breach of some Hotel Guests Data Information. Though the Hospitality Industry is still arguably playing catch-up, there are some minimum Privacy and Data Protection Laws and Regulations that every business, especially Hotels, that collects, process, stores and retain any Guest Data must familiarise itself with, and adhere to. Hotel Guests Valid I.D. Check-in It is a global, standard practice for any Guest checking into a Hotel or other Hospitality Establishment to provide to such a Hotel a Government issued Identification Document (“I. D.”) like a Driver’s Licence, National Identity Card, Voter’s Card, International Passport, etc before any hospitality services are provided to such a

Hotel Guest. This practice is also in compliance with the Money Laundering (Prohibition) Amendment Act, among other legislations and regulations on this matter. A vast majority of Hotels also now require their Guests to pay for the services to be rendered by such a Hotel using the Guest Credit or Debit Card details provided also at the point of check-in at the Hotel. A large amount of private information or data is collected by each Hotel when their Guests provide to the Hotel copies of their public authority issued identification document and credit or debit card details. Each Hotel, as a Data Controller, must therefore ensure that in their collection of the numerous Data, they familiarise themselves with, and ensure adherence to the various Privacy Data Protection Laws and Regulations. Rights of Data Subjects Data Protection Regulations give Data Subjects, like Hotel Guests, the right to ask questions from Data Controllers or collectors regarding how each Subject’s Data is collected, processed, stored and retained. Data Subjects also have the right to raise objections as to www.businessday.ng

how their personal Data are collected, processed and stored. The right of a Data Subject to object to the processing or handling of his or her data must be safeguarded at all times. Data Controllers further now owe Data Subjects a statutory duty of care when collecting, processing, storing and retaining any Data Subject’s private information. Data Controllers must accordingly now develop security measures that safeguard the confidentiality and integrity of any data collected or processed from any unlawful and unauthorised access. Data Protection Policy Data Protection Laws and Regulations now expressly require any person or organisation (“the Data Controller”), like Hotels and other Hospitality Establishments, to ensure that when they collect, process, store and retain the personal data of any person in the ordinary course of their business transactions with such persons, they must ensure that the use and privacy to such personal data are protected and safeguarded from any unauthorised and unlawful use or disclosures.

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Accordingly, all Data Controllers are mandatorily required to publicly publish, in a easily understandable language, their Data Protection Policy, which Policy must disclose among other things what constitutes the Data Subject’s consent to the use of such Data, a description of the kind of Data collected, the purpose for the collection of the Data, the technical methods used in processing and storing such data, persons with access to such Data, remedies for any data privacy violation, etc. In furtherance and adherence to the above statutory duty of care, Data Controllers must also now conduct annual data compliance audits of their Data Privacy Protection Practices; with their Data Compliance Audit Reports mandatorily required to be filed annually, on or before the 15th day of March of each calendar year, with the Data Protection Regulator. Penalties for Data Breaches In addition to any criminal liability prescribed by Law, one of the civil penalties for a Data Controller managing more than

10,000 Data Subjects, for a Data Breach, is the greater of a fine of 2% of the Data Controller’s Annual Gross Revenue for its preceding year of operation or N10,000,000 (Ten Million Naira). For a Data Controller dealing with less than 10,000 Data Subjects, the penalty is the greater of 1% of the Data Controller’s preceding year’s Annual Gross Revenue or the payment of N2,000,000 (Two Million Naira). Without prejudice to the right of the Data Subject to seek redress from a Court of Law for a Data Breach, a Data Subject can also approach the Regulatory Data Administrative Redress Panel to investigate and proffer appropriate redress within twenty-eight (28) working days of the lodgement of the Data Breach complaint. Conclusion Any Data Security Breach has the potential to incur administrative, civil and criminal liabilities. Hotels will therefore do well to mitigate if not eliminate these kinds of risk by adhering to the various Data Protection Regulations, some of which are highlighted above.

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Thursday 30 January 2020

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

NBA Calabar Law Week: Experts offer tips on modern legal practice

senior partner a t Te m p l a r s, Olumide Akpata, was on Tuesday January 28th, 2020 honored as a special guest at a mentoring programme in the city of Calabar, Cross River State, organised by the local bar association for its young lawyers, most of whom were already his mentees. The programme themed ‘Tips on modern legal practice’ put together by the 2020 NBA Calabar Branch Law Week Planning Committee was sponsored by the law firm of Templars, an international firm with offices across the country. According to a member of the planning committee, the event was aimed at providing young practitioners with free resources relating to practical technology issues commonly encountered in the practice of law, as well as featuring an audience participation session for young lawyers. “The participants also explored topics such as Technology Law and So-

cial Media Law as aids to helping young wigs make the transition to becoming tech-savvy and competitive lawyers. “The understanding that modern legal practice has become a highly technical affair was the motivation for ‘this mentoring event with Olumide Akpata’ as free information was provided to help lawyers and their respective firms increase their efficiency and productivity through networking and storage technology.”The committee member said. Akpata has over two decades of experience in corporate and commercial law and has been recognised by IFLR 1000 as a leading

mergers and acquisition lawyer in Nigeria and by Chambers and Partners as having experience in advising clients on various aspects of Nigeria Corporate Law. He is often called upon to speak at local and international conferences and seminars. He was the immediate past Chairman of the Nigeria Bar Association Section on Business Law (NBA-SBL). Participants have said that the NBA Calabar law week was made worthwhile by the mentoring programme, as young lawyers savored the opportunity to deepen their knowledge of the technical side of legal, and made the most of the networking opportunities on offer.

RIGHTSWATCH

HIV and AIDS (Anti-Discrimination) Law and Mandatory Policy OSEROGHO & ASSOCIATES

he HIV and AIDS (AntiDiscrimination) Act, 2014 (“the HIV and AIDS Act”) makes provisions for the prevention and the protection of the Human Rights of people living with or infected with the HIV virus, from any form or manner of discrimination and stigmatisation especially in the workplace, in communities, institutions’ and in other fields of human endeavour. Employers, Communities, Individuals and Institutions’ are accordingly required by the HIV and AIDS Act to ensure that they have a HIV and AIDS Policy which adheres to the non-discrimination and non-stigmatisation provisions in the HIV and AIDS Act, and in the National HIV and AIDS Workplace Policy. This is especially as it is a criminal offence to discriminate against any person living with or perceived to be living with HIV or AIDS. No employer, individual, institution or body is allowed to require from any person other than strictly between a married couple, the conduct of a HIV or AIDS medical or health test; or to require such a

person to disclose his or her HIV or AIDS status; or the status of anybody else whether or not related to the concerned person. Also, the real or perceived HIV or AIDS status of any person shall not be the basis for the termination of such a person’s contract of employment. And where a person is infected with HIV or AIDS in the course of their employment, such infected employee shall be entitled to claim compensation from their employer. The confidentiality of the health and medical records of any person living with HIV or affected by AIDS must be protected at all times. The fine and term of imprisonment for any breach of this confidentiality provision, on conviction, is not less than N500,000 (Five Hundred Thousand Naira) in the case of any individual, and N1,000,000 (One Million Naira) in the case of a corporate body. The term of imprisonment is not to however exceed two (2) years. HIV and AIDS Grievances Procedure Every Employer is statutorily required to ensure that the Fundamental Human Rights of its emwww.businessday.ng

ployees, especially its employees living with or infected with HIV or AIDS, are always protected. Where any of these rights, to confidentiality, dignity, non-discrimination, non-stigmatisation, etc are breached, the remedies available to such an Employee are required to be integrated in the Employer’s Workplace Grievances Procedures.

subsequent year that the default continues. Failure to lodge the adopted HIV and AIDS Workplace Policy with the Minister of Labour and Productivity for approval attracts on conviction a further fine of N10,000 for everyday that such a default continues to persist.

HIV and AIDS Workplace Policy Employers who have five (5) or more employees are required to within twelve (12) calendar months of the employer commencing business, in consultation with its employees’, design and adopt a written Workplace Policy that is consistent with the National HIV and AIDS Workplace Policy. Every adopted Employer and Employee HIV and AIDS Workplace Policy is in turn required to be submitted to the Minister of Labour and Productivity for his or her approval. The penalty for failure to adopt such a HIV/AIDS Workplace Policy is a fine, which on conviction attracts a penalty of N250,000 (Two Hundred and Fifty Thousand Naira) for the first year of default and N100,000 for each

Other HIV and AIDS Compliance Penalties The contravention of any of the provisions in the HIV and AIDS Act, for which an express penalty is not provided for in the HIV and AIDS Act, will on conviction attract a fine of not less than N500,000 for individuals and N2,000,000 for corporate organisations. The term of imprisonment, on conviction, is for a period of not less than One (1) year, or to both the fine and the term of imprisonment. The Federal Minister of Justice has the authority to conduct a HIV/AIDS Compliance Enquiry regarding the provisions of the HIV and AIDS Act. And where any contravention is revealed from such an enquiry, the said Minister can make recommendations to the defaulting party for corrective measures to be undertaken before

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criminal proceedings are initiated in a competent Court of Law. Individuals and groups also have a right to seek civil remedies and compensation from the Courts provided a prior communication of such a legal action is forwarded to the Minister of Justice. Conclusion Stigmatisation and Discrimination against people living with HIV or AIDS is still very prevalent especially among religious institutions’ and hirers of domestic staff. Some religious institutions are still compelling couples intending to get married to undergo mandatory HIV and AIDS tests before they can be married in such religious institutions HIV and AIDS education, prevention and care should primarily be a matter for the Government and not for private institutions who are already over-burden with a challenging business environment and multiple taxes. Some amendments to the HIV and AIDS Act compelling governments to take a greater implementation lead in HIV and AIDS prevention, protection and care are therefore necessary.

Thursday 30 January 2020

BUSINESS DAY

GLOBALREPORT

LegalBusiness

Senior partner bags £1m for lock-in deal extension

isted firm Rosenblatt plc. has made a one-off £1m payment to its founder to stop him leaving the business, it emerged today. A trading update to the London Stock Exchange announces that Ian Rosenblatt received the one-off payment as part of his agreement to stay on. A restrictive covenant put in place when the firm listed in 2018 has been extended for an additional two years, running through to 2023. According to the company’s admission document, Rosenblatt entered into an agreement to be appointed as senior partner on a £500,000 annual salary. The agreement contained non-poaching and non-solicitation restrictive covenants for two years fol-

lowing termination of his employment, and a covenant preventing Rosenblatt from being employed, engaged or interested with any competitive business for 12 months. The company said today that the terms of the new

agreement are ‘fair and reasonable’ as far as shareholders are concerned. Looking ahead to the publication of full-year results for 2019, the group said it expected performance ‘in line’ with market expectations

and ‘significantly ahead’ of 2018 results. Revenue growth was achieved through contributions from dispute resolution, litigation finance and the acquisition of corporate finance boutique Convex.

The firm said its corporate division saw reduced billings due to the impact of the cautious business environment caused by Brexit uncertainty. Revenue from this source is expected to be ‘subdued’, although the company insists that since the year-end, following the general election result, the number of transactions is beginning to increase significantly. The company intends to pay an interim dividend of 3p per share for the six months to 31 December 2019. The amount of the dividend will be formally announced on 21 April 2020 and will be paid to shareholders on the register as at 1 May 2019. The total dividend for 2019 is therefore expected to be 5p per share. Shares in RBG Holdings crept up 1% to 99.5p following today’s announcement.

Solicitor struck off over Norwegian harassment convictions

solicitor who practised for more than a decade without flagging up two harassment convictions has been struck off the roll. Farid El Diwany had been convicted in 2001 and 2003 in a Norwegian court but continued to practise in England until his practising certificate was revoked by the Solicitors Regulation Authority in 2017. The Solicitors Disciplinary Tribunal heard that El Diwany had been fined and then given a suspended prison sentence after sending 200 letters and cards to a former friend in Norway and setting up a website on which he wrote disparaging comments about her. The correspondence contained repeated themes about her sex life, abortions, suicide attempts and partner’s drug abuse. He also sent a ‘report’ about her life story to neighbours, friends and relations. The harassment was said to have forced the victim to move to a secret

address, obtain an unlisted number and reportedly feeling scared to go out. Details of El Diwany’s convictions appeared in a High Court judgment from 2011 when he brought unsuccessful libel actions against a Norwegian journalist, police officer, the Ministry of Justice and the

police of Norway. His record was flagged up to the SRA in 2017 after a report from a colleague. The SRA told the tribunal it should not look behind a conviction unless there were exceptional circumstances. El Diwany, who represented himself, submitted

that the convictions were unsound and claimed it was ‘plainly untrue’ the woman felt harassed. His second conviction was the result of duress and he considered that had he not been a Muslim the prosecution would never have been brought. He warned that the tribunal risked ‘subtle Islamophobia

tainting the proceedings’ if it did not go behind the convictions, but the panel found no basis for claiming exceptional circumstances. It was heard El Diwany made repeated applications for practising certificates without telling the SRA about his convictions. He claimed not to know at the time he was under a duty to report this. He considered there was no obligation to disclose ‘something so flawed’. The tribunal ruled it was not open to a solicitor to unilaterally determine under which circumstances it was unnecessary to report a conviction. In the event, he was ‘effectively usurping the role of the regulator’ to form his own conclusion. The tribunal rejected El Diwany’s suggestion that a one-month suspension would suffice, and opted to strike him off. He was also ordered to pay £5,700 costs.

LAW SOCIETY GAZETTE

Thursday 30 January 2020

BUSINESS DAY

BUSINESS TRAVEL Air Peace’s renewal of critical safety certification points way for local carriers IFEOMA OKEKE

he importance of safety in the day to day operations of an airline cannot be over emphasised. There are lives involved in every operation of an aircraft; therefore safety must be number one priority for airlines in all aspect of air transportation. Aviation safety is state of an aviation system or organization in which risks associated with aviation activities, related to, or in direct support of the operation of aircraft, are reduced and controlled to an acceptable level. It encompasses the theory, practice, investigation, and categorization of flight failures, and the prevention of such failures through regulation, education, and training. It is for this reason that countries put in place regulations and agencies to monitor the operations of airlines to guide against practices that could compromise safety and put the lives of passengers in danger. For instance, the Nigeria Civil Aviation Authority, (NCAA) is the regulatory body for aviation in Nigeria, which became autonomous with the passing into law of the Civil Aviation Act 2006 by the National Assembly and assent of the President of the Federal Republic of Nigeria. The Act not only empowers the authority to regulate aviation safety without political interference, but also to carry out oversight functions of airports, airspace, meteorological services, amongst others as well as economic regulations of the industry. While the NCAA carries out oversight on the airlines in Nigeria, international organisations such as the International Air Transport Association, (IATA) have set high standards to ensure safety is attained both the domestic space and internationally. Therefore, beyond meeting just the safety requirements of NCAA, airlines like, Air Peace is employing international best practices in its operations as is reflected in the third renewal of its IATA Operational Safety Audit (IOSA) certification. IATA Operational Safety Audit The IATA Operational Safety Audit (IOSA) programme is an internationally recognised and accepted evaluation system designed to assess the operational management and control systems of an airline. IOSA uses internationally recognised quality audit principles and is designed to conduct audits in a standardised and consistent manner. Created in 2003 by IATA, the program is designed to assess the operational management and control systems of airlines. The airlines

are included in the IOSA registry for a period of two years following an audit carried out by an organization accredited by IATA. The auditing standards have been developed in collaboration with various regulatory authorities, such as the Federal Aviation Administration, (FAA), the Civil Aviation Safety Authority, Transport Canada and the Joint Aviation Authorities (JAA). IATA oversees the accreditation of audit organisations, ensures the continuous development of IOSA standards and practices and manages the IOSA registry. The IATA Operational Safety Audit (IOSA) is the benchmark for global safety management in airlines. All IATA members are registered and must remain registered in order to maintain IATA membership. Why is IOSA certification important? Registering for IOSA certification and auditing is not mandatory therefore an airline that does not have IOSA certification may have either failed the IOSA audit or alternatively chosen not to participate. Small regional airlines generally don’t do the IOSA audit purely because of the cost to have the audit conducted and to implement the likely required changes. However, a passenger can have comfort knowing that an IOSA certified airline does comply with the most stringent of rules and practices governing aviation safety. Today’s results revealed that IOSA certified airlines had a crash rate three times less than those airlines not on the IOSA registry. Air Peace maintains league of IOSA certified airline Air Peace, Nigeria’s largest carrier, was again recently re-issued the IOSA certificate, showing the airline’s consistent compliance to the highest levels of safety and putting www.businessday.ng

it at par with carriers worldwide. The airline had first achieved the IOSA certification two and a half years after it commenced operations, achieving the feat in record time. Samson Fatokun, the head of account management, West and Central Africa, IATA, commended West Africa’s leading carrier, Air Peace, for upholding high standards of safety in its flight operations. Fatokun, who gave the commendation while presenting the third IOSA, certificate to Allen Onyema, the Chairman of Air Peace, congratulated the Air Peace team for achieving the rare feat. He declared that many airlines had started the safety audit but were unable to complete it. He said: “It gives me joy to present this certificate today because I know it’s the fruit of painstaking effort of your team”, adding that scaling through this third safety audit process is a testament to Air Peace’s commitment to maintaining high safety standards in its operations. Fatokun, noting that safety is IATA’s number one priority, asserted that for any airline to pass the safety audit, its safety compliance must be hundred percent, and Air Peace has met this prerequisite. “Many airlines are not able to achieve this because they don’t have the discipline and hard work which have consistently earned Air Peace this safety recognition. The certificate gives the airline a global recognition as a hundred percent safety-compliant airline”, he averred. In his remarks, Onyema said that the IOSA certificate is something to be proud of, adding that Air Peace is becoming the emerging force in Africa’s aviation landscape. He expressed gratitude to the IATA team and commended the entire Air Peace team for a success-

