BusinessDay Jul 30 2018

INEC in a fix over funding of 2019 elections Tony Ailemen, Abuja

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he decision of the Senate to go on a recess a few days after President Muhammadu Buhari submitted a supplementary budget for funding the 2019 elections has left the Independent National Electoral Commission (INEC) walking a tightrope.

President Buhari on July 17 submitted a N254 billion budget which is what is required to ensure an election holds in February 2019, just about seven months away. But even before

the budget could be considered, the Senate announced on July 24 that it is adjourning plenary until September 25, when it will just be five months before the general election.

The commission is now worried on how it would fund its preparation for the national elections.

The Chairman of the INEC, Mahmoud Yakub expressed his concern at a retreat held on 28 July organized

by State House Correspondents on “Covering Election Campaigns” at the

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news you can trust I **MONDAY 30 JULY 2018 I vol. 15, no 106 I N300

L-R: Omamofe Boyo, deputy group chief executive, Oando plc; Ayotola Jagun, chief compliance officer and company secretary, Oando plc; Oba Adedotun Aremu Gbadebo, Alake of Egbaland, chairman, Oando plc, and Adewale Tinubu, group chief executive, Oando plc, at the company’s concluded 41st annual general meeting on Friday.

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Earnings season lifts stocks as investors cheer results LOLADE AKINMURELE

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nvestors are bidding stocks higher after a flurry of positive half year corporate earnings by Nigerian companies last week helped the stock market climb by 0.58 percent Friday.

Among the companies that posted impressive half-year earnings last week include Glaxo Smith Kline (GSK), First City Monument Bank (FCMB), Cement Company of Northern Nigeria (CCNN), Fidson healthcare and 11 plc (Mobil).

Other companies that posted

Guinness jumps 10% on Diageo optimism

Analysts say valuations compelling

Iheanyi Nwachukwu

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Agbaje, Dozie, three others join FMDQ board

Inside

Pgs. 24-26

…gas agreement with Eroton to boost fertilizer capacity by 100% igeria-based fertilizer maker, Notore Chemicals Limited has got regulatory approval to list its shares on Nigerian Stock

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Auto policy: ‘What we have seen is activity, we now need to see achievement’

Notore eyes N100bn valuation from share sale on NSE

….as Exchange records 74% increase in debt securities listing

L-R: Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange; Joseph Okwu Nnanna, chairman, board of directors, and Ajibola Asolo, company secretary, during the 6th annual general meeting of the company in Lagos, at the weekend.

Pic by Olawale Amoo

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MDQ OTC Securities Exchange has annnounced new board Members at its 6th Annual General Meeting which held at the OTC Exchange’s

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businessday market monitor Commodities

NSE

Bitcoin

Brent Oil

Biggest Gainer

Biggest Loser

$74.15

CCNN N31.35

SEPLAT N625.00

Cocoa

US $2,233.00

10.00pc 36,636.97

-3.85pc

₦2,798,378.20

Everdon Bureau De Change -3.231pc

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$-N 357.00 360.00 £-N 472.00 480.00 €-N 408.00 418.00

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FMDQ Close Foreign Exchange Market I&E FX Window CBN Official Rate

Treasury Bills

Spot $/N 362.28 305.90 %

3M 0.12 11.33

6M 0.23 12.73

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fgn bonds 5 Years

10 Years

20 Years

-0.24% 13.76%

-0.02% 14.29%

0.06% 14.22%

Monday 30 July 2018

NEM Insurance outperforms peers INSIGHT Why Nigeria does so badly at converting growth to wellbeing for citizens on NSE Insurance goods Index ...sees average annual profit growth of 48% in 5 years David Ibidapo

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usinessDay analyses reveals that NEM insurance is the best performing company amongst other companies on the NSE insurance index based on average growth in earnings in the past 5 years.

The NSE Insurance index comprises of the most capitalised and liquid insurance companies. The index is designed to present a benchmark of the performance of the sector.

NEM insurance saw its profits grow impressively by 48 percent from N395.06 million in 2013 to N2.77 billion in 2017 making the company seat comfortably on the top of the chart.

Also, NEM saw its shares bid by investors leading to higher prices as it grew by 144 percent, topping the chart as the best performing stock in the index. Stock price for the company grew from N0.68 in 2013 to N1.66 in 2017.

Analysis reveals that growth in average earnings of NEM insurance lags its growth in stock price. This may lead to further share price gains in the future if investors determine that The analysis also reveals that stock price of NEM insurance is currently up by 84 percent from N1.58 in January to N2.91 as market close today. This reveals NEM insurance

outperforms peers based on YTD stock price analysis.

In the last 5 years, total revenue of NEM insurance grew on an average by 8 percent with significant increase of 14 percent between 2016 and 2017.

Also claim expenses of the company declined by 9 percent over the period under review.

Linkage assurance plc followed closely with a 47 percent average growth in profit during the period under review. In 2013, the company’s profit after tax stood at N414.28 million and increased consistently till 2016 when it hit N544.7 million.

Between 2016 and 2017, Linkage assurance recorded an impressive jump in profit by 431 percent to stand at N2.8 billion in 2017.

Stock price of Linkage insurance within the period lagged average profit growth. The company saw its share price increase by 32 percent making it the 3rd best performing stock in the index behind Custodian and Allied Insurance with a share price growth of 88 percent.

Other companies in the index that recorded positive average growth in their earnings includes Lasaco Assurance plc (19%), Custodian and Allied Insurance (16%), Mutual Benefits Assurance (13%), and Continental Reinsurance (10%).

Lagos markets largely vacant years after opening for business CHINWE AGBEZE

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ewly-built markets in Lagos remain largely vacant years after they were opened for business, as they seem to have been priced out of the reach of the middle-class.

A recent survey by BusinessDay at the Tejuosho market which was rebuilt through a Public Private Partnership (PPP) arrangement after being gutted by fire in 2009, the new Alade market, in Ikeja, as well as the Arena shopping complex, near Oshodi, showed that the cost of shops have shot up by 40 to 100 percent in the past two years owing what a trader called ‘racketeering’.

Findings show that about 70 percent of the over 1,000 shops at the Tejuosho shopping complex, which was commissioned four years ago, are still vacant. ‘‘They belong to investors who bought 20-30 shops earlier. I don’t think the management has any,’’ said a management staff at the shopping complex, who craved anonymity.

The stores, according to findings, are rented for as much as N800, 000, as against N350, 000 a year ago. However, this depends on the retailer’s haggling power. It was found that the management serves as a go-between the investors and the retailers.

“Racketeers buy shops at the complex at N6.9 million (on a 25-

year lease) and resell at N8 million,” said a trader. It was further gathered that the 70 percent empty shops in Tejuosho are owned by these racketeers, who do not even do business in the complex. ‘‘The management helped me get a shop from one of those who bought earlier,’’ said a clothing retailer, who gave his name as Daniel. Kayode, a retailer at the complex had been trying to assist a shop owner rent his store, but the price has been scaring many away. ‘‘The owner of shop 155 bought her store for N7m. She said I should help her get a buyer for N8m or someone who could pay N600,000 as yearly rent, but when people hear the price, they never come back,’’ Kayode said.

Retailers at the shopping complex further told BusinessDay that they were informed of a 25-43 percent increase in rent upon expiration. ‘‘We were told the rent from next year is N500, 000, and we pay N9, 000 for service charge. The sad thing is that patronage is very low,’’ said a retailer who deals in fairly-used clothing. ‘‘Customers feel goods here are expensive, and they prefer to shop from the streets.’’

However, Thompson Tom, the promotions and event manager at the shopping complex, insists that shop prices at the shopping mall have been constant.

Continues on wwwbusinessday online.com

BUNMI BAILEY

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survey by BusinessDay revealed the reasons why Nigeria occupied the 7th position among the worst countries at converting economic growth into wellbeing for citizens.

Reasons include the country having the highest level of out of school children, high mortality rate, one of the countries with highest unemployment rate in the region, with high volume of extremely poor people and declining purchasing power of its citizens.

Johnson Chukwu, CEO, Cowry Asset Management Limited said that in terms of education that the country has highest level of out of school children that could have negatively affected the country’s rating. “Nigeria has one of the highest unemployment rate in Af-

rica about 18.8 percent in Q3 2017.

We have one of the highest infant mortality rate in the world. In infrastructure our global rating is not worth celebrating,” Chukwu said.

Meanwhile, the current ranking for Africa’s largest economy was disclosed in a recent 2018 Sustainable Economic Development Assessment (SEDA), which was put together by Boston Consulting Group (BCG), a global management consulting firm that measures how well countries convert GDP growth into improved well-being for its people.

The survey ranked Africa’s most populous nation 145th position out of 152 countries scoring 26.3 over 100 making it the world’s 7th worst at converting economic growth into wellbeing for citizens.

The country performed badly in terms of the ten indicators used by the SEDA index which was infrastructure, income, education,

health, environment, governance, civil society, income equality, employment and economic stability.

In the ten indicators, the country scored 6.9 in the income indicator, 80.9 in Economic stability, 58.4 in employment, 22.9 in health, 17.1 in education, 19.6 in infrastructure, 27.5 in equality, 21.0 in civil society, 26.6 in governance and 57.9 in environment.

“The fact that the number of extremely poor people account for 45 percent of the population will be a major negative in assessing the country’s SEDA. So with those scores I think the country’s weight would have been dragged down drastically,” Chukwu added.

In the income indicator, the country per capital income declined from $3,268 in 2014 to $1,994 in 2017 and International Monetary Fund (IMF) thinks it may further worsen in the coming years.

Continues on wwwbusinessday online.com Continues on wwwbusinessday online.com

Kingsley Moghalu ( l), presidential aspirant of the Young Progressive Party (YPP), and former deputy governor of the Central Bank of Nigeria, being received by Islamic scholar, Sheikh Ahmed Gumi, in Kaduna

World’s 4.5m electric car surge should worry Nigeria ...to shed 2mbpd daily demand by 2020 ...budget funding at risk from shrinking oil market ISAAC ANYAOGU

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y 2025, there could be 4.5million units of electric cars on the road indicating that the world may shed over 2million barrels per day crude oil out according to forecasts by the UK-based McKinsey and Parisbased International Energy Association but the implications seem lost on Africa’s biggest oil producer.

European countries are passing regulations that compel car manufacturers to produce models that run further at the same amount of petrol in line with projections to ban internal combustion engine vehicles in two decades.

“The world around us is changing and the danger is that those of us in this part of the world who play

ostrich, could be in a dangerous situation as time will pass quickly and others would move on,” warns Victor Eromosele, CEO of M.E Consulting, in a keynote address at the 18th edition of the Annual Petroleum Policy Roundtable, organised by Centre for Petroleum Information (CPI).

The cost of electric vehicles, formerly a deterrent is falling.

According to Bloomberg New Energy Finance, the industry average price of a lithium-ion battery pack was $208 a kilowatt hour in 2017 from about $800 in 2011, and batteries constitute about 42 percent of the total cost of an electric vehicle. It is projected to fall by 62 percent by 2030 as technological advances and ramped-up production push costs ever lower.

Tony Ogbuigwe, managing director, PEJAD Nigeria said exploits been

achieved in electric car manufacturing including reduction in charging time, investments in charging stations and more efficient engines that cover more distance on a single charge should make Nigeria which depends on crude oil to fund its budget jittery.

“Now electric car makers can come to set up a recharging point for you in your house, Switzerland is constructing metal strips, a technology that helps you charge the car while you are driving on some roads and ongoing research is helping to create lighter battery.

“To recharge electric cars, takes between 30mins- 1hour, they are developing more efficient system that will enable you recharge in less than 5 minutes,” Ogbuigwe said.

Continues on wwwbusinessday online.com

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Why Nigeria lags behind SSA peers in financial inclusion BUNMI BAILEY

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oor level of education enlightenment, adaptation of technology and insufficient telecoms infrastructure are the reasons why financial inclusion in Africa’s biggest mobile phone market has lagged behind its sub-Saharan African (SSA) peers, according to analysts.

Johnson Chukwu, CEO, Cowry Asset Management Limited, said, “Some of these countries are better than us in terms of education penetration, early adaptation of technology. For example, Kenya with Mpesa has helped their financial penetration level and financial system and other infrastructures like communication, transport, etc.

“And these factors may have contributed to the country lagging behind. But the core of it is the poor education enlightenment in educating the people on the value of having a bank account.”

Ayo Akinwunmi, head of research, FSDH Merchant Bank, said the issue of the insecurity and the high unemployment rate in Nigeria were factors contributing to the decline in financial inclusion of Nigerians.

He said, “A lot of banks

that are located in these areas where there is high level of insecurity are already shutting down .If there is peace there will be more bankable adults.

“And when you look at the unemployment rate also, people are losing their jobs on account of the recent economic recession we enter in 2016 and existed in Q2 2017 and with the weak purchasing power that we are experiencing is why the bankable adults are dropping.”

According to the World Bank Fintech Database 2017, Nigeria receded in financial inclusion between 2014 and 2017, and the percentage of banked adults dropped nearly 4 percentage points to 39 percent, while the SSA average increased more than 8 percentage points to 43 percent.

“Between 2014 and 2017, the percentage of banked adults dropped nearly 4 percentage points to 39 percent, while the sub-Saharan African average increased more than 8 percentage points to 43 percent,” the Fintech report said Financial inclusion in the country declined in the last four years to 39.4 percent in 2017 from 44.2 percent in 2014, while SSA countries on average gained across the region as the number of bankable people increased to 42.6

percent in 2017 from 34.2 percent in 2014.

Kenya improved to 81.6 percent in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent, and South Africa receded little to 69.2 percent from 70.3 percent According to a 2016 report

by Financial Sector Deepening (FSD) Kenya, the introduction of Mpesa changed the game as the population of adults in Kenya that are financially excluded is about 17 percent from 23 percent within a decade.

“I think there is still a wide communication gap between the telecoms and the banks which can only be addressed by the CBN. In the case of Kenya (Safaricom), every bank in Kenya integrated with Mpesa (mobile money app) for ease of transfer,” Ayodeji Ebo, MD, Afrinvest Securities Limited, said in a telephone response.

“The Telecom then recruited agents across the cities to distribute the products. This model should be further studied and adapted to Nigeria. To work effectively in Nigeria, the intervention of the CBN will be required to ensure positive synergy between the telecoms and banks,” Ebo suggested.

In South Africa for example, more than 70 percent

of adults, for example, have a transaction account more than in Brazil, Chile, India, Mexico, and Russiaand its life insurance adoption rate is higher than that of far wealthier countries such as Italy and Spain , according to Boston Consulting Group (BCG), a global management consulting firm.

Ivory Coast has experienced a mobile money revolution. There are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. In fact, Ivory Coast has the fifth highest rate of mobile money accounts in the world behind Kenya (58%), Somalia (37%), Uganda (35%), and Tanzania (32%), according to Brookings Institute, a highly regarded, non-profit public policy organisation based in Washington DC. Financial inclusion is when individuals and businesses have access to useful and affordable financial products and services that meet their needs e.g. transactions, payments, savings, credit and insurance delivered in a responsible and sustainable way This month, the Central Bank of Nigeria announced it is not on track to reach its target of increasing financial inclusion to 80 percent by 2020.

Monday 30 July 2018

Chinese Yuan exchanges N53.35k, dollar for N360 … as CBN sells $340m, 69m Chinese Yuan HOPE MOSES-ASHIKE

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ne Chinese Yuan (CNY 1) exchanges for N53.35k while one US dollar ($1) goes for N360 at the Bureau De Change segment of the foreign exchange market.

The Central Bank of Nigeria (CBN), on Friday, injected $340 million into the interbank retail Secondary Market Intervention Sales, and CNY69 million in the spot and short tenored forwards.

However, naira on Friday depreciated against the dollar at the investors and exporters (I&E) forex window by 0.02 percent to close at N362.28k per dollar compared with N361.86k/$ traded the previous day, according to data from the FMDQ. Naira also weakened by 0.14 percent at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) as it closed at N362/$ on Friday from N361.93k/$ on Thursday. The local currency was stable at the CBN official window, closing at N305.90k per dollar.

At the Bureau De Change segment of the foreign exchange market, naira was quoted at N360

to the dollar. Against other currencies it traded at N480 against the British Pounds and N420 against the Euro at the BDC segment.

The figures obtained from the CBN on Friday, showed that the US denominated interventions were only for concerns in the agricultural and raw materials sectors.

According to Isaac Okorafor, acting director, corporate communications at the CBN, the sales in the Chinese Yuan are through a combination of spot and 15-day tenors. He said the exercise, in line with its guidelines, was for the payment of Renminbi denominated Letters of Credit for agriculture as well as raw materials and machinery.

Okorafor also explained that the requests attended to were bids received from authorised dealers, adding that the availability of Renminbi was sure to ease pressure on the Nigerian foreign exchange market.

He attributed the relative stability in the foreign exchange market hugely to the continued intervention of the CBN as well as the sustained increase in crude oil prices in the international market.

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90 [ninety] candles for Dr. J.K. Randle BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

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apan and the Koreas, if they continue with their current trend of hardly having any children, will become extinct – within two centuries, there’ll be no Japanese or Korean people on the planet,” Cordeiro says.

“But thanks to these new techniques, there will indeed be Japanese and Korean people, because they’ll live forever and remain young.”

The cost of anti-ageing treatment was compared to that of the latest Smartphones.

“At first, it’ll be expensive, but with a competitive market the price will gradually fall because it’ll be something that benefits everyone,” Cordeiro says.

“Technology, when it’s new, is poor and extremely expensive, but it eventually becomes democratic and mainstream and becomes cheaper.”

The engineers say they have already been employing their techniques for two years – illegally, but in Colombia where there are fewer regulations covering genetic

manipulation.

Elisabeth Parrish, their first human patient, ‘started to see symptoms of ageing and asked what could be done to prevent it’.

Her treatment is ‘very risky and even illegal’, Wood explains, but at the moment is going well, has not had any adverse sideeffects, and the level of telomeres in her blood is ‘20 years younger than before’.

“I want Spain to have a place in the world of these technologies and show that we’re not mad, it’s just that people still don’t know about them,” Wood concluded.

The Death of Death will eventually be published in four languages at first – Spanish, English, Portuguese and Korean – and all proceeds from its sales will be ploughed back into the authors’ research.”

However, not everyone wants to live forever. Some really smart guys want to die now and thereby avoid any last minute rush.

Headline: 104-year-old scientist to fly across globe to end life – Regrets having reached that age “A 104-year-old scientist, David Goodall, yesterday bid farewell to his home in Australia to fly across the world to end his life.

The lauded ecologist and botanist is not suffering from a serious illness but wishes to bring forward his death. Key to his decision, he says, has been his diminishing independence. “ I g r e a t l y r e g r e t h av i n g reached that age,” Dr Goodall said on his birthday last month, in an interview with the Australian Broadcasting Corporation.

“I’m not happy. I want to die. It’s not sad particularly. What is sad is if one is prevented.”

An online petition raised $A20, 000 (£11,000; $15,000) for the scientist to fly in business class to Europe.

He will visit family in France before heading to Switzerland with his closest relatives “I’m not happy. I want to die.

It’s not sad particularly. What is sad is if one is prevented.” An online petition raised $A20, 000 (£11,000; $15,000) for the scientist to fly in business class to Europe. He will visit family in France before heading to Switzerland with his closest relatives.

“They (my family) realise how unsatisfactory my life here is, unsatisfactory in almost every respect,” Dr Goodall told the ABC. “The sooner it comes to an end, the better.”

Assisted dying was legalised by one Australian state last year following a divisive debate, but eligibility requires a person be terminally ill.

It is illegal in other states. Dr Goodall said he will travel to a clinic in Switzerland to voluntarily end his life.

However, he said he resents having to leave Australia to do so.

The London-born academic had lived on his own in a small flat in Perth, Western Australia, until only a few weeks ago. He stepped back from full-time employment in 1979, but remained heavily involved in his field of work. Among his achievements in recent years, Dr Goodall edited a 30-volume book series called Ecosystems of the World and was made a Member of the Order of Australia for his scientific work.

In 2016, aged 102, he won a battle to keep working on campus at Perth’s Edith Cowan University, where he was an unpaid honorary research associate. Accompanying Dr Goodall on his journey out of Australia yesterday was his friend, Carol O’Neill, a representative from assisted dying advocacy group Exit International.

Mrs O’Neill said the dispute in 2016 over Dr Goodall’s working space had affected him greatly.

The row began when the university raised concerns about his safety, including his ability to commute.

Although Dr Goodall ultimately prevailed, he was forced to work in a location closer to home. It came at a time when he was also forced to give up driving and performing in theatre, Mrs O’Neill said.

“It was just the beginning of the end,” she told the BBC. “He didn’t get to see the same colleagues and friends any more at the old office. He just didn’t have the same

spirit and he was packing up all his books. It was the beginning of not being happy anymore.”

Dr Goodall’s decision to end his life was hastened by a serious fall in his apartment last month.

He was not found for two days.

Later, doctors said he needed to engage 24-hour care or be moved into a nursing home.

“He’s an independent man. He doesn’t want people around him all the time, a stranger acting as a caretaker. He doesn’t want that,” Mrs O’Neill said. “He wants to have intelligent conversation and still be able to do the same things like catching the bus into town.”

Mrs O’Neill said Dr Goodall’s main desire was to die peacefully and with dignity. “He’s not depressed or miserable, but there’s just not that little spark that was there a couple of years ago,” she said. Mrs O’Neill said he had spent recent days revising his final letters and holding conversations with his extended family, including his many grandchildren.

Dr Goodall’s story has gained attention locally at a time when his home state, Western Australia, considers whether to debate assisted dying legislation. The state government has publicly expressed sympathy for Dr Goodall, but said any proposed legislation would cover only terminally ill patients.” My feeling is that an old person like myself should have full citizenship rights including the right of assisted suicide,” Dr Goodall said last month.”

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The possible impacts of the general data protection regulation (GDPR) on Nigerian businesses

ROTIMI AKAPO Rotimi Akapo is a partner at Advocaat Law Practice

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he General Data Protection Regulation (GDPR or the Regulation) became operative on May 25, 2018and it is expected to have a profound effect on the management of personal data by data controllers and processors globally. Its far reaching provisions are expected to pose complex compliance challenges to organisations that process personal information worldwide, including Nigerian businesses.

One of the key changes to the Regulation is its extra-territorial application. It provides that where a business not located in the E.U processes personal data (Personal data is defined under the Regulation as ‘’any information relating to an identified or identifiable

natural person.’’) in relation to (a) the offering of goods or services within the European Union (E.U), irrespective of whether or not a payment is required, or (b) the monitoring of the behavior of individuals within the E.U, such a business will be required to comply with the provisions of the Regulation. Therefore the Regulation may be applicable to a Nigerian business that processes personal data of E.U citizens or residents in relation to the offering or provision of good or services or monitors their behavior in any way shape or form. This is irrespective of the fact that such business does not have an office or employees physically present in the E.U. If a Nigerian business targets E.U citizens or residents via the internet, markets in a language spoken in one or more E.U countries, agrees to accept a currency used in an E.U country for goods or services offered, offers to ship goods to E.U countries, appoints sales agents in E.U countries, represents that it has customers in the E.U, tracks persons resident in the EU or monitors their behavior in order to predict spending patterns or their be-

havior online e.t.c, such a business will be subject to the Regulation.

It is important to note that it is not necessary for a financial transaction to have occurred before the business comes under the purview of the Regulation.

Some of the Nigerian businesses that may need to comply with the regulations may include e-commerce companies, airlines, logistics, travel and hospitality companies, digital advertising companies, software companies, application developers, Nigerian companies employing E.U citizens, payment systems processing companies, telecommunication companies, internet services providers, cloud services providers, fintechs, recruitment agencies, hotels, law firms, and global mobility specialists There is some uncertainty as to how the GDPR will be enforced against companies that, even though are caught by its provisions, are located outside the E.U and without any physical presence in the E.U. Enforcement can be directly against the representative of the business within the jurisdiction, if any, though still without prejudice to any legal action that may be instituted against the

business itself. The service or the website of the infringing company may be blocked. Where there is a sale and or delivery of physical goods, the goods may be seized on arrival in the E.U. Trade restrictions may be placed on the company’s goods and services or the goods may be banned from being sold in the E.U. Where the company has assets within the E.U, the assets may be frozen or seized. In addition, the assets of the company in other jurisdictions that recognize judgments of the E.U might also be frozen or seized.

Some of the steps Nigerian businesses that the GDPR may be applicable to need to take include – (i) audit, review, update and publicize data protection and privacy policies, payment policies and terms of use of their websites or services offered to the public to make it GDPR compliant (ii) Implement data protection procedures (ii) Review and amend contracts with suppliers and vendors that may be involved in activities involving the processing of personal data to ensure they are GDPR compliant. (iii) Train employees on GDPR compliance. (iv) Ensure only necessary

personal data is collected and stored and further review data storage procedures (v) Ensure the deployment of appropriate technical and administrative processes to ensure adequate security for stored data. (vi)Where the business is involved in large scale data processing, appoint a Data Protection Officer. (vii) Consent process must be clear, unambiguous and expressly provided by data subjects. (viii) Implement data breach detection and notification processes. (ix) Where a third party is engaged to process personal information contractually (x) extract a guarantee that they will implement appropriate security measures that are GDPR compliant. (xi) In designing products ensure compliance with privacy by design and default requirements and be proactive. (xii) Adopt solutions such as data masking, encryption, and pseudonymization to protect customer data. (xiii) Consider appropriate insurance coverage particularly where the business processes personal data on a large scale.

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Imagining a N500 billion housing fund

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

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big part of Nigeria’s infrastructure gap is the huge housing deficit.

At the last count, it was estimated that the country has a 17 million housing deficit.

However, this figure has been around since 2012 and so many players in the housing sector believe it is no longer an accurate reflection of the housing gap. Considering that housing provision has been deficient over the years, there is a strong prospect that the housing gap would have grown wider since 2012 than narrower.

But if we assume that the 17 million housing units’ figure is still accurate, even if the country were to build a million houses every year, it will still take 17 years to close the existing gap. With the country’s population growing at an estimated 3.5 percent per annum, to effectively close the housing gap, the country should actually be providing about 1.5 million housing units on an annual basis over a 17-year period. If the gap were to be closed in the tenure of a single administration, assuming an 8-year

tenure, we should be looking at approximately two to three million housing units per annum to do that.

Practically, it is impossible for any government to seek to provide up to a million housing units on an annual basis. The cost would be too much and the logistics too huge. If we assume that the government would be providing very low cost housing at an average rate of N5 million per unit (say a two-bedroom apartment in a condominium), we would be looking at a cost of N5 trillion per annum, more than have of this year’s budget.

The government is certainly not in a position to fund such huge budget for public sector housing.

However, government is a continuum. So no one government needs to close the housing gap in an 8-year tenure. What is really needed is a long term strategy that is fully funded on an annual basis aimed at closing the housing gap over a determined number of years. Besides, a well-funded and implemented public housing scheme could have a profound impact on economic development. We have all seen the impact Festac and 1004 estates, two mass public sector housing schemes that has stood the test of time, had made in Nigeria. Sadly, they have not been replicated over the years.

So imagine that the federal government sets up a N500 billion public sector housing fund that is fully funded in the first year and use it to bridge the country’s ever widening housing gap. There is no doubt that a N500 billion housing fund is likely to have more socio-economic impact than the N500 billion social investment scheme that the government is currently implementing.

The Federal Mortgage Bank can be remodelled into a regulator and possibly a buyer of last resort in the mortgage sector for those who may default in paying up on their mortgages If we assume that the government can provide a two-bedroom flat on a mass housing basis at an average of N5 million per flat in a condominium style type of housing scheme, the government could easily be building a 100,000 housing units per annum over the next few years. This means that in four years, the government could build 400,000 housing units, a drop in the country’s housing deficit pool, but a significant step forward, when you consider that the government is currently unable to even provide up to a 1000 housing units on an annual basis.

If we assume that you will need to engage a minimum of 10 direct labourers to build one flat, building 400,000 flats per annum, assuming economies of scale, could create at least two million direct labourer jobs. The multiplier effect on other industries, like cement manufacturing, carpenters, wire manufacturers, electricians and many more that will have to be engaged or their products bought to complete this massive

public sector housing scheme will be massive. Then, there is also the taxation impact of providing housing for 400,000 households, who because they are living in government housing, can be identified and taxed. So those not already in the tax net can easily be brought into the tax net.

The other major advantage of such a housing scheme is that it can be used for urban renewal, creating new urban centres and also for societal integration. So imagine a replica of 1004 estate in Ikorodu area of Lagos that also comes with a shopping mall located within the premises, an entertainment hub, including cinemas and an office complex. It also comes with all the basic amenities like water and road infrastructure. The estate is built as a place where you can live, work and play. Allocation of flats is done on a quota system basis, that is, a combination of all the major tribes in the country and a healthy sprinkling of minority tribes to encourage ethnic integration.

The question is how do those who get allocated these houses pay for them. The answer is in the country’s fast growing pension funds. As at May 2018, data from the Pension Commission (Pencom) shows total retired savings funds under management is now N8.14 trillion. Total contributors in the fund stand at slightly over eight million. Average contribution per person is slightly above N1.0 million while 74 percent of contributors are below 50 years. This means that there is room for a good chunk of these contributors to use part of their pension contribution as mortgage payments for a house. This will resonate well with most people as the biggest

challenge facing many people looking to retirement is having a house of their own. It is just a matter of allocating a part each person’s monthly pension contribution as part payment for a mortgage for a house which he or she can move in as soon as a certain portion is paid.

Also contributions currently being made under the National Housing Fund (NHF) can be consolidated under the pension fund contribution.

Basically, Pencom should take over the NHF contributions and administer it as a mortgage fund under the pension contributions. The Federal Mortgage Bank can be remodelled into a regulator and possibly a buyer of last resort in the mortgage sector for those who may default in paying up on their mortgages. As a regulator, the federal mortgage bank will ensure that all houses being built under the public sector housing scheme meet with laid down standards and regulations. It could also undertake the provision of the public infrastructure needed to support the new housing units that will come up.

Public housing could be a catalyst for economic development. Sadly, despite our rising housing infrastructure gap, the government has failed to think through a workable and sustainable solution. With the high pace growth in the country’s population, the slow growth rate in housing provision and fast growth in rural to urban migration, the country faces a slum crisis and the associated insecurity that comes with it unless significant efforts are made to close the housing deficit.

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Hike the minimum wage but accept the implications

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

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igerian public employees are poorly paid in a developing country context, and deserving of the increase in the national minimum wage that is under discussion within a tripartite commission (government, employers and organized labour). We can carp at the timing of the discussions within the electoral calendar, and we can identify a repeat of 2010. Once we are through with the carping, we can acknowledge that governments worldwide like to offer sweeteners to the population in their quest for re-election.

A wage rise is doubtless warranted on social grounds, and may bring motivational benefits too. From the macro perspective, however, there is considerable downside. Fiscal data on person-

nel spending, rather than the broader category of recurrent expenditure, is patchy, and for state governments in aggregate is particularly weak. Another complication is that personnel spending can exclude or include pension payments.

The build-up to the elections in 2011 is instructive for our purposes. Personnel spending by the FGN increased by 24 per cent from N1.4trn in 2010 to N1.7trn the following year, and so reflecting the then new minimum wage of N18,000 per month. The FGN’s annual bill remained within a range of N1.6trn to N1.7trn though to 2015, and the approved 2018 budget projects spending of N2.1trn on the personnel of ministries, departments and agencies (MDAs, perhaps a broader measure than in the earlier CBN series).

Clearly we have no idea what conclusions the tripartite commission will reach. Labour’s reported push for a more than threefold increase is unlikely to be settled in full. We should expect a compromise, and perhaps some staggering of the increase that is agreed. To calculate its impact, we need to know the number of employees on the minimum wage of course, but also make allowances somehow for adjustments to the salaries of all others so that pay

differentials are maintained.

Such wage increases push up recurrent spending. This can be directly translated into less fiscal space for capital programmes, assuming (as we do) that the FGN is fiscally responsible. They also raise the oil price threshold required in the budget to cover the FGN’s spending commitments, and so blunt the efforts of the federal government to diversify the economy away from oil.

The solution is to transform revenue collection, notably from the non-oil economy. That way, the authorities would be able to pay their employees a reasonable salary and to spend in line with the size of their economy. Total FGN expenditure in the 2018 budget represents little more than 8 per cent of forecast GDP, and is unlikely to be disbursed in full. In peer countries, the ratio is at least 15 per cent and often more than 20 per cent. The gap is huge, even when we allow for Nigeria’s federal system (and the fact that we are citing data for the FGN alone).

Revenue enhancement is underway, and the authorities have devoted time, manpower, technology and external technical expertise to the case. In the 2018 budget the FGN is projected to collect revenue equivalent to about 6 per cent of GDP, and we expect that this will be overambitious.

The tax amnesty (VAIDS) could be

the game-changer in the short term: we suspect, however, that if the operation has been a stunning success, the federal finance ministry would have shared the good news.

Gains are more likely to be steady. We might also be pleasantly surprised by the petroleum industry governance bill. To be realistic, we should accept that the FGN is serious about non-oil revenue collection and that progress will be unspectacular for well-documented reasons. The administrative capacity of the revenue agencies is weak, harmony between relevant departments is poor, the informal sector is huge and there is a prevalent culture of not paying (because the reciprocal benefits are elusive). E-payments, the growth of mobile money, computerization, data sharing and mining between departments, and growing international regulation will all help over time.

