Businessday 30 may 2018 by BusinessDay

news you can trust I ** WEDNESDAY 30 may 2018 I vol. 15, no 65 I N300

MTN Ghana makes history with first mobile money-based IPO ... set to raise $743m (N264bn) ... priced at N58.29/share naira equivalent (GH75 pesewas) DIPO OLADEHINDE & MICHEAL ANI

TN Ghana, the largest telecom operator in Ghana opened a historic Initial Public Offering (IPO) in the country that will see it raise as much as US$743 million in fresh capital or an equivalent of N264 billion. The IPO is the largest ever undertaken by the country and if successful could set the stage for other companies to test the market. The offer is being keenly watched by operators in the Ni-

In his Democracy Day speech, Buhari lists steps to stimulate economic growth Ifeoma Okeke, OWEDE AGBAJILEKE, Abuja

resident Muhammadu Buhari, in his Democracy Speech yesterday, listed the several steps his administration is taking to stimulate growth in different sectors of the Nigerian economy in an apparent defence that he has handled the economy poorly. Buhari highlighted some of the initiatives in the transportation, agriculture and other sectors of the economy that he believes will create jobs in the next few years and attract

billions of dollars in investments. He disclosed that a new Maintenance Repair and Overhaul, (MRO), facility with capacity for aircraft Cchecks and other comprehensive levels of maintenance established in Lagos would save the country an estimated $90m annually. Buhari stated that the Transportation Sector continues to undergo a series of reforms in order to sustain the international best practices and ensure safety and security. Buhari also disclosed how the

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gerian capital market because its success could open room for Nigerian firms to look to the West African neighbour for their capital needs considering the dearth of IPOs in the Nigerian capital market, a situation that is expected to be remedied with an expected similar MTN Nigeria IPO later in the year. But MTN Ghana IPO is also unique in that it is the first ever IPO globally on any stock exchange in which shares can be purchased through mobile money. This is being facilitated through the MTN Momo Wallet, a mobile money

platform popular in Ghana where Telecom operators have been allowed to lead the mobile money revolution. This is unlike Nigeria, where mobile money platforms have failed to pick up largely because it is still a bank led model. In the MTN Ghana IPO, all an investor has to do to buy units of the shares on offer is to ‘Dial *170 Hash” and follow the required instructions, and he will be able to purchase as many shares as he can afford with the cash stashed away on his MTN Momo Wallet. It Continues on page 4 L-R: Roosevelt Ogbonna, group deputy managing director, Access Bank plc; Sean Hoy, Irish ambassador to Nigeria; Herbert Wigwe, group managing director, Access Bank plc, and Thessa Brongers Bagu, representative, Nigeria Enterprise Ireland, during a courtesy visit to the bank’s head office in, Lagos.

BUSINESS DAY

Wednesday 30 May 2018

BUSINESS DAY

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MTN Ghana makes history with first... Continued from page 1

is a unique mode of IPO that has ‘democratised’ the share offering process, a factor that would likely make the offer highly successful, say analysts. The offer is open for nine weeks starting May 29 and closes on 31 July 2018. The MTN Ghana IPO is a pre-condition given to it by Ghanaian telecom regulators for the company’s acquisition of the 4GLite license. The licence allows MTN Ghana to offer 4G LTE mobile internet services to its customers and is expected to improve the Company’s ability to offer its customers a high-speed data network and advance its competitive position in the market. This launch reaffirms our commitment to Ghana and this fills us with a great sense of optimism,” Ebenezer Asante, CEO of MTN Ghana said. The Offer comprises 4.6 billion ordinary shares representing 35 percent of MTN Ghana’s issued shares post Offer. However, up to 2.5 billion of the Shares will be new MTN Ghana Shares to be issued by MTN Ghana to the successful and qualifying applicants while another 2.2 billion Shares are from existing shareholders who are selling their shareholding to aspiring investors. The MTN Ghana IPO is being closely followed by the Nigerian investment community because of the expected MTN Nigeria IPO, which is expected to follow a similar pattern. In statement released to the media on May 28, MTN Nigeria said that it is yet to set a date for the IPO but confirmed that the IPO process will be concluded in 2018. Tinuade Awe, Executive Director at the NSE told BusinessDay recently that the Exchange is also planning to ensure retail investors are able to participate in the proposed MTN Nigeria IPO by subscribing to shares through the use of their mobile phones. She disclosed that the exchange is working with the Nigerian Communication Commission to enable investors use of Unstructured Supplementary Service Data (USSD) to subscribe to the proposed MTN Nigeria IPO. “MTN has expressed publicly an interest to list this year and what I can tell you is that the exchange is able, willing and ready to list the company this year. If MTN does not list, it will not be because

of the Nigerian stock exchange as we are working on an electronic IPO platform that will ensure that the 150 million subscribers it has in the eco space, actively participate in the MTN listing,” Awe said. “The idea is basically to give retail investors, who were hurt in the mid 2000 market crash an opportunity to come back to the market.” With a market share of approximately 55.09 percent as at December 2017; MTN Ghana is the market leader in Ghana’s increasingly competitive mobile telecommunications industry, growing from a subscriber base of 8.7 million as at December 2010 to over 17.83 million as at December 2017. MTN Ghana is expected to have a market capitalisation of about 10-billion cedi (N777 billion) post offer. The offer document shows that the firm forecasting that its revenue for 2018 will hit GHC4-billion (N311 billion) but rise consistently to GHC5.4-billion (N420 billion) in 2020. The Ghana telecom firms net profit is expected to hit GHC 718-million (N55.8 billion) in 2018, but will rise to more than GHC1-billion (N77 billion) in 2020. The Ghana stock Exchange has set the minimum amount to be raised for the offer to be considered successful and for the listing to proceed at GHC350-million (N27.2 billion) which represents about 10 percent of the total offer size. Allocation to foreign investors have been capped at five percent of the total shares on offer. MTN Group, Africa’s biggest mobile phone operator, and parent company to both MTN Ghana and MTN Nigeria recorded 9.1 percent increase in its revenue for the first quarter of 2018 ended March 31 due to growth in Nigeria and Ghana, where voice revenue expanded. The MTN Group cited MTN Nigeria’s stronger-than-expected growth in revenue as one of the major contributor that allowed the business to benefit from increased scale. “Group voice revenue growth of 5.4 percent benefited from strong growth in Nigeria and Ghana of 15.2 percent and 20.6 percent respectively. Group data revenue grew by 26.9 percent quarter –on-quarter, as we executed on our dual-data strategy, ensuring appropriate data coverage across our footprint,” Rob Shuter, MTN Group CEO, said.

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Lagos lawmakers keep sealed lips on LUC JOSHUA BASSEY

…as state stays on slashed rates

rincipal members of the Lagos State House of Assembly have continued to keep sealed lips on the Land Use Charge (LUC) which implementation drew flaks from a wide spectrum of the society in March this year, compelling the state government to slash what many dubbed “outrageous” rates. The House of Assembly had earlier passed the LUC law which was subsequently assented to the state governor, but was forced to reconvene a public hearing on Tuesday March 27, after it admitted to an error in earlier passed law which featured a private tax consulting firm. Nearly two months after the public hearing which saw array of segments of the society- professional bodies, landlord associations, estate developers, property valuears and the Organised Private Sector (OPS) bombarding the House chamber, to voice their opposition and demanded a suspension or reversal to the old rates, key members of House of Assembly, has continued to keep mum and foot-drag the outcome of the six-man ad hoc committee saddled with the task of reviewing

the law to enable the House give new legal backing. Calls placed to Moadaishiru Obasa, speaker of the House, Tunde Braimoh, chairman, House Committee on information and strategy, Bayo Osinowo, chairman, LUC review committee, on Tuesday were not were not responded to. The three key members of the House did not also respond to SMS sent to their GSM phones, even after one of them requested that a SMS be sent rather than a call. “Pls send a text” said one of the three, but he refused to respond after the text was sent. But while the lawmakers vacillate; BusinessDay has gathered that the state government is likely to further review downward the rate applicable to commercial property in its 2018 LUC law. The LUC is a consolidation of ground rent, tenement rate, and neighbourhood improvement levy. Thus, the tenement rates law, the land based rates law, the neighbourhood improvement charge and all other similar property rates or charges, laws or amendments to any such property laws cease to apply to any property in the state as

In his democracy day speech, Buhari... Continued from page 1

nation’s major airports have witnessed reconstruction of runways, installation of navigational equipment and new international terminals due for commissioning in Abuja, Lagos, Kano and Enugu, while Bilateral Air Services Agreements between Nigeria and the Governments of other countries will significantly open up new flight routes. He observed that as a result of strict regulatory and compliance policies, Nigeria retained her Federal Aviation Administration (FAA) Category 1 status, after a routine international audit. “Giant strides have been recorded over the past three years to improve road transport infrastructure in all geo-political zones of the country” Buhari said. “The railway sector has also received tremendous attention as this administration is committed to the goal of linking all State capitals in the Federation by rail network to ease the movement of goods and passengers”. President Buhari explained that

the government recently conducted Focus Labs in three key sectors of the economy namely, agriculture and transport, manufacturing and processing as well as power and gas which have yielded significant prospects for investments and Job creation to the tune of $ 22.5 billion with a potential for creating more than 500,000 jobs by 2020. He said these investment generation initiatives are expected to increase capital inflows in the form of foreign direct investment. The president added that there is a high prospect that the cumulative investments from this first phase of the Labs will hit $39.2 billion by 2025. Under agriculture, President Buhari explained that Nigeria continues to pursue a strategic food security programme built around self-sufficiency and minimization of import dependency. He maintained that as a result of this, rice importation from other countries has been cut down by 90percent which has a direct impact on foreign reserves. He emphasised that: “The So-

from February 2018. A source which craved anonymity told BusinessDay that the government is not considering a further reduction in the LUC rates after it was forced to slash the original rates. “The LUC and the rates applicable to commercial property or any other property mentioned in the law is not meant to serve the government. Rather, it is a law that the state government believes will enable it serve Lagosians better by building the necessary infrastructure The House of Assembly is working on it. It is taking a little longer because the House had to go on recess after the public hearing in March. We should just wait to see the outcome,” said a source. The original rates which are based on current market value of eligible property were as follows: owner-occupied residential property, 0.076 percent per; industrial premises of manufacturing concerns, 0.256 percent while commercial property attracted 0.76 percent. Continues on wwwbusinessday online

cial Investment Programmes (SIP) has been created as a means of graduating our citizens from poverty through capacity building, investment and direct support. The major strategic objective is to restore livelihood, economic opportunities and sustenance for the poor across the country. The SIP programmes and projects include: A Home Grown School Feeding Programme – About 8.2 million pupils are currently being fed from 24 States of the Federation with over 75,000 Catering Staff engaged under the programme.” But the Peoples Democratic Party (PDP) has described the Democracy Day address by President Muhammadu Buhari as uninspiring, hollow, full of self-praise and false performance claims, without addressing issues agitating the minds of Nigerians. Describing the broadcast as the worst since President Buhari assumed office three years ago, the main opposition party said the address was garnished with a list of phantom projects and executive regurgitation designed to sway Nigerians and divert attention from the many failures of the administration. Continues on wwwbusinessday online

Wednesday 30 May 2018

BUSINESS DAY

6 BUSINESS DAY NEWS

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Wednesday 30 May 2018

2019 Poll: Rescue Nigeria from bad governance, impunity, dictatorship with your PVC - Ize-Iyamu IDRIS UMAR MOMOH, Benin

L-R: Joseph Makoju, CEO, Dangote Cement plc; Onyeche Tifase, MD/CEO, Simens Limited; Olola Ogunlana, doyen of insurance/ member of Society for the Advancement of Local Talents and Virtue Management (SALTVIM) of the Metropolitan Club, and Michael Omolayole, chairman of SALTVIM, as the SALTVIM honours Tifase in Lagos Metropolitan Club.

Stakeholders list critical conditions for hitch-free electricity market OLUSOLA BELLO & STEPHEN ONYEKWELU

takeholders in the power sector have stated four critical conditions that must be met before the Nigerian electricity market can be made viable and attract the necessary investment. According to them, the Federal Government should take responsibility for the N800 billion debt liability in the sector so as to free the operators from the debt hang over that has continued to inhibit their ability to make necessary investments in the sector. Debts are piling up in the Nigerian Electricity Supply Industry, as only four of the country’s 11 distribution companies (DisCos) paid for supplies of power they received for transmission to their customers from the generation companies (GENCOs) in January 2018. Bu s i n e s s Day ’s c h e ck shows that the highest percentage of revenue paid by the distribution companies for electricity received from the generation companies is 29 percent. Eight of the

11 electricity DisCos have remitted N11.38 billion only from the invoices of N44.44 billion they received from GenCos for the electricity they purchased in February 2018, data from the Nigerian Bulk Electricity Trading PLC (NBET) show. The update of monthly remittances for the 3,225 megawatts hour per hour (MWh/h) energy consumed by the DisCos posted on the website of NBET showed that the payment represented a paltry 25.62 per cent payment of the invoices. BusinessDay’s examination of the financial statements of seven DisCos indicate that they are veering dangerously close to full blown bankruptcy with reported losses of over N196.23 billion to end the 2016 financial year. A source close to the industry said to revamp Nigeria’s energy sector, some radical decisions are needed. “For a start, the Federal Government would need to find a way to renegotiate, absorb and set aside the N800 billion electricity sector debt stock,” he said. Secondly, the government needs to give up its 40 percent equity holding in the DisCos,

in stages. First, it could be managed by a consortium and some commercial banks. However, the government will have to ultimately give up its equity entirely. Babatunde Fashola, minister of power, works and housing, stated that the federal government would be open to welcome new and tangible offers that would lead to it divesting its 40 percent shares in Nigeria’s 11 electricity distribution companies (DisCos). “The other point according to sources is to ensure that government, going forward, would not owe Discos. It must budget for power in the way that it budgets for diesel and travels. We have done that in the 2017 budget; we will do it again in the 2018 budget, and enforce compliance by agencies to pay their debt. This will help in bringing stability to liquidity problems in the power sector, ultimately for the benefit not only of the DisCos but the entire value chain”. Thirdly, Transmission Company of Nigeria (TCN) needs to be broken-up and privatised. Experts say this is necessary if the market it to be optimally deregulated.