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ful safety audit. He also assured that the airline would always align with global best practices and safety standards. Stakeholders commend Air Peace John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, commended the airline to achieving such great feat. Ojikutu stated that IOSA certification for airlines is similar to ICAO certification of member states that have sufficiently complied with the international best standards in aviation safety and security or better still, maintained the standards for the Category One status of the US FAA. “It means the operator’s safety and security standards meet those required for international operations which necessarily are higher than the national standards. With such certification, you can fly international, interline with other international airlines or go into alliance with them if you wish. “Renewal of certification is similar to renewal of pilots licences to ensure currency or assure that the standards are maintained. Such certifications are subject to periodic audits like those of ICAO audits too on the international safety and security standards,” he said. He further explained that it is not by choice for airlines that go or fly international flights, it an IATA requirement. “It may not be a requirement regionally in the WA sub region, but most countries make it compulsory for reciprocity airlines that fly to their countries or for airlines that want interline or alliance with them,” Ojikutu added. Tayo Ojuri, chief executive officer, Aglow Aviation Support Services said what the renewal of Air Peace IOSA certification implies for @Businessdayng

the industry is that from the safety perspective, it gives assurance to the passengers and ensures there is a safety culture within the airline. “The IOSA certification helps reduce the cost of insurance for the airline because when you see that there is a safety process and a conscious attention to safety, it reduces accidents and incidents. The reduction of accidents and incidents eventually reduces the insurance cost. For Air Peace, the certification shows that there is a culture and operational efficiency within the process, whereby the staff imbibes that process to ensure there is safety from the ramp, to the check-in counter, to the engineers,” Ojuri said. He further explained that the certification shows that Air Peace is playing actively in the league of best international practice. “If there is a partnership opportunity for Air Peace and the foreign airlines or a code share, these are some of the things foreign airlines are going to consider. Apart from the revenue and the route, the safety is paramount,” he said. Setting a standard for other airlines Experts in the aviation sector have called on other domestic carriers to emulate Air Peace in its dedication to maintain the highest safety standards. According to Tayo Ojuri, “This is the way to go. Renewing the IOSA certification is best international practice, especially in this clime. If you look at the insurance and accident report, we have poor report because of the airport infrastructure and other issues. But with this IOSA certification, it actually puts things in perspective that we are getting things right in line with best international practice.” Air Peace affirms commitment to safety The airline has said it is not resting on its oars but has assured to maintain this high safety standard it has attained. Nigerian Institution of Safety Engineers (NISE), few years ago honoured Air Peace with an award in recognition of its “promotion and support for the practice of engineering safety in Nigeria.” Allen Onyema, assured that the carrier was uncompromising in its approach to matters of safety. He described the award by NISE as a priceless testament to the high standard of the airline’s safety practices and flight operations. Adeyemi Oyedepo, the National Chairman of NISE, commended the carrier for running an excellent safety regime. He affirmed that the carrier had continued to distinguish itself in the Nigerian aviation industry on account of the quality of its safety programme.

Thursday 30 January 2020

BUSINESS DAY

ENERGYREPORT

Oil & Gas

Power

Renewables

Environment

Oil and gas industry needs to step up climate efforts now - WEF Olusola Bello

il and gas companies are facing a critical challenge as the world increasingly shifts towards clean energy transitions. Fossil fuels drive the companies’ near-term returns, but failure to address growing calls to reduce greenhouse gas emissions could threaten their long-term social acceptability and profitability. The oil and gas industry now needs to make clear what clean energy transitions mean for it – and what it can do to accelerate clean energy transitions. According to World Economic Forum (WEF) whatever path the world follows in its efforts to limit the rise in global temperatures, intensifying climate impacts will increase the pressure on all industries to find solutions. While some oil and gas companies have taken steps to support efforts to combat climate change, the industry as a whole could play a much more significant role through its engineering capabilities, financial resources and project-management expertise, according to the IEA’s Oil and Gas Industry in Energy Transitions report, which was released today.

“No energy company will be unaffected by clean energy transitions,” said Fatih Birol. “Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.” The landscape of the oil and gas industry is diverse, meaning there is no single strategic response but a variety of approaches depending on each company’s circumstances. “The first immediate task for all parts of the industry is reducing the environmental footprint of their own operations,” Birol said. He said as of today, around 15 per cent of global

energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers, stating that a large part of these emissions can be brought down relatively quickly and easily. Reducing methane leaks to the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions. But there are ample other opportunities to lower the emissions intensity of delivered oil and gas by eliminating routine flaring and integrating renewables and low-carbon electricity into new upstream and LNG

OPEC eyes deeper cuts to head off impact of China virus Olusola Bello

PEC members are considering deeper production cuts, or extending their existing deal, in response to a slump in prices caused by the outbreak of coronavirus in China, according to a source in the group. “The next two weeks are very critical for not only the oil market but the global economy,” the OPEC source said on Monday, speaking on condition of anonymity. “There is right now discussion among the ministers of OPEC+ of watching the market closely

and preparing to do anything if there is a need for it.” According to S&P Global Platts, the remarks followed a statement on Monday from Saudi Arabia’s oil minister, Prince Abdulaziz bin Salman, aimed at calming the market after Brent crude dropped almost 3.5% to below $58/b amid fears of a wider economic impact of the virus, which has killed over 80 people in China and shut down the country. The kingdom has “the capability and flexibility needed to respond to any developments, by taking the necessary actions to support oil market stability, if the situation so requires,” Prince Abdulaziz

said in a statement carried by the Saudi Press Agency. According to Prince Abdulaziz, the kingdom “is closely monitoring the developments in the global oil market resulting from the gloomy expectations about the impact of the coronavirus outbreak on the Chinese and the global economy and oil market fundamentals.” He added that the impact on global markets, including oil and other commodities, is driven by “psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand.”

Brade Group rebrands, have new identity

RADE Group, an emerging African conglomerate based in Nigeria, West Africa with operations in Ghana and Uganda has launched its new identity as part its ongoing rebrand. The Group’s activities span petroleum and energy services, manufacturing, consulting services and chemical solutions. Olusola Bello, Team lead,

The new brand design marks the start of the new era for BRADE Group. The new visual language of the brand is different from that presented by BRADE to date – it is bolder and more colourful. It is also more modern, clearer and simpler. In the new logo, a new red tone is now being added to the letter “A” in the brand name.

Graphics: Joel Samson.

This new logo is a visual depiction of the premium we place on our values – integrity, reliability, respect, safety and creativity, all qualities that are synonymous with an enduring institution: the family unit. The logo has been launched on all its channels and platforms since Tuesday, January 14th, 2019.

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developments. “Also, with their extensive know-how and deep pockets, oil and gas companies can play a crucial role in accelerating deployment of key renewable options such as offshore wind, while also enabling some key capitalintensive clean energy technologies – such as carbon capture, utilisation and storage and hydrogen – to reach maturity,” Birol added. Without the industry’s input, he said these technologies may simply not achieve the scale needed for them to move the dial on emissions. Some oil and gas companies are diversifying their

energy operations to include renewables and other lowcarbon technologies. However, average investment by oil and gas companies in non-core areas has so far been limited to around 1 per cent of total capital spending, with the largest outlays going to solar PV and wind. Some oil and gas companies have also diversified by acquiring existing non-core businesses – for example in electricity distribution, electric-vehicle charging, and batteries – while stepping up research and development activity. But overall, there are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path. An essential task is to step up investment in the fuels – such as hydrogen, biomethane and advanced biofuels – that can deliver the energy system benefits of oil and gas without net carbon emissions. Within 10 years, these low-carbon fuels would need to account for around 15per cent of overall investment in fuel supply if the world is to get on course to tackle climate change. In the absence of low-carbon fuels, transitions become much harder and more expensive. The scale of the climate challenge requires a broad coalition encompassing governments, investors, compa-

nies and everyone else who is genuinely committed to reducing emissions, he said. That effort he stated further requires the oil and gas industry to be firmly and fully on board. Low-carbon electricity will undoubtedly move to centre stage in the future energy mix. But investment in oil and gas projects will still be needed, even in rapid clean energy transitions. If investment in existing oil and gas fields were to stop completely, the decline in output would be around 8% per year. This is larger than any plausible fall in global demand, so investment in existing fields and some new ones remains part of the picture. In some cases, company owners may favour sticking with a specialisation in oil and gas – possibly shifting more towards natural gas over time – for as long as these fuels are in demand and investment returns are sufficient. But these companies will also need to think through their strategic response to new and pervasive challenges. The stakes are particularly high for national oil companies charged with the stewardship of countries’ hydrocarbon resources – and for their government owners and host societies that typically rely heavily on the associated oil income.

Consumers decry diversion of electricity supply to premium customers Olusola Bello

ustomers of electricity distribution companies have decried the seemingly unchanged situation of power supply to them despite having pre-paid meters. According to them, the disco seems not to be happy with the arrangement of customers having pre-paid meters because it has reduced their penchants for crazy or estimated bills which is used to unjustifiably extort customers. They complained that once there is sizable number of prepaid meters in a particular area, the number of hours with which they are supplied electricity becomes shortened because the companies are not making much money in the area as they used to when crazy or estimated bills was the order of the day. Kolapo Odusunle who lives in Suru Lere, Lagos told BusinessDay that he noticed that since a good number of

his community have been able to get pre-paid meters the hours of supply has reduced. He stated that it was not like that they use to give them crazy or estimated bills. Tunji Olaore who stays in Alapere, a suburb of Lagos expressed the same feeling, saying that even though he was

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not paying as much as he was paying before but that the sad aspect of it is that he does not get supplies as he uses to get before. Balami Shaibu, a resident of Abuja said Abuja disco has been trying but it can do more as the supply has not been as regular as it was before he got pre-paid meter.

Thursday 30 January 2020

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

consumer spending

Nigerians still love beer despite economy downturn

yrion Lannister, one of the lead characters in G.R.R Martin’s Novel, The Game of Throne, said “l am a person who drinks. People who drink need to keep drinking. It is not easy being drunk all the time. If it were easy, everyone would do it. The Imp added that “Everything’s better with some wine in the belly. I can’t sleep without wine,” If Tryrion were to be reborn into the World again, he would love to be a Nigerian. Nigerians love beer. They consume it and every tribe or ethnic group has a name for it. Even foreigners know we are addicted to rum in the bottle, and we are ready to spend our hard-earned cash on it no matter the economic situation. On a cool Saturday evening, Anthony Rapuluchukwu, a 42-year-old businessman, was holding a glass full of beer in his right hand, getting ready to take a sip of life. He said he had already drunk four bottles of Trophy, and he hadn’t even started as that number was just an appetizer.

“Every day, I drink beer. I have been drinking since l was 18. We like beer in this country and l think it is hereditary as my parents do drink, even my grandparents tasted it and l am sure those before them had,” said Rapuluchukwu. Rapuluchuku is absolutely correct because statistics validates his point. Nigerian Breweries, the largest brewer in Africa’s largest economy, recorded sales of almost N259.92 billion as at nine months September 2019 while Guinness Nigeria and International Breweries recorded sales of N26.89 billion and N26.89 billion respectively. That means these companies generated cumulative revenue of N383.98 billion, which is more than the combined internally revenue of 20 states. If we divided the total revenue figure (N383.98 billion) by a population of 170 million, it then means that one Nigerian will get a bottle and a halt each. According to a recent report by a market research group, the country has an average beer consumption of 12.28 litres per year, which means it leads the top 10 biggest beer-drinking countries in Africa.

“This is by virtue of her population, which technically translates to higher volume and litres consumed per year,” said the report. The report also revealed that beer makes up just 16 percent of alcohol consumption in Nigeria, while other drinks make up 84 percent due to the high popularity of home-brewed beverages in the country. According to a 2016 report by the National Bureau of Statistics (NBS), Nigerians spent at least N208 billion on alcohol – this amount was more than the budget of Ondo State for that year. A breakdown of the nation’s sobriety pattern shows

the South-South zone is the least restrained community of alcohol consumers. There, N74.4 billion was spent on alcohol, making the states of Delta, Edo, Bayelsa, Rivers, Akwa Ibom, and Cross Rivers the section of the country inhabiting the most enthusiastic drinkers in the year. However, the largest brewers are struggling as a stuttering economy has hindered consumers from drinking more beer while some of them have downgraded to cheaper brands. While the country’s gross domestic product (GDP) stood at 2.28 as at the third quarter of 2019, it is lower than the 6.31 percent growth

‘

l am a person who drinks. People who drink need to keep drinking. It is not easy being drunk all the time. If it were easy, everyone would do it

‘

BALA AUGIE

of 2014. Inflation for the month of December 2019 stood at 11.98 percent, the highest in 17 months as food prices have skyrocketed on the back of closure of the borders by Federal Government. Analysts are of the view that that 2020 will remain tough for Nigeria from a macroeconomic standpoint, and even more so for consumers. Upward adjustments on electricity tariffs next year, Increase in VAT, and the land border closures, will further squeeze consumer wallets. Despite the harsh and unpredictable environment, brewers are sanguine that the economy will rebound to growth as they are intensifying strategy to take advantage of the Nigeria market. International Breweries plans to raise capital via a rights issue so as to reduce the huge debt in its books. The company has been recording losses since 2018. “Additionally, higher energy costs are likely to weigh on COGS, and with brewers still unable to fully transfer the cost burden to consumers, we expect some contractionary margin pressures,” said analysts at Cordros Capital Ltd.

company

Nestle eyes more market share, re-launches Golden Morn Gbemi Faminu

n its drive to improve customer satisfaction and earn a larger market share, Nestlé Nigeria, a top player in the Fast Moving Consumer Goods industry (FMCG) on Wednesday relaunched its Golden Morn cereal at its Agbara factory. Speaking to guest at the product re-launch, Mauricio Alarcon, Managing Director/ CEO, Nestle Nigeria, said golden morn is a product created in Nigeria for Nigerians by Nigerians, adding that in delivering value, Nestle has always moved for consumer satisfaction. Speaking on the relaunched cereal, he said asides having the production materials and ingredients 100 percent locally sourced, the cereal has increased vitamins and minerals with the inclusion of smart grain,

which is necessary to combat undernourishment and vitamin deficiency adding that almost 200million people in Africa are undernourished while Nigeria has almost 26 million undernourished people. “The re-launch of Golden morn today is one more step towards fulfilling our commitment to help address the health challenges created by micronutrients deficiency especially iron deficiency among the most vulnerable in our society. At Nestle, we are committed to helping to develop a sustainable solution to this menace through the inclusion of bio-fortified food crops and the fortification of our products today over 80 percent of Nestle products sold in Nigeria is fortified with micronutrients reaching 34 million households.” Alarcon said. He mentioned that the www.businessday.ng

product is 100 percent locally sourced from its agricultural ingredients to its packaging materials which is described as an activity that not only ensure supply but also contribute to transforming SMEs involved in the Nestle value chain. Despite the production cost, Alarcon said Nestle will continue to value to its

consumers, “Our business model is built on our belief that our business will only be profitable in the long term by creating value for shareholders and for the society, particularly in the communities where we operate, a concept we call Creating Shared Value (CSV),” he said. Noimot Salako-Oyedele, deputy governor, Ogun State,