For now, we urge realism and patience.

The FGN will be able to pay the new minimum wage because it can borrow. The state governments, in contrast, have been bailed out by five separate debt relief packages by the FGN. In return, their freedom to borrow has been severely curtailed with a few exceptions such as Lagos State. The states, most of all those

termed oil-producing and so enjoying the 13 per cent derivation formula, are seeing the benefit of the higher crude price and the recovery in crude output in the regular distributions of federation account balances. This bonus notwithstanding, a good number of the state governments, perhaps as many as one half, are still in arrears on their salary and pension payments to their staff.

In passing, we should mention two other implications of a sizeable salary hike: a push to inflation, which featured in the MPC’s communique after its meeting last week, and a challenge to small businesses that may struggle to pay the higher amounts.

To conclude, a hike in the national minimum wage is on its way, and the timing of the discussions is easily explained. On the surface we may think that the FGN, if not all states, can afford it and that the damage may look limited. Yet until the FGN is able to collect revenue at far higher levels, at or close to 20 per cent of GDP rather than the current 6 per cent, such hikes merely reduce the scope for sorely needed capital/infrastructure programmes and increase the economy’s dependence on the oil price.

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Monday 30 July 2018

Is Buhari a tyrant?

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s news broke that the residential houses of Senate President Bukola Saraki and Deputy Senate President Ike Ekweremadu were under siege by the security agencies, #TyrantBuhari started trending twitter on 24 July. The top tweet under the hash tag had about 1,300 tweets and 1,400 likes, an indication of how popular the tweets were.

The tweets were mainly about the siege on the houses of the leaders of the senate which social media users fully blamed the president for.

The siege on the houses of the two leaders of the senate was seen as largely undemocratic and also a threat to democracy.

Most social media users immediately tied the behaviour to Buhari’s military background as a former general who was also once a coup plotter.

This link to Buhari’s past as military dictator may not be totally fair, since similar attacks on the national assembly happened under the previous Goodluck Jonathan administration, when members of the House of Representatives were forced to scale the national assembly fence in a bid to have access to the chambers.

When that happened, Ty-

rantGoodluck did not trend. So TyrantBuhari may be an unfair representation of what happened on 24 July, distasteful as it may be.

However, a pattern of behaviour under President Buhari may have justified #TyrantBuharihash tag. The first that easily comes to mind is the impunity with which court orders are being disobeyed under the Buhari administration.

Of course, the case of Dasuki comes to mind easily. After being granted several bails, Sambo Dasuki remains behind bars.

The Attorney General of the Federation and Minister of Justice Abubakar Malami (SAN) response to the bail granted Dasuki by a competent court of jurisdiction is even more disheartening. He was reported to have said that Dasuki’s right to a court granted bail would be waived for public good, adding that he was responsible for more than 100, 000 deaths. The first question that comes to mind is; what is ‘public good’ and who determines ‘public good?’

Only under tyranny would the presidency or the executive arm of the government act as the accuser, the law enforcer and the judge at the same time. Dasuki may be the ‘devil’ but under democratic rule, only the courts have the right to say so.

There is also the case of Ibrahim Zakyzaky, the leader of the

Islamic Movement of Nigeria, otherwise referred to as the Shiittes, who was illegally detained for about two years before being arraigned for murder. Then there is the cold blooded killing of 350 members of the IMN, which will remain a bloody signpost of the Buhari Presidency that will not be forgotten just like the Odi massacre signposts former president Olusegun Obasanjo’s administration. No one has been brought to book over the Shiite or Odi massacre.

There is also the case of Jones Abiri, a journalist that has been in detention for about two years now without trial. Abiri has been detained incommunicado as his family and friends have not been allowed to have access to him over these period. This type of behaviour is definitely not in line with the tenets of democracy. The government has claimed that Abiri is not a journalist. But the truth is that, even if it is assumed that it is true that Abiri is not a journalist, it is still absolutely unacceptable to detain anyone for two years without trial. Our argument has always been that it is kidnap when the government detains a citizen indefinitely without a court order.

Finally, there is the mysterious case of Nnamdi Kanu who has vanished, along with his parents, for more than a year now after

the army raided his family home.

Till today no one knows if Kanu is alive or dead. Hundreds of members of the Indigenous People of Biafra (IPOB) were also shot dead during the raid. Up till today, no one has been held account for these killings.

It is only when tyranny reigns in a country that the rule of law is ignored. Under the Buhari Presidency, increasingly, there are becoming too many situations that the rule of law is being ignored in favour of the whims and caprices of the president. But it should be noted that those who ignore the rule of law today, will need the law to protect them in future.

It is therefore very dangerous to the freedom of all citizens when the rule of law is ignored in the name of ‘perceived’ public good as determined by the President and not by the courts. The President we see today, no matter how good intentioned, will not be there forever. Only the law, and quest for justice lasts forever and justice is what everyone seeks for and deserves. #TyrantBuhari trended for a reason and it is important that Buhari should not ignore the fact that he is increasingly being seen as a dictator and there are valid arguments to show that he is increasingly acting in a dictatorial or even tyrannical manner.

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Monday 30 July 2018

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All under heaven

China’s belt-and-road plans are to be welcomed—and worried about The “project of the century” may help some economies, but at a political cost

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HUNNING all false modesty, China’s leader, Xi Jinping, calls his idea the “project of the century”. The country’s fawning media hail it as a gift of “Chinese wisdom” to the world’s development. As for the real meaning of the clumsy metaphor to describe it—the Belt and Road Initiative (BRI)—debate rages.

The term itself is confusing. The “road” refers mostly to a sea route; the “belt” is on land. Countries eager for China’s financing welcome it as a source of investment in infrastructure between China and Europe via the Middle East and Africa. Those who fear China see it instead as a sinister project to create a new world order in which China is the pre-eminent power.

All roads lead to Beijing One cause of confusion is that the BRI is not a single plan at all. A visitor to its website would click in vain to find a detailed explanation of its aims. There is no blueprint of the kind that China’s leaders love: so many billions of dollars to be spent, so many kilometres of track to be laid or so much new port capacity to be built by such-and-such a date.

Chinese maps show the belt and road as lines that trace the routes of ancient “silk roads” that traversed Eurasia and the seas between China and Africa (see Briefing). That was the original conceit, but these days China talks about BRI as if it were a global project. The rhetoric has expanded to include a “Pacific Silk Road”, a “Silk Road on Ice” that crosses the Arctic Ocean and a “Digital Silk Road” through cyberspace.

To the extent that this is all about building infrastructure, the idea is

welcome. Trillions of dollars’ worth of roads, railways, ports and power stations are needed in countries across Asia, Africa and Europe. China’s money and expertise could be a big help in spreading wealth and prosperity.

China says anyone can join in.

Countries such as Azerbaijan and Georgia, which stand to benefit immensely from better connections to the world, are wildly enthusiastic. One of China’s motives is to strengthen security on its western flank by helping Central Asian countries prosper— thereby, it hopes, preventing them from becoming hotbeds of Islamist terrorism. Everyone would benefit from that, too.

But there are worries. The BRI is bound up with the growing cult around Mr Xi. State media call it “the path of Xi Jinping”. It has become shorthand for China’s overseas aid, state-led investment abroad and for Mr Xi’s much-ballyhooed “greatpower diplomacy with Chinese characteristics”. China urges other countries to praise the BRI, so that their

words can be relayed back home as propaganda. Few Chinese dare offer open criticism; that makes mistakes more likely.

The citizens of countries hosting BRI projects may come to regret their governments’ enthusiasm. Like all Chinese cash, the BRI billions come without pesky questions about human rights or corruption. Indeed, the terms are often shrouded in secrecy, raising fears that local politicians may benefit more than their people. Projects tend to require the use of lots of Chinese labour. BRI countries risk piling up dangerous amounts of debt, which some fear is designed to give China a strategic hold over them. Pakistan, one of the most important BRI countries, has just held an election in which candidates vied to take credit for Chinese investment; yet the debts are so large that, before long, Pakistan is likely to need an IMF bail-out.

Then there are possible security risks. In his metaphorical flights, Mr Xi sometimes speaks of his belt and road as a single thoroughfare, a “road of peace”. But what if the Chinese navy were to take advantage of ports such as Hambantota? This was repossessed by a Chinese state-owned firm after the Sri Lankan government struggled to repay the debts it had amassed to build it. Military planners worry that China could develop a string of such berths that its ships could use to extend their reach far beyond China’s shores.

Analysts in Asia and the West believe that China wants to displace America as the Asian hegemon. The BRI could end up furthering that plan, even if it is not its focus. China’s crude maps show the belt and road running

through disputed territory, including the bitterly contested waters of the South China Sea where China has been busy building fortresses on reefs.

Some Asian countries, including India and Vietnam, are wary and most Western countries share their unease. Last year America’s defence secretary, James Mattis, said that: “No one nation should put itself into a position of dictating [BRI]”. In January France’s president, Emmanuel Macron, warned that the BRI “cannot be the roads of a new hegemony that will make the countries they traverse into vassal states.” He added: “The ancient silk roads were never purely Chinese…

These roads are to be shared and they cannot be one-way.”

Keep those American signposts What should the world do about the BRI? For a start, it needs to keep some perspective. Even if China does hope to use it as a political tool to beat back Western influence, Beijing is bound to face difficulties, as projects go awry, debts go bad and people grow hostile to China’s presence. History suggests that simply doling out money will not, on its own, usher in a Pax Sinica.

The world can also use its influence to make the BRI more beneficial.

Even China’s billions cannot finance everything on offer. Money coming from the West, from the European Union and from institutions such as the World Bank and the IMF should be lent according to international standards—including on such things as transparency, environmental safeguards, public procurement and debt sustainability. So long as they are good projects, let China include them in the BRI if it wants to.

Last is security. The way to assuage fears about the BRI’s threat to the balance of power is not by trying to frustrate China’s efforts, let alone by starting a trade war or by pulling America’s armed forces out of Asia, as President Donald Trump sometimes seems to contemplate. On the contrary, the balance of risks and benefits of the BRI is related to America’s commitment to Asia. If the United States is engaged, the world can mitigate the dangers of BRI and reap its rewards. If not, the risks will outweigh the benefits.

The BRI is yet one more argument for America to stay in Asia.

Sealed with a kiss

Donald Trump agrees to cease fire in the trade war with the EU But American farmers are already suffering the consequences of his policies

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RESIDENT Donald Trump has not been shy about his admiration for tariffs. But on July 25th his love of deals appeared to prevail.

Tweeting a picture of Jean-Claude Juncker, the president of the European Commission, kissing his cheek, Mr Trump heralded an advance in trade relations between America and the European Union. “A breakthrough has been quickly made that nobody thought possible!” Mr Juncker was triumphant, too, tweeting: “I came for a deal, we made a deal.”

The two sides agreed to work

together towards “zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods.”

Trade barriers in services, chemicals, pharmaceuticals, medical products and soyabeans are on the chopping block, too. Pundits were quick to point out that Mr Trump had, in fact, secured talks to negotiate something that looks remarkably similar to the Transatlantic Trade and Investment Partnership, an accord put on ice when he became president. Such a deal might be possible, but it is a lot more remote than Mr Trump’s jubilation suggests.

The meeting’s other outcomes have more immediate consequences. Mr Trump agreed to “hold off further tariffs”, halting the threat of punitive measures on European cars and avoiding escalation into a nastier tit-for-tat dispute. Remarkably for a man said to be itching to withdraw from the World Trade Organisation (WTO), Mr Trump announced that he would work with the EU to reform it. Rather than mindlessly bashing the WTO, Mr Trump may have realised the benefits of using it to tackle China’s economic misdeeds.

Given Mr Trump’s mercurial Continues on page 15

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In Association With

Open Future

How free expression is suppressed in Saudi Arabia

Donald Trump agrees to cease fire in...

A self-exiled journalist reflects on his country’s direction

Continued from page 14

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personality and his peeves over America’s bilateral trade deficit with the EU, the truce may prove fragile.

That means the most lasting policy announcement of the week could yet be the one made on the day before Mr Juncker’s arrival, when Sonny Perdue, Mr Trump’s agriculture secretary, outlined a relief package of up to $12bn for American farmers hit by retaliatory tariffs from America’s trade partners.

American farmers have long worried about their position on the front line of Mr Trump’s trade wars. Around a fifth of their production is exported, leaving them exposed to retaliation from the likes of China, Mexico and the EU; their political heft at home makes them prime targets for foreigners trying to make the Trump administration reverse course.

The Trump-Juncker deal offered American farmers little relief. Not only was agriculture conspicuously absent from their joint statement (beyond a promise to buy more soyabeans), but the EU accounts for less than 4% of the agricultural trade flows affected by the new tariffs. By contrast, $12bn is a big increase in government support for an industry that already gets a lot. The OECD, a club of mostly rich countries, estimates that in 2016 American farms received $33bn in various types of support.

As generous as Mr Perdue’s plan may be, only its outline is clear.

Producers of soyabeans, sorghum, corn, wheat, cotton, dairy and pigs can expect payments. They can also expect the government to hoover up unexpected surpluses. Last, some of the cash will be spent on developing new export markets for farm products.

The subsidies are meant to fortify Mr Trump as he attacks foreign partners with tariffs and quotas.

Most important, he is trying to pay off the domestic losers from his trade war with China lest they cause trouble for him and the Republican Party in the mid-term elections. So far, the move has attracted a mixed response. Zippy Duvall, president of the American Farm Bureau Federation, has thanked the administration for offering help, but will continue to argue for a “swift and sure end to the trade war”.

year ago Jamal Khashoggi (pictured), a prominent journalist and past newspaper editor, left his home in Saudi Arabia for the last time. He is now in self-exile, living in Washington, DC, fearing that he will be arrested for his political views if he returns to his country.

Unlike other figures the Saudi authorities have targeted, such as the writer Raif Badawi, who was sentenced to 1,000 lashes for allegedly “insulting Islam”, Mr Khashoggi is hardly a dissident. Before he left, he was generally seen as close with the royal court, and even today describes the idea of regime change as “ridiculous”.

Mr Khashoggi’s troubles began after he gave a speech to an American think-tank shortly after Donald Trump’s shocking presidential victory. He argued that Saudi Arabia should be “rightfully nervous about a Trump presidency” at a time when the kingdom was cosying up to the presidentelect. Shortly thereafter, he was informed

by Saudi officials that he could no longer write or tweet. After hearing stories of friends and colleagues prevented from leaving the country and even imprisoned, he decided to leave.

Muhammad bin Salman, the crown price, has an ambitious agenda to reform his country’s oil-dependent economy. He has turned Western heads by loosening his kingdom’s stiff social restrictions, most notably by lifting the ban on female driving.

At the same time, he has ramped up his suppression of political freedoms and the ability to voice dissent. The kingdom has detained the owners of Saudi media outlets and extracted concessions in exchange for their freedom. Many of the prominent female activists, such as Lujain al-Hathloul, who lobbied for the right to drive, now find themselves in jail. Saudi journalists who have contacts with foreign embassies risk being labelled as treasonous. The country already scores among the worst in the world on its free-press protections. Despite the crown prince’s youth and courting of the West, that seems unlikely to change.

Mr Khashoggi sat down with The Economist to give his thoughts on the state of free expression in Saudi Arabia and across the Middle East. Our transcript, presented below, has been lightly edited for clarity.

The Economist: Tell me the story of

why you left Saudi Arabia Jamal Khashoggi: It was around this time last year. It was Ramadan, and usually we Saudis—and as someone from Medina—I would have loved to spend this time in Saudi Arabia, in Medina during Ramadan. But I did not feel comfortable.

I was nervous.

I was banned from writing. I was banned from tweeting at that time.

The Economist: Why were you banned from writing and tweeting?

Mr Khashoggi: They did not give me a reason when they ordered me to go silent. But it all started after I spoke at the Washington Institute [for Near East Policy], and I said Saudi Arabia should not be comfortable with the election of Donald Trump. If they did not like [Barack] Obama for not supporting the Saudi stance in Syria, they should expect the same from Trump because of Trump’s relationship with Russia. The Washington Institute quoted me as saying that. And I learned later from a close acquaintance at the royal court that they were afraid that me speaking might hurt talks then underway with the Trump team. It was really ridiculous because I was just a journalist.

Then the Qatari crisis broke out, and the Saudi media went into a frenzy. The Saudis who were silent were accused of being traitors. That made me feel like I better leave just to be safe. So I packed my stuff and I left for America. When I left, I had no plan to speak out. I just wanted to be safe. I was afraid of getting banned from traveling, because I was hearing of people getting banned. So I thought: “Get out while you can, before it is too late.”

After I arrived in Washington, things began to happen in Saudi Arabia.

Arrests…

The Economist: These were the big arrests?

Mr Khashoggi: The big arrests [of prominent princes and businessmen like al-Waleed bin Talal who were detained in the Ritz-Carlton hotel in Riyadh]. And many of my friends were arrested.

The Economist: Your journalist friends?

Mr Khashoggi: Journalist friends, activists, social-media personalities, ordinary friends who I knew, acquaintances. What is annoying is that there was no reason. And I think when you get arrested for doing nothing, it is more painful that way. Now eight months after the arrests of those guys last September, they haven’t been charged with anything! Many of them spent months in solitary confinement.

A brother of one of them called me and said you will not believe what I have been through. This brother visited him and found him so broken. We are talking about economists, intellectuals, writers. We are not talking about criminals who are used to a tough life. People like you and me. If you ended up in jail, it could break you— especially in your own country.

The Economist: So now you’re in self-exile?

Mr Khashoggi: I’m in self-exile. I don’t see myself as opposition. I just want to be an independent writer, and that is what I’m doing with the Washington Post [where Mr Khashoggi is a contributor]. I’m just writing my views assuming that I am Saudi Arabian.

I am writing a forthcoming piece in which I suggest why Muhammad bin Salman [the crown prince of Saudi Arabia] needs a free press. In it, I propose the Kuwaiti publication law as a model. In Kuwait, even though it is a monarchy, the Kuwaiti media has more room to debate and check

and balance the government. But they do not criticize the emir.

The Economist: That you think is a reasonable compromise?

Mr Khashoggi: I think it’s reasonable.

I’m not an extremist. And I disagree with Saudis who are calling for regime change and stuff like that. It’s just ridiculous. We don’t need that in Saudi Arabia. I believe in the system—I just want a reformed system.

Actually, I want the system to give me a voice to allow me to speak.

The Economist: And so in your view, monarchy can encompass free expression?

Mr Khashoggi: Yes, yes of course.

Kuwait has that, why can’t we? Jordan has that, why can’t we? Morocco has that, why can’t we?

The Economist: So what are your plans in terms of returning to Saudi Arabia?

Mr Khashoggi: I will not return because I don’t want to risk losing my freedom. I really don’t like being in jail. I don’t want to struggle and be the shining example. I just want to be a free writer. I think I am serving my country and my people by providing an independent narrative.

I often get attacked in Saudi Arabia, but the critics don’t ridicule my ideas. There were about 30 or 40 articles attacking me in the Saudi press. Not a single one debated something I wrote. They just ridiculed me as a person. They see me as a traitor who is writing in the foreign press. But discuss what I am writing? They will not.

The Economist: Looking at the rest of the Arab World in terms of the ability for journalist to write or to express an independent voice, it seems like there has been a backslide there. The country I’m thinking of is Egypt after President Abdel Fattah al-Sisi came to power in 2014.

Mr Khashoggi: Egypt is a mess. There is totally no freedom, but they are making a mockery of journalism in Egypt. In Egypt a journalist lies. Or the government tells people to lie and engage in conspiracies.

If you were working a news agency, you cannot trust anything you read in Egyptian newspapers, you cannot trust any number.

And this is very sad because Egypt is the mother of Arab journalism. But in the Arab world, the countries where you can find decent journalism is entirely related to the extent of freedom there: Tunisia, Morocco, Kuwait, and Lebanon except for the intimidation of Hizbullah.

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Flights of fancy

Zimbabwe launches a second state-owned airline

The first one is so indebted its planes are impounded when they land abroad. Will the second be any better?

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AVING one lossmaking stateow n e d a i r l i n e is bad enough.

What, then, of a government that wants two?

Earlier this year Zimbabweans were startled to learn that the government had concluded a secret $70m deal to buy four second-hand Boeing jets from Malaysia to form the core of a new national airline, Zimbabwe Airways. This venture is supposed to compete with Air Zimbabwe, the flag carrier, which ran up huge debts thanks to poor management and exPresident Robert Mugabe’s habit of commandeering its planes so his wife could shop abroad.

The government hopes to stimulate tourism and business by reopening long-haul routes that are closed to Air Zimbabwe, whose planes can be impounded as soon as they land on foreign runways. It suspended flights

to London’s Gatwick airport in 2011, for instance, after one of its planes was seized over an unpaid debt. It has since been banned from European skies because of concerns over the safety of its creaking planes.

Critics questioned the secrecy and the price paid for the new planes. The government had claimed for months that the new airline was a private initiative, funded by Zimbabwean investors living abroad. Joram

Gumbo, the transport minister, told local newspapers it had been necessary to lie because “if they had been exposed as government of Zimbabwe planes, they would have been taken by the creditors who were claiming

for money.” He also revealed that “the man in charge of Zimbabwe Airways” is Mr Mugabe’s sonin-law.

Officials see the new airline as a panacea for the economy.

That seems unlikely. It will be pitted against rivals offering reliable connecting services via their hubs in South Africa, Kenya, Ethiopia and the United Arab Emirates. Airlines based in those countries have the upper hand on numerous fronts, among them economies of scale, network synergies and more frequent flights. Zimbabwe Airways will have only one advantage: the ability to fly between Harare, the capital, and destinations in Europe and Asia without boring stopovers. Yet there is probably not nearly enough direct traffic to fill its planes.

That Zimbabwe hopes to subsidise not one, but two airlines ought to raise a red flag for international lenders who are being asked to write off its debts.

Pierre pressure

Burundi’s president is now “Supreme Eternal Guide”. Retirement is out Pierre Nkurunziza exemplifies a dismal trend for abolishing term limits

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S OMENS go, it is not a good one. In Kinama, a district in north-east Bujumbura, the cobble-stoned capital of Burundi, residents found the body of a man floating in a field of rice on May 8th.

His head was missing; his heart had been torn out. Stuck to his chest was a message written in Kirundi, the language of most Burundians: “Traitors are punished.”

Violence has broken out in Burundi ahead of a referendum on May 17th to change the constitution to allow Pierre Nkurunziza, a former rebel who has been president since the end of the civil war in 2005, to stand for office again in 2020. On May 11th, 26 people were killed in the north-west of the country in an attack by rebels who crossed in from the neighbouring Democratic Republic of Congo.

Three days later an opposition activist who had been campaigning against the change was murdered in the street by a crowd of young pro-government militiamen.

Many Burundians expect the constitutional amendment to pass comfortably (no matter which way they actually vote). Having named himself “Supreme Eternal Guide” of the country in March, Mr Nkurunziza could then stay in office until 2034. The referendum in Burundi highlights the steady erosion of term limits in recent years across central Africa (see map). Over the

past decade half a dozen countries have ignored or revoked laws limiting presidents to no more than two terms in office.

It also represents the final death of the Arusha accords that ended the civil war, created a blueprint for democracy and mandated power-sharing between Hutus and Tutsis, the two main ethnic groups, whose fighting has torn Burundian politics apart since independence in 1962.

Burundi’s latest crisis began in earnest in 2015, when Mr Nkurunziza decided to run for a third term. His party, the CNDD, which is descended from the Hutu rebel group he led during the civil war, argued that under the constitution his first term did not count. He had been appointed by parliament,

not elected, you see. Two months before he was re-elected, his government was briefly overthrown in a coup while he was on a trip to neighbouring Tanzania. In the year afterwards, Burundi was shaken by violence. Opposition supporters (or those merely suspected of being so) were arrested or went missing.

Almost half a million people have fled to neighbouring countries.

Rights groups say 456 were assassinated in 2017 alone.

Gunshots and grenades are a rarer sound in Bujumbura than they were two years ago, say residents. But repression continues.

“Many citizens today live in fear, even if they do not say so aloud,” says Monseigneur Joachim Ntahondereye, president of the Burundian Council of Bishops. The

church is one of the few institutions to have spoken out against the constitutional change. Independent journalism has been all but banned; this month, the BBC and Voice of America transmitters were shut down. Most foreign publications have been denied accreditation.

Particularly worrying is the gradual ethnic polarisation of the army. It had been rebuilt under the Arusha accords with quotas for Hutus and Tutsis at all levels of its officer corps, to win the trust of both groups. Yet many of the officers who dominated before 2005, most of them Tutsi, have been forced to retire or posted abroad on peacekeeping missions in places such as Somalia and the Central African Republic. Some officers have been murdered. Meanwhile, rebels who served in Mr Nkurunziza’s force— mostly Hutus—have risen up the ranks. The constitutional amendment opens up the possibility of doing away with ethnic quotas, allowing Mr Nkurunziza to make the army and police completely dominated by Hutus.

The economy has been crushed.

GDP per person has fallen every year since 2015, even as the population has risen by around 10% to about 11m. Almost three-fifths of Burundians are “chronically malnourished”, according to the UN’s World Food Programme. Hunger

has worsened of late, as the government has increased taxes to pay for the referendum. The only growing industry has been smuggling gold from Congo, where Mr Nkurunziza is said to have allies in the remnants of the genocidal Hutu militias that fled Rwanda after the massacres there in 1994. Fears are growing that a proxy war between Burundi and Rwanda (whose president, Paul Kagame, is a Tutsi) is reigniting in Congo.

Monday 30 July 2018

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Cyclical stocks take the shine at Nigeria bourse, as economy moves out of recession

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

Tier-based capitalisation, best for insurance industry at this time – FBNInsurance …firm ready to play in Tier 1 Modestus Anaesoronye

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anagement of FBNInsurance Group said the announcement last week by the insurance regulator, the National Insurance Commission (NAICOM) of a new risk based capital requirement for insurance companies in Nigeria, is the best thing to have happened to the market at this time.

The company said the Tier-Based risks capital will increase the financial capacity of insurance companies to enable them retain more risks in Nigeria, enjoy better returns on earnings, enhanced returns to shareholders, as well as ability to meet obligations.

And most importantly, address the challenge of operating in an environment with so many fringe players, whose collective activities have brought a lot of shame to the industry.

Val Ojumah, managing director/CEO, FBNInsurance who made the remark during a press briefing at the Company’s head office in Lagos

commended NAICOM for taking the bold step to reposition the insurance industry.

He said the Commission has not increased capital for anybody, but what it has done was to say that companies must align their capital with the risk they carry. So, it is now left for every company to choose where they want to play.

Ojumah said this new development aligns with the vision and expectation of FBNInsurance, saying “We are bringing to you an insurance group that will take its rightful position as Tier1 insurance company in Niger”.

As a member of FBN Holdings and Sanlam, we have the financial muscle and pedigree to belong to the Trier1 group, so those big ticket risks should come to where they belong, Ojumah stated.

“We are in 46 locations now, and within the next 16 months we will add 20 new locations” Ojumah further stated that in the next one year, you will see new things happening in the insurance industry; you will see insurance stocks rise because insurance companies will be in position to pay dividend to their shareholders.

Bode Opadokun, managing director, FBN General Insurance said the new RBC will bring to the market strong and secured insurance companies to compliment the rebranding efforts going on in the industry.

“Consumers, particularly the corporate clients will now have choice where to place their risks; price undercutting will disappear; companies will have capacity to employ and retain qualified manpower, and there will resources for training and development, he said.

FBN also believe that this development will increase consumer confidence, improved consciousness of where to place risks, going forward.

Under the risk based capital structure, life insurance firms need a capital level of N6 billion for Tier 1; N3 billion for Tier 2 and N2 billion for Tier 3: For non-life business, the requirement is N9 billion for Tier 1; N4.5 billion for Tier 2 and N3 billion for Tier 3. While for composite companies (combination of life and general business), the new capital requirement is N15 billion for Tier 1; N7.5 billion for Tier 2 and N5 billion for Tier 3.

Gateway Mortgage Bank grows capital to N2.5bn RAZAQ AYINLA, Abeokuta

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aving moved from microfinance status to a full-fledged mor tgage bank, which has prompted the change of name from Gateway Savings and Loans to Gateway Mortgage Bank Limited, the Ogun state-owned bank has grown its capital base from N120 million to N2.5 billion within 12 years of operations.

It will be recalled that the bank secured an operation licence from Central Bank of Nigeria (CBN) in 2005 and started full operations in February, 2006 as Gateway Savings and Loans, but Ibikunle Amosun-led government of Ogun state change its status to a primary mortgage bank when it was recapitalized in 2016, moving its authorized share capital to N3 billion, but N2.5 billion was fully paid.

Speaking at first Annual General Meeting of Gateway Mortgage Bank Limited in, Olawale Osisanya, managing director, stated that the bank declared N1billion Profit After Tax (PTA),

N3.2 billion total assets and N2.4 billion total liabilities for 2017 financial year.

Osisanya added that Gateway Mortgage Bank had also created different financial products and services that cater for all customers in the state, especially people in the informal sector in order to capture more business operators in the sector, just as he explained that the bank would help reduce huge number of people who are excluded from banking transactions.

He also noted that the bank works with the sister agencies - Ogun State Housing Corporation (OGSHC) and Ogun State Property and Investment Corporation (OPIC) on various mortgage products and services including Gateway Homes Empowerment Scheme, Gateway National Housing Fund, Gateway Home Improvement Scheme, Gateway Rent Loans, among others, with a view to improving home ownership in the state.

Governor Ibikunle Amosun of Ogun state has assured people of Ogun state and beyond of expanding the

State-owned mortgage bank by locating its branches across major cities of the state, saying more home owners would be created and more customers would come on board if the bank branches are located in Ijebu-Ode, Ifo, Sagamu, AgoIwoye, Ilaro, among other cities of the state.

L-R: Demola Adekoya, corporate banking, Coronation Merchant Bank; Yombo Bammeke, MD, UAIB Insurance Brokers Ltd; Tope Dare, executive director, Inlaks Computers; Yinka Adekoya, MD/CEO Wapic Insurance; Iyabo Soji-Okusanya, corporate banking, Access Bank; Olusola Teniola, president, Association of Telecoms Companies (ATCON), and Bode Ojeniyi, executivedirector, Wapic Insurance, at the just concluded Wapic Insurance Inaugural Telecoms and ICT Seminar in Lagos.

Oando, Capital Oil highly leveraged ... total debt to equity above industry average OLALEKAN IPELE & SOBECHUKWU EZE

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perating in the Nigerian oil and gas industry with an average total debt to equity of 67.94 percent at the end of 2017, two firms, Oando and Capital oil having total debt to equity of 90.1 percent and 280.9 percent respectively, underscores serious challenges.

Creditors view a higher debt to equity ratio as risky because it shows that the investors haven’t funded operations of the company as much as creditors have.

Hence, it is safe to say investors don’t have as much skin in the game as the creditors do in the business of the above mentioned companies.

An analyst BusinessDay

spoke with noted that incurring such high ratio would ordinarily not be much of an issue if the companies are efficiently utilizing their borrowings to generate more revenue and increase profitability. This is however not the case for oando and capital oil as they have not fared so well on the revenue and profit front in the last 5 years.

BusinessDay analysis of Oando’s five year financial summary as stated in the company’s 2017 financial statement indicates that the company made its first profit before tax (PBT) in 2017( N27.1 billion) after 4 years, posting continuous losses after tax in 2014, 2015 and 2016 (N137.7 billion, N51.1 billion and N32.4 billion respectively).

Profit after tax (PAT) for 2017 stood at N19.7 billion up by 405 percent from N3.9 billion in 2016. While the company posted losses of N49.7 billion and N145.7 after tax in 2015 and 2016.

Oando spent N58.5 billion as interest paid on debt in 2015,

the company’s highest in 8 years.

The amount however dropped by 11.6 percent to N51.7 billion and 52.8 percent to N24.4 billion in 2016 and 2017 respectively.

Kayode Tinuoye, fund manager at united capital asset management stated that “excessive debt is a disadvantage to investors in many ways because the company’s bottom line is adversely affected by interest payment on debt. That is probably why you haven’t seen Oando declared substantial dividend payment for shareholders” He continued by saying if the trend continues, there are high possibilities that the companies go into default or receivership, a situation in which an institution or enterprise is held by a receiver or an individual placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights especially in cases where a company cannot meet financial obligations or enters bankruptcy.

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COMPANIES & MARKETS Cyclical stocks take the shine at Nigeria bourse, as economy recovers Sobechukwu Eze & David Ibidapo

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he cyclical stocks are rallying, leading other stocks on the Nigerian Stock Exchange Market (NSE) as the economy moves out of recession. Since the second quarter of 2017 after the Nigerian economy rebounded from recession, analysis reveals that 8 out of the 10 top best performers where cyclical stocks with Cement Company of Northern Nigerian Plc, C&I Leasing Plc and NEM Insurance Plc leading the charge.

Data collated showing price changes of securities from Q2 2017 to date showed that CCNN led the chart with a price return of 567.8 percent. Other cyclical companies with positive price returns include; C&I (388 percent), NEM (287 percent) and FBN

(242 percent) were among the top 5.