CIBN inaugurates Olowu as new President HOPE MOSES-ASHIKE

hartered Institute of Bankers of Nigeria (CIBN) has inaugurated Uche Messiah Olowu as its 20th president/chairman of Council. The transition ceremony, held in Lagos, was attended by key players in the banking sector, regulators and captains of industry. In his remarks, the chairman of the 2018 investiture and chairman of FBN Quest Merchant Bank, Bello Maccido, said Olowu’s tenure would mark positive changes in the institute, which would lead it to growth in leaps and bounds. Olowu also performed the official swearing in of the newly elected officials and governing council members of the CIBN.

In his acceptance speech, Olowu pledged to uphold the tenets of transparency in the leadership of the institute, while ensuring that it operates at the highest standards. He outlined a five-point agenda for CIBN, which include upholding the rules and Standards of CIBN, skills upgrade and competencies, improved research and advocacy, investing in technology and resources, and improving brand visibility. The new CIBN boss called on all stakeholders and development partners to join hands with the institute in its quest to uphold the ethics and professionalism of the banking industry. Olowu said the banking industry is contending with some challenges triggered by regulations, disruptive models and technologies as

well as new competitions and of frightening dimension is the inadequate skills set and competencies across the banks.” He pointed out that the recent crisis in the banking industry also presented an unwholesome picture of poor risk management and corporate government practices, knowledge gaps in critical core banking functions and non-adherence to professional standards occasioned mainly by the failure of the larger society to address the challenge of eroding values. According to Olowu, “Our fiduciary role is being threatened if urgent intervention is not employed”. He urged financial institutions to pursue strategies that would balance long-term goals with shortterm performance pressure for sustainable growth.”

‘We are complementing FG’s efforts at providing affordable housing’ CHUKA UROKO

ederal Government’s efforts at providing affordable housing for low income Nigerians will remain a mirage for so long as it does not involve the private sector meaningfully, says Festus Adebayo, a housing expert, saying all they are doing is to complement government’s efforts. Affordability of houses, interest rates, access to land, green building and local building materials have become topical issues and constitute major topics for discussion at the annual housing show already slated for July in Abuja with the aim of giving Nigerians access to own houses. Adebayo, the managing director of International Housing and Construction Show Limited, the organizers of the annual Abuja international Housing Show (AIHS), urged the government to take a cue from India, Singapore and Malaysia on how they were able to address their housing challenges, hoping that government would help to improve ways to get it right providing affordable housing for Nigerians. The AIHS, already in its 12th edition, has become a platform that has carved for itself international reputation in the course of finding lasting solutions to housing shortage in Nigeria. “The show has also become a credible platform where people network, promote their businesses and make housing available at affordable rates; It has been doing all these with the support of its partners drawn from World Bank, Africa Union of Housing Finance, UN Habitat and other major housing -professional bodies,“ Adebayo said. This year’s edition of the show with the theme, ‘Everyone Deserves a Home’, promises to be the largest international real estate festival in Africa. Earlier editions had hosted many Nigerian leaders, including the senate president, sp ea ke r, Hou s e o f Re p resentatives, governors, ministers, etc.

he People’s Democracy Party (PDP) candidate in the 2016 governorship election in Edo State, Osagie Ize-Iyamu, on Tuesday, said the 2019 general election was to rescue Nigerians from bad governance, dictatorship, impunity, molestation and disobedience to the rule of law. Osagie spoke in a rally organised by Friends of Democracy in solidarity with him and other PDP chieftains recently arraigned in court by the authorities of the Economic and Financial Crimes Commission (EFCC). The PDP chieftain, who said the forthcoming general elections, was not all about restoration of good governance, but also to rescue the country from economic doldrums, total collapse, among others. “We are in a very dangerous time. It is no longer a time for change the change but to rescue Nigerians from the All Progressives Congress (APC)-led federal and state governments dictatorial and unprogressive governance. “Corruption is worst today in Nigeria. Insecurity, Fulani herdsmen are killing people on daily basis. Farmers can longer go to farms. Let me tell you, this government has failed. But you know, it was good that they came because if they had not come we will not know that they will fail so badly. In federal level they have failed, in every state they have failed and God is saying they must not return,” he said. While urging Nigerians to use their Permanent Voters Card

judiciously and wisely in the forthcoming general elections, however appealed to those that are yet to collect theirs to go for it. Ize-Iyamu, who said his recent arraignment and some other PDP members in the state by the EFCC was geared towards intimidating opposition members in the state noted that the arraignment had only made them stronger and committed to the Nigeria project. “They must not return. I want all of you to get ready because this country belongs to us. All of us cannot leave this country for abroad and all of will not die today. By the grace of God, our enemies will die and we will be here to bury them. We must rescue our people. We must rescue our country. “The suffering is too much. The oppression is too much. When we got to Sapele Road prison, one warden there told me that pastor, by next year, Edo will have the highest number of prisoners in the country. I said how? He said ask your government. Everyday, they are bringing people from mobile court, street trading and if you cannot pay N5,000 you will spend three months in prison, if you cannot pay N10,000 also three months imprisonment,” he said. Earlier, the state chairman of the party, Dan Orbih, who urged Nigerians not to be discouraged and intimidated, and fear the future of the country, said the leadership of the party in the state was being tried for offences they were innocent of. Orbih, represented by Chris Nehikhare, the state publicity secretary of the party, said the party was the only hope for the country.

Development architecture stimulates economic growth, boosts investor confidence – Aganbi

EO/chairman, Akogate Ventures, Felix Aganbi, says Edo State governor, Godwin Obaseki’s development architecture has continued to stimulate economic growth and boost the confidence of local investors in the state. Aganbi, who operates an integratedwaterfactoryinthestate,said this in Benin City, the state capital. Aganbi said, “The governor, who came into power with much expectation from the people in relation to his background and experience in the private sector, has not failed in delivering on his mandate. “He has remained professionalinhisengagementswiththe private sector. He has been able to prove that individuals from the private sector can come into governance and make a difference.”

He commended the governor for bringing a new breath of life to governance, adding, “We have seen how he has brought professionalism into public administration. He has been able to show us that if we do the right thing, we will get the support of most people. “Obasekihasshapedhowgovernment should bring great value to the people. I have great respect for the Governor for what he is doing and what he has achieved.” Notingthatinfrastructuraland industrial projects are becoming the hallmarks of the administration, he said, “We are seeing the roads that are being constructed, how new areas are springing up with the governor’s developmental strides. The effort on the Benin Industrial Park will, for instance, improve the human capital development indices in the state.

Agatu crisis: Sheathe your swords, Mark tells combatant OWEDE AGBAJILEKE, Abuja

enator David Mark on Tuesday urged warring communities in Agatu Local Government Area of Benue State to sheathe their swords and embrace peace. Agbaduma, Abugbe and Aila communities in Agatu, Benue State, have been reported to engage in a ferocious battle over ownership of land and fishponds in the area. No fewer than 10 persons have been killed while scores of houses and property burnt. The communities have been deserted as people scampered

for safety in neighbouring communities of Nasarawa State. Mark, who represents Benue South Senatorial District in the National Assembly, appealed to the combatants to sheathe their swords and embrace dialogue to resolve the dispute. A statement by Paul Mumeh, media assistant to the senator, quoted him as saying: “Resort to self-help as a means of solving any problem is counter-productive. Killing one another will only aggravate the situation. We must embrace dialogue as a panacea for peace to reign. I urge security operatives to rise up to the challenge and restore normalcy in the war-torn communities.”

Wednesday 30 May 2018

BUSINESS DAY

8 BUSINESS DAY NEWS Law firm to hold lecture series, luncheon, book presentation

lliance Law Firm has disclosed that it will be holding the maiden edition of its Public Lecture Series and Luncheon on May 31, at the Radisson Blu, Ozumba Mbadiwe Street, Victoria Island, Lagos, by 10.30am. The theme of the lecture is: Contemporary Corporate Governance Issues in Nigeria. The confirmed Chairman of the occasion is Pat Utomi, director, Lagos Business School, while Dotun Suleiman, the chairman, Financial Reporting Council of Nigeria, is confirmed lead speaker. Panel discussants will include: Ben Akabueze, DG, Budget Office of the Federation, Mary Uduk, acting directorgeneral, SEC, Oscar Onyema, CEO, Nigerian Stock Exchange, Austin Avuru, the managing director, SPLAT Petroleum, Toyin Sani, CEO, United Capital plc, and Fabian Ajogwu, senior advocate of Nigeria Considering the topical nature of the theme and the overall importance of Corporate Governance law and practice to the growth of the Nigeria economy,

regulators, leaders of the bar, captains of industries, operators and academics will be attending the event. A book titled Class Action in Nigeria, authored by the undersigned will also be presented at the occasion. The book, which is a pioneer local work on the subject, was forwarded by Fidelis Oditah, and will be reviewed at the event by Gbolahan Elias. Class Action is a legal procedure or a form of suit in which a large group of people collectively bring a claim to Court or in which a class of defendants are being sued. The outcome of the suit will bind them and others falling into the same class whether or not they were named as parties. So there is finality of the outcome of the suit over the subject matter of class suit. It enhances access to justice. It is arguably one of the greatest most effective legal mechanisms to remedy mass wrongs in a fast and evolving globalised world order, where the effect of a single wrong in a particular territory could affect millions of consumers in the country or across the world.

ASUU, TETFund, CVC, NUC reject amendments to TETFund Act

gain, the clamour to amend clause 72a and 73 of the Tertiary Education Trust Fund, TETFund, Act 2011, and expand its scope of intervention, on Monday, suffered a major setback as stakeholders forcefully rejected any change to the law. According the report, two separate bills proposing the amendments had passed first and second reading at the House of Representatives and came up for public hearing on Monday where stakeholders tersely spurned the amendments as an attempt to weaken the impact of TETFund. The bills seek to expand TETFund interventions to private universities by about 10 per cent of all the 2 percent company taxes collected; and to federal tertiary health institutions and teaching hospitals by 17.5 percent of the taxes. Biodun Ogunyemi, national president of the Academic Staff Union of Universities, (ASUU) at the public hearing held by the House of Representatives Committee on Tertiary Education Services, said private universities are private enterprises which should be

contributing to TETFund and not drawing from it. Ogunyemi argued that allowing private universities to benefit from TETFund will violate the essence of establishing the fund which was to get private sector to contribute to funding of education through education tax. “How can we be deploying public funds to support private investment? They are charging fees and making profit and they are coming back to say they want to draw from public funds?” he said. He warned that 40 out of the 74 private universities, representing about 54 per cent of private universities, were faith-based and encouraging them to draw from TETFund will open another window of national crisis. The ASUU president also argued on the lack of geopolitical spread of the institutions as over 70 per cent of the universities are concentrated in two or three zones of the country which will further raise eyebrows about government using public funds to support private universities in some geopolitical zones.

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Expectations as discussants offer insights on business, productivity at institute’s confab CHUKA UROKO

xpectations are high among human resources management professionals and business owners as Institute of Work and Family Integration (IWFI) gathers stakeholders tomorrow for a conference that will be providing insights and solutions for a fulfilled family life and enhanced work productivity. The conference, already in its fifth edition, will also be providing opportunity for businesses and human resources management practitioners to come together to discuss new trends and challenges in human resources as it pertains to work-life balance and productivity. It is also expected that the conference, which will be holding at Four Point by Sheraton in Victoria Island, Lagos, will serve as a platform for participants to discuss issues that will go beyond balance to employers implementing friendly policies for better family, better business and better society.

Organisations are, increasingly, recognising the need to pay close attention to their employee experience in the work place and how that affects their productivity or lack of it. Therefore, there is now a new shift in the human resources space that recognises humanistic management. Human resources are an organisation’s important asset, meaning that its people that are a means to the end of an organisation’s goal or purpose, say productivity or shareholder value. But none of these, according to Chevalier Charles Osezua, IWFI chairman, addresses the intrinsic value of an employee as a human being, first and foremost, and not as tools. “The humanistic management approach focuses on the intrinsic value and dignity of employees and how that dignity or lack of it affects the organisation’s bottom line as well as the society at large,” Osezua noted in a statement obtained by BusinessDay. To discuss the conference theme, ‘Humanistic

Management and Employee Experience’, are experts from the academia, public and private sectors. It is expected that the discussants will offer insights on how to engage and adopt the humanistic management approach to business by providing the right employee experience and, in turn, making the work place a more conducive environment for staff. Helsinki Finland, CEO and Founder, Providentia Limited, is to share his knowledge on ‘Virtuous Leadership and Humanistic Management’, while Udom Inoyo, executive director, Exxon Mobil, president/chairman, governing council, Institute for Personnel Managers (CIPM) will be bringing perspectives from practitioners. Inoyo will be speaking on ‘Humanistic Management and Employee Experience: Impact on Work and Family’. Franca Ovadje, Founder, Danne Institute for Research will bring empirical research findings to share on ‘Employee Experience and Meaningfulness at Work: What Research Shows’.

Wednesday 30 May 2018

BSN empowers business executives with scholarships

n a bid to celebrate her 30th anniversary, Business School Netherlands, a pioneer of Action Learning MBA, has announced plans to empower Nigerians with scholarships. Lere Baale, director of the school in Nigeria, wrote, “Our umbrella theme is - Celebrating 30 years of Resilience. A line-up of activities will be taking place all through the year. We call upon our students, alumni and the general public to join the celebration.” The director in a statement announced that the school would be holding an Essay Competition on the topic – “The Application of Action Learning to Business Growth” in which Nigerian working class professionals stand to win scholarships for her Executive Masterclass programmes. “We observe that when Nigerians are exposed to international education, they excel. Every year, Nigerians emerge among our best students. Our aim is to celebrate the opportunity to shape the brighter future for business in Africa and across the world.” The climax of the celebrations will be the Resilience Awards, to be held later this year, where outstanding personalities and organizations that have built lasting legacies will be recognised and given the BSN International Award for Resilience.

L-R: Femi Hassan, president, Institute of Loss Adjusters of Nigeria; Mohammed Kari, commissioner for Insurance, National Insurance Commission, and Sunday Thomas, deputy commissioner for Insurance, during a courtesy visit of ILAN to NAICOM’s office in Abuja.

