BusinessDay 30 Jul 2020 by BusinessDay

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news you can trust I ** thursDAY 30 july 2020 I vol. 19, no 617

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Investors eye reforms to pump foreign capital into Nigerian businesses I V

Lack of synergy between Discos, TCN will render transmission of 8000mw ineffective - stakeholders Olusola Bello nability of electricity distribution companies (Discos) to have access to many of the transmission transformers installed by the Transmission Company of Nigeria (TCN) will render the transmission of the expected 8000 Continues on page 30

Odinaka Anudu

enture capitalists are demanding economic reforms and some form of business restructuring to pump big equity and debt capital into Nigerian businesses, particularly start-ups and small/ medium enterprises. They want to see clarity in the foreign exchange market, land reforms, better business environment, improved security, policy consistency and intellectual property rights reforms. “We want certainty, stability Continues on page 30

Inside

Nigeria’s rice paddy prices surge 69% amid COVID-19 pandemic P. 2 Godwin Obaseki (m), governor, Edo State, signing the revised 2020 appropriation bill into law; Frank Okiye (l), speaker, Edo State House of Assembly, and Momoh Oise Omorogbe, commissioner for budget and economic planning, at Government House, Benin City, yesterday. See story on page 2

FBN Holdings reports 56% P. 2 profit surge to N49.5bn in June

Thursday 30 July 2020

BUSINESS DAY

news Edo signs N128.8bn revised 2020 budget into law

… says 30% reduction wil not affect workers’ salary, pensions IDRIS UMAR MOMOH & CHURCHILL OKORO

do State governor, Godwin Obaseki, has signed the Revised 2020 Appropriation Bill into law with a pledge to make necessary sacrifices to ensure the sustenance of critical sectors of the state’s economy amid disruptions caused by the coronavirus (COVID-19) pandemic. The budget, which was reduced by 30 percent from N179 billion to N128.8 billion, was signed into law after Frank Okiye, speaker of Edo State House of Assembly, and leadership of the House presented it to the governor, at Government House, Benin City, the state capital. The budget is coming at an unusual time when the COVID-19 pandemic has imposed certain challenges, Obaseki said, noting, “The challenges may be difficult now but in the medium and long term, this administration would need to re-think the economy of the state. “The financial and economic consequences of COVID-19 pandemic are challenging, if not more challenging than the health crisis it created. Following several reforms taken by this administration, especially in our

financial management and budgeting system, and that of the economy, the impact has not been so devastating. “We have been able to pay workers’ salaries and also pay our pensioners on time. We will focus on critical infrastructure that is required for production. We would be realigning the Edo economy to make us stronger after the pandemic comes to an end. “With this budget as a state, we need to make painful adjustments as we don’t intend to lay off workers or stop paying pensioners. We would spend more on recurrent expenditure as we keep jobs on, but it will affect capital expenditure that we wanted to undertake this year 2020.” The governor assured the people of the state that despite the reduction in the 2020 budget by 30 percent his administration would focus on the things that were key, important and critical for the state’s development. “People and nations are no longer depending much on energy and crude oil, following the slowdown in the global economy. Transportation has been grounded, factories are not producing as we are having a cyclical shift in earning profile and its fundamentals as life may not go back to what it used to be,” he said.

Nigeria’s rice paddy prices surge 69% amid COVID-19 pandemic Josephine Okojie &Bunmi Bailey

he price of rice paddy in Nigeria has surged 69 percent in recent weeks owing to the high cost of logistics and farm inputs triggered by the coronavirus COVID-19 outbreak. The recent sudden and speedy rise in prices is challenging the output of millers currently, as many are unable to get enough rice paddies to feed their mills. Currently, a metric ton of rice paddy in Kebbi State – Nigeria’s top rice grower - costs N214,500 as against N127,000 sold pre-COVID-19 era, indicating a 69 percentage point surge.

“Millers are not getting enough paddy for their mills because of the recent surge in prices, and this would soon start affecting their output,” Rotimi Williams, founder, Kereksuk Rice Farm, states in response to questions. “We usually experience a marginal increase in price during the wet season but this year’s increase has been much higher because of the impact of the pandemic and slashes in Asian export,” Williams says. He says players in the industry are not anticipating any drop in price when farmers commence harvesting for the wet season in the next two months, because of the

continuous impact of the COVID-19 pandemic. Despite farmers increasing productivity per unit area, Nigeria’s rice has remained uncompetitive owing to the high cost of paddy as it constitutes 70 percent of the total rice processing. Nigeria - Africa’s most populous country - needs 7 million metric tons of milled rice yearly to meet its demand, the Federal Ministry of Agriculture says. Joseph Ununu, a rice supplier in Ebonyi State, says millers are currently running out of paddies as most warehouses are becoming empty in the state owing to the recent surge in prices.

BN Holdings plc Wednesdayannounced its unaudited results for the six months ended June 30, 2020, showing a 56-percent increase in after tax profits to N49.5 billion. Gross earnings of N296.4 billion were up 5.8 percent year-on-year (y-o-y) for the period, while non-interest income grew by 46.8 percent to N80.1 billion. Total assets increased by 14.9 percent to N7.1 trillion, year-to-date (y-t-d), customer deposits of N4.4 trillion were up 8.8 percent y-t-d, while loans and advances rose by 7.7 percent from December 2019 to N2.0 trillion. The Group had a post-tax return on average equity of 14.5 percent and cost to income ratio fell to 65.8 percent from 70.3 percent in June 2019. Non-Performing Loans (NPLs) ratio declined to 8.8 percent in June 2020, from 9.9 percent in December 2019. Commenting on the results, UK Eke, the group managing director, FBNHoldings, said: “The H1 2020 financial results are impressive and re-

confirm our consistent focus on enhanced shareholder value. Despite the difficult operating environment, the H1 results demonstrate our resilience and capacity to deliver on long-term ambitions. “The 56.3% y-o-y growth in profit after tax for the period is a testament to the strength of our organisation to continually deliver exceptional services to our customers in these unprecedented times. We have been able to achieve this feat by leveraging our agent banking network, innovative e-banking capabilities, and operational efficiency utilising technology.” During the quarter, we successfully divested from the underwriting (insurance) businesses to focus on our banking operations.Weareconfidentthis willenhancegreatervaluetoour stakeholdersandstrengthenthe Group’sresolvetoconsolidateits leadership of the banking sector. Following the divestment, FBNHoldings injected Tier 1 capital into FirstBank, effectively increasingitsCARto16.5%.This provides a comfortable buffer againstregulatoryrequirements with the potential to support any emerging business opportunities. www.businessday.ng

Continues on page 30

Ibrahim Gambari (l), chief of staff to the president, and Vice President Yemi Osinbajo, during a virtual meeting of the Federal Executive Council at the Presidential Villa in Abuja, yesterday.

FBN Holdings reports 56% profit surge to N49.5bn in June BALA AUGIE

“A lot of warehouses that were filled during the lockdown are now empty because the owners have sold everything and running out of stock,” Ununu states. Similarly, the prices of parboiled rice – a key staple in Nigerian diets - have also surged owing to the rise in paddy prices. BusinessDay surveys some markets in the Lagos metropolis and found out that local brands of parboiled rice dominated the shelves of traders. In Daleko Market, the biggest rice market in Lagos, a 50kg bag of local parboiled rice was sold for N20,000 three

Everything to know about implication of NNPC’s $1.5bn deal with Vitol, Matrix DIPO OLADEHINDE

igeria National Petroleum C o r p o ra t i o n ( N N P C ) ha s signed a $1.5 billion cash-for-crude prepayment loan with the world’s top biggest independent oil trader Vitol Group and Nigeria’s Matrix Energy, a decision that comes with huge implications for Africa’s biggest economy. Already cash-strapped and weighed down by billions of dollars in old debts, NNPC has been looking to bring in outside cash in a bid to cushion the effect of coronavirus (COVID-19) pandemic upending the finances of the Nigerian economy. The deal Starting from August, Vitol and Matrix will each get 15,000 barrels per day (bpd) of crude as repayment over five years from Nigeria, according to Reuters. The financing package

called Project Eagle will be backed by African ExportImport Bank (Afrexim) and United Bank for Africa (UBA). Sources said British multinational Standard Chartered Bank was hired to advise on the oil prepayments, widely used in commodity finance by traders as banks consider them to be one of the more secure forms of lending in countries viewed as risky. For trading firms such as Vitol, these loans are ideal for securing long-term supplies and boosting razor-thin margins. The sources said NNPC planned to use a large portion of the money to pay taxes owed by its subsidiary Nigeria Petroleum Development Company (NPDC) while the remainder would go towards operational expenses, capital expenditure and upgrade of the Port Harcourt refinery. Both sides benefit in prepayment deals A prepayment deal would

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provide Nigeria with up-front cash and guaranteed revenue as it expands its budget. At the same time, an agreement would assure traders a source of supply at a discount for an extended period of time that they can use for resale in the global market. Nigeria also enjoys the advantages of a close relationship with a major global oil exporter, giving them access to time-sensitive data that will boost their market intelligence and information flow. Furthermore, prepayment deals allow traders to establish long-term relationships with producers. Implication for Nigeria Analysts and chief financial risk officers (CFOs) have said while the deal would provide immediate guaranteed revenue, Nigeria will likely weaken longer-term revenues since it will offer its oil at a reduced price and it will miss out on any price increases. “With deals like this, future @Businessdayng

benefit of an increase in oil price will likely erode Nigeria, except there are options for contract renegotiations,” Kelvin Atafiri, who runs Cavazanni Human Capital Limited, an investment firm exposed to the oil and gas sector, said. On the flip-side, others have raised concerns about the effect of oil price volatility on the load, while noting if oil prices decline, NNPC may still be obliged to service the loan at its original terms, thereby pouring limited revenues into repaying the loans. Researchers from the Natural Resource Governance Institute (NRGI), a global extractive sector transparency group, cautioned that this kind of loan if not carefully structured and managed, could mortgage the country’s resource wealth without much productive return. It also poses major fiscal risks, especially to how much money the government collects from NNPC.

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news

Oil companies seeking to cut cost are gutting their workforce ISAAC ANYAOGU

or many senior oil and gas workers, many working from home due to the coronavirus pandemic, every new email from a superior, every call from the office, triggers an anxious concern- is it today they are letting me go? Once the most attractive and lucrative places to work, the oil sector is losing its shine. Conversations with some senior oil and gas workers show that the prospect of job security in the sector is fast morphing into an illusion as oil companies try to ride out of the storm stirred by a rampaging pathogen. “In some departments, especially senior staff members who have handled big-ticket projects, disengagements are rife,” said one senior manager who asked not to be identified due to confidentiality concerns. While these oil companies employ only a few (Shell Nigeria’s total workforce is 3,000), they provide indirect jobs and their activities have a serious impact on the economy. The NLNG, for example, represents at least 4 percent of Nigeria’s GDP. However, keeping jobs in these oil companies is proving difficult. According to BusinessDay findings, ExxonMobil, Chevron, Shell Nigeria, and ENI

have been quietly laying off senior staff members, some with severely depleted severance packages. Staff pay and work conditions are also being renegotiated. Staff members in local oil companies are not spared either. The oil and gas industry has been in a state of flux since this year due to COVID-19, a bruising oil price war by Russia and Saudi Arabia, and the threat of shale producers. Oil prices have dropped and there’s uncertainty on whether they’ll recover to around US$50/bbl they started the year. Oil benchmark, Brent crude, traded $41 Wednesday morning. “When it comes to moving forward, some companies are thinking of growth while others still have work ahead to adapt to the new reality. All are considering their next investments, and how they can remain profitable in the current state of the industry,” said analysts at Wood Mackenzie. This situation is worsened by a decline in investments in the sector. Global upstream sp e n d i ng wa s f o re ca st t o reach $383 billion this year, the lowest level in 15 years, and a staggering 29 percent decrease of $156 billion compared to 2019, according to Rystad Energy analysis of the industry’s first-quarter results.

This no longer looks realistic with the rash of capital expenditure cuts by oil majors and deferment of final investment decisions. Personnel costs in oil and gas companies represent up to 50 percent of total expenditure but current reality does not make this sustainable. Costcutting is one of the thorny issues in Nigeria’s oil and gas sector as many producers are drilling at costs higher than their peers. “Companies spend more than 50 percent to pay for human resources, this is not sustainable and anyone that cannot be efficient will be irrelevant,” said Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), in a recent webinar organised by Future Energy Leaders, World Energy Council. The NNPC boss said oil companies including the NNPC will need to evolve a realistic HR process, better adoption of technology as well as reducing logistics costs. Elaborating on what constitutes the personnel costs he wants reviewed, Kyari said that many companies were piling on staff costs beyond basic allowance to include huge disengagements cost, bonuses, regular raises, among others that drive personnel cost above 36 percent of cash flow rather than the industry average of 11 percent.

Manufacturing PMI contracts by 44.9 index points in July HOPE MOSES-ASHIKE

he Manufacturing Purchasing Managers Index (PMI) contracted further for the third consecutive month by 44.9 index point in the month of July 2020 from 41.1 points in June. The Central Bank of Nigeria (CBN) on Wednesday released the PMI, which showed that in July 2020, supplier delivery time was faster, while production level, new orders, employment level and raw materi-

als inventories contracted. The report shows that out of the 14 sur veyed subsectors, transportation equipment subsector reported growth (above 50 percent threshold) in the review month while nonmetallic mineral products sector reported no change. However, the remaining 12 subsectors reported contraction in the review period. These include printing and related support activities; primary metals; fabricated metal prod-

ucts; paper products; food, b e ve rag e a n d t o b a c c o products; chemical and pharmaceutical products; furniture and related products; electrical equipment; plastics and rubber products; petroleum and coal products; textile, apparel, leather and footwear and cement. The non-manufacturing sector PMI stood at 43.3 points in July 2020, indicating contraction in non-manufacturing sector for the fourth consecutive month.

Experts canvass fines by mobile courts for defaulting developers CHUKA UROKO

xperts in Nigeria’s building industry have canvassed the use of mobile courts to enforce compliance with building permits and approvals by estate developers some of whom do their developments without any approvals by government authorities. The experts, who spoke to BusinessDay against the backdrop of recent sealing off buildings by Lagos State government authorities in the highbrow locations in the state, said the decision by the authorities to seal off completed and occupied buildings was punitive and insensitive. The state government had, through its ministry of Physical Planning and Urban Development, sealed off over 20 buildings in the Banana Island and Ikoyi axis of the state over lack of building permits and conformity issues. Idris Salako, the Commissioner for Physical Planning and Urban Development, explained that the action was part of Special Enforcement Operations led by officials of the ministry in Ikoyi and environs, noting that out of the 22 buildings sealed off, 16 were sealed on Banana Island while the remaining six were sealed at Adeyemi Lawson, Mcpherson and surrounding streets in Ikoyi. The government has asked those that own property in those areas to come forth with the planning permits granted for their building construction and also evidence of stage certification obtained from the Lagos State Building Control Agency (LASBCA), or have their buildings sealed. “It seems to me that somebody

is getting it wrong somewhere; where were these government officials when these buildings now being sealed off were at foundation, walling and even roofing levels?” queried Yemi Madamidola, a real estate consultant and service provider. He wondered how an approving authority could allow a developer to start a building process, complete the development and parks in or sells off to buyers and nobody approached him to demand for permit until some years after. “That for me is dereliction of duty or regulatory failure. And just imagine the areas in question—Ikoyi and Banana Island. These areas that are as expensive as they are conspicuous. They are not places somebody will tell you are not accessible like the suburbs. I smell rat here,” Madamidola said. Often times, he added, you see some new developments with red markings, asking the developers to stop work. “A few days or weeks later, you see workers back to site. The question is, what has changed just in a matter of days or weeks? That tells you that somebody has circumvented the process,” he noted. Though he says real estate sector is over-regulated, Sola Enitan, an estate surveyor and valuer, sees some benefits in development regulation, explaining that it is a key aspect of development appraisal that gives credence to the project feasibility and viability. Enitan however faulted Lagos State government on its long and cumbersome building approval processes, stressing that the state has one of the worst

Glo subscribers to call all networks at 11k per second

new tariff plan that allows subscribers call all networks in the country at 11k per second has been unveiled by national telecommunications company, Globacom. The plan, which is another move by the company to give its customers a unique calling experience, is also expected to help cushion the effect of the global pandemic, Covid-19. According to a Globacom statement in Lagos, subscribers who opt for the plan will be charged an access fee of N7, which will be billed alongside their first call of the day, after which they will be able to

make calls to all networks in Nigeria at 11k per second (exclusive of tax) for the rest of the day. It states further that the access fee of N7 will be waived for any customer who does not make any call but only receives calls throughout the day. The company says international calls and SMS rates remain unchanged, adding that customers on the new tariff plan will pay the standard SMS and IDD tariff. It, however, adds that customers can enjoy better international call rate on the Glo network by purchasing any of the IDD packs available. According to Globawww.businessday.ng

com, “It is our desire to continually delight our customers with innovative products and services at the most competitive rates in the country,” adding that “This new tariff plan is another manifestation of that burning desire to add value to the lives of our customers and make it more convenient and affordable for them to communicate with one another.” Customer can access the new tariff plan by dialling *311# and he or she will be automatically migrated to the Glo 11k per second plan. The new tariff plan is open to both existing and new prepaid customers. https://www.facebook.com/businessdayng

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approval processes in the world. “The regulatory processes are overloaded with rent-seeking line officers; shelf-time for processes is unnecessarily long. Imagine a building approval taking a year and six months, some documents are shelved indefinitely in ‘keep in view’,while some are lost in transit,” he noted. He advised that the state government should be mindful that unnecessary delays in project approvals increase cost of construction and development unnecessarily; pointing out that time is money. Enitan advised further that government should make the approval and documentation processes friendly to discourage people from looking for ways to circumvent the system. “There are cases of houses built without any sort of approval whatsoever. Some don’t even apply for approval,” he said. According to him, cutting corners become a convenient alternative when government becomes too compromised by rent and corrupt practices, noting that instead of sealing completed houses because they are unable to provide approval of plans, the government should come up with mobile courts with immediate sentencing and punitive fines. He cited instance of a developer in Washington DC, Deadwood, who was fined $250,000 for building without approval, a process which ordinarily would have cost him about $1,500. He argued that if government could deploy the mobile court option for housing sector, building without approvals by developers would decline.

Thursday 30 July 2020

BUSINESS DAY

news

Seplat swings to loss of $145m in H1 2020 on lower oil prices DIPO OLADEHINDE & MERCY AYODELE

he decline in crude oil prices has plunged Seplat Petroleum Development Company Plc, Nigeria’s largest listed oil & gas firm by market value, into a loss before tax of $145 million in the first half of 2020, according to an unaudited report published Wednesday. Seplat had declared a profit of $120.4 million in the comparable period last year. A 45 percent dip in oil prices to $35.94 from $65.16 per barrel in the first half of 2019 saw a 301 percent jump in impairment of assets cost for Seplat. The impairment cost Seplat a whopping $160.9 million, the cost includes $146.0 million IAS36 impairment on revaluation of assets and $14.8 million impairment of financial asset. “The impairment is primarily as a result of re-assessment of future cash flows from the Group’s oil and gas properties due to significant fall in oil prices,” Seplat said. The above development reflected in the company’s earnings as revenues fell to $233.5 million in the first half of the year, down from $355.1 million in the same period of 2019. Seplat’s tax position for the first half of 2020 was a credit of $35.1 million, compared to a tax expense of $1.4 million for the same period

in 2019. “Our continued resilience is possible as a result of our financial strength, our careful management of risk and our prudent approach to capital allocation,” Austin Avuru, Seplat’s Chief executive officer said. The tax credit is made up of a deferred tax credit of $39.0 million and a current tax charge of $3.9 million. “The deferred tax credit is mainly driven by the underlift position and tax loss for the period,” Seplat said. Seplat produced 51,177 barrels a day in the period, up slightly from 48,004 bpd. The company maintained its previous guidance of 47,000 to 57,000 barrels of oil equivalents per day (boepd). Seplat also announced it has hedged 1.5 million barrels at $45 per barrel for the first three quarters of 2020 and another 1.5 million at $30 for the final quarter of the year. “Our oil hedging strategy and gas revenues continue to protect the business from price volatility, we are achieving substantial cost reductions from our suppliers and are managing our own costs even more carefully in this challenging period,” Avuru noted. Gas sales revenue decreased by 25.9percent to $53.5 million from $72.2 million recorded in H1 2019, due to lower gas sales volumes of 18 Bscf compared to 26 Bscf in H1 2019.

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FG releases timetables for NECO, WASSCE, others Godsgift Onyedinefu, Abuja

ederal Government on Wednesday released a schedule for various national examinations for exit classes, starting from August 17 to November 18, 2020. Minister of state for education, Chukwuemeka Nwajuiba made the announcement in Abuja after a series of meetings with chief executives of various examination bodies in the country. Nwajiuba, in statement by Ben Bem Goong, director, press and public relations, said that the West African Examinations Council (WAECSSCE) would commence from August 17 while the National Business and Technical Examination Board (NABTEB) examinations would kick off on September 21 and end by October 15, 2020. Other details of the schedule indicate that the Senior Secondary School Certificate Examinations, (SS CE) for SS3, conducted by NECO would start on October 5 and end on November 18, 2020. The Basic Education Certificate Examinations, (BECE) for JSS 3 also conducted by NECO, would start

from August 24 to September 17, 2020. Similarly, the National Common Entrance Examination, (NCEE) which is a one-day NECO examination for intending applicants into Unity Colleges (JSS1) would run in between the Senior Secondary Certificate Examinations, on October 17, 2020. The minister explained t h a t re g i s t r a t i o n f o r t h e NECO (SSCE), which is ongoing, would end on September 10, 2020 and there shall be no extension for the registration whatsoever. Nwajiuba also informed that the National Board for Arabic and Islamic Studies, (NBAIS) examination would commence on Wednesday, 23rd September 23 and on October 17, 2020. For the one-day National Common Entrance Examination conducted by NECO, the minister said it was compulsory for parents and pupils to wear face masks on the exam date, while als o car r ying along with them, alcoholbased sanitisers. The minister, therefore, d i re c t e d a l l e x a m i nat i o n bodies to release details of their examination timetables in the next seven days.

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Oyo plans employment scheme for repatriated indigenes REMI FEYISIPO, Ibadan

yo State government is to set up employment scheme that will provide job opportunities for repatriated indigenes of the state. The scheme, when in place, will create opportunities for Oyo State indigenes who, for one reason or the other, have returned home from different parts of the world. Chairman, Oyo State Road Transport Management Authority (OYRTMA), Akin Fagbemi disclosed this on Wednesday after a meeting with the senior special adviser to Governor Seyi Makinde on diaspora affairs, Bolanle Sarumi-Aliyu, in Ibadan. Fagbemi said discussions at the meeting centred on how the Department of Diaspora Affairs could effectively partner OYRTMA, saying that the scheme would help take the repatriated indigenes off the streets, and reintegrate them back into the contemporary Nigerian society. He believed this would equally reduce crime rate, as, according to him, “unemployed individual is a reserved soldier for destruction noted.” “We are ready to join hand with you to make life easier for the returnees. We shall create a special arrangement and training for those of them you

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recommend and subsequently co-opt them into our ‘OYRTMA Mayor Scheme’ so as to enable them earn a living through government-provided-stipends while contributing significantly to the economic growth of the state.” Fagbemi, who commended the initiative, reiterated the commitment of the Makindeled administration to the welfare of the indigenes of Oyo State at home and abroad. “It is important we appreciate Governor Seyi Makinde for putting the people of Oyo State first in his policies and governance model,” he said. On her part, Bolanle Sarumi appreciated the collaborative gesture of OYRTMA, saying the scheme would serve as an opportunity for the young repatriated indigenes of the state to be useful for themselves and the society. “This scheme will serve two main purposes; one is the pride the individual will have to serve the society for greater purpose and the most important being the opportunity to have something doing in the interim. “It is a sign of better things to come for the youths of Oyo State. They have seen that the present administration is churning out policies and programmes to favour the youths and the less privileged in the society,” she said.

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SMEs: Essence of cashflow

Timi Olubiyi

s the coronavirus pandemic continues to affect economies, businesses and households globally, the impact has been severe, and the world is grappling with the negative consequences. The cash flow of a company is a crucial factor that enhances business operations at this time. To achieve longterm success, Small Medium Enterprises (SMEs), including large firms, must pay close attention to their cash flow. The cash flow portrays how companies have spent or received cash. It is also one measurement for evaluating firm stability, strength, and future ability to generate cash flows. A business must have adequate cash on hand to pay for operations, liabilities and borrowed funds, and to make investments. Having cash is a crucial requirement for a business to stay solvent. When a business no longer has enough cash to pay its dues, it is often declared bankrupt. Cash flow is the net amount of cash and cash-equivalents being transferred into and out of business. Simply ascribed as inflows and outflows of cash and cash equivalents. Cash is referred to cash on hand, in the bank, which is the most liquid in business transactions. Cash equivalents are items that are similar to cash or can easily be sold off and turned to cash, examples are short term investment bills, stocks and unfinished goods in-store and marketable securi-

ties with less than 90 days maturities (commercial papers, treasury bills and short-term government bonds). A good quality cash equivalent does not usually include equity or stock holdings because they can fluctuate in value with some associated risk elements. It is imperative to state that both cash and cash equivalents are usually referred to as current assets in the balance sheet of a company, meaning they are the most liquid of short-term assets. That said, the cash flow statement’s primary purpose is to provide information regarding a company’s cash receipts and cash payment in various sources. A secondary purpose of the cash flow statement is to provide information about a company’s operating, investing, and financing activities. Because of the importance of this concept, International Reporting Standards (IFRS) require that companies distinctively report cashflow statements in the annual reports. Cashflow statement is necessary in a financial statement for companies to summarise the amount of cash and cash equivalents entering and leaving the company’s coffers. Therefore, expectedly the cash flow statement is usually presented as a separate financial statement that provides additional information for evaluating the solvency and liquidity of SMEs or any business entity. Cashflow statement is often used in tandem, and it complements the balance sheet and income statement. It is a mandatory part of a company’s financial reports since 1987 and the third component of a company’s financial statements. The cash flow statement measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses. The cash flow report is essential because it informs the reader of the business cash position.

The places where cashflow are required in any business entity are in the operating activities (such as proceed from sales, Salary and wage payments to employees, rent, cash recovered from good sold on credit and payment made for purchases). Investing activities such as (dividend received, interest received, and purchase of investments. Financing activities (proceeds from company shares issued, proceeds of loan, bank loan repayment and dividend paid to shareholders. A cash flow deficiency from operating, investing or financing activities could lead to poor overall cash flow performance, meaning reduced cash inflow and increased cash outflow, which could lead to a shrinking cash reserve. Insufficient cash on hand could have dire consequences for businesses. In the end, a business must have enough cash to pay for operating expenses, capital expenditures and any borrowing costs. To ensure an adequate cash flow performance in all areas of business activities, a business must effectively manage sales, investment holdings and fund-raising activities to achieve maximum cash inflow and maintain an optimal level of cash reserves. Although cash flow is essential if a business entity is to continue in operation, in general, it is misconstrued with liquidity which is the ability of a company to meet its current liabilities using its current assets, especially its obligations when it falls due. Cash flows are a more direct measure of liquidity and a contributing factor in corporate performance. The novel coronavirus (COVID-19) has brought about stiff cashflow issues that companies need to work on because any ongoing and unattended cash flow concerns could have a general negative impact on a business’ overall performance. Cash represents the firm’s vascular system; if it dwindles, the busi-

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The novel coronavirus has brought about stiff cashflow issues that companies need to work on because any ongoing and unattended cash flow concerns could have a general negative impact on a business’ overall performance. Cash represents the firm’s vascular system; if it dwindles, the business will not survive

e cannot overemphasised what leaders are expected to do all the time. Leaders are to achieve results. Not one-off positive outcome but sustainable results. One of the essential functions that ensure the continuity of business organisations is the sales function. The sales function is crucial to any organisation without which the essence for existence is threatened. Without a capable sales force, no business entity will survive competition or meet the objective of the shareholders. Sales as a function are pivotal to serving the customers with products or services and to gain market share that ensures positive returns on the shareholders’ investment. However, an unplanned event like COVID-19 will no doubt impact negatively on the achievement of the sales target. The companies might structure to sell their goods, salespeople will obviously be in doubt as per the prospect of continuous patronage and priority their customers will give to their sales pitch. Customers at this time will change their preference and desire to consume what they don’t consider as essential for their survival. It is now more difficult to be a salesperson than in the previous normal. The new normal post-COVID is to adopt new ways of engaging and connecting with customers. Nonetheless, sales and marketing are still an important part of any corporate success and sales leaders are preferred to lead companies ahead of the other leaders. In the 80’s the managing directors of companies were mostly subject matter experts. I have seen accountants, engineers and other experts becoming the chief executive officers of top companies.

In today’s dispensation, you cannot lead any profit-oriented organisation successfully if you are not a salesperson. You might not be a marketer by background, but your ability to organise the sales function, attract customers to your company’s products or services, and deepen the market share year-on-year is a sine qua non to success. In Practical sense, sales teams are vital because they affect the top and bottom lines of the company’s financial and performance outcome. I discovered I was a natural salesperson when a leader deployed me to the sales functions after years of being in the middle and back-office roles. I am grateful to my past employers, where I horned my selling skills. I have since been coaching people who are desirous of improving their figures as salesmen and saleswomen. My coaching target is also people who are afraid to transition into the sales role for some reasons. Sales roles are not to be feared but something to be embraced with the knowledge and desire to succeed. In life, you would one day sell for yourself either as a retiree, or a selfemployed person. For employees, deploying your service to the sales function is, therefore, a training platform for what you will eventually do for yourself. I was in an online coaching session with over 200 salespeople last week sharing my thoughts and experience on how to win the business and loyalty of customers as sales leaders. My audience are sales leaders having responsibility for sales figures of their territories and team members. I shared thoughts from my book, the value chain banking with this group, though they are not employees of banks.