This is a sharp contrast to the first quarter of 2016 to the beginning of the second quarter 2017 said to be the recession period, It was seen that among the 10 top performers on the NSE only 3 stocks namely United Capital Plc, United Bank for Africa and Guaranty and Trust Bank Plc were cyclical stocks.

An analyst Businessday spoke to said that “a cyclical stock is an equity security whose price is affected by the ups and downs in the overall economy. Investors buy the stocks at the low point in the business cycle and sell them at the high point”. He added that they offer greater potential for growth because they tend to outperform the market during periods of economic strength.

Tajudeen Ibrahim, head

of Research at Chapel Hill Denham, on a phone call to Businessday said that “Cyclical stocks will do well during economic growth and expansion and when the country is in a trough, they would do otherwise, so their performance is just a reflection of the economy which would reflect in their numbers.

On further analysis of the top losers, the period in which the country was undergoing a recession 6 of the 10 least performers were cyclical goods. Some of the stocks that performed the least are; Diamond Bank Plc, Skype Bank and UACN property development Company with a negative return of 63.04, 68.35 and 73.23 percent respectively.

Speaking on what investors would see in the nearest future Ibrahim opines that “there is still some head room in their performance

L-R: Yetunde Adesola, Astymin School, program coordinator; Friday Enaholo, marketing manager; Oshoke Ayebae, head, business and corporate development, and Adesoji Fasanya, product manager, Over-TheCounter(OTC), during the 2018 Astymin Brilliance Reward (ABR) Pre-event Press briefing held today at the Pic by Pius Okeosisi Fidson Head office, Lagos.

as economic growth is meant to improve in subsequent quarters in the economy”.

With what the central bank CBN in the Foreign exchange

market which has resulted in a stable fx rate and their plans to support employment elastic sectors by helping a steady flow of credit from banks at a

cheap rate he went on to say, concluding that the recovery so far is just a beginning as from all indication there are better days ahead.

Monday 30 July 2018

BUSINESS

COMPANIES & MARKETS Wapic Insurance champions risk management series to bolster productivity in ICT, Telecom sector MODESTUS ANESORONYE

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o ensure that that her clients and potential clients in the ICT and telecommunications industry manage their riskeffectively and efficiently towards greater productivity and value creation, Wapic Insurance Plc has extended its Risks Management series to stakeholders within this sector.

Insurance companies believe that if the operators in ICT and telecommunications become more aware of the risk facing their business and investments, they will be more proactive and strategic in the process of achieving better productivity.

According to the Insurance Company, this will not only impact the sector, but also contribute significantly to the economy and overall development of country.

Adeyinka Adekoya, CEO/ managing director of Wapic Insurance Plc made the remarks at the Seminar Series organized by the insurance firm with the theme “Mitigating Risk in the Telecoms & ICT Industry: Challenges & Solutions.”

She said the Insurance seminar series, which started in 2017 is one of many of its kind organized by the Company to

add value to the businesses of its clients across different sectors of the economy Adekoya noted that risk is constant in life, and this is the reason risk management is an important aspect in the lifecycle of any business.

“In a progressively globalizing world, risk management is in fact a measure that calls for constant remodeling, and fine tuning to fit evolutions in business and the world in general.”

She further noted that globalization has allowed for the proliferation of digital solutions, Telecoms and ICT. “The technological and industrial advancement in itself poses a risk to our collective future and to secure a progressive future, it is important that all technological investments of today remain sustainable and scalable for the future.”

“This is the reason we share risk management perspectives, and tinker on the alternative methods of managing risk exposures of Telecoms & ICT companies, especially within a volatile economic environment like Nigeria.”

“Insurance is one very important risk management measure.

However, there are many other valid measures that together with insurance will provide the right fortification for Telecoms

and ICT companies in Nigeria.”

At Wapic, it is our desire to always lead in all that is worthy, and to provide maximum value to all our clients, which is why we have organized this seminar, Adekoya noted.

Olusola Teniola, president, Association of Telecoms Companies who commended Wapic for the initiative said mitigating risks is important in the telecommunication industry.

Teniola stated that proper understanding of the risks available in the space will provide operators and investors in the industry some comfort and courage to delve into new areas and explore opportunities, which ordinarily would have been difficult with the knowledge because of fear of loss.

Yombo Bammeke, managing director/CEO, United African Insurance Brokers in his presentation on Enterprise Risk Management said recognising where the risks are and applying strategies to mitigate them was critical for business survival.

Wapic Insurance Plc. is a leading West African multi-line insurance company providing solutions covering life, general and special risks. Established in 1958 and listed on the Nigerian Stock Exchange since

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COMPANIES & MARKETS CWG boss canvasses new revenue sources to make electricity distribution companies viable MICHEAL ANI

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o address the nation’s energy crises, electricity distribution companies must be viable and stable, through generation of incomes from value added services.

James Agada, the chief executive officer, CWG made the remark during a seminar on resolving energy crises in the country with the theme “Using Value Added Service To Solve Energy Crisis”.

CWG recently got approval from the Nigerian Electricity Regulatory Commission (NERC), as a Meter Asset Provider (MAP), and to participate in the distribution and installation of prepaid meters.

Agada noted that traditional business model of electricity distribution companies is no longer very attractive to be depended upon for sales of electricity in Sub Saharan Africa.

But however noted that the assets needed for, and generated from the distribution business could creates secondary revenue models that can justify additional investments which are capable of strengthening the discos business.The CWG boss explained several revenue generating means that the distribution companies can explore that were ordinarily not captured in the traditional business of the discos.

The first he said was for Distribution Companies to leverage her right of way to help communication companies install high speed internet services directly to homes.

A more futuristic looking

distribution company according to him can utilise the benefit of her right of way to install fiber to home and rent out the capacity to content and service providers.

These rights of way he further noted have been cited as big impediments to the growth of broadband in Nigeria, India and other emerging fixed and vary from location to location, making it extremely difficult for broadband infrastructure to be built out.

Another sources of revenue that the discos can leverage on according to him is on the poles, towers and ducts, which the lease out for the use of smart city operators or broadband providers, telcos and other providers of wireless communication.

On Customer Address Information (CAI), Agada said two separate revenues open up here for the discos - they can provide some address lookup services for her customers, they can ask customers to use their reference numbers for address and then offer routing service to logistics and delivery companies.

The discos can also operate her own logistics company and utilise her addressing information to deliver packages faster and more efficiently especially in areas where the formal addressing codes are not applicable.

He noted also that the disco can partner with FinTechs and be able to provide loans quickly and effectively.

The disco can also provide these input to credit bureau’s for a fee. Discos can also use their data as proxies for economic activity and publish

indices which can be followed and used by economic analysts and reporters for a fee.

The Meters at customer premises is another sources of revenue generation for the discos. According to him, it can serve as a hub for home automation allowing for remote control of home appliances and security equipment.

The meter can also serve as a set top box for the delivery of video content either wirelessly or via fibre on the transmission network. The meter can also serve as a WiFi hot spot in the home or office. Of course this kind of meter will not be your traditional electricity consumption meter but must be designed specifically for that purpose.

Electricity distribution has been a major headache in Nigeria and several African countries. In June this year, The Nigerian Electricity Regulatory Commission (NERC) approved CWG alongside seven other firms to participate in the distribution and installation of prepaid meters.

This approval provided an opportunity for CWG to approach major DISCOs to be positioned as their registered Smart Metering vendor; under the Smart Utilities Sector of CWG’s operations.

Ease of ‘electricity payment’ has also been integrated into the BillsnPay platform, which is the Bills presentment & payment solution CWG also has within its stables.

With the approval as a ‘MAP’; CWG is in partnership with IPP (Independent Power Project); supplying the meters for SURA, Ariaria (Abia) and Tejuoso markets.

Dreamworks launches new tech store in Ikeja

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reamworks Integrated Systems, a retailer and distributor of laptops, smart phones, accessories and a wide range of office, home, and kitchen appliances, recently opened another tech shop at Ikeja, the Lagos State capital.

The new tech shop, which hosts various brands like HP, Lenovo, Apple, Infinix, Tecno, Binatone, LG, and many more, is located at D’Podium Events Centre, 31B Aromire Street, off Adeniyi Jones.

Keeping to our commitment of going the extra mile for our valuable customers, the new tech shop brings

D re a mw o rk s’ nu mb e r o f stores in Ikeja to two and four stores in Lagos.

According to Franklin Okere, business manager, “By intensely focusing on consumer expectations both in store and online, we decided to open this store in Ikeja.

“In addition, we improved our website for seamless ecommerce as well as a portal for our esteemed distributors and interested partners. These initiatives ensure we are always accessible to our growing customers.

“We are well positioned to dominate the brick-andmortar space while also offering a range of alternative

choices and affordable prices that consumers expect from us. We have also strengthened the after sales service team to better leverage on our expertise in stores and one-on-one calls to help customers understand, install and better use the vast numbers of tech products we offer.”

From banks, schools, restaurants to hospitals, Dreamworks has a wide array of gadgets to keep customers’ businesses going. We have the best deals on computers, smart phones, tablets, printers, projectors and other home and office appliances with free nationwide delivery on select products, Okere said.

Business Event

L-R: Eluma Nneka, partner, audit services, KPMG; Ini Ebong, Governing Council Member, Financial Markets Dealers Association (FMDA), and Sam Ocheho, FMDA, president, during the 25th Annual General Meeting (AGM) of the FMDA, at the Moneymart Centre, Victoria Island, Lagos.

L-R: Osi Oguah, senior driver operations manager Nigeria, Uber; Banjo Olayemi, driver-partner; Lola Kassim, general manager West Africa, Uber, and O’Yoma Ukueku, Greenlight operations manager West Africa, Uber at the presentation of the brand new car to Olayemi to mark the culmination of the uberFREEKICK campaign.

Members of Staff of Dreamworks Integrated Systems, at the opening of their new tech shop recently, in Ikeja, Lagos.

L-R: Winifred Oyo-Ita, Head of Civil Service of the Federation; Adebola Odugebsan, director, Legal, Office of the Head of Civil Service of the Federation, and Femi Akintunde, MD/CEO, Alpha Mead Group, at the MoU signing ceremony between the Office of the Head of Civil Service and Alpha Mead Group on the Pilot PPP Policy Initiative of the Ground Floor Block A and Parking Lot of the Federal Secretariat Complex Phase II in Abuja.

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CityFile

Agency destroys N650m fake products

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he National Agenc y for Food and Dr ugs Administration and Control (NAFDAC) has destroyed fake, counterfeit, sub-standard and expired drugs worth N650 million in Kaduna.

Christiana Adeyeye, the director-general of the agency said at the destruction site in Buruku, Kaduna State that the products were substandard, falsely labelled medicines, unwholesome food products and cosmetics.

Others were counterf e i t e d u n sa f e NA F DAC regulated products by the agency from manufacturers, importers and distributors.

Represented by the No r t hw e s t z o n a l c o o rdinator of the agency, Gimba Dauda, she said the exercise was part of efforts to stop spurious NAFDAC regulated products from circulation in Nigeria. “ The products being destroyed today are made of substandard and falsely labelled medicines, unw h o l e s o m e f o o d p ro d ucts, cosmetics and other counterfeited products.

“Drug counterfeiting is an act of economic sabotage and also terrorism against public health,’’ the director-general said.

Commending the Federal Government for ban-

ning the use of codeine syrup, Adeyeye said: “The decision is to ensuring the reduction in the abuse of the substance.

“We have continued to aggressively pursue the g oal that only g enuine medicines and wholesome foods of the right qualities are imported, exported, manufactured and distributed.

“We commend President Muhammadu Buhari for re-instating NAFDAC personnel to our ports of entry and borders.”

She noted that the re l e nt l e ss e f f o r t o f t h e federal government was helping in the increase seizures of counterfeited a n d s u b s t a n d a rd NA FDAC regulated products smuggled through the land borders.

According to her, NAFDAC has deepened its collaboration with agencies of government and stakeholders to end the spread of fake and counterfeited drugs in Nigeria.

Part of the drugs, food, cosmetics and chemical destroyed included antibiotics, anti-malarial, anti-hypertensive, anticancer, herbal remedies and controlled substances.

Others were Mom’s tomato paste, non-alcoholic beverages, maize flour, Eva complexion soap, hair cream and fake insecticides.

Oyo, NAPTIP partner against human trafficking AKINREMI FEYISIPO

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yo State government is par tnering National Ass ociation of Nigeria Travel Agencies (NANTA),National Agency for the Prohibition of Trafficking in Persons (NAPTIP) and security agencies to curb activities of human traffickers in the state.

T h e p a r t n e r s a re t o jointly prosecute fake travel agents who sell women and girls into slavery outside the country.

The agreement was reached at a recent meeting involving the government and stakeholders in the travels and tours industry in Ibadan Toye Arulogun, the state commissioner for information, culture and tourism, condemned the increase in human trafficking and the attendant unholy act of slavery and prostitution, assuring that the government will not shy away from its responsibility to protect the citizens of the state.

He called on parents, guardians, residents and the citizens to prioritise their values and desist

from employing the services of visa fraudsters and traffickers in order to seek greener pastures.

He als o appeale d to the stakeholders to assist in apprehending travel agencies and individuals who engage in human trafficking.

Arulogun said: “Oyo State government has been inundated with series of complains from the citizens on how citizens of the state fall prey to the antics of these human traffickers who promise greener pasture but turn their victims to slaves in the foreign land.

“These traffickers dangle juicy carrots of greener pasture at their would-be victims but the victims end up coming back with harrowing experiences. We owe it to the people to protect them from unpleasant experiences and this is why we are calling on all stakeholders to see to the end of this unholy act.”

Dagunduro Olatokunbo, vice president of NANTA, called for urgent action in sensitising the populace about the dangers involved in such journeys to the diaspora.

First set of ECWA Kauna pupils react during their graduation ceremony in Bauchi on Friday. NAN

Otedola Bridge fire: Breakthrough as Lagos matches corpses to families JOSHUA BASSEY

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agos has recorded first of the kind major breakthrough matching dead b o d i e s o f t h e O te d o la Bridge’s tanker fire explosion to their relatives and families.

The highly scientific process marks the first time unidentifiable victims of a mass disaster would be successfully identified locally (in Nigeria) using DNA technology.

Interestingly, Jide Idris, the state commissioner for health, says the Ministry of Health and the Lagos State DNA and Forensic Centre completed the process in less than four weeks after the tanker explosion which occurred on June 28.

According to Idris, this is far less than the six months it often took to complete the analysis abroad in previous inci-

dents in the state.

Idris spoke with journalists on Friday, saying with the Lagos DNA and Forensic Centre, Nigeria stands shoulder high and no longer need to spend fortunes in hard currency taking samples outside the country as had been the case before now. “ Ba s e d o n t h e D NA analysis performed at the Lagos State DNA and Forensic Centre, all victims’ samples were successfully matched to relatives’ samples. Nine bodies were successfully matched to nine families out of the 11 families that showed up at the centre.

“This was the first time unidentifiable victims of a mass disaster had been successfully identified locally using DNA technology.” He said the remains of the victims were taken to the Lagos University Teaching Hospital (L ASUTH) where samples of

the incident were picked up by the Lagos State DNA and Forensic Centre from LASUTH Forensic Pathologists under secured chain of custody.

The commissioner added that rigorous efforts were put in to ensuring that errors were reduced to the barest minimum in order not to compound the agony already experienced by the bereaved families.

He also clarified that nine bodies were burnt beyond recognition and taken for the DNA examination as against the 10 earlier reported, explaining that the sample of one of the victims was conveyed in two sacks which gave the impression that 10 bodies were burnt beyond recognition.

Some of the successfully matched victims were released to the relatives and families last Saturday for burial.

It would be recalled that

a petroleum tanker laden with fuel upturned and exploded on June 28 on the Otedola Bridge, inward Berger on Lagos-Ibadan expressway, killing 12 persons while several other sustained varying degrees of burns.

New fewer than 54 vehicles were also burnt in the inferno, one of the worse of such incidents on Lagos roads in many years.

Some of the injured persons are still receiving medical care in hospitals at the expense of the state government.

Ten patients were initially admitted in government and private hospitals out of which two died, three discharged and five still on admission.

The state government is working to prosecute the driver and the owner of the trucks which, at the time, was said not to be roadworthy.

Ikpeazu tasks FG on abandoned roads in N/Delta

G

overnor Okezie Ikpeazu of Abia has called on the Federal Government to urgently resume work on abandoned federal roads and other projects in the Niger Delta states.

Ikpeazu made the call when the minister of Niger Delta Affairs, Usani Uguru Usani, paid him a courtesy visit at the Government House, Umuahia. He regretted that many federal roads in Abia and other Niger Delta states were in a state of disrepair, several of them abandoned.

He cited the ObehieAkwa-Ibom Road and Aba -Azumini Road in the state, which were allegedly started but abandoned midway. The governor appealed to the Federal Government to order the contractors back to site and ensure the completion of the roads.

He underscored the need for the construction of interconnecting roads to link up the nine Niger Delta states.

He said that linking up the states in the region through a good road network would facilitate rapid socio-economic

development of the region.

Ikpeazu also made a case for the inclusion of Abia in the Federal Government’s amnesty programme.

“Abia is perhaps the only state in the Niger Delta region without any record of youth restiveness, yet the state has not been rewarded for its peaceful disposition.

“We therefore use this opportunity once again to demand that Abia be included in the Federal Government’s amnesty programme for Niger Delta states,” he said.

The minister on his part

said that he was in the state to attend the ongoing Third National Council Meeting on Niger Delta region. He said that the meeting, which would deliberate on pertinent issues affecting the region, would provide a road map for greater collaboration among the states in the region.

He commended the Abia government for accepting to host the conference, as well as for his unrelenting made-in-Aba campaign and measures aimed at making Aba Africa’s biggest industrial hub.

Monday 30 July 2018

C002D5556

BUSINESS DAY

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BUSINESS DAY

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Monday 30 July 2018

BUSINESS DAY

Monday 30 July 2018

INTERVIEW

25

Auto policy: ‘What we have seen is activity, we now need to see achievement’ As more than 90 percent of Nigerians and freight depend on the automobile industry, there should be more structured engagement and more robust action in developing the industry, according to Bambo Adebowale, chairman, Auto and Allied Sector, Lagos Chamber of Commerce and Industry (LCCI), in this interview with BusinessDay. Adebowale says further that the Nigerian auto policy is 5 years old and needs a review before signing it into law. He talks on various issues such as the macroeconomics, when it was drawn up have all changed and more stakeholders need to be taken into consideration.

As a further reaction to the clams by the Federal Government on making progress with the auto policy, he says we are inadvertently supporting the continued use of combustion engine vehicles when the rest of the world is fazing them out, and other issues. Excerpt: Has the LCCI done any comprehensive evaluation of the government’s auto policy and if yes what are the findings in terms of the core objectives of the controversial policy?

According to Nigerian Ports Statistics 2012 to 2017 report released by the National Bureau of Statistics (NBS) 269,386 vehicles were imported in 2012, while 280,226 came into the country in 2013 and 247,932 in 2014.

Also, in 2015, import collapsed to a mere 131,994 vehicles was reportedly received at various terminals and just 105,189 in 2016. What in your view is responsible for this and are you happy with this trend, especially given that the level of import of new cars is today only 10% of what it was in 2014? Evaluation, maybe, but comprehensive.

W

e at the Chamber of commerce doubt it and are surprised that for a sector responsible for over 90% of passenger and freight movement, the level of attention isn’t there. The policy was brought in as part of the 2014 Nigeria Industrial Revolution Plan, but don’t forget that the policy - The Nigerian Automotive Industry Development Plan (its full name) is just one of a three-part approach to rekindling the auto industry – the other initiatives were a basket of fiscal provisions and a support programme.

As much as it is commendable that the current government states that automobile development is high priority in the 2017 Economic Recovery and Froth Plan, in reality, the industry has received little structured support from the government or its agencies. The policy was meant to increase local component use, improve technical skills and provide employment. Employment figures north of 500,000 were robustly announced – in itself, an indication that the policy makers didn’t quite understand the auto market and were propagating academic proposals to economic situations.

It didn’t factor in increased technology, robotics, renewable energy and the imminent death of the combustion engine.

Falling import numbers are no surprise. A weaker Naira, a contracted GDP, limited access to forex and the need to refocus after the recession were going to impact purchases.

Unfortunately, the government has chosen not to revisit the very macroeconomics in place when the policy was drawn up and introduced in 2013 (5 years ago!).

The policy was based on looking at what countries like South Africa had achieved, not what those countries had done. The naira was N158:$1, inflation was 8.5%; Nigeria’s GDP had been rebased to $515bn. That was then, this is now.

I​​ s this an evidence of success or failure of the government’s auto policy? Please explain?

I suppose it depends on who you ask. The policy was developed in 2013 and we are in 2018. It was meant to, among other things; address the nation’s appetite for self-inflicted pain - spending N6.3trn between 2010 and 2015 importing vehicles.

When the CBN announced the fiscal policy measures for the auto industry, a key point was an increase on many HS code 87.03 items. Duty on fully built cars became 70% (35% duty plus 35% levy) unless you operated an assembly plant - 24 hours prior, the duty was 22%.

There was however no comprehensive plan for auto finance and no plan to ease out used cars then out-selling new cars 10:1 in fact, duty on used cars is 35%, and I read a few

middle class?

Like all sectors of Nigeria, the middle class needed a reality check. In the 2012 symposium that I co-organized for the Lagos Chamber of Commerce, the economist Dr Doyin Salami estimated that 1million Nigerians could afford new cars. That statistic was actually quoted in the defense of the auto policy, but they missed three fundamentals of Dr Salami’s explanation: – Car price - 3m compared to the government’s boasted and unrealistic N1.5m – Timing – 2013 was when the explanation was made - we are now in 2018 – “using structured loans” was key, but finance isn’t in place in 2018 It’s not just a middle class interest though. Whilst Nigeria allows cars as old as 15year to be imported, other countries are phasing out the development of petrol and diesel engines. We are not creative enough in our thinking.

weeks ago that the used car dealers were lobbying the Secretary to the Government of the Federation (SGF) for a waiver of duties on imported cars! Now, how do we plan making a success of the policy when some of key stakeholders, who stand to benefit from a properly structured auto industry, pursue self-interests – and though they are entitled to their own decisions, don’t we have an auto development council?

What is the role of the SGF in Auto development?

Is there any honest evidence of local manufacturing of vehicles in Nigeria beyond the noise being made?

I suppose this is part of the success that the Hon. Minister referred to recently, but we shouldn’t get sentimental in this matter. We do not manufacture, we barely assemble and most of the finance and technology is foreign.

The national Automobile design and Development Council (NADDC) has issued over 50 auto assembly licenses for a total installed capacity of 410,000 vehicles. Morocco has 2, maybe 3 assembly plants with an installed capacity of 400,000 and is planning 1million units by 2020.

Local assembly is unlikely to improve in the near future because support is unstructured or difficult, but some of the policy analysis is incomplete. For instance, we do not have all the stakeholders considered, so once that missing link is affected, everything stalls - verifiable auto statistics for instance, proper identification and accreditation for auto technicians, the involvement of makers and traders of new, used and even fake spare parts and the used car dealers.

What we need is a complete value chain deployment.

What we have is concentration on the assembly and a near total exclusion of all the other stakeholders – take a look at the NADDC board then ask yourself - who will buy the assembled vehicles if there is no finance and used cars are cheaper?

Who will service the vehicles once assembled, if the technician’s skills are moulded through apprenticeship and limited interaction with modern tools and technology? What will I do with my end-of-life car when there is no structured disposal platform? And don’t forget that we are assembling combustion engine vehicles – when many of our main OEM countries have announced that they are fazing these out from as early as 2020 in the case of Sweden. Germany, UK, even India are all going down the electric car path.

If there is any local manufacturing going where, where please is this being done and how has the decrease in importation boosted ​local manufacturer(s)? ​What is total number of cars being manufactured in Nigeria by the various car manufacturing companies including the joint ventures?

I believe there are a number of operating assembly plants functioning. Only 10,673 vehicles were assembled by the end of 2016 and fewer in 2017. Even if capacity was higher, how many can realistically buy a newly assembled car?

The N1.5m car boasted about never materialised and that was when the Naira was N158:$1. Finance is exorbitant, there is no structured market to offload your old car at a reasonable value, the roads will hasten the wear and tear and the ratio of service workshops to population is scary - technicians with proper training are negligible for a country of 11million vehicles, according to the FRSC. ​Is it not the case that the auto policy of this government has failed?

You be the judge. At the time the policy was issued; Nigeria had 5 truck assembly plants and 2 car assembly plants

Are you aware that even banks are no longer buying cars for their senior staff because of the exorbitant prices?

That is nothing more than a reality check, though with all the billions declared in profits, banks can’t really argue the pinch like many other businesses. There is nothing actually wrong in a well-used pre-owned vehicle. I use a pre-owned vehicle and have used it for 8 years. It’s now that used vehicles have become the new norm that we need to check ourselves – and used cars are outselling new ones 20:1 now. It’s a scary situation.

Nigeria’s local assembly plants have, in the past decades, remained a shadow of themselves; does Nigeria have the right infrastructure to meet up with local demands?

What about the state of auto parts manufactures? And can a nation make cars when it does not make parts?

India for instance has over 3400 parts manufacturing plants and has gradually built its local car or vehicle manufacture on this base. That question is academic.

Our cars are old; they require parts no longer in production and you can’t afford to change the vehicle – so you buy refurbished parts. Even if you wanted to buy a new part and headed to ASPANDA in Badagry or went to a dealer, prices will make your eyes water and if that doesn’t, you are caught Bambo Adebowale

in different stages of operation, with a total capacity of 150,000 vehicles. Today, we have 54 assemblers licensed with an installed capacity of nearly 410,000 vehicles.

Production capacity is less than 3% - makes the refineries at 22% sound impressive, Part of the challenge of the policy is that a lot of attention is on what could happen post implementation – at least on paper: • Scaled up employment to 700,000 in the auto sector • Contribution of up to 10% of GDP. • Nearly $10billion in FDI • Savings of $3.35bn in import duty Market Development for the success of the policy was meant to include: (i) Credit Purchase Scheme: to ensure affordable funds are available (ii) Auto clusters to support assemblers and increase the ability of component manufacturers and

(iii) Patronage by Government: to show commitment Interestingly, the instructions to the Nigeria Customs Service included valuing used cars by depreciating the cost of a new car by 10% over a 10 year period and a commercial bus by 7% over a 15 year period. Any wonder we still allow vehicles 15 years old to be imported? Meanwhile, the accountants are still depreciating over 5 years!

The government that is meant to support the industry included rubber and plastic products in a list of 41 items denied access to the preferred forex market in May 2015. Earlier this year, the president was shown riding in a Lexus SUV to meet the very Nigerians that are being encouraged to patronise “made in Nigeria”. What kind of encouragement is that for business?

Is it the case as many believe that this auto policy, which ensures that only a few of the supper rich are able to buy cars, is the most visible of the strong wind decimating the Nigerian

At the time the policy was issued; Nigeria had 5 truck assembly plants and 2 car assembly plants in different stages of operation, with a total capacity of 150,000 vehicles. Today, we have 54 assemblers licensed with an installed capacity of nearly 410,000 vehicles

between a semi-skilled (or skilled but uncertificated) technician and a properly structured but outrageously expensive auto workshop.

Then there is the issue of quality. Parts should be purchased from recognised dealers, but there is no structure in place and the government seems either reluctant or unsure of how to control the spare parts supply chain – especially the used and the fake parts. Don’t get me wrong, quality parts and quality service are a given but if the spare part is N10,000 at a dealer, N7,000 at ASPANDA and N5,000 at Ladipo Market, you can guess where the bulk of the transactions will take place.

It’s just the reality. In 2016, there were 11,363 road fatalities and you can imagine what number was a result of defective vehicles. The easy solution is to phase out used cars and used car parts together with the regulation that allows the importation of vehicles up to 15yrs old.

Partly because of this, the LCCI expects a holistic approach to the development of the industry, with all stakeholders across the value chain involved, but if you look at the implementation team at NADDC, it’s mostly the manufacturers and assemblers. We need the financiers, insurers, and technicians, even the used car sellers. The CBN, BOI and the Customs services should all be actively engaged in this matter. ​What is the impact of the auto policy on the Nigerian SMEs, middle class-income earners, considering the increase in tariff on imported cars and a hefty special levy added to this, which in turn has spiked the prices of imported cars?

Not sure of spiking, it’s more of dampening! Car imports – new and used are down. Six months after the Nigerian Government banned the importation of vehicles through the land borders last year; Benin republic reportedly slashed its transit vehicle charges by 38% and reported threefold increase in car imports. An estimated 250,000 cars passed through the port at Cotonou.

Considering that the whole of Benin has an estimated 239,000 do you want to venture a guess where most of those cars ended up? PwC presented a repost at the LCCI Auto symposium in October 2016 entitled “Africa’s Next Automotive Hub” it’s a good read for various stakeholders.

How much has been collected so far since the increase in special levy on imported cars in the three years of this administration? And what does the government do with this money? Can you account for it?

You will have to ask the Nigeria Customs service that collects it. Not just the levy though. The BOI recently announced that N18.09bn was generated between 2003 and 2015 by the NAC Fund (National Automotive Council Auto Development Fund) a 2% levy on the CIF value of vehicle imports.

Personally, the fund will serve a more economically viable option if used as seed capital in the development of an Auto bank. We have a bank for industry, we have for agriculture. Why not one for the development of the auto industry. A basic inspection of the 11m vehicles in Nigeria will reveal that half of those vehicles need replacing.

Can you imagine the volumes? The income to the assemblers, the income to the dealers – should they wean themselves of cheap tokunboh cars and sold finance backed new (or at least newer) cars? Can you imagine the income in insurance premiums; better technicians that

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INTERVIEW

Monday 30 July 2018

Auto policy: ‘What we have seen is activity, we now need to see achievement’ now have to scale up to service and repair newer cars, the reduction in accidents caused by defective, old and tired vehicles? How can’t the government see this? How can’t the car assemblers and tokunboh dealers see this?

Kilode! Maybe I should get a licence and set up an autobank!

PSA Peugeot Citroen revealed plans to start assembling cars in Nigeria by the first quarter of 2019 through a joint venture with the Dangote Group and five state governments. How close are we to the realisation of this project and what role is your ministry playing in helping to turn desire into actual projects via dialogue with leading auto manufacturers (OEMs), especially given the meeting at the state house yesterday?

The concentration here shouldn’t be on the obvious.

It should be on what is coming. Between Renault and PSA Peugeot Citroen, Morocco produces 400,000 cars and it is targeting 1 million engine by 2020. Do you think those engines will be sold in Morocco? Why do you think Morocco is seeking to join ECOWAS? We have the market true, but we have huge production inefficiencies – and foreign investors are going to capitalise on our inefficiencies and not thoroughly thought out policies.

Mark my words. No one, I repeat, no one will allow their technology and skills to be used to develop another country. We might have interest for foreign investors, but I can assure you the interest is in what they can get – not what Nigeria will benefit – and while they are offering us technology that helps us use wheel spanners and screw drivers to assemble vehicles that will become obsolete in 3 years, they are fast tracking to electric cars and the death of the combustion engine. ​ ccording to the policy, imported cars through the A port of which is the Fully Built Units (FBU) attract 35 percent duty and another 35 percent levy, bringing the total to 70 percent as tax to import a fully built brand new car. In the same vein, fully built commercial vehicles attract 35 percent duty without levy. Are there plans to review the tariff?

There should be. The tariffs might have been developed with best interest in 2013, but they were never totally implemented and the effect is counterproductive. Don’t get me wrong. Tariffs are a good means of controlling imports, but they should be structured. How can you charge 35% on a used car that is most likely past its useful life, uses a

policy overlooked the fact that the development of the industry requires finance, lots of it and upfront – for investment in assembly equipment, for training of technicians, to wean users off used vehicles, to help in the purchase of assembled vehicles.

Five years down the line, the proposed finance isn’t in place. Less than 10 of the 27 banks offer vehicle financing, but you won’t touch those loans if you depend solely on a monthly salary. The domino effect is that individuals and companies will turn to the cheaper vehicle market (less popular brands), the used vehicle market (tokunboh), or the smuggled vehicle market (banned car imports).

combustion engine, encourages retardation in technical skills, yet penalise new car imports – though they should also gradually be curtailed in support of locally assembled and quality certified cars.

We have been advocating a review – not a change, but at least a review. The policy includes an incentive to import 2 fully built vehicles for every one vehicle assembled, but I’m not aware of any assembler issuing statistics to state the number of units assembled – so how do you determine that the correct number of FBUs were imported?

The Customs department determines the value of your vehicle – not the invoice, the Standards Organisation of Nigeria actually agreed a list of assembled vehicle checks with the NADDC. Now, how can you determine specific checks across board for different brands, different engine sizes, different what checks for different Whoever advised the then Finance Minister on the

Summary 1. More than 90% of Nigeria’s passenger and freight depends on the automobile industry. There should be more structured engagement and more robust action in developing the industry.

2. The auto policy is 5years old and needs a review before signing it into law.

The macroeconomics when it was drawn up have all changed and more stakeholders need to be taken into consideration.

3. We are inadvertently supporting the continued use of combustion engine vehicles when the rest of the world is phasing them out.

4. We cannot continue with mostly used vehicles, refurbished parts and semi-skilled technicians. The broken down vehicles and accidents are proof, but the solution needs to be structured.