Discontent Nigerians want more from Buhari JOSHUA BASSEY

ot satisfied with governance in three years of President Muhammadu Buhari’s outing, Nigerians are challenging the President and ruling All Progressives Congress (APC) to buckle up as they begin the last year of their four-year tenure. Buhari, a former military ruler, who toppled democratically elected government of former President Shehu Shagari in 1983, but got removed from office in 1985, via a coup d’état by another military ruler, Ibrahim Babanginda, swept into power again

in 2015 when he defeated President Goodluck Jonathan, then incumbent President in a keenly contested presidential election. Buhari assumed office on May 29, 2015, and with the mantra of ‘change’, promised to fight corruption, insecurity and reposition the economy for growth. The President claimed on Tuesday in a national broadcast to mark this year’s Democracy Day that his administration had delivered on most of its promises. But his speech has elicited mixed reactions, with some Nigerians urging him to do more within the one year he’s got to round off his first tenure.

Muda Yusuf, directorgeneral, Lagos Chamber of Commerce and Industry (LCCI), in a live interview on a television monitored in Lagos, noted that though expectations of Nigerians were yet to be met, the administration deserved commendation in some areas. Yusuf listed growth in Nigeria’s foreign reserve from $23 billion in 2015 when Buhari assumed office to about $47 billion currently, downward inflationary trends since the beginning of the year, but observed that this was yet to reflect in foods, which affect the “ordinary man in the street.”

LCCI DG also gave some credit to administration’s effort in the promotion of ease of doing business, business registration and improved process of visa issuance to foreign nationals seeking to doing business in Nigeria. But he knocked the country’s inability to overcome the challenge of power, high cost of fund and diesel, all of which add to the cost of doing in Nigeria and put Nigerian businesses at a disadvantage when compared to what obtained in other economies with single digit interest on loans. Labour leaders and workers also reacted to the broadcast.

Muhammed Kiri, president of Civil Service Union, said the administration had put in good efforts in tackling corruption but needed to do more to curb the daily killings in some parts of the country. Kiri said that workers were impoverished because of many factors, including poor pay which he expressed the hope would soon be tackled by via an increase in national minimum wage promised by the government. “As a member of the minimum wage committee, we will soon start the technical session to debate on pertinent issues that will help us reach

a conclusion on the wage increase,” he said. Didi Adodo, the general secretary of United Labour Congress (ULC), said that Nigerians, particularly workers expected more in the last three years because of the economic challenges. Adodo said that some state government still owed thousands of workers salaries and allowances, which had further impoverished them. “We expect more from the leaders that will reflect the desired change. Workers are still expecting a new minimum wage, insecurity has not abated and cost of goods are still high,” he said.

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NEWS

Rising oil price triggers optimism among commercial office investors … as oil/gas sector, FMCG dominate demand for prime space in Q1’18 CHUKA UROKO

ising oil price in the international market coupled with relatively high level of activities in the economy has triggered optimism among landlords and investors in commercial office segment of the real estate market. Oil and gas firms along with technology, fast moving fast moving consumer goods (FMCG) operators and professional services dominated demand for prime office space, while entrepreneurs and start-ups continued to favour shared or co-working spaces in the first quarter of 2018. The implication of this is that prospective investors have to rethink their project size in line with market realities, more so as demand for space was in favour of sizes from 200 square metres to 500 square metres. The growth of start-up firms has been on the rise in the last couple of years. As at the end of the first quarter of 2018, oil price (Brent Crude) grew by 5.1 percent to $70.27 per barrel relative to $66.87 per bar-

rel in the previous quarter. Currently, the price is on $80 per barrel thresh-hold. But, on the domestic front, oil production remains flat, quarter-on-quarter (q-o-q), at 1.8 million barrels per day. Broll Nigeria’s just released viewpoint on the commercial office market notes that the economy generally has witnessed some upswings even though recovery from recession remains slow, fragile and vulnerable. As at the end of last quarter, macroeconomic conditions in the country outperformed the last quarter of 2017 levels. The foreign exchange reserve level grew by 19 percent to $46.26 billion in Q1:2018, up from $38.77 billion in the previous quarter, the highest level recorded since Q1:2013. This gave the economy a forex payments buffer of 13.4 months at the end of the quarter. The naira appreciated marginally within key market segments in the foreign exchange market. At the parallel market, the naira closed Q1:2018 at N362/$, a slight q-o-q appreciation of 0.03 percent. Similar instances were recorded at the inter-

bank and Investor-Exporter Foreign Exchange (IEFEX) windows, with the naira closing the quarter at N305.65/$ and N360.2/$, respectively. The consequence of these developments was a significant rise in business and investor confidence, leading to renewed interest in the real estate market, particularly in commercial office submarket where enquiries for space was appreciable as at the end of the quarter. Though average asking rent for A-grade spaces in some locations like Ikoyi remained constant at was $750 per square metre per annum relative to Q4:2017, in the Victoria Island commercial node, the median average asking rent was $650per square metre per annum, showing a hike from the previous quarter’s median average of $600 per square metre per annum. Therefore, the upward rent review by landlords represents optimism about the country’s economic prospects as well as renewed investor confidence, which they expect to translate into increased activity in the commercial real estate market.

FG’s project won’t suffer setback due to geographical location - Fayemi HARRISON EDEH, Abuja

ederal Government has restated its commitment to ensure that all projects embarked upon by the administration are completed and put to effective use, adding that no project will suffer setback or abandonment because of its geographical location or any other considerations. All Progressives Congress (APC) gubernatorial candidate for Ekiti State and current minister of mines and steel development said this in Otan Ayegbaju, Osun State, during the commissioning and handing over ceremony of Soil Erosion, Flood Control and Road Improvement works at Ifedayo/Boluwaduro/Ila, Federal Constituency, Osun State at the weekend. He also said the President Buhari administration would implementation all genuine government policies, agreements and contracts at both national and international levels entered into by the previous administration in the bid to lay a solid foundation for a virile and prosperous nation. The project is one of the 18 ecological intervention projects approved by President for the first quarter, 2017 and was executed by the Ecological Fund Office, Office of the Secretary to the Government of the Federation (SGF). Fayemi, who was special guest of honour at the event, said in a statement issued on Sunday that President Buhari administration was committed to making lives better for the citizens of the country, adding that no part of the country would be left out in the developmental agenda of the administration. The minister, who noted

that a similar project by the Federal Government had earlier been commissioned in the state a few weeks earlier, said this underscored the commitment of the government to ensure that every part of the country feel the impact of development. He stated that erosion and flood menace at Ifedayo/Boluwaduro/Ila Federal Constituency had made lives difficult for the people in the communities with attendant dangers

to lives and properties. He urged the people of Ifedayo/Boluwaduro/Ila communities in to make good use of the projects and guard it jealously. The minister said: “I feel honoured with this invitation as a special guest of honour while keeping faith with the present administration promise that no project will suffer any setbacks owing to its geographical location or political consideration.

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

am not one of those who took up arms against President Donald Trump for calling certain countries by names not approved by many. I rather take up arms against those who give their countries names they want no one else to call them. That includes those who do not bring home the good ideas they see abroad. There are not so many new wheels being invented nowadays. So I take good ideas wherever I find them. I think the Small Business Administration (SBA) of the U.S is one. I decided to keep the issue of personal guarantee I wanted to discuss for next week and do this. The SBA specializes in the provision of financial support to what Americans call Small Business. Despite the differences in definition of what constitutes small business in Nigeria and the U.S, I think small business in America, in a relative sense, approximates to our MSMEs in Nigeria. TheSBA, which was originally founded in 1932 by President Herbert Hoover and known as Reconstruction Finance Corporation (RFC), aimed to help alleviate the financial difficulties of businesses, big and small, that followed the Great Depression. Several years later, and following different mutations, driven almost entirely by desire to accommodate and improve the patronage of small

AKINTOLA BENSON OKE Dr Oke, is Lagos State Commissioner for Establishments, Training and Pensions, Lagos State

n anonymous author once affirmed that: “In absence of clearly defined goals, we become strangely loyal to performing daily acts of trivia.” Similarly, Albert Einstein once said: “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” And, of course, according to popular wisdom, only the unwise embarks on a journey without a map. The importance and indispensability of strategic planning in management has been proved and validated over the years. Surprisingly, however, organisations are not always readily open to embracing a culture of strategic management. Ironically, every well meaning organization strives to be the best in their sphere of influence. For the public service especially, the sure way to be the best lies in embracing a culture of strategic management. Strategic management model remains, perhaps, the best ever and definite way to ensure an efficient and productive public service that would impact greatly on good governance and quality service delivery. In an article titled: ‘Introduction

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Like SBA of America; unlike SMEDAN of Nigeria enterprises in the U.S for war time supplies and procurements being monopolised by big business, the SBA was born. With the passing of the Small Business Act of July 30, 1953, the US Congress created the Small Business Administration, with aim to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” Furthermore, the SBA was to ensure that small businesses hada “fair proportion”; of government contracts. I can’t see the equivalence in Nigeria. The SBA was a product of research, which showed that small businesses could not access the loans they needed to develop. It was also part of the US government’s poverty alleviation efforts, under the Equal Opportunity Loan (EOL) programme. I believe we in Nigeria reached the same conclusions about our MSMEs when we began to do so many things to get finance to them. The EOL may be likened to the many MSME financing facilities created by the Central Bank of Nigeria (CBN). Not only did the SBA relax lending conditions for those living below the poverty line, it aggressively promoted the cause of small businesses that could not secure funding for their otherwise very bankable projects. Clearly, one can see that we are not reinventing any wheels here. What the SBA did in the post-war years and still doing today looks to me like what the Small & Medium Enterprises Development Agency of Nigeria (SMEDAN), the Central Bank and our microfinance programme, are trying to do for MSMEs.But that seems to be where the similarity between the US SBA and our own programmes end. Reading the National MSME Survey Report of 2013, jointly prepared by the National Bureau of Statistics (NBS) and the SMEDAN, I was struck

Reading the National MSME Survey Report of 2013, jointly prepared by the National Bureau of Statistics (NBS) and the SMEDAN, I was struck by a revelation in the report that over 70 percent of the entrepreneurs surveyed, which SMEDAN is supposed to serve, did not know about the existence of the agency and its services by a revelation in the report that over 70 percent of the entrepreneurs surveyed, which SMEDAN is supposed to serve, did not know about the existence of the agency and its services. At first, I thought that was a rough joke, which SMEDAN and the NBS were casting on the former but on realizing the full implication of that revelation I knew a lot more is probably wrong with our development strategies than is recognized. In that same report, it was stated that MSMEs contributed over 84 percent of industrial and human development in countries like India, Bangladesh, Pakistan and Nigeria. That is a major vote for MSMEs,though I didn’t understand the choice of countries used for the comparison with Nigeria. Of late though, we seem to be looking to certain unusual places to draw credit. For example, Nigeria’s opponents in the competition for the worst place on earth to have a baby are Sierra Leone, Central African Republic and Chad. These are the only countries worse than

Nigeria in maternal mortality. This is not to say that these countries are unfit to stand in contest with Nigeria (We probably do not have better electricity supply than any of them), but in the days of yore, we used to benchmark with countries in Western Europe. Those apart, what is probably worrisome is that the same report quotes the SMEDAN Act, 2003 as charging the institutionwith, among others, “promoting and facilitating development programmes, instruments and support services to accelerate the development and modernization of the MSME sector”. With the vibrancy ascribed to the Nigerian informal sector, andthe MSMEs, one would have thought that the development agencies and institutions charged with the above quoted mandate would work hand in gloves with operators in the sector to deliver on the mandates. I suppose there must be remote ways of doing this job which SMEDAN must have preferred it to be unknown to those it has served so “diligently” since it was formed ten years earlier. Is that a puzzle? The US created a lending agency, the SBA, which grants credit and provides guarantees for loans to small business.We created a lot of funds and hauled them at the commercial banks to on-lend at their own risk to MSMEs. One nil against us! That way, the only difference between the CBN funds and other loanable funds inbanks is the subsidized interest rate decreed on the CBN funds.They both became risk capital of the banks the moment the banks have to on-lend at their own risk. Are we still wondering why the operators are unable to utilize the CBN facilities?The SBA has grown significantly and its programs now include financial and management assistance and the provision of loans to small business. Why is the federal government shifting the credit risk

to banks? While advising the Nigerian Minister of Finance, and Budget and Planning at different times, we created certain institutions in the financial sector, including the Peoples Bank and National Economic Reconstruction Fund (NERFUND). They both played roles identical to those of the US SBA: gave loans on conditions like those of Equal Opportunity Loans of the SBA, etc. Without advocating institution duplication, am wondering what level of momentum the CBN expected to see when the commercial banks have to take full responsibility for the credit risk of the on-lending facilities it provided. The fact that those organizations were impacted by non-performing loans has nothing to do with their significance in an emerging economy like ours. Am sure the SBA has the same experience. It is rather an indictment of the way we recruit leadership for critical institutions. When we let incompetent friends and loyalists, lackingthe aptitude and orientation for the requisite leadership run particular institutions,that’s what we get. We shut down the Peoples Bank and NERFUND and ask Bank of Industry to do it alone. The same thing happened with NALDA. Once we returned from Malaysia and Indonesia where we copied NALDA,and wroteit’sDecree, under Dr Chu SP Okongwu. KBE, Nigeria’s most distinguished Finance Minister, the project was taken away from us and some jokers who had no idea of the philosophy behind the project, turned it to a cassava-planting project.