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Being a sales leader or a sales team member with budget responsibility is like riding at the back of a tiger. I got this from one of my Indian friends and mentors who rhetorically use the proverb to inspire the need to keep working hard. What will you do when you are at the back of a tiger? If you do anything outside to keep riding, the tiger will eat you for lunch, breakfast, or dinner, depending on the time of the day. As a sales leader, you must keep working with your team to drive the numbers using strategy to deepen your market share and increase the penetration of your products. Your approach must, however, take cognisance of the customers’ preference and the current economic reality (the new normal like online engagement, social distancing and working from home) to be effective. One way to ensure sales strategies are effective is to fully understand the customers both demographically and in the behavioural sense before making your products available and affordable. Any sales strategy not in alignment with the customer will fail. In order words, a sales strategy that is a product or service-oriented without the customer at the centre of its creation, will deliver a less than the desired outcome. The customers of today are skilful and knowledgeable. They want salespeople to understand their unique situation and reflect that in the approach. Due to scarce resources and the need to maximise benefits from cost, customers are philosophers and higher degree holders in buying naturally. All options are considered before parting with their money. A salesperson must, therefore, be aware of the customers’ sophistication. Every customer is assessing his salesperson using what I termed the trust and respect quadrant in the value chain banking book.

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ness will not survive. So, with the current realities with COVID-19 companies need to pay extra attention to cashflow and see that it remains positive at all times. If cash inflow exceeds cash outflow, the business is said to have positive cashflow. While for the opposite, the business will have a negative outflow. Cashflow is relatively different from profit because it only involves the availability of cash for business spending and most times cash transaction activities. The fact that a firm is profitable does not mean that it is also solvent. The profit is not cash It is imperative to state that cash flow statements and information assist the financial statement users in obtaining the relevant information concerning the use of resources of virtually the entire financial resources over a given time period of a business. The cash flow statement allows investors to understand how a company’s operations are running, where its money is coming from, and how money is being spent. The cashflow can help determine whether a company is on a solid financial footing. In conclusion, should you be having serial challenges around your business or company’s cash flow management a problem even after employing a professional? Can you tell if your business is actually profitable? Are you having difficulties distinguishing among cashflow, profit or even liquidity of your organisation? Do you have the necessary records in case of any audit exercise or performance review? You might need to reach out using the details below for the essential advice. Good Luck! Timi Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, business engineer, Chartered Member of the Chartered Institute for Securities & Investment (CISI) and a financial literacy specialist. He can be reached on the twitter handle @ drtimiolubiyi and via email: drtimiolubiyi@gmail. com, for any questions, reactions, and comments.

Golden tips for sales leaders during tough time

Positive Growth with Babs Babs OlugbemI A customer like the CFO of an organisation is evaluating the banker if he or she can trust and respect the banker. The trust component is the customer’s perception of your ability to build a long-term mutual relationship with the company, your ability to keep confidential information and be a friend to his or her team. The respect component is your competence and integrity on the job. Your competence is, therefore, your ability to understand your products, the industry and be a sales consultant and adviser to your customers. The trust and respect quadrant will determine if the salesperson will be in any of the four customer’s levels of acceptance for any company or product. It is your trust and respect level that will place you in the empathic or total or moderate or no acceptance level with the customers. A high level of trust and respect will enable your team to win the heart, the loyalty, and the unflinching patronage of your customers. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 30 July 2020

BUSINESS DAY

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Climate change: Will coronavirus hasten the demise of Poland’s coal?

The country burns more hard coal than any other in the EU. But even before the pandemic, the industry was in crisis James Shotter and Agata Majos

n early June, nearly two months after coronavirus began sweeping through Silesia’s coal mines, Poland’s government ordered a three-week production halt at 12 pits in a belated bid to curb the outbreak. Yet rather than applauding an effort to protect workers, union leaders fired off a furious letter demanding that the decision be reversed. It was not just the fact that six of the mines had not recorded cases of the virus among miners that angered union bosses. Such a shutdown, they argued, would also bring PGG, Poland’s biggest coal mining group and the employer of roughly 40,000 miners, to the brink of collapse. “In my opinion, [this] was the germ of an attempt to liquidate some mines under the pretext of coronavirus,” says Dominik Kolorz, head of a regional branch of the trade union Solidarity, and one of the letter’s authors. “But our quick reaction thwarted this effort.” Government officials have repeatedly denied that they intend to use the pandemic as an excuse to cut jobs in the struggling industry which employs 80,000 people, and the mines in question all reopened earlier this month. But the spat was a harbinger of the battle over the future of the sector that will have profound implications both for Poland’s economy and for the EU’s ambitious climate goals. For much of the 20th century, coal was seen as the guarantor of Polish prosperity. Until the 1980s, the central European nation was one of the world’s top five producers. Even last year, it drew 74 per cent of its electricity from the black fuel. No EU state burned more hard coal. And only Germany burned more lignite, the most polluting grade of coal.

Viewed from Brussels, where the European Commission wants to make climate change the centrepiece of its agenda for the next five years, Poland’s huge coal industry is one of the biggest obstacles. Leaving aside Germany, Poland now generates more energy from coal than the rest of the EU nations combined. But as Europe has tightened its environmental rules, the coal industry has become an increasing burden on both Poland’s public finances and the wider economy. In recent years, Poland’s mines have lurched from crisis to crisis. And the state-owned energy companies that rely on them have been hit by losses. The pandemic has compounded those problems. As Poland went into lockdown to stem the virus’s spread, overall energy use fell 5 per cent in the first half of the year compared with the same period in 2019, according to Ember, an energy think-tank. Energy from coal, however, fell even faster, dropping 12 per cent as expensive electricity from ageing coal plants was squeezed out by cheaper, and greener, alternatives. The decline will reverse as the economy recovers. But the episode has given renewed urgency to a question that successive governments have long avoided: how, and when, the EU’s sixth-biggest economy will wean itself off coal. “We need to carry out the transformation of our energy sector while we still have some room to manoeuvre,” says Wojciech Dabrowski, chief executive of PGE, Poland’s biggest energy utility. “Failing to take the necessary decisions won’t improve the situation of energy producers. All it will do is leave us searching for last minute solutions at a time when our options are already very limited.” Missing the moment To some extent, the woes of Poland’s mines are homegrown. As coal reserves have been depleted, miners have had to dig deeper, making each tonne of coal more expensive. Yet state-owned mines

have failed to adapt to changing conditions. A scathing report by Poland’s supreme audit office into PGG, which was formed in 2016 in the most recent attempt to rescue the sector, found that even as productivity in its mines had fallen by 2 per cent, average salaries had been raised by 13 per cent. “PGG did not take advantage of an opportune moment to lay the foundations for running a profitable mining business, including in weaker economic conditions,” the audit office said. Much of the pressure, however, has come from the EU’s ever tighter rules to protect the environment. The emissions trading scheme, which forces companies to pay for their CO2 emissions, has made energy production based on coal increasingly expensive. Tougher rules around capacity market payments, which give energy groups an additional revenue stream alongside funds from power generation, and tightening industrial emissions standards, will only ratchet up the pressure. On top of this, the growing reluctance of banks to finance companies involved in coal has made it hard for Poland’s energy groups to secure financing for coal, and even for projects they invest in that are not related to coal. In recent months, the results of these forces have begun to show. In January, the government announced that it would build a huge central depot to house the surplus of coal that has piled up, as prices have been increasingly been undercut by cheaper imports. In June, the state-run groups behind a plan to build a new coal-fired power plant in Ostroleka conceded that it would instead be based on gas, after they failed to secure external financing. “What we are seeing now is the result of these market shifts and years and years of neglect,” says Krzysztof Bolesta, a Polish energy expert. “Every expert in Europe realised that the EU’s climate policy was going to change the European power market. But Poland just froze any changes. Now we are see-

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As Poland went into lockdown to stem the virus’s spread, overall energy use fell 5 per cent in the first half of the year compared with the same period in 2019, according to Ember, an energy think-tank

ing the consequences. Push has finally come to shove.” Quest for security Even after it became clear that the tide had turned against coal, Poland’s ruling Law and Justice party, which came to power in 2015, continued to resist calls to set out a plan for an exit from the fossil fuel. Two years ago, as the world descended on Katowice, the former centre of the country’s coal industry, to thrash out a plan for how to limit global warming, Poland’s president Andrzej Duda paid a visit to a miners’ festival where he promised that he would never allow anyone to “murder” Polish mining. Even though the EU is aiming to be carbon-neutral by 2050, Poland’s latest energy and climate plan, submitted to the EU in December, predicted that coal would still account for 28 per cent of the country’s electricity production in 2040. One reason for this stance is energy security. Deeply distrustful of the Kremlin’s use of gas supplies as a geopolitical tool in Ukraine and elsewhere, successive Polish governments have long viewed coal as a guarantee of energy independence. But like its predecessors, Law and Justice has also been wary of riling miners’ unions. These still wield considerable influence, particular in the Silesian heartlands of Poland’s coal industry in the south of the country, where generation after generation has worked underground, and where many fear that the move away from coal will deal a fatal blow to the region’s economy. “You need to remember that in these mining settlements . . . life revolved around the mine: cultural centres, cinemas, shops, everything was connected to the mine. When the mine dies, everything around it dies, too,” says Rafal Jedwabny, an official at the union Sierpien 80, who works in the Murcki-Staszic mine in Katowice. FT

Are we really living in the dread of COVID-19?

n the distant past, before the coming of the white people to Africa, diseases such as Tuberculosis, Smallpox, Malaria, Sickle cell anaemia, and others decimated the populations of many kingdoms in Africa. Then, a woman, who gave births to babies who died in their infancy, would blame her misfortune on the Ogbanje spirit or the phenomenon of changeling. In the Igbo metaphysics, an ‘ogbanje’ is a spirit child that dies in its infant age. And the spirit child will continue to torment his or her mother in an endless cycle of birth and death until the spirit child is appeased. However, with the coming of the white people to Africa, and the introduction of western education to native Africans, it’s discovered that most babies that died in their infant ages in the distant past were afflicted with the deadly sickle cell anaemia disease. Today, those with that debilitating health condition, who can access medical treatment, can live to a relatively old age. It is evident that our people’s acquisition of health knowledge has helped to trump superstition rooted in Igbo metaphysics. Thankfully, until now, medical scientists are steadily and fiercely pushing back the frontiers of health science and technology to find cures for diverse diseases, which have afflicted mankind. Diseases like HIV/AIDS and Cancer cause high mortalities in some countries of the world. However, the peoples of the world are hopeful that drugs, which can cure sufferers of the diseases, would be found in the near future. Aside from these diseases, the cures for which

have not been found, pandemics have been ravaging our world since the Biblical times. The plagues which God visited on the Egyptians owing to the contumely and impudent acts of their king Pharaoh are contained in the Pentateuch of the Bible. And, history students are not unaware of the Bubonic fever (Black Death), which swept across the world between 1347 and 1351, killing millions of people. And the Spanish Flu, which ranged from 1918 to 1920, causing the deaths of millions of people in the world is still in living memory. So, when we thought that mankind had built a bulwark against the outbreak of pestilential diseases, the Corona Virus disease happened. The deadly disease started its deathly march in the Wuhan province of China, and spread rapidly like harmattan fire to other continents of the world with its morbid consequences. However, conspiracy theory had it that Chinese scientists manufactured the deadly virus in its laboratories. Consequently, then, the American President, Donald Trump, accused the world Health Organization (WHO) of being China-centric, which informed his threat and vow to stop his country’s lending of financial support to WHO. In the midst of this, the COVID–19 pandemic spread to Europe, America, Australia, and Asia decimating populations of many countries and causing panic and fear among people. People can become infected with the disease irrespective of their social status. For example, the British Prime Minister came down with the disease; however, he successfully rallied from it. The COVID–19 pandemic can pluck its victims from

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both the young and old demographics. The dreaded disease made its landfall in Nigeria when an Italian businessman who was afflicted with the disease entered the shores of Nigeria. Since then, the disease has spread to all parts of Nigeria where it has caused fatalities, affecting both the highly placed people and the down-trodden. Abba Kyari, a top government official, was said to have died of the disease and the former governor of Oyo state, Abiola Ajimobi, died of it, too. The world’s initial response to the outbreak of the disease was lockdown. Not a few countries closed their borders, shut their airspaces, and closed their schools and public offices to stem the tide of the spread of the disease. More so, almost in all countries of the world, the practice or culture of social distancing and wearing of face masks were instituted to stop the spread of the disease. In Anambra state, Nigeria, wild partying as well as large gathering of people accompanied by roll of drums, which did characterise the funeral ceremonies of old people in the recent past, was banned. The measure is designed to curtail the spread of the disease. But, now, many countries are unlocking their countries as remedies for the disease are being manufactured. The English premiership league and other European leagues, which were suspended, have started again. In Nigeria, markets in many states have opened for economic activities after they were locked up for months. And, our airspace is open for domestic flights. So, there is hope in the horizons, and light at the

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Chiedu Okoye end of the tunnel, that the people(s) of the world will, sooner rather than later, return to their old ways of living and doing things. However, owing to the government’s opacity and lack of transparency regarding the dissemination of COVID-19 news coupled with some governors’ covert stance on the issue of COVID-19, not a few Nigerians believe the myths and legends woven around the disease. For example, the utterances and stance of governors Ben Ayade and Yahaya Bello of Cross River and Kogi states respectively may have deepened and reinforced people’s scepticism of the reality of the existence of the disease on our shores. More so, in some states of the federation, the identities of the victims of the disease are shrouded in secrecy, ostensibly to protect them from being stigmatised. However, some high-profile Nigerians, especially these who belong to the political elite, made public their COVID-19 condition. Many of them tested positive to the Corona virus disease. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

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Thursday 30 July 2020

BUSINESS DAY

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Time to end the culture of ‘passing the buck’ in Nigeria ‘ While many CHRISTOPHER AKOR

ne of the most important qualities of leadership and life generally is the assumption and acceptance of responsibility for the state/organisation and all the decisions taken within the state/organisation and for one’s actions. The leader is responsible for making strategic decisions and s/he cannot shirk or abrogate that responsibility without losing his/ her right to leadership. Likewise, a person seeking to grow and make progress in life must acknowledge the role s/he plays in his/ her life – the good and bad – rather than looking around for someone or something else to blame. Harry S.Truman, United States president between 11945 and 1953 so appreciated this fact that he often reminded his cabinet that while he was open to their advice, he was responsible for making the decisions because, ultimately, the buck stops at his table. He popularised phrases such as “the buck stops here” and “if you can’t stand the heat, you better get out of the kitchen” often to show that the leader must always make the decisions and accept responsibility for decisions made. And he did make very weighty decisions like the authorisation of the use of atomic weapons against Japan to force its surrender in 1945.

Likewise, individuals desirous of personal success know the first thing they must do is to take responsibility for their lives and careers. It doesn’t mean they will have to do it alone. No! It simply means they are basically in charge of their lives and externally own the consequences for the things they do and things they don’t do. They also learn to internally take ownership of the circumstances of their lives. One of the first things highly successful people realise is the old adage: “if it is to be, it is up to me.” A critical aspect of owning one’s circumstances is taking responsibility when things go wrong. As psychologists have noted, this is most crucial in building trust with others and learning from mistakes. Psychologists attribute the habit of ‘passing the buck’ mainly to children. But sadly, many individuals and leaders carry it to adulthood. No leader person desirous of growth/success can be involved in the despicable game of ‘passing the buck’. A culture of taking responsibility cannot exist in a culture of blame and recrimination. Crucially, a leader must not always take responsibility, but also share the credit. However, these principles do not seem to apply to Nigerian leadership or even Nigerians in general regardless of their education, sophistication or finesse. For one, the history of governance and politics in Nigeria is the history of “passing the buck”. Here, it is all about leaders wanting to take the glory for any modicum of achievement or progress even if it happens accidentally and the stubborn refusal to accept responsibility for anything that goes wrong including the massive corruption, bad governance killings and despoliation of the country. As a keen student of Nigeria govern-

ment and politics, I am always reading and reviewing the actions, policies, statements, biographies and autobiographies of our leaders and statesmen. One theme that runs through them all is the shameful act of ‘passing the buck’ and ducking responsibility all the time. But beyond just the leadership, it is an attitude that is now firmly rooted in the Nigerian society and now shapes our worldview. An argument can even be made that the culture of taking responsibility is alien to us. We spent generations blaming Europeans/ Americans for the slave trade while saying nothing about the local captors and sellers of the slaves. Our entire body of social scholarship, until the late 20th century, was dedicated to blaming European colonialism for the dislocation of African society and sowing the seeds for the state dysfunction that has characterised the post colonial era. While we kept passing the buck, other countries (especially in Southeast Asia) that emerged from European colonialism at the same time with us took charge of their circumstances and went about the business of creating capable states that would serve the needs of their societies. It took their successes for the world, and perhaps, some of us to realise that we have been the problem all along and not the people/countries we always love to blame. By the time our anti-European/ Western scholarship had run its full course at the beginning of the 21st century, our country has not only become a wasteland, but our people have internalised the culture of passing the buck such that the task of national rebirth is now made more difficult and complicated. It has really been depressing seeing commentaries by Nigerians on their family’s involvement in the slave trade.

other African countries including Benin Republic, Senegal, and Ghana have variously apologised for their roles in the slave trade, Nigeria’s only contribution to the debate was to demand compensation from European and Western nations for the damage done to the continent by the slave trade

An overview: Foreign participation in business in Nigeria

igeria is a Sub-Saharan country with a population of over 200 million and a labour force of over 62 million people. With a Labour force the size of the United Kingdom, Nigeria provides several investment opportunities to investors as the largest economy in Africa. The Federal Government has continued to maintain a welcoming disposition towards foreign investors, inviting them to invest in the green or brown fields of the Nigerian growing economy. There has also been concerted efforts by the government to emplace policies and measures to promote and streamline the ease of doing business in Nigeria and remove known obstacles and “bottlenecks” that hinder the smooth conduct of business by foreign investors in Nigeria. These concerted efforts are primarily responsible for the progress in the World Bank’s ease of doing business ranking, moving 15 spots up in October 2019. With this said, the question on the mind of every potential investor would be how to invest in Nigeria. Primarily, in Nigeria there are two major routes to investment: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). An investor can invest in Nigeria directly either by setting up a company with or without partnership with Nigerians or owning productive assets of a company. This is generally known as FDI. Alternatively, an investor can choose to invest by purchasing shares in a Nigerian company, through a Stockbroker in the case of a public company and direct allotment or private placement in the case of a private company.

Section 54 of the Companies and Allied Matters Act, Cap C20 LFN 2004 requires every foreign company that seeks to operate in Nigeria to be incorporated. Thus, any investor intending an FDI must be incorporated as a company registered with the Corporate Affairs Commission. Furthermore, by the provisions of Section 28 of the Nigerian Investment Promotion Act, Cap 115 LFN 2004, before the commencement of operations, companies with foreign equity must register their businesses with the Nigeria Investment Promotion Council (NIPC). This is in addition to the requirement to apply for and obtain a Business Permit from the Federal Ministry of Interior. As a means of meeting business capital requirements, Nigerian law permits an investor to import capital required for its business operations. Capital importation however must be done through an authorised dealer. Upon approval, the investor would be issued a Certificate of Capital Importation (CCI). The dealer will then present the Certificate of Importation to the Central Bank who shall pay the face value of the Capital imported. Foreign Capital could be imported in the form of cash (directly or through Debt-Equity conversion) or via equipment. One of the benefits of capital importation, is that it allows for unconditional transfer of funds in freely convertible currency. It also allows full repatriation of capital, capital gains, dividend and interest received through an authorised dealer. Further to this, a foreign national who intends to form a company in Nigeria must obtain a Business permit to do so. A Business Permit

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is a certificate granted to wholly foreign or joint venture companies intending to do business in Nigeria to enable them bring in investment and commence business activities in Nigeria. To qualify for the grant of a Business Permit the applicant company must have a minimum share capital of N10 million and must demonstrate strong commitment to invest in Nigeria. Failure to obtain Business permit is an offence and defaulting foreigners may be liable to deportation. Foreign owned companies who desire to employ the services of qualified expatriates would be required to apply for and be issued an Expatriate Quota under the provisions of the Immigration Act 2015. The administration of Immigration Act falls within the jurisdiction of the Federal Ministry of Interior, with support provided by the Nigerian Investment Promotion Commission and other related government agencies (the Corporate Affairs Commission, Nigerian Drug Law Enforcement Agency, the Corporate Affairs Commission etc.). However, the Nigerian Immigration Service, an agency under the Federal Ministry of Interior, is the primary government agency charged with the responsibility of regulating and approving the immigration and emigration of expatriates and the granting visas and entry permits into Nigeria. Under the Immigration Act, every company that intends to engage the services of foreign professionals shall apply for an Expatriate Quota issued by the Ministry of Interior. There are two categories of Expatriate Quota which as follows: Permanent until Reviewed (PUR): This is mostly granted to companies intending to hire foreign nationals to fill the role of senior management.

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At a time when countries and families are fully coming to terms with the atrocities their forebears committed during the slave trade, our finest writers and scholars, whose family wealth and privileges were directly tied to the inhuman trade in people, are busy justifying the actions of their forebears and denying their agency in the inhuman trade. While many other African countries including Benin Republic, Senegal, and Ghana have variously apologised for their roles in the slave trade, Nigeria’s only contribution to the debate was to demand compensation from European and Western nations for the damage done to the continent by the slave trade. “We call on all the countries of Europe and the Americas to compensate Africa for the untold hardship and exploitation that the continent had been subjected to in the past,” Babangida was quoted as saying in a conference on Reparations for Africa sponsored by Chief MKO Abiola – another Nigerian and so-called advocate for reparations to Africa. Babangida based his demand for compensation on precedents at the time – reparations paid to Israel by West Germany for atrocities committed under the Nazis, and the United Nations resolution backing the payment of reparations by Iraq to Kuwait for damage and looting by its occupation forces. It never occurred to Babangida then and many Nigerians still entertainer the thought of reparations that those who deserve compensation are the people sold into slavery and not the sellers who exploited the opportunities to make money. This childish national culture of passing the buck is one of the key reasons why we have been unable to create a capable and functional state. The sooner we realise it and begin to work on it, the better for us as a country.

Chinedu Ozor

Temporary: this is granted from a period of 5 years and subject to a 2-year renewal. Alongside Business Permit and Expatriate Quota, a foreign national intending to live and work in Nigeria for a prolonged period shall require a residence permit usually issued in the form of Subject to Regularisation (STR) visa which is usually regularised into a Combined Expatriate Residency Permit and Alien Card It should be noted that under Rules 406 of the SEC Rules, all forms of foreign participation are required to be registered with the Securities and Exchange Commission. With a GDP of over $376.284 billion and a promising outlook, the Nigerian economy is budding with potential. Understanding this, the Nigerian government has set up a robust framework and initiatives to ease doing business. Recently the government extended the Visa on Arrival initiative to all African countries. The visa on arrival initiative is targeted at business travellers and high net worth individuals allowing such individuals to come into Nigeria and be issued a Visa at a pre-designated port of entry in Nigeria. There are also various incentives available to Foreign investors who invest in Nigeria such as the Pioneer status that grants tax holiday for a period of 5-7 years, Tax relief on double taxation treaties, investment Tax Credit, Tax Relief on Foreign Loan, Exemption on Tax Credit, amongst other incentives. Chinedu Ozor is a Partner at DCSL Law. Kindly forward comments and reactions to cozor@dcsl.com.ng

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BUSINESS DAY

Thursday 30 July 2020

Editorial Publisher/Editor-in-chief

Azura plant is not the problem

Frank Aigbogun editor Patrick Atuanya

Fix the broken electricity market

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

he comparison of the Azura Power plant to fraudulent P&ID gas project by Omo Agege, the country’s deputy senate president is disingenuous and evidences a cavalier attitude by government officials to legitimate contracts which worsens the country’s risk perception. Worse still, the senator’s remarks avoid the real issue, which is the broken electricity market. Nigeria entered into an agreement to procure from Azura, a 450-MW of power plus a transmission substation and a gas pipeline/metering station to boot. This contract was directly between Azura and the Nigerian Bulk Electricity Trading company (NBET), Nigeria’s bulk buyer of energy and whose job it is to provide guarantees. However, because NBET’s cash flows were and are known to be suboptimal, Azura could not raise capital (equity/debt) for the project unless NBET itself also secured guarantees to back its desire to deal. These guarantees were provided for Nigeria by the World Bank/MIGA and the Federal Government Put-Call Option Agreement (PCOA). The regula-

tor NERC and NBET worked with Azura from 2011 to 2015 to work through licenses, tariffs, Power Purchase Agreements, loan agreements and credit support arrangements with shareholders, the World Bank, Federal Ministry of Finance and the lending banks. EPC work could not start at Ihovbor-Benin (located right next to the NDPHC plant) until 2015 when all the licenses and project agreements (over 20 of them) were in place. Project construction (all elements from IPP through TCN substation to gas pipeline and metering) was completed 6 months ahead of schedule, also on budget and commissioned in 2018. Subsequently, Azura committed (in its Power Purchase Agreement with NBET) to deliver 450MW of capacity daily and NBET committed to take this power and pay for that energy. That’s what all sellers and buyers do all over the world. Since then, Azura has not missed a day of that obligation. NBET has vesting contracts with all 11 Discos under which capacity/energy received from all the country’s Gencos and IPPs are allocated (vested) amongst the Discos. The Discos are supposed to pay back upstream to GenCos and the

Transmission Company of Nigeria (TCN) for this energy sold to it. As has now been shown, the DisCos have since 2018 been paying only an average of 30–35 percent for the capacity and energy received. That creates a massive payment risk for the GenCos, gas suppliers, the very unique Nigerian mess that Azura’s guarantee portfolio was designed to hedge against. Nigeria’s GenCos and TCN are owed over N1.7 trillion for unpaid energy delivered and transmitted and worse still there is no clear path to payment. NBET is unable to pay up because it does not have enough cash to pay these debts even though NBET signed up effective agreements to pay these GenCos and TCN. In turn, the GenCos owe their gas suppliers about a third of the N1.7 trillion owed to them by the Discos. The only reason Azura is not caught in this mess is that it negotiated and received solid international-backed guarantees, just like all properly structured IPPs across the world. This insight is to show the senator the true situation with the Azura Power Plant deal. The P&ID deal is a failed 2010 contract to develop a gas processing plant. P&ID claimed Nigeria violated terms of its agree-

ment by failing to provide gas for the power plant it wants to build for the country and puts its future income at risk. It was awarded $9.6 billion judgement by a London Court. Facts show these two deals are different. The real issue with Nigeria’s power sector is the broken market. Every month, GenCos generate and send out electricity valued at over N80 billion but DisCos who sell the power can only recover less than N40 billion. This means that operators cannot recover their costs. The reasons are numerous. Less than 40 percent of customers have meters, the cost of power does not guarantee commercial returns and technical losses are enormous due to broken infrastructure. This is why the Nigerian Electricity Regulatory Commission (NERC) came up with a service reflective tariff but lawmakers prodded by DisCos scuttled the process, pushing it till next year. Nigeria cannot afford to continue to disrespect contractual agreements. Sanctity of contracts and respect for rule of law are key reasons investors shun the country. At a time, the government is making overtures at investors, its officials should not be making reckless comments about contracts otherwise it depicts the government as irresponsible.

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Thursday 30 July 2020

BUSINESS DAY

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

In association with briu@businessday.ng

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How COVID-19 affects Africa’s debt profile the COVID-19 pandemic, and to weather the effect of the pandemic on the economy, the IMF approved financial assistance for Cabo Verde to the tune of US$32 million under the Rapid Credit Facility. On April 13, 2020, the IMF Executive Board approved the disbursement of US$1 billion to Ghana to address the COVID-19 pandemic and to be drawn under the Rapid Credit Facility. Nigeria, on the other, is the biggest recipient of the IMF emergency credit facility so far. The country secured $3.4 billion under the Rapid Credit Financing Instrument. The government is talking with the World Bank for $2.5 billion loans and a further $1 billion loan from the African Development Bank.

ISAAC ESOWE

s the days morph into weeks and weeks into months, the world is moving and changing at such a rate that many new issues are cropping up daily. One of the major concerns is the rising number of concerns around the quality of life in general, deteriorating living standard and increasing rate at which public debt is accumulated, particularly, in emerging economies like Nigeria. Before the emergence of the health crisis coded COVID-19 that almost silenced the global economic activities, susceptibility to debt problems had been building in many emerging and frontier countries. Although, the issue of debt varies significantly across countries, nevertheless, it covers or extends over an area of worsening fiscal finance, especially, since the decline in international commodities prices, such as crude oil, has further made the revenue generation capacities of African countries precarious. Nigeria, like other countries around the world, is contending with an unprecedented shock arising from the crash in crude oil prices, coronavirus pandemic and shrinking external buffers. And again, the country is facing deep economic crisis at all levels – health economic and its social institutions are already overwhelmed and corruption is hitting at its peak. The coronavirus pandemic hits Nigeria at a time the country is struggling with unsustainable debt burdens as well as the rising health and economic needs. Nigeria in April announced it would raise $6.9 billion from multilateral lenders to help curtail the spread of the coronavirus and to deal with the adverse impact of the virus on the people’s livelihoods. It was a move which was set to exert pressure on the already increased debt portfolio and this is happening as at the time when tax revenue is shrinking,

export earnings are falling at an increasing rate and diaspora remittances are drying up. To get the full impact of the unfolding scenario, an analysis of the debt data was done from the data extracted by BusinessDay Research and Intelligence (BRIU) from the National Bureau of Statistics (NBS). The Nigerian states and the federal debt stock data as at 31st March 2020 indicated that the country total public debt portfolio (consisting of external and domestic debts) stood at N28.63 trillion. Further disaggregation of the Nigeria total public debt showed that N9.99 trillion or 34.89 per cent of the debt was external while N18.64 trillion or 65.11 per cent of the debt was domestic. Few months earlier, as at 31st December 2019, the country’s total public debt portfolio stood at N27.40 trillion, comprising N9.02 trillion or 31.55 per cent of the debt as external debt while N18.37 trillion or 67.07 per cent of the debt was domestic. A year earlier, that is, as at 31st Decem-

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ber 2018, the country foreign and domestic debts stood at $25.27 billion and N16.63 trillion made up of $11.01 billion of the debt as multilateral; $344.63 million was bilateral (AFD) and another $2.75 billion bilateral from the Exim Bank of China, Japan International Cooperation Agency (JICA), India and KFW, German state-owned development bank while $11.17 billion was commercial which are from Eurobonds and Diaspora Bonds. In the same magnitude, borrowing spree is not limited to Nigeria as in the last few months since the confirmation of the index cases, Sub-Saharan African countries have borrowed at least $ 10,636.85 million in new loans. Before the coronavirus pandemic, African governments already burdened with high debt level. Kenya’s total debt was way above the $60 billion regional marks (more than 60 per cent of gross domestic) while Uganda’s total public debt stock as of January 2020 stood at $13 billion, about 36.5 per cent of GDP.