5. There are many stakeholders and vested interest in the industry.

Unfortunately, natural instinct is to treat each other as part of the problem, rather than as part of the solution – so we take two steps forward and one step back.

Will government consider granting tax holidays to some critical players in the industry as a form of incentive to stimulate volume?

Please, we’ve had enough tax holidays! We need to be more creative in our thinking. The same view applies to the pioneer company scheme in my view. We need to quantify the cost: benefit of these lazily thought “handouts” in the guise of business support. Do you know that in Ghana, the government has to defend a duty waiver or tax holiday in parliament because it is lost income to the country – that we give away like party souvenirs in Nigeria?

So much for giant of Africa. Let the critical players step forward, request and defend the support. Let them demonstrate what makes then critical, then we can consider an appropriate response.

What measures are in place towards promoting investment in a wide range of Free Trade Zones (FTZs) and sustaining cluster developments (Including automotive components. that would be capable of attracting core investors leading to local manufacturing and affordable vehicles?

FTZ are really for export, so it will be of little benefit unless we are producing for export. I pray that the industry develops to that stage, but let’s focus on getting our house in order first. Instead of the FTZs, maybe we focus more on the industrial estates and parks. These facilities should be at expressway interchanges, supported by container terminals and independent power plants.

They should be right in the middle of clusters of tertiary institutions and rail lines - we are talking Plug and Play.

Even the lease should be subsidised. Can you imagine the explosion of jobs and production?

So, where does all this leave us? Let’s think creatively for a minute. Here’s what I would present as my idea.

Put the duty on cars back to status quo ante, but ensure that importation is only by distributors/dealers registered as such. Restrict “personal“ imports of vehicles, insisting that such imports be registered and kept for a minimum of say, 2 years prior to sale – that stops the unregulated used car business.

Enforce a total ban on imports through land borders.

Imported cars will all carry certification for roadworthiness from origin and sanctions imposed on for origin countries or shippers that break this rule. Reduce the age of imported cars from 15 years to 1year over a 5-year period, allowing the used car dealers’ time to re-strategize and the assemblers’ time to scale up production.

Develop a buy-back scheme to take older vehicles (>15 years) off the roads. Use vouchers redeemable with assemblers and these should be supported by an autobank credit. The bank will be set up using the NAC fund and will include OEM equity.

Allow mechanic villages, technical colleges, university departments and auto workshops to perform roadworthiness checks. Let them also double as structured training centres, creating economic value, professionalism, and better performing vehicles, increases in the skill sets of technicians and a robust industry.

Eventually you can restrict the service and repair of vehicles to only certified workshops and technicians – and that will be part of the documentation required to insure your vehicle.

Monday 30 July 2018

C002D5556

BUSINESS DAY

This is M NEY A daily guide to your Personal Finance

27

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

‘Wills don’t kill’

W

hat are you leaving behind; a lasting legacy or a family feud?

How do you wish to be remembered? For the great work that you accomplished in your lifetime, or for World War III that erupted in your close-knit family after your demise?

Here are some important issues to reflect upon regarding the transmission of your wealth to avoid family palaver: Do you have a will?

Sadly regardless of the level of sophistication and education, in our communities, there is still the taboo against talking about death or addressing your mortality, even though it is the greatest certainty of all. But dying intestate, or without a will, just causes your nearest and dearest untold hardship and inconvenience in addition to the grief of your loss.

Discuss your options with an experienced estate planning lawyer who will consider all your assets and determine the most appropriate estate planning tool for you; from trusts to lifetime gifts and, of course, the most basic tool, a will. Make sure your will is current, as this remains one of the simplest and most important instruments for the orderly, peaceful disposition of your assets.

It is important that your will is carefully drafted

as imprecise, ambiguous language can cause confusion; if sensitive family dynamics have not been considered, relatives may still feud. Wills are often contested particularly when parents create “inadvertent inequality”.

Consider these two scenarios: Chief Johnson willed five properties to his five children as follows: A plot of land in Lekki Peninsula A block of 4 apartments on Falolu Road in Surulere A warehouse on a halfacre plot in Warri A 3-bedroom house on a 1-acre plot in Old Ikoyi A town house at

Asokoro, Abuja The children who inherited the Surulere and Warri properties felt hard done by; they have been in court for years, fighting their siblings over the Ikoyi and Abuja properties, which are of significantly higher values, both in terms of market value and rental income, Mr Bamidele left all his assets to his wife Gbemi, from his second marriage, expecting that she would pass on assets as appropriate to his son from his first marriage. She bequeathed everything to her own children. Her stepson did not receive anything and is going to court. After a remarriage, a trust might be more appropriate for the protection of new beneficiaries such as a second spouse or for children from an earlier marriage.

Fairness should be a primary consideration.

Consider a Trust A trust is an ideal estate-planning tool both during your lifetime and thereafter. It works like this; ownership of assets are transferred to a third party who then distributes the assets according to the wishes of the settlor. With a trust, one can avoid the long drawn out and expensive probate process, manage the outflow of estate proceeds and benefit from tax efficient estate planning.

Selecting the right executor or trustee whom

If you don’t get round to tidying up your affairs, you may be compounding the difficulty that your beneficiaries will experience after you are gone you believe can carry out your wishes effectively is of paramount importance.

Some people choose qualified family members to serve as executors; ideally a trusted professional, a lawyer or a trustee company should be appointed to perform this important role so you can benefit from their expertise and objective independent counsel.

Special needs Each one of your children is unique and in some circumstances it is wise to make special arrangements to accommodate this. There could be an irresponsible child that is a spendthrift, or one who has a drug or alcohol addiction that could decimate an inheritance.

A physically or mentally challenged child may need support throughout their lives.

Through a trust, funds are managed and disbursed by trustees on behalf of beneficiaries; it is well suited to accommodate special situations.

There are various types of trusts and they are so flexible that each circumstance can be clearly presented and managed by the trustees.

Communication is key Don’t leave mystery and secrecy in your wake.

As far as possible (and in some families this may not be advisable), talk about your estate to your adult children when you still can. Secrecy rarely produces genuine long-term harmony. Letting lawyers and private bankers into all the secrets and leaving your loved ones, children, spouse(s) and “significant others” in the dark about who gets what, often causes chaos whilst you are resting in peace. Complicated lifestyles usually beg for extra planning.

Rather than keeping everyone in the dark, why not make specific arrangements that will stand the test of time to ensure that your wishes for your properties, businesses and social impact initiatives do not die with you.

Communication when you are well and strong makes sense. Whether you are of substantial means or not, equip your spouse and children about wealth preservation and wealth management with financial education.

Many Nigerian family owned businesses have struggled after the passing of the founder. Indeed, globally, only 30% of businesses survive the passing from the founder to their heirs. A family owned

business requires careful transition and succession planning. Remember, it doesn’t absolutely have to be your own children that take over and manage the business; indeed they might not be capable or interested. Professional management and the best person for the job should be identified over time.

Your children may own the business as shareholders but they do not necessarily have to run it.

Do not procrastinate. If you don’t get round to tidying up your affairs, you may be compounding the difficulty that your beneficiaries will experience after you are gone. It is often a reluctance to address one’s own mortality or a feeling that the time isn’t quite right that causes such procrastination.

The loss of a loved one comes with huge challenges and unfortunately it can and does bring out the worst in siblings. The best estate plans have come from engaging proactively in a process, during your lifetime. With careful thought and planning and most importantly, with tested professional advice, one can mitigate much of the potential conflict and leave a lasting legacy.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

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

28

BUSINESS DAY

Monday 30 July 2018

Access Bank Rateswatch Market Analysis and Outlook: July 27 - August 3, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.16% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion)

25.17

Increased by 2.64% in May 2018 from N24.52 trillion in Apr’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

22.21 1.93

Decreased by 0.21% in May 2018 from N22.25 trillion in Apr’ 2018 Decreased by 1.36% in May 2018 from N1.96 trillion in Apr’ 2018

Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

11.23 14

Declined to 11.23% in June’ 2018 from 11.61% in May’ 2018 Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

14 (+2/-5) 47.28 72.35

Lending rate changed to 16% & Deposit rate 9% July 25, 2018 figure — a decrease of 1.05% from July start July 27, 2018 figure— an increase of 1.54% from the previous week

Oil Production mbpd (OPEC)

1.66

June 2018 figure — an increase of 1.84% from May 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 27/07/18

NSE ASI

Friday

Change(%)

36,603.44

0.09

13.27 0.31

13.26 0.68

0.09 (54.21)

3.49

3.90

(10.63)

Friday Rate

Friday Rate

Change (Basis Point)

Value (N’bn)

Indicators

27/07/18

1-week Change

20/07/18

36,636.97

Market Cap(N’tr) Volume (bn)

MONEY MARKET NIBOR Tenor

Global In the Eurozone, the European Central Bank retained its key policy rate at 0% at the end of its policy meeting on the 26th of July 2018. It also left its deposit facility rate and the marginal lending facility rate unchanged at -0.4% and 0.25% respectively. The bank said it expects the rates to remain at their present levels through 2019 and as long as necessary to ensure the continued sustained convergence of inflation levels to 2% and below. The ECB stated that it will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of €30 billion until the end of September 2018, after which it will reduce the monthly pace to €15 billion till the end of December. Elsewhere in the US, IHS Markit reported that the US manufacturing Purchasing Managing Index (PMI) notched up to 55.5 in July from 55.4 in June. This reflected slightly stronger growth of the manufacturing sector amid a robust rise in new orders and a solid upturn in both production volumes and employment. The degree of positive sentiment also picked up in June and has remained above the average seen in 2017. In a separate development, India consumer price for the month of June was recorded at 5% from 4.87% in the prior month. It is the highest rate of inflation since January and the eight straight month that inflation rate is above the central bank target inflation rate of 4% according to the ministry of commerce and industry. This came on the back of higher prices of housing, fuels and light, clothing and foot wear, and tobacco.

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

YTD Change

(%)

(%)

72.35 2.78

1.54 0.36

12.24 (9.03)

2295.00 108.95 87.65 10.99 532.25

(1.03) 0.05 0.18 (0.81) 4.83

18.54 (16.32) 13.10 (28.31) 22.78

1219.32 15.37 280.95

(0.46) (0.07) 2.31

(7.46) (10.59) (14.29)

(%)

(%)

27/07/18

20/07/18

6.83 7.25

15.00 15.67

(817) (842)

CALL 30 Days

7.73 12.84

8.15 12.70

(42.0) 14

27/07/18

20/07/18

90 Days

13.52

13.33

18.4

1 Mnth 3 Mnths

10.42 11.07

10.67 11.27

(25) (20)

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

6 Mnths 9 Mnths 12 Mnths

12.48 12.76 13.10

12.33 12.85 13.47

16 (9) (37)

27/07/18

20/07/18

27/06/18

OBB O/N

FOREIGN EXCHANGE MARKET Market

Friday

Official (N) Inter-Bank (N)

305.90 349.41

305.85 348.12

305.75 344.91

BDC (N) Parallel (N)

361.55 360.00

361.00 360.00

360.00 362.00

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Indicators

Friday

Change

(%)

(%)

(Basis Point)

27/07/18

20/07/18

3-Year 5-Year

0.00 13.70

0.00 13.68

0.0 1.8

7-Year 10-Year 20-Year

13.95 13.82 14.21

13.99 13.78 14.14

(3.9) 3.4 6.9

Change

(%)

(%)

(Basis Point)

27/07/18

20/07/18

2671.41

2670.31

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

8.51 5.49 8.75

8.50 5.50 8.71

YTD return (%)(US $)

-46.53

-46.55

Index

0.04 0.04 (0.18) 0.04 0.02

TREASURY BILLS (MATURITIES)

Disclaimer

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

(Basis Point)

Friday

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

Change

(%)

Friday

AVERAGE YIELDS Friday

Friday

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Friday

91 Day 182 Day 364 Day

Amount (N' million) 5,849.034 26,600

Rate (%) 10 10.5

145,962.899 11.49

Date 18-July-2018 18-July-2018 18-July-2018

Domestic At the conclusion of the third Monetary Policy Committee (MPC) meeting of the year last week, committee members voted 7 – 3 to retain all monetary policy tools at prevailing levels.

Specifically the Committee retained the Monetary Policy Rate (MPR) at 14%, Asymmetric corridor around the MPR at +200/500 basis points, Cash Reserves Ratio (CRR) at 22.5%, and Liquidity Ratio (LR) at 30%. The decision was against the backdrop of potential inflationary pressures especially from food prices, a liquidity injection in H2 2018 from the implementation of the 2018 budget and preelection spending, and concerns over portfolio outflows in a policy-normalising global environment.boost lending to the real sector, the Committee hinted at plans to introduce unorthodox policies such as buying of corporate commercial papers and a differentiated dynamic Cash Reserve Requirement (CRR) regime to compensate banks for lending to the private sector. It disclosed that details of the framework were being worked out by its Banking Supervision, Monetary Policy and Research departments. In a separate development, newly released data by the National Bureau of Statistics show that headline inflation declined by 38 basis points (bps) to 11.23% year-on-year (y-o-y), to register a 17month consecutive decline on a year-on-year basis since January 2017. The slowdown in inflation was broad-based. The biggest contributions to the reduction in inflation in June came from easing food price pressures.

Food inflation edged lower by 47bps to record 12.98% y-o-y compared to May’s 13.45% y-oy. Similarly, core inflation trended lower by 32bps to 10.39% y-o-y.

Stock Market Trading indicators at the local bourse ticked up last week. The bullish performance was a result of bargain hunters taking advantage of low share prices, especially of interim dividend paying companies. The All Share Index (ASI) notched up by 33.53 points to close at 36,636.97 points from 36,603.44 points the previous week, representing a gain of 0.09%.

Similarly, market capitalization gained 0.09% to

close at N13.27 trillion from N13.26 trillion the previous week. Stocks in the industrial goods, consumer goods and the oil & gas sectors aided the rise in the market. This week, market direction will be swayed by expected Q2 earnings.

Money Market Money market rates trended downwards at the close of the market last week following inflows of about N725 billion from Open Market Operations (OMO) maturities and the Federation Account Allocation Committee (FAAC) payments which boosted liquidity. The combined inflows outweighed outflows of N585 billion from OMO auctions.

Open Buy Back (OBB) and Over Night (O/N) rates eased to 6.83% and 7.25% from 15% and 15.67% the previous week. Call rates also declined, to close at 7.73% from 8.15% the prior week.This week, cost of funds in the interbank money market is expected to tick up as a result of expected Retail Sales Market Intervention Sales (SMIS).

Foreign Exchange Market The naira-dollar exchange rate depreciated at most market segments last week. At the official window, it lost 5 kobo to settle at N305.9 from N305.85 the previous week. Similarly, at the Interbank market the local unit weakened by N1.29 to close at N349.41/$ from N348.12/$.

Meanwhile, at the parallel market the currency closed flat at N360. The weakening seen in the official and interbank markets comes amidst sustained intervention in the FX market by the monetary regulator. This week, the naira is expected to be stable on the back of sustained injections by the apex bank.

Bond Market Bond yields on the average rose across most maturities last week even though the Access Bank bond index posted a modest increase. The index increased slightly by 1.10 points to close at 2,671.41 points from 2,670.31 points. The upswing witnessed was due to uptake of bonds by both local and international parties during the bond auction as they sought to cover their short positions. Yields varied across maturities as the seven year yield declined from 13.99% to 13.95% while the five-, ten and twenty-year debt papers increased to 13.70%, 13.82% and 14.21% at the close of market last week, from 13.68%, 13.78% and 14.14% for the corresponding maturities the prior week. This week we expect that yields will decline as liquidity in the market will spur demand.

Commodities Oil prices rose last week after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed US inventories fell to a 3½-year low. Bonny light, Nigeria’s benchmark crude, gained $1.5, or 2.8%, higher at $72.35 per barrel. In contrast, precious metals prices edged lower as trade jitters eased after the United States agreed to refrain from imposing tariffs on cars from the European Union following US - EU trade talks.

Gold prices fell 0.46% to close at $1219.32 per ounce, while silver slipped 0.1% to settle at $15.37 per ounce. This week, oil prices will likely remain supported by easing trade tensions. For precious metals, we see prices pressured by strength of the US dollar and hawkish stance by the US Fed. MONTHLY MACRO ECONOMIC FORECASTS Variables

Jul’18

Aug’18

Exchange Rate (Official) (N/$)

346.90

347.02

348

Inflation Rate (%)

9.34

9.00

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

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

Sept’18

Monday 30 July 2018

C002D5556

BUSINESS DAY

29

Nigeria’s financial inclusion: Late to the party ENDURANCE OKAFOR

A

s at the time Nigeria was considering the optimal approach needed to leverage new and innovative technology to deliver financial services to its people, its Africa peers were already taking mobile money as their financial inclusion led model.

The telecom led model however paid off in the various countries but Africa’s most populous nation is seen left behind. This is despite a global trend of rising financial inclusion.

There is reason therefore to wonder whether Africa’s largest economy, showed up late.

As reported in the World Bank Findex Database released in April 2018, Nigeria receded in financial inclusion between 2014 and 2017 leading to a 5 percentage points drop in banked adults from 49 percent in 2014 to 44 percent in 2017. Meanwhile, the sub-Saharan African average increased more than 8 percentage points to 43 percent in the same period.

In the 3 year period, Kenya, East Africa’s largest economy improved to 81.6 percent in 2017 from 74.7 percent in 2014 and Ivory Coast improved to 41.3 percent from 34.3 percent The introduction of MPesa in Kenya changed the financial inclusion game in the country, as the financially excluded population of adults is currently at about 17 percent from 23 percent within a decade, as compiled from a report by Financial Sector Deepening (FSD).

“I think there is still a wide communication gap between the telecoms and the banks in Nigeria which can only be addressed by the CBN. In the case of Kenya (Safaricom), every bank in Kenya integrated with Mpesa (mobile money app) for ease of transfer,” Ayodeji Ebo, MD, Afrinvest Securities limited said in a phone response.

Meanwhile, according to Boston Consulting Group (BCG), a global management consulting

firm, more than 70 percent of adults in South Africa have a transaction account which is more than in Brazil, Chile, India, Mexico, and Russia. Also its life insurance adoption rate is higher than that of far wealthier countries such as Italy and Spain.

Ivory Coast also, has experienced a mobile money revolution. There are now more adults with mobile money accounts of about 24.3 percent than with bank accounts of 15 percent.

This places the country as the fifth highest with mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania (32 percent), as compiled from Brookings Instititue, a non-profit, public policy organization.

On the reasons why Africa’s largest producer of crude oil lagged its peers in financial inclusion ranging the period between 2014 to 2017, financial analysts cited poor level of education, adaptation of technology

and insufficient telecommunication infrastructure.

Johnson Chukwu , CEO, Cowry Asset Management Limited said some of these countries are better than us in terms of education penetration, early adaptation of technology, for example Kenya with Mpesa has helped their financial penetration level and financial system and other infrastructures like communication and transport.

“And these factors may have contributed to the country lagging behind. But the Core of it is the poor education enlightment in educating the people on the value of having a bank account,” Chukwu said.

Ayo Akinwunmi, Head of Research, FSDH Merchant Bank said that the issue of the insecurity and the high unemployment rate in Nigeria are factors contributing to the decline in the rate at which Nigerians are having access to financial inclusion.

“A lot of banks that are located in these areas where there

is high level of insecurity are already shutting down .If there is peace there will be more bankable adults. And when you look at the unemployment rate also, people are losing their jobs on account of the recent economic recession we entered in 2016 and existed in Q2 2017 and with the weak purchasing power that we are experiencing, is among the reasons the bankable adults are dropping ,” Akinwunmi explained Meanwhile, the Central Bank of Nigeria (CBN) announced that the country is not on track to reach its target of bringing 80 percent of its citizens into the financial cycle by 2020, owing to economic recession in the country as well as the insecurity in northern Nigeria.

Akinwunmi, of FSDH Merchant Bank had said it was a wakeup call for the federal government of Nigeria because if they are saying the insecurity in the northern part of the country is one of the reasons as to why they

cannot achieve the set target, it means that the crisis is beginning to have negative impact on the Nigerian economy.

“This is because CBN cannot resolve that crisis and a lot of banks are closing down from those areas and the economic activities are also nothing to write home about in those places. So if the crisis cannot make CBN to attain 80 percent target by 2020 it implies that it is having another dimension of risk on the Nigerian economy,” Akinwunmi said.

Also, the slow uptake of digital financial services and limited rollout of national identity numbers restricted financial service providers to meet the know-yourcustomer (KYC) requirements, as compiled from the CBN’s statement.

It is now reviewing the path it took in 2012 with a ‘refreshed strategy’ and has also signed a co-operation agreement with the Nigerian communications commission to improve the penetration of financial services using mobile phones.

“The refreshed strategy is based on a first-principles approach. It recognises the various core mandates that need to be managed to develop a solid, stable yet inclusive financial system and identifies the principles that need to be in place to manage and govern financial services,” CBN said in a statement.

The apex bank also said that actors are to focus more on the activities they possess ‘comparative advantage’ in to achieve the greatest impact. Given the complexity and volume of changes that need to happen, individual actors are to focus more on the activities that best suit their capacity while maintaining an inclusive lens as much as possible.

On the best strategy to help include more Nigerians into the financial cycle and the solution to solving the exclusion problem in Nigeria Bismarck Rewane, MD of Financial Derivatives said “more people should be brought into the financial inclusion cycle as this can be done by not necessarily through bank account.”

30

BUSINESS DAY

Monday 30 July 2018

Live @ The Exchanges Top Gainers/Losers as at Friday 27 July 2018

GAINERS Company

Market Statistics as at Friday 27 July 2018

LOSERS Opening

Closing

Change

Opening

Closing

Change

N28.5

N31.35

2.85

SEPLAT

N650

N625

-25

N15

N16.5

1.5

BERGER

N8.55

N8

-0.55

INTBREW

N35.5

N37

1.5

TOTAL

N200

N199.8

-0.2

FO

N23.1

N24

0.9

NPFMCRFBK

N1.72

N1.57

-0.15

VALUE (N billion)

DANGFLOUR

N8.25

N9.05

0.8

NSLTECH

N0.44

N0.4

-0.04

MARKET CAP (N Trn

CCNN DANGSUGAR

Company

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

FMDQ listings, quotations business thrives with 74% growth Stories by Iheanyi Nwachukwu

T

he listings and quotations business of FMDQ OTC Securities Exchange thrived in 2017 as it admitted 50 debt securities, representing 74 percent from the 2016 financial year, with a total value of N236.87billion.

In 2017, FMDQ recorded a total of 37 Commercial Papers (CPs), 10 Bonds and 3 Funds quoted and listed on its platform. It also attracted foreign currency-denominated securities listings to the tune of $4.98billion, with the Federal Republic of Nigeria making history by listing, for the first time on a Nigerian Exchange, its Eurobonds and the inaugural Diaspora Bond on the OTC Exchange.

“This was a major feat for FMDQ and Nigeria as a whole, as this promotes, among others, visibility for the issues and financial inclusion, and demonstrated the government’s commitment to drive the growth and development of not only our debt capital market (DCM), but also our local financial markets by bridging the longterm financing gaps for economic development and enhancing the global com-

Bola Onadele.Koko

petitiveness of our financial markets,” said Okwu Joseph Nnanna, chairman, FMDQ OTC Securities Exchange at its 6th Annual General Meeting.

Notwithstanding Nigeria’s macroeconomic challenges, FMDQ OTC Securities Exchange recorded revenue of N2.57 billion, up 26 percent from 2016, the highest recorded since its inception in 2013.

Turnover from trading activities on FMDQ platform also recorded the highest value since inception at N142.03 trillion, a 25 percent increase when compared to the previous year, with increased trading activities seen in the Treasury Bills and Foreign Exchange product lines.

At the meeting which held Friday July 27 2018, the shareholders of FMDQ received and adopted the audited annual financial statements and other information for the year ended December 31, 2017, together with the reports of the directors, the auditors and the audit committee thereon.

The shareholders also appointed the company’s external auditors and authorised the directors to fix the remuneration of the external auditors; as well as elected the members of the audit committee.

The shareholders of FMDQ OTC Securities Exchange approved for the Board of Directors to implement slight change in its name to FMDQ Securities

Exchange Plc. FMDQ experienced growth in its membership base, as the year under review closed with a total of 181 members, representing an increase of 16 percent from the preceding year level.

“This growth was seen across all Membership categories”, Nnanna said during the meeting which held at FMDQ OTC Securities Exchange new building called “Exchange Place”.

“Due to investments made in strategic market development initiatives during the year, the operating expenses also grew by 39 percent to N2.22 billion, leading to a decline of 20.58 percent in Profit before Tax (PBT), at N349.76 million, when compared to 2016,” he added.

Bola Onadele. Koko, Managing Director/CEO, FMDQ OTC Securities Exchange said, “The OTC Exchange’s revenue diversification drive was a major factor that aided the sustained financial performance through the challenging market conditions of 2017, further reinforcing its role as Nigeria’s foremost debt capital, currency and derivatives OTC securities exchange.

FCMB Group records 86% increase in H1 profit to N7.1bn

F

CMB Group Plc recorded a profit before tax (PBT) of N7.1 billion for the six months ended June 30, 2018, the results at the Nigerian Stock Exchange (NSE) show.

The record H1 profit represents an increase of 86percent from N3.8billion FCMB Group Plc achieved for the same period in 2017. The positive development reflects the improving performance of the financial institution, as well as the effects of diversification through its investments in asset and wealth management.

FCMB Group Plc, which is a holding company, is made up of operating companies divided along three business groups – Commercial and Retail Banking (First City Monument Bank Limited, Credit

Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); and Asset & Wealth Management (Legacy Pension Managers Limited, First City Asset Management Limited and CSL Trustees Limited).

From the details of its unaudited results announced on the floor of the Nigerian Stock Exchange (NSE), the Group’s gross revenue rose to N83.9 billion as at the end of June 2018, compared to N77.5billion in the corresponding period of 2017.

Similarly, net interest income rose by 9percent

36,636.97

Year-on-Year (YoY) from N32.5billion to N35.3billion, while non-interest income grew to N16.5billion, an increase of 29percent, from N12.8billion for the same period of last year.

The Commercial and Retail Banking group (which comprises First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited) generated a 32.2percent increase in PBT to N2.9billion for half year 2018 from N2.2billion at the end of first quarter 2018.

Revenue increased 3.7percent year-on-year (YoY), driven by an 8.1percent YoY increase in non-interest income and an 8.7percent YoY increase in net-interest income.

3,735.00 311,362,982.00 3.487 13.271

CIS inaugurates 10th president … Obaseki wants stockbrokers to show interest in politics

T

he Executive Governor of Edo State, Godwin Obaseki has urged Stockbrokers to take the values of their profession to the political space in order to move the country forward.

Obaseki explained that every professional stockbroker operates on the premise of my word is my bond and noted that Nigerian politicians needed to embrace this element of integrity in order to ensure economic growth and development.

Speaking at the 10th Investiture of the President of Adedapo Adekoje, organized by the Chartered Institute of Stockbrokers (CIS) in Lagos at the weekend, Obaseki explained that his background in Stockbroking over the years had contributed immensely to the efficiency of his administration.

According to him, those of us that have corporate background would find out that we are quite different from others as we have an obligation to deliver and under no circumstances must we fail to keep our promise.

He noted that the Institute had come a long way saying that the repositioning that some of us undertook over the years are what we are enjoying today.

Obaseki commended the newly elected CIS’ President, Adekoje on his new position and assured the Institute of support of his administration.

Obaseki also congratulated the entire stockbroking community on the milestones recorded over the years despite the challenges in the operating environment.

In his acceptance speech, Adekoje expressed gratitude to the Stockbrokers for their support during his confidence reposed in him and appealed for their co-operation in order to move the market forward.

Earlier in his farewell address, the outgone President, Oluwaseyi Abe also thanked the Stockbrokers for their support during his administration. Abe recalled that many achievements were recorded during his tenure, including the newly acquired corporate office at Ikoyi, Stand-Alone-Certification

Programme for Stockbrokers and sustained initiatives to attract the youths to Stockbroking profession among others. He attributed these to collective efforts of all stakeholders.

A paper titled “Exploring the Nexus between Capital Market Growth and Economic Development ” was presented by Uyi Akpata, Country and Regional Senior Partner, West Africa, Price Water House (PwC).

He identified some of the factors militating against competitiveness of the Nigeria’s Capital Market as high transaction cost and dearth of securities.

Akpata proposed product development, financial literacy, investor education among others as some of the issues that must be addressed in order to enhance competitiveness of the Nigeria’s Capital Market.

Also, the Acting Director General of The Securities and Exchange Commission, Mary Uduk, congratulated the new president and commended the leadership of the Institute and the immediate past president, saying that the Institute has grown tremendously.

However, she charged Stockbrokers to do more to take investor education to people at the grass root and rather than concentrate activities on the people in urban areas.

Congratulating Adedapo Adekoje, The Chief Executive Officer of The Nigerian Stock Exchange, Oscar Onyema pledged the Exchange’s support for the Institute.

He said “we at the Nigerian Stock Exchange are going to be firmly supportive of the administration and the Institute”.

In a similar vein, the Chairman of The Association of Stockbroking Houses of Nigeria (ASHON), Patrick Ezeagu, in his farewell massage to the new president stated that ASHON would continue to support the Institute to attain greatness.

“ASHON is very delighted to be a part of the Institute because we are like the other part of the Institute, we shall extend the same level of cooperation and support to the new president.

Monday 30 July 2018

C002D5556

BUSINESS DAY

31

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Monday 30 July 2018

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REAL SECTOR WATCH C002D5556

Monday 30 July 2018

BUSINESS DAY

FG study on AfCFTA fails to address concerns of manufacturers—MAN

Stories by ODINAKA ANUDU

T

he Manufacturers Association of Nigeria (MAN) has said that a recent study conducted and launched by the Nigerian Office for Trade Negotiations (NOTN) on the African Continental Free Trade Area (AfCFTA) did not address the concerns of manufacturers.

Speaking at a press conference in Lagos on July 25, Frank Udemba Jacobs, president of MAN, said that the independent study fell short of standards and lacked the much-needed information required to take an informed decision.

Jacobs said MAN had since commissioned a study and would have the report in a month’s time.

According to him, the concerns of manufacturers that were not captured in the report included: the impact of AfCFTA on the country’s t ax st r u c tu re, g overnment revenue and the welfare of over 180million Nigerians; impact on the industrialisation and

economic development aspirations of Nigeria; its fiscal and monetary implications on Nigeria, as well as justifications for agreeing to the proposed movement of 90 percent of tariff lines to zero duty.

Other concerns which the NOTN study failed to address, according to Jacobs, were: status of non-tariff charges, levies, incentives, waivers and exemptions currently operational in Nigeria; fiscal

implications of AfCFTA on the income of governments and regional economic communities, as well as product lines that have been agreed for liberalisation, for exclusion and sensitive list.

He advised the federal government to stay action on the AfCFTA until MAN concluded its painstaking study that addressed these concerns.

“In the light of recent developments, we con-

sidered it necessar y to intimate you that an insignificant number of nonreal sector operators in the private sector are tactfully recommending that Mr President should sign the agreement under the camouflage that majority of Nigerians and the Organised Private Sector agrees with their position.

They are essentially not at home with the technicalities of a trade agreement of this magnitude. The

pronouncement of this group of actors is not representative of the views of the Organised Private Sector of Nigeria,” Jacobs stated.

“It is pertinent to report that the Presidents of the Organised Private Sector at its meeting on July 24 had in attendance the Manufacturers Association of Nigeria, the Nigerian Employers Consultative Association and the National Association of Small Scale Industries. They affirmed that our country should be circumspect on the decision to sign the AfCFTA and that we should await the outcome of a credible study that should guide our negotiations. Although, NASME could not attend the meeting, it is equally supportive of the position of the OPSN,” he pointed out.

He reiterated that Muhammadu Buhari should not sign the AfCFTA agreement until the outcome of a credible study so indicated. He recommended that the President allow the country’s team to resume participation in the negotiation processes only to ensure that the country was abreast of develop-

ments.

The AfCFTA is a trade treaty that seeks to unify the African economy by reducing all trade barriers. Over 45 countries, including South Africa, have already signed up, but Nigeria is yet to do so, as the federal government, in line with the position of local manufacturers, says it is not yet ready to endorse any agreement that will jeopardise Nigerian industries.

The AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994.

It is targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity.

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) had last Monday urged the President to sign the AfCFTA as soon as possible.

“As we speak today, there is no objective basis for asking the President to sign the AfCFTA, and those canvassing it have not given us any reason,” Segun Ajayi-Kadir, director-general of MAN, said.

Fidson Healthcare and Astymin Brilliance Reward 2018

S

ince 2010, Fidson Healthcare Plc has been supporting the Nigerian education system through Astymin Brilliance Reward.

The programme is aimed at developing the mental and academic performance of primary school pupils through special acknowledgment and provision of educational materials.

Fidson, one of Nigeria’s leading drug makers, works with ministries of education in many states.

This year’s edition is scheduled to hold on August 4, 2018, at Ndubuisi Kanu Park, Lagos.

It will witness the convergence of the very best graduating pupils from over two hundred private and public schools across the south-west and south-east regions, as well as parents, teachers and stakeholders

in Nigerian educational system.