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Public service and imperatives of strategic planning to Strategic Management,’ Ryszard Barnat listed the benefits of strategic management for organisation to include provision of a way to anticipate future problems and opportunities, providing personnel with clear objectives and directions for the future of the organisation, more effective and better performance compared to non-strategic management organisations, increased personnel’s satisfaction and motivation, faster and better decision making and cost savings. In addition to the above, Ryszard Barnat equally stresses that strategic management allows for identification, prioritization, and exploitation of opportunities, provides an objective view of management problems, represents a framework for improved coordination and control of activities, minimizes the effects of adverse conditions and changes, allows major decisions to better support established objectives, allows more effective allocation of time and resources to identified opportunities, allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions, creates a framework for internal communication among personnel, helps to integrate the behaviour of individuals into a total effort, provides a basis for the

clarification of individual responsibilities, gives encouragement to forward thinking, provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities, encourages a favourable attitude towards change and gives a degree of discipline and formality to the management of an organisation. At this point, it is important to draw attention to five essential attributes of strategic management, according to the thoughts of a leading management consultant, Mr. Mark Rhodes. First, an effective strategy should be deeply understood and shared by the organization. Rhodes argued that the ancient Mongols defeated far larger Armies because they were able to make adjustments on the battlefield despite ancient systems of communication that limited the way orders could be delivered to warriors already in action. He then stated that the secret was instilling battle strategy in the hearts and minds of all soldiers so that they could make correct tactical decisions without direct supervision or intervention. Like the mission statement published in the annual reports or guiding principles framed in the lobbies of organisations, a strategic plan itself accomplishes nothing. What matters is whether personnel in the organization understand and internalize the

strategic direction that have been well articulated and can make tactical choices on their own. Strategic plans must be articulated in a manner such that operational and tactical decisionmaking can follow suit. Furthermore, the leading strategist must count on the employees or members of the organization to make sound tactical and operational decisions that are aligned with the desired strategic direction. To ensure that these decisions are well made, the articulated strategic direction and strategic plans must be applicable and clearly related to the issues that people face. It is always helpful to remember that an effective strategy provides a picture of the desired long-term future. In order to make sound day-to-day decisions, all members of the organization must be able to begin with the end in mind. All steps must ultimately keep the organisation on course toward the long-term objective. In the second place, an effective strategy allows flexibility so that the direction of the organization can be adapted to changing circumstances. Rhodes explained that rigid strategic direction seldom turns out to have been the best course of action. To assure that your organisation is nimble and able to react to changes, it is

essential that your strategy is flexible and adaptable. As a strategist, you will count on timely and accurate information about prevailing relevant conditions. It is essential to build and employ effective mechanisms for observing and listening to what is going on in the environment. Realtime information, in turn, must feed on-going strategic and operational shifts and deployments. Thirdly, effective strategy results from the varied input of a diverse group of thinkers and participants in strategic decision-making must be unafraid to state contrary opinions. Managers of human resources must look carefully in the mirror in order to ensure that their strategic team is ready to make effective decisions. They must encourage debate, even argument among their strategic team about key decisions. Encouraging blind alignment with the organization’s positions can be counterproductive. Personnel must be allowed to feel free to air contrary views about organizational goals.

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Familiar failings stand in the way of Nigeria’s mining prosperity

OLADIRAN OLA BELLO Dr Bello, holder of MPhil and Phd degrees from Cambridge University, is extractive governance expert and Executive Director, Good Governance Africa (GGA)

he pressure to diversify Nigeria’s economy presents opportunities. Yet, deeper reform in mining is needed to realise the sector’s enormous potential. If there is an African country that requires sustainable mining to drive manufacturing for its large internal market, that country is Nigeria. Getting mining right also holds out the promise of national self-redemption, with success potentially mitigating the legacy of the ‘oil curse’. A widely respected mining sector which supports Nigeria’s industrialisation ambitions could be within grasp. This though calls for new governance approaches and dynamic stakeholder learning on a scale never before seen in Nigeria. Bold changes can help align Nigeria’s mining with global best practises. These include the fiscal, conflictmanagement, social inclusiveness, technical linkage and the human and gender rights dimensions of governance in the sector. Even as geological exploration lags, Nigeria’s known reserves– modestly estimated at 47 distinct minerals– could support the creation of 250,000 new jobs. The 7th Sustainability in the Extractive Industries (SITEI) conference took place in Abuja last week, with this author as the compere for the two days event. With its theme of ‘Managing

Conflict and Security’ the conference highlighted Nigeria’s sustainability challenge which hampers the sector. Road less travelled Adorning the walls of informal money-changers throughout Nigeria, an untrained eye may not recognise the value of ornaments created from Nigeria’s semi-precious stones. From upmarket hotels in Abuja and Zamfara, to merchants’ shops in Bayelsa, Lagos and Yola, these semi-precious stones are among the most sought after items by discerning foreign visitors to our shores. Expatriates can usually acquire these ornaments at a fraction of their cost in Asia, Europe and North America. With proper regulation, training and market support, Nigeria’s semi-precious stones, together with dimension stones could provide sustainable livelihood for millions of its citizens. The United Nations Development Programme has been working to increase awareness of the sector’s potential, most notably in its development minerals programme which convened a West Africa regional workshop in Accra in 2016 with this author in attendance. As the Abuja sustainability conference unfolded last week, major national newspapers reported on multiple mining-related incidents in Ebonyi state. These point to worsening communal conflicts driven by illegal mining activities; alleged police brutality against host communities; intra-community rivalries with factions granting partial ‘consent’ to mine operators; and non-compliance of some licenced miners with state tax regulations. In addressing its extractive challenges, some observers complain that Nigeria copies foreign solutions that are ill-suited to our context. In mining, it seems that the key difficulty resides in our treatment of minerals with their distinctive value chains and high labour absorptiveness in

Bold changes can help align Nigeria’s mining with global best practises. These include the fiscal, conflictmanagement, social inclusiveness, technical linkage and the human and gender rights dimensions of governance in the sector

the same way that we treat the more mature oil and gas sector. Whereas states and local authorities are at the frontline, Nigeria’s 13% derivation formula offers paltry incentive to these grassroots governance actors to help reorganise the sector to drive job creation. Unless we give states an attractive stake, Nigeria’s dream of improved mineral sector governance will remain a pipe-dream. If so, we risk in the longer-term being saddled with stranded assets – mineral and energy resources that are no longer economically viable to extract –because we failed to capitalise on them before the world’s productive systems shift wholesale to renewables. Changing the ground-rules Any suggestion that we give states autonomy over mines, with a percentage of mineral revenues being remitted to the federal government, is bound to prove controversial. Yet, successful mining countries with federal constitutions similar to ours, including Canada and Australia, allow state control over their mineral endowments. Such arrangement could help states to aggressively grow their internally generated revenues whilst rebuilding tax and royalty collection systems. Nigeria under President Buhari has

been receiving help from the African Mining Vision (AMV), a pan-African initiative for good governance in the mining sector with seven distinct principles on linkages, environmental protection and others. It was endorsed in 2009 by African Heads of State. As member of the African Union (AU) Technical Working Group (TWG) advising on AMV implementation, this author was selected by the AU and the UN Economic Commission for Africa (UNECA) as their in-country resource person for consultative missions to Nigeria’s mining ministry in February 2016. In truth the Fayemi-led mines and steel ministry has achieved much in terms of the process revamps that are needed, most notable in the endorsement of the mining roadmap by the Federal Executive Council in 2016. Among other measures, Nigeria now offers mining investors a three-year tax holiday and duty-free importation of equipment. Steps are being taken to establish the Nigerian Mining Commission as regulator in the sector and a ‘strategic partnership’ between the federal and state governments on mining is also on the card. Nevertheless, much remains to be done, including striking the right regulatory and revenue-sharing balance between the federal and state governments. We should not pretend that we can impose same fiscal provisions in the embryonic mining sector as those in the well-established oil and gas industry. Adjusting mineral revenue-sharing may require changes to Nigeria’s constitution. Inclusive analysis of benefits, diligent sensitisation in mining communities, and proactive consultations among regulatory, corporate, communal and CSO stakeholders will help. Also, a more substantive gender focus is needed. This will increase the prospects for pro-women, povertyreduction strategies in the sector, par-

ticularly in artisanal and small scale mining. Beyond recalibrating the state-federal fiscal formula, legislative changes should provide for community mining trusts to forestall local strife. Amending gender-discriminatory clauses in the 2004 Labour Act – such as section 55 which excludes women from working at certain hours and section 56 which prohibits the employment of women for manual labour underground – is also key. We must allow women choice even whilst sensitising them on the hazards of working underground. This applies also to operations such as the sieving of ores. Women are preferred for sieving because of their painstakingness. This though disproportionately exposes them to harmful substances such as lead and mercury. Recovering lost ground Momentum has since been lost in the Nigeria-AU-UNECA consultations. Still, Nigeria remains one of the more promising contexts for actualising the AMV’s sustainability principles. Going forward, our policymakers must seek closer alignment with AMV principles. We should couple external learning with deeper introspection of our own experiences. We can leverage for example Nigeria’s successful local content approaches in the oil industry. That should make for richer exchanges with African peers and foster holistic national learning. With our large internal market suited to mineral beneficiation and mineralsbased industrialisation, we could see several green-field mining projects rapidly emerge.

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Examining the monetary policy communique of the Central Bank of Nigeria

MAXWELL EKOR Maxwell Ekor is of Ecopol Associates Limited and writes from Abuja

his piece attempts to provide an insight into how the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has communicated its policy decisions for the last three meetings and the likely pattern it will take for the rest of 2018. It is no longer news that the Committee in its second meeting in 2018 decided to leave the Monetary Policy Rate (MPR) unchanged at 14%, the Cash Reserve Ratio (CRR) at 22.5% and the Liquidity Ratio (LR) at 30%. For the first time in many months, the decisions taken by the Committee has continued to generate mixed reactions among analysts. The objective of this article is not to contribute to this debate, but rather provide another perspective on activities of the Committee by examining the contents of the monetary

policy communique. Modelled after the monetary policy communication pattern of the European Central Bank (ECB), the Committee led by the Governor of the CBN, usually holds a press conference where explanations and justifications are provided for decisions taken. The press conference is important given the role that the media plays in the dissemination of the verdicts of the Committee to the public. As such, the press conference provides the platform for questions to be asked and grey areas clarified before transmission of the Committee’s decisions to the public. Another important means of communicating monetary policy decisions is through the issuance of monetary policy communique which is usually published on the website of the CBN moments after the press conference. The communique provides the avenue for analysts to read, digest and get more details on the deliberations of the group. In addition, the Committee has since 2011 been delivering statements of members’ as part of efforts to improve monetary policy transparency. To provide an insight into the contents of the monetary policy communiques for the last three meetings, a readability device was

used for the analysis. In other words, the contents of communiques issued at the end of the two meetings so far held in 2018 (Communiques No. 117 and No. 118) as well as the last meeting of 2017 (Communique No. 116) were examined. The results indicate that Communique No. 118 which was issued at the end of the second meeting of 2018 had a total word count of 2,848, an average sentence length of 29.4, an average vocabulary level of 5.5 and an average word length of 5.2. Communique No. 117 that was issued at the end of the first meeting of 2018 had a total word count was 2,200 while the average sentence length was 26.5 and the average vocabulary level was 5.5 and with an average word length of 5.3. Communique No. 116 that was issued after the final meeting of 2017 had a total word count of 2,080, an average sentence length of 25.7, an average vocabulary level of 5.4 and an average word length is 5.2. Juxtaposing these results, we see that the total word count of 2,080 for Communique No. 116 is less than 2,200 for Communique No. 117 and 2,848 for Communique No. 118. This indicates that the Committee has talked more in its two meetings this year compared with the last meeting of 2017. Also, the average sentence length was 25.7 for Communique No. 116; 26.5 for Com-

munique No. 117; and 29.4 for Communique No. 118, also indicating that the Committee has spoken more this year. The average vocabulary level of 5.4 for Communique No. 116 and 5.5 for Communiques No. 117 and No. 118 means that the Committee has attempted to provide more explanations using some key words and terminologies in its two meetings of 2018 when compared with its last meeting of 2017. The average word length of 5.2 is however the same for Communiques No. 116 and No. 118 while it is 5.3 for Communique No. 117 that was issued at the end of the first meeting of 2018. One could attribute this to the fact that having failed to hold its first meeting for 2018 due to executive-legislative politicking, the Committee on average talked more when it eventually met for the first time in 2018. Another key component of the readability tool is the provision of a score that helps to explain the ease with which publications can be read. Known as the Flesch Reading Ease Score, higher scores indicate a material that is easier to read while lower scores show publications that are more difficult to understand. Applying this to the communiques, the results show that Communique No. 116 has a score of 39.113 while

Communique No. 117 has a score of 36.446 and Communique No. 118 has of 35.401. These results illustrate that Communique No. 116 is easier to comprehend when compared with the two communiques issued so far in 2018. This is quite understandable given the challenges that the Committee has faced this year. The executivelegislative face-off that resulted in delay in clearing the then would-be members nominated by the President is one factor that may have influenced communication of monetary policy in early 2018. Also, the delay in passing the 2018 budget as well as other issues that the Committee highlighted in Communique No. 118 needed to be properly explained, thereby resulting in lower scores. In conclusion, beyond the decisions of the monetary policy committee such as increasing, cutting or leaving the monetary policy rate unchanged, the way and manner that the choices are communicated is important. Reading and understanding the contents of the monetary policy communique, and indeed any publication by the CBN will enhance policy predictability and more importantly help in managing public expectations.

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Nigeria’s burgeoning debt burden

ast month the International Monetary Fu n d , I M F, i n i t s presentation of the Global Financial Stability Report warned that Nigeria and other emerging economies’ debt level was creating some form of vulnerabilities and if not checked, could undermine financial stability. Although Nigeria always retorts that its debt to GDP ratio is low in comparison to even developed countries, the real danger is in the area of debt sustainability and revenue to debt service ratio. The Debt Management Office put Nigeria’s total national debt stock at N22.73 trillion ($66.70 billion), of which the external dollar denominated component is in excess of US$17 billion. With a GDP of almost $500 billion, Nigeria’s debt remains with 13 percent of GDP. That is why finance minister Kemi Adeosun, always respond to these warnings that Nigeria’s debt are sustainable and under control. The real problem however is in the area of debt service to revenue. The Bretton Woods institution – and some recent calculations, put Nigeria’s debt servicing at 66 percent

of revenue – surely anyone who spends 66 percent of his/her income to service debt monthly has some serious issues and may sooner or later run into difficulties. It is clear Nigeria has a problem of debt sustainability. But the government will never acknowledge it. Reality is, the government is caught between declining revenues and rising expenditures all at once. But there are more sustainable solutions than plunging the nation into unsustainable debt. Nigeria’s tax to GDP ratio is one of the lowest in the world, meaning tax-collection rate is very poor and can be grown exponentially. Additionally, the government could sell public assets, intensify its public private partnership drive to finance capital projects and infrastructure and or outright concessioning of commercially viable government assets. But the government isn’t considering these avenues and is only looking towards borrowing. There’s als o the problem of external borrowings at ridiculous interest rates that is hurting the country. The government has explained its penchant for external borrowing on the need to balance its loan portfolio and reduce the pressure on domestic borrowing.