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Rwanda, on the other hand, borrowed $109.4 million from the IMF to ease foreign exchange pressures with an additional $11 million in debt service relief under a special programme for six months; $14.25 million from the International Development Association for its Covid-19 emergency response arsenal, and $100 million from the World Bank for budget support, with the further expectation to borrow from the African Development Bank. IMF Executive Board approved a $125 million disbursement under Benin’s ECF-Supported Arrangement to address the urgent financing needs stemming from the spread of COVID-19 and to mitigate its economic and social impacts. Burkina Faso was not left out. The pandemic took a major toll on its economy, with the near-term outlook deteriorating speedily. It got an approved Rapid Credit Facility (RCF) to a tune of $115.3 million. Like many countries around the globe, Cabo Verde’s economy is significantly affected by

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Impact of COVID-19 on African countries vis-à-vis China Africa continent is faced with a twin blow since the outbreak of the novel coronavirus pandemic – health and economic crisis. Nigeria and other countries alike initiated measures to protect the health of the citizens and to weather the further impact of the pandemic on the economic stability as at the time where they are burdened with their debt. Debt servicing has become a major impediment, some even borrow more for debt repayment leaving them with slim chances to divert the scarce resources towards more pressing health and economic needs. Many take solace in China loans, and findings show that China is largely Africa’s bilateral creditor. The Chinese government, banks and state-owned enterprises are estimated to hold 17 per cent 24 per cent of Africa’s external debt. Conversely, a default in payment comes with a negative economic implication, regardless of the origin of the loans. Going forward, it will be harder to borrow and they could face broader negative repercussions on their economies.

Thursday 30 July 2020

BUSINESS DAY

COMPANIES&MARKETS BANKING

Sterling Bank, stakeholders brainstorm on driving foreign trade HOPE MOSES-ASHIKE

o highlight and address some of the challenges of the manufacturing and trade sectors of the economy in light of the coronavirus pandemic, Sterling Bank Plc held a webinar for customers in the business of import/export of goods and services,. In a keynote address, Raheem Owodeyi, executive director of operations and Chief operating Officer (COO) of Sterling Bank, told participants at the webinar that COVID-19 has disrupted global logistics, leading to price fluctuations in commodities and drops in GDP and foreign reserves. He also said that the situation has consequently made it a challenge for banks to support importers and exporters of goods and services in meeting their trade obligations to suppliers. Owodeyi remarked that those who go all out to obtain the foreign exchange outside of the official channels tend to incur higher than required

costs, and in a bid to reduce the constraints of its customers, the bank decided to put together the seminar to educate customers on how they can manage the changes created by the pandemic, dearth of foreign exchange and how they can source foreign exchange through the right channels. Also speaking, Samuel Oyeyipo, regional coordinator, Nigerian Export Promotion Council (NEPC), South West Regional Office, Lagos, in his paper entitled, “Export trade in Nigeria, Opportunities and Requirements,” said exporters engage in export business to earn forex, gain access to bigger markets and increase profit levels. He explained that there are several opportunities in non-oil exports for leather, cashew, cocoa, rubber and manufactured products, among others as all of these have potential to contribute to the nation’s non-oil foreign exchange earnings. He also listed some of the major destinations for Nigerian exports as Europe, US, Asia, other parts of the African continent and the Middle

East, adding that steps taken to export products include an export plan, decision on the product or service to export, business registration with appropriate regulatory bodies like CAC and NEPC, and opening of foreign currency domiciliary account to receive FX earnings. Other requirements include adequate packaging and labelling of products for export, which must meet certain international standards of containment, protection and preservation. The regional coordinator also shared that the NEPC is engaged in some intervention projects such as collaborations with Sterling Bank to train interested individuals and enterprises for the export business, human capital development with other international and local agencies and its OneState-One-Product Initiative, under which each state in the federation is encouraged to develop a product in which it has comparative advantage for export. Presenting his thoughts on “Trade Competitiveness through Collaboration,”

Bamidele Ayemibo, managing director/CEO- 3T Impex Trade Academy, stressed the need for collaboration between importers and exporters. He said, “In order to survive the impact of COVID-19 on international trade in Nigeria, the importer and exporter must work together with their banks in a symbiotic relationship to generate funding to grow the volume of non-oil exports and foreign exchange as a way of easing the pressure on Naira.” He also reiterated the need for importers to build capacity and consider direct export funding as alternative means of generating FX to meet their import funding needs while at the same time mitigating exchange risks by entering into FX forward and futures contracts Kola Awe, managing director/CEO of XPT Logistics International Limited, who spoke on ‘Imperatives of Freight Forwarding and Documentation’, noted that freight forwarding is the heart of the export trade because it involves the movement of goods from one location to another.

CRYPTOCURRENCY

ABiT Network Quick Swap Sees over N80M Naira worth of Transactions in a week LUCKY NWANEKWU

BiT Quick Swap, the newly launched feature of the Abit Network, has seen over N80 million naira worth of transactions just days after listing on two top exchanges, according to the Founder/ CMO Gaius Chibueze. Users liquidate digital assets into fiat currency or any other cryptocurrency to pay bills, cover an emergency, or buy any other investment. When needs arise, speed is of the essence; no one has time to wait three days for a bank wire to clear. For those occasions when a rapid exchange is essential, individuals need a wallet that can guarantee quick swap between assets or fiat. In an announcement on social media platform Twitter last week the founder of ABiT Network wrote that a new feature was released on the ABiT trading platform and an extra security layer was also announced. . The official twitter page of Tatcoin explained how easy it was to swap naira with bitcoin, using the quick swap feature.

According to the information, users can log into their profile on ABiTrader, copy the naira account and transfer money from their bank to the account. Users can thereafter check their balance after which they can click on QUICK SWAP to convert Naira (NGN) to TATCOIN (TAT) by typing the amount they want to convert and click Swap. In an e-mail interview, the CTO of ABiT Network, Raymond Idu told BusinessDay that “How it works is that when a user has naira and wants Tatcoin , he or she can swap for Bitcoin also if you have Ethereum and you need Bitcoin, you can swap Eth for Btc.” For now, ABiT has about four pairs, naira, bitcoin, tatcoin and ethereum which can all be swapped. “It all happens on the ABit Trader platform. So some transactions also work partially, and the challenge we have with users is they think the swap order happens all at once. But sometimes it does partially,” said Idu, who added that there will be another top listing soon.

BANKING

Access Bank provides financing opportunity to Female SMEs across Africa ... Unveils second edition of Womenpreneur Pitch-A-Ton HOPE MOSES-ASHIKE

A L-R: Bola Olowu, chairman, director, public private partnership and diaspora, federal ministry of health; Abike Dabiri-Erewa, chairman , Nigerians in Diaspora Commission, Chikwe Ihekweazu, director-general, Nigeria Centre for Disease Control (NCDC), and Ali Onoja, representing , president of the Nigerian Association of Pharmacists and Pharmaceutical Scientists in the Americas (NAPPSA), during NAPPSA’s donation of COVID-19 diagnostic and other medical equipment to NCDC in Abuja.

COMPANY RELEASE

FCMB announces resignation of directors from board

CMB Group Plc. has announced the resignation of two directors, Olutola Mobolurin and Olusegun Odubogun from the Company’s Board. This was part of decision reached at the end of the board’s general meeting. In a corporate disclosure posted on the Nigerian Stock

Exchange NSE and signed by the Company’s Secretary said “Both directors however remain as directors on the Board of the Group’s subsidiary First City Monument Bank Limited.” The group recently announced that its pensions arm, FCMB Pensions Limited has entered into an agree-

ment to acquire 96percent of Aiico Pensions Limited. The acquisition was said to be part of its strategy to grow the Group’s investment management portfolio and build on the inherent synergies between its pension arm and its retail banking operations. Its financial results for the year ended December 31,

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2019 revealed that the Group’s gross revenue increased to N188 billion compared to N177.2billion in 2018. Its profit before tax also rose by 9% to N20.1 billion. Its share price as of today stands at N1.90. Its price-toearnings ratio stood at 2.00 while its price-to-book ratio was 0.1833.

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s part of its promise to continuously provide financial and business skills to female entrepreneurs, leading retail bank in Nigeria, Access Bank Plc has unveiled the second edition of its Womenpreneur Pitcha-ton programme. T h e Wo m e n p re n e u r Pitch-a-ton Africa 2020 Campaign is designed to p rov i d e f e ma l e ow n e d businesses across Africa an opportunity to access to finance and world-class business trainings as well as mentoring opportunities. This programme has been designed to create an enabling environment for female entrepreneurs to grow their businesses. Speaking at the launch of the second edition of this initiative, Ayona Trimnell, group head W Initiative, said, “Access Bank has been a leading advocate for women’s economic empowerment in Nigeria and this is the key motivation for the ‘W’ Initiative which caters @Businessdayng

to the women economy particularly in the areas of capacity building and creating networking opportunities for women”. She further stated that the Pitcha-ton is an expansion of the Womenpreneur Business Workshop, under the Bank’s women proposition, the W Initiative. “We launched the Pitcha-ton initiative last year in line with our value proposition as the No. 1 Bank of Choice for women in Nigeria, and we got a tremendous amount of applications with innovative business ideas. This year we want to do more and we want to reach out to more female entrepreneurs not just in Nigeria but across Africa. “As a responsible financial institution with huge presence in other African countries, we want to give the same opportunity to other female entrepreneurs in Ghana, Rwanda and Zambia as well as Sierra Leone, Gambia, & Congo to apply and participate in this year’s edition of the programme.

Thursday 30 July 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

NSE All Share Index

Week open (17-07–20)

24,287.66

Week close 24 07–20)

24,427.73

Percentage change (WoW) Percentage change (YTD)

Market capitalisation

NSE Premium Index

The NSE-Main Board

N12.670 trillion

2,115.89

N12.743 trillion

2,165.54

0.58

2.35 2.33

-8.99

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,021.70

741.05

123.33

405.78

191.12

1,809.60

1,099.97

915.73

1,011.03

1,032.74 1,040.14

272.10

741.05

270.41

122.34

404.25

182.20

1,824.65

1,106.55

920.06

-0.62

-0.80

-1.04 -0.02

0.00 0.00

0.72 -11.69

-24.22

-2.77

-0.38 -31.81

NSE Lotus II

-4.67

0.83

-30.60

-0.55

NSE Ind. Goods Index

NSE Pension Index

0.60 2.88

0.47 -12.71

Investors to price in corporate actions, earnings guidance as H1 season kicks-off Storeis by Iheanyi Nwachukwu

ividends and capital gains are the two wealth-building tools of the stock market. Investments either rise in price through capital appreciation, or companies pay out a portion of their own profits to shareholders as dividends. When the two wealth-building tools lack in the stock market, investors are always on the losing side. No doubt, Covid-19 has eroded earlier gains seen in the market but that has not stopped investors from being hopeful to recoup part of their loss from dividends. Now that the half-year (H1) 2020 earnings season has fully kicked off, fundamentally sound stocks with consistent records of paying interim dividend will no doubt become investors delight, leading to increased activity on the demand side of the remote trading sessions of the Nigerian Bourse. “We expect market performance to be driven by corporate actions; Zenith Bank approved the payment of an interim dividend last week, while management of MTN Group guided about a positive earnings expectation this period. We expect these corporate news to spur some positive sentiment on these counters”, said Meristem Research analysts in

their July 27 note. The analysts believe that the cheap valuations of some fundamentally sound tickers present an opportunity for bargain hunting. Ultimately, they expect bullish sentiment to permeate the equities market this week. The shares of companies with record of dividend payment are topping the list of analysts picks

for a “Buy” despite that July is earnings reporting month which spans the April to June period where the Covid-19 pandemic hit the economy and many businesses hard. While the overall outlook for equities performance in this second half (H2) remains murky, and companies continue to churn out

their half-year results, investors are advised to seek trading opportunities in only fundamentally justified stocks. Lagos-based United Capital research analysts in their top stocks recommendation for this week want investors to buy Dangote Cement Plc, GTBank Plc, Nestle Nigeria Plc, Okomu Oil Palm Plc, and Zenith Bank Plc. In the trading week to July 24, the Nigerian Stock Exchange (NSE) All Share Index (ASI) advanced by +0.58 percent while the negative return year-to- date stood at -8.99 percent. Stock investors had gained N72billion in the review trading week. The market defied the odds of mixed trading session to close in green zone following gains in largely capitalised stocks (NSE 30 increased most by +0.72 percent). “We believe the direction of the market this week will largely be dictated by the tone of earnings results released by bellwether stocks”, Vetiva research analysts said. Vetiva analyst want investors to buy shares of GTBank, Zenith Bank, UBA, Access Bank, FBN Holdings, FBN Holdings, FCMB, Stanbic IBTC, Nigerian Breweries, Guinness Nigeria, Flourmills Dangote Sugar, Lafarge Africa, Dangote Cement, Julius Berger, Seplat, Total, Mobil and Ardova. The analysts ‘Buy’ rating for these stocks was because they are considered highly undervalued, but with strong fundamentals and

where potential return in excess of or equal to 15percent is expected to be realized between their current price and analysts’ target price. In what seems to be a mixed feeling for equities, Afrinvest research analysts believe that events of the firsthalf (H1) of the year caution against an overly optimistic outlook for the second half. Though, Afrinvest analysts envisage that the recovery pattern in late H1:2020 would be sustained “due to an improvement in risk appetite mostly from the locals and an improvement in external conditions”, they however noted that the downside risks to their expectation include tightening of the partial economic reopening due to new wave of the COVID-19 spread, lower oil prices, MSCI’s classification of the Nigerian market as a standalone, continued FX illiquidity and weaker than anticipated economic and earnings growth. “Our view continues to favour cautious trading owing to the fact the gains recorded last week were not broad-based. We reiterate that risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks”, Cordros Capital research analysts said in their recent note.

and corporate treasuries directly or indirectly impacted in the short term. Thus, it came as no surprise to see a 28percent y/y drop in cement sales in Nigeria in April, the month of the lockdown. Revenue was also impacted across the Pan African business due to similar shutdowns. However, by the start of May, lockdown restrictions had eased across Africa, leading to a resurgence of economic and more importantly, construction activities. By the end of Q2’20, volumes had recovered to 3.4 million MT in Nigeria (Vetiva: 3.1 million MT), a mild 6percent y/y drop in sales, even as the borders were closed. Combined with strong Q1 volumes, the Nigerian business reported 7.4 million MT of sales in the first half of the year, 2.4percent

down y/y. With the relaunch of the popular bag of goodies promo in July and amidst the resumption of sea-based exports in Q2, we forecast FY’20 Nigerian volumes at 14.0 million MT, up from 13.4 million MT. While cement sales fell 6percent y/y in Q2, a 3 percent y/y rise in average revenue/tonne to N45,118 in Nigeria meant that Revenue moderated only 3percent y/y to N153.1 billion. Combined with stronger Q1 results however, H1’20 Revenue came in 1percent higher y/y at N332.4 billion. While we maintain our expectation of stronger competition in the space amidst reduced demand, we adjust our pricing expectations to reflect higher costs and anticipate a 3percent growth in average revenue/tonne over FY’20.

Vetiva Research: Dangote Cement Plc: Forging ahead in spite of pressure ....Earnings surge despite lockdown

angote Cement wrapped up the first half of the year in impressive fashion, reporting a 6 percent year-on-year (y/y) jump in Group bottom line to N126.1 billion, 22 percent ahead of our N103.2 billion estimate. The earnings expansion was achieved amidst a pandemicinduced slowdown in economic activity in April. On a quarterly basis, operating earnings came under pressure, with the Nigerian business reporting a 6percent y/y drop in EBITDA to N91.1 billion, dragged by higher energy costs, wages, haulage costs and selling and distribution costs. EBITDA margin moderated 190 basis points (bps) y/y to 59.5percent. On the other hand, the Pan African business reported a 40percent y/y jump in EBITDA

to N16.9 billion, a record quarterly operating profit from the region. This was largely due to increased volumes, higher pricing in Zambia, reduced haulage and depreciation costs in Tanzania, Zambia and Ethiopia. That said, dragged by the weaker Nigerian figures, Group EBITDA fell 2percent y/y to N103.8 billion in second quarter (Q2), at a reduced margin of 45.6percent (Q2’19: 46.7percent). Overall, supported by the stronger operating environment in Q1, Group H1’20 EBITDA came in flat versus the previous year at N218.1 billion (Vetiva: N210.4 billion), with an EBITDA margin of 45.7percent. Furthermore, PBT fell 2percent y/y to N74.8 billion in Q2, as a 16percent y/y increase in debt balance drove a 24percent y/y increase in Net finance www.businessday.ng

costs. However, in spite of the drop in PBT, Dangote Cement reported an 11percent y/y jump in Q2 PAT to N65.6 billion, supported by a 12.4percent (Q2’19: 22.9 percent) effective tax rate. Exports, promotions to drive volume growth At the end of March 2020, Lagos State announced a partial lockdown in movement of citizens in a bid to curb the spread of the ongoing COVID-19 pandemic. The rest of the country soon followed, with the resulting lockdowns limiting economic activity across the country. Lockdowns were also enacted across the Pan African countries. We had anticipated a sharp drop in public and private sector infrastructure spend as a result, with government

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Thursday 30 July 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Oil and gas project sanctioning in 2020 set to fall by 75 percent …as Nigerian companies suspend actions olusola Bello

lobal project sanctioning is set for a staggering decline this year of over 75 percent from 2019 levels, as the Covid-19 epidemic has caused exploration and production(E&P) spending to drop much lower than what was expected at the beginning of the crisis. Rystad Energy estimates total sanctioning value will end up at around $47 billion, an amount that would be even lower if not for recent developments in Norway and Russia. The situation is worse in Nigeria as noticeable projects that were set to be sanctioned in the country had to be put on hold. The industry only hope which is Bonga South West being undertaking by Shell Nigeria Exploration and Production Company , SNEPCO, activities have gone dormant since the advent of COVID 19. The French oil giant,Total E and P has also suspended it planned work of Preowei, deep water project on oil mining Lease (OML) 130.

“We have just finished with Egina and it is expected to be producing 200,000 barrels of oil per day but as you all know that the dynamics of the reservoir means that after sometime we will not be able to keep Egina to producing oil at that level,” the former managing director Nicholas Teraz said. “What we need is to have a project that will feed in for Egina. Preowei is the first one that we want to put into production. And, we are

working with Department of Petroleum Resources (DPR) to be able to get the necessary approvals for this project,” he said Perhaps the only project that may manage to go ahead presently is the Nigeria Liquefied Natural project, train7 which escaped by whimsical the ravaging effect of COVID19. The situation is bad because Nigeria is just depleting her production level without any replacement.

Outlook for oil market remains dependent on considerable uncertainties in 2021 olusola Bello

he outbreak of COVID-19 pandemic had an unprecedented and devastating impact on the global economy and oil market fundamentals in 2020. While the market still finds itself in the midst of the crisis, gradual stabilization is expected to begin in 2H20, leading to a cautious forecast of renewed growth in the year to come. GDP growth in 2021 is forecast at 4.7, following a contraction of 3.7 percent seen this year . This assumes that COVID-19 is contained, especially in major economies, allowing for recovery in private household consumption and investment, supported by the massive stimulus measures undertaken to combat the pandemic. The 2021 forecast assumes no further downside risks materialize, particularly from trade related issues. Growth risks include high debt levels, which could pose serious challenges for anOlusola Bello, Team lead,

ticipated growth, not only due to general limitations in fiscal space, but also a rise in debt-services. Indeed, the magnitude of the recovery in the travel and hospitality sector, along with general leisure services and transportation will be significant to economic recovery in 2021. According to OPEC, the GDP growth forecasts, Global oil demand in 2021 is projected to recover strongly from the downturn seen in 2020 registering historical high growth of 7.0 mb/d although remaining far below the preCOVID-19 level. Encouraging improvements in economic momentum are assumed to be the driving factors for increasing demand in 2021. In regional terms, the OECD is estimated to contribute around 3.5 mb/d to growth, driven by positive developments in OECD Americas. In the non-OECD, growth in petroleum product demand is also estimated at 3.5 mb/d with Other Asia and China contributing a combined increase of more than 2.4 mb/d.

Graphics: Joel Samson.

Gasoline and diesel are anticipated to record the highest y-o-y gains as both products are foreseen rising by more than 3.8 mb/d. Jet fuel is expected to only partially recover, World oil demand growth forecasts, mb/d growing by 0.8 mb/d, as international travel will remain under pressure for the whole of 2021; lower travel and commuting activities will affect transportation fuel demand in general. Non-OPEC oil supply is forecast to grow by 0.92 mb/d in 2021, following a deep contraction in the current year. This is mainly driven by an expected recovery in demand and a likely improvement in oil prices to levels that would lead to increased activities by US producers. US production in 2021 will see only a minor growth of 0.24 mb/d, compared to the growth of 2.3 mb/d seen in 2018 and the 1.7 mb/d seen in 2019. US tight crude is expected to grow by 0.24 mb/d, mainly from the Permian Basin, offset by declines in onshore conventional crude.

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This action has seriously affected the country crude oil reserve base Of total global sanctioning value in 2020, some $27 billion is expected to be for offshore projects, with the remaining $20 billion for onshore. In 2019, the total sanctioning value reached $197 billion, with $109 billion going to offshore projects and $88 billion to onshore projects. So far this year, the projects that have been commit-

ted are worth a combined $29 billion, with $16 billion going to offshore and the remaining going to onshore. Rystad Energy’s forecast is based on a scenario in which Brent averages around $40 per barrel this year, not far from its current market price. “At the beginning of this year, the project commitments forecast for 2020 were expected to be comparable to 2019, but the industry downturn thanks to Covid-19 has caused commitments to fall sharply. Going forward, Rystad Energy estimates that sanctioning will not pick up again and recover to 2019 levels anytime soon,” says Karan Satwani, energy service analyst at Rystad Energy. Meanwhile global oil discoveries of conventional resource volumes reached just 4.9 billion barrels of oil equivalent (boe) in the first half of 2020, the weakestperforming first half of the 21st century. The resource volumes were 42% lower and the number of discoveries was down by 31% compared to the same period in 2019. The average monthly discovered volumes so far this

year are estimated at 810 million boe, a 34 percent drop from the same period last year. This year could be on track to repeat the 2019 predominance of gas discoveries, with 55 percent of the volumes discovered so far being categorized as gas. The top five largest discoveries account for about 68percent of the total discovered volumes. The monthly average was pulled down primarily by June, which only saw three small onshore discoveries, adding around 16 million boe in discovered volumes. January and May were the most successful months in 1H20 due to significant discoveries such as Jebel Ali in the United Arab Emirates, Maka Central in Suriname, Uaru in Guyana and 75 Let Pobedy in Russia. “Last year we saw the highest volumes of discovered resources since the last downturn. Based on the large number of high-impact exploration wells planned for this year, 2020 was meant to follow the same path. But then Covid-19 struck and the oil market crashed in 1Q20, resulting in delays and cancellations as operators cut budgets.“

Chevron reiterates commitment to STEM education

s part of the efforts to promote quality science education in Nigeria and other parts of Africa, Chevron cosponsored the inaugural edition of the Summer Engineering Academy (SEA) virtual conference, organized by the Africa Leadership Academy (ALA). This initiative is designed for highly motivated and talented high school students from Nigeria and Angola, who are interested in a career in Science, Technology, Engineering and Mathematics (STEM). A total of 18 students (15 Nigerians and 3 Angolans) from various high schools participated at the event and generated proposals for which they tried to gain investment support by tackling the “Engineering Design Challenge” question: What technology would help my community navigate an epidemic? Chevron has partnered with ALA since 2016 to support the AfriSTEM programme which is designed to establish an AfriSTEM center of excellence through the recruitment and funding of STEM scholars into ALA’s Diploma programme. A

group of Nigerian students at the virtual event won the best presentation award. Highlighting the objectives of the event, Monday Ovuede, director, CNL/NNPC Joint Venture, who was one of the judges at the conference’s final presentation, conveyed Chevron’s continued commitment to the development of STEM education in Nigeria and other parts of Africa. “I think the Nigerian students’ performance at the event shows that Nigeria has young talents with the drive and ability for critical thinking. What we need is to continue to support and replicate events like this by providing the necessary artisan and technical support to enable our talented youths to bring their ideas into reality,” he stated. Ovuede, who described Chevron’s involvement in the programmes as apt and valuable, advocated the establishment of technical competition among Nigerian and African universities in different fields related to STEM to further boost development of the country and the continent. Also speaking at the gathering, Pedro Cesaltino, Manager,

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Chevron South Africa Business Unit and the guest Speaker at the closing ceremony of the event, noted that the Summer Engineering Academy represents for the young people a very unique opportunity to be part of what’s going on in the world, and set themselves up to make a big difference. Explaining further on Chevron’s commitment to STEM, CNL’s general manager, Policy, Government and Public Affairs, Esimaje Brikinn highlighted some of the initiatives embarked upon by Chevron and its partners to advance STEM education in Nigeria. According to him, these efforts include the investment by Chevron and the Agbami parties, of about N8.4 billion on the Agbami Medical and Engineering Professional Scholarships (AMEPS). “Since inception, over 16,300 students from all the states of Nigeria have benefitted from the Agbami Medical and Engineering Scholarships, which has recorded a total of 715 first class graduates. The Agbami parties have also donated 39 science laboratories and nine hybrid libraries to schools in different parts of the country,” he noted.

Thursday 30 July 2020

BUSINESS DAY

INTERVIEW ‘Through Forza Digital, we hope to empower businesses to provide valuable industries for coming generations’ Seye Bandele is managing partner at Forza Digital Media. He specialises in marketing and sales with interests in business growth, development and technology, heading teams across Yesmobile (acquired in 2016), Yudala and Konga. During his time in e-commerce, he presided over the execution of cumulative marketing budgets of approximately $5 million over 5 years. In this interview with IFEOMA OKEKE, he speaks on how Forza Digital is helping connect clients to the audiences. Excerpt: Since you set up, have you been able to get as many clients as you expected? n the time that we have set up, gracefully, we have been able to amass a good number of clients, chief of whom are Coscharis Group, Flour Mills and a number of other smaller entities that we are servicing. What are some of the challenges you have experienced since you started operations? Our biggest challenge is customers not fully understanding what their problems are and thinking that they can just recommend to you what they want you to do. For instance, if a customer has a product and the product is not selling, they think the problem with product is that not many people know about it and that is why they are not buying. When you engage us, first of all we try to look at the bigger picture. If a product is good, no matter the number of people you have channelled your communications to, you will see some level of engagement, and then you realise that if you speak to a larger number of people, sales could go up. So there could be many things wrong with a product. It could be the way the brand has been designed; it is not connecting to who you want it to connect to. Or maybe the product is not actually solving a real problem. So, we try to ask those questions and give very strong recommendations on what needs to be done. Customers come to us and say ‘Please just help me package this,’ you can’t really package your audience or market. A product needs to be solving a real problem and you now boost it with marketing to get the profits or the business that you are trying to create. Secondly, Nigeria is a very peculiar environment. Unfortunately for us, we are a country with a very large population but a large number of that population is extremely poor. By extension, if the people who make up a country are poor, then it means that we have a poor country. So, as rich as Nigeria may appear on the outside in terms of resources, the people are inherently poor. We are also not a producing country, so you who have a product have likely created that product using foreign exchange because it was created outside before it was brought in. So, for it to make commercial sense to you there is usually a range of costs associated with your products. Before you can achieve a large number of customers for your product which will give you the volumes that you

Seye Bandele

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do proper work for. There is a big element of our offering called the Strategic Consulting Arm. This means we sit with the customers and identify the problems before we proffer solutions. It is easy to market ourselves as a solution-focused agency but we even identify your problems for you before we proffer solutions. We work with people who value the advice that we give, who value the insights we are able to expose them to and

‘

Nigeria is a very peculiar environment. Unfortunately for us, we are a country with a very large population but a large number of that population is extremely poor. By extension, if the people who make up a country are poor, then it means that we have a poor country

‘

are looking for, you need to find a specific area of the market where their disposable income is enough to buy your product and become an active user of your product. With this in mind, the market now becomes a little bit small depending on the kind of product you are trying to sell. You also have to be deliberate in your communications, know who you are targeting, ensure that you have done customer profiling so that you know that these people can afford the product that we are trying to sell to them. The billionaires in the country today are selling very basic things which are survival items like sugar, salt, food, oil, kerosene, petrol amongst others. This is because we have a large number of people who buy these things. If you are providing some level of luxury or semi-luxury products, you may struggle. That is a challenge. We need the economy to be buoyant enough for the people within to be making meaningful income so that they can spend again and grow at large. How do you strike a balance between making revenue and ensuring the right steps in providing the right services for your clients, even if your customers think otherwise ? By virtue of our business, we are a boutique agency and what that means is that we are not looking for thousands of clients. We are looking for very deliberate clients who value the quality of our work and who will be patient for us to

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who are willing to work with us to create these impactful solutions in the market that we are trying to create. At the bottom of it all, what is important to us is that we want to create an enabling environment for those who are coming after us. We want a Nigeria that we look back in the next 30 years to be the Nigeria where because of the work that we have done, these opportunities are now available. Digital marketing as it is today is an industry that did not exist 50 years ago. So, what has happened is that a new industry has been created and there aren’t a lot of core professionals in that industry. There is nobody in the industry today that has studied Digital Marketing for 20 or 25 years. So you can’t say someone is a veteran of Digital Marketing for 25 years. So because of our environment, we are trying to create that deep expertise in this field so that we create solutions that solve the problems in our locality. Many of the things we enjoy today are things from industries that have been created over time. So we also want to create a valuable industry for the younger ones and be able to impact our society. What is your role in Forza Digital? I am the co-founder of Forza Digital, a digital marketing and growth focused Communications Company, powering medium to large scale businesses to make the quantum leap into new frontiers. I work as the managing partner. From the way we are set up, it is a team of partners. It was set up by me and co-founder, Chikodi Ukaiwe. We then got a couple of other partners to join us. So each person has domain expertise in all of our pillars and offerings as a business. I am in charge of brand management, daily operations, managing the partners and the business. What does Forza Digital stands for and how does it operates? In Forza Digital, we help connect our clients to the audiences that they are looking for and they want to connect to. Marketing agencies have suffered quite a lot of misconceptions. Advertising agencies are seen as a marketing communications business. So, we say exactly what we stand for. Our process is very result-oriented and it is very data-led. So, we question everything. Rather than the conventional method of marketing where people say they want to get their message out to certain number of people, we will only recommend to you based on the kind of @Businessdayng

offerings you are serving, the channels, techniques and different types of methods that will get you the kind of results that you are looking for and everything that we do is led by data. We never do anything from history or what we think works. If the data speaks differently, whether it is empirical, survey or sample data, we try to use data to inform our decisions, no matter what it is. No matter what it is; whether it is using certain colours for designs or selecting billboards whether digital or analogue; all these must be data-led decisions. How long has Forza Digital been set up? We are just over a year old now. We started very early last year but I and my co-founder have been working together for a very long time. While he was in commercial operations, I was in marketing and when we eventually left ecommerce, we decided to do this. During our time in e-commerce, we were able to create brands that didn’t exist before and build an industry that didn’t exist into the market. Technology has brought a new advent of possibility into our environment, so everybody had something that they wanted to do or create and who better to talk to than the guys we have seen do it before. We had a lot of people talking to us such as young start-ups, wristwatch makers, even medium to large scale companies; and several people who just want to create a brand and engage fresh audiences. We then and we now decided to set this up as an entity to help these people to launch their products into the market and that was how Forza Digital came to be. How is your business faring in this COVID-19 period? Obviously, it has been very tough. The outbreak of the pandemic was characterized by serious financial losses that nobody could have predicted from January 1. However, without any disrespect to people whose families and personal lives have been negatively impacted or disrupted by the pandemic, COVID19 has also presented some semblance of a silver lining. Businesses are now forced to innovate and think quickly about how to reposition themselves for maximum benefit in the face of today’s realities. We are now very busy engaging with clients all over the world, who want to recreate many of their business offerings in a much more optimized way that gives them superior advantage in a new, distributed yet connected world.