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commended Nestle for its activities and the re-launch which she described as a milestone towards the industrialization and development of the state. Salako-Oyedele, who was represented by Olubola Aikulola, permanent secretary, ministry of commerce and industry described them as a good partner in progress and urged them to continue to increase their contribution to state development through employment generation, product variety, and other avenues. Sabo Nanono, minister of agriculture and rural development commended Nestle for being a key stakeholder and partner of the ministry in producing and supplying quality and nutritious products toward the reduction of malnutrition in Nigeria. Nanono who was represented by Karima Ba@Businessdayng

bangida, Director, federal department of Agriculture, said “This is a typical private sector investment that would contribute to greatly reducing malnutrition and boosting the economy of our nation, The Federal Government is encouraging more private sector investment in the production and marketing of bio-fortified foods and other micronutrient-rich commodities,’’ Aboubakar Coulibaly, Category Manager, Dairy, Nestle Nigeria, said aside from providing more health benefits, it has an improved package which will improve consumer attraction. “GRAINSMART is a combination of different vitamins (B1, B5 and C) specially made for cereals which will provide the necessary and required daily dose of protein, vitamins and minerals, it will also curb nutrient deficiency which is rampant in Africa”

Thursday 30 January 2020

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Did OPay really violate Google’s predatory lending policy? FRANK ELEANYA

pera the parent company of OPay, a payment company with major operations in Nigeria has been accused of violating Google’s policy on predatory lending by Hindenburg Research, an accusation that puts it at risk of being sanctioned by Google. The US-based Hindenburg Research which bets on falling share prices claims Opera was involved in predatory short-term loans in Africa and India, deploying deceptive ‘bait and switch’ tactics to lure in borrowers and charging egregious interest rates ranging from 365 to 876 percent. Hindenburg says Opera is doing because its core business – Opera browser – is facing stiff competition from Chrome and Safari, with market share down about 30 percent globally. “When a new management team takes over a declining business, it can become a race against the clock to cash out,” the report noted. “This is what we think is going on at Opera, a company based around a oncepopular web browser that is now seeing its userbase erode.” Since the report was published, the share price of Opera has fluctuated from 7.72 percent to 7.38 percent as at the time of writing this article on Thursday. Hindenburg Research would benefit immensely from short-selling shares of Opera. A short sale is the sale of an asset or stock the seller does not own. It is

generally a transaction in which an investor sells borrowed securities in anticipation of a price decline. Hindenburg suggested Opera’s stock should trade at around $2.50, around a 70% discount to Opera’s $9 share-price before the report was released on January 16. “The report mentioned is from a firm that specialises in making short calls, often sensational in nature, with their conclusions being designed for that single purpose,” Alejandro Viquez, Opera’s Communications Manager told BusinessDay. “As communicated in our statement, we believe that the report contains numerous errors, unsubstantiated statements, and misleading conclusions

and interpretations regarding the business and events relating to us.” Viquez also said providing more than 60 days repayment options for users is common with Opera’s lending services. From Hindenburg Research’s report, Opera may have offended a Google policy that states that the tech company does not allow apps that promote personal loans with repayment in full in 60 days or less from the date the loan is issued. The policy applies to apps that offer loans directly, lead generators, and those who connect consumers with thirdparty lenders. Google had in October 2019, published an updated financial policy

Free space for start-ups to collaborate as Google Developers Space opens in Lagos CALEB OJEWALE

echnology start-ups, developers and enthusiasts with a commitment to building the ecosystem now have free access to the Google Developers Space, a facility formally opened in Lagos this week. Previously referred to as the Google Launchpad Space, the Google Developers Space is a hub for African developers, entrepreneurs and startups. According to Google, it does not charge for use of the space, which in addition to housing Google Launchpad Accelerator Africa will support developer meetups, training, experts office hours, Women in tech events, startup programs (outside of Launchpad), partner events that support the wider entrepreneur and developer ecosystem, as well as Google initiatives for empowering people through digital skills training. The company also says the launching of this facility is in fulfillment of a commitment made to African entrepreneurs by Sundar Pichai, Google CEO, when at the Google for Nigeria event in 2017, pledged the start of the Launchpad Accelerator Africa program, as well

as launching of a space to house these efforts in Nigeria. The company now says it is launching the Google Developers Space to provide that home, and a space where entrepreneurs, developers, Venture Capital firms and investors can connect and collaborate with each other. “It is amazing to have people creating local solutions to local problems, and I firmly believe that with the right support and environment, we can indeed have global successes coming out of Africa,” said Juliet Ehimuan, country director, Google Nigeria during the launch. She explained that a facility such as this is an opportunity to support the visions of startups and developers in bringing to life, ideas that can help create innovative solutions and spur positive developments across the continent. “Google is strengthening its commitment to supporting the entrepreneurial ecosystem in Africa by opening the Google Developers Space today. We have partnered with Impact Hub to bring the Space to life and worked with a local company called Spacefinish, which designed it specifically to create an

environment that fosters collaboration and innovation. We’re looking forward to working with startups and other players in the ecosystem from across the continent at the Space,” said Onajite Emerhor, Launchpad Accelerator Africa head of Operations. Launchpad Accelerator Africa according to Google has worked with 47 startups since the first class kicked off in early 2018. These companies have raised millions of dollars in investments, and created over nine hundred jobs across the continent. Launchpad Africa has accelerated startups from 17 African countries so far. The next class will kick off at the Google Developer Space in May 2020. “There is no reason why we can’t have global tech successes coming out of Africa,” said Ehimuan. She further explained that a lot of African start-ups struggle with issues such as access to high quality infrastructure, access to mentors, and access to funds among other challenges, but all these can be better tackled through the provision of a facility where “likeminded people can meet and support each other to grow”.

which it said was aimed at helping users have adequate information to make informed financial decisions by allowing them to weigh the costs associated with financial products and services, and to protect from harmful or deceitful practices. Google also requires lending apps on its Play Store to include details of loans in their meta-data. Apps for personal loans must disclose the minimum and maximum period for repayment and the maximum Annual Percentage Rate (APR) in their meta-data. The APR includes the interest rate plus fees, other costs for a year, or similar other rates calculated consistently with local law. The app must also include a representative

example of the total cost of the loan, including all applicable fees. Since it kicked off its aggressive expansion in Africa and India, Opera through its four fintech platforms including OPay, OKash, Cashbean, and Opesa, has been offering instant loans to users in Nigeria, Kenya, and India. As of the time of submitting this article, an Okash application was still listed on the Play Store with information clearly stating tenure from 61 to 365 days but it was registered to Blue Ridge Microfinance Bank with an office in Lagos. “OKash is available as a standalone app on Google Play Store,” Dare Oyegbola, who works with Boomerang Havas Africa, Opera’s PR agency in Nigeria told BusinessDay. Viquez also confirmed that Blue Ridge Microfinance Bank is a subsidiary of Opera. OPesa and Cashbean – both standalone apps – also appear to be missing on the Play Store. But Viques explained that the apps might not be visible in the Google Play Store as they are only listed in specific markets such as Nigeria, Kenya, and India. All the apps are available to download in Google Play. “Our Google Play Developer Policies are designed to protect users and keep them safe, and we recently expanded our Financial Services policy to help protect people from deceptive and exploitative personal loan terms. When violations are found, we take action,” a Google spokesperson told BusinessDay via email.

Code4TEEN partners schools to launch ‘Computer Language’ as classroom subject CALEB OJEWALE

he initial public rollout of computer language as a classroom subject to about 100 pupils in some selected schools is to commence soon, as Code 4TEEN, a Lagos based education technology company unveils its partnership with some schools in the state. The company, which describes itself as an education technology research lab focused on providing a solution to the issue of technology literacy as it pertains to the next generation, says it has spent three years engaging in broad research on the feasibility of teaching pupils from as early as Year 3 (7years old), text-based programming in a classroom context. It has also launched ‘Andrew Teaches Coding’, a software programme that functions as an automated textbook with functionalities the company says creates an ecosystem for the new subject, Computer Language. By facilitating the delivery of curriculum, management of classwork, homework, examinations and grading, ‘Andrew Teaches

Coding’ gives primary schools across the country and beyond the ability to now create and run Computer Language as a time-tabled subject. Next Monday (February 3) Code 4TEEN, a subsidiary of Media Technology Group iNspire plans to officially roll out Computer Language through timetabled slots in four schools across Lagos state, identified in a statement as; The Fountain School, Moral Ville Academy, Leaders Field International School and First Stones School. It also says discussions with some other tops schools in the state are at advanced stages, on the possibility of integrating with their curriculum on or before September 2020. “We choose to focus on empowering schools as we believe children spend 70 percent of their childhood under the influence of ‘school’, hence positioning the school as the foremost catalyst in the technology literacy drive globally, with regards to the next generation,” said Otaru Daudu, director, Research & Technology at Code 4TEEN. Continues online at www.businessday.ng

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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Thursday 30 January 2020

BUSINESS DAY

Corporate Social Impact

The global rise of rights consciousness Onuwa Lucky Joseph

t has always been the case that the winner tells the story that gets disseminated and repeated. That is the basis of the oft repeated African proverb: “Until the lion learns how to write, every story will glorify the hunter”. The lion’s point of view or his take on the story, as long as he has not the luxury of an imperial pen, is immaterial and counts for nothing. The story we know of the Americas is that Christopher Columbus discovered the place and overcame a hostile and sorely uncivilized native population whose pastime was usually cannibalism and other practices detestable to a normal civilized culture. Great Columbus, who we now know infected the native population wiping them out with syphilis as well as the sword and gun has remained an icon until lately when ‘revisionists’ are beginning to take time to look at the facts again. Is it true that there was no civilization until Columbus and his crew arrived the Americas? Isn’t it true that the disparate tribes had their own ways of life and had existed there millennia before the whites? Isn’t it true that they were generally friendly and accommodating until they found out that the other party had only tendencies not apropos to friendliness? The River Niger had for centuries snaked its way from the Futa Jallon Highlands to the Atlantic. But this reality notwithstanding, the communities and people making their homes on its banks and depending on the river for their living and livelihood (water and fish), notwithstanding, the River Niger was yet never certified discovered by humanity until Mungo Park did us the honours of coming all the way from Scotland to open our eyes to the fact of its existence.

Colin Kaepernick Nike Ad.

Australia Invasion Day Protest

Photo courtesy of DW

Never mind that it went by different names in the different locations it traversed. That was how we learnt it in school. Not only did our early scholars learn it the same, they ran with it and repeated it to all their students, us included. But young Africans are clearly having none of that hogwash. All over Africa and South America, oil and mineral mining companies, in the name of foreign investment are despoliating environmets in a way that makes life in those communities brutally unsustainable. This is done largely in connivance with the governments a lot of which close their ears to the pleas of their people, preferring instead the lucre that clangs in the till. Rights activists and corporate organisation with mostly gadfly leaders have led the fight for indigenous people to reclaim the health of their lands. It’s a fight that goes on everywhere but mostly in the 3rd world where the communities have nary an

Aboriginal Peoples Protest Photo courtesy of Reuters

advocate to plead their cause. In Nigeria’s Niger Delta, especially since the demise of Ken Saro Wiwa, the pitch has toned down considerably despite there not being a corresponding improvement in the environment and the practices of the oil companies. In America, Blacks have had to rise up with the Black Lives Matter campaign. It seems to have lost its real sting but it’s a trenchant campaign ongoing in ways that are not always backed by placards and street signs. Colin Kaepernick, the former quarterback for the San Francisco 49ers, still does not have a team long after taking a knee rather than stand up for the flag. It’s a protest the establishment wants squelched by all means. But corporate titans like Nike are backing it to the hilt, though some may say for their own reasons. Blacks, especially black males have, routinely, had their lives snuffed out with or without provocation. And those who kill blacks walk free as

they are usually Caucasian law enforcement officers. Was Australia founded in 1788 or 65,000 years prior? It’s estimated that the Aborigines had been living on the land for at least that long before Britain landed its first group of prisoners to populate what it claimed was a wild, open, uninhabited land. The convicts from the penal colony proceeded to take over the land and lord it over the natives almost brutalizing them out of existence. But the hardy Aborigines have rebounded and are increasingly demanding for more. It’s their land, they say, and while they are prepared to coexist with others, they will no longer tolerate being treated as inferior or as people who don’t count. The good part about rights struggles nowadays, and here, I say it in broad terms, is that a significant number of those doing the struggle are from the ‘other side’. Check the Black Lives Matter protests. There is more than

a sprinkling of whites right there demanding respect for black folks. The Australian ‘Invasion Day’ protest has more than a sprinkling of whites and others not Aborigines. The rights struggle in the Niger Delta has been championed by folks like the late Body Shop Founder, Dame Anita Roddick as well as bodies like Amnesty International, Greenpeace, etc. As well, in the fight for gender equality, a good number of men have crossed over to the other side to be counted amongst their female kinfolk. The issue of Almajiri education is one championed more by Nigerians from other parts of the country. It’s a ticking time bomb, we all know. The Osu Caste system, although ‘outlawed’ in some places is still going strong in many others. The fight for equality cannot be fought solely by the Osus. The enemy is the friend, in other words. And that’s how it should be and stay. Respect for everybody’s rights is something that requires a humongous deal of work to actuate. And so, the bulk of the effort should always be towards building consensus, marshaling the points in such a way that though the oppressor does not see the point, others in his/her camp are sufficiently swayed so that they cross over and join the struggle. Responsibility requires solidarity to stay sustained. And so, inflammatory comments that tar whole communities from the other side are usually unhelpful and unnecessary. Let us endeavour to build the bridges that connect our differing viewpoints and to stand strong for what is right whether it is our right or that of others that is being infringed upon. And having been vindicated, when we finally are, may we not turn around and become the new oppressors who deprive others their right to live a good life on God’s good earth. As today’s conscious folks would say, be woke and stay woke.

How Ebele the flutist blew her own horn during the holiday season Onuwa Lucky Joseph

enerally regarded as Nigeria’s foremost female flutist, Ebele Ezeamakam, popularly known as Ebele the Flutist was busy through the holiday season serenading her fans and spreading the word about her beloved instrument and how good it would be if more people took to the flute to expressed themselves though its melodious sound. In November, just before the onset of the holidays, she was at the Sky Lounge, Eko Hotel and Suites for “Lunchember to Remember”, a gala, lunch and fundraiser organised by the International Women’s Society. One notable thing about Ebele’s music is that she delights in cheerfully lending it to those elevated public

Ebele the Flutist, with King Sunny Ade at the Ikoyi Club Performance

Ebele The Flutist

spirited audiences that take joy in doing fundraisers and charity galas. In such audiences are to be found individuals sitting enraptured, sometimes eyes closed, as

high point of the club’s annual calendar where arrangements are made for support to orphanages and other civic arrangements to help improve the lives of the less

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the flute lady blows through notes high and low. Friday, 14th December, she was at the Ikoyi Club serenading the crème de la crème. It was the

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privileged. On stage that evening was King Sunny Ade and Ebele the Flutist And before that, earlier in October, she was featured by the MUSON Diploma Students Association in a Masterclass where she lectured on stage management and music professionalism. She considers this her own way of mentoring the new wave of musicians in a formal setting to ensure they take pride in their calling as musicians handle their careers as true professionals. There’s more for this soulful flutist who also sings and writes and directs and just about does everything else in the music business. May her efforts redound to good for her and for the many less privileged whose lives are impacted by proceeds from her performances.

Thursday 30 January 2020

BUSINESS DAY

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

Accelerated rollout of 4G network adds impetus to Airtel Africa’s earnings ...Pretax profit surges 129.60 percent in FY’19 BALA AUGIE

irtel Africa Plc has just released its nine month period 31 December 31 2019 that showed the telecommunication giant recorded double digit growth in all performance metrics. Growths were recorded across services, including revenue in voice, data, and mobile money. The company has consistently maintained strong operating efficiency as it continued to turn each dollar invested in sales into higher profit. Airtel Africa has reduced debt in its balance sheet; this gives it the leeway to bolster profit and deliver a higher return to shareholders in form of share appreciation and bumper dividend. Double digit growth in

revenue, thanks to investment in 4G network Revenue was up 12.40 percent to $2.52 billion as at nine month period 31 December 2019 from $2.29 billion as at December 2018. The growth in revenue was largely driven by improved performance in Nigeria, East Africa and the rest of Africa. Revenue growth also got a boost from customer base, which was up 9.40 percent to 107.10 million, and ARPU growth of 2.20 percent. A breadown of the top lines (sales) showed that voice revenue was up 3.90 percent;

data revenue, data revenue, 39.0 percent, and mobile money up 40.40 percent in constant currency. Operating profit increased by 23.70 percent to $657 million in 2019 as against $542 million the previous; thanks to strong growth in revenue. Earnings Before Interest Taxation, Depreciation and Amortization (EBIDTA) increased by 15.50 percent in the period under review as against $988 million the previous year; also, operating expenditure as a percentage of revenue remained broadly stable.