But why is the government b orrowing s o much of late? Government argues its heavy borrowing pattern is necessitated by the need to invest in infrastructure. But even the sources of the debts are a source of concern. The government could have easily approached the International Monetary Fund for cheap loans which come in at less than one percent interest rate instead of the significantly more expensive commercial loans which it is building up. Obviously, the government is avoiding the IMF because it is not a politically popular decision. Nigerians are not particularly in love with the IMF because of the conditionalities that the fund will force the country to implement in return for its cheap money. So the fear of the IMF has pushed the Nigerian government into the arms of shylock lenders who will demand for their pound of flesh if Nigeria at any point in time is unable to repay the loans. Sadly, unlike the IMF, investors giving Nigeria money t h r o u g h t h e Eu r o b o n d a n d other such means will not border to see whether the country really spends it on infrastructure as promised. All they are interested in is that the country

does not default in its payment schedule. This is unlike the IMF that will put in place a monitoring programme and ensure that the funds are used as stated and future funds released only when the stated spending plan and in many cases cost plans are met. While money raised from bonds or commercially can be spent in a way and manner that suits the government, an IMF or a World Bank loan cannot be spent in a similar manner. Sadly, Nigeria does not have a track record of judicious utilisation of loans and an IMF loan, accountability-wise, may have been the best for the country. Currently, no Nigerian can say exactly what the borrowed funds are being spent on. For all practical purposes, it may be used to service recurrent expenditure. That is why we would have preferred a loan whose spending will be effectively monitored and supervised. Now that Nigeria has taken the de cision to pro cure expensive loans just to escape supervision, we expect the National Assembly to strengthen its oversight and supervising capacity to ensure that the loans procured are used strictly for infrastructure projects as stated in the request sent to them.

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Wednesday 30 May 2018

BUSINESS

COMPANIES & MARKETS

DAY

‘We have seen significant growth in total asset size of our mutual funds’

Pg. 14

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

NNPC, NPA forge closer ties to sustain products supply … as NNPC established one stop shop for supplies HARRISON EDEH, Abuja

he Nigerian National Petroleum Corporation (NNPC) and the Nigerian Ports Authority (NPA) have expressed readiness to ensure seamless reception of petroleum products into the various ports across the country. This commitment was made during the visit of the Managing Director of the Nigerian Ports Authority (NPA), Hadiza Bala Usman, to the Group Managing Director of the NNPC, Maikanti Baru, at the NNPC Towers in Abuja. Baru in a statement said as part of efforts to introduce efficiency into the maritime operations of the corporation, the NNPC had proposed the establishment of a one-stop-shop at the ports with all agencies relevant to the clearing of petroleum products vessels to reduce delay and demurrage that usually result in under-recovery for the corporation.

He said NNPC would relocate pipelines along the Escravos Channel to pave the way for the dredging aimed at easing the movement of ships to the Warri Port. “Because of the sheer number of the pipelines and the criticality of some of the petroleum products they carry, we are looking at the timelines that would span 12 months to relocate some of the pipelines. In some of the critical areas, we have agreed that because of supply situations, they would do an initial dredging that would give us at least 10 metres, especially in the Escravos areas,” Baru stated. He commended the NPA for securing the approval of the Federal Executive Council for the dredging of the Escravos Channel, stressing that the feat would go a long way to buoying economic activities in the area. The NNPC helmsman commended the Managing director of NPA for the support extended to the corporation during the last bout of

fuel supply hiccups, saying that such inter-agency collaboration was needed for the growth of the Nigerian economy. “The test point for the

he Nigerian-American Chamber of Commerce (NACC) says Nigerian exporters still have an opportunity to explore the benefits of the African Growth and Opportunity Act (AGOA) till 2025. Speaking at the 2nd Edition of the African Food and Products Exhibition and Conference themed, ‘Non-Oil Exports’ Scaling up Productivity to Meet Global Demand’ in Lagos weekend, Olabintan Famutimi, president, NACC, noted that the United States had committed a lot of resources in capacity building to ensure the success of AGOA. Checks show that AGOA allows African countries to export 6,421 products to the US free of duty till 2025. It was initially supposed to end in 2008 and then 2015, but was extended to 2025 because many African countries, including Nigeria, did not maximise its benefits. The US has laid-down regulations and rules which beneficiaries must meet, but exporters mostly try to evade them, experts say. According to Famutimi, the chamber and other part-

ners were now working hard to ensure that Nigerian products exported to the US were not rejected. He said NACC had been talking with off-takers in the US to see if they could establish contacts with Nigerian traders, adding that the US market was so huge to be ignored. He said the chamber had set up an AGOA desk at its secretariat to be able to help and support members and nonmembers to derive the benefits from the trade agreement. “AGOA is still available till 2025 and we can still take advantage of it,” Famutimi said, pointing out that the chamber had been getting support from the West African Trade Hub, and the African Trade Development Office in Miami, among others. “No doubt we have entered an era in which micro small medium enterprises are needed for economic growth and development. Their impact is systemic and all-encompassing: from the integration of essential goods and services like apparel and fashion, beauty and wellness, foods and beverages, art and crafts to the promotion and establishment of non-oil exports. In light of this, we must

us patriotically prompting our coming out of the crisis and it actually helped the nation as well. The MD of NPA was very patriotic, she prioritized ensuring the

L-R: Esther Akinnukawe, HRE, MTN Nigeria; Ola Oladoja, head teacher, St. George’s Girls School, Ikoyi; Ferdinand Moolman, CEO MTN Nigeria; Ade Ajulo, head teacher, St. George’s Boys School, Ikoyi, and Abiola Olugbenga, director, special duties LGEA Eti-Osa, during MTN Nigeria’s visit to St George’s School, Ikoyi for Children’s Day.

AGOA still available for Nigerian exporters till 2025- NACC ODINAKA ANUDU

support of the NPA to NNPC was between December 2017 and February this year because it was really a trying period during the fuel scarcity and the NPA supported

do two things: we must scale up our productivity and we must make our response even more relevant in the global space,” he noted. He stated that one of the biggest challenges of Nigerian manufacturers was that they did not know what was available, urging the government to ensure that exporters access its N500 billion facility, managed by NEXIM Bank, to earn the much needed foreign exchange. Olukayode Pitan, CEO of Bank of Industry, said agriculture should not be treated as just a social sector intervention for managing poverty but more as a business for creating wealth and empowering citizens. “It is the kind of business that can help many African nations, including Nigeria, diversify revenue, reduce import dependency, create jobs and develop rural areas. But the question to answer is this: How can Nigeria drive economic diversity and productivity in the agricultural sector? One solution is to embark on agricultural industrialisation and implement innovative financing models that cater to the needs of both low-income farmers and high-income processors.

comfort of the people which, in turn, went a long way in enabling us touched the lives of Nigerians in many positive ways,” Baru enthused. In her response, NPA MD, Hadiza Bala Usman, said the interface with the NNPC was geared towards strengthening collaboration with the corporation, especially in the areas of relocation of pipelines at various locations across the operational areas of the Port Authority. “We are here to strengthen synergy and collaboration between NPA and NNPC. We are about embarking on dredging activities at Escravos and Ejigbo and there are a lot of pipelines that are buried within that location and so we want to work with NNPC on relocating and burying those pipelines deeper so that NPA can dredge and have a deeper draft for bigger vessels to come to Warri and Lagos to enhance the supply of petroleum products and other larger vessels coming into the country,” Usman affirmed.

ACCION MfB grows profitability in FY 2017 SEYI JOHN SALAU

ccion Microfinance Bank (MfB) in Full Year (FY) 2017 posted positive results growing profitability and other key financial indicators despite operational challenges as a result of macroeconomic difficulties witnessed in the country. On overall, Accion MfB grew profits after tax by 50 percent to close at N809 million. The return on equity for the national MfB was at 20 percent demonstrating an effective use of the shareholders’ capital. Furthermore, shareholders’ funds grew to N3.19bn in 2017 from N3.36bn in 2016 representing a growth of 16 percent, while capital position continues to grow from strength to strength, with a total capital adequacy ratio of 45 percent, compared to the regulatory requirement of 10 percent. For the year ended December 31, 2017 the bank delivered an impressive financial performance; as it impacted the lives of its customers in a positive manner to see its active borrowers grew by 2

percent, from 39, 036 in 2016 to 39, 749 in December 2017. Compared to December 2016, Accion total loan portfolio grew by 24.4 percent from N6.12bn in December 2016 to N9.13bn in 2017. Also, Accion accounts base increased by 15 percent from 245,094 in 2016 to 282,057 accounts in the period under review, while number of savers grew by 15.6 percent from 144,284 in 2016 to 166,795 in December 2017. Patr ick Akinwuntan, Chairman, Accion Microfinance Bank Limited, while commenting on the bank’s performance at the 2017 Annual General Meeting (AGM) held recently in Lagos said, the bank is upgrading its core banking system to more robust and versatile versions to enable product cross-selling and delivery through multiple digital channels available to its customers. “Accion MfB shall be able to reach more unbanked communities through easy-to-use, secure and low-cost technology solutions,” said Akinwuntan. Taiwo Joda, MD, Accion MfB said during the period under review, the bank disbursed a total of N19.13bn in

loans bringing the accumulated loan disbursement from inception to date to N81.28bn. This indicates a growth of 23 percent when compared to N62.14bn in 2016. Similarly, cumulative number of loan disbursed closed at 336,764 from 278,784 in 2016 indicating an increase of 21percent. Joda while speaking on ‘Sustaining Market Leadership and Driving Digital Transformation, the next phase of Accion MfB’ said the bank maintained its lead in market leadership in line with its vision and mission with impressive performance year on year inspite of the challenging economic environment in Nigeria. According to him, the total active portfolio during the period under review closed at N7.27bn compared to N6.12 bn in 2016. The bank made a profit before tax of N1.38bn for the year ended December 31, 2017 indicating an increase of 97 percent from N700m in 2016. However, to further serve its customers better in a digital and retail banking space, the bank launched its USSD short code *572# while the board also approve a dividend payout of 24.89kobo per share.

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COMPANIES & MARKETS

‘We have seen significant growth in total asset size of our mutual funds’ Emeka Okolo is the head, Coronation Asset Management, a fund and investment management company. He speaks in this interview with Iheanyi Nwachukwu. Excerpts How well has Coronation Asset Management Limited built strategic partnerships with clients? t the hear t of ever ything we do, is a commitment to serve our customers. We are constantly pushing the boundaries of service delivery, pioneering new products and looking for better ways to serve our customers. We do all this because we understand that financial resources are scarce. So, when it comes to making investment decisions for our customers, we have to always get it right the first time every time. Nothing speaks more to our ability to create value for customers like the quality of our past investments decisions for our clients. In 2017 we launched three mutual funds and all three recorded huge subscription levels. The success of our mutual funds attest to the progress we have made in building strategic partnerships and reflect the loyalty and support we enjoy from our customers. In Nigeria, a lot of families struggle to effectively transfer wealth in a manner that meets the financial goals of their future generation. One of the ways we build strategic relationship is by creating transgenerational wealth. As a fund manager you believe investment risks should be properly analysed and understood. How often do you communicate with your clients on your analysis on possible market risks or opportunities? Understanding investment risk is paramount to making money irrespective of whether you are making investments in Real Estate, Bonds, and Treasury Bills. A lot of people keep cash in their bank accounts with the belief that the money is safe and yes, it is. However, if the interest you earn from that deposit is less than the prevailing inflation rate, your money is exposed to devaluation risk. Given the importance of knowing and managing investment risk, at Coronation, a critical first step in our client engagement process is working with our clients to understand all possible types of risk, and thereafter undergoing a comprehensive assessment of their appetite for the identi-

fied risk. Using this approach, we are able to decide the right investment solutions that align with our clients’ risk appetite, and we can then generate the desired investment goals. Knowing that market conditions are never static, we further evaluate the identified risk in line with prevailing market conditions and changing customer circumstances. With this proactive process and the discipline we introduce to it, we can, to a high probability, properly articulate the right investment strategy that reduces risks as much as possible. Obviously, our clients are carried along in this process with timely information to enable them to make proper investment decisions. We have also put a lot in place to ensure our risk management governance framework is of global standards. In addition to this, the oversight functions of our Board of Directors, whom have over 100 years of combined experience in financial markets enable us to properly dimension risk and profer investment solutions. You see, when it comes to making investments, poor assessment and inadequate monitoring of investment risk, especially in a volatile economy as ours is the fundamental reason why individuals and institutions fail to meet their investment goals. Do you adhere to global standards of investment codes of conduct when developing investment solutions of your clients? Yes we do. As an organization registered with the Securities and Exchange Commission of Nigeria, we are mandated to uphold various regulatory codes for capital market operators. Also, all staff of the organisation are mandated to abide by the Chartered Financial Analyst Code of Ethics and Standards of Professional Conduct. Keeping these codes of conducts are important to us as a business, because we are accountable to clients, regulators, stakeholders and the capital market to ensure that we always act in a professional and ethical manner, which is independent of any conflict of interest. Therefore, it is a matter of obligation for us to employ utmost care in developing investment solutions for clients irrespective of status. We are very diligent in our approach