Thursday 30 July 2020

BUSINESS DAY

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Pandemic: FirstBank offers support to small enterprises in education sector

This pandemic has been a terrible thing, and one lesson from it is that we have not invested enough in solutions we can deplore at a time like this.’

irst Bank of Nigeria Limited has offered to give financial support to Small and Medium Enterprises (SMEs) in Education Sector to cushion the effects of the COVID -19 pandemic, according to NAN report. Bankole Adediran, Head, Transaction Banking Products, FirstBank, made this known at the Bank’s SMEConnect webinar with theme: “Managing Your School through the Pandemic: Engagement and Retention Strategies”. Adediran said that the Bank was ready to partner with SMEs in the education sector through the period of the novel coronavirus pandemic to sustain their businesses. “FirstBank, as an institution, is very passionate about education, and will continue to support the sector,” he said. He said that the Bank would continue to reinforce its leading role at enabling the growth of the educational sector in the country. Adediran said that the Bank had an array of financial products that could be accessed by SMEs in the educational sector in the period of COVID -19. He said SMEs in the sector could key into FirstEdu Loan targeted at private nursery, primary and secondary schools to assist the schools in achieving their desired growth in medium and long terms. According to him, the product provides funding advancement of up to N20 million for schools with a minimum of 100 students with school fees collection domiciled

at FirstBank. Adediran said that, with the product, school owners/proprietors could stay ahead to make learning easy and conducive for students. He said the Bank had launched various interventions and initiatives to support the sector to navigate through challenges occasioned by COVID -19. He noted that FirstBank recently launched an e-learning initiative aimed at reaching out to one million students across the country to ensure they would be academically engaged while at home. Adediran also said that the Bank supported 10 universities and three secondary schools across the

country with major infrastructure projects. He added that the Bank donated 20,000 e-learning devices to the Lagos State Government to promote online learning for students in the public schools. Adediran urged schools must learn from the COVID -19 pandemic by embracing automation to plug leakages in the sector. Mrs. Folasade Adefisayo, Commissioner for Education, Lagos State, who was a panelist at the webinar, commended the Bank for donating 20,000 devices with six months data, to the state for e-learning. Adefisayo said the state reached out to many companies for support

at the wake of the pandemic and that FirstBank came to its aid. She disclosed that all the schools were not prepared for the situation, noting that most children in public schools did not have device and data for online learning. “This pandemic has been a terrible thing, and one lesson from it is that we have not invested enough in solutions we can deplore at a time like this,” Adefisayo said. She said that the pandemic had forced Nigerians to be more creative and innovative, adding that schooling would no longer be the same again. Adefisayo called on teachers to change their teaching and learning strategies, saying that COVID -19

had changed learning. Also, Yomi Otubela, President, National Association of Proprietors of Private Schools (NAPPS), said the association had responded greatly by interfacing between government and its agencies since the beginning of the pandemic. Otubela said the Central Bank of Nigeria was working out modalities for palliatives for schools and teachers who had not been receiving salaries since the pandemic started. He noted that there had been an increase in rape, kidnapping and robbery as a result of COVID -19. Wale Abioye, Team Lead, Customer Practice in Management Consulting (KPMG), said the pandemic had impacted negatively on many sectors of the economy, especially education. Abioye highlighted some of the negative impacts of the pandemic to include financial/economic, structural, social and policy challenges. He said many SMEs in the educational sector could be out of business due to the pandemic, thereby increasing unemployment rate. Babatunde Vaughan, Education Lead, Modern Classroom, Microsoft Nigeria, said the company had introduced a lot of products to make online learning easy and interesting. “COVID -19 is a very unique period for everyone, change has come and we will continue to experience change. “We must be more proactive than reactive,” Vaughan urged.

Manufacturing

Manufacturers’ stand on unified exchange rate Mansur Ahmed

ver the years, the Manufacturers Association of Nigeria (MAN) in its various submissions and publications has been advocating for a unified exchange rate in the country to promote a market friendly rate that can facilitate stable production planning and engender sustainable economic growth. It is therefore gratifying; as it appears that the Central Bank of Nigeria has now unified the country’s exchange

rate. Clearly, this is a welcome development that should engender increased investment inflow into the real sector of the economy and a laudable initiative that has come at the right time, particularly now that the economic outlook is gloomy in light of the impact of the ravaging Covid-19 pandemic that has culminated in uninspiring macroeconomic situations. It is pertinent to note that IMF and World Bank have at different times advised the country on the

need to unify the multiple exchange rate windows to prevent distortions in investment decisions in the public and private sectors of the economy. In fact, the World Bank had attributed the Country’s loss of Foreign Direct Investment (FDI) to investor’s exasperation from perceived manipulation of the foreign exchange market. An advice that was hitherto rejected by the monetary authority until very recently when it became conditionality for monetary support. Implications of the Foreign

Exchange Adjustment You would recall that the CBN had at two different occasions “adjusted” (devalued) the value of Naira amid lower oil prices, first from N306 to N360 and now followed it up by another adjustment of July 7, 2020, which moved the rate at the Special Secondary Market Intervention Sales (SMIS) to N381 per dollar. Obviously, the adjustment was motivated by the intention of the Apex bank to merge the exchange rate around Investors & Exporters (I & E)

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window where the Naira is weaker. Drawing from basic knowledge of the transmission mechanism of exchange rate management and experiences of Cuba and India, the current forex unification agenda will entrench convergence, enhance exchange rate stability, boost investors’ confidence, control rising inflation and promote transparency. It will also entrench better exchange rate management,

Continues on page 19

Thursday 30 July 2020

BUSINESS DAY

Workplace with Shuaibu Idris mni FIoD mcipm

Covid Secured Work Place: Preparing for the New Normal II

background to subject topic was provided last week and the stage for detailed discussion was set. Today we would continue the discussions on the subject matter given that its burning and strategic to mankind in general. The labour force usually consists of workers in the formal and informal sectors, with majority of Nigerian workers in the informal sector. These are the small business owners, artisans and traders. Majority of these class of people have their businesses closed during the pandemic, and access to basic things like food, shelter, and health-care may be very difficult. A good number of the formal sector workers, such as those working in oil and gas companies, telecommunications, financial services, real estate, hospitality, etc, may get to retain their positions at work, post pandemic period. For those that find themselves in the job search market, it is best they proactively update their resumes, look for work elsewhere and take whatever comes their way. These types of jobs should be considered as stepping stones, till one is able to get back on track with a desired job. Safety for Frontline workers: These are the workers involved in the care value chain of COVID-19 victims. This is a very challenging period for them because they are at risk of contracting the infection, due to their exposure. It is expected that the various state governments provide safety gear / Personal Protective Equipment (PPE) for these workers. In addition, workers in essential services like supermarkets, traders (particularly food), drug stores, etc, also need to wear PPE to protect themselves, as they will be exposed to a lot of people, and thus stand the risk of infect on from contacts with customers and co-workers. They may also be challenged by transportation to commute them back and forth from work place and home. As we all know, the pandemic

has caused shutdown of offices, businesses and restaurants as well as worship centres. Thus as a result of the stay at home order in effect in most countries, businesses are challenged in the following ways: Loss of income: Companies and businesses that stay shut this period will lose a lot of money. Some of these businesses include hotels, travel agencies, Laundromats, schools, retailers/wholesalers of non-essential items. This is because there has been zero patronage, so they are not making a sale, or providing a service. The UK renowned Clothing retailer, Primark, now makes zero sales in a month, due to store closure as a result of COVID-19. The company was previously making about £650m monthly sales in its Europe and US locations. Staff Lay-Off or Right sizing: This will become inevitable for majority of the companies worldwide. They may need to shed weight, to manage their losses, re-strategize and reposition for the future. Create alternative work arrangements: These include equipping staff to work from home, and working shift hours. These can be challenging because the company may not be ready to undertake the financial commitment in securing equipment needed to WFH. Those that are working shifts may need to stay close to work and worry about exposure to the virus from commuting. Businesses that want to go this route need to determine that it is a cost effective measure. Indeed, the effect of the pandemic is not all gloom as it presents quite a few opportunities. Some of these includes: Increase in sales of PPE businesses: For these businesses, it is not all bad news. Manufacturers and dealers in PPE from surgical masks, hazmat suits, hand sanitizers, etc, will experience an increase in revenue and profit. Research & Development Opportunities: This will exist in phar-

maceuticals industry particularly for vaccines and treatment drugs. This singular opportunity will open up a can of others to include funding, testing, laboratory supplies and equipment, etc. The Nigerian Presidential Task Force on Covid 19 has commenced a gradually relaxation of the lockdown order largely arising from pressure as well as a feel that the country is on top of the challenge pose by the virus. Offices, Shops, Restaurants etc would be opened for normal businesses. One may ask, are we going back to our normal ways of doing things prior to the pandemic? If no what would be the nature, form and scope of the changes that would be made in our new life style? Indeed, given that no cure has been found for the virus nor a vaccine developed to prevent infection from the virus, health practitioners warned us to trade on the path of caution. However, the relaxation of the lockdown is largely so as to avert other crisis such as ‘Hunger virus’. In the first part of this topic published last week, a glossary of mankind’s experiences with epidemic and or pandemic was provided. History almost always repeat itself. This axiom makes it mandatory that we as human beings should, if not most, learn from history hence the need for strategic approach to understand, appreciate and manage the new ways of living on planet earth, what some people tagged as the ‘new normal’. We would conclude this topic next week with suggestions to Managers, Administrators and Human Resources Officers on areas to pay attention to in order that organisation’s most valued assets; human capital, are covid secured and remain so for ever even without vaccination against the virus. Keep a date with us please. “Sometimes, the bravest thing you can do is to never look back.”

Manufacturers’ stand on unified exchange rate Continued from page 18 eradicate distortions to the barest minimum, eliminate the notorious socially destructive rent seeking activities, halt the incidence of round tripping, ensure better allocation of resources, facilitates income expansion and stimulate the inflow of foreign investment into the economy. However, it is important to recognize the existence of the unavoidable pains that naturally come with the transition from a multiple exchange regime to the domain of a single exchange rate, particularly the burden of dollar denominated loans and offsetting existing credit commitments to foreign suppliers of raw materials. CBN should as a matter of urgency, put a measure in place to minimize the intensity of the pain by considering outstanding obligations of manufacturers from the second quarter 2019 till date given at N345 to a dollar prior to unification and allow such to be settled at between

N330 and N360 per dollar to enable banks to redeem these obligation to foreign suppliers on of manufacturers. Otherwise, many manufacturing factories may close and CBN stimulus packages to the manufacturing sector will suffer a huge setback as cash flow crunch becomes the order of the day. Recommendations In the light of all of the above, the Association is imploring the CBN to do the following: Develop appropriate implementation strategy that will engender a successful transition from the current multiple windows to a single efficient one. Ensure that the strategy pursue two fundamental objectives; the first, is to limit the short-term pains until efficiency gains materialize by responding swiftly with an inward oriented rescue guideline while the second should seek to boost the pace at which such efficiency gains materialize. Submit all the instruments of exchange rate determination gradually

to the unseen forces of demand and supply as a matter of necessity and completely avoid the temptation of interference in order to fully harvest all the benefits that foreign exchange unification can offer. Conclusion It is the earnest belief of our Association that the CBN also needs to ensure that the implementation of the critical aspect of the unification process is done as fast as possible, to enable Nigeria take her portion from the meagre capital currently available in the global economy. This is not unconnected with the fact that the intensity of the prevailing aggressive competition for resources occasioned by the backlashes of COVID-19 may deny some countries from accessing the much-needed capital inflow, as investors holding scarce resources by default rationally settle for destinations where investment is safe and earnings can be easily repatriated. Engr Mansur Ahmed is president Manufacturers Association of Nigeria (MAN)

Editor’s Note

op on the list of trending news, globally, this season, is COVID-19 Pandemic. It is the lead story in all media platforms. And one important element of this worrisome issue is finance. Folasade Adefisayo, Commissioner for Education, Lagos State, who was a panelist at a webinar sponsored by FirstBank recently, captured it succinctly. Said she: ‘This pandemic has been a terrible thing, and one lesson from it is that we have not invested enough in solutions we can deplore at a time like this’. Our lead story is on FirstBank’s pandemic-related support for small enterprises in the educational sector. We also have manufacturers’

Siaka Momoh view on the CBN’s recent unified exchange rate policy, and more.

Please send your comments and content contributions to Siaka Momoh via email: siakamomoh@yahoo.com; Twitter: @RealSectorNow.

Off Balance Sheet

You can do it the Bill Clinton way (This piece by Siaka Momoh was first published in BusinessDay September 2006)

t is good to be on vacation. Yours sincerely just came back from one and enjoyed every bit of it. It gave one time to catch up with one’s reading. Bill Clinton’s My Life, a 957-page autobiography, came in handy. This is one book that leaders and those aspiring to be one will find useful. My Life is a must reference book for our myriad of politicians who, from the way we have seen them going about the business of governance, need political tutorials. In the US, as revealed in Clinton’s autobiography, you do not just come from nowhere and start gunning for top political office. You must go through the mill; you must cut your teeth in politics by starting off from the grassroots and then move up. Bill Clinton and many of his peers, who became top politicians, did just that. He started right from school – he was in student union politics. He lost and won elections. Bill had a humble beginning. He was born William Jefferson Blythe III on August 19, 1946, three months after his father had died in a traffic accident. His mother remarried, wedded Roger Clinton. Bill had to adopt his step father’s name. Bill new where he was coming from - so was determined to be a success in life. Bill Clinton met John Kennedy while in high school in White House Rose Garden. The encounter made him enter a life of public service. As an undergraduate, he shuttled between school and work. He worked with senators, undergoing political pupilage. He learnt the ropes; he thus got himself equipped for the tough political terrain ahead. This was beside the intellectual empowerment he got in school. He graduated from George Washington University in 1968, won Rhodes Scholarship to Oxford, had a law degree in Yale in 1973, and entered politics in Arkansas, his state, kicking off with the State’s Congress ) the equivalent of our own State House of Assembly. Rhodes Scholarship was established in 1903 by Cecil Rhodes’ will. Rhodes, who made a fortune in South Africa’s diamond mines, provided for scholarships for young men from former British colonies who had demonstrated outstanding intellectual, athletic and leadership qualities. Bill Clinton was defeated in his

Bill Clinton

campaign for Congress in Arkansas’s Third District in 1974. He was elected Arkansas Attorney General in 1976, and won the governorship in 1978. After losing a bid for a second term, he regained the office four years later, and served until he defeated incumbent George Bush and third party candidate Ross Perot in the 1992 presidential race. Thus Clinton served several terms as governor of Arkansas, the state’s constitution allowed this. This looks like what OBJ wanted to predicate his quest for a third term on. Under Bill Clinton (full name William Jefferson Clinton) US enjoyed more peace and economic wellbeing than any time in history. He remains first Democratic President since Franklin Roosevelt to win a second term. Good enough, Clinton had heroes, which kept him focused, a good thing for a purposeful politician. John Kennedy was one, J. William Fulbright was another. His political outlook and operation reflected what these two stand for, what they stand for is in consonance with his beliefs. He liked Fulbright for example, because Fulbright was interested in things besides politics. For Fulbright, the purpose of politics was to enable people develop all their faculties and enjoy their fleeting lives. The idea that power was an end in itself, rather than a means to provide security and opportunity necessary for the pursuit of happiness seemed to him stupid and self-defeating. Fulbright believes great nations get into trouble and can go into long term decline when they are arrogant in the use of their power, trying doing things they shouldn’t do in places they shouldn’t be. He thinks for instance that when US “brings its power to bear in the service of an abstract concept like anticommunism, without understanding local history, culture and politics, this will do more harm than good”.

Thursday 30 July 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

The Courts should open rather than vacate

Nigerian Bar Association National Election 2020: [Not] Learning from History

ith the official lifting of the ban on interstate travel and other restrictions, anyone who thought that the courts in Nigeria which in most cases were closed or worked far less optimally, due to the pandemic, would be more willing, like other institutions, to open and device initiatives to dispense justice more efficiently and effectively and to cover up for the backlogs, would be extremely shocked to hear that the Courts, rather than open fully are announcing their vacation. The National Industrial Court of Nigeria and the Federal High Court will embark on an 8 weeks’ vacation from the 27th of July to Friday 25th of September 2020. Likewise, the Federal Capital Territory High Courts will begin its Annual Vacation on Monday, July 20th to the 7th of September 2020 and Oyo State will proceed on its vacation from the 25th of July to the 10th of September 2020.

An irresponsible and insensitive decision or not? Bearing in mind the effect Coronavirus has foisted on the administration of Justice, the backlog of cases and the sluggishness of the Judiciary to embrace virtual hearings during this period, many; legal practitioners and litigants have expressed great dismay and shock at the news of the vacation. Indeed some have declared this decision as irresponsible and insensitive. The Justice Reform Project (JRP) rightly called it “a personal interest service” and a “negation of the rule of law”. Suspecting the unacceptability and the uproar this vacation may cause, in announcing the vacation of the Federal High Court, the Chief Judge of the Federal High Court, Hon. Justice J. T. Tsoho, said “For the purpose of allaying concerns, it should be understood that the importance of the Judge’s Annual

he Spanish-born American writer, George Santayana is credited with the profound statement that those who cannot learn from history are doomed to repeat it. If urgent remedial measures are not put in place by the Electoral Committee of the Nigerian Bar Association (“ECNBA”) in the coming days, I fear that the 2020 national elections of the Association scheduled for 29-30 July 2020 will be heading for a spectacular failure, and the most unfortunate thing will be that any discerning mind would have seen it coming. The Nigeria Bar Association, better known by its acronym NBA, describes itself as Nigeria’s foremost and oldest professional membership organisation and Africa’s most influential network of legal practitioners, with over 120,000 lawyers on its roll in 125 active branches across the 36 States of the Federation and the Federal Capital Territory of Nigeria. Following a crisis that deprived it of national leadership for a six-year period from 1992-1998, the Association introduced a delegate system for electing its leaders that helped in attaining peace and giving the Association a platform for normalcy to return to its activities, but left majority of its members disenfranchised and having no direct say in the election of their leadership. For an Association that prides itself as being engaged in the promotion and protection of human rights; the rule of law; and good governance in Nigeria, this left a dent on the image of the Association until universal suffrage was restored by the Association under the leadership of Austin Alegeh, SAN. To actualise this universal suffrage, which was first put in place for the election that led to the coming into office of Abubakar Balarabe Mahmoud, SAN in August 2016, the NBA introduced

Joshua Nwachukwu

Vacation cannot be overemphasized. No more than ever, it is important that the morale of Judges is revitalized. This is moreso because throughout the period the lockdown occasioned by the Corona Virus pandemic (Covid-19), Judges of this court remained focused and rendered essential services despite untold attendant hardships and uncertainties” With due respect to the Honourable Chief Judge, it is an insult/slight to the common Nigerian to say that our Judges despite not working fully and despite been given their benefits, when others got nothing or got reduction, suffered “attendant hardships and uncertainties” and need to revitalize their morale. What hardships did our Lordships suffer? Is it worse than most Nigerians? What exactly does our Lordship mean that the “Judges remained focus”. Indeed, this is an attempt to defend the indefensible. Such statements embolden in the common man the narrative that the Honourable Judges are disconnected from the real challenges Nigerians face, hence they are incapable of effectively addressing them, rather than being the last hope they are the lost hope. This will force many to resort to self-help to get their desired justice.

Continues on page 23

INSIDE The Controversy of Electricity Tariff Increase

Rotimi Ogunyemi

electronic system of voting. Issues with the electronic voting system in 2016 triggered litigation that outlived the NBA Executive Committee that resulted from that election. Those issues were magnified in the 2018 election that instated the administration of the incumbent President, Paul Usoro, SAN. There were credible reports of electoral malpractices in that exercise to the extent that the Economic and Financial Crimes Commission (EFCC) and the State Security Services (SSS) both commenced investigations into the process, leading to the arrest of some staff of the Association. Indeed, it has recently emerged that the EFCC has filed criminal charges against some staff of the NBA for rigging the 2018 election. Although the judicial challenge by one of the ‘losers’ of the 2018 election was ultimately futile, the Association is yet to recover from the crisis of confidence occasioned by the electoral debacle. The prevailing sentiment therefore is that if the NBA with an electoral population of less than fifty thousand is unable to conduct a credible poll, then they have no moral clout to advocate for credible elections for the rest of the country. It is for the above reasons that any right thinking

How NBA voters lost faith in the Electoral Committee

member of the Association and the society at large would have expected the Paul Usoro Administration and the ECNBA to do everything possible to ensure a credible, transparent, free and fair electoral process in 2020. With less than 5 days to the election, nothing on ground is indicative of that desire. Instead, everything suggests that the ECNBA is headed for the same path that birthed the infamous 2018 election process. If history is permitted to repeat itself, it might be difficult for the Association to survive the fallout this time around. A few public commentators have written about the 2020 NBA election with some even going as far as predicting with a degree of confidence, and on the strength of the reality on ground, that the 2020 election will be rigged. Two of the Presidential candidates have [directly or indirectly] also written to the ECNBA to register their displeasure with the state of [non] preparations of the electoral body, with the election only a few days away. It is in this regard, that I write [in my unique capacity as both a lawyer and an information technology practitioner] to (i) lend my voice to the call on the ECNBA to get their acts together and prevent

a crisis that is sure to arise if they bungle the 2020 national election; and (ii) call on indigenous Information Technology companies not to lend their imprimatur to a shambolic exercise that will ultimately reflect badly on the Technology sector in the country. From a detailed consideration of the process, it is easy to identify five areas of vulnerability that the ECNBA must take a second look at if they are truly desirous of conducting a credible election. The first issue with the 2020 election is that less than 5 days to the election, there is no credible voters register. Paragraph 2.3(d) of the 2nd Schedule to the NBA Constitution 2015 (as amended) prescribes that the ECNBA shall, in conjunction with the National Secretariat of the NBA, publish the full list of all legal practitioners qualified to vote, at least twenty-eight (28) days before the date of the election. It is an open secret that the list published by the ECNBA and termed ‘FINAL VOTERS REGISTER’ is anything but credible. Even a cursory examination of the list reveals multiple cases of duplication of names that are at best indicative of a shoddy and incompetent collation exercise or at worst determinative of a design to induce election rigging. There is also the now infamous case of OPENING BALANCE included in the so-called final voters register when there are hundreds of duly registered legal practitioners whose names are missing from the list. The ECNBA in their Statement No. 012 admits that their so-called final voters register still requires a “clean up exercise in case of names found to have been duplicated”. To date they are yet to advise the electorate of the result of such clean up exercise, which means that no one other than themselves have an indication of the final list of voters, once again

Continues on page 22

Ondo state judiciary takes giant strides with justice delivery

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Thursday 30 July 2020

BUSINESS DAY

POWERPERSPECTIVE with AYODELE ONI

LegalBusiness

The Controversy of Electricity Tariff Increase …Understanding the Issues Around the Commencement of Service Reflective Tariffs Ayodele Oni

T Proem:

he determination of electricity tariffs by the Nigeria Electricity Regulatory Commission (“NERC”) was initially based on a system of ‘sculpting’ with an emphasis placed on the achievement of cost-reflective tariffs, overtime. There are, however, indications that NERC plans to shift from the desire of having a strictly cost-reflective methodology for determining tariffs, to a service-reflective methodology. This article briefly analyses the tariff methodology currently in place and then goes on to highlight the indicative features of the service-reflective tariff system and how the adoption of the service-reflective tariff system would impact the Nigerian Electricity Supply Industry (“NESI”). Sculpting and Cost-Reflective Tariffs NERC developed a system for sculpting electricity tariffs. In the initial period around the period of the privatization of the power sector, electricity tariffs were generally regarded/expected to be non-costreflective, meaning investors would initially under-recover on their investments. However, the tariffs were meant to rise to a cost-reflective level, eventually resulting in investors over-recovering on their investments in the power sector and reaping substantial profits necessary to encourage competition and investment in the sector. As a matter of fact, many of the investors who bought majority shares in the Distribution Companies (“Disco”) obtained letters of comfort from the Federal Government of Nigeria providing assurances that the electricity tariffs would be increased to ensure viability of their business operations. The First Multi Year Tariff Order (“MYTO”) model was introduced in 2008 (MYTO 1) was stated to be applied from 2008 to 2012. Subsequently, following a major review of the methodology in June 2012, MTYO 2.0 was issued and it was to remain effective from 2012 to 2017. Following a minor review in December 2015, NERC issued a new MYTO called the MYTO 2.1 that was to take effect from January 2015 to 2018. In 2015, NERC revised and amended the MYTO 2.1 by removing the collection loss component of the electricity resulting in the MYTO 2.1 (amended). The uproar created by the removal of the collection loss factor resulted in NERC issuing a MYTO to reinstate the collection loss thereby translating to MYTO 2015 which was meant to cover the period from 2015-2024. The MYTO spelt out the methodology for determining and reviewing tariffs based on assumptions on certain variables outside the control of the DisCos including the inflation rates in Nigeria and the United States of America, the Naira to United States Dollar exchange rate, gas prices and available generation capacity. To facilitate the transition to

Dr Ayodele Oni

and maintenance of cost-reflective tariffs, the MYTO was meant to undergo biannual minor reviews and major reviews every five years and where necessary, tariffs were to be adjusted to reflect any changes in the underlining assumptions. However, the first minor review of the 2015 MYTO was only carried out in 2019, four years after its issuance. Within the period where no review took, there were significant changes to the macroeconomic variables upon which the existing tariffs were calculated and despite the government’s assurances to DisCos, the NERC failed to increase tariffs appropriately. The non-cost-reflective tariffs caused a substantial shortfall in DisCos’ revenue and the Federal Government (“FG”) was required to fund the revenue gap or tariff shortfall, calculated as the difference between the cost-reflective tariffs and the actual end-user tariffs payable by customers. Although this was a necessary element of the tariff sculpting adopted by NERC, it was not expected that the period of revenue shortfall and under-recovery would last for as long as it has. However, despite significant pressure from stakeholders in the power sector and announcements by NERC, the transition to cost reflective tariffs has not proceeded as expected by stakeholders and required by the power sector to solve the liquidity issues facing the sector. Following the collaborative efforts of the FGN and international developmental organizations such as the World Bank to improve the NESI, policy measures were put in place to ensure that cost reflective tariffs are attained. One of such policies is the Power Sector Recovery Programme (“PSRP”) approved in January 2018 which advocates that tariffs in the NESI be appropriate and sustainable to ensure financial viability of the sector. www.businessday.ng