Foreign exchange had an adverse impact of $52 million on revenue and $21 million on underlining EBITDA, largely driven by the devaluation of the Kenya Kwacha and central Africa Fran. Profit before tax (PBT) surged by 129.60 percent to $501 million as at nine months December 2019 from $227 million the previous year. Reduction in debt underpins profit margin Airtel Africa can easily pay interest on its outstanding debt and its going concerns are not threatened as it has a times interest coverage 0f 2.92 times operating income. What this means is that operating profit can cover interest expense 2.92 times. The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio may be calculated by dividing a company’s earnings before interest and taxes (EBIT) during a given period by the company’s interest payments due within the same period. When a company’s interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable. Total net debt reduced by 22.72 percent to $4.18 billion in the period under review

from $3.22 billion the previous year. The reduction in net debt of $956 million is a result of an increase in cash from the IPO proceeds of $670 million and a reduction in debt of $143 million. Airtel Africa generates much cash for every dollar of revenue earned as Earnings Before Interest Taxation Depreciation and Amortization (EBITDA) margin increased to 44.30 percent in 2019 from 43.0 percent the previous year. Operating margins, otherwise known as Earnings Before Interest and Tax (EBIT) margins, increased to 26.0 percent in the period under review as against 23.0 percent the previous year. Profit before tax margins surged to 19.80 percent as at nine months ended December 2019 from 9.80 percent the previous year. Aggressive expansions validates 4G network expansion Airtel Africa has enough ammunition and financial

strength to fund new projects, pay dividend to its owners, and settle obligations to creditors as free cashflow increased by 22.22 percent to $391 million in the period under review from $206 million the previous year. The company has capital expenditure of $396 million, which shows it invested in its African operations as it rolled out its 4G network. In November 19, Airtel Network Limited (Aitel Nigeria) signed an agreement with intercellular Nigeria Ltd, in order to acquire additional MHZ 10 spectrum in the MHZ 900 in Nigeria for a consideration of $70 million. Airtel Tanzania has been allocated additional spectrum of 10 MHZ IN 1800 MHZ with an annual fee of $0.60 million. With this allocation, Airtal Tanzania has been authorized TCRA (Tanzania Communication regulatory Authority) to use 10 MHZ in the 700 MHZ band for 8 months from 21st October.

Stable foreign exchange rate spurs Airtel Nigeria to growth BALA AUGIE

aghunath Mandava, Chief Executive Officer of Airtel Africa, said during a conference call that on market specifics, Nigeria has been leading the company’s growth with double digit voice revenue. With a population of

200 million and the proliferation of smartphones, the country will continue to a pace setter for other African countries. Airtel Nigeria’s revenue increased by 23.40 percent to $995 million as at nine months December 2019 from $805 million the previous year, thanks to a stable foreign exchange rate. There has been relative

stability in the foreign exchange market since the central bank introduced the Investors’ and Exporters’ Window in 2017, a monetary policy tool that helped the country exist its first recession in 25 years. The growth in revenue was largely driven by voice data growth of 13.50 and data growth of 75 percent. Voice revenue of 13.90

was driven by customer base of 8.90 percent. The customer base expectation was driven by the efficient sales and distribution network supported by the acceleration rollout of network infrastructure. Data revenue increased by 75 percent and contributed 71 percent to overall revenue growth for nine month December 2019. Data revenue

growth was driven by increase in the customer data base, as a result in the 4G network rollout and data ARPU growth. The data customer base grew by 12.20 percent driven by the acceleration rollout of network. Airtel Nigeria has translated top line (sales) impressive performance into bottom line (profit) growth as EBITDA

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

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margin increased to 53.70 percent in the period under review from 48.40 percent the previous year. The company has a freecash flow of $355 million as at nine month period December 2019 from $277 million in December 2018. What this means is that the company has enough ammunitions in its arsenal to fund capital project.

Thursday 30 January 2020

BUSINESS DAY

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Thursday 30 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 29 January 2020

Top Gainers/Losers as at Wednesday 29 January 2020 LOSERS

GAINERS Company

Opening

Closing

Change

FLOURMILL

N21.15

N22.35

1.2

Company

Opening

Closing

Change

N125

N120

-5

MTNN

N54

N55

GUARANTY

N31

N30.1

-0.9

JBERGER

N22.15

N22.25

0.1

UNILEVER

N15.8

N15

-0.8

OANDO

N3.64

N3.74

0.1

UACN

N10.55

N10

-0.55

N5.9

0.1

BOCGAS

N4.95

N4.5

-0.45

UBN

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

29,110.90 3,556.00 242,758,444.00 4.591

Global market indicators FTSE 100 Index 7,481.99GBP +1.30+0.02%

Nikkei 225 23,379.40JPY +163.69+0.71%

S&P 500 Index 3,285.87USD +9.63+0.29%

Deutsche Boerse AG German Stock Index DAX 13,341.50EUR +17.81+0.13%

Generic 1st ‘DM’ Future 28,818.00USD +108.00+0.38%

Shanghai Stock Exchange Composite Index 2,976.53CNY -84.23-2.75%

14.994

SEC insists capital market important for Nigeria’s economic growth

T L-R: Iheanyi Nwachukwu, Head Capital Markets, BusinessDay; Efe Ebelo, Head Corporate Communications Securities and Exchange Commisison (SEC); Sufian Abdulkarim, Head External Relations SEC; Patrick Atuanya, Editor, BusinessDay; and Victoria Afen, principal manager, External Relations Department SEC, during a visit of the SEC team to BusinessDay in Lagos.

Stock market sheds N142bn Stories by Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased further by 0.91percent on Wednesday, moving from 29,378.63 points to 29,103.21 points at the close of trading session. This record dip increased the week-to-date (WtD) negative return to -1.75 percent, while the positive return year-to-date (YtD)

dropped to +8.45percent. The value of listed stocks on the Nigerian Bourse decreased to N14.99trillion from preceding day high of N15.13trillion, down by N142billion. The share price of MTNN recorded the highest decline after it moved from day open high of N125 to N120, losing N5 or 4percent. GTBank Plc also dropped from N31 to N30, losing N1 or 3.23percent. Also on the top laggards league include Unilever Nigeria Plc which

declined from N15.8 to N15, shedding 8kobo or 5.06percent. The share price of UAC of Nigeria plc also moved down from N10.55 to N10.1, losing 45kobo or 4.27percent, while Access Bank Plc decreased from N10 to N9.65, shedding 35kobo or 3.50percent. Flourmills led the advancers list after moving from N21.15 to N22.35, gaining N1.2 or 5.67percent. Nigerian Breweries Plc was also on the top gainer list, after rising from N54 to N55, up N1 or 1.85percent.

Union Bank of Nigeria Plc stock price rose from N5.9 to N6, adding 10kobo or 1.69percent. Oando Plc increased from N3.64 to N3.74, adding 10kobo or 2.75percent, while Unity Bank Plc moved up from 60kobo to 65kobo, adding 5kobo or 8.33percent. Zenith Bank, Unilever, GTBank, FCMB were actively traded stocks. In 2,789 deals, equity dealers exchanged 209,583,630 units valued at N4.003billion.

he Nigerian capital market has again been described as a vital segment of the economy that facilitates its growth and development. Mary Uduk, Acting DirectorGeneral of the Securities and Exchange Commission (SEC), who was represented by Sufian Abdulkarim, Head, External Relations Department during a visit to BusinessDay in Lagos noted that the capital market can assist the nation in its infrastructural development while also creating wealth for Nigerians. According to Uduk, the SEC is stepping up regulation to ensure that Nigerians are able to invest in the market and get returns on their investment. “We have zero tolerance for infections in the market and will not hesitate to apply the necessary sanctions on any operator that is found wanting. We are doing all of these to make the investor know that his money is safe in the market” she said. Uduk while commending the media on their role in educating and enlightening members of the public on the opportunities that abound in the capital market, however stated that more needs to be done for it to perform better. She said “we are aware of the support and co-operation we have received from the media so far, but we want to further solicit your help especially as it relates to issues around our

recent initiatives, to enlighten investors on the need for them to key-in. “We urge Nigerians to go out and register for the e-dividend, they need to consolidate their multiple accounts as these are some of the ways they can get the benefits of investing in the market while also reducing the unclaimed dividends profile”. “We also have the Direct Cash Settlement which makes it possible for investors accounts to be credited directly when there is a transaction. We have also migrated from physical share certificates to electronic ones. All these initiatives are geared towards marking our market perform better and ensure investors receive the benefits of their investments. The SEC boss however cautioned investors to ensure they do due diligence before investing their hard earned money on any product to avoid patronising fund managers that are not registered. “Investors should cross check before they put their money in any fund. A list of registered fund managers can be found on the SEC website” she said. Uduk said it is important for people to understand the workings of the capital market and not have the misconception that they must have a lot of money before they can invest.

NSE Growth Board targets companies with high growth potential

he Nigerian Stock Exchange (NSE) on Wednesday January 29, 2020 launched its “Growth Board” which aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity in the trading of their shares. The board also presents as an avenue for companies in their growth phase to leverage the NSEs platform and varied products and services to achieve their long term business objectives. Oscar N. Onyema, Chief Executive Officer, the Nigerian Stock Exchange said the Growth Board is in line with the Exchange’s focus and drive

to deepen the Nigerian Capital market and its support for Start Ups and Small and Medium Enterprises. “This board is designed to offer relaxed entry criteria as well as less stringent ongoing listing requirements and allows for greater accessibility to capital flows, global visibility and credibility through corporate disclosures. “The growth board also restructures current market segments to better meet needs along company’s entire lifecycle –that is Entry Segment - for companies with a Market Capitalisation from N50million and Standard Market for institutions with a Market Capitalisation from N500million. The segmentation of the boards also www.businessday.ng

provides alternative options for interested investors to participate in each company’s growth journey”, Onyema noted. The traditional role of the Exchange as an enabler of capital flow from areas of surplus to deficit holds good

Oscar N. Onyema, chief executive officer, the Nigerian Stock Exchange

promise for its capability to support SMEs, as access to capital is the prime challenge faced by companies that are active in the SME sector. To successfully achieve the NSE listed company’s growth strategy and listing objective, the Exchange said it will be collaborating with various strategic business partners and value added service providers to offer cost effective services designed to create a competitive edge for listed companies within their respective industries while stimulating investors’ interest through enhanced information delivery. Services such as pre-listing diagnostics; institutional services (including audit services, financial advisory, legal

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advisory, corporate strategic advisory); investor relations; analyst coverage, corporate access and corporate governance will be provided, Onyema further said. The Exchange will also provide tailored trainings on its learning and development platform “X-Academy” for capacity development and to promote increased Corporate Governance for Board and employees of companies on the Growth Board. According to the Nigeria Bureau of Statistics (NBS), small and medium scale enterprises (SMEs) in Nigeria have contributed about 48percent of the national GDP in the last five years. This segment of the economy also accounts for 96percent of @Businessdayng

operational businesses and 84percent of employment. With a total number of about 41.5 million enterprises, the SME segment accounts for nearly 90percent of companies operating in the manufacturing sector and 50percent of industrial jobs. Despite these significant contributions by SMEs to the Nigerian economy, the reality and headwinds faced by operators in this segment are quite daunting. The economic landscape in recent years has been quite challenging for corporates with small and medium scale enterprises experiencing some of the difficulties observed in the Nigerian macro landscape.

Thursday 30 January 2020

BUSINESS DAY

news

LG Electronics opens multi-million naira Free Wash Centre in Kano Adeola Ajakaiye, Kano

G Electronics, one of the global leaders in consumer electronics, has opened a multi-million naira Free Wash Centre, with capacity to dry-clean about 400 set of clothes, as part of it corporate commitment to people of the commercial city of Kano. The multi-million naira facility, situated in the heart of the Kano Business District, is a follow-up to similar state-of-theart Wash Centres established by the company in Lagos and Port Harcourt, initiated under its corporate social responsibility (CSR). Speaking with BusinessDay after presiding over the commissioning of the centre at the weekend in Kano, Hari Elluru, head of corporate marketing, West Africa operations of the company, said the initiative was designed as a support to Nigerians residing in the states where the centres were located. According to Elluru, the project, which started two years ago in Lagos, is geared at improving the living conditions as well as support the laundry needs of the people residing in the places where the facilities are currently operational. “LG Electronics has over the

years continued to receive commendation from Nigerians consumers for having their interest at heart in the development of cutting edge technological products. “In almost two years of operating the two free wash centres in Lagos, and Port-Harcourt, LG Electronics has been able to serve over 25,000 people and washed more than 190,000 set of clothes. “The wash centre that we are opening here in Kano today, has the capacity to wash 400 sets of clothes per day for over 30 persons, and this we believe would go a long way in assisting the people of the state in meeting their washing needs,” Elluru stated. The LG Electronics head of corporate marketing disclosed that the washing centres were operating free of cost to end users, while calling on the residents of the state to take full advantage of the support being rendered to them by the company. Also speaking at the occasion, Jiung Park, general manager, home appliances division, West Africa operations, expressed the commitment of the company to drive sustainability through inclusive growth in the Nigeria.

Retired AIGP fails to corroborate major corruption claim in Malabu trial SEGUN ADAMS

saac Eke, a retired assistant inspector-general of police said to be a key witness to the distribution of money from the sale of a controversial Nigerian oil-field in 2011, has failed to back up claims of bribery made against oil majors Shell and Eni in a long-standing trial in Italy. The latest twist in the corruption case known as the Malabu trial weakens prosecution case against Eni and Royal Dutch Shell plc, both of which have denied any wrongdoing. Eke was in Italy following the request of The Palace of Justice in Milan for prosecutors to make the key witness testify in trial on Wednesday. Eke’s involvement in the

case that has roped many actors including former Nigerian oil minister, Dan Etete, and US bank JP Morgan followed a mention by former Eni manager Vincenzo Armanna that the police officer said to be a presidential bodyguard for President Goodluck Jonathan showed him a picture evidence of $50m bribe money which was moved to a plane at Aso Rock Villa. Armanna said Etete was paying off “political sponsors” of the 2011 oil deal that saw most of the payments made by Shell and Eni for a Nigerian oil field ended up in Malabu Oil and Gas controlled by Dan Etete, then oil minister of Nigeria. Eke denied both being at Aso Rock Villa and the meeting with Armanna, who is now both key witness and

defendant in the oil scandal. This serves a second-blow to Italian prosecution after initially producing Nigerian secret policeman, Victor Nwafor, as the presidential bodyguard Armanna spoke to but admitted to a case of mistaken identity after Nwafor denied any involvement. Eke on Wednesday testified that he met Armanna twice through a mutual friend, the first time being 2014. His testimony contradicted a previous statement in his letter to the court where he claimed to have first met Armanna in 2009 in a meeting where he was introduced by the mutual friend to the former Eni manager as Victor Nwafor. Eke denies using the name Victor Nwafor even though he had signed the letter himself.

The Italian cour t on Wednesday scheduled February 5 to hear these new witnesses ahead of concluding arguments of prosecutor and defence in March. In the wider context, the Malabu trial began in 2011 when Eni and Royal Dutch Shell allegedly paid $1.1 billion into the coffers of the Nigerian government for an offshore oilfield licence. The offshore oilfield called oil prospecting licence (OPL) 245 was said to have been worth $3 billion but most of the payments made by Shell and Eni ended up in Malabu Oil and Gas, controlled by Dan Etete, then oil minister of Nigeria. The Malabu case which is now in its final months in Milan is also being tried in London courts.

Nigeria’s debt stock hits N26.14trn in Q3, 2019 Cynthia Egboboh, Abuja

igeria’s federal and state governments accumulated total debt worth some N26.14 trillion as at September 2019, a leap from the N25.7 trillion level in the previous quarter, according to National Bureau of Statistics’ data. A breakdown of the total public debt showed that N8.27 trillion representing 31.55 percent of the debt was external while N17.94 trillion representing 68.45 percent of the debt was domestic. Similarly, the total FGN debt for the period (external and domestic) stood at N20.86 trillion while the total debt stock for states was N5.354 trillion.