Emeka Okolo

and take into consideration all possible scenarios when analyzing financial markets and investments. Without these codes, especially in a developing market like ours where clients need solid reassurance and resolve to adhere to professional standards, you will find a situation where it will be difficult to build or create the environment of trust required for strategic partnerships with our clients. Hence, at Coronation, we take adherence to these codes very seriously and we have put in place processes by which we are constantly trained and kept abreast of these commitments which have now become a way of life for everyone at Coronation. As a portfolio manager, effective risk management is very important to ensure improved returns to your clients who may either be retail, ultra and high networth individuals. So, what are your strategies around risk management? We have a four-step strategy around risk management namely: 1) Risk Identification (2) Measurement (3) Risk Control 4) Risk Monitoring and Reporting. These four steps are very much integrated in our investment culture and we are much disciplined about how we carry them out at Coronation. We all know that risk

cannot totally be eliminated; therefore it is apt that we have clearly defined risk tolerance limits for all types of investments we undertake as a business on behalf of our clients. However, we employ primarily the evergreen principle of efficient diversification of investments to sufficiently eliminate as much risk as we possibly can. Through diversification, we have acceptable exposure limits between all types of investments. We invest in such

Mutual funds are very popular investment products that support retail investors to pool monies just like the traditional Esusu schemes

a proportion that we can efficiently meet client goals. For instance, if an individual client in their middle age wants to start saving towards retirement, as a rule of thumb we start by applying the 60/40 rule – 60percent and 40percent of their investments in risky and non-risky assets respectively. However, as stated initially, we consider the client’s risk appetite and circumstance as well as market conditions before we finally arrive at an acceptable ratio between risky and non-risky investments. Now, consistent monitoring of investments is more important than the actual investment process. Hence, as part of our risk management strategy we continuously review the investments we have made, and whenever necessary take the required actions to rebalance them appropriately in line with market realities. From an organisational standpoint, our risk governance process requires that all risk practices and results be reported to our Board of Directors frequently, as evidence of the importance we give to managing risk. How do you describe your investment management approach at Coronation Asset Management? We are value investors by nature, always seeking for investments that have growth potentials backed by strong fundamentals. This philosophy is our guiding principle to investing. Before we make any investment whatsoever, we conduct a thorough global and domestic economic and financial market evaluation seeking for the best value out there depending on what our clients’ goals are. At Coronation, we are very proud of the quality of our research, which underpins all our investment decisions and we make sure that our clients are well informed about all our actions. A big advantage we have at Coronation and one that we clearly promote is the diversity our people bring onboard. This diversity in knowledge and experience enables us to make decisions collectively, in the best interest of our clients. Hence, we have an Investment Committee that is responsible for ensuring we remain disciplined in our approach to investing and that clearly established investment guidelines are adhered to.

Please give us more insight on your asset management services for individual and institutional clients? Coronation Asset Management is a Fund and Investment Management company. For our Fund Management business, we currently have 3 mutual funds in offering: Coronation Money Market, Fixed Income and Balanced Funds which were launched in September 2017 after a successful and well subscribed Initial Public Offer, as we raised a total of N2.1billion from individual and institutional clients. Today, we are proud because we have seen a significant growth of 1.9percent in the total asset size of our mutual funds. Our idea of launching 3 funds simultaneously was to meet the investment and risk needs of different types of investors. We continue to build and develop distribution and sales channels that will make these mutual funds easily assessible especially to retail investors. An important value proposition for our mutual funds is that irrespective of how little the investor has to save to meet their financials goals, they will have access to Coronation’s professional investment managers who will ensure their investment goals are met. Mutual funds are very popular investment products that support retail investors to pool monies just like the traditional Esusu schemes. Investors are able to enjoy the benefits of economies of scale and competitive pricing amongst others. On the other hand, the investment management business provides bespoke investment solutions using multiple asset classes, financial advisory and research to individuals and corporate organizations who are looking to meet numerous investment goals. For individuals, these goals could range from targeted savings for asset acquisition such as building a home or buying a car. Others include saving for retirement, and education for children and wards. The investment needs of corporation organizations are often more specialized in nature, and involve finding how best to maximize the return on their assets to adequately provide for whatever liabilities they may have as well as a surplus for profit.

Wednesday 30 May 2018

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BUSINESS DAY

COMPANIES & MARKETS Taxify launches new campaign, urge young Nigerians to get PVC Seyi John Salau

axify, one of Nigeria’s leading ride-hailing company has announced a campaign to inspire more young people to get involved with the political structure in Nigeria by urging them to get their Permanent Voters Card (PVC). This millennial targeted campaign is powered by a in new website. Using the website, users can locate their closest PVC centers, pledge to complete the PVC registration process and get a free ride to their selected center. Uche Okafor, Taxify’s City Manager, in a statement said “We believe cities and countries work best when every-

body has a say. We are excited by the conversations happening both on and offline. Young Nigerians are perhaps for the first time interested in taking charge of their futures and in celebration of this year’s Democracy Day, we want to make the journey to getting a PVC hassle free for everyone,” said Okafor. According to Okafor, everyone can take advantage of Taxify’s offer by visiting www.mypvcjourney.com to find their PVC center, enter current location and get directed to a PVC locator with a list of centers closest to them. Okafor said, “Take the pledge to complete the process and Taxify will send you an email showing the centers operating hours and offering a free

ride code to your designated PVC Registration Centre”. Taxify has said it would continue to push messages directing users to register with the following campaign slogan, “What could you do in the three minutes it takes for your Taxify to arrive? How about starting the process of getting your PVC? Around two-in-every-three eligible 18- to 26-year-olds are still not registered. Put simply, that means they are missing out on having their say.” The tech-driven company has already proven that it can seamlessly connect drivers to riders via its app; it remains to be seen if it can also move more people to get involved in the political process in the coming years.

Business Event

L-R: David Onyemata, plant manager, Mouka Limited; Kashim Akora, director general, National Productivity Centre, and Chris Ngige, minister of labour and employment, during the conferment of National Productivity Order of Merit Award on Onyemata in Abuja.

Career and Work Life Blog launched in Nigeria

career and work Life blog, a platform that several life-transforming events/program will be built has been launched in Lagos. “We have plans to include the Youth Call corner to the blog, where Call members will constantly be kept abreast of career and work life issues before embracing it, owners of the platform have said. According to the Blogger, Favour Erebosi-Samuel, a trained broadcast journalist turned brand and marketing Manager “The idea was birthed out of my experiences at different work places, the culture, values that organization embrace and disregard, how employees are treated well and badly, and sometimes you discover that these employees do not speak

out, they bottle everything up, suffering and smiling, this blog is a community for all 9to5 stakeholders, the CEO, manager, even the cleaners” We sure have something for everyone she explained. “We have seen several bloggers, popular and unpopular blogs and bloggers have emerged in Nigeria since the social media surge. We have had a few bloggers featured on CNN. These bloggers have carved a niche in the following category; lifestyle, celebrity, food, gossip, Tech etc.” We have also seen career websites in Nigeria, but this new blog is not only on Career but also on how people can manage work and personal life issues, one of the categories in the blog is the “workpalaver share it” In this category,

employees and employers are expected to share their work place experiences, the good and the bad. Favour further revealed that the blog is a platform that several life-transforming events/ program will be built on, “We have plans to include the Youth Call corner to the blog, where Call members will constantly be kept abreast of career and work life issues before embracing it, this is like preparing them for 9to5 life. 9to5.com.ng also publish articles that look at a variety of issues revolving around an imbalance of work and leisure time. We provide career advice to help people of all ages and profession achieve a healthy balance of work and relaxation through insightful featured articles that contain tips and recommendations.

Microfinance experts canvass for increased financing for agriculture Idris Umar Momoh

he need for Government to increase budgetary allocation to agricultural sector to enable financing get to the rural areas was topical at the 4th Nigerian Microfinance Annual Symposium held recently in Benin-City. Microfinance bank experts, who advocated for the increase in budgetary allocation to the agricultural sector in a one-day symposium with the theme, “Serving the Agricultural Sector Through Micro-Banking” noted that the increase in allocation would enable governments to set aside funds to the Microfinance banks to fund rural farming. Some of the experts include

Godwin Ehigiamusoe, founder and managingdirector of LAPO Microfinance bank limited, Rogers Nwoke, managing director of Hasal Microfinance Bank Limited, Taiwo Joda, managing director of Accion Microfinance bank limited and Akin Lawal, managing director of Nigerian Police Force Microfinance bank Plc. The experts opined that agricultural activities, which are the mainstay of the rural dwellers economy will remain unproductive to contribute meaningfully to food security if not adequately funded. In his remark, Rogers Nwoke, who is also the National President of Nigerian Association of Microfinance Banks lamented that the sum of N220 billion initially set aside to Microfinance bank was however

allegedly diverted to empower Medium, Small, Micro Enterprise (MSMEs). He however urged the federal government to restate the N220 billion fund and refocus it to Microfinance banks as rural agricultural scheme to enable it lend to rural farmers. He said in 2012, Hasal Microfinance bank spent about 27 per cent of its portfolio on agriculture, and that the money would have been lost if not for the funding from the now defunct Millennium Development Goals. Nwoke noted that Microfinance banks are willing to lend to farmers but they are however constrained by paucity of funds. On his part, Taiwo Joda of Accion urged the central bank of Nigeria to increase its funding to agricultural sector.

L-R: Nnenna Ikpeme, perfect city manager, customer development, Unilever Nigeria; Angelina Ibikunle, pupil of Ken Ade Private School, Makoko; Bawo Ayeseminikan, principal, Ken Ade Private School, Makoko; Julius Awhansu, pupil of Doyisem Best Academy, and Ayodele Alabi, sustainable business manager, Unilever Ghana and Nigeria, at the Unilever Children’s day celebration in Makoko, Lagos.

Olorunfemi Edwards, Globacom’s territorial sales manager, Lagos Island, with pupils of Doreen School, Alakija, Lagos, at the Lagos Educational Festival sponsored by Globacom as part of activities commemorating 2018 Children’s Day.

L-R: Keye Quadri, chief executive officer, Just Interior & Cynosure Limited; Maymunah Kadiri, managing director, Pinnacle Medical Services; Bukola Smith, executive director, business development of First City Monument Bank (FCMB); Oyinkansola Alabi, managing director, Emotion Clinic, and George Ogbonnaya, group head, business banking of FCMB, during a training organised by FCMB for Women Entrepreneurs in Ilorin, Kwara State.

Politics & Policy

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Wednesday 30 May 2018

APC to Nigerians: PDP is full of falsehood, ignore them

INNOCENT ODOH, Abuja

he All Progressives Congress (APC) has warned Nigerians to ignore the antics of its rival, the opposition Peoples Democratic Party PDP stressing the PDP has found new proclivity for constantly spewing falsehood in the name of opposition rhetoric and politics. The APC gave this warning in a statement signed by its spokesman, Bolaji Abdullahi made available to BusinessDay while reacting to the PDP allegation that the APC is corrupt and planning to clampdown on opposition, the ruling party said “this comes against the backdrop of a recent statement by a spokesperson of the PDP in which the APC is accused of among others corruption, sectionalism and opposition clampdown, in the lead up to the 2019 elections. “While it is a widely-known fact that suppressing the opposition was the stock in trade of the PDP during its defunct 16-year rule, the APC has definitely not inherited this undemocratic practice in its governance style both in its internal politics and the country’s administration, under President Muhammadu Buhari.

Bolaji Abdullahi

“Nigerians will recall how past PDP administrations illegally and routinely used state apparatus to harass opposition figures as seen in the attack on the APC data centre, blockade of the air and road routes to prevent movement of then opposition leaders in the leadup to the 2015 elections, among other clampdowns that are too numerous to list,” the statement said. The APC further charged that the PDP is quick to forget the divisive, insensitive and sectional politics it played during the 2015 electioneering campaign when its women’s wing led by a former

first lady denigrated the country’s north as parasitic and unwilling to educate and cater for its young populace. It added that the PDPled administration at the time as a matter of fact, pointedly regarded the Boko Haram insurgency as a northern affair. “The PDP without an iota of proof, rather spewing laughable conspiracies accuses the APCled administration of ‘barefaced looting’. Elections are around the corner and Nigerians are not gullible. They see through the PDP’s diversionary antics aimed at deflecting attention from the wanton culture of impunity and

Ekiti guber: Despite 77- member APC campaign council, PDP will win- Ononuju INNOCENT ODOH, Abuja

public affairs analyst and a chieftain of the People’s Democratic Party (PDP), Katch Ononuju, has said that despite the massive force being mobilized by the ruling All Progressives Congress (APC) to ‘capture’ the Ekiti state Governorship seat, PDP might still carry the day in the Ekiti election because incumbent Governor Ayo Fayose has a lot of popularity in the state. Katch Ononuju told BusinessDay at the weekend that the 77-member Campaign Council of the APC may split into factions of the legacy parties that formed the APC over disagreements that are allegedly brewing between Bola Ahmed Tinubu led faction of the Action Congress of Nigeria (ACN) and the Congress for Progressive Change (CPC) faction of President Muhammadu Buhari. The All Progressives Congress (APC) on Thursday appointed the Governor of Kebbi State, Abubakar Atiku Bagudu to head the Party’s

77-member National Campaign Council to ensure victory for the Party’s governorship candidate, Kayode Fayemi, who will face Olusola Eleka of the PDP at the July 14 Ekiti Governorship Election. Ononuju said that APC stalwart Bola Ahmed Tinubu is not likely to give support to Fayemi because since the former Minister of Solid Minerals came to the centre, he allegedly teamed up with the President Muhammadu Buhari’s CPC faction of the APC coalition to sideline Tinubu’s faction of the Action Congress of Nigeria (ACN). He added that Fayose has courted friendship with the Tinubu faction, which is desperate not to be swallowed up by the CPC faction. “The PDP is likely to go into alliance with the Bola Tinubu faction of the ACN. Since Fayemi came to the center, he has teamed up with the CPC faction against the ACN. What you are seeing is desperation to unleash their alliance members and those who will work to get Ekiti. But that day will come and the people on ground might defeat

them. The 77 members of the APC campaign council are mostly not from Ekiti state and all politics are local. “It is likely that day will come and only the indigenes, the local players will be there and these 77 men and women will just be in their hotel room without any serious impact. The fact that the APC failed to coalesce into a national political party simply means that the interest of the factions that formed the coalition must be protected by its members. Nobody wants to be swallowed by another faction. “Fayemi wants to drag the ACN faction into the pockets of the CPC and that is what the ACN seems to be resisting. Tinubu’s wife once complained that after helping the APC win the 2015 elections, her husband was thrashed and thrown in to the dustbin. It is now that Buhari wants to contest another election that he wants to use Tinubu again. So history will see if Tinubu will allow himself to be used and dumped two straight times,” he said.

corruption it instituted when it held sway. “Do we forget the PDP administration’s unwillingness to operate the now implemented Treasury Single Account (TSA) which has greatly plugged government revenue leakages? Do we forget the voodoo economics, reckless fiscal policies and shocking pillage of the public treasury perpetuated during past PDP administrations? Do we forget confessions by the immediate-past finance minister and coordinating minister of the economy, reporting “zero political will to save” under the immediatepast administration. Do we forget the $2.2 billion anti-insurgency funds fraudulently diverted and disbursed by the erstwhile National Security Adviser to political associates of the immediate-past President and PDP members, while our military personnel on the frontlines were ill-equipped and demoralized, resulting in many avoidable deaths and the maiming of our gallant men in uniform? “For one, Nigerians generally agree that the era of impunity is beginning to disappear from our national life. There is a gradual acceptance of the best practice and time-honoured values of honesty,

hardwork, patriotism, abhorrence of corruption, accountability and integrity in our everyday life. “PDP’s narrative is anchored on the belief that if they continue to throw these wild allegations around, somehow Nigerians will forget what they truly represent and the atrocities that they have committed against the country. Alas, Nigerians are wiser now and our memories are longer. We can forgive, but we will not forget. “Change is perhaps the most difficult idea to implement in our societies, but sometimes, it becomes necessary or even inevitable, just as Nigeria found itself in 2015 because of PDP misrule. Whatever is left of PDP, after years of suicidal gluttony, can only whine about imaginary persecution while wilfully ignoring the efforts being made to literally clear the mess they created and build a new Nigeria in line with the Change Agenda promised the electorate. “We urge Nigerians to remain steadfast to our collective task of achieving the Nigeria of our dreams. With the prayers and support for the administration, we will propel the country on the path growth in all facets,” the statement said.