In addition, there will be scholarship awards to three best performing WAEC candidates in 2017. All these are part of the company’s corporate social responsibility (CSR) initiative.

According to Ola Ijimakin, general manager, Fidson Healthcare Plc, this year’s edition is an indication of Fidson’s unrelenting commitment to supporting Nigerian children in all their academic endeavours through its Astymin brand, in line with the corporate brand promise of adding value to the lives of Nigerians as expressed in its slogan, ‘We value life’.

“Like we have always emphasised, the ABR is our attempt to bring back the glory days of our education by throwing our weight behind the children’s drive for

academic excellence. This is another season of delight for the kids who have worked so hard and performed exceptionally well in their academics. But for us as a brand, it is another day of celebrating excellence,” he

said.

“We believe it is better to catch them young and put them on the right path to success. Therefore, Astymin will continue to take the giant stride in rewarding brilliant primary school kids

in a way that will motivate them to stay focused on their studies, believing that merit and hard work can still be rewarded,” he said.

Explaining the rationale for the event, Ijimakin noted that Astymin Brilliance Re-

From Left: Sylvester Iriogbe, corporate service manager, Fidson Healthcare Plc; Friday Enaholo, marketing manager, Fidson Healthcare Plc; Yetunde Adesola, Astymin School Program Coordinator; Oshoke Ayebae , head, business and corporate development; Adesoji Fasanya Product Manager, Over-The-Counter(OTC), during the 2018 Astymin Brilliance Reward (ABR) Pre-event Press briefing at the Fidson Head office, Lagos. Pic by Pius Okeosisi

ward is the brand’s biggest and most prestigious event.

He further explained that Astymin brand supports various school programs in primary schools, adding that every month, Astymin unveils its ‘Genius of the Month’.

Adesoji Fasonya, produ c t m a n a g e r, F i d s o n Healthcare, said Astymin sharpens the intellect and enables adults to cope with stress.

Fasonya said Fidson continues to identify and follow up with the studentawardees to ensure they excel throughout their lives.

Yetunde Adesola, school programmes coordinator, explained that the programme is now in many states in Nigeria, including Abuja, Lagos, Ogun, Oyo, Osun, Ondo, Ekiti, Delta, Anambra, Enugu, Imo and Niger.

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Let’s Make Kaduna Great Again

Kaduna state government secures £10m EU grant for solar project ... Signs maintenance agreement for 1.7mw solar projects

K

aduna State Government says it has secured £10m grant from the European Union to scale-up the provision of solar power across the state. This will see the Kaduna solar programme being expanded to rural general hospitals, public secondary schools, water treatment facilities and more primary healthcare facilities to improve healthcare delivery, education and availability of water in rural communities.

Governor Nasir El-Rufai’s Senior Special Assistant on Energy, Dolapo Poopola disclosed on Thursday 26th July, that the additional grant will enable the state government to expand its solar program to rural areas of the state. She stated this after signing an MOU with MP Infrastructure Limited for the operations and maintenance of solar power installed at 34 PHCs across the state.

In 2016, the Kaduna State Government, as part of its strategic and robust energy development agenda, began installation of a total of 1.7MW of Solar Systems in Primary Healthcare Centers (PHCs) across Kaduna. In partnership with the UK Department for International Develop-

ment (DFID), a total of 34 primary healthcare centers in 21 Local Government Areas have now received these solar systems.

In fulfilment of this commitment, the Kaduna State Government Thursday 26th July, signed a one-year operation and maintenance contract with MP Infrastructure Limited, a solar and infrastructure company.

Speaking at the signing, the Executive Secretary of the State’s Primary Healthcare Development Agency, Dr. Hadiza Balarabe said, “at its initiation, this project was the first of its kind in Northern Nigeria ensuring that the selected healthcare centers, serving over 180,000 patients annually, can be supplied all the power they need to provide quality healthcare round the clock in an environmentally friendly manner. On average, almost 6,000 babies are delivered every year across these 34 Primary Healthcare Centers – 44% at night” Solar systems are essential at night in rural Primary Healthcare Centers where there is no supply of grid electricity. In the absence of grid electricity, PHC staff have little choice but to deliver babies that come at night under candlelight.

In the 34 selected PHCs,

Dr. Hadiza Balarabe, Executive Secretary, Kaduna State Primary Healthcare Development Agency and Sonnie Asuki of M-P I Ltd, at the singning of MOU for the Operations and Maintenance of 34 Solar in Kaduna Projects.

the solar systems are helping to make night-time deliveries safer. The solar systems have also eradicated the need for noisy generators; thereby reducing carbon emissions and creating a more serene environment for patients.

It is for these reasons that the significance of proper maintenance cannot be overstated. If properly maintained, solar systems can last for over 20 years.

In her statement, Dr. Hadiza Balarabe further

Installed Solar Power at Primary Heathcare Center, Gidan Waya, Jema’a LGA.

said, “the Operation and Maintenance Plan will feature remote monitoring, a fault alert messaging service, training and a 24hr maximum response time for system failures.”

Continuing, the ES said “by establishing an O&M plan for the solar systems, this administration is not only protecting investment in public assets but also ushering in a culture of maintenance for sustained improvement in public service delivery.”

The O&M contract has an option for renewal based on performance and includes training of electrical and civil technicians employed in the state service in each local government impacted. PHC staff, as users of the system, will go through annual sensitization on energy conservation and the proper use of the solar systems.

According to the Senior Special Assistant on Energy to the Governor, Ms. Dolapo Popoola, “the

Kaduna State Government has secured an additional grant of 10 million Euros from the European Union Delegation to Nigeria and ECOWAS for the scale-up of the Kaduna Solar intervention. This will see the program being expanded to rural general hospitals, public secondary schools, water treatment facilities and more primary healthcare facilities to improve healthcare delivery, education and availability of water in rural communities”.

Installed Solar Power at Primary Healh Center, Badarawa, one of 34 PHCs that benefited from Kaduna State Solar for Clinic programme.

Monday 30 July 2018

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These Charts show why Seplat got 100 percent Buy ratings from analysts BALA AUGIE

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h i r t e e n ou t the thirteen top ratings agencies have placed a Buy rating on Seplat Development Corporation Company of Nigeria Plc, which means it the type of stock to own, according to data gathered by Businessday.

BusinessDay markets and intelligence has decided to show readers why 1oo percent of investment house see upsides in Seplat’s stock.

The company shares have gained 31.15 percent since the last year, underperforming the broad market by around of 2.32 percent. Seplat shares are currently trading on a 2018 P/E of 3.30x for and EPS of 0.54 percent.

Analysts at Chapel Hill Denham put a target price of N932 on the stock of the oil major while analysts at investment house ARM Securities which placed strong Buy ratings on the stock put a target price of N957.27.

“This is a company that is making a turnaround bad performance to a better one as it now has the opportunity to produce to full capacity, said Jubril Kareem Energy Analysts at Ecobank Research.

“They are not exposed to devaluation because their assets are in dollars.

They are also favoured in terms of their Naira expenses such as salaries, Kareem.

An improvement in oil price and the resumption of production at the Forcados terminals helped underpin the Nigerian upstream oil and gas giant’s profitability and key

months through March 2018 stood at $180.58 million, this compares with $146.21 million recorded in the corresponding period of 2014.

Crude oil sales stood at $141.03 million in March 2018, this compares to the $120.08 million recorded in 2014. Revenue from gas stood at $39.55 million in March 2018, from $4.09 million recorded in 2014.

Sales were beaten down in the first quarters of 2016 and 2017 due to the shut in and suspension of oil exports that resulted in loss of production, and a drop in oil price.

Seplat recorded a profit after tax of $20.655 million at March 2018, the first impressive performance at the bottom line in 3 years.

ratios.

The company was able to cut costs and scale back on capital expenditure project during the lower

The company is able to efficiently manage direct costs attributable to projects as evidenced in improved margins and in gross profit growth.

Gross profit stood at $92.86 million in March 2018, as against $29.63 million recorded in the 2016, thanks to consistent revenue growth and reduction in operating costs.

Gross profit margin stood at 51.42 percent in 2018, the highest since 2016. In other words, Seplat earns $51 on the dollar in gross margin.

An improvement in margins means the firm has enough money left after accounting for the cost of goods sold (COSG).

Seplat is able to turn each Naira invested in sales into higher profit as net profit margin improved to 11.38 percent in march 2018 as against a (40.40 percent) recorded the previous year.

Seplat’s leverage ratios have been improving since 2015 as management of the firm continues to intensify its debt refinancing strategies.

Seplat’s debt to equity (D/E) ratio fell to 35.29 percent in March 2018, the lowest since the all-time high of 139.18 percent in 2015. A lower ratios means a firm is less susceptible to financial risk.

oil price in order to bolster cash flow and liquidity position.

For instance, its revenue for the first three

35

P.E

SHORT TAKES 14% The Monetary Policy Committee retained the MPR benchmark rate at 14 percent for the 11th consecutive time. The CBN governor cited the risk of increasing inflationary pressure from pre-election and budgetary spending, agitation for increased salaries as reasons for maintaining the rate.

The Committee believes the decision is in line with achieving the single-digit inflation target rate. The committee also maintained the asymmetric corridor at +200 and -500 basis points around the MPR while maintaining the CRR at 22.5 percent and the Liquidity ratio at 30 percent.

11.23%

Headline inflation fell for the 17th consecutive time Y-o-Y to 11.23 percent in June 2018 compared to 11.61 percent in May 2018. The M-o-M inflation however rose 1.24 percent in June 2018 from 1.09 percent in May 2018.

The y-o-y drop in inflation rate was due to base effect of higher prices of food recorded in June, 2017. The base effect on inflation is seen to gradually wear off as prices tend normalize.

In line with attaining single digit inflation rates, the CBN in its mpr meeting encouraged tight monitoring of election spending and other inflationary heightening pressures.

$300 million First bank Holdings (FBH) largest subsidiary First bank of Nigeria limited (FBN) is set to exercise its call option rights to redeem the US$300 million fixed rate subordinated note at 8.25 percent from the international debt markets, 2 years before the maturity date in 2020 This exercise would make it the second time the bank will call and prepay its bondholders, following its debut in 2007 with a 9.75 percent US $175 million Eurobond which was called in 2012.

The bank will also be able to save about $24 .75 million annual interest it would have to pay in subsequent years to bondholders as the callable bond pays 8.25 percent annual interest.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: David Ogar )

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

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Markets Intelligence Economy

GDP growth forecast revised to 2.3% - Analysts at United Capital

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he outlook for the Nigerian economy in H2-18 hangs on a balance between pre-election uncertainties and gradual recovery in the broader economy.

While the trajectory of key macro variables is seemingly improving, uncertainties in the political space, both locally and externally, are disturbing. Overall, we expect activities in the broader economy to continue to recover. The key drivers include an above $60.0/b oil price as w ell as stable local production w hich we anticipate to further boost oil GDP despite OPEC+’s agreement to mmaintain the prior 1.8mbpd cut on global supply and restore compliance to 100%. I n the non-oil sector, Agric GDP will sustain uptrend on

the back of stronger growth in crop production in Q2-18.

However, Livestock output may remain strained as the herdsmen crisis persists. Momentum in the manufacturing sector is also expected to sustain the sharp recovery observed in Q1-18, even as political spending buoys activities in the Construction space. Nonetheless, growth in the Trade and Real Estate space may remain muted as observed in Q1-18.On a balance of factors, w e adjust our FY-18 GDP grow the forecast to 2.3%.Output grow th may, However, remain vulnerable to the vagaries of the oil market (both externally and internally) and uncertainties in the domestic sociopolitical and global environment.

Infinity mortgage bank earnings best among peers first half of the year Abimbola Hassan, David Ibidapo & Sobechuckwu Eze

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he half year 2018 earnings performance by mortgage ba n k s o n t h e Nig e r ia n Stock E xchange (NSE), Infinity Mortgage Plc strides out as the best, outper for ming its peers in earnings as it records a 41 percent increase in its Profit after Tax (PAT).

Infinity mortgage revenue grew by 14 percent as its PAT increased to N461 million in the first half of 2018 (H1) from N406 million in H1 2017. Despite a 2 percent increase in its operating expenses, operating nincome grew by 12 percent during the periods under review.

Other peers in the index include Abbey mortgage, Omoluabi,Also Savings, Union homes and Report savings and loans. Data gathered

revealed that out of the 6 mortgage bank listed on Nigeria stock Exchange, Aso savings and loans, Union homes and Report savings and loans have been suspended as for the last three years as they have missed their regulatory filing date.

The other players in the sector experienced a bad first half as they all had contractions in their earnings, as Abbey mortgage recorded a negative profit after tax as its positive earnings first half 2017 of N31.9 million crashed by 450 percent to result in a loss for the period by N111.9 million.

This performance was followed by a withdrawn profit by Omoluabi mortgage as PAT contracted by 1.4 percent to N45.14 million from N45.49 million.

On further analysis, it was seen that the revenue of Abbey mortgage Ltd H1 decreased by 16 per-

cent when compared to the same period in 2017 as it dropped from N687 million in H1 2017 to N578 million in 2018 H1.Omoluabi mortgage. Revenue for the period 2018 H1 fell by 0.5 percent, decreasing to N228 million H1 2018 from N229 million in the same period of the preceding.

Abbey mortgage recorded a 28 percent reduction in operating income from N454 million in 2017 H1 to N329 million 2018 H1. Omoluabi mortgage also had its operating income for the period fall by 6.7 percent to N210 million from N226 million in 2017 H1.

The sentiment that shrouds the mortgage sector has affected share price of this institutions as they have not had much actions.

Infinity mortgage dropped by 1 . 3 p e rc e nt t h i s ye a r t ra d ing at N1.44 below beginning of

the year N1.42. Abbey mortgage bank share price also fell by 18.5 percent year to date from N1.30 to N1.06 followed by fall in share price of Omoluabi by 19.4% from N0.72 to N0.58.

According to Dolapo Ashiru, an investment analyst, he stated that the mortgage banks are struggling despite the large housing gap in Nigeria which can best be serviced through mortgage. He added that “except government intervenes and legislations that will create enabling environment for mortgage bank operations, mortgage banks will continue to struggle�. Looking at the half- year profitability of these banks, the net income margin of Abbey mortgage declined by 52.6 percent, Omoluabi mortgage had 21.63 percent growth in its net income margin while Infinity recorded a 34 percent.

BUSINESS DAY

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Start-Up Digest

37

In association with

Meet Akin Abolaji, start-up coach and vocational skills consultant BUNMI BAILEY

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kin Abolaji is the founder and managing director of Ownsie Investment International Company Limited, an investment company involved in environmental consulting, real estate, as well as oil and gas.

Abolaji is also the founder of Talent Builders Vocational Institute (TBVI) that trains and mentors entrepreneurs. The institute started in 2012 and is located in four places in Nigeria, including Canada.

The geologist-turned-entrepreneur was inspired to establish this business by the influence of his mother and the desire to be financially independent even as an undergraduate.

“I was inspired to establish TBVI in 2006 while I was still an undergraduate, out of my desire to be financially independent. I cofounded the business with my mother who also wanted to raise a generation of independent youths,” Abolaji explains.

His initial start-up capital was from his mother and his own personal savings.

According to him, he also had other capitals that helped in growing the business from its early stage to where it is today.

“I had the four start-up capitals: Idea, capacity and character and cash. All these cumulatively brought TBVI to where it is today,” he says.

Since starting officially in 2012, the institute has schooled over 100 individuals through the vocational and entrepreneurship training and

Akin Abolaji

over 20 are movers and shakers of their industries.

“I started having protégées as far as 2006, during my businesses ventures in school, but officially, I started training young entrepreneurs in 2012 when Talent Builders Vocational Institute was officially incorporated.

“Hundreds of trainees have gone through the vocational and entrepreneurship training and are using the acquired skills to meet their personal and societal needs, but over 20 have been confirmed to have started and running viable businesses as a result of skills acquired under Talent Builders.”

Abolaji initially started with vocational skills such as catering, tailoring, tie and dye, knitting, hand crafts, cosmetology, computer appreciation, bead making, barbing, hair styling and make-up. Later on, he upgraded to holding different classes on packaging and marketing, assessing finance for new business, basic business management skills like accounting, book keeping, as well as business plan/ proposal writing.

“Overtime, I noticed an anomaly. I realised that youths who are highly skilled in some vocation/ technical areas are still unengaged/ unemployed and few lucky ones

are eventually taking up menial jobs. So we introduced trainings on ‘How to Start Different Businesses with a Vocational Skill You Possess’.

One unique thing that stands out from his business is the compulsory free entrepreneurship skills he offers and the follow-up after training.

“We follow up to ensure they start viable ventures from trainings acquired from us. In fact, we have a mandate to ensure that every uneducated trainee we have is put through the Use of English class and Basic Use of Computer, free of charge. These cost us more, and many of our competitors are not ready to expend more resources doing it,” Abolaji discloses.

Abolaji further says that despite the success being recorded, the institute still encounters challenges.

“The major challenge peculiar to my line of business is perception. Some parents who discover weakness in their children’s academics would rather ‘patch’ them along. When the children are unable to cope, they would eventually be directed to a roadside place to learn a skill or trade where only a few eventually succeed. Many a time, they do not come to a place like ours where that weakness can be converted into strength.

“Secondly, at the primary and secondary education level, the vocational/entrepreneurship training embedded in the school curriculum is majorly ineffective as the ‘free education’ policy in most public schools hinders the school from placing a financial demand on the students for the training, and no budgetary provision for it from the government,” he points out, adding that many

private schools are yet to adopt the training.

At the tertiary level, most government universities (especially federal) only give their students entrepreneurship seminars without hands-on skills training, he observes.

He recommends that government should embark on a re-orientation and sensitisation campaign on the importance of vocational and entrepreneurship skills training as an integral part of education.

“They should make provision for the public primary, secondary schools, tertiary institutions to engage experts to train their students on vocational and entrepreneurship training and also make skills acquisition compulsory for the National Youth Service Corps (NYSC),” he suggests.

Abolaji is a firm believer in building young entrepreneurs because, according to him, they contribute to the economy of Nigeria, reduce unemployment rate which is still high and also fill the value-chain gap of all businesses in the country.

He says his institute has grown in capacity and staff strength.

“We have also grown in the number of training outlets and currently have two additional branches (Ibadan and Regina office in Canada), along with the head office in Ile-Ife. The institute has also grown in the number of available skills, and a production outlet for some skills for the trainees to gather industry experience during their internship programmes,” he discloses.

He advises individuals to embark on vocational training business as it is a lucrative one.

vide values. Without entrepreneurs, without SMEs, the economy would stagnate and that’s why these people are very important,” he added.

Bamkole urged the federal government to create policies that would address the challenges of doing business for entrepreneurs and SMEs in Nigeria.

Also speaking during the event, , Anna Samake, CEO of MBC Africa, said that nothing has really changed in the challenges being faced in the ecosystem in the past 15 years, stressing that this is a serious concern.

“I have dealt with entrepreneurs from many perspectives as a business developing person, which I started my career with, on how to help entrepreneurs in developing strategies, especially in the agric business. I have been in the banking business as well because these entrepreneurs are having difficulties in accessing finance from banks,” Samake added.

Devin Chesney, ANDE director of strategic development and Olatunji Ajani, ANDE West Africa manager, also stressed the commitment of ANDE to bridging the gaps

in the entrepreneurial ecosystem through the entrepreneurial ecosystem snapshots initiative and other ecosystem building initiative.

The two day event ended on the note that the government of various West African countries and Nigeria in particular needs to create policies that would address the challenges of doing business for entrepreneurs and also work together to enhance trade within the region.

Nigeria needs new policies to drive MSMEs growth JOSEPHINE OKOJIE

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takeholders in the micro, small and medium enterprises (MSMEs) subsector have called on the government to enact new policies that will drive the growth of small business operators in the country.

The stakeholders made the call at the just concluded ANDE West Africa regional conference held in Lagos.

“What I want the government to do more is to focus on policy formulation because there are policies constraining certain things from happening in the SMEs space,” Peter Bamkole, executive director, Enterprise Development Centre (EDC) of Pan-Atlantic University and chairman of steering committee, Aspen Network of Development Entrepreneurs (ANDE) West Africa said in a press statement made available to BusinessDay. “We would like to work with the government in the area of policy for the ease of doing business to get better for businesses,” he said.

He stated that MSMEs are the

driving force of the economy today as they contribute 50 per cent to the country’s Gross Domestic Product, noting that the entrepreneurial ecosystem is growing at a geometric level but is still limited by the challenges of doing business in the country.

The stakeholders reflected on some of the challenges that have been experienced over the last few years and also discussed potential

opportunities that actors in the ecosystem should prepare for.

“One of the challenges I saw before founding EDC was the inability for entrepreneurs to be able to grow and find the kind of support and funding required. Finance is still a big challenge for entrepreneurs.

“Entrepreneurs have the capacity to spot opportunities within their environment very quickly, and they have this level of opportunity to pro-

L-R: Peter Bamkole, executive director, Pan-Atlantic University and chairmansteering committee, ANDE West Africa; Tenemba Anna Samake, executive director, MBC Africa and Olawale Anifowose, director, Enterprise Development Centre, (EDC), Pan-Atlantic University, Ajah, Lagos at the ANDE West Africa Regional Conference held recently in Lagos.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

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Start-Up Digest

How I make skin care products with jollof rice, goat skin milk—Okpuzor ODINAKA ANUDU

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londie Okpuzor creates soaps, lotions and other beauty and skin care products using unconventional raw materials such as ‘jollof rice’ and goat skin milk.

As the chief executive officer of BathKandy, a beauty company that creates dessert-inspired beauty treats, Blondie uses locally available raw materials to create value for Nigerians, saving the country some foreign exchange.

She set up the company in December 2014 after a request from a friend to make something for her mum for Christmas.

She officially opened a store in March 2015 in Lekki, where she manufacturers these products herself, alongside a team of other young people.

She makes soaps, lotions, scrubs and home products such as candles. Her candles are unconventional and look like desserts.

She explains that her firm has over 50 different types of soap.

“We have goat milk lotions, made from goat milk. We have scrubs made from garri, coffee, and chocolate,” she says.

“They are all manufactured here in Nigeria. I make them by hand and we infuse delicious things like oils, tea, chocolates.

“Recently we just made soap from jollof rice. We are using lo-

Blondie Okpuzor

cal ingredients to make them. We have found that there are a lot of natural things that are there for you, but if you don’t know or use them, then you don’t get the benefits. So, we merge science with arts,” she says.

She says that the products are all natural and perform different functions.

These products are not just like soaps sold for N150 at shops but they are specifically designed for Nigerians who want to maintain their skins with natural ingredients.

Blondie set up a second store in Abuja in 2016.

The entrepreneur believes that her products are experiential and

How iCreate Africa celebrated World Youth Skills Day ODINAKA ANUDU

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head of Africa’s biggest vocational skills event, known as iCreate Skills Fest 2018, iCreate Africa recently organised a pre-event celebration to commemorate the World Youth Skills Day 2018.

The event was held on July 15 in Abuja and attracted over 5,000 youths, including food vendors & fashion designers. The event

was focused on celebrating and acknowledging young skilled professionals while giving them a platform to showcase their skills.

This event was a preview of the main event which is set to happen in October, where more skills will be displayed through skills competition and exhibition across various fields, including brick laying, plumbing, carpentry, tilling, hair dressing, garment making, Robotics, web and graphic design and app development, among

iCreate Africa team celebrating World Youth Skills Day 2018.

others.

The iCreate Skill Fest is poised to catalyse the advancement of technical and vocational education and training (TVET) in Africa, by creating an environment that encourages and enables skill acquisition and skill excellence, according to the organisers.

“A first of its kind initiative in Africa, the vision for iCreate Africa is to rebrand technical and vocational skills in a manner that is considerably more appealing and attractive to young people.

We want to create success stories in the various skill sectors to inspire the future skilled workforce,” the organisers said, in a statement.

The iCreate Skills Fest is open and free to the public and only youths aged 18 and 30 are eligible to enter the skills competition.

The exhibition is open to small and medium enterprises (SMEs), multinationals, and indigenous companies who desire to showcase the quality and diversity of their products.

The organisers urged all interested parties to visit www.icreateafrica.com or send an email to info@icreateafrica.com

for everybody, including men.

Since she started, the market response has been great, with orders coming from various parts of Lagos and even outside Nigeria, she tells Start0Up Digest.

“We sell internationally now.

We do have a lot of international demands and we can get across to buyers in five business days,” she discloses.

“We are looking more internationally. We are looking at Ghana, Kenya and South Africa, because these are the biggest beauty markets in Africa.”

She says that many Nigerians are moving into the skin care industry because they consider it easy.

“People think you get three things, mix them together, and you get the products. But Nigerian women are obsessed with beauty.

So, there is a ready market,” she says.

The entrepreneur says she didn’t start the business with any money.

Blondie says that competition is good for business, as it keeps everybody on their toes.

There have been cases where employees stole the ideas of their employers. Is Blondie afraid of this?

“People have tried,” she replies.

“We have had people who have done that in the past. What we found was that you can steal an idea, but you can’t execute it like the owner. This is a gift and you

can’ steal a gift. But we always have a lot of checks and balances. Just like no one has been able to copy Coca-Cola, we study how they do it and we try to do it here,” she notes.

Like all entrepreneurs in Nigeria, she faces challenges.

“In Nigeria generally, people always want the face of the business to be there. I live in Lagos and manufacture here, but people would like to see me in Abuja.

Sometimes it tends to slow down the whole process,” she states.

“We found that training has to be so good that the customers do not see a need for the owner to be there.

Blomdie mentors younger entrepreneurs through her BathKandy University.

“We teach people how to make skin care products and start their own business. What we have found is that even though it is easy to start a skin care business, there are so many details that people do not have. Social media is a great thing. I have people who want me to mentor them and I do that. Everything I learnt was literally trial and error, so I won’t like others to go through that.”

The entrepreneur has some pieces of advice for young entrepreneurs.

“Just do it,” she says.

“It is OK to fail. We are in a culture where we don’t celebrate failure, but I think we should celebrate failure because that is the only way to learn,” she adds.

Entrepreneur commences plantain flour export to US Market

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riday Ejam, chief executive officer, Jubockz Nigeria Limited, is set to commence export of its brand of manufactured plantain flour the US market.

Ejam told newsmen that the company has received international recognition for its premium brand with a ten tons supply order from customers in the United States.

“The standards and specifications of exports into the US market are very high. The order we received is in recognition of the standards we set for ourselves from the beginning.

“We adhere to the highest standards irrespective of the market we supply. Jubockz is able to do this because we pay keen attention to our processes from the plantain suckers to the farm and then to the factory,” he said.

According to him, this development will make positive impact on the Nigerian economy and it will open up opportunities to

other agricultural brands to are eyeing the US market.

Similarly, Ejam said that exporting to the US and other advanced markets will help reduce the country’s trade deficit and earned foreign exchange for Nigeria as well as growing the Nigerian economy.

Also, he stated that opportunities presented by exporting JKB plantain flour and other agricultural products to the US will translate to increased productivity back home, thereby creating additional jobs for the country.

He pointed out that the company’s success resulted from careful monitoring of its entire production process from farm to table and adhering to global best practices in production of its products.

“The future of Nigerian economy is in agriculture and agrobased industries. We will get it right when the government begins to adopt the right policies to position the sector for growth,” he added.

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39

Start-Up Digest

Creativity, passion drive Halima’s baking business Stories by JOSEPHINE OKOJIE

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alima Adeniji is the entrepreneur behind ‘Cakes on Point’, a Nigerian start-up that provides outdoor and indoor baking services across Lagos and its environs.

Her passion for baking and the success of her mother, who is also a baker, inspired Halima to establish Cakes on Point in 2015.

The young entrepreneur started baking at the age of 13. Her mother owned a baking shop then and Halima usually went there daily after school to assist her.

To learn more about baking, Halima took up a job with a confectionary company to improve her skills immediately after her tertiary education.

Working for some years helped the young entrepreneur to save some money, which she eventually used in establishing the business.

“I got my inspiration from my mum because she

knows how to bake and also sells baking items. When I was younger, each time I went to her shop, all I wanted to do was to look at cake catalogues and imagine how making cakes would be like,” Halima recalls.

“I started my business really small. I worked for a cake company before I decided to start my own. Every month, after collecting my salary, I would save half of it, buy one or more baking equipment and, gradually, I was able to start my owing baking business,” she says.

The computer scientistturned- entrepreneur tells Start-Up Digest that her business has grown well since starting and has continued to stay afloat owing to the excellent services she renders to her clients, who in turn recommend the business to others.

“I ensure that I satisfy my customers so that they can always come back and refer others to me,” the young baker says.

She explains that her ability to maintain creativity in the business has been a

Halima Adeniji

strong success point. “You need creativity to be relevant in the baking business.

We have a lot of bakers and what has helped me over the years is my creativity,” she says.

The young entrepreneur

How Vilsquare Makers’ Hub grooms techpreneurs to address social problems

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igeria faces a plethora of problems. Some require the application of technology, some do not. But many of these problems are underscored by societal challenges including lack of inclusiveness for Nigeria’s vulnerable groups, especially the youth; inadequate provision of public goods, and divisiveness along ethnic and religious lines.

These trends are causing a strain on the social lives of Nigerians. The absence of social inclusion has contributed to the surge in insecurity and this is nearly on all the geopolitical zones of the country as young people turn towards crime.

Divisiveness is reinforcing negative stereotypes that promote distrust among the different ethnic groups.

The inadequacy of public spending is leading to outcomes such as Nigeria being home to the largest number of out-of-school children in the world, and the greatest number of poor people on earth.

Nigeria’s high youth population which could be an asset is fast becoming a liability that is weighing

down on the country. But inherently, Nigerian youths are enterprising, innovative, and ingenious.

To help reverse these issues, young people are coming together in a hackathon comprising groups of diverse participants in an inclusive environment, to provide practical tech-hardware solutions to problems facing their societies.

With clear identified goals targeted towards attaining five specific Sustainable Development Goals (SDGs) — namely good health, quality education, innovation and industry, clean water and sanitation, and zero hunger—, solutions will be arrived at through dialogue and collaboration among members of these diverse groups.

Groups will comprise participants with backgrounds ranging from technology –hardware, software, creative and fine arts, graphics design, fashion and health among others.

To achieve long-term societal stability, it is believed that Nigerian youths have a role to play. They ought to be contributors in the sense that conversations around national cohesion

need to originate amongst them within the context of topics they are passionate about — technology.

Organising this hackathon is Vilsquare Makers’ Hub, a subsidiary of Vilsquare Global Resources, a research and data analytics firm along with Meluibe Foundation, which specializes in the empowerment of youth and women.

The hackathon, themed, ‘Building the Makers’ Movement’ is an initiative that will occur in series and hold in all the geopolitical zones in the country.

In each of the zones, participants will get to talk about the common problems they face within the context of the SDGs, decide which ones to address, and together come up with ideas and solutions to the problems.

Diversity among participants is necessary in order to develop robust concepts and designs that accommodate all orientations and technical backgrounds. The overall aim is to use technology to foster bonds between strangers, who are united by the common quest to solve Nigeria’s problems using hardware.

points out that she sources her raw materials for baking from local markets across the country. “I source my raw materials for baking locally.”

Speaking on the challenge confronting her busi-

ness, Halima tells Start-up Digest that lack of finance was the greatest challenge that hurt her business its early stage.

According to her, it made it difficult for early set-up of the business, as she was un-

able to secure enough funds for business registration and proper financing.

She urges the federal government to provide adequate grants and loan opportunities to youths with entrepreneurship minds, stating that a lot of youth with wonderful business ideas are yet to go commercial owing to inadequate funds to finance their businesses.

Apart from finance, Halima also says that high cost of food items and inadequate power supply are two major challenges confronting her business now.

She states that adequate power supply is the backbone of any economy, calling on the government to ensure adequate supply of power for start-ups and businesses to survive.

When asked what her advice to other entrepreneur would be, Halima says, “Do what you know how to do best. There are going to be hard times but never give up ,dream big ,aim high ,pray very hard , work hard and success is yours.”

OVL Foundation holds skills acquisition programme for youths

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VL Foundation has organised a skills acquisition programme for youths across the country, in commemoration of the 2018 World Youth Skills Day. The initiative which theme, ‘Skill Acquisition: A tool for Maximising Potential’, was targeted at empowering young people in rural and peri-urban areas with skills needed to make them economically productive.

The training which took place at the OVL Foundation premises in Victoria Island, Lagos, exposed the trainees to seasoned professionals in the field of photography and make-up artistry.

Victor Laniyan, executive director, OVL Foundation, said that young people are almost three times more likely to be unemployed than adults and continuously exposed to lower quality of jobs, greater labour market inequalities, and longer and more insecure school-towork transitions.

He stated that for that reason it is imperative that youths get the required

education and training that are key determinants of success in the labour market.

“Identifying the need for building capacity and developing the skills of the youth in society as a tool for alleviating poverty and driving economic independence, the OVL Foundation, through this initiative, has empowered and built capacity of youths with skills and knowledge that would take them to greater heights,” Laniyan said.

He a d d e d t hat OV L Foundation will keep on working with trainers and community stakeholders to take the training to every local government in Lagos State.

He also called on the private sector and individuals to support the foundation in building a sustainable framework for empowering young people across the nation to be financially independent”.