Further breakdown of the states’ domestic debt shows an increase from N3.966 trillion recorded in second quarter to N4.042 in the third quarter. Lagos State accounted for 10.9 percent of the total domestic debt stock while Yobe State had the least debt stock in this category with a contribution of 0.7 percent. The CBN warned last Friday that public debt was rising faster than both domestic and external revenue and urged government to tread cautiously in interpreting the debt-to-GDP ratio. The CBN is further concerned that rising stock of public debt and lack of fiscal buffers are major downside risks to growth projections this year and beyond.

TAK Group chairman’s wife Jennifer passes on

ak Group wishes to announce the transition to eternal glory of Jennifer Ramatu Etuh, the devoted, pious and cherished wife of its chairman, Thomas Etuh. Jennifer passed on to glory on Sunday night January 26, 2020, in London, after a protracted illness. She is survived by her husband, father, mother, siblings and four children. Details of funeral arrangements shall be announced by the family in due course. The group prays for the peaceful repose of her kind and gentle soul and for God Almighty to comfort those she left behind while providing them the

strength to bear this most irreplaceable loss.

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Olayinka Akeredolu (l), state coordinator, Federal Ministry of Agric and Rural Development, Lagos, with Olatokunbo Fagbemi, GMD/ CEO, Nigerian Aviation Handling Company plc (NAHCO AVIANCE), at the Africa AgriExpo Nigeria 2020, in Lagos, yesterday. Pic by Olawale Amoo

Fire guts multiple buildings on Lagos Island JOSHUA BASSEY

n what seems to be the baptism of fire in Lagos this season, seven buildings were on Wednesday gutted in an inferno that erupted in Balogun Market, along Martins Street, on Lagos Island. The fire incident occurred barely five days after the popular Amu Plank Market located in Mushin area of the state was completely razed on Saturday, January 25, leading to loss of properties worth several millions. On Sunday, January 19, the cries of anguish at Ekoro, in Abule Egba area of the state, where several buildings, vehicles and about three lives were destroyed in a pipeline fire, said to have ignited following the vandalism of Nigerian National Petroleum Corporation (NNPC) pipeline in the area. The Balogun Market fire,

Wednesday, it was learnt sparked off from one of the numerous generators used in the four-storey building on 35/7 Martins Street, which also served as market. The fire was said to have spread to another five-storey building located next to the first, and also another 10-storey building and then spread to four other buildings, as fire-fighters battled to salvage the situation. Femi Oke-Osayintolu, managing director of Lagos State Emergency Management Authority (LASEMA), who confirmed the inferno, however, said no life was lost but heavy losses in material resources recorded. Among the responders to save the situation were LASEMA Sharks, Lagos State Fire, Federal Fire, Nigeria Ports Authority Fire Lasambus, Nigeria Police Force, who were seen combating the fire.

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Olabisi Onabanjo University honours Zainab Ahmed KELECHI EWUZIE

labisi Onabanjo University has bestowed honour on the minister of finance, budget and national planning, Zainab Ahmed, with the conferment of an Honorary Doctorate Degree (Honoris Causa) in Accounting. “We are delighted to get the news of your conferment of an Honorary Doctorate Degree (Honoris Causa) in Accounting from the Olabisi Onabanjo University, Ago-iwoye, Ogun State. Your enthusiasm, dedication to your work, patriotism and selflessness, has always stood you out. You have left us with no doubt that this was just a matter of time,” members of family and committee of friends of the minister said, in a congratulatory message to her, considering the milestone. The vice chancellor of the institution, Ganiyu Olatunde, disclosed that the minister was a good ambassador of the institution and had also contributed @Businessdayng

immensely to the development of the country. The choice by the Academic Board to confer on her the honorary degree is to further cement her commitment to pushing beyond boundaries and further committing herself to the challenging task ahead in repositioning the country’s finance and economy. After the resignation of former minister of finance, Kemi Adeosun, in 2018, to fill the space, President Muhammadu Buhari swiftly appointed Ahmed as the minister of finance. Ever since her appointment, she is one of the few female ministers who have proved their mettle, performing excellently well, most especially in the area of finance, economy and fiscal policies. In 2019, the President reappointed Ahmed Minister but with an added portfolio, the ministry of budget and national planning. This was a clear testament of her capability and the trust the president has in her ability

Thursday 30 January 2020

BUSINESS DAY

news feature Sahel Consulting ALDDN to catalyse vibrant local dairy sector

ver the next five years (2020 – 2024), Sahel Consulting’s Advancing Local Dairy Development in Nigeria (ALDDN) will catalyse a vibrant local dairy sector in an inclusive way that improves the livelihoods, productivity, nutrition, and empowerment of smallholder women dairy farmers and the communities in which they live. Funded by the Bill and Melinda Gates Foundation, ALDDN will reach 60,000 dairy farmers in 15,000 dairy households in Adamawa, Jigawa, Kaduna, Kano, and Plateau states. The ALDDN launch event held at Fraser Suites Abuja. The ALDDN programme promotes a private sector-led and market-based approach to solve the problems inherent in the dairy sector while improving the livelihood of the women dairy farmers. ALDDN will be implemented in partnership with 6 private sector dairy companies and with the support of the Federal Ministries of Agriculture and Rural Development, Health, Women Affairs & Social Development, and the Governments of Jigawa, Kaduna, Kano, and Plateau States. The dairy processor partners are Arla Global Dairy Products Limited, Integrated Dairies Limited, L&Z Integrated Farms Limited, Majestik Integrated Dairy Farm, Saj Foods Limited, and Sebore Farms Limited, while TechnoServe and Agridrive Limited are implementing partners on the ALDDN program. In her welcome address, Ndidi Nwuneli, Sahel Consulting’s Managing Partner, referred to dairy as a silver bullet in the Northern Nigerian agricultural landscape, given its role in creating employment, improving livelihoods, addressing malnutrition and empowering women. The ALDDN programme was officially launched by Alhaji Mohammed Sabo Nanono, Honourable Minister, Federal Ministry of Agri-

Audu Grema, senior program officer agriculture, Bill & Melinda Gates Foundation; Paulin Basinga, country director Bill & Melinda Gates Foundation; Bima Muhammad Enagi, vice chairman Senate Committee on Local and Foreign Debts.

Team members of Sahel Consulting with Bima Muhammad Enagi and representatives from the Federal Ministry of Agriculture & Rural Development

culture and Rural Development. In his remarks, stated that Nigeria has 30 trillion Naira assets in livestock contributing about 17% to the Gross Domestic Product but the sector is neglected. The Minister thus expressed his appreciation to the Bill and Melinda Gates for funding the ALDDN programme and affirmed the government’s readiness to support Sahel and other implementation partners to ensure the success of the program. He however noted

that ALDDN must appreciate the cultural context of the communities and existing systems as it tries to enhance those systems to improve the local dairy sector and improve livelihoods of Nigerians. In his remarks, Dr. Paulin Basinga, Country Director, Bill & Melinda Gates Foundation, the funder of the ALDDN program restated the Gates Foundation’s commitment to improving agriculture in Nigeria and his excitement at the leadership

Mohammed Sabo Nanono, Minister of Agriculture; Paulin Basinga, country director, Bill & Melinda Gates Foundation and Ndidi Okonkwo Nwuneli, managing Partner, Sahel Consulting Agriculture & Nutrition www.businessday.ng

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of private sector companies in the program, and their commitment to local sourcing. In addition, Dr. Audu Grema, Senior Program Officer, Agriculture, Bill and Melinda Gates Foundation, described the history of the program and its roots in the Nigerian Dairy Development Program. He also underscored the importance of dairy as it sits at the intersection between agriculture and nutrition and it is at the heart of the BMGF strategy focus areas – access to nutritious food, enhanced productivity and enhancing women empowerment and income. The Keynote Address was delivered by Obai Khalifa, Senior Program Officer, Business Dev. & Private Sector Alliances - AgDev, Livestock, Bill and Melinda Gates Foundation. He noted that the ALDDN program allows for a Government-enabled, private sectorled livestock development to serve the underserved, thus making it critical to the development of the local dairy sector. Mr. Khalifa cited examples from Kenya, India, New Zealand and the Netherlands, underscoring the clear gap between Nigeria’s productivity and some comparable countries and the potential for what could be accomplished with a focus on pastorialist organizations. He ended his keynote speech with a powerful quote by C.K. Prahalad - “If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious

ALDDN, who painted a very exciting and vibrant picture of the dairy sector in 2024, given the catalytic role that the program will play in the industry. In his words, “Nigeria must become a leader in diary in Africa, and ALDDN will galvanize stakeholders in all key sectors to achieve the realization of this achievable vision.” About Sahel Consulting Agriculture and Nutrition Limited Established in 2010, Sahel Consulting Agriculture and Nutrition Limited is committed to transforming Africa’s agriculture and nutrition landscape. Sahel partners with government agencies, private sector companies and leading international development organizations to conduct in-depth market research on key value chains, analyze and shape policies, develop strategies, launch innovative business and ecosystem solutions,, organize convenings and provide training programs that promote sustainable agricultural development across Africa. Sahel’s mission is to transform Africa’s agriculture and nutrition landscape through tailored, innovative, and market-based research, strategic advisory services, training, and innovative business and ecosystem solutions, thereby impacting communities and achieving sustainable growth. Its vision is to be recognized as the most trusted consulting partner and point of reference in the African agriculture and nutrition landscape, integral to building effective and efficient value chains and attaining

consumers, a whole new world of opportunity will open up.” In his speech, Dr. Andrew Kwasari, Senior Special Assistant to the President on Agriculture, who is also sits on the ALDDN National Advisory Committee, expressed his delight that ALDDN will be financing the supply chain of the dairy sector, as this is a key component of the National Livestock Transformation Plan. He thus, stated the need for data to be generated to support other interventions that will transform the dairy landscape. He restated that the NLTP implementation team to is happy to partner with Sahel in the program implementation. The event was formally closed by Mr. Ernest Ihedigbo, Team Leader of

food security. Over the last 9 years, Sahel has worked with a range of clients to deliver high impact interventions in the agricultural and nutrition landscape in Benin Republic, Burkina Faso, Ghana, Liberia, Mali, Niger, Nigeria, and Senegal. Sahel has built a formidable reputation as a dynamic and credible organization. The Sahel team members have also established strong networks and relationships with an array of contacts in the private sector, civil society, key agencies, institutes, and government parastatals that it engages. In addition, Sahel has a strong track-record of integrity and a high level of professionalism, with an experienced team of professionals committed to strong values of the organization.

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Thursday 30 January 2020

BUSINESS DAY

news Lagos seals N100bn bond deal for... Continued from page 1

requisite infrastructure to catalyse its economy, saying it was the largest bond programme ever embarked on by any sub-national entity in the country. Sanwo-Olu said: “We have embarked on a new

L-R: Olubayo Adekanmbi, chief transformation officer, MTN; Ifeoma Dozie, director, marketing and communications, subSaharan Africa, MasterCard; Doyin Salami, chairman, Economic Advisory Council; Hannah Oyebanjo, managing director, Redwood Consulting; Adewale Arikawe, CDSM director, FrieslandCampina Wamco; Chandana Fernando, commercial manager, Nestle Nigeria; and Olayinka Ijabiyi, head, brand, product and stakeholder management, First Bank Nigeria Limited, at the Winning the Channels Series: Power of Consumer Data in Lagos. Pic by Pius Okeosisi

Plot of Argentina’s pension grab playing... Continued from page 1

came an accessible source

of funds to the government. President Kirchner got two-thirds of the Congress to approve of the move that the country would rue years later. Argentina was shut out of international capital markets from 2001 up until the 2008 pension grab because it defaulted on its sovereign debt. It got worse afterwards as nationalising the pension funds couldn’t save the country’s ailing finances. The country took a $57 billion bailout from the IMF and defaulted on the loan in 2018. Argentina is today battling to restructure around $100 billion in sovereign debt after crashes in the peso currency, steep inflation and an anaemic economy left the major grains exporter unable to service its public debts. Nigeria doesn’t plan to nationalise pensions in the style Argentina did but could roil its own private pension system if it arbitrarily takes out cash from it. The move to pull N2 trillion out of the N10 trillion in assets under management of the pension fund administrators could damage confidence in the pension system and slow down contributions. The government says the

motivation for taking the money is to invest in infrastructure, the lack of which has continued to haunt Nigeria even after borrowing nearly N10 trillion from local and international investors within five years. The worry is not that the government wants to borrow but rather the lack of trust in its true intention for racking up debt. Like Argentina, Nigeria is also amid a fiscal crisis that started after the prolonged slump in oil prices. The Federal Government’s budget deficit has ballooned since then as the government opens the tap on spending at a time when revenues have fallen way off mark. Rather than spend the bulk of its scarce resources on infrastructure, the government has prioritised recurrent expenditure from salary payments to sustaining an overbloated civil service. In 2019, central bank data showed that the Federal Government’s budget deficit was a hefty N4.6 trillion, a record high and almost equal to the N4.8 trillion in revenue generated. Recurrent expenditure gulped nearly 80 percent of the N9.4 trillion in total expenditure for the period, an unwanted trend for a country

NESG outlines 12 key steps to attract... Continued from page 2

rent unfavourable outcomes and with the focus still on the liquid gold, Nigeria is missing out on the opportunity to tap in the much-available cheap global liquidity. “Nigeria has suffered a steep loss of liquidity which has hindered growth,” said Teriba. “Rather than identify growth as our major priority, raising liquidity threshold should be the focus.” Teriba pointed to India’s successful LPG (LiberalisationPrivatisation-Globalisation)

model and China’s success in attracting record-breaking FDI inflow and remittances, as the world shifts focus from trade to financial flows. In the three quarters of 2019, Nigeria was only able to attract a patient capital (FDI) of $666m from abroad, only 3.4 percent of total foreign investment inflows (hot money making up 73.4 percent). China attracted $64bn FDI last year. Franklyn Ngwu, a senior lecturer in Strategy, Finance and Risk Management at the Lagos Business School, said the issue for Nigeria is not the www.businessday.ng

with such a massive infrastructure deficit. The government plans to spend another N10 trillion this year and will be hoping a newly enacted Finance Act would help bolster revenues and reduce a swelling budget deficit. But that’s no guarantee, not when tax income may remain subdued on the back of weak economic activity. It’s not clear how the government wants to take the N2 trillion from the pension funds, but it looks different from the current approach where the government borrows money from the fund by issuing a bond that the pension fund administrators (PFAs) buy. Under the current practice, the government holds 70 percent of the pension funds in the form of bonds and treasury bills. “If what is being contemplated is equivalent to FGN bonds, then why not just issue more bonds? The PFAs will buy anyway,” said Andrew Alli, a former CEO of the Africa Finance Corporation, a multilateral financial institution created by sovereign African states to provide pragmatic solutions to the continent’s infrastructure deficit. Government officials already held meetings to speak to the PFAs of some private bonds that will be sold at between 6-9 percent that they would have

to buy, according to a source familiar with the matter. “The worry with such an action is that pensioners are at risk of giving up their savings to a government that isn’t an efficient spender and prioritises recurrent expenditure over capital expenditure,” the source said. “It also threatens to scuttle any confidence in the system.” Nigeria’s mandatory contributory pension scheme has continued to grow because of the conservative approach the National Pension Commission has adopted in its management. A central feature is a restriction on investments to assets of the highest quality. Plans to grow participation in the scheme mainly by private sector firms depend on its credibility. “Argentina serves as an example of how not to run a pension system and the consequence of government meddling,” a business leader told BusinessDay on condition of anonymity in order to speak freely. “It would be interesting to see exactly how the government enforces this move.” Emmanuel Odiaka, a financial analyst, said the pension funds belong to longsuffering Nigerians “whose savings should be efficiently well managed to generate competitive yield and should not by any means be borrowed by fiat”.

absence of liquidity but the absence of investment-friendly policies that can make the country attractive for global liquidity already at a record high. Economists say about 25 percent of capital in the world are in developed countries where yields are negative and if Nigeria could attract a mere 2 percent, the country can unlock most of its growth potential. While much capital is available globally on the back of quantitative easing by major central banks, experts say Nigeria has adequate domestic capital in private hands it can also unlock if the

government stepped outside of its comfort zone. “Private sector money is available but it’d only go where the environment is attractive,” said ‘Laoye Jaiyeola, CEO, NESG. Nigeria can also unlock value in dead capital and fast-track the race to reduce the poverty narrative in the country. “Poverty incidence is very high in areas like Borno State but people there have vast land resources they cannot borrow against,” said a private sector participant. “Unlocking that capital can actually increase the net worth of the poor who have land resources.”