Inability of three tiars of government to operate freely; threat to democracy SIKIRAT SHEHU, Ilorin

peaker of the Kwara State House of Assembly, Ali Ahmad, the has identified inability of the three arms of government to function independently as one of the problems threatening the nation’s democracy. Ahmad, in a statement issued on Monday by his Special Assistant on Media, Shuaib Abdulkadir, to commemorate Nigeria’s 19 years of uninterrupted democratic governance, stressed that it could get better. The speaker who maintained

Ali Ahmad

that though every arm of government must find means to accommodate one another for the good of the citizens, posited that it was expedient that they work collectively but independently as enshrined in the 1999 constitution. He pointed out that irrespective of the challenges encountered over the years, democratic culture is evolving steadily in the country, just as he noted that, “though the achievements recorded might be short of the citizens’ expectations in all ramifications, there were signs that as a nation, we have continued to learn from the past mistakes.” He challenged governments at all levels to work assiduously towards ensuring that the dividends of democracy reach all the nooks and crannies of the country. “Nigeria is blessed with both human and capital resources, if harmonised successfully the nation stands to benefit immensely”, he said. Ahmad appreciated various roles played by individuals, group of people and social groups towards the attainment of the ‘hard earn democracy’.

Wednesday 30 May 2018

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BUSINESS DAY

Politics & Policy

Why Nigeria’s budgets fail - Kingsley Moghalu INNOCENT ODOH, Abuja

residential aspirant under the platform of the Young Progressive Party (YPP) Kingsley Moghalu, has said that the structure of the country is the reason budgets have witnessed persistent failure over the years. This was part of his submission while declaring for the YPP during a press conference in Abuja stressing that the “Nigerian political economy is a lie.” “We know that the political economy of Nigeria is a lie. That is why Nigeria is not functioning today, that is why for the past years, our budgets are perennially late and when they are eventually passed, months after they should have been passed, performance is never more than 20-30 per cent. This is something that goes into the core of governance,” he noted. He averred that there is no vision behind the budget adding that a budget in which 70 -80 % of budgets perennially goes to paying civil servants can never lead to development. “How can a country develop like that? 1 or 2 million people are taking 60-70 % of the federal budget and we think is normal, we are not serious, we don’t want to address it because politically it is seen as unpopular,” he said. He also frowned at the unitary system Nigeria operates in name of federalism and advocated for restructuring as the only panacea to the crisis of budgeting in the country. “Now everyone knows that a part of my vision is constitutional restructur-

SIKIRAT SHEHU, Ilorin

Kingsley Moghalu

ing so that this country can function economically. The country is failing because the wealth of this country is trapped into what although officially is a federal system but in reality is a unitary system and all the decisions and policies are made at the centre. “Until we have real fiscal federalism, with resource control and organize Nigeria along the federating units of the six geopolitical zones who generate their own resources and manage their resources and pay a tax to the Federal government, we will continue to have non -functional budgets in this country,” he noted. He added that the nation will experience immense prosperity if Nigeria is restructured. “We need restructuring so that this nation can prosper. The reason why I advocate for restructuring along the lines of geopolitical

zones is that we have what is called economies of scale. Each of the zones is big enough to provide markets for trade and manufacturing and in each of those regions will have competitive advantage for internal trade and external trade. “You will see the potential of this country unleashed. But some people don’t want it, they want to keep us the way we are- non- functional and poor because it suits their small views, which they want to maintain in the absence of a real world view. “So, budgeting will be more essential under a restructured federation because budgeting will not be based on a natural resource only.90% of Nigeria’s foreign exchange come from crude oil, so once the oil prices sneezes, we catch pneumonia and we cannot continue like that,” he noted.

Oshiomhole begins campaign for APC chair, visits Kalu JAMES KWEN, Abuja

head of the next month’s National Convention of the All Progressives Congress, APC, former Edo state Governor and Adams Oshiomhole has begun the campaign for the position of National Chairman. Oshiomhole who is the anointed candidate of President Buhari and APC Governors, recently declared for the position at an elaborate ceremony in Abuja where he promised to revamp the APC for victory at the general election. The former Edo State Governor started his campaign in Abuja

APC congress: Appeal committee confirms no petition in Kwara

when he visited former Abia State Governor and APC chieftain, Orji Kalu during which he vowed to sanitize the party. He promised not to allow people with questionable character entrance into the party if elected as the party’s next chairman at the forthcoming APC National Convention. “I believe, working along with leaders like you and other leaders of our party to begin the process of building a functional, democratic, masses-based, membership-driven, membership-funded political party that is accountable to its members. “That way, Nigerians will begin to see over time the difference between

the APC and any other party. When I read newspapers, I see people wondering aloud, what is the difference between Party A and Party B? You really cannot fault them because the difference is so difficult to define but I believe that going forward, we must begin to consciously work towards that”, he said. Oshiomhole further said that: “If a reactionary element wants to join the APC and by his antecedents, we feel that his values, his actions do not conform to the core values of social democracy, we should be able to engage him and say, ‘Mr Applicant, maybe you have to look elsewhere’.

he All Progressives Congress (APC), congress appeal committee in Kwara State has confirmed that there is no petition or appeal against the just concluded state congress conducted by the national secretariat of the party. Osita Egwuatu, the Chairman of a three-man committee who said they were in the state for a 3-day assignment on election petition that might have arisen from the last Saturday state congress election. He confirmed that the committee has not received any complaint against the congress or petition from any parallel camps. Speaking with journalists in a press briefing at the APC secretariat, the venue for the appeal, Egwuatu promised to present his reports to the appropriate quarters in a way to reflect exactly all he had seen and observe in Ilorin as an independent head of the appeal committee. Responding to question on rumours that his committee was caged by some interests in the state, Osita said: “You all can see which cage they are insinuating. We are here for fact findings. Did you journalists found me inside a cage? We have said it openly that whoever has a petition should come forward with it but as we speak, nobody came out to protest the outcomes of the congress and no one, at least to the best of my knowledge was prevented from seeing me.” Earlier Osita and his team, Raji Akinbugbe and Mallam Gafar had paid a courtesy call on Kwara State Governor, Abdulfatah Ahmed at the government house where it was made public that a State Congress appeal committee was ready to receive petitions. The state Governor, Abdulfatah Ahmed in his reaction assured that the state will continue to strengthen the party in order to give it the much desired support that will ensure victory and sustenance in power at the national level. Ahmed further stated that the congress election was a reflection of what happened at the ward and local government congresses

in the state which, he said, was largely due to the inclusive process that allows input into the selection and election processes. He said: “the successful ward, local government and state congresses was largely due to the peaceful environment and most importantly the inclusive process that the state party system allows”. According to him, the inclusive style of the party allows for ventilation of differences and amicable resolutions noting that the appeal committee is not unlikely to receive petitions but may not be a genuine one. Meanwhile, the Kwara State chapter of the All Progressives Congress (APC) has congratulated its newly elected state chairman, Ishola Balogun- Fulani and other elected party officials at the ward, local government and state levels. The party in a statement by its state publicity secretary, Sulyman Buhari, however, urged all elected party officials to immediately settle down for the task of propelling and navigating the party to win all contestable seats in the 2019 general elections. It expressed satisfaction that the ward, local government and state Congresses of the ruling party were held in peaceful atmosphere, devoid of wrangling. The statement reads: “Like the APC Congress Committee, officials of the Independent National Electoral Committee (INEC) and other observers have said, the congresses held in Kwara State at the ward, local government and state levels were not only credible, they were also peacefully and transparently conducted. “Evidently, other state chapters of our party have a lot to learn from how Kwara APC has consolidated on inclusive and participatory democracy during the last party congresses. “The party commended the leadership roles played by its party leaders in Kwara State, particularly, Senate President, Bukola Saraki and Governor Abdulfatah Ahmed. “The worthy roles played by the leaders greatly ensured the success of party congresses in Kwara State. The APC wishes all elected party officials successful tenure.”

2019: Nigeria’s presidential aspirant addresses UK Parliament As part of build up to the 2019 general election in Nigeria, one of the leading Presidential aspirants, Ali Soyode (Alistair) has addressed United Kingdom House of Commons on his ambition to become the country’s number one citizen, a statement sent to BusinessDay at the weekend said. During the event, which brought together leading Nigeria’s community leaders, British political leaders from Councillors to Members of the Parliament, the aspirant presented his views on Africa as the continent of choice and Nigeria’s readiness to work with the British establishment especially in the areas of Health and security. Soyode talked about the chal-

lenges and opportunities Nigeria offers the diaspora, international partners and his ‘YEEEEEEES’ manifesto which according to him will build bridges of development in Nigeria and set the country on sound footing. He stressed that the 2019 election needs all eyes and hands on board to make the 2019 election a success, freely and fairly conducted for the benefit of all electorates. Ali, who is the former CEO of BEN Television, Europe’s first ethnic media satellite and former Chairman of Nigerians in Diaspora Organisation, recently declared to joined the race to the presidency in Abuja. He promised a total overhaul of the security forces

especially the Police and zero tolerance to disobedience of laws of the country. His declaration focused on YEEEEEEES which declared the following as its cardinal points he called bridges which include; The bridge to a brighter future for the Youth and Young ones; The bridge to real reforms and access to Education and the bridge to wealth creation and Employment. Others include; The bridge to more power, lights and Energy; The bridge that will unleash skills, affordable health care, agriculture etc. through Enterprise; The bridge between young ones in solidarity of making Nigeria better and greater with the Elders; A bridge based on

Expertise, Experience and Equality and The bridge to reform, empower and effective secure Security. Speaking at the event, Jeremy Lepfroy British Member of Parliament (MP) and a member of the Health committee called on African countries to deal with the rampaging issue of malaria and follow other countries’ commitments to totally eradicate the challenges associated with Malaria. The MP had earlier spoken on the Parliamentarian House floor that the al-Barnawi faction of Boko Hara, which returned 104 of the 110 girls they abducted on 19 February 2018 from the Government Girls Science and Technical College in Dapchi, Yobe State and wishes

these young ladies every success in rebuilding the life that they were torn from. He further noted that there are some who have not been returned, including Lear Sharibu, who has reportedly continued to be held due to her refusal to renounce her faith. Also speaking at the event, Jim Shannon MP Shadow DUP Spokesperson (Health and Human Rights) and representing Strangford, Ireland in the House of Commons since 2010 spoke on the need for government across Africa to provide security for their citizens to practice their faiths freely without intimidation or attacks. He called on the provision of effective security on lives and properties.