In line with the recommendations of the PSRP, in the December 2019 Minor Review of the MYTO and Minimum Remittance Order for the Year 2020 (“Minor Review”), NERC indicated that an increase in end-user tariffs was scheduled for April 1, 2020 and a transition to full cost-reflectivity by the end of 2021. However, in March 2020, NERC postponed the planned tariff increase to 30th June 2020 due to the economic constraints caused by COVID-19. The Introduction of ServiceReflective Tariffs In the Order on the Transition to Cost Reflective Tariffs in the Nigeria Electricity Supply Industry (the “Order”) issued on March 31, 2020, in addition to ordering the postponement of the planned increase in tariffs, also announced the considerations which would govern future tariff increases, including the service reflective tariff methodology. In the Order, NERC reported on the public hearings it had conducted to assess applications filed by DisCos for a review of their respective enduser tariffs. From the public hearings, NERC determined that end-users of the eleven (11) DisCos were only willing to pay tariffs commensurate with the quality services provided by DisCos. Their willingness to pay costreflective tariffs was conditioned on receiving guaranteed hours of supply of good quality electricity and adequate metering. In essence, from the public hearings and consultations, end user customers would prefer a tangible improvement in quality and quantity of electricity supply before agreeing to pay increased tariffs. The Order also stipulated the parameters for measuring DisCos service as including: hours of supply of electricity; reliability of supply which would be determined by the frequency and duration of interruptions and; quality to be determined by voltage and operating frequency prescribed

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in governing industry codes. Future tariff reviews would now be based on consultations between DisCos and customer clusters, with DisCos required to provide firm commitments on the quality of service. There were also provisions for compensation mechanisms to be instituted to compensate customers for DisCos failure to meet performance targets. Finally, the Order requires DisCos to disaggregate their respective service areas and/or customers in accordance with the quality of service and to provide a proposal for service reflective tariff classes. From the provisions of the Order, it appears that the concept of sculpting and cost-reflective tariffs may have been abandoned altogether in favour of a shift to service-reflective tariffs. As such, rather than NERC focusing on ensuring that tariffs are sufficient to cover DisCos costs and provide a reasonable return on investments, NERC has now shifted the focus to ensuring that tariffs are reflective of the quality of service provided to end customers. The clamour by customers for improvements in power supply to precede tariff increases must have played an important role in NERC’s shift in focus, as is evidenced by NERC’s reference to public hearings and the need for DisCos consultation with customer clusters. Breaking down the provisions of the Order, the new concept of service reflectivity will mean that customers who enjoy electricity supply which meets the service parameters, including longer and more reliable hours of electricity supply with less frequent interruptions or electricity supply of the appropriate voltage, will be charged higher tariffs than those whose electricity supply does not meet the set parameters. In essence, tariffs will be proportional to the quality of electricity supply enjoyed the relevant customers as determined by the service parameters. It will be important however for NERC to ensure that the Discos do not leverage on this policy shift to supply electricity to premium customers who are willing and capable to paying such tariffs to the detriment of the low earning families who may not be able to pay the costs that comes with increased supply of electricity. In relation to the disaggregation of customers by DisCos, it appears that DisCos will group customers into bands or classes based on customers who enjoy electricity supply which meets the various service parameters. This will enable DisCos to conveniently charge customers tariffs proportional to the achieved service level parameters. It is understood that customers who receive less than eight (8) hours of electricity daily will have their tariffs frozen. This is comparable to the tariffs payable in areas with premium power such as Magodo based on an agreement between residents of Magodo estate and Ikeja DisCos under NERC’s willing buyer willing seller initiative. Comments The idea of tying the level of tariffs to @Businessdayng

the ability of DisCos to meet certain service parameters is, prima facie, a brilliant idea. Both because it acts as an incentive for DisCos to improve service levels for electricity supply in order to benefit from higher tariffs and because it ensures greater customer satisfaction by ensuring that customers pay for the quality of services they are provided. However, it is important to identify potential issues which may hamper the implementation of service reflective tariffs. Firstly, NERC has chosen inappropriate timing to introduce these new measures. Currently, the COVID-19 pandemic has negatively affected Nigeria’s economy, leading to increased unemployment and reduction in the disposable income of the average citizen. The pandemic has thus affected all classes of DisCos’ consumers, both companies and individuals, making now an inappropriate time to implement planned tariff increases. As NERC failed to do this when the time was appropriate and the average Nigerian would have been more financially capable of bearing the effect of such increase, NERC and DisCos should resign themselves to finalizing the necessary plans and guidelines for this new methodology of service reflective tariffs with a definite plan to implement same when the economy eventually recovers. Additionally, the framing of the policy may hamper the purpose of encouraging improved electricity supply throughout Nigeria. It may have, instead, served to expand the rich/poor divide in Nigeria by encouraging DisCos to invest greater resources in improving supply in areas where tariffs are already higher so as to maximise revenue. In setting guidelines for the service reflective tariffs, NERC must recognize this potential problem and ensure that DisCos are obligated to meet set service parameters across all service areas and end-users. It is noted that the Order references the potential of introducing compensation mechanisms to compensate customers where DisCos fail to meet performance targets. NERC should ensure that these compensation mechanisms are expressly stipulated in any guidelines issued on the service reflective tariffs policy. In conclusion, while the introduction of service reflective tariffs is a welcome idea, the COVID-19 pandemic presents an inopportune occasion to introduce tariffs increases. It will be best for NERC to spend greater time finetuning the important details of the service reflective tariff methodology and introduce same when Nigeria’s economy has recovered. In this period, NERC should ensure that the policy does not inadvertently encourage DisCos to concentrate performance improvements in certain areas while neglecting others.

Dr. Ayodele Oni (ayodele.oni@ bloomfield-law.com), a lawyer, specializes in international energy (oil, gas and electric power) investment law and policy.

Thursday 30 July 2020

BUSINESS DAY

The Bar

LegalBusiness

How NBA voters lost faith in the Electoral Committee Caleb Adebayo, Esq.

n Monday July 27th, 2020, the Electoral Committee of the NBA (ECNBA) organised a virtual meeting with the candidates for the forthcoming NBA National Elections as well as other stakeholders - the first ever since the committee was set up in March. T h e m e e t i n g , h ow e v e r, achieved very little in terms of allaying the fears and concerns of the candidates and the voting public. To the dismay of many, the ECNBA had neither the details of the voting process nor the final voters’ register ready, and this was about two days to the commencement of the elections. The ECNBA also failed to acknowledge the porous nature of the NBA portal, as revealed by various IT professionals in the

past few weeks. Instead they gave empty assurances that the portal was secure. Perhaps more embarrassing was the fact that the ECNBA denied that it had ever stated that the NBA portal was the platform where the voting will be carried out, effectively speaking from both sides of the mouth, considering the information made available to voters in this regard few weeks back. After questions from various candidates, Alozie Echeonwu,

who had been invited by the ECNBA Chair, Tawo Tawo, SAN, to throw more light on some aspects of the election said, “The Chairman did not say that the election will be on the NBA website.” Presidential candidate, Olumide Akpata then raised concerns about the vulnerability of the NBA portal, which the ECNBA had advertised via an infographic as the platform for the voting exercise. In response to his concerns, ECNBA Secretary, Cordelia Eke again

asserted “I do not believe the ECNBA at any time said election will be conducted on website.” This is contrary to information that has been circulating for the past few weeks that the election will be conducted via the NBA portal, supported by an infographic setting out the steps for voting. More than ever, yesterday’s meeting left voters and candidates uncertain and with little faith in the ECNBA and its process.

It is unfortunate that at the time of going to press – which “was” less than 24 hours to the elections- the ECNBA had not released any information about what platform the voting will be on, the final voters’ register for transparency and how voters are to cast their vote. This then raised the question: Can we really trust the ECNBA to deliver on its mandate? For a committee that could openly deny the fact that it had mooted and publicized conducting the elections via the NBA portal, can we trust them to conduct free and fair elections? Why is there so much hooded activity going on? Why are the curtains drawn on the candidates and electorate? Is this a grand plan to rig the elections? All lawyers must ask these questions, and better still, all lawyers must speak up.

Nigerian Bar Association National Election 2020: [Not] Learning from History Continued from page 20 leaving room for manipulation of the election result. A related issue is the strange refusal of the ECNBA and the leadership of the NBA to make available the Access Bank PLC data which is the only credible data to show the names of the legal practitioners who paid their Bar Practising Fees as and when due. One of the criticisms of the 2018 NBA election was the allegation that some lawyers were allowed to vote in favour of a particular candidate despite not having paid their Bar Practising Fees and Branch Dues by 31 March of the relevant year, in contravention of the express provisions of the NBA Constitution. To ensure that such complaints are not repeated this year, the ECNBA ought – in the interest of transparency and good faith – to make that data available to the three Presidential candidates, otherwise they leave themselves at the risk of being accused of having a vested interest. The third issue with the current electoral process in the NBA arose from the ECNBA’s reliance on the NBA Branches to provide the names of the members who paid their Branch Dues by 31 March 2020. The result of this exercise is a voters list with very questionable integrity. To be eligible to vote at the NBA election, the NBA Constitution requires a member to have paid his/her Bar Practising Fees and Branch Dues by 31 March of the election year i.e. 31st March 2020 in this election cycle. While the NBA can point to the Access Bank record as conclusive proof of payment of Bar Practising Fees, most Branches have no such credible records for the payment of Branch Dues. This is what accounts for the miraculous increase in the

list of eligible voters between May 2020, when the ECNBA released the provisional list of voters and June 2020, when the final list was released. That said, the responsibility of ensuring the compilation of a credible voters register with the ECNBA, and their actions have left a lot to be desired. In earlier statements, the ECNBA requested the Chairmen of the 125 NBA Branches to submit the names of eligible voters AND to submit proof of such payments in the form of Branch bank statements. Subsequently, the ECNBA diluted this requirement by merely requesting the Branch Chairmen to provide any form of proof. This resulted in the production of payment receipts of doubtful provenance and in some cases, no receipts at all. When the ECNBA published the so-called final voters register, signed off by the Chairman and Secretary of the ECNBA, it became the document of the ECNBA and the attempt by the ECNBA to pass the buck to the Branches is mere face-saving and unacceptable. By publishing the list of voters, the ECNBA guaranteed that they had reviewed the list against the prism of the evidence of payments provided by the Branch Chairpersons. Once again, a simple reference to the Access Bank data will suffice to eliminate those who did not pay their Bar Practising Fees by 31 March while the rest of the list can be forensically examined to ensure that only duly qualified legal practitioners are included in the proper final list of voters. Why this data remains top secret is anyone’s guess. To complicate what is already a tedious process, the ECNBA has introduced a completely irrelevant requirement: the verification of www.businessday.ng

already verified lawyers for the purpose of voting. Paragraph 2.4(c) of the 2nd Schedule to the NBA Constitution 2015 empowers the ECNBA to issue guidelines for the conduct of electronic voting. These guidelines may include the verification of members but only in order to afford all registered voters the opportunity to vote at the election. The current verification exercise of the ECNBA appears designed to actualise the opposite by enfranchising ineligible voters and disenfranchising eligible voters. As stated above, the NBA Constitution requires members to have paid their Bar Practising Fees and Branch Dues by 31 March 2020, this results in a list of eligible voters. The NBA Constitution also provides for verification of voters, which results in a second list of verified members. The verification currently being undertaken by the members of the NBA is not a verification of eligible voters that should have resulted in the third list of verified eligible voters but a verification of all NBA members on the NBA Portal, inclusive of those who did not pay their Bar Practising Fees and/or Branch Dues as and when due. What the ECNBA is doing is to conflate two distinct requirements of the NBA Constitution and the result is the predictable confusion that has already led to three postponement of the closure of the verification exercise. In reality, the verification exercise has been anything but seamless. What the ECNBA requires from NBA members – thousands of whom either have no password or have forgotten theirs – is to log into their account and update their records. However, in many cases, the operators of the NBA portal are not instantaneously treating

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the requests for the retrieval of these lost or forgotten passwords as is the case everywhere else. In some cases, these emails take up to 2 weeks to deliver and many may never get theirs before the election date. In 2020, this is completely unacceptable. The last issue with the 2020 NBA election process is the questionable integrity of the verification and voting portal. The ECNBA promised in their Statement No. 014 to “put forward the Guidelines for electronic voting which shall amongst other things provide for a place, time and platform to be utilized for electronic voting for the elections to enable our members to vote without difficulty” and to hold interactive sessions with the stakeholders in this regard. Less than 5 days to the poll, the ECNBA is yet to issue this guideline. This means that they are yet to disclose the platform to be utilized for the electronic voting and the Information Technology company responsible for deploying the platform. Beyond this, there are already several credible reports of members who received email notifications of attempts to log into their portals or to change their passwords that were not initiated by them. There is also report from an IT company highlighting the porous nature of the NBA portal. These can only be a foretaste of what is to come with the election itself. The foregoing issues make it difficult to disagree with those who have predicted that the 2020 NBA election is designed to be rigged in favour of a particular candidate. It is in light of the above, that I call on indigenous Information Technology companies not to lend their imprimatur to a shambolic exercise that will ultimately reflect badly on the Technology @Businessdayng

sector in the country. It will be recalled that at the beginning of the year, a senior member of the Bar called on the NBA to use only foreign Information Technology companies for the conduct of the election to avoid manipulation. This is a vote of no confidence on the Information Technology sector in Nigeria that should not be allowed to stand. Only the conduct of a transparent, credible, free and fair election can prove the learned Senior Advocate of Nigeria wrong. Unfortunately, however, there is nothing on ground other than fantastic optimism to suggest that the opposite will be the case. Everyone is watching and the stakes are high, not just for the legal profession in Nigeria but also for the indigenous software companies who must rise to the occasion and write their names on the positive sands of time, if they are to get the needed recognition and be trusted to implement and manage big technology projects. The imperativeness of conducting a credible poll for the NBA is clear for all to see. The ways to actualise this are simple and straightforward. Why the ECNBA has chosen the difficult and complex path to complicate matters is bewildering. And that is putting it mildly. If the legal profession in Nigeria is not doomed to repeat history, with fatal consequences, the ECNBA must get its acts together. They are already running out of time.

Rotimi Ogunyemi Managing Partner, Bayo Ogunyemi & Co. Co-Founder, Spindlar CyberLaw Centre Chairman, ICT Committee NBA - Section on Business Law

Thursday 30 July 2020

BUSINESS DAY

JUSTICE SECTOR

LegalBusiness

Ondo state judiciary takes giant strides with justice delivery …implements end-to-end court automation system in partnership with Lawpavilion

he advent of the Covid-19 pandemic has brought about lockdown and social distancing rules which have restricted the day-to-day activities of the Courts and created a new normal for the Judiciary. The Ondo State Judiciary is taking a giant stride, with the aid of technology, to ensure justice delivery is not stalled especially when physical court sittings may not be feasible in the foreseeable future. The recent decisions of the Supreme Court in the two cases of Attorney-General of Lagos State VS. Attorney-General of the Federation and Ors, and Attorney-General of Ekiti State VS. Attorney-General of the Federation have given judicial teeth to virtual proceedings by holding that such proceedings are legal. The Ondo State Judiciary is proud to be the first State in Nigeria to make her E-Registry fully automated. This was achieved working hand-in-hand with LawPavilion Business Solutions to create a seam-

Oluwarotimi Akeredolu, SAN, Governor of Ondo State.

The Courts should open rather than vacate Continued from page 20 As a legal practitioner, it has been extremely difficult to advise my clients against self-help, when there is no other solution in sight. While our Judges have incessantly condemned self-help from their high-horse, they have unfortunately not addressed the reasons why people seek it, rather they fuel it with their bureaucracy, inaccessibility and excessive absence from Court due to a plethora of reasons and while the litigants and lawyers sacrifice alot for the Judiciary, the Judiciary does not reciprocate, in fact, our Judges seem to be adverse to sacrifice and compromise. Indeed this call of vacation is indeed callous and self serving, globally institutions are making compromises in order to ensure a smooth running of their organisations but the Nigerian Judiciary does not seem to care. Despite being paid from the common patrimony of Nigerians, they seem to feel no accountability to Nigerians. Little wonder, the Justice Reform Project (JRP) rightly urged the Judiciary “to be very wary of treating citizen’s right of access to justice with levity”. The thought of our Lords going for the Christmas and New Year vacation after their return in September and the other engagements that will detract from their core adjudicatory work, makes me wonder what the output for 2020 will look like. Moreso, this pandemic gave the Judiciary a golden opportunity to revamp its image, structure and operations, we had hoped that our Lords would embrace it but it does not seem that they are interested.

Vacation: Not Statutorily Compulsory The Chief Judges in announcing the vacation in their various courts have sought to give the impression that they are merely complying with the relevant Orders in the various Civil Procedures Rules of their court. Infact they all cited the various orders in their circular. Even some Judges in open court in further defence have said, “Vacation is statutory”. While we affirm that vacation is statutory, it is not statutorily compulsory. Infact, a reading of the various orders cited by the various Chief Judges shows that vacation is subject to the Directions of the Chief Judge and one will presume that like all other powers that are to be exercised by a Judge, it should be exercised judicially and judiciously. Even if it was statutorily compulsory, one would have thought the Chief Judges in light of the effect of Covid-19 would want to stick to the barest minimum rather they are not. For example, Order 46, Rule 4(d) of the Federal High Court (Civil Procedure) Rules 2019, provides that, the vacation period wouldn’t be less than 6 weeks. Meanwhile the Chief Judge did not stick to this minimum but he chose 8 weeks. Moreso, the provision of vacation Judges is not a consolation, apart from been a normal practice, the Chief Judges haven’t increased the number of the vacation Judges nor have they increased the capacity of cases they can hear, invariably it is not a worthy remedy. Kudos to the Chief Judge of www.businessday.ng

Ogun and Jigawa State Unlike other Chief Judges, the Chief of Ogun State and Jigawa State, in further confirmation of the power of the Chief Judge, have cancelled the Annual Court Vacation in their states. They had earlier announced the vacation but they rescinded after considering the adverse impact the vacation would have on both litigants and their counsel. Rather than a general vacation, judges will embark on vacation upon the evaluation of the Chief Judge. For this bold and daring decision, we commend the Chief Judges and trust other Judges will follow suit and as can be seen, the heavens did not fall with the cancellation CONCLUSION While other Chief Judges are deliberating on whether or not to embark on 8 weeks vacation, which in 2020 is a big luxury, we beseech our Honourable Judges to toe the path of honour and think of the thousands of lives that are going to be affected by the delay of Justice. This is a golden opportunity to present the Judiciary as an ally of the people. Indeed we are not saying that our Judges should engage in all work and no play. Far from it, we are encouraging our Lordships to engage with the bar and find a win-win solution for all. Our Courts should not vacate, rather they should open, and open wide its doors to the thousands who are in need of their succour.

Nwachukwu, a lawyer, writes from Lagos.

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less E-registry which can be used by both litigants, their counsel and court officials. In times past, physical filing could take several hours, but with E-registry, filing with the E-registry can now be done in the twinkle of an eye; and what is more, the Eregistry is web based and can be accessed anywhere. To this end, litigants and their counsel can now file their processes in the comfort of their homes, anywhere and at any time. Through Robotic Process Automation in the E-registry, the filing of court processes has been fully automated with all the necessary features to allow for an end-to-end e-filing. Chief among the essence of the E-registry is that it has provided solutions to most of the challenges plaguing e-filing and remote hearing in Nigeria before now. For instance, the E-registry has been automated with the necessary filing fees to allow for a quick and effective filing process. The Counsel or the Litigant can have their pro-

cesses assessed, pay the assessed filing fee and proceed to actually file their processes all on the same platform and within the twinkle of an eye. These filed processes are also automatically synced into the court’s record. This is the future of justice delivery- the new normal, which has come to stay. This novel programme will commence with the publication of Practice Direction on e-filing on the Judiciary website on Monday 27th July, 2020 while e-filing and remote hearing will be launched on Wednesday, 29th July, 2020 with dignitaries led by the Governor of Ondo State, Arakunrin Oluwarotimi Akeredolu, judges and other stakeholders in the justice sector in attendance. This will be followed by a live demonstration on remote hearing at 9:00am on Thursday, 30th July, 2020. Arrangements are being put in place for the Bar and Bench to be guided through the process in order to ensure a seamless e-process.

DEAL ALERT

Duale, Ovia & Alex-Adedipe advises Duport Midstream Company Limited (DMCL) on NCDMB’s acquisition of US$15 Million Equity Stake in DMCL

he law firm od Duale, Ovia & Alex-Adedipe has advised Duport Midstream Company Limited (“DMCL”) in a groundbreaking US$15Million equity investment by the Nigerian Content Development and Management Board in DMCL. The investment is to be utilised for the construction of an Energy Park comprising a modular refinery of 2500 barrels per day, 300million standard cubic feet per day Compressed Natural Gas Facility and a 2 Megawatt Power Plant. Speaking about the deal DOA founding partner, Adeniyi Duale

said that the firm was glad to have supported DMCL on this milestone having provided advice on structuring, negotiation and review of the investment documentation. According to him, the Project being embarked upon by Duport will encourage more refining capabilities for local consumption and create more jobs for Nigerians. It this era of global depression and microeconomic challenges, such an invesmtment in the energy sector is a welcome development. The transaction was led by DOA Partners, Adeniyi Duale and Seye Ayinla.

NBA Elections 2020: Aspirants express concern over potential election manipulation Continued from last week

he former Chairman of the NBA Section on Business Law expressed hope that the issues he highlighted in his letter will be attended to; as he urged the ECNBA to publish a complete and accurate list of eligible voters, while releasing a statement from Access Bank showing members who paid their Bar Practising Fees @Businessdayng

by 31 March 2020. With hopes that the verification process will be simplified and made more secure, he requested that technology to be deployed for the elections be disclosed and adequately secured to ensure integrity of the polls. Read full article on www.legal.businessday.ng

Thursday 30 July 2020

BUSINESS DAY

BUSINESS TRAVEL COVID-19: Emirates boost Nigerian travellers’ confidence with free medical cover Stories by IFEOMA OKEKE

mirates customers can travel with confidence, as the airline will cover medical expenses of up to EUR 150,000 and quarantine costs of EUR 100 per day for 14 days, should they be diagnosed with COVID-19 during their travel, while they are away from home. This cover is provided by the airline, free of charge to its customers. Sheikh Ahmed bin Saeed Al Maktoum, Emirates Group Chairman and Chief Executive said: “Under the directive of Sheikh Mohammed, UAE Vice President and Prime Minister and Ruler of Dubai, Emirates is proud to lead the way in boosting confidence for international travel. “We know people are yearning to fly as borders around the world gradually re-open, but they are seeking flexibility and assurances should something unforeseen happen during their travel.” He added: “Emirates has worked hard to put in place measures at every step of the customer journey to mitigate risk of infection, and we have also revamped our booking policies to offer flexibility. “We are now taking it to the

next level, by being the first in the industry to offer our customers free global cover for COVID-19 medical expenses and quarantine costs should they incur these costs during their travel. It is an investment on our part, but we are putting our customers first, and we believe they will welcome this initiative.” This cover for COVID-19 related medical expenses and quarantine costs is offered by Emirates free of cost to its customers regardless of class of travel or destination. This cover is immediately effective for customers flying on Emirates until 31 October 2020 (first

flight to be completed on or before 31 October 2020). It is valid for 31 days from the moment they fly the first sector of their journey. This means Emirates customers can continue to benefit from this cover, even if they travel onwards to another city after arriving at their Emirates destination. Customers do not need to register or fill in any forms before they travel, and they are not obligated to utilize this cover provided by Emirates. Any impacted customer who has been diagnosed with COVID-19 during their travel simply has to

NANTA launches Capacity development, accreditation programme

he National Association of Nigeria Travel Agencies, (NANTA) has launched capacity development and accreditation programme to help equip travel agents with skills that could help them serve clients better. Speaking during the launch of the programme at a zoom meeting on Tuesday, Uloma Ibiware Kemabonta, the chairperson training committee said objective of this programme is to introduce the training courses and brief insight into how NANTA plans to change the narrative of the industry and produce travel and tour professionals over the years to come. Kemabonta explained that knowledge gap in the industry could cause a lot of problems and this programme has been put in place to empower members with skills that will help them thrive in the industry. She further explained that the training is divided into three stages which are the basic training, the core training and the professional training. She said the basic training will focus on the foundation while the core training will address the core management business and the professional training will give travel agents all the empowerment needed for

leadership, emotional development and staff management amongst others. She assured that every single subject matter will help everyone from start-ups to professional travel agents, adding that the ultimate goal is to have affiliations with international recognized bodies and give members opportunities to have global recognized licences. Kemabonta said there is a need to position NANTA members to adapt with changes in the industry. Also speaking during the launch of the programme, Susan Akporaiye, national president, NANTA said the programme for her was a dream come true as capacity development was very paramount to her and her agenda as president. She disclosed that her exposure to past leadership and ability to learn from them had also made her a visionary leader. “We run an open door policy leadership in NANTA. We hope to make this industry world class and comfortable for everyone. If you don’t equip yourself, no one will do business with you,” she said. Stella Fubara, a director at Dubai Tourism during her remark congratulated the the president of NANTA for launching what she described as www.businessday.ng

‘Great initiative.’ Fubara said she was excited about what was taking place today, adding that she had always advocated for an initiative as this. She explained that without training, travel agents cannot grow and COVID-19 is forcing everyone to evolve. She said travel agents have the power and can use this training and research to build back the confidence of the flying public. Fubara assured that Dubai Tourism will continue to support NANTA. Chima Ike, 2nd national deputy president in his address recalled that when Madam President was campaigning for her election into office, she made Membership Training/empowerment one of her cardinal points if elected into power. “She sang the song in Ibadan, repeated it in Garden city of PH, carried it to kano and Abuja while Lagos echoed it. Here today history is unfolding as Nanta unveils the first phase of her Training program. It is all about giving power to the members. Knowledge is power!! The Exco asks you all to support this noble course. Nanta is going to greater heights n we want to align to global best practices,” he said.

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contact a dedicated hotline to avail of assistance and cover. The hotline number, and details of what COVID-19 related expenses are covered, is available on www. emirates.com/COVID19assistance. Flexibility and assurance: With the gradual re-opening of borders over the summer, Emirates has revised its booking policies to offer customers more flexibility and confidence to plan their travel. Customers whose travel plans are disrupted by COVID-19 related flight or travel restrictions, can simply hold on to their ticket which will be valid for 24 months

and rebook to fly at a later time; request travel vouchers to offset against future Emirates purchases, or request refunds via an online form on Emirates’ website or via their travel booking agent. Emirates currently serves over 60 destinations in its network, facilitating travel between the Americas, Europe, Africa, the Middle East and the Asia Pacific through a convenient connection in Dubai for customers across the world. Dubai is open: Customers from Emirates’ network can now travel to Dubai as the city has re-opened for business and leisure visitors with new air travel protocols that safeguard the health and safety of visitors and communities. Health and safety first: Emirates has implemented a comprehensive set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitizers and antibacterial wipes to all customers. Travel restrictions: Customers are reminded that travel restrictions remain in place, and travellers will only be accepted on flights if they comply with the eligibility and entry criteria requirements of their destination countries.

AIB to commence training for aircraft accident investigators in West Africa

he Accident Investigation Bureau (AIB) Nigeria has concluded plans to commence training for aircraft accident investigators in the West African sub-region. Disclosing this on Monday in Abuja was Akin Olateru, the Commissioner/CEO of AIB Nigeria, when the Senate Committee on ICT and Cybercrime visited the agency to ascertain their level of ICT infrastructure and cyber security architecture. The Commissioner revealed that beyond partnerships with local and international institutions, it has also completed plans to begin training air accident investigators for the entire West Africa at its Abuja facility in partnership with the Nigerian College of Aviation Technology (NCAT) Zaria. The commission said it has released 27 accident reports in four years. Olateru said since he assumed office in 2017, AIB has released 27 final accident reports and issued 97 safety recommendations to the public. This, he said, represented 64 percent of releases since the inception of AIB. He said: “We will be releasing an additional four reports tomorrow, which will bring the total number of final reports released to 32 and 106 safety recommendations during this current administration.” He said the releases will make a total of 50 final reports and 187 safety @Businessdayng

recommendations since the inception of AIB. He also told the senators that AIB now releases air accidents in record time unlike in the past, saying that this was made possible due to the capability it has attained in the last four years in terms of equipment and human capital. He also said the AIB now has the capability of releasing an air accident report in 18 months from the date of the accident. AIB has partnerships with the United Kingdom Air Accident Investigation Bureau (AAIB UK), Singapore Transportation, Safety Investigative Board (TSIB), Canada’s Transportation Safety Board (TSB Canada) and the University of Ilorin among others. Olateru also appealed to the Senate for improved funding and the quick passage of its Amendment Act to enhance its operations. Speaking on some of its facilities, the AIB Commissioner, noted that “the bureau has acquired some drones and our staff are scheduled to undergo the training to enable us to get aerial shots of crash sites and proper analysis.” He also said handheld investigation equipment devices they also acquired will help its investigators to carry out on-the-spot analysis of evidence at the crash site and also download the Flight Data Recorder & Cockpit Voice Recorder through the handheld device.