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journey that is not meant to serve our personal interest, but to activate more prosperity for our dear Lagos and give our people the hope for better tomorrow we all dreamed. When we came into Government, we made commitment to all Lagosians that we are coming to pursue and implement an agenda that will build our capacity to achieve ‘Greater Lagos’ we all will be proud of. “Today, I am standing in from you all to say we are writing the financial history of Lagos in another chapter and it will bring good dividends to all residents. With this N100 billion bond, we will ensure that all Lagosians feel the direct impact of this intervention in their homes and on the roads. We are bringing new infrastructure and repairing the existing ones, including bridges and hospitals. We are going to renovate schools and build new ones for our children; slums will be regenerated and pressing environmental issues will be solves. We are going to make people feel the essence of governance.” Sanwo-Olu recalled that the effort to raise the bond started some three months ago with a simple discussion with professional partners led by Chapel Hill Denham. He observed that the State almost missed the opportunity, as the statutory period recommended by Securities and Exchange Commission (SEC) to raise such bond was closing when the State started pushing for the bond issuance. The Governor said the partners staked their time and energy for the State to secure essential requirements to access the capital for the bond. Within a period of three months, Sanwo-Olu said the partners helped Lagos to restructure its balance sheet and reduce the State’s interest expense by N17 billion, which gave Lagos the opportunity to raise the bond from the capital market. He said: “Less than three months down the line, we are celebrating the biggest subnational bond issuance today and the team of partners has also helped us to restructure our entire balance sheet. We have been able to revert the entire borrowing of Lagos from very high rate to acceptable numbers. The team has also helped us to reduce interest expense by N17 billion, which made it easy for us to approach the financial market.” Sanwo-Olu promised not to betray the confidence of investors that subscribed to the bond, pledging that the funds would be disbursed strictly to finance infrastructural projects required to boost the State’s economy. Commissioner for Finance, Dr. Rabiu Olowo, said the @Businessdayng

State accelerated the bond programme in response to the need to close “huge infrastructural gap” in the face of limited financial resources available to the State. He said the State Government took the advantage of favourbale investment climate in the capital market to issue the “Series Three” of its bond programme to raise the money. He said: “The cost of inaction would have been huge and it would mean over 20 million Lagosians would be underserved in many areas. It was, therefore, with this mandate that Lagos Government sought the support of professional advisers to access the capital market in December 2019. “It is fulfilling to note that, despite hurdles we faced, we have been able to achieve the target we set for ourselves. In fact, we exceeded the target. I want to assure all residents that the proceeds from this bond issuance programme will be judiciously utilised in line with our T.H.E.M.E.S agenda to achieve a ‘Greater Lagos’.” Managing Director, Chapel Hill Denham, Bolaji Balogun, described the bond as a “jumbo” for the State, stressing that the support given to Lagos Government by the capital market was unprecedented. Balogun noted that Lagos issued a bond of N100 billion, adding that the Minister for Finance granted the approval for the process while in transit. Lagos, he said, must accelerate investment in infrastructure, adding that such would create an incredible multiplier effect on economic activities and give the State financial buoyancy. Sustained investment in infrastructure, Balogun said, remained the only way to achieve irreversible development and lift millions of people out of poverty. A total of 315 bids were submitted during the offer period for the Lagos Series Three Bond Issuance, putting the value of the total bids at N196.48 billion. A total of 208 bids, which amounts to N100.33 billion, qualified under the terms of the offer at the clearing price of 12.25 per cent per annum. Nigeria’s commercial capital, Lagos State launched the third series of its N500bn debt issuance programme earlier in as it seeks to raise up to N100bn for financing physical and social infrastructural development projects in the state. The issue was rated Aa(GCR) by Agusto & Co although the issuer which is Lagos State Government is rated A+(GCR). Lagos state launched the first tranche of series I in December 2016 when it issued N60bn. The government raised N97.34bn in the series II which was issued in four tranches. In August 2017, the first two tranches of N46.37bn were issued as a 7-year bond priced at 16.75 percent for Tranche 1 maturing in August 2024, and the Tranche 2 which is a 10-year bond of N38.77bn priced at 17.25 percent will mature in August 2027.

Wednesday 29 January 2020

BUSINESS DAY

news

Coronavirus: FCCPC closes down Abuja store designated ‘special area’ for Asian nationals …be cautious, NIDCOM boss urges Nigerians in China HARRISON EDEH & Innocent Odoh, Abuja

L-R: Demola Sogunle, chief executive, Stanbic IBTC Bank plc; Benedict Oramah, president, Afreximbank; Chandi Mwenebungu, director, treasury and markets department, Afreximbank, and Charles Omoera, chief executive, Stanbic IBTC Trustees Limited, at the signing ceremony of the African Export-Import Bank’s N300bn Domestic Bond Issuance Programme between Stanbic IBTC Capital Limited and Afreximbank in Lagos.

Senators ask Buhari to sack service chiefs, declare state of emergency Solomon Ayado & James Kwen, Abuja

hequestionofwhetheror notNigeriashouldimplement the establishment of state police to foster security of lives and property and end insurgency in the country raised so much dustonthe floor of the Senate on Wednesday. Some lawmakers said state police was not the right option to tackle insecurity because, according to them, it would become a willing measure to be easily adopted by state governors to display leadership rascality and crass abuse of power. This is coming just as the Senate has directed President MuhammaduBuharitoimmediately declare state of emergency on security. Also, the senators have asked Buhari to sack the service chiefs due to their failure to ensure adequate security in the country. Theservicechiefswereappointed in July 2015. Theservice chiefs the senators mentionedforsackaretheChiefof

...as Reps call for resignation of service chiefs Army Staff, Tukur Buratai, Chief of Defence Staff, Abayomi Olonisakin, Chief of Air Staff, Sadique Abubakar,andChiefofNavalStaff, Etuk Ibok Ibas. Similarly, the House of Representatives on Wednesday called for the resignation of the service chiefs and asked President Buhari to sack them if they do not resign as they have failed to address the security challenges confronting the country since 2015 when they were appointed. The call was part of the resolutions reached by the House during plenary sequel to adoption of a motion sponsored by the Chief Whip, Mohammed Monguno, and 14 others on the continued attacks by Boko Haram insurgents on communities in the North-East. The House also resolved that the leadership of the House and indeed the National Assembly should hold a tripartite meeting with the president and the service chiefs with a view to finding

lasting solution to the security challenges. On their part, the senators on Wednesday took a whole legislative day to debate on insecurity in the country and to evolve proactive measures to secure lives and property of Nigerians. The debate session on the worsening security situation in the country which started at about 11am lasted for more than five hours. The senators took turns to make personal contributions and submit their positions. The senators in their varied contributions on the floor of the Senate said the service chiefs have overstayed, and that they are bereft of intelligent ideas to tackle insecurity. Some of the other reasons adduced for high level of insecurity include corruption, lack of political will by government authorities, unemployment, poverty, youth restiveness, lack of infrastructure and basic amenities, among others.

Apart from calling for the sack of the service chiefs, the senators also urged the Federal Government to strengthen security at the country’s borders to avert invasion by insurgents. The lawmakers noted that despite the fact that the Federal Governmenthascommittedhigh premium on fighting insurgency, lives and property are being lost, chiefly because the service chiefs lack the will to contain the attacks. Consequently, the Senate has summoned the Inspector General of Police, Mohammed Adamu, to appear before it next week Wednesday to proffer explanations on why the security architecture has deteriorated. To further x-ray the security situation and proffer lasting solutions, the Senate constituted a 17-member ad-hoc security committee, chaired by the Leader of the Senate, Yahayah Abdullahi, to interface with heads of relevant security agencies and review the security system.

Uzodinma reiterates resolve to reposition Imo Civil Service for optimal productivity … says payment of minimum wage, training of officers, housing scheme top agenda Iheanyi Nwachukwu

overnor of Imo State, Hope Uzodinma, has reiterated his resolve to reposition the civil service for optimal productivity. Addressing the civil servants after inspecting facilities at the state secretariat on Wednesday, the governor harped on the need to return joy and confidence to the civil service. “Civil service is like engine of government and for a long time, government was removed from the service. I have come to return government back to you. If we don’t get the civil service right, get the required motivation, provide job security and satisfaction,

it means that the engine of government is broken down. I have come to give you hope, just know that the old order is gone and I have come with a new order,” the governor said. Expressing disaffection over the deplorable state of some of the facilities at the Secretariat, Governor Uzodinma promised that water will be restored within the next few weeks; electricity reconnected to disconnected areas next month and engineers to be sent to assess damages in the buildings for immediate rehabilitation. The Governor assured that he will make payment of salaries a priority: “I have arranged with the banks, whether FAAC www.businessday.ng

comes or not on or before 25th of every month, your salaries will be paid in full. Under no condition should you be paid anything less than your 100percent salaries.” The Governor promised that payment of the new minimum wage will soon commence as he has given marching orders to the Joint Committee on minimum wage to submit their report so that implementation can commence immediately. While assuring the workers that their promotions will be coming as at when due, Governor Uzodinma pledged his commitment to the training and retraining of workers: “We will introduce a training

programme for all cadres of the workforce, you need to update yourselves on the new digital operations which will obviously translate into greater productivity” he said. On Housing Scheme for Civil Servants, the Governor expressed his desire to see Civil Servants retire to their own homes. He stated that the housing scheme would be decentralized into the three senatorial zones of Owerri, Orlu and Okigwe. However, Governor Uzodinma called for change of attitude from the workers, demanded total loyalty and commitment, assuring that he has come with sincerity of purpose and will not let the people down.

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ederal Consumer Protection and Competition Commission (FCCPC) has closed down a store in Jabi, Abuja, after getting information that the store has a special area for Asian nationals. Babatunde Irukera, directorgeneral of the commission, led a team of officials of the FCCPC to the supermarket named Panda, while noting that the visit is a proactive step by the government against possibilities of an infiltration of the Coronavirus into Nigeria. The commission during the visit impounded some of its products and locked it up, asking for more information from people about other stores that might be a threat to public health. “FCCPC inspected Panda Supermarket, Jabi, on credible reports that it discriminated and had a concealed area for Asian nationals. Allegation confirmed, seafood and animals imported illegally from China discovered. Store closed in abundance of caution considering Coronavirus. “Products with expired and irregular shelf life were also discovered at Panda Supermarket, Jabi, Abuja on Tuesday. Regulatory activities to remove all offensive products from the Supermarket continues,” the commission said in a twitter post monitored by BusinessDay. The Wuhan Coronavirus is a

deadly viral disease that has reportedly killed over 100 people. It has its roots in China, an Asian giant with many of its nationals in Nigeria. Meanwhile, Abike DabiriErewa, chairman/CEO, Nigerians in Diaspora Commission (NIDCOM), has advised Nigerians living in China to be wary of coronavirus as the Nigerian mission in Beijing is in touch with Nigerians in Wuhan. In a statement issued by Abdurrahman Balogun, head of media and public relations of the Commission, Erewa counselled Nigerians in China to stay more indoors to avoid contacting the killer disease, and take necessary medical precautions as advised. She said the warning became imperative as medical persons said there was no specific medication or vaccine so far for the disease, and assured Nigerians living in China that the mission would ensure that all necessary actions were taken accordingly. “It is important to advice Nigerians in China to be careful and take necessary precautions by staying indoors more for now,” she advised, and called the attention of Nigerians in China to follow medical advice as obtained in many educational fliers and announcements. She advised Nigerians to avoid crowded and closed areas as well as avoid close contact with people having cold and also avoid eating uncooked meat and animals products for now.

Budget 2020 design to sustain growth, create jobs - finance minister KELECHI EWUZIE inister of finance, budgetandnational planning, Zainab Ahmed, says the current budget is designed to sustain growth and create jobs, and also aims at targeting, strengthening, consolidating and enhancing social investment programmes to improve the lives of the most vulnerable. Ahmed, who spoke at the Nigeria Economic Outlook 2020 edition, an annual event organisedbyDeloittetoprovideinsights into the economic direction for the year by reviewing monetary and fiscal policies, as well as other key initiatives of government in Lagos, says the Budget 2020 would catalyse on Nigeria’s 12th consecutive quarters of GDP growthtoacceleratethesustained momentum and accelerate the trajectory. Ahmed, while delivering a keynote address titled ‘Expectations for 2020: Budget 2020, StrategicRevenueGrowthInitiatives& Finance Act 2020,’ says the budget is also geared towards achieving a morediversifiedrevenuebaseand betterremittancesbymajorGOEs (Government Enterprises). AccordingtoAhmed,“Budget 2020, the budget of sustaining growth and job creation, shows our resolute commitment to continue allocation of resources to key growth and developmental levers to actualise our vision of a bright and prosperous future for all Nigerians. “We have successfully reversed the budget cycle to a pre-

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dictable January – December fiscal year. From this, we expect a multiplier effect on the economy from early spend on critical infrastructure.” Also speaking, Rotimi Amaechi, minister of transportation, notes Nigeria would in five years from now build her own railway infrastructure as part of efforts to boost industrialisation. Nigeria needs to look inwards to produce locally as majority of materials are usually imported, he says. Partner and West Africa Tax leader, Deloitte, Yomi Olugbenro, says it is important to create response mechanism as a regulatory measure against changes. However, the minister further state that Strategic Revenue Growth Initiatives (SRGI) would drive the delivery of Federal Government targeted 15 percent revenue to GDP ratio in the medium term.

CHANGE OF NAME

I, formerly known and addressed as Nkem Glory Eseka now wish to be known and addressed as Nkem Glory Obaro-Ikoh. All former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Azode Stella Adanna now wish to be known and addressed as Mrs Ezeonwuka Stella Adanna. All former documents remain valid. General public please take note.

Thursday 30 January 2020

BUSINESS DAY

POLITICS & POLICY

Insecurity: North under siege, needs ‘Amotekun’ - Yerima Iniobong Iwok

erima Shettima, president, A re w a Yo u t h Consultative Forum (AYCF), has said that Northern Nigeria was under siege and urgently needs a brand of ‘Amotekun’ as a solution to the security challenges that plagued the region in recent times. Yerima stated this in an interview with BusinessDay on Wednesday, noting that the rise in crime, kidnapping, banditry, armed robbery, insurgency and other forms of criminality perpetrated in the region, had necessitated the need for a neighbourhood watch or community, re-

gional policing, similar to the Western Nigeria Security Network, called ‘Amotekun’ in the Northern region. “Considering the level of insecurity in the Northern part of the country, the region needs Amotekun, more than the South-West region,” he said. Yerima lamented the rise in criminality in the region, maintaining that the idea of any security outfit set up to complement the effort of the police would be welcome. While reacting to insinuation in some quarters that Amotekun was targeted at the Fulani, Yerima maintained that he did not believe there was any such insinuation, stressing that he did not want to

think that anybody made such allegations, because criminality was not limited

to Fulani ethnic group, as crime could be committed by other Nigerians

L-R: Muhammed Adamu, Inspector General of Police; Seyi Makinde, Oyo State Governor, and Hosea Agboola, chairman, Oyo State Advisory Council, during a courtesy visit to the Inspector General of Police in Abuja.

Bello swears in commissioners, special advisers …Orders them to be accessible VICTORIA NNAKAIKE, Lokoja

arely 48 hours after being sworn in for a second term, Governor Yahaya Bello has ordered the newly appointed commissioners to always make themselves

accessible to the people as they would be accountable in their dealings. Speaking on Wednesday at the Lugard House while swearing in the commissioners, Bello also announced appointment of 30 new special advisers and their portfolios. “Reach out, be accessible,

approachable and serve the people with humility,” he said. The governor also told the 17 newly appointed commissioners that human capital development was one of the main thematic areas of the ‘New Direction Administration’ and must be respected to the letter.

“Every commissioner as well as all Ministry, Department and Agencies (MDA) must operate an open door policy and make themselves available to the people because human capital development would form the nucleus this administration,” he said.