Anthonia Jim, one of the participants, expressed her gratitude for the opportunity, saying, “the training was awesome and I really learnt a lot, thanks to OVL Foundation for this amaz-

ing opportunity.”

Oyinlola Scott-Igbene, executive secretary, OVL Foundation, explained that education and training are keys to success in the workforce. However, unfortunately, existing systems are failing to address the learning needs of many young people. Therefore, through this initiative, the OVL Foundations aims to close this gap in the local context.

Also, Adebowale Oluseyi, one of the facilitators, said: “It is a privilege for me to be here today to teach young people makeup artistry. I am grateful for the opportunity to empower the next generation with skills and tools that can make them financially independent.

The facilitators shared their personal experiences, knowledge and skills in the specialised vocations in which the youth were trained.

The training also provided youths with handson, one-on-one experiences on how to build their skills in the professions and develop self-sustaining businesses from these skills.

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BUSINESS DAY Harvard Business Review

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In association with

How to get someone to put away their phone and actually listen Joseph Grenny & Kelly Andrews

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merging research shows that even the simple presence of a cellhone — not to mention its glowing screen and constant beeps — interrupts our ability to connect.

In one online survey, my colleagues and I found that nearly 9 out of 10 people say that at least once a week, their friends or family stop paying attention to them in favor of something happening on their digital devices. Too many of us are waiting for social norms to naturally evolve and catch up, but they won’t. Norms develop when a critical mass of people begin to confront those who violate them.

So how can we accel-

erate necessary change in digital etiquette, especially in the workplace? It starts

with speaking up. Here are a few ways to begin the process:

DISCUSS THE DATA. If you’re trying to change norms in a group, you

might begin by sharing the “why.” Share studies like the one cited above.

If people aren’t convinced about the impact on social connection, show them the evidence; the presence of a cellphone impairs productivity too.

MAKE IT PERSONAL. Wait until you’re not feeling diminished, and they won’t feel shamed. Then say something like, “I’ve been noticing that I feel much different about my conversations with people when I or they are semidistracted by technology. I’d like to both make a commitment to you and ask for a commitment from you. When I’m talking with you, I want to give you my full attention. And I’d like to ask for the same.

And if it’s not a good time for you to focus completely, I’ll wait until it works for

To see the future of competition, look at netflix Bill Taylor

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’ve been following Netflix since 2005, when I first visited its headquarters in Silicon Valley and interviewed Reed Hastings, its founder and CEO. I don’t think I’ve learned more about strategy, technology and culture from any other company I’ve studied.

Here are three lessons that apply to every company: 1. BIG DATA IS POWERFUL, BUT BIG DATA PLUS BIG IDEAS IS TRANSFORMATIONAL. Netflix is a technology juggernaut whose analytics, algorithms and digital-streaming innovations have changed how customers watch movies and TV shows. But this technology has always been in service of a unique

point of view — building a platform that shapes what customers watch, not just how they watch.

Here’s how Reed Hastings explained it in 2005, when the company had just 3.5 million subscrib-

ers. “It’s possible to totally misunderstand Netflix,” he told me. “The real problem we’re trying to solve is, How do you transform selection so that consumers can find a steady stream of [entertainment] they love? We

give everyone a platform to broaden their tastes.”

2. IF YOU AIM TO DISRUPT AN INDUSTRY, YOU MUST BE WILLING TO DISRUPT YOURSELF. Netflix began, of course, with a pretty simple innovation

— crushing Blockbuster by shipping DVDs by mail and abolishing late fees. It then transitioned from mailing content to streaming movies and TV shows digitally.

Today, Netflix is most noteworthy as a creator of content; it will spend a staggering $12 billion this year alone on programming.

At every step, Netflix’s dramatic strategic moves invited external skepticism and required deep internal rethinking of what had worked before. The key lesson: For companies and leaders alike, you can’t let what you know, all your past success, limit what you can imagine going forward.

3.

STRATEGY IS CULTURE, CULTURE IS STRATEGY. When it comes to who it hires and what it promises them, how it makes decisions and shares information,

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

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you to do that. Would that work for you?”

HOLD THE BOUNDARY. Now comes the hard part. You have to adhere to the norm, and speak up when others cross it. That means that if you sneak a peek at a device in a way you agreed not to, own up to it. And the instant you see others do the same, be prepared with a nonpunitive but crystal-clear acknowledgment of the violation.

While there are great benefits to today’s technology, they should not trump social norms of respect, courtesy and politeness.

(Joseph Grenny is a best-selling author and keynote speaker. Kelly Andrews is a master trainer and client coach at VitalSmarts.)

even what it does about vacations, Netflix has invented (and reinvented) a range of practices that are designed explicitly to connect what the company aims to achieve in the marketplace to how it organizes the workplace.

Last year, the company updated its manifesto on Netflix Culture, a detailed statement of its principles, policies and practices with respect to the human factor in business. What’s unusual about the manifesto is how sharp the language is; there is no hint of HR boilerplate. As more and more of us turn to Netflix for entertainment, the company bears watching as a source of insights about the future of business and work.

(Bill Taylor is the cofounder of Fast Company.)

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AbujaCityBusiness Comprehensive coverage of Nation’s capital

Low quality of research results from varsities, research institutes worrisome – says Minister OYIN AMINU, Abuja

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ederal Government has blamed the inadequate and noncommercialization of Research and Development findings and result on low quality from various institutions of learning.

Ogbonnaya Onu, Minister of Science and Technology, expressed the concern during a public presentation of the guidelines on Commercialization of Research and Development (R&D) results and inventions in Nigeria, held in Abuja.

“Commercialization Research and Development results have not been successful because of low quality of research results emanating from Nigerian universities and research institutes.

“All the factors mentioned above, coupled with several inventionsw hich are lying idle on the researchers’ and inventors’ shelves of research institutions across the country necessitated the National Office for Technology Acquisition (NOTAP) to come up with the pub-

lication on ‘Guidelines on Commercialization of R&D results and inventions in Nigeria’ to ensure that R&D and inventions in Nigeria are commercializable,” the Minister noted.

The Minister further averred that the process of moving R&D results from the laboratory to the market place is very complex and requires skills and expertise of different professionals as well as capital for it to be meaningful.

According to him, the objectives of R&D commercialization include: acceleration of technological development and industrialization of the economy; wealth creation and employment opportunities through the utilization of indigenous technologies and raw materials to add value to the economy.

He maintained that effective commercialization of R&D research and findings would help hasten the growth rate of small and medium enterprise in Nigeria, making the country economically competitive world over.

WAEC seeks FCTA support to migrate to digital administration of exams JAMES KWEN, Abuja

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est African Examination Council (WAEC) has solicited the support of the Federal Capital Territory Administration, FCTA for a Zonal Centre for its electronic marking technology (e-marking) for some West African Secondary School Certificate Examinations (WASSCE) papers.

Iyi Uwadiae, WAEC Registrar who made this appeal during a courtesy call on the FCT Minister, Muhammad Bello, said WAEC is working towards migrating into full digital administration of its examinations in keeping with global standards.

Uwadiae stated that WAEC is aspiring for a hitchfree impeccable world class

service through the deployment of cutting edge technology to the doorsteps of all stakeholders in education which involves the decentralization of the councils operations and activities.

He said WAEC currently carries out its activities in Nigeria through a total of 35 zonal, branch, satellite and liaison offices located in the various states across the country, including the WAEC Liaison Office in Garki, Abuja as well as the full-fledged Zonal Office in Gwagwalada.

The Registrar revealed that the Federal Government is collaborating with WAEC International Headquarters in Accra, Ghana in funding the establishment of a Computer Based Testing (CBT) centres in each of the six geopolitical zones.

L-R: Vera Nwanze, General Manager, Azuri Technologies (West Africa); Hon. Wale Oluwo, Lagos State Commissioner for Energy and Mineral Resources; Houssam Azem, Chief Executive Officer, Lumos Nigeria and Uche Val Obi, Managing Partner, Alliance Law Firm, at the BusinessDay Future of Energy Series 2018.

FCTA Commissions Abaji, Karshi erosion, flood control projects JAMES KWEN, Abuja

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ederal Capital Territory Administration (FCTA) under the leadership of the Minister, Muhammad Bello has commissioned Abaji and Karshi Ecological Fund Erosion and Flood control Projects.

The projects are among the 51 intervention projects, executed by the Ecological Fund office in various parts of the country under the second and third quarters of the Fund’s project cycle.

The Abaji project involved

the reclamation of a wide expanse of gully, in the heart of Abaji town, measuring over 7000 square meters created by prolonged erosion posing serious threat to surrounding vegetation, residences and businesses and the scope of work include land reclamation, reinforced drainages, water re-channelling, land-fills and surrounding road networks.

The Karshi project involved the reconstruction of 1.7 kilometer township road destroyed by persistent flood at the cost of N263 million and the work done include the provision of concrete drainage

system, laterite fillings, culverts and asphalting.

Bello while commissioning the projects charged the benefiting communities to own and protect the infrastructure in order to stem their relapse into another cycle of degeneration, saying the projects would impact positively on the life and environments of the benefiting communities.

“I am truly hopeful that the successful completion of the project would improve the environment and welfare of the benefitting communities.

“This is because it would reduce the dangers to lives

and properties posed by erosion and persistent flooding in these areas. There is also no doubt that it will open windows of opportunities for economic growth”, he stated.

Bello recalled that at the inception of the current FCT Administration, the paramount Chief of Abaji, Adamu Yunusa, had approached him with distress call on three main issues confronting Abaji residents, namely; the threat to houses occasioned by the widening gully, potable drinking water and the completion of the Abuja University of Technology, Abaji.

Engineers must be innovative for Nigeria to attain economic prowess – Onu CYNTHIA EGBOHO, Abuja

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gb onnaya O nu, Minister of Science and Technology has challenged the Nigeria Engineers to be more innovative in the bid to move the country towards the direction where its economy will be dependent on knowledge rather that commodity.

Onu gave the charge during the 4th edition of Engineer Otis Anyaeji’s an-

nual distinguished lecture organized by Nigeria Society of Engineers (NSE), Maitama Branch, held in Abuja.

The Minister also emphasized the need for Nigerian engineers to work as a team saying: ‘’this is the major way Nigeria can attain economic prowess with development of affordable engineering products with the power sector in focus.

He also re-emphasized “the current administra-

tion’s aims at moving Nigeria towards the direction where its economy will be dependent on knowledge rather than commodity.”

In his keynote address, James Momoh, Chairman, Nigerian Electricity Regulatory Commission (NERC) urged engineers to embrace team work among themselves, in order to come out with modern solutions to solve the problems of darkness and modern ways to distribute light to Nigerian homes.

He also harped on the need to promote research and local contents, saying: “these are the major ways to touch Nigerians homes with solutions.”

The theme for this year’s lecture is “Development of Nigerian Electricity supply Industry” with focus on how to address the many challenges faced by generation and distribution companies’ and how it hinders them from getting power supply to different categories of consumers.

“To build a generation of safe and healthy workers, preparation must begin early with parental and community awareness for young people to be aware of risks and able to advocate on their own behalf, education about work hazards and risks as well as about workers’ rights, need to start in school and continues through vocational training and apprenticeship programmes” the

Minister said.

He added that practical steps must be taken to eliminate the root causes of child labour and ensure that the rights of young workers are protected within the ambits of the law. Noting that the Federal Government under President Buhari’s Administration has done a lot in the fight against child labour and will continue until it is eliminated in Nigeria.

FG to accelerate fight against child labour KEHINDE AKINTOLA, Abuja

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ederal Government has reiterated commitment to accelerate action in achieving alliance 8.7 of the Sustainable Development Goal (SDG) which seeks immediate and effective measures to eradicate forced labour, modern slavery, human trafficking and secure prohibition and elimination of the

worst forms of child labour by the year 2025.

Chris Ngige, Minister of Labour and Employment gave the assurance in Abuja during the commemoration of the World day against Child Labour 2018 with the theme: “Generation safe and healthy” and sub-theme “Elimination of child labour and protection of young workers” He explained that the “cam-

paign also aims at accelerate action to achieve target 8.7/alliance 8.7 of the sustainable Development Goal (SDG) which seeks among other things to take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure prohibition and elimination of the worst forms of child labour.”

Ngige observed that child labour is the engagement of

child under 18 years of age in any work that deprive them of their childhood and the opportunity to be educated and also hamper their physical and moral development and this has assumed a global dimension and attention, hence this year’s theme is meant to awaken the need to improve the safety and health of young workers and end child labour especially in its worst forms.

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ULC raises concern over threats to democracy

Gridlock: Ambode shutdown bonded terminals in Ajegunle

JOSHUA BASSEY

JOSHUA BASSEY

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rganised labour has raised concern over Federal Government’s increasing political intolerance for dissenting voices, warning such disposition puts pressure on the polity and constitutes a threat to democracy.

Rising from their Central Working Committee (CWC) meeting in Lagos at the weekend, the United Labour Congress (ULC) also challenged the government to rejig the nation’s security architecture as an urgent measure to stop the continued senseless killings being experienced in the country.

Joe Ajaero, president of the congress, who read the communiqué issued at the end of the meeting, said the government must demonstrate that the lives of Nigerian workers and the people matter by arresting and prosecuting “some self-confessed killers that still walk the streets.”

He said “the refusal of this government to rejig the nation’s security apparatchik and remove erring heads in the face of complete failure to halt the apparent civil war in the country makes the government more complicit. We had thought that this would have been one of the measures that would have restored confidence and rebuild trust which will send the right signals of its intentions to resolve the security crisis.

“The deepening crisis of political intolerance, debauchery and brigandage that have suddenly become prevalent in our body polity is highly condemnable. Governance in Nigeria has been reduced to drama on daily basis ridiculing the seriousness with which other nations hold its dynamics and importance to the welfare of their citizenry and nation.

“Nigeria is a democracy and the beauty of democracy is when all of its tenets are strictly observed by all parties especially the principles of the rule of law and separation of powers between the three arms of government. We therefore strongly condemn the harassment, intimidation and hounding of political opponents across the nation using the instruments of state and other forms of terror.”

Speaking further, he said, “Our democracy remains very fragile and may not withstand the pressures being put on it by politicians in and out of government. Actions that threaten democracy have become preponderant and we are afraid that the nation may be thrown back to the years of despotism and dictatorship.”

The organised labour also called for the immediate passage of the National Minimum Wage bill into law as soon as the committee concludes negotiation.

The national minimum wage committee is expected to wrap up negotiation on the minimum wage in August.

Ajaero said the minimum wage negotiation had dragged for too long and the committee should endeavour to conclude it next month.

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agos State Building Control Agency (LASBCA) on the order of the state governor, Akinwunmi Ambode, at the weekend shutdown five illegal bonded terminals and other buildings in Ajegunle.

Governor Ambode, concerned about the gridlock within and around Apapa, which, last week, grounded movement on major roads in the state, including Apapa-Oshodi Expressway, warned that government would no longer allow indiscriminate illegal bonded terminals within Ajegunle, in Ajeromi Ifelodun Local Government of the state.

LABSCA, backed by armed security men from the Lagos State taskforce, shut down the affected terminals early Sunday morning.

The popular Godday Cinema that had existed for decades in Ajegunle was also shutdown by the government officials, while buildings converted from residential to commercial purposes

were also shutdown.

Also, the government officials sealed the Queena Bonded Terminal, Don Climax Bonded Terminal, Godday Cinema and several buildings and terminals.

Lekan Shodeinde, general manager of LASBCA, represented by Tayo Fakolujo, the agency’s secretary, said the exercise was part of the efforts of the state to ensure that building developments in the state followed the approved layouts of the areas and due process.

According to Shodeinde, the government, in its quest to put the state in the pedestal of other smart cities in the world was making Lagos city a well-planned and structured society where buildings were constructed according to its building plan approval granted by its sister Agency, Lagos State Physical Planning Permit Authority (LASPPPA).

Shodeinde said all bonded terminals operating within the residential areas would be sealed up and that the genesis of Apapa gridlock was as a result of indis-

criminate citing of tank farms and bonded terminals in the areas without an approval from the State government.

He, however, said with the new monitoring and auditing of building exercise in the state, wrath of the law would be on any recalcitrant operator of a terminal or owner who converted the residential buildings to commercial usage without any recourse to proper regularisation, engineering appraisal of the building and that the master plan of the area would be prosecuted accordingly to stem the tide of non-conforming and unplanned development in the state.

He stated, “Instant mobile court is on ground to prosecute any recalcitrant defaulters”.

Speaking during the exercise, one of the residents of Dada Onijomo Street, Awodi-Ora in Ajegunle , Taiwo Aina said that since the establishment of bonded terminals in that area, the community had known no peace as a result of indiscriminate parking of trailers on the streets.

L-R: Chidi Izuwah, acting director general/CEO, Infrastructure Concession Regulatory Commission (ICRC); Onyi Ikemefuna, administrative director, Shamar Educational Foundation, and Chidi Umeano, chairman, Nigeria Investment Gateway (NIG), during the NIG Investment Destination Nigeria International Symposium in Abuja. Pic byTundeAdeniyi

Monday 30 July 2018

Aba is key to Nigeria’s industrialisation - Awolowo GODFREY OFURUM, Aba

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EO, Nigerian Export Promotion Council (NEPC), Olusegun Awolowo, the country’s non-oil export promotion agency, has observed that Aba, the commercial hub of Abia State, is pivotal to the industrialisation of Nigeria.

Awolowo made this observation, last weky in Aba, at a day export workshop on preshipment inspection organised by the Council’s Aba Smart Office, in conjunction with Neroli Technologies Limited, a pre-shipment inspection outfit.

The NEPC boss, who was represented by Relicx Shiolban, trade promotion advisor, Aba office of NEPC, stated that Aba had great potentials that needed to be harnessed to boost the country’s economy.

He appealed to manufacturers in the area, especially the finished leather goods manufacturers, comprising - shoes, belt and bag and garment makers, to embrace formal export to grow their businesses.

Aba shoemakers currently produce for the West and Central African markets, but these activities are done unofficially with no proceeds to the state and Federal Government.

He further observed that Governor Okezie Ikpeazu understands the importance of locally made goods to the economy of the State and country and commended him for supporting artisans in Aba. Datonye Jack, area coordinator, Naroli Technologies Limited, South-East/SouthSouth zone, urged manufacturers in Aba to formalise their trade, stressing that they have so much to gain.

He also advised them to improve on their product packaging and labelling, noting that most locally made products are rejected over-

seas, because of poor packaging and labelling. “Good product packaging and labelling are important in export, as it improves the acceptability of goods”.

Tony Nwadinobi, managing director, Hammer Head Limited, an art furniture making outfit, explained that benefits export business exposes manufacturers to different designs and standards.

According to Nwadinobi, formal trade helps manufacturers to improve on their product standards, thereby enabling them to make better products that would be accepted all over the world.

Okechukwu Isiguzo, public relations officer, Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA), who stood in for Andy Obasi, president, ACCIMA, thanked the NEPC, for its efforts at encouraging non-oil export in Aba. He explained that ACCIMA is working assiduously to encourage Aba made products, through synergy with the State and Federal Governments.

“We are also making sure that informal export is stopped in Aba. “I want to say that most of our members have realised the importance of export and that is why they most of them are investing in agriculturecocoa, ginger, among other produce.”

He stated that the aim is to produce enough raw materials for local industries, as well as for export.

Isiguzo, affirmed that high cost of foreign exchange, lack of raw materials, machinery and power, were responsible for shutdown of many industries in Aba. “And that is also why we are aligning with the NEPC, to encourage our people to embrace export and earn foreign exchange for our country, “ he stated.

Chaos at Lagos airport as scanning machines pack up … passengers negotiate their way into airside IFEOMA OKEKE

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undreds of passengers were stranded at the weekend at the Murtala Muhammed International Airport (MMIA), as three of the four functional scanning machines at the airport failed to work.

A visit to the MMIA by BusinessDay at the weekend showed an unbelievably single long queue of people waiting to scan their luggage and enter the departure lounge.

BusinessDay learnt that many passengers who patiently waited on the queue missed their flights and expectedly, many passengers began to negotiate their way in without having to scan their luggage, posing a huge security risk for everybody.

One of the passengers affected by the unfortunate situation told BusinessDay that this had been happening for a few days now and no one in Abuja seems to care.

“I am now on board to London and the pilot is of-

fering an apology to passengers, but pleading that some passengers are still stuck out there and we have to wait,” the passenger said.

This development is coming few days after the Nigeria Civil Aviation Authority (NCAA) held stakeholders meeting with the airlines and agencies across the airports including the Federal Airports Authority of Nigeria (FAAN), and resolved that facilities at the airports would work optimally going forward.

Some of the resolutions reached at the meetings as announced by NCAA, read, “FAAN, airport operators and owners will ensure facilities at the airports are functional and FAAN should beef up security at the airports to prevent unlawful interference.”

However, John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, said it was disappointing that few days after the stakeholders meeting to resolve the issues at the

airport, three scanners at the most busiest airport in Nigeria, packed up.

“Why should NCAA single the airlines alone to issue warnings and sanctions?

Why not include the service providers in the talking and warning? The breakdown of three scanning machines is sufficient to cause the delays of at least 20 out the over 30 international daily flights.

“That is the problem of our airports infrastructure capability and the capacity utilisation.

Let the NCAA talk now if it can talk to or warn FAAN as it has done to the airlines,” Ojikutu said.

A source in one of the international airlines who craved anonymity told BusinessDay that the breakdown of the three scanning machines had caused the airlines to delay flights for two to three hours, just to ensure customers were not left behind.

“Our global scheduled operations have been affected by the unfortunate development. This has had a ripple effect in our operations because passengers in other countries are delayed

since they have to wait for the aircraft to arrive before they board for other destinations.

“We hope the government can look into this situation and address this problem,” the source told BusinessDay. Sam Adurogboye, general manager, public relations, NCAA, said he was not aware of the development, but noted that “when issues like this arise, NCAA directs FAAN to address them.

“While this process of addressing the problem is ongoing, we refer passengers to an alternative method, which is the manual process. The procurement policy requires that they go through the due process to procure a replacement. We have to plead with the passengers.”

He said it was not abnormal for three machines to break down at once, as this could be coincidence, saying, “These are machines and they can break down. If we direct FAAN to replace the machines, it will only be realistic to make them get the replacement by following a due process.”

Henrietta Yakubu, FAAN’s acting general manager, told BusinessDay that she got details from the director that the technicians were on ground to fix the problem and assured that it would be sorted out.

However, as of Friday night, the situation was still the same at the airport. But Sunday evening, some travellers said things had improved.

Meanwhile, Yakubu said yesterday that the security of the airport and those of departing aircrafts and passengers was not compromised in any way.

“While any inconvenience experienced by anyone on account of the situation is regretted, we assure all users of MMIA that adequate measures and efforts have been put in place to guarantee minimal impact on their facilitation and security.

“An extra machine has been installed with an x-ray generator and currently serviceable and operational. All hands are on deck to ensure that all the machines are functional,” she said.

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NEWS New code of corporate governance splits CEO, chairman’s roles ONYINYE NWACHUKWU, Abuja

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n a new code of corporate governance, the Financial Reporting Council of Nigeria (FRC) has proposed the separation of roles of board chairman from the managing director/ chief executive officer (MD/ CEO) of the company such that no person can combine the two positions going forward.

As contained in the draft document currently being exposed for inputs by stakeholders, the chairman of the board is also no longer expected to serve as the chairman or a member of any board committee while the MD/CEO or executive directors should not function as the chairman of any board.

The council also proposed that directors of companies operating in the country should not be members of boards of competing companies to avoid conflict of interest, breach of confidentiality, diversion of corporate opportunity and divulgence of corporate information.

In the document seen by BusinessDay, the council also proposes that directors may hold concurrent directorships, but fears however that concurrent service on too many boards may interfere with an individual’s ability to discharge his responsibilities.

To assist the board in de-

termining the appropriateness of concurrent directorships, the FRC suggests, “Prospective Directors should disclose memberships on other Boards, and current Directors should notify the Board of prospective appointments on other Boards.

This information should be kept current by serving Board members.

“The Board should consider the disclosed directorships, taking into account the number of other directorships and the responsibilities held, and determine whether the individual can discharge his responsibilities and contribute effectively to the performance of the Board before recommending such a person for appointment or continued service.

“Directors should not be members of Boards of competing Companies to avoid conflict of interest, breach of confidentiality, diversion of corporate opportunity and divulgence of corporate information.”

Also, “a person or group of individuals who is not a serving Director of the Company should not exercise any influence or dominance over the Board and/or Management.

Such a person or group of individuals would be deemed a shadow director as defined by extant laws.”

The FRC held the fourth leg of the public hearing on the exposure draft code in Abuja re-

cently having held in the SouthEast, South-South and NorthEast zones of the country.

The public hearing, which commenced in Owerri a couple of weeks ago, is slated to hold in all geopolitical zones of the country and the Federal Capital Territory.

“It is our belief that this Code will promote ease of doing business, attract local and foreign investments and enhance the integrity of the Nigerian capital market, by entrenching a culture of disclosure, transparency and accountability.

“In addition, this Code will raise public awareness of good corporate governance practices,” Daniel Asapokhai, executive secretary/CEO, FRC, stated at the public hearing held in Abuja.

The new code has adopted the ‘Apply and Explain’ principle, which requires companies to apply the requirements of the Code and to explain how they did so.

According to Asapokhai, “The decision to adopt the ‘Apply and Explain’ approach was made after careful considerations of several factors including the Nigerian legal system, Nigerian culture and history, government policies, state of the Nigerian economy, global economic and political climate, and levels of capital inflow of investment coming into the country.”

FG, IFAD-VCDP train female farmers on processing of vitamin A cassava EMMANUEL NDUKUBA, Awka

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o fewer than 30 women of the ‘batch A’ female farmers have been trained on use of ‘vitamin A’ cassava for the production of recipes and other byeproducts.

The women were trained under the capacity-building programmes captioned ‘Business Opportunity in Vitamin A Cassava for Improved Nutrition and Livelihood.’

The training, which was anchored by Harvest Plus Firm at the International Institute for Tropical Agriculture (IITA), Ibadan was a collaboration with the Federal Government and International Funds for Agricultural Development – Value Chain Development Programme (IFAD-VCDP).

Anambra State Programme Coordinator for VCDP, Nnamdi Agwuncha handed over ‘Start up pack’ equipment to the trainees at the ADP complex, Awka.

The trainees received other equipment like, gas cylinder with burner, extruder, and sealing machine and 50kg bag of vitamin A cassava flour.

Agwuncha said that VCDP would collaborate with the Ministry of Education for supply of the nutritious produce to the schools feeding programme in the state.

ECOWAS wants increased awareness in prevention of illicit arms

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COWAS has called on member states to increase awareness at the community level to reduce the illicit circulation of small arms and light weapons in the region.

Director, Gender, ECOWAS Commission, Sintiki Ugbe, said this in an interview with the News Agency of Nigeria on the sideline of a workshop on peace and security in Abuja.

Ugbe said the proliferation of small arms within the region was a major challenge to security and also threatened the rights of vulnerable groups.

The Heads of State and Government adopted the ECOWAS Convention on Small Arms and Light Weapons, their Ammunition and other Related Materials in 2006 to support member states control the proliferation of small arms.

She, however, stressed that the convention did not deter criminal organisations from violating its provisions and called for synergy at all levels.

“ECOWAS is playing an important role to control how arms come into countries and that is our responsibility within the small arms

convention. If a country is to acquire arms, they must obtain exemptions to show that they are going to use it in line with the convention.

“But we have to complement what is happening at the strategic level with what obtains at the community level. We have to engage the community more in being part of preventing the flow of illicit small arms and also raise awareness more because it is cheaper to prevent than to respond.”

She further called on member states to adopt necessary measures to promote the participation of women in vital decision-making positions on conflict prevention, management and peace building.

The ECOWAS Commissioner of Political Affairs, Peace and Security, Francis Behanzin, represented by Head of the commission’s Small Arms Division, Joseph Ahoba, said that the workshop was aimed at promoting gender balance in the peace and security sector.

“A major ingredient in this direction is mainstreaming of gender balance in our plans and processes in the peace and security sector.

NAADC seeks legitimacy to fast track NAIDP success … as investor’s confidence remains doubtful MIKE OCHONMA

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o gain investor’s confidence, the National Automotive Design and Development Council (NADD C ) is once again pushing that the polic y establishing the Nigerian Automotive Industry Development Plan (NAIDP) be passed into law.

Aliyu Jelani, directorgeneral of NADDC, while advising on the just concluded 2018 Nigeria Auto Jo u r na l i s t s A s s o c i at i o n (NAJA) Annual Training/ Capacity building workshop in Lagos, said although, additional effort was made to legislate the policy by both the Senate and the House of Representatives passing it into law, more still needs to be done.

Speaking on the topic “Achieving 2013-2020 Nigerian How Feasible?” Aliyu said that the Economic Community for West African States (ECOWAS) has admitted automotive industry for consideration as one of its priority development sectors.

Emphasising on the importance of legal support, the director-general who was represented by NADDC Director of Special Duties, David Oyetunji said Original Equipment Manufacturers (OEMs) came from South Africa to meet with the National Assembly and Vice President and im -

plored the President to put ascent on the bill as it was considered a key factor for them to establish their plants in Nigeria.

Apart from the legal aspect, other challenges the NAIDP is facing include difficult process of certification of bona fide motor vehicle assemblers/manufacture; the programs to precede the imposition of 35% levy on used vehicle, which can potentially undermine investment have not been realised because of investors fear of policy reversal and delays in the integration with Nigeria Customs Service (NCS) to obtain VIN records and the outstanding full buy-in of the NCS due to misunderstanding of policy intent and perceived conflict with revenue collection.

For NAIDP to make further progress, Aliyu said, “Nigeria Customs Service should collaborate with NADDC fully, to avoid misunderstanding of policy intent and perceived conflict with revenue collection.

Nigeria Customs Service should collaborate with NADDC fully.

“The policy has not been signed into law by Mr. President whose approval is most deserved and the problem of smuggling of used vehicles from neighbouring countries has not been fully curtailed.”

R-L: Udoma Udo Udoma, Minister of Budget and National Planning; Vladimir Voronkov, United Nations (UN) Under-Secretary on CounterTerrorism, and Michele Coninsx, assistant secretary-general and executive director, United Nations Security Council Counter-Terrorism Committee Executive Directorate, during a meeting at the ministry in Abuja.

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Nigerian airlines lack appropriate feedback mechanisms – CPC IFEOMA OKEKE

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irector-general,Consumer Protection Council (CPC), Babatunde Irukera, says the domestic carriers have no appropriate mechanism for people to call in and have complaints resolved.

Irukera, who made the observation at the 22nd annual seminar of the League of Airport and AviationCorrespondents(LAAC),held in Lagos recently, said, “One thing is that they don’t even have the appropriate mechanism for people to call in and have complaints

resolves.

“Experiences at the airports, airsideortheterminalsidearevital to the consumers. Even if you have the best airports but there is poor responsiveness, then consumers will still be displeased.

“Airline industry is one place where you can easily satisfy consumers.Nobodywantstoflywhen it is unsafe to fly, so if there is a delayforalegitimatesafetyreasons, consumers will actually appreciate that.

“But what needs to happen is that first, those delays have to be for legitimate reasons and your

responsiveness and sensitivity to theissuesmustbesuchthatyouare upfront, you provide the information and then you provide options or find a way to mitigate whatever the inconveniences that consumers will be experiencing,” he said.

In addition to these, he suggested that in working with the sector regulator, it was going to be important to truly provide the kind of 360-degree protection that was required.

“I am also grateful that the sector regulator has agreed to work with us and has invited me to their meeting and we had an

opportunity to jointly confront the airlines, so I think that is a good thing,” he said.

He explained that consumer issues are primarily soft infrastructureissuesandthatconsumerswill still be displeased if there are poor response mechanisms even in the best airport.

He said he had a collaborative parley with the Nigerian Civil Aviation Authority (NCAA) and the airlines on how to address consumer issues in the aviation sub-sector where the airlines complained about infrastructure challenges as well as regulatory bottlenecks.

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Earnings season lifts stocks as investors...

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profit last week were Dangote Ce-

ment, Okomu Plc, Transnational Corporation of Nigeria and Dangote Sugar. The flurry of positive half year earnings comes at a time where a long standing sell-off, triggered by political uncertainty ahead of the 2019 Nigeria elections and rate hikes in the United States, have pushed the market to a negative return of 4 percent year to date.

“Despite the continued sell-off in the equities market in recent times, we believe this presents decent entry opportunities in our quality names,” Investment One said in a research note to clients Friday. “Furthermore, we could see investors take position in anticipation of the release of H1 2018 results and possible corporate action,” the financial advisory firm noted.

The local unit of Diageo Plc, Guinness, jumped 10 percent Friday, the most since September, with trade volume 63 percent the three-month daily average, as investors believe the parent company’s positive results will run off on Guinness Nigeria.

Cement maker, CCNN, also gained 10 percent Friday, after its financial results published same day showed a 155 percent jump in net profit to N2.6 billion from N1.02 billion.

11plc, formerly known as Mobil, saw profit after tax rise 120 percent to N5.4 billion in the first half of 2018 from N2.5 billion in the same period of 2017.

11plc’s share price was unchanged at N180. Fidson healthcare also recorded a jump in net profit, following an 11.8 percent rise to N521 million in H1 2018 from N466 million in H1 2017, while revenue was up 10 percent to N7.4 billion from N6.7 billion. Fidson shares were unchanged at the close of trading.