Thursday 30 July 2020

BUSINESS DAY

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

Top Gainers/Losers as at Wednesday 29 July 2020 LOSERS

GAINERS Opening

Closing

Change

Company

Opening

Closing

Change

N282

N310.2

28.2

GUINNESS

N13.5

N13

-0.5

BUACEMENT

N39

N39.4

0.4

WAPCO

N12

N11.75

-0.25

N3.9

N4.1

0.2

STUDPRESS

N1.99

N1.8

-0.19

N1.54

N1.39

-0.15

N1.31

N1.18

-0.13

Company SEPLAT

UACN

N6.8

0.2

ARBICO

GLAXOSMITH

N4.8

N4.9

0.1

NPFMCRFBK

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

24,693.73 3,685.00 101,586,874.00 973.636

Global market indicators FTSE 100 Index 6,131.46GBP +2.20+0.04%

Nikkei 225 22,397.11JPY -260.27-1.15%

S&P 500 Index 3,245.36USD +26.92+0.84%

Deutsche Boerse AG German Stock Index DAX 12,822.26EUR -13.02-0.10%

Generic 1st ‘DM’ Future 26,347.00USD +50.00+0.19%

12.881

Shanghai Stock Exchange Composite Index 3,294.55CNY +66.59+2.06%

Nigeria’s equities market closes shortened trading week in green

Seplat says to drill two gas wells in 2020 as cash reserves hit $343m

...as investors buy Seplat, BUA Cement, PZ, others

… Maintains $120m capex, records $234m revenue

Iheanyi Nwachukwu

he equities market of Africa’s largest economy closed the threeday trading week

in green. The market’s benchmark performance indicator (NSE All Share Index) rose by 43.57 points or 0.18percent on Wednesday July 29 to 24,693.73 points, from 24,650.16 points recorded on Tuesday. The Federal Government declared Thursday, July 30 and Friday July 31 as public holidays to mark this years Muslim festival of Eid El Kabir. This week, Nigeria’s stock market increased by 1.09 percent; this month it is up by 0.88 percent while this year it has decreased by 8 percent. Investors bought Seplat shares which made them advance most on the Bourse, from N282 to N310.2, up by N28.2 or 10 percent. It was followed by

L-R: Fidelis Ayebae, MD/CEO, chairman of the board, Segun Adebanji, company secretary, Yomi Adebanjo, during Fidson Healthcare Plc’s 21st AGM(Virtual) held last Thursday.

that of BUA Cement which increased from N39 to N39.4, adding 40kkobo or 1.03 percent. PZ Cussons also increased from N3.9 to N4.1, up 20kobo or 5.13 percent. UACN rallied from N6.8 to N7, up by 20 kobo or 2.94 percent while GSK went up from N4.8 to N4.9, up 10kobo or 2.08 percent.

At the close of stock trading on Wednesday which is the last session this month, the value of listed stocks increased to N12.881trillion as against N12.858trillion recorded the preceding trading day, indicating an increase of about N23billion. In 3,685 deals, investors exchanged 101,586,874 units valued at N973.636million.

GTBank, FBN Holdings, UBA, ETI, and Sterling Bank were actively traded stocks on Wednesday. No doubt investors are still cautious in buying stocks despite that a number of fundamentally sound counters are attractive. Amid the record positive close on Wednesday, analysts still expect Nigeria’s

Fidson grows full year profit by 500%, Unilever holds 95th AGM, assures pays dividend to shareholders stakeholders on growth, profitability

idson Healthcare Plc held its 21st Annual General Meeting (AGM) last weekend at the Conference Centre, Fidson Towers in Obanikoro, Lagos. The AGM was held by proxy, to comply with the Federal government’s directives on social distancing and rules limiting social gathering to a maximum of 20 people. Shareholders approved a dividend of N0.15 per share while commending the company for ensuring that investors continue to get good value on their investments. Fidson grew its profit for the year by 518percent from a loss of N97.45 million in 2018 to N407.19 million in 2019. This is despite a decrease in Revenue of 13percent, from N16.23 billion in FY2018

to N14.06 billion in FY2019, which is largely as a result of the impact of the rescheduled national elections on its business operations in the first half of 2019, as well as the ensuing consumer passivity. According to the Chairman of the Board, Segun Adebanji, the company adopted several cost optimisation initiatives that ultimately led to the profitability increase. Gross margin improved from 39percent in FY2018 to 42 percent in FY 2019, administrative and sales expenses reduced by 13percent while finance cost dropped by over 10petcent. He reported that proceeds from the company’s Right Issue in July 2019 were used to repay expensive loans, finance capital expenditure and working capital needs. www.businessday.ng

n line with its resolve to enhance profitability, the Board and Management of Unilever Nigeria Plc has assured the shareholders of their commitment to good corporate governance that would in turn drive sustainability and efficiency across every aspect of the Company’s operations. Addressing shareholders at the 95th Annual General Meeting of the Company, the Chairman of the Board, Nnaemeka Achebe commended the shareholders for their trust and loyalty to the Company. He noted that despite the challenging business environment, which has now been complicated by the Covid-19 pandemic, the management

at Unilever Nigeria will remain strategic in their approach to sustaining the Company’s operations to revert to profitable and sustainable growth. The company’s N60.5 billion revenue in the year under review represents a decline compared to N92.89bn recorded in the year ended December 2018. Profit after tax showed a decline at N7.42bn for 2019 compared to N10.55bn recorded for the year ended December 2018. These results reflect challenging operating conditions but also the company’s decision to tighten credit terms to address exposure from trade receivables and excess stock in trade to better position the company for innovation and a return to competitive growth.

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eplat Petroleum Development Company Plc, a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), has announced a cash increased to $343m despite lower revenues, for the six months ended 30 June 2020. The Company’s full-year capex of US$120m (US$86m already invested) would also include two gas wells and related infrastructure. Revenue for the period stood at $234m amid lower oil prices and demand. Commenting on the results, which were released to the NSE and LSE on Wednesday, the Chief Executive Officer, Seplat, Mr. Austin Avuru, said: “Seplat has delivered a robust performance despite the unprecedented crises we have experienced since March. Our continued resilience is possible as a result of our financial strength, our careful management of risk and our prudent approach to capital allocation. Unlike many in our industry, we were able to protect our 2019 dividend and increase our capital investment to ensure continued growth.” Seplat’s oil hedging strategy and gas revenues, according to Avuru, have continued to protect the business from price volatility, with the Company achieving substantial cost reductions from its suppliers while managing own costs even more carefully in this challenging period. “Thanks to the excellent relationships we have with our Government partners and supply chain, our Nigerian Petroleum Development Company (NPDC) receivables have fallen and we are managing our payments equitably. The cash position is also robust because our careful management of debt has ensured that the majority of obligations mature in 2022 and 2023. We are operating within our covenants on all our lines of debt,” the Seplat CEO said. Speaking on Seplat’s ef-

@Businessdayng

forts at ameliorating the impacts of Coronavirus, the Seplat outgoing CEO said: “As part of our commitment to our host communities, we have provided medical and food assistance where needed and will continue to do whatever we can to support those upon whom we depend for our business. “This is my final set of results as Chief Executive of the Company I helped to found ten years ago. I thank all my staff, past and present, for working to make Seplat a major force in Nigerian energy production. I hand a robust and successful company over to Roger Brown, the incoming CEO, in the confidence that he and everyone at Seplat will make its second decade even more successful than its first.” Highlights Operational: Working interest production comfortably within guidance at 51,177 boepd despite market volatility; Eland OML40/Ubima assets produced 10,861 bopd, 32percent of Group oil volumes, integration progressing well; Low unit cost of production at $7.60/boe, with cost-cutting initiatives ongoing, particularly at OML40/Ubima; Liquids production of 34,117 bopd, gas production of 99 MMscfd; ANOH project remains on track for Q4 2021 first gas, financing RFP launched; Amukpe-Escravos Pipeline delayed due to access to the Escravos terminal, expected operational in H2 2020. Financial: Cash increased to US$343 million despite lower revenues, US$29 million 2019 dividend, and US$86 million capex. Net debt steady at US$457 million with most maturities after 2021. Revenue US$234 million • IAS 36 impairment provision of US$146 million (non-cash) in line with IAS 36 COVID-19 impact assessment • Business continuity and re-opening plan successfully mitigating the impact of COVID-19 lockdowns

Thursday 30 July 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

As GTBank Hosts Its 10th Autism Conference… Onuwa Lucky Joseph

or some reason, the incidence of autism has become way more visible. Growing up, most kids I encountered were like me: normal, motor and cognitive skills intact. The ones who were ‘abnormal’ were usually the older folks who frequented the beer parlours or mammy market. They were the ones whose gait was a lesson in staggering and whose families tended to move from gutter to gutter at night looking for them. But the kids; we all played football, we all did mischief and we all went to school, just that some knew how to pass their exams better than others, and some knew how to act out the films they watched the night before such that you could see all of the action in 3D as they were telling it. Other than that, we were all normal as far as we could see. But that’s been different for some time. Autism now

dots the filial landscape of numerous families - straddling a wide spectrum of manifestations. And some don’t exactly evince some of the symptoms we’ve come to associate with the condition that Mayo Clinic describes as one “related to brain development that impacts how a person perceives and socializes with others, causing problems in social interaction and communication.” “The term ‘spectrum’, in autism spectrum disorder, according to Mayo, “refers to the wide range of symptoms and severity. It goes all the way from mild to extreme.” But one thing that applies to every autistic person as indeed with every

disabled person is that they are discriminated against. Maybe not in equal measure, but it’s clear that because society reckons them different, it treats them as undeserving of what ought to go round. GTBank’s embrace of the cause of autistic persons as a signature cause is heartwarming. Ten years running, it’s brought people together to discuss the plight of the autistic amongst us and to find ways for fostering understanding and a sense of normality for those with the condition. This year, with Covid 19 all over the place, the bank insists the conference must go on, albeit digitally. And by the time you read this, the 2020

edition would have been done and over with, but we still will try to serve you tidbits from the event. With an uplifting theme that talks about “Focusing on similarities instead of Differences”, this year promises to be even stronger on the message of inclusivity which when well done, has potential for bringing together all the diverse talents from every strata of society towards effective nation building. Nigerians generally have a penchant for disparaging the disabled, (mental or physical). What GTBank is doing is to show how the disabled amongst us can be enabled to actualize their potentials with the right nurturing and atmosphere. The community of parents, families and caregivers for autistic people is, via this GTBank initiative, finding support and learning new ways to love their autistic children and other family members. We applaud GTBank for staying the course all these many years.

Introducing, Dr. Marcus Rashford! arcus Rashford’s name was not on the score sheet on the last day of the EPL this season when they beat lackluster Leicester 2:0, but the young man had the honour of, alongside his team mates, qualifying for next year’s Champion’s League. That is a big deal. But what’s an even bigger deal on an individual level, was the doctorate degree awarded the 22 year old Rashford by

after a hearty meal supplied by their government. Well, we shouldn’t bring Nigerian matter into this: But the VP Yemi Osibajo had declared last year that the Nigerian government Homegrown School Feeding Programme was catering to the stomach infrastructure needs of 9 million Nigerian children which he put (in May this year)at a cost N679m [$1,739,881.82] per day! Beyond the humongous price tag, which seems to be the pull for those in our

Accelerator program provides training, support and funding to enable great communities make an even greater positive impact in the world. The focus is more specifically on communities that are already established and running, have a business model, and are looking to grow their community through Facebook’s family of apps. She Writes Woman, a women-led movement of love, hope and support that gives mental health a voice in Nigeria, was founded in April 2016 by Hauwa Ojeifo, following a double diagnosis of bipolar and PostTraumatic Stress Disorder (PTSD). Since inception, Ojeifo’s work has received the 2018 Queen’s Young Leaders Award, 2019 Obama Africa Leader, 2018 Viacom MTV EMA Generation Change and Women Deliver 2020, among others. She is currently a One Young World ambassador and has spoken at the United Nations several times.

University of Manchester for his work with regard to child poverty. Specifically, his work with persuading the government to overturn a decision to stop free school meal vouchers in the summer was the catalyst which was topped by his raising $25million to aid vulnerable people during the Covid 19 crisis. Coming from a single parent background himself, the young man knows firsthand the stress families go through when there just isn’t the fund for food, how extremely difficult for children to develop to their full potential when they are deprived food in those critical growing up years. So he campaigned vociferously and relentlessly until the Boris Johnson government overturned that decision. It’s in view of his efforts that thousands of kids can pat their round tummies

government, (witness the ongoing NDDC palaver), not many people know many schools and children benefitting from the project. But that is Naija. Over there in the UK, the free feeding for kids is a manifest reality which about 50 thousand kids benefit from. It is so effective that someone of Rashford’s stature had to campaign to ensure it wasn’t taken away. Over in Nigeria, we know it’s a major drainpipe which needs to be stopped unless it is re-engineered such that everyone can vouch for its authenticity. All hail Dr. Rashford, even though being the gentleman he is, his name won’t be so prefaced being an honorary doctorate. However, his sterling example on and off field is one that other young folks would do well to imitate.

the nonviolent ethos. But John Lewis agreed it was the way to go. And he stayed with it all his life, pressuring first from outside and then from within, for equality, for justice, for civil liberty. Coming from a deeply segregated South, it was the distinct crowning achievement of his life when Barack Obama became President of the United States of America. President Obama returned the favour for all those many years of struggle by forebears like Lewis while bestowing on him the Presidential Medal

of Freedom. At that event, he called him the “conscience of the United States Congress,” where he had served from 1986 till he died, representing Georgia in the House of Representatives. John Lewis, to the very end, was all too aware of his moral obligation to his beloved people and nation. He knew there was a price to pay, a price that could all the way as high as his life. Little wonder therefore that he got high honours in life as in death. Organisers of Black Life Matters as indeed black

people everywhere need to stick with the struggle like Lewis did, pressuring our oppressors from within and without, one civil disobedience at a time, one march at a time, one victory at a time, ‘Until justice rolls down like water and righteousness like a mighty stream.’

Onuwa Lucky Joseph

MENTAL HEALTH:

She Writes Woman Gets Facebook 2020 Funded Accelerator Support

he Writes Woman (SWW) Safe Place community has been selected for the 2020 Facebook Accelerator, a six-month program focused on helping impactful communities to grow stronger quicker. It is one of the 77 communities across six regions that have been selected to participate. Up to $3 million total will be awarded to program participants globally. The selected participants will each receive up to $30k to execute their growth plans during the duration of the program and could be eligible to receive part of the $500K additional funding available at the end of the program to further grow their communities and impact Safe Place Nigeria started as a first of its kind women-only support group initiated in October 2016. Hauwa Ojeifo, the Executive Director, created Safe Place Nigeria to provide a stigma and judgment-free space for young people to talk

about mental health-related issues. It has since become a community for young people to learn, feel connected, get support and feel a sense of belonging. Its 22,000+ members enjoy the benefit of free telephone counseling, support groups and other mental health resources. A press statement signed by Adaora Okoye, She Writes Woman’s Communication Manager quotes Hauwa Ojeifo as saying: “Safe Place Nigeria, (a She Writes Woman’s initiative) is focused on building

a dedicated online community for the growing number of mental health-conscious Nigerians, especially now with restrictions in accessing physical spaces. We have directly supported over 900 beneficiaries in the last 2 years. This Accelerator offers us an unprecedented opportunity to scale access to mental healthcare, self-care tools and wellness resources”. The six-month program is aimed at helping these community leaders quickly and strategically achieve their growth goals. The Community

A Fond Farewell for John Lewis (1940 – 2020) Onuwa Lucky Joseph

ohn Robert Lewis was no ordinary Civil Rights icon. He was, at a tender age, right there with Martin Luther King Jr., shoulder to shoulder in the 5-day Selma to Montgomery March. And other marches, and sit-ins, and the within an-inchof-his-life beatings… Those were the tough early days when adequate laws secur-

ing racial equality were not in place. There was no road map. MLK and his trusted lieutenants www.businessday.ng

were plotting their path as they moved along. Beyond spontaneous outbursts was the need to codify the nonviolent movement against segregation in such a way that different chapters in the different parts of the country could run with the template. And not to forget, that in view of the nature of this brazen crime against humanity that had gone on for far too long, not many Blacks were willing to abide by

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Thursday 30 July 2020

BUSINESS DAY

Garden City Business Digest Echoes at MAN AGM in PH:

Corruption, other factors stop Nigeria’s manufacturing march to G-20 • MAN: Nigeria is nowhere near 20 top economies in the world in 2020 Ignatius Chukwu

t is now clear that Nigeria will not meet its target to be among the 20 industrialised nations of the world in the magic year, 2020. The Manufacturers Association of Nigeria (MAN), which made the heartbreaking pronouncement in Port Harcourt named corruption as the number one factor in this malady. One-time president, Umoru Musa Yar’Adua had set the Vision 2020 when Nigeria should join the top 20 economies of the world. This has failed just like Sani Abacha’s Vision 2010 did. This was the biggest echo at the MAN Rivers/Bayelsa chapter annual general meeting (AGM) for 2020 which just held in the Garden City. The branch chairman, a former senator, Adawri McPepple, listed the culprits as high cost of funds, poor electricity supply and high cost of energy, incidence of multiple taxes/levies and over regulation/multiple regulations by government agencies, low patronage of locally manufactured goods, and smuggling coupled with counterfeiting of locally manufactured products. He said everybody was aware of the numerous challenges which limit the productivity of the manufacturing sector in the region which he said were evident from the MAN CEOs Confidence Index report compiled quarterly by

Adawari McPepple, MAN Rivers/ Bayelsa chairman

secretariat. Pepple went on: “We are now in the year 2020 and I believe it is now evident that Nigeria is nowhere near our goal of being among the top 20 economies in the world, which we can attribute to a number of factors but not limited to corruption, policy summersault and mismanagement of public office and funds.” The one-time senator quoted John Naisbitt; “Countries don’t create economies. It is entrepreneurs and companies that create and revitalize economies. The role of governments should be to create a nourishing environment for entrepreneurs and companies to flourish, not to get in the way of economic development”. Drawing the link between industrialization and manu-

facturing, he said: “When a nation engages in manufacturing, it enables the production of diverse and sophisticated products which are produced with advanced machines and technology. The use of new technologies and machines therefore results in the creation of jobs that require skill levels with higher wages. Ultimately, the outcome is an increase in the capacity of the nation to come up with economic development opportunities which would improve the standard of living for individuals and families. He warned that if Nigeria truly wanted to achieve its goal of being among the top 20 economies in the world, special attention must be paid to manufacturing sector to encourage entrepreneurship and the expansion of already existing manufacturing companies. He feared that even this has been hampered by the Coronavirus pandemic which he said has forced new rules in factories which also limited the MAN to virtual AGM and denied them the presence of top guests especially governors of the two states. He commended Gov Nyesom Wike for the efforts to transform the business landscape of Rivers State which he said is evident in the numerous infrastructure projects and improvement in the security situation in the state. They urged him to do more and also congratulated Gov Douye Diri

MAN Rivers/Bayelsa AGM

of Bayelsa State for the victory recorded at the polls. “MAN is confident that you will do a lot to make Bayelsa an economic hub in the coming years.” National MAN President, Mansur Ahmed, whose address was presented by the Acting Director-General, Ambrose Oruche, reminded Nigerians that if there is no manufacturing, there can be no industrialization. “Rivers/ Bayelsa chapter has continued to wax strongly. In the current year, your chapter recorded some feats such as creating a ‘help desk’ to support member companies, the rebate you won from the Nigeria Ports Authority (NPA) in Port Harcourt for members imports, your enthusiastic participation in the seminars by the National Assembly of reactivation of eastern ports, your top actions to rescue members’ trapped trucks, etc.” At the nationaal level, he

went on; “We have continued to engage the FG on ways to help MAN. There is serious effort to meet with up operationalisation of the AfCFTA and urge chapters and members to participate in seminars on this sensitive subject matter. There are numerous challenges but endeavour to be stable and steady.’ Bring in SMEs: Former Rivers/Bayelsa chairman, Ekama Emilia Akpan, commended the secretariat and the leadership of MAN in the chapter but urged members to get closer and help because the job is not for the chapter chairman alone. “We must speak with one voice which is the chairman’s voice while all others will support it.” On boosting membership, Akpan, who is immediate past national deputy president (south-south/east) called for efforts to bring in successful SMEs. “They still think MAN is

for big corporations only. Most of us believed so, too. Port Harcourt will send special masks to MAN national to show what efforts we have made in this part of the country and to lead in the push for standardisation of masks for national and international use. This is the time for MAN to stand and take its position.” Members called for closer collaboration with the Nigerian Content Development and Monitoring Board (NCDMB), saying their objective was same with that of MAN in making Nigerians to buy Nigeria. It was disclosed however that great efforts were already going in such direction and that the National Assembly was trying to broaden the Board to cover up to power and manufacturing sectors. It was also made known that MAN has since set up local content group set up to collaborate with the NCDMB.

Ogoni clean up:

Back HYPREP with an Act now, else, a crazy president will scrap it – CEHRD Port Harcourt by Boat

IGNATIUS CHUKWU

he Hydrocarbon Pollution Remediation Project (HYPREP) is loved and hated by many at the same time but a research finding says the agency could easily be scrapped by any president that does not like it. For this reason, a strong call has gone for an Act of the National Assembly to back it up without delay. This was the highpoint at the presentation of findings by the CEHRD in Port Harcourt where a scholar and researcher, Kabari Sam (PhD), backed by professor, Nenibarini Zabbey, also called for key performance index (KPI) now to know where HYPREP is starting and heading to in the clean up exercise. Else, they warned, the exercise would be another big joke. Reeling out other earthshaking findings, Kabari said it was clear that 84 per cent of people surveyed consume polluted water while 23 per cent only treat water by boiling. He said boiling of water does not remove the oil in water but can kill germs. He also

said the mangrove forest has been depleted, thus exposing the base of the coastline and reducing livelihood of most persons. Part of the research work tried to document exactly where the contaminated soil being removed went to, but this was not found. “We have ascertained that borrow fits in impacted areas are empty at the moment. So, if they get filled up later, we can determine that the contractors did that with impacted soil from sites and if they have used them as dumpsites. The issue is, where is the hazardous waste you so far remove from your lots? Those interviewed said they saw no evidence of waste disposal procedures.” Finding out from either National Oil Spill Detection and Response Agency (NOSDRA) or HYPREP did not pay off, the researchers stated. The report also revealed that fish and cassava produced in the spill-impacted areas have oil in them. “Bacteria load in Ogoni potable water is very high such that there can be outbreak of dysentery, cholera, etc in the area. People are breathing petroleum everywhere with black particles and coloured water. At 30cm depth, oil is still found in the soil. It shows the oil is going deeper. Fish is contaminated in Ogoni communities. Nitrate is very dangerous. It is in fish there.” Perhaps the most alarming could be the revelation that soot has become even deadlier. “The boys have improved a lot and the soot has gone into smaller particles these days but more dangerous. They now burn with oxygen and this breaks it down to smaller particles the eye may not see. The result is even more deadly.” Worse; “There is no competent lab to test soil in

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the Niger Delta. The ones present give result in 0.0005 which reports that the soil is ok, whereas labs that detect in smaller granules would find out what is wrong. There should be a scientific threshold to test soil and need to have labs and experts in the Niger Delta to be able to be capable. Some think its due to the level of equipment in the labs in the region. There is need to demand that labs should report in micrograms per kilogram instead of in grams per kilogram. “If regulatory threshold is adopted, no need to repeat these when the larger Niger Delta would be cleaned. “We are not asking HYPREP to build hospitals but if they can carry out an epidemiological survey, people can build hospitals along the findings. HYPREP says it is a development agency, yes, but building lab centres will give jobs to over 1000 youths where 94 per cent have their livelihood disrupted. “There is no framework for human rights measurement. Kpofire (illegal refining) must stop. The damage is outrageous. People are simply breathing in petroleum. Remember that the UNEP Report asked that re-pollution must stop if coastal clean up

Sam Kabari, CEHRD

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must take place. The clean up must adopt a holistic approach If coastal pollution due to artesenal refining continues, the efforts would be wasted. It pollutes coastal forests.” The solution, the expert said, is to create packages to stop the boys. “Do not clean the floor while the tap is still running. Cultism is caused by gangs fighting over control of refining access. Access to land in Ogoni may be an issue in next two years as remediation begins proper.” For the clean up of the larger Niger Delta to be a reality, the researchers urged the FG to commission the assessment of region now because it has been proved that the study takes time. “Law should back up HYPREP because if the clean up will last over 50 years in the Niger Delta region, about 10 presidents may be involved. One of them can come and scrap the exercise where there is no law. Board of HYPREP must be independent in the Act. Only then can the Niger Delta be cleaned.’ In his opening remarks, the professor (Zabbey) said; “The study is key to restoring the Ogoni soil. We demand for international best practices. There is need to benchmark the clean up. Where are we starting from, where are we heading to? So, KPI is important. We started our researches with community perception and went to assessment of key component of environmental impact assessment (EIA) adding gender issues and human rights impact. “We have been advocating up to the National Assembly to include gender and human rights assessment in all EIA. This exercise today is to make the bulky document to a mere handbook for faster grasp. It is to guide the Ogoni clean up on the new guidelines. Hopefully, policy makers and HYPREP should consider this as very useful tool.”

@Businessdayng

Thursday 30 July 2020

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

19 years after funding first telco, can Nigerian investors lead tech investment again? FRANK ELEANYA

he year is 2001 and the federal government under President Olusegun Obasanjo has just given the approval for an international auction process for three national mobile phone licences. Potential bidders including Econet and MTN would not only need to raise money, they must have a member of the bidding consortium who is an experienced GSM operator. Econet met the requirements because a consortium of 100 percent local investors including two state governments (Lagos and Delta), leading Nigerian banks, and high net worth individuals (HNIs) pooled resources together to raise the $285 million licence, which at the time was the most expensive licence ever issued on the African continent. Although Econet did not quite live up to the investors’ expectations, the company has changed many hands over time and it’s today known as Airtel, owned by the Bharti Group. The funding, nevertheless, was the one last time Nigerians took the funding initiative and executed it without overseas participation.

It is also the last time local investors have totally dominated investment in a technology firm setting a record of more than $200 million. After Econet, seven Nigerian banks tried to replicate less than a fraction of the investment in Interswitch when they raised N30 million in 2002 for the take-off of the switching and payment processing company. The seven banks later sold 75 percent of their stake to Helios Investment Partners which earned the banks about 1400 percent return on investment. While states went to bed and have stayed asleep on funding tech firms, banks and some young Nigerians have in recent times written a few

Dispatch riders embark on 3 days strike despite Minister’s assurances FRANK ELEANYA

mall business owners will struggle to deliver products and services to customers’ homes from Monday following the decision by dispatch riders to embark on a three days strike. In a strike notice which BusinessDay saw, the delivery companies stated that the strike was to bring to the public the “injustice” they are facing in the hands of Lagos State “taskforce, council boys, MOT and other unnecessary papers.” Many eyewitnesses have narrated how the staff of different delivery companies was being harassed by officials believed to be working with the various Lagos State government. The harassment appears to have increased after the Niger ian Postal S er vice rep or te dly hike d registration fees for courier services. The new charges by NIPOST

stipulate that companies that provide international courier services are expected to pay N20 million for a new license and N8 million for renewal of services annually. Logistics companies operating at the national level will pay N10 million for license and N4 million yearly. The companies operating within regions are expected to pay N5 million for license and N2 million annually. Following a public outcry on the hike, Ali Isa Pantami, Minister of Communications and Digital Economy said the increase in licence fee was not part of the regulation that was approved, hence it is void. “The power of regulation of NIPOST lies with the minister. Any change of fee must be specific and be approved by him before implementation. I know the economic challenges of NIPOST. However, looking at the economic hardship of our citizens, we need to suspend any move,” Pantami said on Twitter.

cheques to some early-stage startups but none so significant as to compete with the dominant foreign investors. Funding in the tech space has surpassed record levels over the years with the dominance of foreign investors continuing to grow on a yearly basis. For instance, while foreigners controlled 87.8 percent of funding in 2018, they increased their stake to 95 percent of the total funds raised in 2019. “It is a shame to Nigeria that we allow our tech space to be controlled by foreigners,” Victor Asemota, a member of the Board of PlaceFund told BusinessDay. Nigeria sits prominently on the list of top ten richest

people in Africa. The country is home to the richest black man in the world and it also occupies the two spots in the top three richest people on the continent. According to Forbes’s most recent ranking, aside from Aliko Dangote ($10.1 billion) who has remained at the number one spot in Africa for seven years, Nigeria’s billionaires on the top twenty list include Mike Adenuga ($7.7 billion), Abdulsamad Rabiu ($3.1 billion), and Folorunsho Alakija ($1 billion). Apart from Mike Adenuga who owns Glomobile, Nigeria’s third-largest telecommunication company, the rest billionaires have no form of exposure to the

Nigerian tech ecosystem. Unlike MTN Nigeria which often collaborates and sometimes provides technical and financial assistance to local tech startups, Glomobile has practically played a silent role in the development of the community. Jim Ovia, chairman of Zenith Bank, is currently the only billionaire with direct equity in a Nigerian tech company, through his venture capital (VC) firm, Quantum Capital. Quantum Capital’s $5 million investment in TeamApt in 2019 is the largest single equity stake in tech startups by a Nigerian investment firm and a billionaire in Nigeria. As Nigeria’s billionaires dilly-dally, startups are receiving increasing attention from local venture capitals firms backed by mostly Nigerians in the diaspora. “We have to back our own. We don’t want to be biting our fingers in decades to come. Moreover, several events have further cemented the role of local capital even in matters of corporate governance,” Kola Aina, founder of Ventures Platform one of the VC welcoming diaspora funding in the country. The company has funded over 20 local companies in Nigeria and Africa since it was founded in 2016. In a Twitter thread in June,

Asemota explained that foreign dominance in Nigeria’s tech ecosystem is akin to relinquishing power of innovation. “Power is the one who determines if you live or if you die. Power is resources at the early stage but it becomes the market at later stages. Those who provide resources at the early stages want to control the market at the later stages,” Asemota said. He says, however, that local investment does not necessarily have to come from high net worth individuals (HNIs). Iyinoluwa Aboyeji, a co-founder of Andela and Flutterwave, recently revealed how his team was “politely” refused funding by an investment team representing a Nigerian billionaire, at the early stage of Andela. Some other local investors and government officials also turned down the opportunity to invest in the company because they erroneously thought it was a nonprofit. While diaspora has a key role to play, there are the communities that Asemota says should typically be the first investors in a tech firm. “Banks are showing up on cap tables and with the new regulation will soon be able to invest in venture funds. We need to focus on enabling more of that,” Aboyeji said.