No injunction can remove us from office – Sacked Oyo LG chairmen REMI FEYISIPO, Ibadan

he sacked local government chairmen have said that the court injunction obtained by the Oyo State government cannot stop them from resuming in their various offices. An Oyo State High Court, on Tuesday, restrained the sacked chairmen from forceful takeover of secretariats in the state. Also restrained were the Minister of Justice and Attorney-General of the Federation, Abubakar Malami as well as the Inspector-General of Police, Muhammed Adamu. Chairman of the dissolved Association of Local Government of Nigeria (ALGON), Ayodeji Abass-Aleshinloye in a statement said it was a fact that there cannot be a restraining order for an ac-

tion that had already been completed. Abass-Aleshinloye said: “It is unfortunate that the state continues to embark on an exercise in futility. Our people have resumed office since Friday 24 and Monday 27, January, 2020 and they (State Government) claimed to have an order of restrain procured today, Tuesday, January 28, 2020. “Meanwhile, that order has not been served on anyone and if eventually served on anyone, it is of no legal effect. Is it possible to restrain an action that has already been completed?” The dissolved council bosses vowed to continue in office despite an injunction procured by the state government. “Our attention has been drawn to an unconfirmed order purportedly issued by a court claiming to rewww.businessday.ng

According to him, “The idea of Amotekun is to tackle insecurity as a result of

strain elected local government Council Chairmen and Councillors from resuming office in pursuance of our constitutional mandate and as affirmed by the Supreme Court and Oyo State High Court Judgment. “Let all and sundry be informed that we have not been served with any such order and/or process in any fresh suit. We will like to state the following for the purpose of record. We were never removed from office in pursuance of any Order and there is no law that can be employed in aid of an illegality that will stand in a constitutional democracy.” According to him, “Reference to a purported Court Order in internet chat room does not constitute service of Court process until such order is served on relevant parties. More importantly, it is trite in law that an order of

injunction cannot lie against acts already completed. All the local government Chairmen and Councillors have since resumed in their offices in 33 the local governments and 35 Local Council Development Areas (LCDA) since Friday 24th and Monday 27th January, 2020. “Hundreds of witnesses abound to testify about the resumption including the Nigeria Police, Oyo State Commissioner of Police, Shina Olukolu, Division Police Officers (DPO) of various divisions as instructed by the Inspector General of Police to ensure compliance with the Supreme Court Judgment, Local government staff, Peoples democratic Party (PDP) members and the thugs they procured to cause a breach of peace in some Council Areas as well as witnessed by several other citizens of Oyo State.

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failure of the police and if the South-West governors took the initiative to establish Amotekun to complement the effort of the police, I don’t see any reason it would not be supported. “We need Amotekun in the North more than even the South-West. Kidnapping, banditry, armed robbery and other forms of criminality are being committed on a daily basis, in the North. Nobody is sure that he would return if he goes out. “The failure of government to provide security has placed the war against insecurity on the shoulders of stakeholders, and it should be a collective one and every stakeholder must be involved to win the war.”

Edo APC: Opportunities lost to crisis can never be recovered – Okiye IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

peaker, Edo State House of Assembly, Frank Okiye, We d n e s d a y s a i d times and opportunities lost to the political crisis in the state can never be recovered again. Okiye made the remarks at a press conference tagged, ‘Putting the records straight’ at the premises of the Assembly. “We must equally reckon with the sad truth that the times and opportunities lost to this political disagreements and the obvious failure of our brothers to give their constituencies a mandated representation, can never be recovered again. “This is a big disservice to the people of their constituencies and the mandate given to them. This is not a fair political game. It is unacceptable,” he said. He said the declaration of seat of the absentee members-elect vacant was not to hurt anybody but to bring sanity and responsibility to politics and governance in the state as well as to assert the importance of the legislative arm. While noting that failure to declare the seats vacant would have hunted the house for a long time @Businessdayng

to come, opined that they courageously toed the path of honour and constitutionality. According to him, “If we as politicians and elected officials must fight; if we must disagree and if we must act in any way, we must never do so to the disadvantage of the good of our dear state. “It is irresponsible, unthoughtful and indeed an unpardonable sin to abdicate responsibilities under any guise, while also indulging in retrogressive politics at the expense of the people. “We are paid to serve the people; they must get adequate rewards for their money. Tomorrow shall judge our today. On our part, we shall not relent in serving the people,” he added. He however, added that the political crisis rocking the party in the state predated the proclamation letter for the inauguration of the 7th State House of Assembly by the state governor, Godwin Obaseki. He alleged that the crisis was prompted by the inordinate ambition of the national chairman of the party, Adams Oshiomhole to dictate the political affairs of the state at the expense of the sitting governor, Godwin Obaseki.

Thursday 30 January 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper Katrina Manson and Mehul Srivastava

onald Trump said on Tuesday that his long-delayed Arab-Israeli peace plan would lay the foundations for “a realistic twostate solution”, but it appeared to require the Palestinians to give up key negotiating positions they have fought for over the past three decades. Setting the tone for a plan weighted in favour of Israel, the US president said Jerusalem, the holy city, would be the undivided capital of the Israeli state. David Friedman, US ambassador to Israel, later told reporters that a “meaningful portion” of the occupied West Bank would also be allocated to Israel, including the Jordan Valley. “Today Israel has taken a giant step toward peace,” Mr Trump said as he unveiled the plan at the White House, flanked by Benjamin Netanyahu, Israel’s prime minister. “My vision presents a win-win opportunity for both sides, a realistic two-state solution that resolves the risk of Palestinian statehood to Israel’s security.” He said the proposals would more than double Palestinian territory, but did not provide details how that would work in practice. He said the Palestinian authorities would have four years to meet US-set conditions of statehood, during which Israel committed not to develop the land allocated for a future state. He added that the Palestinian capital would be in eastern Jeru-

Donald Trump pleases Israel with long-awaited Middle East peace plan US president claims win for both sides but proposals enrage Palestinians

salem, but did not state where. Mr Netanyahu said it would be in Abu Dis, a suburb separated from the holy city by an Israeli security barrier. According to a draft plan published in Israeli media, the Palestinian state envisioned by Mr Trump would mean the Palestinians would have to place their capital outside the municipal boundaries of present-day Jerusalem and would be largely landlocked and bifurcated by Jewish settlements. The status of Jerusalem is

one of the most contentious issues at the heart of the IsraeliPalestinian conflict. While Israel considers the holy city its undivided capital, Palestinians see East Jerusalem as their future capital. Palestinian leaders have refused to talk to US officials since Mr Trump announced in December 2017 his decision to move the American embassy to Jerusalem. They have previously said they would reject the plan. The details announced on Tuesday further inflamed their anger and

will fuel allegations that Mr Trump is pursuing a pro-Israeli bias. Palestinian leaders have previously negotiated on so-called final status issues, including the future of Jerusalem, the right of refugees to return and the issue of land occupied by Israel in the 1967 war. You [Trump] are recognising Israel’s sovereignty over all Jewish communities in Judea and Samaria, large and small alike Benjamin Netanyahu, Israeli prime minister The plan said Israel would not be required to accept the return

of any Palestinian refugees, but those living outside the borders of a future Palestinian state would be allowed back subject to limitations that the proposal did not spell out. Mahmoud Abbas, the Palestinian president, described the plan as a “conspiracy”. “I say to Trump and Netanyahu: Jerusalem is not for sale, all our rights are not for sale and are not for bargain. And your deal, the conspiracy, will not pass,” Mr Abbas said in a televised address in Ramallah in the West Bank. Mr Netanyahu hailed the plan, saying Mr Trump had “charted . . . a brilliant future for Israel”. “You are recognising Israel must have sovereignty in the Jordan Valley, and other strategic areas in Judea and Samaria,” said Mr Netanyahu, using the biblical description for the West Bank. “You are recognising Israel’s sovereignty over all Jewish communities in Judea and Samaria, large and small alike.” He said he was prepared to negotiate with Palestinian leaders, but the prospect of talks appeared remote. Israel’s security cabinet is scheduled to meet on Sunday, and could make a decision to annex the Jordan Valley and other settlements considered illegal under international law into Israeli territory.

How dangerous is new coronavirus and other questions answered Scientists race to understand respiratory disease that has infected thousands in weeks Clive Cookson

cientists around the world are racing to understand the deadly coronavirus that emerged in China last month. Several thousand people have already been infected, with the number of cases rising rapidly because of the huge number of Chinese on the move for the lunar new year holiday. International travellers have helped to spread it further afield, including to the US and Europe. There are fears that, if the respiratory illness that probably started in a food market in the central city of Wuhan continues to spread, it will develop into a serious epidemic. How dangerous is the new coronavirus? The nCoV coronavirus has killed 132 people and infected 5,974. Worryingly, it seems to transmit more readily between humans than Sars, a similar coronavirus that killed almost 800 people after it originated in China 17 years ago. Computer modelling at Imperial College London and Lancaster University in the UK suggest that each new coronavirus case is infecting on

average about 2.5 other people. The new virus is, however, less virulent than Sars, which killed 10 per cent of those infected. So far nCoV has caused severe respiratory disease in about a quarter of the confirmed cases and killed 2-3 per cent of patients. But experts warn that fatality rates are hard to estimate in the early stages of an outbreak — and the virus may mutate as it passes between people. It is also impossible to predict whether genetic changes will make it more or less virulent. For comparison, seasonal flu has a mortality rate well below 0.1 but it infects so many people that around 400,000 deaths a year worldwide are attributable to flu. New pandemic flu strains are far more dangerous: Spanish flu in 1918-19 infected 500m and killed 50m worldwide. How does the virus spread and what is the incubation period? There is still a wide range of estimates for the incubation period, from two to 10 days according to the World Health Organization. The transmission routes between people are still under investigation. An important question still to be resolved www.businessday.ng

is whether people who are infected can pass on the virus if they are not showing symptoms. The new nCoV virus is spreading faster than Sars, which affected 8,000 people over eight months. The number of confirmed cases in the current outbreak has risen to nearly 6,000 within a month — and there are almost 7,000 suspected cases. Epidemiologists fear that nCoV has already infected tens of thousands more people. Can masks help protect against infection? Carrie Lam, Hong Kong’s leader, and other officials from the territory wore protective masks when addressing the media at a press conference on Tuesday. Yet there is considerable debate among public health experts about the preventive effectiveness of covering the face to prevent infection. Surgical grade masks will help but there is no consensus about whether flimsy mass-produced versions are of any use. The WHO does not mention masks in its advice to avoid infection. “Wearing face masks may give a false sense of security,” said Bill Keevil, professor of environmental

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healthcare at Southampton university, adding that good hand hygiene was most important. Tests in his laboratory have shown that coronavirus can survive for four days on common materials such as plastics, glass and stainless steel. How can doctors tell whether a patient has coronavirus and are vaccines being developed? Since Chinese scientists published the genetic sequence of nCoV on January 10, laboratories anywhere in the world have been able to test patient samples for its presence. This is done using a procedure called real time polymerase chain reaction (RTPCR) to identify the virus’s genetic code. But RT-PCR is slow and requires specialist equipment, so researchers are rushing to develop faster, cheaper and more portable tests. No existing drugs are designed to treat coronaviruses, though some antiviral medicines may alleviate the symptoms. Chinese doctors are giving patients combinations of HIV drugs, and another antiviral developed to treat Ebola has shown promise against coronavirus in animal tests. Clinical experience in China will show whether any of these @Businessdayng

help against nCoV. A crash programme to develop a vaccine to prevent nCoV infection is also under way under the auspices of the Oslo-based Coalition for Epidemic Preparedness Innovations (Cepi) — a $750m partnership set up in 2017 by governments, industry and charities to prevent future pandemics. Cepi has launched three projects using different technologies to prepare nCoV vaccine candidates. Richard Hatchett, chief executive, said the aim was to have one ready for preliminary testing on human volunteers within 16 weeks. But even if the programme goes well, no vaccine is likely to be ready for mass administration in less than a year. Is the WHO right not to have declared an international emergency? At a two-day meeting last week, the WHO emergency committee voted by a very narrow margin not to declare a so-called public health emergency of international concern. Such a measure has been announced five times over the past decade, including over last year’s Ebola outbreak in the Democratic Republic of Congo.

Thursday 30 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Nigeria makes anti-corruption moves amid criticism over progress President Buhari promised to reduce graft but his record to date has been mixed Neil Munshi

igeria is publicly ramping up its efforts to prosecute graft, after what critics charge has been a lacklustre effort by President Muhammadu Buhari’s administration to deliver on its signature campaign promise of fighting corruption. Last week the country’s top anticorruption enforcer demanded the extradition from the UK of a former petroleum minister accused of helping to loot billions of dollars from the nation’s coffers. Days later the financial crimes watchdog charged a former attorney-general with allegedly taking bribes to allow a $1.3bn oil block deal in 2011. But the headline grabbing moves came as Nigeria fell four spots to 146 out of 180 countries on Transparency International’s latest annual corruption index, its lowest ever ranking, stoking scrutiny over whether Mr Buhari’s anti-graft promise is genuine. “It’s a bit difficult not to draw a link between the recent streams of bad news, such as the TI Corruption Perceptions Index where Nigeria fell to its lowest point ever, and the sudden awakening of the government to the anti-corruption drive,” said Cheta Nwanze, of SBM Intelligence in Lagos and a frequent administration critic. Last year, at the height of the presidential election, Mr Buhari shared the stage with a northern governor who had allegedly been caught on hidden camera accepting stacks of US dollars. Mr Buhari went on to win the governor’s crucial state, and a second term. Lacking an independent and

well-funded police, judiciary and enforcement, “the whiff of arbitrariness and one-sidedness will continue to hang over the Buhari government’s anti-corruption drive,” Mr Nwanze said. Mr Buhari’s government has rejected the results of Transparency International’s corruption index, criticising the organisation for failing to account for a rise in convictions and increased transparency measures across government. “It is not fact-based but based on second-rate data . . . anybody could put together this kind of report from press releases issued by opposition political parties,” Garba Shehu, a spokesman for the president, told local reporters. Sadiq Isah Radda, secretary of the Presidential Committee Against Corruption, said the administration has worked to convict

a number of high-profile members of the president’s All Progressives Congress party. “The facts on the ground speak to the contrary,” he said. Last month, ex-governor Orji Uzor Kalu, a member Mr Buhari’s party who had recently won election as senator from Abia state, was sentenced to 12 years in prison for graft. Mr Radda also pointed to the 2018 conviction and imprisonment of two former governors in graft cases that had dragged for roughly a decade as evidence of high profile scalps — the two men had both been members of the opposition and Mr Buhari’s party at different times. “We have many high profile individuals that have been arrested, without any linkage to any political affiliation but simply because there is evidence against them,” Mr Radda said.

Mr Buhari has long been known as an ascetic, with a clean reputation stretching back to his days as military dictator in the 1980s. One of his main campaign promises when he first won office democratically in 2015 was to fight the corruption that was widely seen as rampant in his predecessor’s administration. One of the highest profile members of the previous regime facing charges is the former oil minister Diezani Alison-Madueke, who has been under investigation by UK authorities since she was detained by police in London in 2015 Last week, Ibrahim Magu, acting chairman of Nigeria’s anticorruption unit, the Economic and Financial Crimes Commission, called on the UK to extradite former oil minister, stating that the agency had sufficient evidence to

prosecute Ms Alison-Madueke for financial malfeasance committed while in office. “We want everybody who has stolen from the commonwealth to bring it back to Nigeria, so as to use the monies to provide the needed infrastructure,” he said. The EFCC says it has traced at least N47.2bn and $487.5m in cash, properties and other valuables to Ms Alison-Madueke, who served as petroleum minister from 2010 to 2015. The assets include “boxes of gold, silver and diamond jewellery worth several million pounds sterling” at one residence in Abuja and a $37.5m apartment building in Lagos, according to the EFCC. Ms Alison-Madueke denies any wrongdoing. But perhaps the biggest corruption case on Nigeria’s docket involves a $6.6bn arbitration judgment awarded to P&ID, an obscure company started by an Irish businessman, over an aborted gas processing plant in southern Nigeria. The 2017 judgment against Nigeria has since ballooned to over $10bn with interest, which is roughly a quarter of the country’s foreign reserves. After sleeping on the case for years — including missing court filing deadlines — Nigeria seems to have woken up to the risk the ruling poses to its reserves and to its sovereign credit rating and ability to raise debt. In recent months it has increasingly sought to label the original contract fraudulent, and prosecuted a number of low level oil ministry officials, who have pleaded guilty to taking bribes in exchange for approving the deal. A spokesman for P&ID has called the recent prosecutions a “sham”.