GSK also saw profit rise 16 times to more than the N21.7 billion recorded in the first half of 2017 to N362 billion in the first half of 2018.

Dangote Cement, the market’s most capitalised company, also saw a 3.1 percent growth in bottom line to N113 billion in the first half of 2018 from N109.7 billion, while its revenue climbed to N482.4 billion, up 16 pc from N412.7 billion.

Also, Transnational Corporation of Nigeria Plc’s PAT rose 161.2 percent

to N10.9 billion from N4.2 billion, as revenue from its power operations climbed. Meanwhile, FCMB’s PAT nearly doubled to N5.7 billion in H1 2018 from N3.018 billion.

Transcorp’s share price rose 3.39 percent to N1.2 per share Friday, while FCMB gained 3.55 percent to N2.04. Dangote Sugar and Okomu Oil posted net profits of N12.7 billion and N6.0 billion respectively. At market close on Friday, the Consumer Goods Index gained 1.05 percent, largely driven by Dangote Sugar which was up 10.00 percent.

The Banking index also closed up by 0.78 percent, while the Industrial index increased by 0.43 percent, following the buy interests in CCNN. The All Share Index (ASI) was up by 209.75 absolute points, closing at 36,636.97 points. Similarly, the market capitalization increased by N75.98 billion to N13.27 trillion.

“The relatively attractive prices at which counters are trading spurred buying pressure and we expect the release of financial scorecards to continue to drive positive investor sentiment on counters in the market,” said analysts at Lagos-based financial advisory, Meristem, in a note to clients.

Monday 30 July 2018

Notore eyes N100bn valuation from share sale ...

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Exchange (NSE).

The company got approval to list “by introduction” 1.6billion units of its shares on the Nigerian Bourse at N62.50 per unit. This gives the company a potential valuation of N100 billion.

A source at the Securities and Exchange Commission (SEC), who confirmed the development to BusinessDay said the company has registered with the capital market apex regulator for its share listings on the Nigerian Bourse. The source could not

disclose the specific date for the share sale although BusinessDay gathered earlier that the listing will be done this third quarter (Q3).

Ahead of the listing, the Board and executive management of Notore will visit the Exchange and capital market stakeholders on Thursday, August 02, 2018 to present a “fact behind the listing” presentation. The presentation is expected to give the management of Notore an opportunity to give investors details about the company’s prospects and plans for the future.

Notore in 2015 signed a strategic gas supply agreement with Eroton Exploration & Production Company, an indigenous oil and gas producer. The agreement is expected to result in enhanced production of fertilizers from the Notore facility, giving the fertilizer, agro-allied, petrochemical and power company a strong competitive edge over other producers.

Due to the availability of gas

to the Notore plant, production days per annum has increased.

Production was previously constrained because of the number of forced shutdowns the plant had experienced.

Production is expected to increase further to 100 percent of the plant’s installed capacity after the next planned turnaround maintenance, which is due to happen in a few months.

Speaking on the enhanced productivity from the fertilizer plant, the Group Managing Director/ CEO of Notore, Onajite Okoloko, said the partnership between his company and Eroton has ended the gas supply shortfalls, which hampered productivity at Notore between 2013 and 2014.

According to Okoloko, significant shortfalls to its facility during the period for approximately 234 days cumulative, owing to incessant militant attacks on oil and gas infrastructure in the Niger Delta, led to a significant drop in output from Notore.

“Our fertilizer plant depends on gas as a major feedstock for production, so when the attacks affected gas supply from oil and gas producers, this had a corresponding impact on our productivity.

“Notore’s plant has the capacity to produce 500,000MT of urea annually and 330,000MT of ammonia per annum, but this was halved between 2013 and 2015 because of gas supply challenges.”

“But with the gas supply agreement entered into with Eroton which has proven gas reserves of 5 trillion standard cubic feet and Continues on wwwbusinessday online.com

INEC in a fix over funding of 2019...

Continued from page 1

L-R: Aisha Abubakar, minister of state, Federal Ministry of Industry, Trade and Investment; Aliko Dangote, president/ CE, Dangote Group, and Santosh Pillai, managing director, PZ Wilmar (West Africa), discussing at the Nigeria Food Processing and Nutrition CEO Forum, held in Lagos, at the weekend.

Agbaje, Dozie, three others join.....

Continued from page 1 new building complex - Exchange Place, 35 Idowu Taylor Street, Lagos - on Friday, July 27, 2018.

FMDQ OTC announced the appointment of five (5) new Directors to the Board of the Company, effective immediately. As part of the ordinary business of the AGM, the shareholders ratified the appointment of Segun Agbaje (Managing Director/CEO of Guaranty Trust Bank PLC); Uzoma Dozie (Group Managing Director/ CEO of Diamond Bank PLC); Charles Kie (outgoing Managing Director of Ecobank Nigeria PLC); Kayode Akinkugbe (Managing Director/ CEO of FBNQuest Merchant Bank); and Samuel Ocheho (Head, Global Markets West Africa, Stanbic IBTC Bank PLC ), as Non-Executive Directors of FMDQ. Shareholders also ratified the retirement of four (4) Non-Executive Directors, following the end of their terms in accordance with the Company’s governance guidelines, from the Board - Demola Sogunle (served on the Board from 2017 – 2018), Adesola Adeduntan (served on the Board from 2016 – 2018), Kennedy Uzoka (served on the Board from 2016 – 2018); Bayo Adeyemo (served on the Board from 2014 – 2018).

The changes in the Board have brought the total number of Directors

on FMDQ to eleven (11). Shareholders also approved the reappointed of KPMG Professional Services, to serve as the Company’s External Auditors for another year, and authorised the Directors to fix the External Auditors’ remuneration.

Three new members were also appointed to serve on the Company’s Audit Committee. They are Nnamdi Okonkwo (Managing Director/CEO of Fidelity Bank PLC); Abubakar Jimoh (Managing Director/CEO of Coronation Merchant Bank Limited); and Hamda Ambah (Managing Director/CEO of FSDH Merchant Bank Limited).

Speaking at the AGM, Okwu Joseph Nnanna, Chairman of the FMDQ board said he was impressed by the number of fifty (50) debt securities admitted to the OTC Exchange which was up 74% from the previous year, with a total value of 236.87bn. FMDQ recorded a total of 37 commercial papers (CPs), 10 Bonds and three Funds quoted and listed on the OTC Exchange.

“We also attracted foreign currency-denominated securities listings to the tune of $4.98bn, with the Federal Republic of Nigeria making history by listing, for the first time on a Nigerian Exchange, its Eurobonds and the inaugural Diaspora Bond on the OTC Exchange”.

The Chairman also listed some of the major achievements FMDQ in 2017 as the successful registration of FMDQ Clear Limited (FMDQ Clear), a fully-owned subsidiary of FMDQ, by the Securities and Exchange Commission (SEC), the approval of the OTC Exchange’s Sukuk Listing Rules by the SEC, and the partnership with S&P Dow Jones Indices by the signing of a memorandum of understanding (MoU) for the development and publication of co-branded fixed income indices in the Nigerian financial market, whilst thanking all stakeholders for their unrivalled support.

Speaking to the financial performance of FMDQ, the Managing Director/CEO of FMDQ, Bola Onadele Koko, noted that in 2017, FMDQ recorded total revenue of 2.57 billion, a 25.94 percent increase from 2.04 billion in 2016, which was driven by the OTC Exchange’s revenue diversification drive.

He expressed FMDQ’s commitment to becoming a fully diversified and integrated market infrastructure group, commencing with the operationalisation of FMDQ Clear, and the activation of its multi-asset Proprietary Market System, FMDQ Q-ex, to facilitate straight-through-processing in the fixed income markets through the integration of FMDQ’s trading systems with the Central Bank of Nigeria (CBN)’s settlement system.

Continues on wwwbusinessday online.com

Epe Resort, Epe, Lagos.

Speaking at the retreat, Mahmoud Yakubu who represented by the Lagos Resident Electoral Commissioner, Samuel Olumeku, said the Commission was facing funding challenge ahead of the 2019 elections but assured that the Commission will have to seek other sources of funding to ensure that its preparations for the elections does not grind to a halt “As you know, our procurement process is very cumbersome and to make a procurement, it may take up to four months and this may affect what we are doing at INEC. But we may be forced to look at other sources of funding so that our preparation for the 2019 election is not affected” He did not explain what other sources of funding INEC will be tapping into to fund the elections.

Before the adjournment by the senate, there were already concerns that the request by President Buhari that the National Assembly take money already allocated to constituency projects to fund the elections could be a challenge as this was expected to be resisted by the law makers.

The Peoples Democratic Party (PDP) had issued a statement on July 18 saying that President Buhari’s request to the National Assembly to vire N242 billion already approved for other projects in the 2018 budget to finance the Independent National Electoral Commission (INEC) and other agencies, was a plot to frustrate the 2019 general elections.

PDP said that was a booby trap deliberately set to drag the elections into financial controversy and ultimately subvert the entire process.

“This request is a deliberate plot

to inject disagreements in the polity, cause confusion in the electoral system and set the stage for a political crisis capable of frustrating the conduct of the elections” Kola Ologbondiyan, PDP National Publicity Secretary said.

Now things have even become more complicated in the National Assembly following the defections of 13 senators from the ruling APC to the opposition parties. This could mean that Buhari would find it a bit more challenging pushing his requests through the national assembly with the PDP now the majority in the Senate.

Besides the concern over its budget, the Commission also expressed concern over the problem of vote buying which the INEC described as “worrisome” Olumeku said “Votes buying has taken a frightening dimension” , but assured that INEC has put in place measures to tackle the challenge.

The INEC Chairman also lamented the non- assent to the 2018 amendment to the Electoral Act, a situation he said may make the organization to jettison the Act unless it comes into effect not later than six months to the election.

“Well, as you know, we work with rules and the 2018 Electoral Act is expected to guide the conduct of the 2019 general election, but we may not be able to use it unless it comes six months before the general election” We need a budget to be able to run the election, any law that does not come into effect six months before the election cannot apply to the 2019 election.

On voter’s card cloning, he assured that such cards will be rejected by the smart card reader, adding that “you cannot vote with such cards”.

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FG cautioned on route choices, transparency with new Nigeria Air Why Nigeria must invest in natural IFEOMA OKEKE

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ederal Government has been cautioned on the routes the national carrier will ply and the need to be transparent in the entire process.

The new airline, Nigeria Air, unveiled recently at Farnborouhg, is slated to commence operations in December 2018, but concerns have been raised over the airline choosing routes that could amount to unhealthy competition with its partners.

Concerns have also been raised on the absence of legal framework in place yet, which makes the process less transparent.

“I think whoever is planning route choices for the new national carrier should go into records and see what happened along same routes between Nigerian Airways and KLM; Nigerian Airways and SA Airways and Nigerians and Virgin Atlantic.

“You can’t go into the same business with your competitors as partners. When we talk of foreign technical partner investors, we are not talking of competitors as partners.

“I am talking of the Gulf Air model that gave birth to the Emirates, Qatars and Etihad.

I don’t see what we are about doing in foreign land as a birth of a national carrier but a replica of Virgin Nigeria, or another Nigerian Airways rebirth as a government airline, except it is a private airline not national,” John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay. Few days ago, Tewolde GebreMariam, Ethiopian’s CEO, said he expected to face competition over the Nigerian project from Qatar Airways, which had stakes in carriers including British Airways owner IAG SA and Latam Airlines Group SA, the biggest South American operator.

Hadi Sirika, minister of aviation, said 81 routes (domestic, regional and international) identified for now, for Nigeria Air, out of more than a thousand considered, adding that the Nigerian government would not own more than 5 percent (maximum) of the new national carrier. Government will not be involved in running it or deciding who runs it.

However, Tayo Ojuri, an

industry expert/CEO, Aglo Limited, an aviation support service, suggested that the new carrier should first consolidate on the domestic routes, before going into regional and international routes.

“I will advise the operators of the new carrier to consolidate on the domestic routes for five to six years. It should cover both the primary and secondary airports. With its operations in secondary airports, it will be able to ease movements.

“We still have a challenge of multi modal means of transport. With this, the airline can now go into alliance with other airlines, which will form a feeder to international operations,” Ojuri said.

He also expressed concerns over the airline not having any legal framework or act establishing it, which questions its transparency.

However, sources close to the ex-Nigerian Airways staff who craved anonymity, told BusinessDay that the airline would not see the light of day except the government paid them N45 billion pension benefits of former workers of the defunct Nigeria Airways Limited (NAL).

Chris Aligbe, former general

manager, public affairs of Nigeria Airways, said, “The kind of airline we should have is one that the government does not own a controlling equity or manage. It is good, it is a highly responsible act for the present government to say we must reestablish a national airline but it should be re-established in the best way that it should be, not in the form of Nigerian Airways where government owned 100 per cent, no.

“It should be zero funding by government but the government should have equity; what we call sweat equity.

Then once it is re-established, the Nigerian public should have access in two, three years to buy into the airline so that it becomes a property of Nigerians and government’s equity would be limited to about 10, 20 percent, not more than that yet government should not invest any fund in it, funds should be used for other things, that is what we need.”

According to Sirika, “We’ve been talking to Airbus and Boeing (and they’re present at this event) regarding the aircraft for Nigeria Air, and we will be making announcements very soon.

We are currently negotiating.”

gas to boost economy - Abazie

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everaging on enormous potentials in the nation’s Liquefied Natural Gas (LNG) through investment has been described as the best way to boost productivity and drive economic growth.

Chairman, Strides Group, owner of Strides Energy & Maritime Limited, Moritz Abazie said the sector presents a good opportunity to complement revenue from oil exports for economic development if well managed.

According to him, the natural gas could be best described as ‘the energy of the future’ despite the threat of alternative energy sources, as it is in high demand for industrial processes.

“Talking about gas, it is the energy of the future despite the threat of alternative energy sources. Besides the use as energy source, gas is in high demand for industrial processes as feedstock for chemicals and fertilizers. The country’s gas potentials are enormous and could be managed to manifest into a robust economy through its huge contributions to her Gross Domestic Product (GDP) as well as growth and development,” he said.

Abazie further cautioned that the country was losing the competitive space in the

LNG global industry due to non-implementation of FID on the additional trains.

“Nigeria was ranked the fourth largest LNG exporter in 2016 according to world LNG report. However, delays in taking final investment decisions (FID) in various LNG projects in the country has started eroding our market share in the global market. While we are going slowly on these, the United States, Australia and Russia are ramping up to take advantage of the growing demand.

The International Energy Agency disclosed in its latest gas market report “Gas 2018”, that the USA will account for about 75% of global LNG export growth by 2023 and will control 20% of total market share. By 2016, USA had 4% of the market share and occupied the 16th position while Nigeria occupied 4th position in global supply market size.

“It is noteworthy though that the Nigerian Liquefied Natural Gas Company NLNG, signed its engineering design contract for Train 7 construction last week, this is in preparation for the signing of final investment decision (FID) later in the year, this will increase its production capacity from 22 million tonnes per annum (MTPA) to 30 MTPA, source progress no doubt”.

Worldwide, every minute, 23 girls get married – UNAIDS ANTHONIA OBOKOH, with wired report

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L-R: Oluwaseyi Abe, immediate past president, Chartered Institute of Stockbrokers (CIS); Mary Uduk, acting director-general, Securities and Exchange Commission (SEC); Godwin Obaseki, governor, Edo State; Adedapo Adekoje, president, CIS, and Oscar Onyenma, CEO, Nigerian Stock Exchange (NSE), at the investiture of Adekoje as the new president of CIS, and send-forth dinner in honour of Abe, immediate past president of CIS in Lagos.

Pic by Olawale Amoo

Shareholders reinforce confidence in Oando management at 41st AGM

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ando plc’s shareholders at the concluded 41st annual general meeting (AGM) held on Friday, in Lagos, were united in their support for the company and applauded the management team for restoring market confidence by maintaining a track record of growth over the last 18 months culminating in the achievement of N8.5 billion PAT in H1 2018.

On the eve of the AGM, the company published its H1 2018 results recording N8.5 billion profit-after-tax.

The shareholders went on to encourage management to keep up the good work and avoid distractions and distractors’ intent on destroying the company’s reputation and eroding shareholder value.

Speaking at the AGM, Ade-

bayo Adetunji Adeleke, a shareholder, commended management for transforming Oando from a downstream company to a dollar earning upstream focused business.

He further said: “The profit declared in H1 2018 has given us hope, I am optimistic that with hard work the company will continue in this stead. I want to commend Oando on the impact of our Corporate Social Responsibility activities, we are touching lives, hundreds of thousands of lives and these same people are praying for the company therefore we will not go down.”

The company’s profits swelled as oil prices increased.

An analysis of Oando’s financials shows that the company’s turnover grew by 11% to N297.3 billion from N267 billion (H1 2017); gross profit increased by

53% to N51 billion compared to N33.4 billion (H1 2017); and profit-after-tax increased by 86% to N8.5 billion compared to N4.6 billion (H1 2017).

In its upstream business, Oando recorded a net profit of N27.1 billion ($75.2 million) compared with N16.3 billion ($53.2 million) in the comparative period of H1 2017.

According to the company’s statement, the increase in net income between the quarters was primarily due to higher revenues as a result of a general increase in the price of oil and gas commodities. Oando picked up on the industry recovery witnessed in 2017.

Brent prices averaged $69.87 per barrel, resulting in a 38% increase in realised crude selling price compared to the same period in 2017. Oando’s performance

was further buoyed by sale price increases of 19% for NGL and 13% for natural gas deliveries.

Tunde Badmus another shareholders said: “Oando has survived all odds and is still strong. I am confident the journey of the company will lead to victory for all. I commend the management for being prompt to respond to issues concerning the business operations. We pledge to continue to support you.”

All resolutions passed at the AGM were approved including the re-appointment of Ernst and Young as auditors, the Directors were authorized to fix the auditors remuneration; appointment of Bukar Goni Aji and Muntari Zubairu to the Board of Directors; election of audit committee members, and approval of the remuneration of non-Executive Directors.

new report by the Joint United Nations Programme on HIV and AIDS (UNAIDS) has advocated against child marriage, which has accounted for 12 million girls under the age of 18 years getting married, equivalent to 23 girls every minute globally in a year.

This rising prevalence has contributed to their personal growth, health and fundamental rights and freedoms denied.

Girls Not Brides, the Global Fund to Fight AIDS, Tuberculosis and Malaria, the Ministry of Foreign Affairs of the Netherlands and UNAIDS hosted a panel discussion on the issue of child marriage at the International AIDS Conference in Amsterdam, Netherlands, bringing together panellists from across regions, sectors and generations.

According to the agency, gender inequalities and gender-based violence force thousands of girls into marriage and motherhood, adding that girls who marry before they are 15 years old are 50 percent more likely to face physical or sexual violence from a partner.

“Child marriage often means that girls find it difficult to negotiate safer sex with their husbands, who are commonly older and more sexually experienced, making the girls especially vulnerable to HIV and other sexually transmitted infections,” says a report by the organisation.

Monica Geingos, first lady of Namibia, says when girls

and women are empowered with rights and given equitable access to education, enabled to participate fully in the labour force and equitably represented in government and decision-making bodies, the benefits far outreach improving the lives of the individual woman. Their families, communities and countries thrive. Yet, more than 150 million girls will become child brides by 2030.

UNAIDS’ latest report, Miles to go, highlights the reality that adolescent girls and young women aged 15–24 years, particularly those from sub-Saharan Africa, are being left behind.

Every week, more than 6,600 adolescent girls and young women become newly infected with HIV, with subSaharan African women and girls bearing the brunt, accounting for one in four HIV infections in 2017, despite being just 10 percent of the population.

However, the panellists highlighted the need to tackle the underlining determinants behind both HIV and child marriage.

They emphasised the need for a comprehensive multisectoral and resourced approach. Gender inequality and harmful social norms have to be challenged.

The solutions, they said, include keeping girls in school, and providing health services that serve young people’s needs and mobilising families and communities, including men and boys.

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How losses turn into relief for Oando BALA AUIGIE

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he tax masters have helped turn Oando Nigeria Plc’s losses into relief as the company returned to a path of profitability in its most recent quarter.

The oil and gas firm, burdened by recurring rising costs and interest expenses, recorded a profit after tax of N8.49 billion in the second quarter of the year, courtesy of an income tax credit of N10.75 billion.

Without the income tax credit, the firm made a loss before tax of N2.22 billion in the second quarter the year while it recorded a loss of N172 million as at June 2017 when it enjoyed less tax relief.

Analysts are of the view that the firm did not pay taxes in some periods because of past losses it had incurred hence it is enjoyed corporate relief that allow companies to carry forward historical losses to mitigate tax expense.

BusinessDay’s investigations have shown that such reliefs by the relevant tax authorities have helped the oil and gas giant reduce losses and underpinned bottom line numbers.

For instance, as at December 2017, Oando could have

recorded a loss of N6.57 billion if the sum of N48.09 billion utilization of previous year unrecognized taxes losses were not taken.

It however recorded a pr0fit after tax of N13.46 billion that year, from loss of N25.38 billion the previous year. “Some countries allow you to apportion 30 percent of the loss to government. You can carry forward 30 percent of loses to when you make profit,” said an analyst who does not want his name mentioned.

“Because Oando made loss in the past, it is using the benefit the tax laws give to offset tax obligation in the reporting period. Even if they are making profit, they still may not pay taxes because of their losses,” said the analyst.

In the corporate tax world, taxes is deducted from profit but where loss is incurred, no tax is payable. In such a case, the company/individual is allowed to use its/his future year’s profits or income to relieve the loss incurred.

In Nigeria, any loss that cannot be relieved in the first year of assessment is called “carried forward loss”. Any carried forward loss that cannot be relieved after 4 years period lapses.

For instance, the U.K government at the 2016 budget

presentation announced new rules limiting the losses from previous financial years, which companies can offset against their annual tax bill, to 50 percent of their profits. Previously, companies could receive tax relief equivalent to their total profits. Oando has been grappling with huge debt as interest expenses are squeezing the bottom-line.

The company’s interest coverage ratio is 0.65 times operating profit. It measures the extent to which operating profit covers interest expense.

The lower a company’s interest coverage ratio is, the more the debt burden of the company.

When a company’s interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable.

Oando says the sustained oil rally will further strengthen its operations in Africa’s largest economy.

“2018 has witnessed a much healthier oil industry, recovering from the last few years of low prices, enforced capital discipline, productivity efficiencies and portfolio realignments. We will continue to drive growth and profitability via our dollar earning portfolios,” said Oando in a statement following the release of its Q2, 2018 results.

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FINANCIAL TIMES Financial world doomed to repeat bad behaviour

Mark Mobius on ‘dumb as a fox’ Trump, Xi and ESG

Page A9

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Macron, the bodyguard and the May Day scandal French president battles biggest political crisis of his tenure Harriet Agnew

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hen Emmanuel Macron finally responded to reports that his private bodyguard had assaulted May Day protesters, he took full responsibility.

“If they are looking for the person responsible, it’s me and me alone,” he told members of his party on Tuesday, five days after the incident was made public.

Yet, in the face of the biggest political crisis of his tenure, the French president remained full of bravado, declaring: “Let them come and get me.”

Critics say that the scandal centring on Alexandre Benalla, the 26-year old formerly in charge of the president’s security during trips, has highlighted the limitations of Mr Macron’s selfprofessed “Jupiterian” presidency.

And it has cast a light on the inner workings of Mr Macron’s highly-centralised team of trusted millennial, mostly male, aides. “Both the strength and the weakness of the president is to have a very centralised and vertical organisation around him,” said Nicolas Bouzou, head of Asterès, an economic research centre. “On the one hand it makes it efficient to launch re-

forms quickly but on the other hand it makes him vulnerable to affairs like Benalla because he’s not protected.”

At the centre of the incident is Mr Benalla, who was caught on camera almost three months ago punching a male protester and tackling a young woman during the May Day riots. Mr Macron and his team were aware of the incident but failed to inform judicial authorities. Mr Benalla was initially suspended for two weeks but was kept on the payroll and accompanied the French football team on their World Cup victory drive down the Champs-Élysées last week. The affair only came to light after a video implicating Mr Benalla was widely circulated online and published in Le Monde newspaper.

The scandal has united opposition parties across the political spectrum, which are preparing to submit a motion of no confidence against the government.

“It’s unthinkable that Mr Macron should taunt his opponents with ‘come and get me,’” said Thomas Guénolé, a political analyst and member of Jean-Luc Mélenchon’s far-left Unbowed party. “It’s a provocation by a child king, not a statesman. The head of state has a behavioural problem — he expresses provocations but refuses to answer questions.”

Signs of change in Samsung’s longstanding ‘no-unions’ stance Sceptics question whether easing of resistance is new policy or effort to repair image Song Jung-a

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amsung Group has maintained an anti-trade union stance since its establishment in 1938, with founder Lee Byung-chul once declaring that unions would be allowed “over my dead body”. But there are signs of change at South Korea’s biggest conglomerate as it faces growing public pressure to reset relations with its workers.

The company’s apparent union-busting activities have come under the spotlight this year as state prosecutors investigate allegations that Samsung has sabotaged efforts to organise labour and disrupted union activities in violation of the law.

While not an official policy,

Samsung has publicly expressed an aversion to unions, arguing that they “create unnecessary conflicts”.

So eyebrows were raised when Samsung Electronics Service, the repair subsidiary of technology giant Samsung Electronics, promised in April to switch about 8,000 contract workers to regular staff and to recognise their 1,000-strong labour union.

“This is the first time that the group has officially recognised the union and promised to guarantee its activities,” said Ra Doo-shik, who leads the union of contract workers for Samsung Electronics Service. “It is a big achievement for us.”

Some analysts credit the rapid Continues on page A8

Emmanuel Macron pictured with Alexandre Benalla, right, in April 2017

Pakistan plans to seek up to $12bn IMF bailout Newly elected leader Imran Khan faces hard choices in coping with forex crisis Kiran Stacey & Farhan Bokhari

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akistan is drawing up plans to seek its largest ever bailout from the International Monetary Fund, with senior finance officials set to present the option to Imran Khan soon after he takes office.

Any loan from the IMF, which officials believe is necessary to resolve the country’s escalating foreign reserves crisis, would see the fund impose restrictions on public spending. Such limits would make it difficult for Pakistan’s charismatic new leader to fulfil some of his election promises such as building an “Islamic welfare state”.

Mr Khan, Pakistan’s former cricket captain, spent the weekend negotiating with potential coalition allies after winning 115 seats — 22 seats short of a majority — and overturning decades of

dominance by the country’s two main ruling families.

One government adviser said: “We are in a rough area and need help. I can’t imagine we could do that without the IMF’s support.”

The person said the country was likely to need a loan of between $10bn and $12bn — double the $5.3bn the fund lent the country last time in 2013 — in what would be Pakistan’s 13th IMF bailout.

During the election campaign, Mr Khan pledged to spend public money on providing access to healthcare for all, upgrading schools and expanding the social safety net.

But analysts warned these promises would be hard to fulfil given the reality of Pakistan’s economic situation.

Pakistan’s foreign currency reserves have declined rapidly in recent months, as higher oil prices

have pushed up the costs of imports, while exports continue to lag.

According to the latest published figures on July 20, the State Bank of Pakistan had just $9bn in reserves — not even enough to cover two months’ worth of imports.

So far, Islamabad has kept going with the help of loans from Beijing — it borrowed at least $5bn from Chinese commercial banks in the past financial year — and by allowing the Pakistani rupee to depreciate 20 per cent against the dollar. Western economists say they believe the currency is still overvalued and think it could fall at least another 10 per cent.

Mr Khan has not yet said how exactly he plans to deal with the balance of payments crisis he now faces, though he told the FT shortly before the election that his shadow finance minister Asad Umar was developing a policy.

Fund managers count cost of Facebook’s $120bn fall Investor concerns grow over level of wealth concentrated in handful of tech stocks Chris Flood

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he $120bn plunge in the value of Facebook last week sent a shockwave across US and European funds that hold investments in the social media company as concerns grow over the huge stores of wealth concentrated in a handful of global tech stocks.

Thursday’s share price tumble was the biggest one-day collapse in value of any listed company in US history, leaving asset managers scrambling to assess the effect on their funds.

Asset managers’ concerns have been increasing for some time about the outlook for the group of US tech stocks known as the Faangs — Facebook, Amazon, Apple, Net-

flix and Google parent Alphabet.

Bets on further gains for the Faangs and their Chinese competitors — Baidu, Alibaba and Tencent — have been cited for six consecutive months as the world’s “most crowded” trade, according to a widely watched survey by Bank of America Merrill Lynch.

Axa Investment Managers, Baillie Gifford, Janus Henderson, Fundsmith, Legal & General Investment Management, Loomis Sayles, Morgan Stanley and Polar Capital all have significant exposures to Facebook though funds offered for sale to UK investors.

The Axa Framlington Global Technology fund held 6.9 per cent of its assets in Facebook, a holding worth just under £37m

in May, according to Morningstar, the data provider. This represented the largest percentage holding of any UK actively managed fund.

Jeremy Gleeson, manager of the Axa Framlington fund, said the investment case for Facebook remained intact in spite of the reputational challenges facing the company and the impact of Europe’s new data protection regulations on its business.

“Thursday’s share price move was a combination of profittaking on a stock that had moved up significantly in the last few months and an over-reaction to the company flagging some near term issues,” said Mr Gleeson.

“We continue to back the management team to be able to resolve any issues they are facing.”

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FT Signs of change in Samsung’s...

Powerful earthquake hits Lombok in Indonesia

Continued from page A7 growth that has propelled Samsung into a global technology giant to the absence of a militant labour culture, noting that other South Korean conglomerates such as Hyundai Motor have had to contend with frequent worker disputes.

Only nine of Samsung’s nearly 60 units have unions and fewer than 300 of Samsung’s 200,000 domestic workers are unionised — well below the national average of 10 per cent.

At Hyundai Motor, 74 per cent of its 68,000 workers are unionised, according to union members.

In another sign of change, Samsung last week formally agreed to accept the final decision of an arbitration panel, expected by early October at the latest, to resolve a decade-long legal stand-off with chip plant workers who say they contracted leukaemia and other serious diseases due to their exposure to toxic chemicals.

Samsung Electronics has denied any causal link but has agreed to accept the mediator’s recommendations, which are expected to include a formal apology, fresh compensation for victims and measures to prevent any recurrence.

Union members believe the changes have been prompted by the probe by prosecutors, who have raided Samsung Electronics’ headquarters 10 times this year and secured thousands of pages of documents that allegedly show guidelines issued by the company to stymie efforts to establish unions.

Labour activists and other analysts have claimed that despite its official statements of support, Samsung has worked behind the scenes to undermine the formation of unions.

“Samsung probably wants to improve its image ahead of Lee’s ruling. It remains to be seen how far-reaching the changes will be,” said Park Sang-in, professor of industrial policy at Seoul National University.

The company says it allows lawful union activities and that it is co-operating fully with the investigation. “We respect law and principles and legally guarantee workers’ establishment of unions and activities,” it said.

Samsung’s volte-face comes as it tries to repair a reputation tarnished by a corruption scandal that has entangled the group’s billionaire heir-apparent Lee Jae-yong, who is awaiting a Supreme Court ruling later this year on bribery allegations.

“This seems to be the beginning of change at Samsung as managers are finally feeling the need to meet social expectations,” said Park Yoo-kyung, a governance adviser at APG Asset Management.

Monday 30 July 2018

At least 10 killed and many buildings damaged by 6.4 magnitude shock on tourist island

Reuters

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Fed chair Jay Powell

Mark Mobius on ‘dumb as a fox’ Trump, Xi and ESG Legendary emerging markets investor is back in the game as his 82nd birthday nears Chris Flood

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ew entrepreneurs have the energy and drive to start a business on the cusp of their 82nd birthday. Mark Mobius still has the spark, though.

Speaking on a recent trip to London, the emerging markets investor says Donald Trump is “as dumb as a fox”. He says that the US president is “negotiating all the time” with trade partners and is convinced deals will be agreed in spite of Mr Trump’s “bluster and bluffing”.

Such plain speaking from an influential market observer is typical of Mr Mobius, who is famed for travelling the world in elegant white suits.

His return to business coincides with an eventful time for EM and for him personally.

Mr Mobius’s “retirement” was announced in January by Franklin Templeton after control of the asset manager’s flagship EM fund was transferred to his protégé Carlos Hardenberg in 2015.

A few weeks later, though, Mr

Mobius stunned observers when he said he would set up a fund boutique in Europe — with Mr Hardenberg and Greg Konieczny, also from Franklin, as co-founders.

“I don’t want to retire,” he says, explaining that the Franklin announcement related only to the company, not his career.

The benchmark MSCI EM index has dropped 14 per cent from a 10year high reached in January. EM equity and debt funds have suffered substantial outflows since the start of May, due in part to Mr Trump’s threat to start a trade war with China.

Mr Mobius cautions that more short-term weakness is likely but notes that the sell-off brings opportunities. He points to stocks that are cheap in oversold markets, such as Argentina and Turkey.

US sabre-rattling leaves him unmoved. He says: “China is on a 100year marathon to overtake the US. Beijing will not allow a trade dispute to disrupt its long-term plans. China can do more to increase imports from the US, but it is now a major trading partner with countries across Asia and

Africa. The impact of an all-out trade war would be limited but expect more heat in the near future.”