Western Digital launches enhanced data centre solutions with 16, 18TB storage capacities CALEB OJEWALE

torage devices with enhanced capacities have been launched by Western Digital, which says it is extending its HDD technology and capacity leadership into its broader portfolio of data center solutions. The company in a statement said leveraging innovations from the Ultrastar 18TB and 20TB HDD technology platform, the WD Gold family now features new 16TB and 18TB CMR HDD capacities. Also available are an upgraded line of Ultrastar JBOD platforms and an Ultrastar hybrid storage server featuring Ultrastar 16TB and 18TB CMR HDDs. Through Western Digital’s vertical integration capabilities and broad portfolio, the company says it continues to be uniquely positioned to help customers meet data

demands as they design their storage infrastructures for better efficiency and productivity. “Cloud service providers and systems integrators today have one thing in common: they all require a multi-tiered storage strategy, leveraging multiple technologies to manage the explosion of valuable data and breadth of workloads. Unlike any other vendor in the space, Western Digital develops, manufacturers and markets NAND, SSDs, HDDs and platforms,” said Yusuf Jamal, senior vice president of Western Digital’sDevices and Platforms Business. According to him , the depth and breadth of the company’s data center portfolio enables it to deliver the right innovations at the right time to help all its data center customers—from hyper scale cloud customers to enterprises and SMBs— solve their most important data infrastructure challenges.

“Western Digital’s expanded family of data center HDD solutions clearly addresses a variety of customer needs, which puts them in a unique early position to capitalize on cloud and OEM customer transitions to 18TB, and even to 20TB for those optimizing the benefits of SMR,” said John Chen, vice president at TRENDFOCUS. “Capacityenterprise HDDs will continue to dominate the near line and secondary storage market as there is simply no other costeffective substitute for data at scale. As a result, we expect near line disk drive exabytes shipments to grow at a 32.5 percent CAGR, reaching 1.9 zettabytes by 2024.” Announced in September 2019 and currently shipping, the 20TB Ultrastar DC HC650 host-managed SMR HDDs and 16TB and 18TB Ultrastar DC HC550 CMR HDDs are described as the industry’s first commercial implemen-

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

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tation of EAMR technology. Together with Western Digital’s HelioSeal design for outstanding power efficiency, and mechanical innovations such as the industry’s first TSA to enhance head-positioning accuracy and deliver greater capacity capabilities, these drives deliver leading areal density. These nine-disk drives also enable customers to more efficiently provision and scale their data center environments with unmatched TCO value. “We are excited to test Western Digital’s latest 18TB Ultrastar HDD reliability and capacity innovations and look forward to identifying technologies that deliver powerful value to our customers,” said Joe Carvalho, vice president, Infrastructure Engineering at Datto, a leading global provider of cloud-based software and technology solutions delivered through managed service providers (MSPs).

Thursday 30 July 2020

BUSINESS DAY

news

Nigeria’s food affordability dependent on smart agripreneurship - Study

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

Lagos targets 2,000 tons fish production to bridge annual demand gap JOHN SEYI SALAU

agos State government is looking to partnering private sector investors for the establishment of a N10 billion Lagos Aquaculture Centre of Excellence (LACE) that will enable the production of 2,000 tons of fish annually. The aquaculture centre, according to the government, would be sited at Igbonla, in Epe area of the state, under a Public-PrivatePartnership (PPP) arrangement. The state governor, Babajide Sanwo-Olu, who disclosed this at the distribution of agricultural inputs and productive assets to about 2,743 farmers under the 2020 Agricultural Value Chains Empowerment Programme, in Ikeja, said the project would further boost food production and sustainability. Statistics obtained by BusinessDay from the Lagos State ministry of agriculture shows that whereas the fish consumption demand in Lagos has risen to 374,000 tons per annum owing to increasing population, the state currently provides about 155,262 tons, leaving it with a deficit of 218, 738 tons.

The deficit in supply is, therefore, being met through importation which gulps enormous foreign exchange, which the federal ministry of agriculture estimated at a about $1 billion annually. The planned aquaculture centre, it is hoped, would bridge the demand-supply gap and conserve foreign exchange for the country. Speaking at the event, Sanwo-Olu, who was represented by his deputy, Obafemi Hamzat said that the centre would be located on a 35-hectare land. He said that the centre would also ensure provision of inputs to fish farmers under the Lagos Nucleus Farms scheme, and serve as off-taker for fish farm clusters in the state. Sanwo-Olu added that the state government would also establish two food production centres in Epe and Badagry to be known as Lagos Food Production Centres, in order to sustain food production and supply. The governor also noted that the two centres would ensure resuscitation, expansion and stocking of agricultural production facilities in various value chains and develop agro-tourism centres in the Lagos State Songhai project in Badagry and the Agricultural Training Institute, Araga, Epe.

“The experience of the past few months during the lockdown occasioned by the Covid-19 pandemic has further reinforced the urgent need to expand the state’s food production base to meet such a spontaneous increase in demand for food in the future. “In line with this realisation, and to ensure sustained food production and supply in the state, we are establishing Lagos Food Production Centres in Badagry and Epe. “In addition, we are establishing the Lagos Aquaculture Centre of Excellence (LACE) N10 Billion project to be located on 35 hectares of land in Igbonla in Epe under a public\private partnership arrangement,” he said. According to Sanwo-Olu, LACE is designed to boost the growth and development of aquaculture industry in the state through direct production of 2,000 tonnes of fish annually. “Also, it will ensure provision of inputs to fish farmers under the Lagos Nucleus Farms scheme and serve as off-taker for fish farm clusters in the state.” Sanwo-Olu said that the agriculture sector remained a key component through which the state government would realise its dream of making Lagos a 21st

century economy, adding that it was a pillar of the government’s T.H.EM.E.S agenda. The state acting commissioner for agriculture, Abisola Olusanya said that agriculture was key to the promotion of food security as it played a vital role in increasing quantity, quality and diversity of food supply. The commissioner noted that the overall aim of the agricultural value chain empowerment programme was to provide the necessary agricultural inputs and productive assets to farmers as a means of achieving improved food production and supply. “Since inception of this project in 2014, a total of 11,233 farmers, fishermen, butchers, processors and marketers have been empowered. The programme is a means of channelling needed support to small holder farmers who are actively engaged in the various agricultural value chains, thereby creating further wealth and job opportunities. Olusanya implored all the beneficiaries to put their inputs into productive use to make maximum impacts. She also called on the private sector to collaborate with the state government to develop the various agricultural value chains.

Be fraud smart, Access Bank urges customers Here’s Yale University’s advice on how to create work-life balance s the Nigerian banking in- ers’ funds,” Etuokwu said

dustry witnesses increased regulatory scrutiny due to the impact of COVID-19, bank customers have not been spared from the whims of fraudsters. To this end, Access Bank has once again urged customers to remain vigilant and beware of the common tricks used by fraudsters to rob them of their monies. Victor Etuokwu, executive director of retail banking, Access Bank, expressed concern about the growing number of fraud cases being reported, and implored customers to take more responsibility in safeguarding their funds and offered reassurance of the bank’s commitment to providing information relevant to identifying and fending off fraudsters. “Over the last few months, the number of reported fraud cases has spiked considerably. This is not unexpected as the current economic hardships experienced due to COVID-19 have caused many to be vulnerable. However, this trend has become very disturbing, while we urge customers to become more aware of the tactics employed by fraudsters. Access Bank will continue to educate customers on how to avoid falling victims as well as deploy resources to ensure the security of custom-

“The bank has identified smishing, phishing, social engineering, and identity theft as the most common methods used by fraudsters. To aid the fight against this common enemy, we have put more power in the hands of our customers, through the *901*911# USSD code. We have provided a platform through which customers can immediately deactivate their USSD profile by dialling *901*911# from any phone in the event their mobile devices get lost or stolen,” he said. Through the years, the bank has remained committed to educating its customers, informing and protecting them from fraudsters. The Bank has created dedicated pages on its official website that constantly educate customers on the schemes and tricks employed by fraudsters. Responding to queries made by customers saying the fraudsters approached them disguising as the Bank’s staff, Etuokwu added that, “Customers should be on alert as the Bank will never ask for personal information such PIN, BVN, 16-digit card number, CVV, Password, OTP or Authentication Code for the mobile banking app. We urge our customers to ignore such calls, text messages or emails”.

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Gbemi Faminu

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

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

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

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

Building insurance, verification in focus as Lagos partners estate surveyors Chuka Uroko

n view of the recently signed Lagos State urban and regional law 2015 as amended 2019, Lagos State government and the Nigerian Institution of Estate, Surveyors and Valuers NIESV) have indicated interest to collaborate on implementation of building insuranceandvaluationaspectofthelaw. The move is in line with the current administration’s zero tolerance to illegal structures and its whistleblowingpolicythatallowscitizensto report irregularities within the state. SpeakingduringavisitbyNIESV members recently, the Lagos State commissioner for physical and urban development, Idris Salako, said the partnership would help regulate the activities in the built environment and would not outsource its powers to anyone. Salako, who said government was willing to work with relevant professional bodies to achieve the THEMES agenda of the current government, added that they have proposed that the issue of certifying building inspectors be looked into as omitted in the new law. “Thegovernorrecentlyassented intolawthestategovernmenturban and regional law 2015 as amended 2019 and one critical issue in the law is insurance. So we are willing to workwithanyprofessionalbodiesto achieve the goals of the law. “We acknowledge the institution’s effort as a professional body to seek collaboration and engage with the ministry especially on the monitoring of planning approval and certifying building inspectors, @Businessdayng

which was not inserted into the law. Government will explore the expertise of private sector in this regards,” he stated. Explaining the purpose of the visit, the chairman of Lagos branch, NIESV, Adedotun Bamigbola, said the need to reduce the risk associated with building collapse and the ministry’s position on the process of implementing the newly enacted law necessitated the visit. According to him, “Economics and population are changing urban and regional planning sector in the state and so people should know the position of government on its 10 master plan as Ikeja will be terminating this year. This partnership will help create building codes and educate citizens on the importance of building insurance.” He stressed the need for its institution to have an input in insurance of building, valuation and as certified building inspectors as enshrined under law in regional and local government levels across the state. “We urge the government to leveragetheprivatesectorcompetencies to fill this lacuna in the recently signedlawasitaffectsinsuranceand ensurecitizensareprotectedshould there be any eventuality of collapse of building. “As recommendation, our professionals cover insurance valuationswhichisveryvitalinmeasuring risk element of building because since the enactment of this law we have extended our efforts to Nigeria Insurance Association to better the physical planning landscape of the state.”

Thursday 30 July 2020

BUSINESS DAY

news Lack of synergy between Discos, TCN will... Continued from page 1

megawatts of electricity from those transformers ineffective. This is because there is lack of synergy among the two organisations on where best the transformers should

be installed. This situation, industry experts observe, is certainly compounding the challenges Nigerians are facing in respect of power supply. The expansion programme of TCN is good but there is misalignment among the parties that should make the impact of the programme effective, according to industry operator in an interview with BusinessDay The TCN claims it has about 8000mw capacity, but some industry operators are sceptical if Nigerians would enjoy this when the generating companies (Gencos) decide to make the 8000mw available for transmission because it is not carrying the Discos along in its programme. The ugly situation between them is manifested in where some of the transmission transformers are installed. Some are installed where they are not needed, while existing transformers in other areas are over loaded thereby causing acute load shedding. Some of the new transformers should have been placed close to the existing ones with facilities that can evacuate power and act as relief transformers, a stakeholder states. For example, a small island in Lagos called Ilase has a 30MVA transmission transformer with 24mw capacity allocated to it, but stakeholders say the community does not need such transformer, saying such facility should have been taking to places where other transformers are experiencing over loading for a more stable power supply. The requirement of the community they say may not be more than 2mw. Similarly, a 2/60MVA transformer was commissioned recently at Odogunyan, also in Lagos, where there is just a 15MVA transformer on the Disco’s side to evacuate some of the loads, leaving the balance unutilised because there is no other 33kv line to evacuate the load to the consumers. The TCN expansion programme does not fit into the workings of the Discos, and this is part of the reasons why there are inadequate supplies of electricity in many places, another stakeholder notes. An industry source discloses to BusinessDay that there are high capacity transformers, 300MVA, dumped at some transmission substations across the country, which are almost redundant because they are underuti-

lised as a result of lack of evacuation facilities. The evacuation of power from where some of the new transformers are installed to the consumers is difficult because the Discos do not have investment plans to put in place infrastructure that will take power out of such areas, another stakeholder states. An official of one of the Discos says they have drawn the attention of TCN and the Federal Government to this anomaly but nothing seems to be happening in that respect. Efforts to get the reaction of TCN through Ndidi Mba, general manager, public affairs, failed, as she did not respond to the email sent to her. Shortly before his removal from office, the former managing director of the TCN, Usman Mohammed, said the transmission company currently had plans to build capacity to evacuate 10,000mw of electricity. The installation of 68 transformers and the construction of transmission lines across the country between 2017 and October 2019, had aided the growth of the country’s electricity evacuation capacity, Mohammed said. He explained that the last simulation of the grid was done in December 2018, when transmission moved from 5,500mw to 8,100mw, noting that the intention of the government was to build more transmission lines, as some areas had high transformer capacities but the lines supplying them power were not adequate. The maintenance and expansions being carried out are being done under the Transmission Rehabilitation and Expansion Programme (TREP) of the Federal Government, he said. The objective of TREP is to expand the grid to 20,000mw by 2023.

Covid-19 evacuation: 289 more Nigerians arrive Abuja from US.

Investors eye reforms to pump foreign capital... Continued from page 1

and legal infrastructure to protect our investments,”

Faizal Bhana, director of a venture capitalist Jersey Finance at Middle East and Africa, says. He asks Nigerian entrepreneurs to leverage international platforms in order to attract the kind of international expertise and capital their businesses need. On the part of Nigerian businesses, they want more SMEs to become internationally structured, with good corporate governance and evidence of the required skills-set. They argue that Nigerian banks are far too risk-averse, sitting on massive portfolios of government bonds than lend to businesses, making it difficult for them to have confidence in investing in Nigerian entrepreneurs. “Nigeria increasingly looks problematic vs. smaller vibrant African countries. There is no good feeling in South Africa now and Nigeria should take advantage of the situation by changing these things,”

Robert Hersov, founder and chairman of South Africabased Invest Africa, says at a virtual meeting entitled ‘Access to International Capital’ organised by the Lagos Chamber of Commerce and Industry (LCCI) on Tuesday. “Debt and equity are available, and there is a significant increase in interest in Africa for international strategic longterm view of the continent. But local entrepreneurs must leverage partnership to scale up their business,” he advises. Nigeria undertook reforms in the doing business environment in 2016/17, resulting in a 15-step up in the 2020 World Bank Doing Business (146 to 131). The country also finalised its tax reforms in 2019, cutting taxes for high-growth and small businesses. However, multiple taxes still exist in many states and local governments across the country, notably Lagos, Nigeria’s economic capital. A lot of sectors such as oil and gas, non-oil export, ICT and imports require policy reforms and consistencies to work efficiently. The fintech players, for example, say

licensing from the central bank is becoming more problematic as they disrupt traditional financial institutions. “We will like to see more regulatory clarity, especially in the fintech space,” Lexi Novitske, managing partner, Acuity Ventures, says, adding that she is ready to fund more fintech, data and identity firms and infrastructurebased companies in Nigeria. Nigerian start-ups attracted $122 million in funds in 2019—one quarter of the funds that came to Africa, according to a 2019 African Tech Start-ups Funding Report. Its Q1 2020 report claimed that investors pumped $55.37 million into Nigerian start-ups in the first quarter of 2020. Most of the funds came from foreign venture capitalists and angel investors. Despite the funds, analysts say Nigerian MSMEs are cashstrapped as financial institutions are reluctant to lend to them due to risk factors. PwC Nigeria estimates that yearly financial gap for Nigerian MSMEs is N617.3 billion. In a new report entitled ‘PwC’s MSME Report 2020,’ the consulting firm surveyed

over 1,600 MSMEs, out of which 22 percent noted that obtaining finance was their biggest challenge. However, investors say every good business will naturally attract capital. “If you have a good transaction, you will have capital,” Raj Kulasingam, senior counsel, Dentons UK and Middle East, notes. “The early to seed stage is difficult because of no institutional investors at that stage. Capital is available, but investors are looking at hard currency projects, which are why currency problem in Nigeria is an issue,” he further states. Toki Mabogunje, president, LCCI, says the size of credit to private sector (as percentage of GDP) is largely insufficient to meet the demand for finance by private sector, thereby creating a huge funding gap and liquidity challenge needed to meet working capital requirements and finance new projects. Citing the Central Bank of Nigeria, she says total gross credit to the private sector stood at N18.90 trillion at endJune 2020, representing about 13 percent of the GDP.

Nigeria’s rice paddy prices surge 69% amid... Dangote Cement fulfils promo promises as Continued from page 2 Zayyanu-Umar Aliero, chair- Season 2 winners get N1m credit alerts weeks ago, now sells for an average of N24,500, indicating a 25 percent rise in price. While foreign parboiled rice sells for an average of N28,000 as against N24,000 a few weeks ago. Since the initial lockdown to contain the virus spread in late March, prices of all farm inputs have also surged by over 20 percent, forcing farmers to reduce their production areas. This led to a steady acceleration of inflation in Africa’s biggest economy. The country’s inflation rate quickens to a 26-month high at 12.6 percent in June, mainly driven by food inflation sub-index. “The recent increase in paddy prices across the country is because of the high input cost incurred by farmers,” says www.businessday.ng

man, Rice Millers Association, Kebbi State chapter. “The cost of NPK fertilizer has gone up from N7,500 we were buying to N11,500 now as we speak,” he says. However, Ade Adefeko, vice president, corporate and government relations, Olam, is optimistic that despite the increase in input cost, the surge in prices of paddy will ease off during the wet season harvest. At the international market, the price of a metric ton of rice has been declining steadily as top Asian growers of the grain lift restrictions on export after the lockdown. Data from the International Grain Council show that a metric ton of rice sells for $466 as at the time of writing as against $492 sold late June.

Bunmi Bailey

hree new millionaires on Tuesday had their million-naira winnings presented to them by the management of Dangote Cement plc in fulfilment of its promise to make 1,000 people millionaires in its ongoing ‘Bag of Goodies: Spell Dangote and win a Million Naira Consumer Promo,’ which commenced barely two weeks ago. The winners from Lagos and Oyo states received their cheques of N1 million each at presentation ceremonies witnessed by top management of Dangote Cement as well as representatives of some regulatory agencies in Nigeria.

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The cheques presentation was all the more exciting as Dangote Cement arranged for the winners to receive alerts while the ceremonies were ongoing in the full glare of the public and the media. The winners said it was like a dream when they presented their winning cards to their various redemption centres and were told they had won a million naira each. It was a thrilling moment in Ibadan when Ojediran Kayode, a block moulder, and 28-year-old Ebenezer Oloyede, a bricklayer who had since been presented with their symbolic one million naira cheque each, only for them to receive alerts for the actual payments. For the managing director @Businessdayng

of Afolabi Adefila Block Industry, a winner based in Lagos, the one million naira was an answer to his prayers. “I didn’t even think I will be a millionaire through this promo. I have been keeping the promo cards found inside the bags of Dangote Cement at the onset of the ‘Season 2 Promo’. “I never really took it serious until a colleague came to request that I sell letter ‘G’ to him at the rate of N60,000. I jokingly told him to pay N200,000. To my utmost surprise, he was ready to pay the N200,000 for a promo card with letter ‘G’. So, that was what prompted me to take all my cards to the nearest redemption centre and I was told I had won one million,” he said.

Thursday 30 July 2020

BUSINESS DAY

POLITICS & POLICY What does Dogara’s return to APC mean to his constituency and Nigerian politics?

His defection to the APC was first disclosed on Friday by Mai Malla Buni, the governor of Yobe State and chairman of the APC Caretaker/Convention Planning Committee, when he led Dogara to meet with President Buhari at the Presidential Villa, Abuja. Anthony Odi, a political analyst, believes there’s more to Dogara’s decision than what is being told the public. He said there could have been high level discussion and carrot dangled before him, to lure him back to the party. “His defection was made known last Friday and the same day he was taken to see the President. I think there must have been a premeditated arrangement,” Odi said. The Accountant, by profession, noted that Nigerians have been bitten several times by the bugs of unfaithful politicians who recycle themselves, jumping from one party to the other. On the likely benefit of his movement back to the APC, Odi said: “We have seen them over the years jump from one party to another. They are jumping for their own selfish interest and not for the people. How, for instance, would his return to APC benefit his people? He just wants to remain politically relevant, having spent a whole year in the cold.”

But Deola Abioye, a grassroots politician, said Dogara’s latest move would benefit his constituency. “It is the person that wears the shoe that knows where it pinches. Politicians must be relevant. Any politician that is not in close contact with the powers that be is a loser, and they know it,” Abioye said. According to him, “Going back to the APC would help him launch back to reckoning. He will no longer be a back-bencher and through him, his people would now begin to feel the federal presence. Some of these moves are not just made for the sake of it.” As interesting as the defection appears, some analysts believe it is a sad commentary in Nigeria’s political development. “Nigerians must not be carried away by the antics of politicians. In 2018, they complained that the APC was a bad party and that they could not serve the country well on account of certain policies or tendencies of the ruling party. “These were the same words that they employed when they dumped the PDP in 2014 for the then newly formed APC. At that time, they saw opportunities that were offered to them on a platter. And because they said unprintable things about their former party, they became hot cake to their new-found friends. They leveraged on this to become governors, senators, members of the House of Representatives. Today, Dogara has gone back to his ‘vomit’. In all of this, the poor masses are the losers. They are the ‘fall guys’ I must say. Nigerians must awake from their slumber and resist these ungrateful opportunists,” a university lecturer, who craved anonymity, said. Lashing out at Dogara over his movement back to the APC, Senator Walid Jibrin, chairman, PDP Board of Trustees (BoT), said the former speaker left the party because he wanted to become president or vice president of Nigeria in 2023. Jibrin urged Nigerians to disregard the reasons given by the former Speaker for returning to the ruling party for the second time. Jibrin said: “I am beginning to suspect that the former House of Representatives speaker Mr. Dogara has a plan of becoming President or Vice President in 2023 which he knows he will never achieve in PDP. I want to assure him that People’s Democratic Party shall continue to be very strong and united and its doors remain open to all Nigerians; therefore, PDP will never accept any plan by anybody to destroy the party.”

media to be interested in filling the vacant seat, among those mentioned are immediate past governor of the state, Akinwunmi Ambode; notable politician and businessman, Lanre Razak, Tola Kasali, a two-time commissioner and the APC leader of the Lagos East constituency; Gbenga Ashafa, Jimi Benson who is currently in the House of Representatives and Abike Dabiri, the current director-general of Nigeria in Diaspora Commission and a former ranking member of the Federal House of Representatives. However, the APC in Lagos State has denied reports that it had endorsed any candidate for the by-election, saying that it was still mourning the death of the charismatic politician. In a statement made available to newsmen by its spokesperson, Seye Oladejo, in reaction to reports in the media which claimed that a former commissioner in the state had been handed over the ticket of the party, Oladejo

pointed out that the process of selecting a candidate was yet to commence for a number of reasons. He added that the party’s constitution was explicit about the process for the emergence of candidates for elections, declaring that it was irrevocably committed to abiding by the document, adding that the nomination is either by consensus or a primary among the aspirants. According to the statement, “Our attention has been drawn to the various speculations as regards the emergence of a candidate for the yet-to-be-scheduled Lagos East Senatorial by-election. “Lagos State APC will like to state emphatically that the process of selecting a candidate is yet to commence for a number of reasons. “First, our party is still mourning the demise of Sikiru Adebayo Osinowo whose sudden departure sent shock waves through the fabrics of the party.

Zebulon Agomuo

ohn Webster, an English dramatist, who lived between c.1580 and c.1632, said: “A politician imitates the devil, as the devil imitates a cannon; wheresoever he comes to do mischief, he comes with his backside towards you.” The return Friday, July 24, 2020 to the All Progressives Congress (APC) of a former speaker of the House of Representatives, Yakubu Dogara from the People’s Democratic Party (PDP), was not surprising to the watchers of the Nigerian brand of politics. Dogara was one of those who decamped from the APC to PDP in 2018 in the run-up to the 2019 general election. The former speaker was a strong ally of the immediate past Senate president, Bukola Saraki. He had emerged speaker on June 9, 2015, after a keenly contested election. He defeated Femi Gbajabiamila, who represented and still represents Surulere federal constituency, Lagos State. He scored 182 votes against Gbajabiamila’s 174. He represented Bogoro/Tafawa Balewa federal constituency in Bauchi state, as the speaker of the 8th Assembly. He emerged the speaker against the wish of his party, the APC, which had earlier conducted a mock election to choose Gbajabiamila as the party’s official candidate. But he and his supporters ignored their party and stated that they preferred to be beaten at the floor of the House. Recall that his chances to win the post received a boost when the opposition PDP adopted him as its candidate and advised its members to vote for the Bauchi lawmaker en masse. Following the contentious manner he emerged as the speaker, he became a pariah to his party and aligned with Saraki, who also emerged in similar circumstances, and became a thorn in the flesh of the APC-led government, as it were. Although he got re-elected last year to represent the same constituency, he has been largely quiet in the house now being led by his “arch-rival”, Gbajabiamila. Critics say that having watched the affairs of government from the sidelines without reasonable recognition and responsibility committed to him either from the leadership of the National Assembly or the Aso Rock Villa, he decided to take the biblical prodigal son’s

Yakubu Dogara

option of returning to his father in penitence. It has also been insinuated that the former speaker must have taken the decision to evade prosecution over some alleged sleaze that may have been traced to his regime in the House. Those who hug this allegation point to the speed with which Dogara ran to the Villa to see President Muhammadu Buhari shortly after he dumped the PDP. But the lawmaker said he decided to jettison the PDP over the failure of governance, financial impropriety, among others in his home state of Bauchi, which is ruled by the PDP. Dogara listed his grievances in a letter of resignation which he addressed to the Chairman of Bogoro ‘C’ Ward of the PDP, in Bauchi State. The state is governed by Bala Mohammed. He said that he could not effectively raise his questions about the poor governance in the state and still be regarded as a loyal member of the party, hence his decision to leave. He pointed out however, that it was his responsibility to say the truth to authorities in Bauchi State, as he had done to previous administrations of former Governors Isa Yuguda and Mohammed Abubakar.

Lagos-East: No date yet for by-election - INEC …APC denies endorsing any candidate Iniobong Iwok

midst speculation in the media, the Independent National Electoral Commission (INEC) has said that there was no date yet for the LagosEast Senatorial by-election. Recall that Bayo Osinowo, who represented the constituency in the upper chamber of the National Assembly, died of Covid-19 complications in May at the age of 64 years. He was a four-time member of the Lagos House of Assembly and was elected a senator in 2019, replacing Bariyu Gbenga Ashafa. However, speaking in an interview with BusinessDay, INEC Public Relations Officer in Lagos State, Femi Akinbiyi said the commission was aware of the vacant seat in Lagos-East senatorial district and would soon announce the date for the by-election. Akinbiyi, however, denied reports that

the commission had fixed any date for the by-election, stressing that it was currently preoccupied with the conduct of the Edo and Ondo States’ gubernatorial elections and would inform stakeholders on the date for the by-election. According to him, “It is not true that there is a date for the by-election yet, it is rumour; we are aware the seat is vacant due to the demise of the senator, may his soul rest in peace. “But we are currently busy preparing for the Edo and Ondo gubernatorial elections, we would fix a date soon and all the stakeholders would be informed. That is all we can say now on that,” Akinbiyi said. Meanwhile Osinowo’s demise has rekindled the politicking in the state and refueled the rivalry between the All Progressives Congress (APC) and People’s Democratic Party (PDP). Within the last few weeks, different politicians from the zone have been touted in the

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Thursday 30 July 2020

BUSINESS DAY

news

Power supply to receive boost as FG approves N8.64bn payment to Siemens AG Tony Ailemen, Abuja

he Federal Government has granted anticipatory approval to President Muhammadu Buhari to release €15.21 million (N6,940,081,465.20) offshore and N1.708 billion onshore, a total of N8,648,081,465.2, as counterpart funding for the power deal with Siemens AG, signed between Nigerian and German governments last year. The Minister of Finance, Budget and National Planning, Zainab Ahmed, stated this while briefing State House Correspondents after the 10th Virtual Meeting of the Federal Executive Council presided over by President Buhari on Wednesday, in Abuja. Ahmed said Power Minister, Saleh Mamman, presented a memo as part of plans to strengthen Nigeria’s epileptic power supply. BusinessDay gathered that the fund is part of the counterpart funding for the bilateral from German Consortium guaranteed by the German government through Euler Hermes to finance the implementation of the end to end grid modernization and expan-

sion programme of the project. The Federal Government had in December 2019, allocated N61 billion for the Nigeria Electrification Road map which will be developed in partnership with Siemens AG. Recall that Nigeria government and Siemens had in 2019 signed a Letter of Agreement on the Nigeria Electrification Road map after President Buhari and the German Chancellor, Angela Merkel met on August 31, 2018, in Abuja. Under the agreement Nigeria is expected to spend about €3.11 billion or N1.15 trillion across four major states, in its bid to improve power supply. The Nigerian electrification project has three phases and it aims at achieving 25,000 megawatts of electricity in the country by 2025. Power projects in the budget include the 3,050-megawatts Mambilla hydropower plant in Taraba State, for which N2 billion counterpart-fund was set aside. Others are 2x60MVA 132/33kV substation at Gwaram in Jigawa State (N717 million); 215MW power station in Kaduna (N190m); and Kashambilla transmission in Taraba (N506 million).