US energy ‘junk’ bonds hammered by oil plunge Downturn in sentiment caused by coronavirus comes after brighter start to the year Joe Rennison and

unk-rated energy bonds have plummeted after the spread of coronavirus hit oil prices, highlighting the strains on a sector that already led US defaults last year. Oklahoma-based Laredo Petroleum’s $600m bond, which was priced at 100 cents on the dollar in mid-January, dropped to as low as 90 cents after just a week of trading. Meanwhile, the yield on a widely watched junkrated energy bond index run by Ice Data Services jumped 0.77 percentage points to a high of 9.02 per cent this week, reflecting a broad sell-off in lower quality debt from the sector. The bonds were picking up somewhat while energy prices

stabilised on Wednesday, but the shake-out marks a sharp downturn in investor sentiment that had been buoyed coming into 2020 by rising oil prices stemming from global production cuts and tensions in the Middle East. Debt that had been issued in the brighter environment has now been punished, alongside other struggling energy companies’ debt. “They have just gotten clobbered,” said John Dixon, a highyield bond trader at Dinosaur Financial Group in New York. “The rise in oil threw these companies a lifeline, but it has been shortlived.” Energy companies account for the bulk of debt in the broader high-yield bond market and comprise 13 per cent of bonds www.businessday.ng

rated triple C, the very bottom tier. Investors are watching the sector closely for signs that cracks are starting to form in the broader credit market. Such bonds had enjoyed a very positive end to 2019, despite pressure on US natural gas prices from a relatively mild winter, as investors piled in to the riskiest assets in a desperate hunt for yield. In December, triple C-rated energy bonds posted returns of 12.3 per cent, outperforming the broader triple C index, which returned 5.6 per cent. Now the reversal is causing discomfort for some issuers. Bonds issued by triple C-rated Chesapeake Energy, maturing in 2025, tumbled as low as 80 cents on the dollar this week from a peak of 91 cents earlier

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in the year. Me a n w h i l e, c o m p a n i e s whose debt was already in territory considered “distressed” are running out of options. Bonds issued by exploration company California Resources, maturing in 2022, dropped to just 34.5 cents on the dollar, down about one-third from this year’s highs. Sales of new corporate bonds ground to a halt on Monday as fears surrounding the coronavirus grew. Brent crude dropped almost 17 per cent from its early January peak, before moderating that decline to 13 per cent. “I think the modest pullback in oil and the severe pullback in natural gas will probably put a lid on [issuance] for a while,” said one bond banker. Energy and natural resources @Businessdayng

companies accounted for the largest share of defaults in the US bond market through to the end of the third quarter of last year, according to S&P Global. The probability of further defaults has risen over the past month, according to Credit Benchmark. Oleg Melentyev, a strategist at Bank of America, said he expected further pain, but added that the riskiest company debt that had already been beaten down could outperform higherrated bonds. Fears over coronavirus, and its effects on global travel, continued to hold sway in the market, said Peter Tchir, chief macro strategist at Academy Securities. The drop in the oil price had “followed straight through into bond prices”, he said.

Thursday 30 January 2020

BUSINESS DAY

ANALYSIS

Nissan’s ‘invisible’ chief executive accused of failing to lead

Makoto Uchida’s low-key approach raises doubts about his ability to solve crisis Peter Campbell, Kana Inagaki and Leo Lewis

hen Nissan’s board met last week in the wake of Carlos Ghosn’s dramatic escape from Japan, the moment cried out for the new chief executive Makoto Uchida to take centre stage. Instead, the crucial turnround presentation was delivered by the group’s number two, Ashwani Gupta. The boss, already dubbed “invisible” by some colleagues, listened quietly alongside the other directors. This low-key approach is already drawing criticism from some insiders, who say it may have its place at other groups — but not at Nissan, which needs a strong and decisive leader who can stop the warring factions splitting the company apart. Just two months into his tenure, there are doubts among some company executives over whether Mr Uchida is the man to solve the crisis at the group, which still has to heal wounds with its French-owned alliance partner Renault. A new three-man leadership group launched with a “one team” slogan to mark a decisive end to the dictatorial style of the Ghosn era and bring stability to the business has already dissolved. A rift has opened up between the CEO and chief operating officer, Mr Gupta, according to three people close to the company’s board, while a third member of the troika left the business in December. As the new alliance team prepares to meet on Thursday in Japan, Mr Uchida needs to start taking charge, say these insiders, with the company’s future reliant on whether he can stem crumbling sales worldwide and revive rock-bottom morale, while under a constant bombardment of criticism from ousted former chairman Mr Ghosn in Lebanon. Renault, led by chairman Jean-Dominique Senard, will aim to breathe fresh life into the 20-year old partnership with Nissan this week, with a spate of new joint projects intended to bring the businesses closer while also, crucially, respecting their independence. On Tuesday, the French carmaker named former Volkswagen and Fiat executive Luca de Meo as its new CEO, although he will not take up the post for several months. A person close to Mr Senard denied any rifts at the top of either Nissan or the alliance, saying that Mr Senard, Mr Uchida, Mr Gupta, Renault’s interim CEO Clotilde Delbos, and third alliance partner Mitsubishi, worked well together and communicated daily. The main protagonists Makoto Uchida, Nissan CEO The former head of Nissan’s Chinese operation, Mr Uchida, 53, previously worked at Nissan’s joint purchasing division with Renault. Being able to work with the French partner and unite Japanese executives will be key to his success in turning round the business. Ashwani Gupta, Nissan chief operating officer The ambitious Indian-born executive, 49, has worked across all three companies in the alliance, most recently as Mitsubishi’s chief operating officer. He previously

A rift has opened up between Nissan chief executive Makoto Uchida, left, and his number two Ashwani Gupta, undermining the group’s drive for reforms, according to company insiders © FT montage / Reuters / AFP

led the alliance’s light commercial vehicles unit. Jun Seki, Nissan’s former turnround expert The former China head was seen as the strongest CEO candidate after he was assigned the pivotal role of overseeing the company’s recovery plan last May. He left Nissan after three decades to become future CEO of Apple supplier Nidec. Yasuhiro Yamauchi, former Nissan interim CEO The former chief operating officer is the closest board member and mentor to the new Nissan boss. He was once considered a CEO candidate but his brief tenure as interim chief ended following tensions with alliance partner Renault. Hiroto Saikawa, former Nissan CEO Once a loyal deputy to Carlos Ghosn, Mr Saikawa’s tenure as CEO was overshadowed by a slide in Nissan profits and a spate of certification scandals. He quit last September following revelations about overpaid compensation. Jean-Dominique Senard, Renault chairman The former Michelin CEO was parachuted into Renault last January, with the aim of holding the alliance together following Mr Ghosn’s arrest. He sits on Nissan’s board, and also chairs the alliance management committee that includes chief executives from Renault, Nissan, and Mitsubishi. From the very beginning the dark-horse selection of Mr Uchida, the 53-year-old former head of China operations, was controversial. Many inside Nissan had considered Jun Seki, the turnround expert who was poached by Apple supplier Nidec in December, as the strongest contender. He was also the trusted protégé of Hiroto Saikawa, who stepped down as CEO in September following internal findings of overpayments.

After the initial internal sounding out of successors to Mr Saikawa by the nomination committee, Mr Seki had garnered the most support while Mr Gupta, the Indiaborn former Renault executive, came in second. Mr Uchida had gained no support. But the process descended into acrimony as unfounded allegations of personal and professional misconduct were levied at several candidates by competing factions inside Nissan, according to people with knowledge of the nomination procedure. Renault chairman Mr Senard, who was in favour of Mr Gupta, subsequently opposed Mr Seki and the official vote settled with the little-known Mr Uchida as a compromise candidate. Mr Senard’s intervention sparked some bitterness among Nissan executives as the nomination process, which was put in place after Mr Ghosn was arrested in late 2018, is supposed to be independent. Nissan and Renault declined to comment on the nomination process. Another Nissan executive has been selected to fill Mr Seki’s number three position. But people close to the management say the new team remains divided owing to Mr Uchida’s tight bonding with his former supervisor Yasuhiro Yamauchi, who remains on the board after stepping down as interim CEO. “The person Mr Uchida should rely on the most is Mr Gupta, but where is the ‘one team’ he pledged if he is only consulting Mr Yamauchi,” one of the people said. Nissan denied there were tensions, saying Mr Uchida and Mr Gupta are “working closely together to lead the company in order to rebuild Nissan’s performance and trust in the company”. But critics say Mr Uchida has added fuel to the fire by siding with his mentor at a time when senior officials were already sparring over retirement packages for a

string of former executives who were removed in the turmoil following Mr Ghosn’s arrest. Rather than apologise for past strategies that saw heavy discounting tarnish the brand’s image, the new CEO repeated previous management directions, asking staff why they were not selling more cars at greater margins The infighting has put scrutiny on the newly formed compensation committee. Its head Keiko Ihara has proposed granting full performance-based payouts for Mr Yamauchi and another executive associated with Mr Ghosn’s downfall despite a collapse in profits and share price at Nissan. The proposal, which was formally approved by the committee, has yet to be reported to the board, according to two people familiar with the process. There are also growing doubts within the board regarding Mr Uchida’s leadership skills. During a trip to Nissan’s struggling US operations earlier in January, it was Mr Gupta who addressed staff at various plants and at Nissan’s research centre in Michigan, while Mr Uchida spoke to an employee gathering in Nashville and the company’s retailers. The meetings with dealerships, which are key to reviving the fortunes of the brand in its largest market, were not well received. Rather than apologise for past strategies that saw heavy discounting tarnish the brand’s image, the new CEO repeated previous management directions, asking staff why they were not selling more cars at greater margins. “There was no contrition at all,” said one person familiar with the details of the trip. Mr Uchida also claimed to be in “listening mode”, a tone that went down badly with retailers looking for a new direction from the new leader.

industry Insight

BUSINESS DAY Thursday 30 January 2020 www.businessday.ng

MSMEs: Oiling the wheels of Nigerian economy Gbemi Faminu

icro, small and medium scale enterprises ( M S M E s ) a re the bedrock of the Nigerian economy as they provide platforms on which economic growth thrives. Business experts agree that MSMEs have significantly contributed to economic growth through job creation, revenue generation, and economic diversification, among others. Vice president Yemi Osinbajo said at a breakfast meeting in 2019 that MSMEs were the bedrock of Nigeria’s industrialisation and inclusive economic development, stressing that they were the most important component of industrialisation as set out in the Economic Recovery and Growth Plan (ERGP). They constitute over 90 percent of the country’s businesses and contribute to half of the Gross Domestic Product (GDP). They have also reformed and actively influenced the country’s economy through innovations, creativity and disruptions of the status quo. A national survey of MSMEs conducted by the National Bureau of Statistics (NBS) and the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) in 2019 described MSMEs as engines for economic transformation and industrialisation. The survey, which covered 2013 to 2017, showed that the total number of MSMEs in Nigeria as of 2017 was 41.5 million, with the micro enterprises constituting a larger part with 41.4 million businesses, representing 99.8 percent. Small scale enterprises were a total of 71,000 businesses, constituting 0.17 percent while medium scale enterprises constituted 0.2 percent of the total with 73,081 enterprises. The survey highlighted some notable contributions of MSMEs to the Nigerian economy. It said MSMEs contributed 49 percent to the national GDP, accounted for 96 percent of businesses and 84 percent of employment. With the huge number of Nigerians setting up new businesses, the survey highlighted that MSMEs had been major sources of employment and poverty reduction. “It is evidently clear that the MSMEs could play a catalytic role in the economic transformation of Nigeria. The role includes substantial contribution of the sub-sector to the gross domestic product (GDP), employment generation, export, increasing local value addition and technological advancement.” the survey said. While MSMEs are scattered across various sectors, they are majorly found in the trade sec-

tor— wholesale and retail—, agriculture, manufacturing, and food services, among others. Increased job creation and skills development especially for youths Paul Ruwase, former president of the Lagos Chamber of Commerce and Industry (LCCI), said at a press conference in 2019 that MSMEs were critical to the nation’s economic development especially with regard to job creation and poverty reduction. Before the growth of entrepreneurship, the public sector was saddled with the responsibility of job creation, but this was overwhelming considering the accelerated growth of the country’s population. The NBS said that Nigeria’s unemployment rate stood at 23.1 percent as of the third quarter of 2018. However, the survey under review showed that amid rising unemployment, MSMEs generated 18.1 million jobs for the economy between 2013 and 2017. Five percent of the jobs were created by small and medium enterprises while micro enterprises contributed 95 percent to job creation, especially in the industrial and manufacturing sector where they contribute 50 percent and 90 percent respectively. The survey showed that the major economic sectors that generated employment were manufacturing sector, which accounted for 47.4 percent; agriculture, which contributed 29.6 percent; the trade sector -wholesale and retail- contributed 10.1 percent, while other services contributed 5.6 percent. However, the least employee figures were recorded under the real estate, arts, entertainment and recreation and administrative and support services. Propelled abundance of local investment in the country Furthermore, following investors’ reluctance to invest in the Nigerian economy due to economic headwinds and restrictive business environment, MSMEs have continued to flood the economy with various business activities, and encouraged financial circulation in the economy. According to the NBS, SMEs in Nigeria have contributed about 50 percent to the national GDP between 2013 and 2017, and 7.64 percent to export receipts. In addition to this, the small-scale industry employed 87.5 percent of local sourcing of raw materials during production activities. Digitalisation and innovation to improve competitiveness Over the years technology has grown to transform and develop at an accelerated speed, and technological innovation has been recognised as a way for developing nations to foster economic development and improvement in all areas. In line

with global practices, different countries have started to ride on the wave of the digital revolution. However, while many developed and developing countries have been able to catch up, Nigeria has been reported to lag in technology adoption, which has limited its competitiveness in the global economy. As engines of socio-economic transformation, including industrialisation, SMEs have managed to change the narrative and have actively engaged in technological advancement and digitalisation through digital marketing, online transactions to any part of the world and ICT engagements. They are seen as platforms to explore various opportunities and connections. The MSMEs have been nurturing Nigeria’s ability to position itself in this new wave and unlock economic growth via investments and viable businesses across all sectors of its economy. Stimulates local economy with demand down the value chain and improved income re-distribution As growth agents for the economy, MSMEs have stimulated business activities in the economy, and also encouraged economic activities among the unbanked population, thereby encouraging financial inclusion. Data from the survey under review showed that small businesses accounted for a greater percentage of all businesses in the Nigerian economy, generated the majority of private sector employment and economic input. “Small-scale industries, by their nature, are such that they are involved in primary and secondary economic activities that depend heavily on locally sourced materials. As such, they achieve high value-added operations which play a key role in the growth and development of any

economy,” the report said. As expected, marketing of MSMEs products was dominated by local channels between 2013 and 2017m according to the report, while exports contribution by the sub-sector was valued at N57.5 billion, representing 7.64 percent of the country’s export activities. This was an improvement from the 7.27 percent contributed in 2013. Furthermore, the SME sector of the economy contributed 49.78 percent to the GDP. According to the survey, the major contributors to the economy were the trade sector –wholesale and retail- with 42.3 percent; agriculture with 20.9 percent; other services with 13.1 percent; manufacturing with 9.0 percent, and accommodation and food services with 5.7 percent. Together, these accounted for about 91.0 percent of all MSMEs. Encourage economic and Industrial diversification Also, the abundance of SMEs have allowed for diversity in the economy in different sectors which align with the federal government’s objective of economic diversification. Further examination of the report shows that the small-scale enterprises consisted of the education sector while the medium enterprises were majorly made up of manufacturers who covered 43 percent of medium enterprise. Small enterprises are well positioned to introduce and develop new ideas. They present a vital platform for boosting technical, technological and entrepreneurial capacities among critical segments of the populace. “MSMEs play significant roles in the transition from agriculturebased economies to industrial ones, providing opportunities for value chain linkages that generate sustainable livelihoods for the bottom-of-the-pyramid citizenry.

MSMEs are responsible for most of the advances in new products and processes,” the report said. In recognition of its activities and impact on the economy, the report said, “In recognition of the crucial roles MSMEs play with respect to economic growth and development, successive governments in Nigeria had availed various initiatives aimed at promoting MSMEs in the country with access to credit featured prominently amongst the measures offered,” the report further said. Some of these measures include establishment of a MSMEs ratings agency, Tradermoni scheme, Anchor Borrowers Programme, and Development and Bank of Nigeria (DBN), all tasked with improving credit access. The measures also include establishment of the Presidential Enabling Business Environment Council, tasked with reforming the business environment, and the 2019 Finance Bill which aims to achieve five major objectives that cut across supporting MSMEs in line with the ease of doing business reforms. In summary, governments across the world protect MSMEs because of the critical roles they play in the economy. However, Nigeria still has a long way to go. The survey disclosed that 2,877 medium enterprises were shut down within this period. This was basically down to recession that hit the country in 2016 and a string of poor policies that hit the country within this period. Today, in the 21st century, Nigerian MSMEs are facing multiple taxation as government agencies and touts see them as cash cows. Many MSMEs, depending on their locations, cannot survive because of high expenditure on energy. This makes a god case for the use of renewable energy in the country.

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