A similar cool judgment applies to the president’s plan to build a wall across the border with Mexico to prevent illegal immigration.

“Mexico and the US are joined at the hip. Building a wall won’t make any difference,” he says.

Assets managed by the Franklin EM team peaked at close to $60bn but Mr Mobius’s eyes are on the challenges ahead.

“We face at least 100 fantastic competitors with tremendous resources and 70-plus markets to research. Now, however, there is an established infrastructure of custodians and brokers that did not exist when we started in 1987. Conducting business is easier in some ways but the competition is also very keen.”

Mobius Capital Partners aims to raise $1bn from investors within two years. It will build a concentrated portfolio of up to 40 stocks and focus on EM companies that have the potential to improve their environmental, social and governance scores.

Japan Display looks to hitch a ride on electric car boom Struggling iPhone display maker sees future in auto sector Kana Inagaki

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truggling Apple supplier Japan Display is staking its turnround on convincing global carmakers that its digital screens will become the new status-symbol feature for vehicles in the era of selfdriving cars.

The world’s biggest supplier of automotive displays believes innovative car design will be central to dispelling industry fears that vehicles will one day become indistinguishable moving boxes when electrical systems begin to dominate carmaking.

“In my point of view, differentiation can only be done by design,” Holger Gerkens, the newly appointed head of Japan Display’s automotive business, said in a recent interview.

“That is where we want to make the difference,” Mr Gerkens added, saying the company’s display technology will give cars more freedom in design.

Mr Gerkens, a former Sony official who previously headed Japan Display’s European business, is taking charge of a business that analysts say is critical

to its survival as the group aims to reduce its reliance on sales of Apple’s iPhones.

Japan Display joins Sony, Panasonic and other Japanese suppliers who are counting on battery-powered self-driving cars to increase demand for components such as interactive screens, cameras and sensors.

Already, Japan Display is supplying curved — as opposed to the traditional rectangular — displays to Volkswagen and other carmakers, and is in discussion to install more than 10 displays per car in a few years time, according to Mr Gerkens.

In the future, Mr Gerkens believes, digital displays will become advanced enough to blend into the vehicle interior and surface only when in demand.

“What we are discussing with our customers is cars for 202223,” he said. “Everything is going more towards design-driven.”

Created in 2012 through the merger of the display units of Sony, Hitachi and Toshiba, Japan Display was once touted as the success story of a stateengineered national champion.

But six years on, the com-

pany’s financial struggles have come to represent the shortcomings of government-led consolidation in an industry that has faced brutal competition from Chinese and Korean rivals.

Despite additional support from a Japanese governmentbacked fund, Japan Display has been lossmaking for four consecutive years. Its annual loss hit a record ¥247.2bn ($2.2bn) in the 2017-18 financial year as Apple shifted to OLED screens for the iPhone X and it was burdened by restructuring costs involving a cut in 3,800 jobs.

To revive its fortunes, the group app ointe d Yoshiyuki Tsukizaki, the former head of its automotive business, to the role of president, in June.

The automotive display business is still small, accounting for about 15 per cent of Japan Display’s annual revenue compared with the 55 per cent generated by Apple, its biggest customer.

“We believe it will be difficult for automotive and new business applications to fully offset a slump in smartphone products,” Nomura analyst Yu Okazaki recently said.

powerful 6.4-magnitude earthquake struck the popular tourist destination of Lombok in Indonesia on Sunday, killing at least 10 people and damaging many buildings, the country’s disaster mitigation agency said.

The quake hit Lombok island early in the morning when many people were still sleeping. Twelve people were injured and many fled into open fields away from collapsed buildings.

“We jumped out of our beds to avoid anything falling on our heads,” said Jean-Paul Volckaert who was woken by the quake while sleeping in the Puncak Hotel near Senggigi on Lombok.

“I’ve been walking around but so far there is no damage. We were very surprised as the water in the pools was swaying like a wild sea. There were waves in the pools but only for 20 to 30 seconds,” he told Reuters via telephone.

“The people in the villages may have damages. It’s still early morning here.”

The quake was centred 50km (31 miles) north-east of the city of Mataram on the northern part of Lombok island, the US Geological Survey said.

Sutopo Purwo Nugroho, the disaster mitigation agency spokesman, posted on Twitter pictures of houses with collapsed roofs and walls.

“People are gathering on the streets and empty fields to avoid collapsing buildings,” he said.

“The main focus now is evacuation and rescue. Some of the injured are still being treated at clinics.”

Around 43 quakes were recorded after the initial 6.4 magnitude tremor, with the largest aftershock recorded at 5.7 magnitude, said the disaster mitigation agency.

The major quake was felt on the neighbouring island of Bali, Indonesia’s top tourist destination.

The quake may have also impacted Mount Rinjani national park, a popular trekking destination.

“Rinjani mountain climbing is closed temporarily because there are indications of landslides around the mountain,” Nugroho said in a statement.

Local news Metro TV reported that people were still sleeping when the first quake hit and they quickly fled their houses in panic. Most of the people were still waiting outside their houses in fear of aftershocks, Metro TV said.

The earthquake struck at 6:47am on Sunday (2247 GMT on Saturday) and was only 4.35 miles deep (7km), a shallow depth that would have amplified its effect. The second struck less than an hour later A magnitude 6.4 earthquake is considered strong and is capable of causing severe damage.

The European-Mediterranean Seismological Centre, the European quake agency, put the magnitude at 6.5.

The earthquake was on land and did not trigger any waves or tsunami.

Lombok is the next major island east of Bali.

Quakes are common in Indonesia, which is located on the seismically active “Ring of Fire” that surrounds the shores of the Pacific Ocean.

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@ FINANCIAL TIMES LIMITED

Financial world doomed to repeat bad behaviour Worst types of transgressions have a habit of being repeated Martin Arnold

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even sins of finance have been repeated for centuries, as fraudsters carry out the same tricks to rip off investors despite tightening levels of regulatory scrutiny and advances in technology.

From gilt investors spreading false news that Napoleon Bonaparte had been killed in 1814 to two authors of the Daily Mirror’s “City Slickers” column trading in shares they tipped almost two centuries later, there are a “limited number of behaviour patterns” that keep being repeated in financial fraud.

This is the conclusion of a study carried out on 390 cases of financial market misconduct stretching back 225 years by the body established to help clean up the City of London after a string of financial scandals.

The Fixed Income, Currencies and Commodities Markets Standards Board, which was set up three years ago by the Bank of England and Treasury in response to the Libor interest rate and foreign exchange rigging scandals, said its research could improve systems and controls to catch bad actors in future.

Mark Carney, governor of the Bank of England, said the review was “fundamental to identifying the root causes of misconduct and to finding ways to reinforce the collective memory of the market about what constitutes acceptable conduct and practice”.

The seven broad types of financial misconduct it identified were: price manipulation, inside information, circular trading, reference price influence, collusion and information sharing, improper order handling and misleading customers.

The review found that patterns of bad behaviour had been repeated across national borders and asset

classes, as well as being adapted to new technologies.

“Technology is not new — it has been a feature of markets for years, and as such there is corresponding body of evidence of conduct malpractice in the screen-based trading environment,” the review said. “These behaviours are not new — they are known behaviours that have adapted to new media.”

In the field of price manipulation, the research found how the media by which false information is published has changed, but the techniques remain the same.

In 1814, Charles de Berenger colluded with Sir Thomas Cochrane and six others to accumulate a large position in UK gilts before he appeared in Dover disguised as a Bourbon officer and reported that Napoleon had been killed, sending a letter to the Admiralty in London to that effect and staging a parade across London Bridge to proclaim an allied victory. UK government bonds rose on the news and they then sold their holdings for a profit.

Some 199 years later, the US Securities and Exchange Commission alleged that a fabricated Twitter account was used to spread false and negative news about Audience, a technology company, and Sarepta Therapeutics, a biotech company.

The report also found evidence that bad behaviour in non-screenbased markets can shift to other asset classes that are already platform traded and vice versa. “Most behavioural clusters are asset class neutral — they can be undertaken in any asset class,” it said.

For example, it cited the case of Optiver, which the US Commodity Futures Trading Commission found in 2012 to have designed a software program called “Hammer” to ensure its orders for crude oil, heating oil and New York harbour gasoline futures were first in the queue and drove prices in its favour on the Globex trading platform.

India’s curb on life-saving drug prompts court challenge US group Mylan files case after Modi government restricts oxytocin to one state company Amy Kazmin

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US drugmaker has hit back at a controversial Indian government ban on the private manufacture, import and sale of oxytocin — a drug given to women immediately after childbirth to prevent potentially fatal haemorrhaging Mylan has filed a challenge in New Delhi’s high court in response to the draconian measures which will take effect on September 1.

Last month, amid concerns about misuse by the country’s dairy industry, New Delhi revoked licences for all private companies — including Mylan, Pfizer, Novartis and many large export-oriented Indian generic drugmakers — to make or sell the injectable hormone, considered a critical drug for every maternity hospital.

It has declared production of oxytocin in India will now be limited to a single state-owned company, Karnataka Antibiotics and Pharmaceuticals, which began producing the

drug this month.

The government has also banned the distribution and sale of oxytocin through private drug wholesalers or retail pharmacies. Instead, hospitals have been ordered to procure their supplies of the hormone directly from KAPL, which is hurriedly establishing 17 distribution points to serve the vast market.

KAPL says it will have a stock of 5m ampoules or units of oxytocin by the end of August, and is already working to fulfil orders from hospitals.

The move has dismayed doctors and public health professionals, who fear major disruption and shortage of supplies will lead to a spike in India’s already high rate of women dying in or immediately after childbirth.

“It has not been properly thought through,” said Dr Subha Sri Balakrishnan, an activist with CommonHealth, a network that works on maternal and neonatal health issues.

“All arrangements have not been put in place to ensure oxytocin is available in the farthest corners.

Workplace communities matter — now more than ever Employers have a big part to play in helping to create social cohesion Isabel Berwick

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ack in the almost-forgotten days before an intense heatwave took hold in Britain, I was somehow persuaded to visit a recently closed factory in a London suburb to see an arts project called “A real job is to make something”. So far, so unappealing.

It turned out to be extraordinarily powerful and I have been thinking about it ever since.

Inside the vast space of George Myristis’s former Wearite clothing factory, there were videos, installations and events inspired by this place and the work done here. One artist had made angular pipes, re-imaginings of industrial detritus. They lay, awkwardly, on the expanse of shop floor. It was clever but this sort of installation is familiar to anyone who has ever visited an art gallery.

What was different, though, was that the organisers, Margot Bannerman and Anna Hart of Air studio, had asked Mr Myristis and some of the 100 machinists who worked for him — many of them for the entire 40 years that the factory was open — to record their memories of the place.

In the empty space where giant looms once produced duvets and sleeping bags and the staff cut out and sewed English country wear (waxed jackets, quilted gilets and the like), we put on headphones and listened to the voices of men and (mostly) women from all over

the world who had come together in aptly-named Seven Sisters.

Their testimonies demonstrated over and over again that Mr Myristis, as owner-manager of the factory, had created something more than the sum of its physical parts and products. He and his staff had built a community. Immersed in the process (“a real job”) of making things, the workers here shared their lives, too.

Experiencing that lost world made me realise that going back to basics, cherishing the unheralded things that keep us together rather than push us apart, seems suddenly important in a polarised and poisonous political climate.

We live inside filter bubbles. Work may be the only place where we meet — and manage — people who are Not Like Us. Mr Myristis, a Greek Cypriot, employed people from the island’s Turkish and Greek communities (others came from Ireland, Somalia, Ghana and many more places). In his corner of London, bonded by common interest, everyone shared things, whether that was a lunch or family joys and sorrows. Businesses are communities, too — and they are missed when they are gone.

There is a lot of management prose written about how work must provide “purpose”, “passion” and “engagement”. That theory is fine and important, but I never saw it embodied until I entered this rundown building next to a busy roundabout in unglamorous outer London.

Those of us who still count ourselves lucky — and engaged — in our corporate lives can and should supplement those abstract words with more grounded ones: normality, routine and kindness. These are the things that matter, and managers and business leaders have an important part to play in reinforcing the reassuring patterns of the workplace. Disrupt your industries, if that is what you are in business to do, but do not disrupt the bonds that tie employees, however loose or unspoken they may be. Everyone wants connection: WeWork has built a global empire on individuals’ desire to rent desks in a shared space.

At the Financial Times we are offered free tea and cake every Thursday — a legacy of the financial crisis in 2008, when many reporters (not me, I confess) slept at their desks. Will we still have cake when we move to our new office next year? I hope so. Because small kindnesses count. Buy tea, cake or fruit for colleagues (but, as a friend reminds me, do not expect anything in return. She was regularly sent off on an expensive coffee run by a highly paid manager who never paid her back).

A woman I met at a networking event told me that she values the 5pm Friday drink in her City office.

It signals the end of the week, and managers lead by example. Everyone stops work, gathers and talks.

Then they leave at 5.30pm. Some staff go on to the pub, others choose not to, but that small ritual helps everyone feel part of corporate culture.

US bank M&A under a cloud after share price falls Investors express doubts over consolidation among country’s 5,600 lenders Alistair Gray

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S regional bankers are facing rising shareholder disapproval over dealmaking in the sector, clouding the prospects for further consolidation between the country’s 5,600 lenders.

While Washington is removing regulatory barriers to deals, and the boost to profits from lower taxes is giving managers more financial firepower to pursue them, shareholders are far from

convinced.

“A lot of us are sceptical,” said Andrew Boord, a Memphis-based portfolio manager at Fenimore Asset Management. “We’re trying to hold them to standards on reasonable returns on capital. Some of them are starting to stretch.”

The latest sign of investor doubts emerged last week, when Georgia-based Synovus struck a deal to acquire Florida’s FCB Financial and create a banking powerhouse in the south-east of the country with $44bn in assets.

Kessel Stelling, the buyer’s chairman and chief executive, pitched the combination as a “perfect fit” for both groups that would generate “compelling” financial returns.

Even so, Synovus has lost 10 per cent of its market capitalisation since it disclosed the deal, which was worth $2.9bn at the start of the week before the sell-off reduced the value of its all-stock bid.

FCB’s stock has declined 14 per cent since the deal was announced, the biggest sell-off since the bank’s 2014 initial public offering.

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Aspiring entrepreneurs latch unto collaborative platforms of co-working space OBINNA EMELIKE

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ast week, policymakers, entrepreneurs, investors, service providers, the media and co-working space operators gathered at the IMAX Filmhouse in Lekki, Lagos, for the second edition of the annual co-working conference.

The one-day conference, which presented the right avenue for stakeholders to explore the endless possibilities of the sector, was organised by Kola Oyeneyin, creator of Coworking Conference Nigeria and founder of Venia Business Hub, one of Nigeria’s first coworking spaces.

In line with this year’s theme, ‘Coworking: The Catalyst for Innovation’, the conference is aimed at connecting the dots on how co-working, co-creation, collaboration and technology are spurring innovation, entrepreneurship, wealth and job creation while charting the course for a new economy and the future of work.

Aside Vice President Yemi Osinbajo, who inspired the participants with his speech, others speakers at the conference include Omobola Johnson, partner at TLCom and former minister of communication technology; Iyin Aboyeji of Flutterwave, Africa’s leading

payment platform; Kola Aina, chairman, Ventures Park; Ola Brown of Greentree Investment Company, among others.

In his speech, the Vice President said he was delighted to be among young Nigerians who had taken a risk to invest in providing co-working spaces to spur innovation, ideas and work that would disrupt our collective lives and experiences.

“The knowledge economy is bound to change everything, co-working is bound to change everything, how we learn and work. The way we taught in schools before now was by individual competition in a classroom full of students.

“But the classrooms of the future will be classrooms where collaboration is the key, where people and young students will be working together, to achieve objectives and ideas. This is already playing out in the way that curricula are defined in various parts of the world today,” the Vice President said.

Also speaking at the conference on the rationale for being the official title sponsor of Coworking Conference Nigeria, Victor Etuokwu, executive director, Personal Banking Division, Access Bank, said Access Bank is recognised as a leading bank in driving digital banking and Fintech innovation in Africa.

“We seek to create new op-

portunities in emerging markets by providing a platform designed to inspire and challenge innovators and entrepreneurs, as such we have partnered with Coworking Conference Nigeria and leveraged on our global platform to further foster innovation, drive entrepreneurship as well as economic development,” he said.

In his opening remarks at the conference, Oyeneyin expressed his delight over the growth of the co-working industry in Nigeria from two spaces eight years ago to over 100 today across the country.

He noted that the country’s entrepreneurial ecosystem has seen a fundamental shift since the emergence of co-working and tech hubs, with many leading startups like Taxify, Flutterwave, Branch Int’l, and AutoGeni tracing the start of their journeys to co-working spaces.

“The essence of co-working is to amplify creativity, connectivity and collaboration. The major challenges for entrepreneurs here is power, internet and enabling environment to thrive. An average Nigerian entrepreneur does very well when he moves to London or New York because the environment is built for him to succeed. What co-working spaces have done is to create the enabling environment for innovative people to collaborate, create and grow their ideas”, Oyeneyin explained.

A11 NEWS

BUSINESS DAY

Politics & Policy

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Monday 30 July 2018

Buhari wanted nothing to do with Tinubu, I organised alliance – Galadima … says, I won’t criticise Buhari if he was raising cattle in Daura

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hairman of the Reformed All Progressives Congress (RAPC), Buba Galadima, says the cosy relationship between President Muhammadu Buhari and the national leader of the All Progressives Congress, Bola Tinubu, is an afterthought.

In a tell-all account in the current edition of The Interview magazine, Galadima said he was principally responsible for the alliance between the Congress for Progressive Change (CPC) and the Action Congress of Nigeria (ACN), against Buhari’s wishes.

Buhari and Tinubu were the leaders of CPC and ACN, two of the five legacy parties that formed the APC in 2014.

Galadima said, “Buhari was the one against the alliance with Tinubu and I don’t want to say anything. Let Buhari deny what I have said. I was for it and I organised it and wrote a memo that even produced a candidate for the vice presidency, this same Osinbajo.”

Galadima gave a hint that Bu-

President Buhari

hari may have, in fact, pencilled in another running mate candidate in the INEC form that was to have been submitted.

In a statement, the MD/editor-in-chief of The Interview, Azu Ishiekwene, described the Galadima interview as “the stuff of a broken love affair, with no closet details are spared.”

Using a slogan, ‘Anybody But Buhari (ABB)’, Galadima said he was planning to write an open

Tinubu

letter to Buhari very soon, adding that the President was a “floored candidate” who will lose his deposit if he contests re-election.

“If he was raising cattle in Daura, I wouldn’t bother about him. I’m criticising him because he’s the President of Nigeria and he’s not doing very well,” Galadima said.

He did not spare the Chairman of the APC, Adams Oshiomhole, whom he described as a latter-

Kwara APC chairman, minister trade words over call for dissolution of party exco SIKIRAT SHEHU, Ilorin

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he chairman of the All Progressives Congress (APC) in Kwara state, Ishola Balogun- Fulani and the minister of Information and Culture, Lai Mohammed, on Sunday traded words over the latter’s call for the dissolution of the state executive committee of the party.

Mohammed had signed a communiqué where he said that the decision to request for the dissolution of Ishola BalogunFulani led executive committee of APC was taken at a stakeholders meeting held in Oro, Irepodun local government of the state of the state yesterday.

But, Balogun- Fulani, in a swift reaction said he remained the authentic chairman of the APC in the state and that he and other members of his executive were duly elected for a period of four years.

The APC chairman’s statement reads: “My attention has been drawn to a communiqué purportedly issued by the Minister of Information and Cul-

ture, Lai Mohammed, calling for the dissolution of the Kwara state executive committee of the All Progressives Congress (APC) led by me. I want to state as follows: “That I remain the authentic chairman of APC in Kwara state.

“That my executive committee members were duly elected as APC executives in Kwara state for a period of four years.

“That myself and other members of the Kwara APC executive committee remain members of the party.

“That only last Wednesday, I attended a meeting of APC States chairmen forum in Abuja.

“That we were not aware of any APC stakeholders meeting in Oro, as neither myself as the state party chairman nor our Kwara south senatorial district chairman, Alhaji Jimoh Balogun convened or attended the meeting.

“We therefore, urge members of our great party and general public to remain calm and discountenance the statement credited to Alh Lai Mohammed.”

The resolution of the stake-

holders meeting which communiqué was signed by the minister of Information reads: “That Balogun Fulani-led Kwara APC executive committee be immediately dissolved and a fresh congress that will include all Kwara APC members and those who are just coming into the party be held at the various levels to constitute a new executive.

“That all those who got appointments by deceit, hiding under the facade of being party men and women, should immediately resign such appointments or be fired.

“That the recent gale of defections has now put the APC in a position of true majority in the National Assembly, as those who remain are the ones who are truly committed to the ideals of our great Party “That all members and supporters of our great party restate their unflinching support for President Muhammadu Buhari and assure him of a harvest of votes from Kwara State in the 2019 general elections.

“That all members should remain calm because there is no cause for alarm.”

Galadima

day Buharist bent on hijacking the ship.

In the same edition, the Executive President of Women in Africa, Hafsat Abiola-Costello, said she suspects the autopsy conducted on her father, MKO Abiola, was inconclusive, because “not all poisons can be traced”, lending credence to suspicions that the winner of the June 12, 1993 presidential election may have been poisoned in detention.

Abiola-Costello shared the last conversation she had with her mother, Kudirat, before she was murdered, the impact of her parents’ death on the family, and family’s business, among others.

Also in this edition, the wife of the Kaduna State governor, Hajiya Hadiza El-Rufai, talked about her passion and role as wife, mother and first lady, saying, “my husband is too honest.”

‘Poverty, a major cause of vote buying syndrome’ IFEDAYO OGUNYEMI, Abeokuta

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lecturer at the Moshood Abiola Polytechnic Abeokuta, Adekunle Musa, has attributed poverty to be a major cause of vote buying syndrome, which is now trending in the nation’s electoral system.

Musa, who is a lecturer in Department of Mechanical Engineering at the polytechnic, said politicians played on accident poverty that had eaten deep into the Ekiti people at the last governorship election, hence, money distribution before and during governorship poll reportedly played a major role in determining who was elected as governor.

Speaking on the sidelines at an interactive session centred on leadership organised in Abeokuta

by Youth for Development Association and Pristine Network, Musa said, “Vote buying does not augur well for us in Nigeria. What is right is to have a clear mind. Do not collect money from anyone even if they offer you.

“Before the inducement of that election, we were made to understand that the government owes about eight months salaries. And a day to the election, you deposited stipends into the workers’ accounts. While one party paid N3,000, another party paid N5,000.

That is poverty.

“If all of the money spent to buy votes are pumped into the economy of the state, they would have been able to pay salaries. There will be prompt payment of salaries, jobs will be available and poverty will leave the state. Nigeria is so blessed but we have bad leaders.”

He also said the Not Too Young To Rule law recently passed and assented by the President might not be implemented unless older generation of people leave the political scene.

Commenting on the spate of defections that occurred last week in the National Assembly, he said the defecting lawmakers had nothing to offer Nigerians anymore, saying they were afraid of not getting their return tickets to the National Assembly.

He also warned that more of it would still happen now that the 2019 general elections were fast approaching.

“The question is, are the present crop of politicians ready to leave the scene for young people? Go and sample the age range of our ministers and senators, majority of them are above 60 years of age.

“Look at the House of Representatives where we ought to have young people, you will see older people there. What do they do there; they go there to sleep. We have seen it severally in the media.

They should have left these positions for the young people.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 30 JULY 2018

fivethings

Opinion

The indefensibility of crony capitalism GLOBAL PERSPECTIVES

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

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h re e Sat u rd ay s ago, on 14 July, I received a copy of the Financial Times (F T ) at home as I do every morning except on Sunday when the FT is not published. On the front page was the smiley face of Alhaji Aliko Dangote, with the blurb: “Aliko Dangote, Africa’s richest man, has Lunch with the FT”. The “Lunch with the FT”is a popular interview section in the paper’s Weekend edition. The interview was largely grating. Why? Well, Aliko Dangote, the 100th richest person in the world, according to Forbes, is, by his own admission, a product of crony capitalism and protectionism, and has no qualms about defending those practices.

To be sure, Dangote was born into wealth; he’s also a hardworking businessman who has “a hankering to make things”. This is how the FT put it: “Dangote has made his money from more prosaic things: salt, sugar, flour and, above all, cement.

An awful lot of cement”. He is, indeed, known as “King of Cement”, the main source of his stupendous wealth.

But how exactly did he hit the jackpot? Well, Dangote “makes no secret of how he got his break”; how he was transformed from just a wealthy man into someonestratospherically rich!

Let’s hear how the FT, paraphrasing Dangote, tells the story. “It happened one day not long after the election in 1999 of Olusegun Obasanjo”.

Dangote had contributed to Obasanjo’s campaign in that election. Then, one day Obasanjo called Dangote in the morning, and asked him, “Can we meet today?” Dangote went to meet the president, who asked him why Nigeria couldn’t produce cement and had to import it.

Well, Dangote told Obasanjo that only if imports of cement were banned would it be worthwhile to produce it in Nigeria. Pronto, Obasanjo banned the imports of cement. Dangote, as the FT put it, “has never looked back”.

Businesspeople usually contribute to presidential campaigns, but in the US, they get political or ambassadorial appointments if their candidate wins, not a monopoly licence on the economy. But, for buying political influence with his campaign contribution, Dangote effectively got

a franchised monopoly over a key economic sector.

But at what price to the economy and to the Nigerian consumers? According to the Nigerian Industrial Revolution Plan (NIRP), the government’s industrial policy, published in 2014, “The Nigerian cement industry is heavily concentrated,with a few large firms”, adding that “strong regulation is needed to ensure the industry adequately promotes competition”. The NIRP also stated that “Nigerian cement prices are among the highest globally” in spite of the products being of “low finished standards for exports”. In other words, Nigerians are buying cement products that are not of international standards yet paying prices that are among the highest globally.

Surely, when Obasanjo was enriching one man or a few people by creating a closed market for the cement sector, he never thought about ordinary Nigerians in a country where there is an estimated housing shortfall of 17 million units and high cost of building materials, particularly cement, is regarded as one of the major causes.

Truth be told, Obasanjo abused his power as president of this country. He abused it politically, and, more damagingly, economically. Politically, he tried to play God by deciding who became president and who became governors and removing governors and leaders of the federal legislature

of this country. In one bizarre example, a businessman who manufactured glass bottles went to Obasanjo at 6.30 am. Yes, 6.30am! Have many business people have that kind of access to the president? Well, this businessman did. He told Obasanjo that some manufacturers were importing bottles into Nigeria, thereby ruining his business, and wanted Obasanjo to ban the imports of bottles.

Obasanjo agreed. According to Okonjo-Iweala, “I tried to interject, but the president ruled me out of order, and importing bottles of all kinds was banned”. It didn’t matter that the ban had damaging effects on manufacturers of pharmaceuticals and cosmetics, who needed special types of bottle. Obasanjo did the same with the bans on textiles and other products, favouring politicallyconnected businesspeople, regardless of the knock-on effects on the economy and the wider society.

Then, there was the granting of waivers of import tariffs, another practice Obasanjo used to create crony billionaires.Think of it, if the tariff on, say, rice is 50% and zero-tariff is granted for some people to import large shipments, who then sell the rice at high prevailing domestic prices, they could become billionaires overnight. Indeed, as OkonjoIweala puts it in her book, those receiving tariff waivers to import large shipments of rice, “could, by my calcula-

Whatever the trickle-down effect of crony capitalism, and it is minimal, it pales into insignificance beside the huge inequality it creates. And nothing entrenches inequality more than the concentration of wealth in the hands of the politically connected

at will. Economically, he introduced crony capitalism at an industrial scale, awarding oil blocks to those from whom he derived political and personal benefits and using protectionism to enrich favoured business people. The ethos of capitalism, passed on centuries ago

by Adam Smith, is that the invisible hand of the market, rather than the visible hand of the government, should allocate resources.But Obasanjo usurped the role of the market by intervening directly to allocate state resources to select individuals and businesses.

I urge anyone who hasn’t read “Reforming the Unreformable”, written by former finance minister Ngozi Okonjo-Iweala, to do so. The book lays bare the extent of Obasanjo’s abuse of power in the economic management

tion, easily make more than US$1 billion equivalent in Nigeria’s consumer market”.

She said it was her refusal to support duty waivers for importation of rice and other products “for certain influential businesspeople and their political patrons” that contributed to her removal as finance minister by Obasanjo!

Whatever motivated Obasanjo’s crony capitalism and protectionism, it was not in the national interest.

Those who cite the Chaebolcentred industrialisation in South Korea to justify crony capitalism ignore the fact that cronyism was widely blamed for the subsequent collapse of the South Korean economy. The truth is that crony capitalism doesn’t drive economic prosperity; rather it creates economic distortions and inefficiency.

Furthermore, it fuels political corruption, as money, politics and influence converge.

What’s more, crony capitalism is a major obstacle to social justice. Whatever the trickle-down effect of crony capitalism, and it is minimal, it pales into insignificance beside the huge inequality it creates. And nothing entrenches inequality more than the concentration of wealth in the hands of the politically connected. Little wonder that the Nigerian Constitution stipulates,in section 16(2)(c), that the State “shall direct” its policy towards ensuring that the economic system is “not operated in such a manner as to permit the concentration of wealth … in the hands of few individuals or of a group”.

But Obasanjo conveniently ignored this in his imperiouseagerness to create crony billionaires.

In his Principles of Political Economy and Taxation, David Ricardo demonstrates how the concentration of wealth in a small social group, such as landowners and industrial capitalists, can upset the social equilibrium. Through excessive prices caused by scarcity, in this case, artificial scarcity resulting from import bans and monopolistic practices, crony capitalists claim a disproportionate share of national income. And they entrench their position through infinite capital accumulation, as Dangote is doing.

The distributional or social justice question, raised by the concentration of wealth in fewer hands, was also the subject of Thomas Piketty’s seminal book, Capital in the 21st Century.

Now, this is not a criticism of wealth or wealthy people.

Far from it. But as an economic liberal, I believe that it is markets, not government, that should createwealthy people.The only role that the government has in the emergence ofmillionaires, billionairesor trillionaires is to create a conducive environment and a competitivelevel-playingfield that allowsuch people to emerge, not by making few people rich through crony capitalism and protectionism.

Without a doubt, Alhaji Dangote is a great Nigerian, a great African. But, truth be told, he is a beneficiary of economic practices that distort competition. Sadly, as the FT put it, he is “defending the thinking that has made him rich”. For instance, he said the “the government needs to bring out a draconian policy” to stop people importing food items “just like they did with cement”. Well, that would make people like Dangote richer and deepen poverty and inequality in Nigeria. The government must indeed bring out a draconian policy, yes, but it must be to stop anti-competitive practices, including cronyism.

They are indefensible!

for your new week

Fascinating business facts

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$10bn

hinese investors signed agreements to build a $10 billion metallurgical complex in South Africa and hope to start construction next year, an executive involved in the project and a provincial official told Reuters. South Africa’s President Cyril Ramaphosa said at a news conference that China had committed to invest $14.7 billion in the South African economy, but neither leader mentioned the $10 billion complex. Ramaphosa is on a mission to kick-start economic growth after a decade of stagnation and is targeting $100 billion in new investment over five years.

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2.1%

igeria’s economy is expected to grow more slowly this year than previously forecast as investors hold off before elections in early 2019, a Reuters poll showed on Friday, while Kenyan growth is forecast at more than double the pace. In the poll taken in the past week, analysts and economists’ forecasts showed a median of 2.1 percent growth for Nigeria, accelerating to 3.0 percent next year. That was a significant downgrade from the previous poll taken three months ago, which showed Africa’s largest economy expanding 2.6 percent this year after a lacklustre 0.8 percent in 2017.

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2.2%

he South African Reserve Bank does not expect the economy to shrink in the second quarter, as it did in the first, Governor Lesetja Kganyago said on Friday, while warning that growth remained too low to make a dent in high unemployment. Africa’s most industrialised economy grew by 3.1 percent in the final quarter of 2017 but contracted 2.2 percent in the first quarter of this year, led by a slowdown in agriculture and mining. “At this stage, the high-frequency data for the second quarter indicate that a modest improvement is likely in the quarter, and the South African Reserve Bank does not expect a second consecutive quarter of contraction,” Kganyago said at the bank’s annual general meeting.

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39%

f Donald Trump is going to make Amazon pay more for postage stamps, it at least has the profits to afford it. The Seattle company reported its second-quarter results on Thursday. Its soothing message must have helped heal tech investors’ whiplash from Facebook’s results a day earlier. The social media group shocked the world with a modest view of its future revenue growth and profits. Amazon delivered 39 per cent year-on-year quarterly revenue a near four-fold increase of operating income to $3bn in the same period.

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19%

witter’s shares followed Facebook into a sharp fall on Friday as worries that social media companies are facing a reckoning that will limit their profits sent a tremor through Wall Street. Twitter’s stock was down 19 per cent on Friday afternoon, just 24 hours after Facebook’s shares shed 19 per cent in the biggest one-day loss of value in US stock market history. The service, beloved by Donald Trump, said its user numbers had fallen from a year before as it weeded out fake accounts and put more effort into producing a “healthy” service.

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