Insecurity: Stop the rivers of blood, NLC tells FG JOSHUA BASSEY

…decries Nigeria’s descent into ‘banana republic’

fected workers was their selfless devotion to alleviating the lot of the hapless civilian population in the different crisis-torn parts of Northeast Nigeria.” The congress observed that for the past seven months, the insurgency and terrorism of the Boko Haram sect and other violent groups across the country have widened in scope. “Since January 2020, Boko Haram has increased the wave of terror on major transportation arteries in the Northeast. Many inter-city and feeder roads in the region have been completely abandoned to the terrorists exacerbating the already precarious humanitarian situation in Northeast Nigeria. So many lives have been lost in this renewed ogre of madness. A lot of public infrastructure has been destroyed in the process. Economic activities along Lake Chad Basin have been crippled and farmers in the crisis locations are attacked daily by terrorists.” The NLC listed local govern-

igeria Labour Congress (NLC) has lamented the degeneration of Nigeria into a ‘banana republic’ and theatre of blood owing to incessant killings and rising insecurity which have forced thousands into miserable life in Internally Displaced Persons (IDP) camps across the country. The NLC in a statement on Wednesday, titled “Stop the rivers of blood,” signed by its president, Ayuba Wabba, said the congress was horrified at the escalating insecurity in different parts of the country. It noted that “the current sad state of affairs took another calamitous turn with the recent public execution of five humanitarian workers by Boko Haram in Borno State,” identified as staff of Borno State Emergency Management Agency, Action Against Hunger, Rich International, and International Rescue Committee. “The only crime of the af-

ments in Borno State where thousands of citizens have been displaced and forced to live in IDP camps to include Mongono, Marte, Kukawa, Abbadam, Guzarualla, Gubio, Magumeri, Nganzai, Benishek, Konduga, Kalabalge, Dikwa and Ngala. According to the congress, in Southern Borno and parts of Adamawa State, renewed attacks have led to the complete sacking of several towns and villages with no single inhabitants. Such villages, the NLC said, include Dagu, Huyum, Killekassa, Kopamaikadiri, Yaffa, Ngurthlaru, Kwabula, Kuburmbula, Kaya, Guryangwal, Shawa, Gogomdi, Gwandang, Gatamarwa, Imirmulza, Thilemakalama, Yaza, Kirchinga, and Mimirsa. “In the entire Gwoza local government area, the only towns where there are still inhabitants are Pulka, Dlimankara, and Gwoza. In all these locations in northern and southern Borno States, many district and village

heads have been killed by the Boko Haram terrorists. The NLC lamented similar spectre of bloodletting, destruction and dislocation in Southern Kaduna. According to the union, “In northern Kaduna, most parts of Katsina, Sokoto, Zamfara, Taraba, Benue, and Plateau States and other parts of North Central Nigeria, kidnapping, cattle rustling, and rural banditry have become the domineering narrative, as villages and towns fell one after the other to criminal masterminds. “This is totally unacceptable,” it said. It noted that the deficit of robust investigation of these violent crimes with the intent of apprehending the masterminds and foot soldiers has the left the citizens with the feelings that “the country has degenerated into a banana republic where autonomous power centres boldly competes for space and subservience with the state.”

Uzodimma signs N108.3bn 2020 revised budget Iheanyi Nwachukwu

overnor Hope Uzodimma of Imo has signed into law the state’s 2020 revised budget of N108.385 billion. The revised budget as approved by the Imo State House of Assembly, reduced the recurrent expenditure by 30.7 percent, capital expenditure revised downwards from N106.28 billion to N44.96 billion. Economicsectorexperienced 7.7 percent reduction; social services revised to N7.19 billion, representing 66 percent decrease, general administration lost 25.5 percent, while N1.15 billion is made available for Covid-19 pandemic in the general administration sector of the budget. Also, government transfers were reviewed upwards to N4.248 billion as against N4.146 billion representing 25 percent increase in the total provisions of government transfers. The revised 2020 capital expenditure stands at N44.966 billion which represents 41 percent of the revised budget size. Signing the budget at the Government House, Owerri, on Wednesday, Uzodimma said the Governor said that the “revised 2020 Imo State budget of rehabilitation, reconstruction and recovery heralds a fresh page, with great promise in the fiscal history of our great state.” Explaining what informed the revised budget, the governor said that it was predicated on two reasons: the downward oil prices that have made the original bud-

get unattainable and the revised NationalMediumTermExpenditure Framework (NMTEF) which is an agreement between Nigeria and the World Bank to help fund the shortfalls arising from the impact of the Covid-19 pandemic through its SFTAFS (State Fiscal Transparency Accountability For Sustainability) Programme. He noted that for the state to benefit from SFTAFS, there were conditionalities attached, which include but not limited to revised budget where Covid-19 related expenses must be at least 10 percent of total budget. According to him, such conditions and more were captured in the revised 2020 Imo State approved budget. In addition, the governor informed that the state has commissioned online publication of the citizens’ budget and first quarter 2020 report on budget performance. He said this was in line with his promise to the people to run a transparent people-oriented governance, adding that he was glad that with the above, Imo State is now qualified to receive the sum of $300,000 and $1m respectively from the World Bank, as an encouragement for running an open, transparent government. Uzodimma seized the opportunity to inform of his administration’s efforts towards mitigating the negative effects of Covid-19 on Imo people to include: granting of a number of tax relief and waivers on personal income tax, consumer tax, PAYE for private schools and levies for tricycles and motor cycle operators. www.businessday.ng

L-R: Adeyemi Fajobi, national sales director, Dangote Cement plc; Ojediran Kayode, a winner, and Funmi Sanni, marketing director, Dangote Cement plc, during the prize presentation of N1 million to winners in ongoing Dangote Cement ‘Bag of Goodies 2, Consumer Promo’ in Ibadan, Oyo State.

Lagos approves N1bn COVID-19 support for hospitality industry SEYI JOHN SALAU

agos State government has given approval for a N1 billion Covid-19 support for the hospitality industry, which would be made accessible through the Lagos State Employment Trust Fund (LSETF), to ensure the sustainability of the sector. The state governor, Babajide Sanwo-Olu, stated this on Wednesday in response to questions raised by the organised private sector (OPS) at the 6th Lagos Corporate Assembly tagged ‘BOS Meets Business’. According to the governor, the state is working in close collaboration with the Central Bank of Nigeria (CBN) on various interventions specifically for the hospitality sector in Lagos. Sanwo-Olu also disclosed that the government was waiving all penalties on late filing of the 2020 annual tax returns, and a 20 percent tax credit on cash/ kind donations made during Covid-19.

According to the governor, the state has started to deploy the first phase of its 3000 kilometres metropolitan fibre optics in partnership with the private sector to improve Nigeria’s broadband penetration and support internet backbone in Lagos metropolis. “There is going to be 6000 kilo metres of fibre optics cables in total,” said Sanwo-Olu. On measures taken to ease the burden of the pandemic on businesses in Lagos, the governor said the state has consolidated all property and land-based charges into a single payment in a new 2020 Land Use Charge, and has given a waiver for three years late payment to cover the period of 2017 - 2019. “We have also given a 25 percent special discount on early payment,” said Sanwo-Olu. Lola Akande, the state commissioner for commerce, industry and cooperatives, said the state government would continue to ensure collaboration with the OPS, not only to sustain the existing level of industrialisation, but also to accelerate the momentum of its development.

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Risk managers appoint board of trustees Hope Moses-Ashike

isk Management Association of Nigeria (RIMAN) at its 20th annual general meeting held recently in Lagos, appointed Olayinka David-West, Austin Okere and Stella OjejweOnyejeli to its board of Trustees. David-West is an information systems (IS) professional with over two decades experience in the Nigerian IT industry. She is currently a senior fellow in the operations, information systems and marketing division of Lagos Business School. She is also the academic director at Lagos Business School and Enterprise Development Centre (EDC) of the Pan-Atlantic University. Austin Okere is the founder/executive vice chairman, CWG Plc and entrepreneur in residence, Columbia Business School, New York. He is a member of the World Economic Forum Business Council on innovation and intrapreneurship. Stella Ojekwe-Onyejeli is the executive director and chief operating officer of Nigeria Sovereign Investment Authority. She brings more than 25 years @Businessdayng

of financial advisory, controls, governance and risk management experience to the board. The appointment of the trio to the board is in line with the quest of the association to continuously demonstrate leadership role in promoting best practice risk management, capacity building, risk advocacy and strengthening the association in its role providing leadership thought on risk management challenges in the country. Other eminent professionals also had their appointment on the board renewed at the AGM. They are Folakemi Fatogbe, CRM, (BOT chairman), director of risk management, Central Bank of Nigeria (CBN); Magnus Nnoka, CRM, (president); chief risk officer, Coronation Merchant Bank; Olumide Olayinka, CRM, partner, Risk Consulting, KPMG; Jude Monye, CRM, executive director, Heritage Bank; Greg Jobome, CRM, executive director/ chief risk officer, Access Bank Plc and Usman Maitambari, CRM, director, enterprise risk management, Nigerian Deposit Insurance Corporation (NDIC).

Thursday 30 July 2020

BUSINESS DAY

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Thurssday 30 July 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

US to pull almost 12,000 troops out of Germany

Trump administration’s move set to exacerbate tensions within Nato Katrina Manson

he Trump administration is pulling almost 12,000 troops out of Germany in a move set to add to tensions within Nato. The decision comes after President Donald Trump last month vowed to cap US troops stationed in Germany at 25,000 unless Berlin spent more on defence for the transatlantic security alliance. Defence secretary Mark Esper said on Wednesday that the US would start withdrawing about 11,900 troops “in a matter of weeks”, with about 5,400 relocating to other places in Europe and about 6,400 due to head back to the US. About 24,000 US troops will remain in Germany. He told reporters the reduction was a strategic decision that would see some troops move east and “strengthen Nato, enhance the deterrence of Russia, and meet the other principles”, including reassuring allies. Despite framing the shift as a strategic effort to deter Russian and Chinese aggression in Europe, Mr Esper was also critical of Berlin. “Germany is the wealthiest country in Europe. Germany can and should pay more to its defence,” he said. Critics have warned US withdrawal would undermine a strong symbol of Washington’s commitment to its European allies and embolden Russia, which has been keen to exploit divisions between Nato members. “Instead of strengthening Nato it is going to weaken the alliance,” said Norbert Röttgen, head of the foreign affairs committee of the Bundestag,

Donald Trump had threatened to cap the number of US troops in Germany amid tensions with the Nato ally © Christof Stache/AFP/Getty

Germany’s parliament, in a tweet. He argued that the US withdrawal would decrease US military clout in relation to Russia, the Near East and Middle East. US Senator Mitt Romney, one of the few senior Republicans to break with Mr Trump, described the decision as a “gift to Russia” that would have lasting and harmful consequences for US interests, and deliver a “slap in the face at a friend and ally”. But a senior defence official said relocating troops would allow the US to react to “very aggressive Russian activity . . . and also increasingly aggressive Chinese posture in the Mediterranean, in south-eastern Europe”.

Nato said the US had consulted closely with allies before making the decision. Jens Stoltenberg, Nato secretary-general, said the US announcement underlined “the continued commitment” towards Nato and European security, and that European peace and security was also important for North American security and prosperity. Mr Trump on Wednesday described Germany as “delinquent” and asked why the US would keep all its troops there when it fell short on its spending commitments to Nato. Germany has “taken advantage of us for many years,” he told reporters. Germany spent 1.3 per cent of gross domestic product on defence last year and is among the Nato

members that have committed to meet a 2 per cent threshold by 2024. A senior US defence official said it would cost potentially “billions of dollars” to build new housing on American soil for the returning US troops, although some of the 6,400 troops might return to Europe on a rotational basis. Pentagon officials justified the decision by saying Germany was no longer “a frontline country” for US operations in Europe and now serves as the central logistics hub. General John Hyten, vice-chairman of the joint chiefs of staff, said on Wednesday the troop reallocation would “bolster” US commitment to its allies because it would “better distribute forces across

Europe and increase the use of rotational forces”. Mr Esper described the shift as “a strategic laydown”, with the US redeploying troops “east into Poland”. He said there were also opportunities to move into the Baltics. The headquarters of the US’s European combatant command, along with its US special operations European command, would also move out of Germany and “co-locate” with other existing Nato headquarters in Belgium and Italy. The Trump administration has been at odds with Chancellor Angela Merkel’s government in Germany over a host of issues, from defence spending and climate change to responses to China’s Hong Kong policy. Some German media had earlier suggested Mr Trump had decided to withdraw troops in a fit of pique, after Ms Merkel declined to attend a G7 summit he intended to host last month in the US, citing the coronavirus pandemic. Richard Grenell, who recently stepped down as US ambassador to Germany after two years in the job, told German media last month there was no connection. Thomas Wright, an expert in transatlantic relations at the Brookings Institution, a Washington thinktank, said: “This is all to do with Donald Trump’s deep-seated psychological hostility to Germany in general and Angela Merkel in particular. There’s no strategy.” Richard Fontaine, chief executive of the Center for a New American Security think-tank, said the Trump administration “has offered no real rationale for the change other than as retribution for a Germany it sees as insufficiently committed to defence spending.”

Republicans and Democrats warn they are ‘far apart’ on stimulus Both parties struggle to find common ground with jobless benefits set to expire soon James Politi

resident Donald Trump and his top officials clashed with Democratic leaders in Congress over new stimulus measures to prop up the struggling US economy, as both sides warned that an agreement remained distant. “As of now we’re very far apart,” Steven Mnuchin, the US Treasury secretary, told reporters on Wednesday morning, suggesting that lawmakers should consider a short-term extension of expiring jobless benefits for millions of Americans to allow time for negotiations. While the White House and Congress agreed rapidly on an initial $3tn burst of stimulus at the beginning of the coronavirus crisis in March and April, they have struggled to coalesce around a plan for further fiscal support, even after a new surge of infections has rattled some states in recent weeks. House Democrats have passed a bill outlining another $3tn in spending, a plan

Participants in stimulus talks — including Nancy Pelosi (left), Mitch McConnell (centre) and Chuck Schumer (right) — say they are no closer to an agreement on next phase © Brendan Smialowski/POOL/EPA-EFE/Shutterstock

that Republicans rejected as expensive and poorly targeted. After weeks of internal tensions, Senate Republicans this week proposed to inject $1tn more in government aid into the economy with the backing of the White House. Their plan was dismissed by Democrats as woefully insufficient. Negotiations between senior www.businessday.ng

White House officials and congressional leaders intensified this week, as millions of Americans face the expiration of $600 a week in emergency unemployment benefits at the end of this week. “The attitude from Republicans has been one of condescension and disrespect for America’s working families,” Nancy Pelosi, the Democratic House speaker,

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told her fellow lawmakers in a letter on Tuesday night. The biggest sticking point in the talks is the fate of the emergency unemployment benefits, which Democrats want to extend until January. Republicans have offered to cut from $600 a week to $200 a week until September and then calibrate them to replace 70 per cent of lost wages in order to encourage people to return to work. Another big source of tension is Democrats’ call for more than $900bn in aid to state and local governments. The Republican proposal calls for none. “The Republicans have unveiled a proposal that would only prolong the suffering for millions of workers and families across America,” Ms Pelosi said in her letter. She even compared reconciling the two stimulus plans to the impossible task of mating “a giraffe and a flamingo” in one of the negotiating sessions with Trump administration officials, according to Politico. The fate of the stimulus talks is being closely watched by many @Businessdayng

economists, including at the Federal Reserve, since it could be pivotal to the trajectory of the US recovery as it suffers from a slowdown owing to new waves of infections across the country. Failure to reach an agreement, or a compromise on a very limited package, could deliver a serious economic setback and plunge the US into a more severe downturn, while a compromise on a substantive package could boost the rebound. One area where both Republicans and Democrats have agreed is on the need to send a new round of cheques worth up to $1,200 to US individuals — and possibly extend a federal moratorium on evictions for people who cannot pay their rent. Mr Trump said on Wednesday morning ahead of a trip to Texas: “You gotta work on the evictions, so people don’t get evicted. You work on the payments to the people. The rest of it, we’re so far apart we don’t care. We really don’t care. We want to take care of the people. The Democrats aren’t taking care of the people.”

Thurssday 30 July 2020

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US dollar weakens ahead of Federal Reserve decision

Investors are also watching lawmakers’ struggles in Senate to reach deal on pandemic relief Bryce Elder, Harry Dempsey, Eric Platt and Hudson Lockett

he dollar weakened against the euro and pound on Wednesday, sending sterling back towards $1.30, as persistent concerns over the economic fallout from coronavirus piles pressure on the greenback. The dollar index, which tracks the US currency against half a dozen of its peers, fell 0.3 per cent, taking its losses for the month to more than 4 per cent. The decline comes as traders price in rock-bottom interest rates in the US for the next few years, with the Federal Reserve expected to leave rates close to zero after its policy meeting today. The drop in US yields, with the 10-year Treasury yield back near historic lows, has increased the appeal of other currencies. The British pound advanced for a ninth straight day to its highest level since early March, up 0.4 per cent to $1.2994, while the euro gained as much as 0.5 per cent to $1.1778. Nikolaos Sgouropoulos, a currency strategist at Barclays in London, noted that the pound has failed to make a significant move against the euro, suggesting that sterling’s surge against the dollar has been driven by pressure on the greenback rather than factors specific to the UK. “The move in the pound is largely explained by the rally in the euro against the dollar,” he said.

The dollar fell as much as 0.3 per cent earlier on Wednesday, setting a new two-year low, while the euro and pound advanced against the greenback © Financial Times

The Fed is expected to remain accommodative, since high-frequency indicators show the US economic recovery may be ebbing following an initial easing of the March lockdowns. Several states have reversed plans to reopen their economies after a surge in Covid-19 cases. The US reported 1,121 coronavirus deaths on Tuesday, taking the seven-day average death toll above 1,000. Meanwhile, Congress remains deadlocked over the terms of a new pandemic relief package. A $1tn proposal by Senate Republicans has encountered intense resistance from Democrats, who oppose cutting

enhanced unemployment benefits from $600 a week to just $200 a week. “It is a slippery slope for global macro risk as the US economic data starts to show signs of moderation in the recovery path,” Citigroup’s foreign exchange analysts said in a note. “This is probably reflecting the move back to partial lockdown mode in some important states.” The bank said it expected the Fed would remain “as accommodative as it can . . . lending an important weakening bias to the dollar”. Global stocks rose. The benchmark S&P 500 index was up 0.8 per

cent by lunchtime in New York, with the advance led by Apple, Microsoft and Amazon ahead of the release of further tech company quarterly results this week. The technology-heavy Nasdaq Composite climbed 1.2 per cent. A mixed day on European stock markets left benchmarks barely changed. The Stoxx Europe 600 and the FTSE 100 both moved less than 0.1 per cent, while in France the CAC 40 rose 0.6 per cent on the back of better than expected results from Capgemini and Gucci owner Kering. Peter Schaffrik, global macro strategist at RBC, said the Fed’s monetary policy meeting was un-

likely to be groundbreaking. Investors do not expect the US central bank to resort to negative interest rates but some suspect it could turn to unconventional measures such as yield curve control, where it could set upper limits on shortterm Treasury yields. “In coming months we expect the committee to detail how the economy would have to evolve in order for it to become comfortable adjusting policy,” Mr Schaffrik said. “Perhaps, [Fed chairman Jay] Powell will provide some additional colour on what this might look like at his press conference.” In the Asia-Pacific region, Japan’s Topix index closed 1.3 per cent lower. China’s CSI 300 benchmark of Shanghai and Shenzhenlisted stocks jumped 2.4 per cent and Hong Kong’s Hang Seng rose 0.5 per cent. Traders in China said the stock market gains were driven by renewed interest from retail investors. State media last week warned that stocks were rising too quickly. Gold was little changed at $1,960 an ounce, holding steady near an all-time high hit on Tuesday. Goldman Sachs lifted its 12-month forecast for the precious metal to $2,300 a troy ounce, from $2,000. “We have long maintained gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows,” the bank said.

Boeing warns aviation market will not recover for three years US group plans deeper cuts in production and staffing as it posts $2.4bn quarterly net loss Claire Bushey

oeing plans deeper cuts to production rates and employment levels, as chief executive David Calhoun said the aviation market would not recover from Covid-19 for three years. The Chicago-based company would “further assess” the size of its workforce, Mr Calhoun said. The first round of cuts will claim 19,000 employees through layoffs and buyouts by the end of the year, an increase over the 12,000 job losses previously announced. “The reality is the pandemic’s impact on the aviation sector continues to be severe,” he said in a memo to employees. “Though some flyers are returning slowly to the air, their numbers remain far lower than 2019, with airline revenues likewise reduced.” Pressure on Boeing’s commercial customers meant they were delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spending — “all of which affects our business

Boeing delivered 20 commercial jets in the second quarter of 2020, compared with 90 for

and, ultimately, our bottom line”, Mr Calhoun concluded. Boeing said three months ago it would reduce its headcount of 160,000 by 10 per cent. The 19,000 workers leaving through a mix of lay-offs and buyouts are offset by 3,000 hires in the company’s defence business. Boeing had anticipated a slow ramp-up for the Max, which has been grounded for 17 months following two fatal crashes. Now it will be even slower. Instead www.businessday.ng

of workers building 31 planes a month by the end of 2021, the company said it would not reach that rate until 2022. The company’s timeline to resume deliveries of the troubled Max also has slipped again. Boeing said it expected to start relaying the jet to customers during the fourth quarter, instead of the third. At the start of the year, Mr Calhoun said the grounding would probably lift by midsummer.

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[Wall] Street estimates [for Boeing shares] will likely move lower for 2021 and 2022 as production rates changes are revised Peter Arment, Robert W. Baird analyst Once the Federal Aviation Administration lifts the grounding, airlines will take another two to three months for testing and pilot training — which now requires time in simulators — before adding it back into their schedules. Southwest Airlines said last week it hoped to start flying passengers on the Max in December, but it could slip to next year. The manufacturer also cut rates again for wide-body jets. They were losing popularity with airlines even before the pandemic, and the trend has accelerated since passenger traffic on the international routes they service is expected to recover the slowest of all. Boeing, which had previously aimed to make seven 787 Dreamliners a month by 2022, said it would not reach that goal. It would instead make six per month in 2021, or down from 10 a month at present. Mr Calhoun also floated the idea of consoli@Businessdayng

dating its production in a single factory. Presently, the jet is built at plants in Everett, Washington, which is unionised, and South Carolina, which is not. The anticipated 777X rate fell to two per month in 2021 from three previously. Boeing posted a net loss of $2.4bn in the second quarter, compared with a $2.9bn net loss for the same period a year ago. Revenue declined 25 per cent to $11.8bn, with the steepest drop, 65 per cent, logged in the commercial jet division. Boeing delivered 20 commercial jets in the second quarter of 2020, compared with 90 for the same period last year. The services business also took a hit, with revenue declining 23 per cent to $3.5bn as airlines pulled back on items such as maintenance and supply chain services. The reduction in deliveries and services led to free cash outflow of $5.6bn, compared with $1bn in the second quarter of 2019. The results reflected “more of the same”, wrote Robert W. Baird analyst Peter Arment in a note.

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BUSINESS DAY Thursday 30 July 2020 www.businessday.ng

Assessing performance of Nigeria’s industrial plan ODINAKA ANUDU

n early 2014, economic and development experts gathered in Abuja to launch the National Industrial Revolution Plan (NIRP). Up till today, that document remains Nigeria’s most comprehensive and ambitious industrial plan, as it was prepared by global and local experts who had worked in global development institutions or exposed to development in advanced economies. At the launch of the document, Goodluck Jonathan, the then president, acknowledged that NIRP was the flagship industrialisation programme ever embarked upon by the country. “The Nigeria Industrial Revolution Plan is the most ambitious and comprehensive industrialisation programme because it is based on the areas where Nigeria has competitive and comparative advantage such as agriculture and agro-products, metals and solid minerals, oil and gas, construction and light manufacturing services. It has identified those sectors where Nigeria can be number one in Africa and top 10 globally,” he said. He explained that the goal of the Nigeria Industrial Revolution Plan was to increase the contribution of the manufacturing sector to GDP from then four percent to more than 10 percent in five years. He further said that the NIRP would address the physical constraints that had consistently inhibited the growth of manufacturing by building industrial infrastructure, prioritising power for industrial use, reducing borrowing cost and mobilising funds for the real sector. “It will help to build our industrial skills, improve our investment climate, raise our product standards, link innovation to industry and ensure local patronage of made in Nigeria goods,” he also said. So far, the performance of the NIRP has been mixed. Firstly, the target of achieving over 10 percent GDP contribution from manufacturing may look closer to many, given the numbers coming out of the National Bureau of Statistics (NBS) recently. In the first quarter of 2020, for instance, real contribution of manufacturing to GDP was 9.65 percent, higher than 8.74 percent recorded in the fourth quarter of 2019 but lower than 9.79 percent reported in first quarter of 2019. So, in 2019, which was exactly five years after, the contribution of manufacturing to GDP was 9.79 percent. However, this represents little progress. As of the time of estimating manufacturing contribution to GDP at four percent, Nigeria had not rebased its GDP. Rebasing only occurred two months after the NIRP launch—exactly in April 2014. After rebasing, the contribution of manufacturing was almost 9 percent. With GDP contribution of manufacturing at 9.65 percent in

the first quarter of 2020, it is obvious that success has been minimal in this area. Secondly, though President Muhammadu Buhari’s ministers say they are implementing the NIRP, age-old constraints to manufacturing are still there. Infrastructure such as roads is getting worse and industrial clusters aren’t always getting enough power from electricity distribution companies. There is, however, light at the tunnel with railway reforms across the country, which should help cut logistics costs for some companies. But cost of funds has remained high at double digits. In the second half of 2019, interest rate charged to manufacturers stood at 20 percent, 1.4 percentage point lower than 21.1 percent recorded in the same half of 2018 and 2.25 percent lower than 22.5 percent recorded in the preceding half, according to data compiled by the Manufacturers Association of Nigeria (MAN). As pointed out by Frank Jacobs, former president of MAN, only very few businesses would survive with that level of lending rate in Africa’s largest economy. Without doubt, the Central Bank of Nigeria (CBN) has raised lending to manufacturers through its own funding

schemes and pushed commercial banks to follow suit. Between May and October 2019, Nigerian manufacturers collectively received N459.69 billion from the banks, according to Mansur Ahmed, MAN president, in an interview with CNBC last year. The CBN’s COVID-19 funds are also pointers to the efforts of the apex bank to fund the real sector. But the major problem is accessibility of the funds. Deposit money banks sometimes create impossible conditions for real sector players. Several aspects of the NIRP are not being implemented. In the automotive industry, for instance, the NIRP specifies the development of auto supplier parks and creation of auto industrial parks, with dedicated ports and berths for assemblers. This has not happened. The government also pledged to encourage private sector procurement of locally assembled automobiles. This has happened only partly. Patronage for locally assembled vehicles was down to 6,999 in 2017, according to PricewaterhouseCoopers (PwC), as against 555,716 in South Africa; 181,001 in Egypt; 168,913 in Morocco, and 94,408 in Algeria. The attention of government since 2015 has been

‘‘

The United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 million MT, up over 2.5 percent from 2017/18 figure of 4.66 million MT. Rice production has risen by 1 million metric tons (MT) per annum from 2016 to 2019

shifted to raising 35 percent levy and 35 percent duty on imported vehicles, including 30 percent duty on ‘accidented’ vehicles. Andrew Nevin, partner and chief economist at PwC Nigeria, said in Lagos in 2018 that imported used car segment (Tokunboh) accounted for 74 percent of all vehicle imports, making Nigeria the largest in the world. Ten percent of imported cars were less than three years old, while 63 percent were over 11 years, he said. Apart from gas industries parks/ cities which only exist in the papers, the government in the plan pledged to facilitate the development of eight industrial cities in Nigeria, with a combined land size of 6,000 to 10,000 hectares and 700 to 1,200 megawatts of captive power capacity. Industrial cities were expected to be operating hubs (or delineated areas) where manufacturers could have the required infrastructure and support to succeed, according to the NIRP. But this is yet to happen. Without doubt there has been progress in agriculture and agroproducts, with the previous Agricultural Transformation Agenda and the current Anchor Borrowers Scheme. The United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 million MT, up over 2.5 percent from 2017/18 figure of 4.66 million MT. Rice production has risen by 1 million metric tons (MT) per annum from 2016 to 2019. The Food and Agricultural Organisation (FAO) had in 2017 attributed the continuous growth recorded in the country’s rice production to high local prices and inputs assistance programmes such as the Anchor Borrowers Programme. However, cocoa, palm oil and sesame farmers say they are not being funded, complaining they are yet to access any of the CBN funds, including its N50bn COVID-19 Targeted Credit Facility. But one

cocoa processor has confirmed getting a facility from the apex bank. Nevertheless, for the industrial plan to make any meaningful impact, according to the initiators, crops such as palm oil, cocoa, sesame and rubber must be properly funded. More so, there was an initial push by the Buhari administration for solid minerals, but the enthusiasm has died down. Perhaps, the government has realised that a lot of beneficiation needs to be done on solid minerals before making them marketable and that international prices for some of the minerals are volatile. In the oil and gas sector, the country has earned a lot from the industry in terms of revenue, but reforms are still lacking. Furthermore, the NIRP recognises the importance of housing and construction to industrial development and plans to build 300 units of housing in each state of Nigeria. However, six years down the line, the 17 million housing shortage figure is yet to change since 2014. In fact, many more are becoming homeless as the population rises by 2.6 percent annually. The Bureau of Public Service Reform (BPSR) said in 2017 that 108 million Nigerians were technically homeless as of that year. The government pledged in the NIRP to establish an appropriate pricing regime for the electricity industry, but this is far from being a reality today. “We are sure that there is a need to review of the industrial plan, assess the level of achievement of the plan and project for the next five years,” Mansur Ahmed, president of MAN, told BusinessDay on the phone recently. “There are areas where the plans have not met expectations in terms of today’s realities and we have to review it to make it more realistic for today’s situation,” he further said. The NIRP further promises to review the Export Expansion Grant to promote export of finished goods. Up till today, the government is yet to re-start the export grant suspended in 2013. Also, the NIRP promises to link skills development to real jobs to enable Nigerians to develop competence in areas they can put to immediate industrial use. Part of the plan is to develop skills development boards at the national level, and in each of the 36 states. This has not happened. More than ever before, many graduates leaving Nigeria’s higher institutions are ill-prepared to compete in the 21st century, with many industries seeking talents from other parts of Africa, Europe, Asia and the America. “We must re-define our education for the future and tailor it towards what the industry of the future requires,” Ibukun Awosika, chairman of the First Bank, said in 2019 at the Nigerian Economic Summit in Abuja.

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