BUSINESS DAY

Wednesday 30 May 2018

In Association with

RMB Nigeria plans wider range of products to meet customers’ needs Rand Merchant Bank (RMB) Nigeria, which opened its doors in Nigeria as a merchant bank in April 2013, will continue to leverage its merchant banking license to develop new platforms to grow businesses in future, Michael Larbie, managing director/CEO said in an interview with journalists, Hope Moses-Ashike was there. Excerpt. About Rand Merchant Bank (RMB) Nigeria and Merchant Bank (RMB) Nigeria is a subsidiary of FirstRand, one of the largest financial services groups in Africa. As a leading African corporate and investment bank, we seek to offer our clients innovative advisory, financing, trading, corporate banking and principal investing solutions. In Nigeria, we have over 15 years of transacting experience ranging from advising on infrastructure projects to funding various transactions in real estate, oil and gas, manufacturing, telecoms, steel, fastmoving consumer goods, and cement, among others. RMB Nigeria was licensed in 2012 and became fully operational in April 2013. Prior to that, we had a representative office in Lagos from 2010. We bring our wealth of global and African experience accumulated over the years to the Nigerian banking landscape both from within the country and from other jurisdictions. Over the past five years, we have created a core client base of solid local companies, multinationals and financial sponsors. Our very targeted approach has enabled the bank to meaningfully support key clients through different economic cycles and strengthened relationships as a trusted partner. Having been around for five years, what milestones have been achieved over the period? We opened our doors in Nigeria as a merchant bank in April 2013. Being

awarded a merchant banking license and starting a new business were our first milestones. Every client we have engaged and worked with was, and still is, a key milestone. Emerging from the recent economic downturn stronger than we were before it started, was a milestone. The annual growth of our balance sheet and profits are others. We are also proud of the number of pioneering transactions in which we have participated over the past five years including; advising GB Foods and Helios on their acquisition of Watanmal West Africa, advising Actis on its acquisition of Sigma, advising the sellers in the sale of Ikeja City Mall to Hyprop Investments and Attacq, as well as the ongoing demutualization of the Nigerian Stock Exchange. The part funding of Azura Power, a greenfields independent power producer is also a good example. We have also availed trade and working capital facilities to key clients such as Unilever, BUA, Dangote, AIG Group, Dufil and Seven – Up. In Oil & Gas, we have participated in the Shell/NNPC, Seplat RBL and Petrobras fund raisings. RMB Nigeria also acted as joint-issuing house and bookrunner on the African Development Bank’s sevenyear medium-term Naira note, a notable capital markets intervention. In 2017, the FirstRand Group added RMB Nigeria Stockbrokers to its Nigerian presence reinforcing its long-term vision to be a full-service financial player in this market. Apart from banking capabilities and relationships, RMB Nigeria takes pride

Michael Larbie

in being a good and leading “banking citizen”. The bank’s strong corporate governance and conservative approach to risk management and strict compliance

We are very proud of our diverse talent pool who do the hard thinking. Our strength is our ability to bring local and international solutionist thinking to the table

with regulations and banking best practice has seen a very measured approach to doing business. We are not trying to necessarily become the biggest bank, but rather aiming at becoming a trusted, reliable and solutionist partner to our clients and other stakeholders. In which sector of the economy do you have most of your clients and investments, and why? Our client base cuts across all sectors of the Nigerian economy - fastmoving consumer goods, manufacturing, telecoms, oil and gas, agro-processing, services, and infrastructure. On balance, we are currently more skewed towards manufacturing. In our Global Markets business, majority of our clients are in financial services sector – Banks, Insurance,

PFAs and Asset Managers. How have you handled competition? Increased competition is a testament to the resilience of the Nigerian economy and to the potential for future economic growth. We embrace competition as we believe there is room for multiple players to fulfill the needs of the broader market and economy. To promote economic growth and development, Nigeria requires significant amounts of capital which a few banks alone cannot provide. Each bank has a limit as to the amount of funding it can supply both to a country and to different sectors; it is therefore wise to diversify exposures. We prefer to partner with other financial services players if it is to the benefit of our clients. Given we are a merchant bank our competition includes other merchant banks, retail & commercial banks and capital market operators. We also see other banks as partners with whom risks can be shared and deals jointly structured. What unique benefits - products, ideas, skills or services - do you bring to the Nigerian economy? RMB is an innovative and solutions-driven bank. We believe in building longterm sustainable relationships with our clients by providing them with innovative ideas and solutions to suit their unique circumstance. We bring hard thinking and a can-do mindset to issues and opportunities. We are very proud of our diverse talent pool who do the hard thinking. Our strength is our ability to bring local and international solutionist thinking

to the table. We structure the most appropriate financing solutions to meet the needs of our clients, whether extending project finance, structured lending or plain corporate lending. We leverage the global reach of FirstRand, its higher ratings and access to efficiently priced dollars to support our clients. What is the outlook for RMB Nigeria in Nigeria? RMB Nigeria will continue to leverage its merchant banking license to develop new platforms off which it will grow businesses in future. We plan to introduce a wider range of products to suit our clients’ needs. We are busy engaging with our clients, regulators and other stakeholders to roll out several risk management and structured products. RMB Nigeria recently introduced a stockbroking business which we will launch during our five-year anniversary celebrations in June. We are continually looking to invest in the Nigerian economy and are interested in partnering with businesses in various sectors. The outlook for the country is positive depending on the outcome of the election next year. We anticipate stronger economic growth and a more stable currency in the future and are positive about investments in the country. The steady decline in inflation should ultimately lead to a reduction in interest rates and consequently increase the potential for investments in a variety of sectors thereby aiding the diversification of the economy. We look forward to continuing our partnership with clients and remaining relevant to them.

Wednesday 30 May 2018

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BUSINESS DAY

Wednesday 30 May 2018

BUSINESS DAY

Wednesday 30 May 2018

C002D5556

Pension Today

BUSINESS DAY

In Association with

Accrued rights: Ensuring sustainable gains of pension industry

he gains of Pension Reform in Nigeria must be sustained, by ensuring that key objective of the scheme which is to ensure that those who retire from employment have access to their pension as and when due. Paddy Ezeala, a communication, development and management specialist based in Enugu in this article looks at the industry, impact of delay in payment of accrued rights among other issues. It has been reiterated several times that the Contributory Pension Scheme (CPS) is arguably the most successful initiative of the Federal Government since the return to democratic governance in 1999. The plight of pensioners under the previous Defined Benefit Scheme (DBS); before the enactment of the Pension Reform Act in 2004, is not worth recalling. However, it is worth emphasizing that while the DBS accumulated a deficit of more than 2 trillion naira before 2004, the CPS since then has amassed the sum of 7.8 trillion naira as Funds under Management (FUM). Comparison of the two schemes with regard to effectiveness and functionality in Nigeria is akin to evaluating the contrast between night and day. There is no doubt that the CPS has given rise to a pension industry that has the potential to be central to Nigeria’s economic development. The Federal Government continues to fall back on accumulated pension funds to support infrastructural development while the industry itself has been generating job opportunities. The National Pension Commission (PenCom) has been doing a great job of strictly regulating the new pension industry and making it impervious to abuses. While the pension industry is obviously gaining as-

cendancy, it is important to plug all the holes that make unfettered rendition of pension administration tedious or even impracticable. It is important to point out these impediments and address them conclusively in order to forestall a reversal of the gains of the industry. Apart from the threat of some failed legislative manipulations to accommodate some interests and the larges cale ignorance of the workings of the scheme even in high places, another sore point is the lateness in the payment of Accrued Rights to retiring or retired workers. While Accrued Rights are largely entitlement of workers before the advent of the private sector – driven Contributory Pension Scheme, its late payment by especially, the various tiers of government renders pension administration cumbersome or even impossible. This is because Accrued Rights have to be lumped into Retirement Savings Accounts (RSAs) before lump sum and Programmed Withdrawals could be worked out for retirees. Most, if not all retirees from government establishments for now have their entitlements straddle both the DBS and the CPS. It is worth re-noting that lack of prompt payment of entitlements by government is adversely affecting the smooth running of the new CPS. Those who do not understand these intricacies would conclude that the new pension scheme is not as rosy as being touted. For a proper understanding of the quagmire in which Pension Fund Administrators (PFAs) somehow find themselves, more light should be shed on Accrued Rights or Benefits. Accrued Rights is a total amount of a pension plan as on a specified date. They are usually in agreement with the terms of the pension plan and are based on the par-

ticipant’s salary package and length of service. In Nigeria, it is not different. It is a term used to describe what the Government owes its workers who have been in service before the commencement of the Pension Reform Act, 2004 (Reviewed in 2014). It is recognised as an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds. When the Government employee retires, the bonds are liquidated and added to the retiree’s balance in his/her Retirement Savings Account (RSA) managed by a PFA. It is the addition of these two that makes up the retiree’s entitlement. Sometimes, the Government finds it difficult to cash back Retirement Benefits Bonds domiciled in the Central Bank. For instance, the Federal Government unpaid Pension Accrued Rights for the period covering May, 2017 to April, 2018 stand at N97.55 billion. The major challenge now is that, as a measure to ensure that the Government settles the ever mounting backlog of Accrued Rights, PFAs are not allowed to grant access to RSAs until the Government releases Accrued Rights. This

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

The Government should look beyond payment of contractors when the need arises to inject liquidity and reflate the economy. Payment of retirees’ entitlements is also a way of circulating liquidity implies that in the Contributory Pension Scheme, government retirees can only get their entitlement when their Accrued Rights are released by the Government. Pension reform in Nigeria has been informed by the desire of the Federal Government to ultimately improve the welfare of retirees and eliminate institutional corruption and unnecessary bureaucracy or red tape. The huge pension funds now

available to support economic development is an icing on the cake. The plight of pensioners in Nigeria across board before the CPS was so bad that workers received condolence visits to their homes once their retirement took effect. It is therefore unthinkable and unacceptable that any impediment to the smooth rendition of the new pension scheme could be tolerated. It is true that we are emerging from economic headwinds that affected every sector. It is also a known fact that economic downturns, apart from bringing enormous stress on available resources, most times negatively affect the real value of currencies. It then becomes a double tragedy for a retiree awaiting his entitlements when currency is plunging and the Return on Investment is below inflation rate. The economic scenario and on ground reality are not such that workers should retire and wait for months or years before getting their entitlements. Pension administration should be viewed holistically by the various tiers of government, most especially, as the country has very poor

social security foundation and warped reward system. Serving the Government and retiring is not a crime and therefore not punishable. The Federal Government should prioritize payment of retirees’ entitlements and facilitate the work of Pension Fund Administrators. The Government should look beyond payment of contractors when the need arises to inject liquidity and reflate the economy. Payment of retirees’ entitlements is also a way of circulating liquidity. While the Federal Government struggles to offset the backlog of pension liabilities that it is burdened with, most state governments are completely unperturbed. Some have neither promulgated the necessary pension laws that would enable them key into the CPS nor addressed the years-long accumulated pension liabilities; not even monthly pension is paid as and when due. Many states have to take their cue from Lagos State Government that is to a great extent up to date in meeting its responsibilities with regardto the old and the new pension schemes. With the successful promulgation and review of the necessary pension laws in the country, a different law to enforce compliance at all levels in the public and private sectors might be necessary. Moral suasion has not worked. Without prejudice to the good work of the Pension Transition Arrangement Department (PTAD) and the enormous challenges it is faced with, there is no doubt that a drastic action has to be taken to address the backlog of pension liabilities in the country. Otherwise, we would have been presenting ourselves as a country of insensitive and bile-hearted people inured to hardship, incurious and insular with regard to the plight of an ordinarily respectable segment of society.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

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Wednesday 30 May 2018

E-mail: insurancetoday@businessdayonline.com

Nigerian insurance industry delegation to the British Insurance Brokers Association (BIBA) 2018 Conference in Manchester (UK). led by Sola Tinubu, president of NCRIB.

L-R: Representative of the Chief of Naval Staff, Rear Admiral U.B. Onyia, Director of Administration, Naval Headquarters, presenting the “Best Oil & Gas Insurance Company Award to the Executive Director, Branch Operations & Business Development, Sovereign Trust Insurance Plc, Niyi Odusi, flanked by Akin Akinrinmade, Senior Manager, Energy Department, Sovereign Trust Insurance Plc and Maryanne Atsenokhai of the Abuja Office at the 2018 Africa Oil And Gas Globe Awards organised by the Institute of Oil & Gas Research and Hydrocarbon Studies in Abuja

Babington-Ashaye’s 10-months of awareness creation, education for insurance industry …as membership enrolment at CIIN rises 12.5% …to launch revised ethics code July Stories by Modestus Anaesoronye

hen Funmi Babington-Ashaye, president and chairman of council of the Chartered Insurance Institute of Nigeria (CIIN) assumed office on 25th July 2017, as woman and 48th president of the Institute, not many believed she was going to achieve her set goals in just a tenure of one year. With lot of dreams on insurance awareness and education, the concern was not only on her ability to get needed funding within the time frame, but also on whether as a woman she will have all the energy required to drive the projects. With the theme of her Presidency being “Insurance-imperative for Education and Enlightenment”, targeted at strategically addressing observed information gap

that exists between the insurance profession/industry and the insuring public/other stakeholders, Babington-Ashaye has not only achieved her set goals, but has also succeeded in putting insurance industry on a higher scale. On insurance awareness, Babington-Ashaye was able to distributed insurance textbooks across different secondary schools in Nigeria as well as tertiary institutions offering insurance; trained heads of department of universities and polytechnics offering insurance, as well as publication of e-newsletter for the Institute. All of these cumulated in increased membership enrolment to over 12.5 percent currently. Other efforts towards awareness creation includes ‘Catch Them Young’ project where over 700 Youth Corps Members in Lagos were exposed to insurance careers. At the end of the programme, Insurance Agency Certificates were

issued to them with referral letters to aid their internship in insurance firms during the course of their service year. There was also establishment and accreditation of insurance department in higher institutions,

Babington-Ashaye

where the Niger Delta University in Bayelsa State was accreditated for a BSc Insurance programme which has been approved by the National Universities Commission. Other areas of success by Babington-Ashaye led CIIN include collaboration with the University of Lagos on introduction of an MSc degree in Insurance and Risk Management by the university; Exchange Programme with insurance market in Hong Kong; Collaboration with CII, UK aimed at enhancing the quality of our training programmes and examination processes; as well as College of Insurance and Financial Management. Another success area was regular advocacy, which involved reaching out to key stakeholders, policy makers including top Government functionaries to persuade them to create an enabling environment for insurance to thrive in their domains and also for them to em-

brace the Insurance philosophy. Pursuant to this, the CIIN during her tenure visited and engaged key public functionaries to encourage them to see insurance not only as a great profession but also to leverage insurance products to secure public sector assets and enhance their ability to create wealth for this and future generations. To ensure that members continue to discharge their professional duties with high ethical disposition, the revised edition of the Code of Ethics for Insurance Practitioners in Nigeria will be launched during the National Insurance Conference which will be held from 8th – 10th July 2018 in Abuja. This Code, which applies to all Insurance Practitioners, clearly define how they should deal with issues and their responsibilities to clients, the general public, government, regulators, the Institute and their professional colleagues, Babington Ashaye stated.

Micro pensions, Multi-Fund structure to redefine pension industry in Nigeria – Stanbic Ibtc pensions

ew measures taken by the National Pension Commission (PenCom) to sustain growth of the Nigerian pension industry including micro pension scheme, multi-fund investment structure and pension account transfer window are capable of putting the sector into stronger footing, says Stanbic IBTC Pension Managers Limited. The company, Nigeria’s biggest pension fund administrator (PFA), spoke against the backdrop of the recent announcement by the industry regulator that the multi-fund structure would become operational from July 1, 2018.

Speaking during a media interactive session in Lagos Chief Executive, Stanbic IBTC Pension Managers Limited, Eric Fajemisin, said such reforms and innovations are necessary to maintain the strength and depth of Nigeria’s Contributory Pension Scheme (CPS). The session was one in the series of strategic approaches by the PFA to engage industry stakeholders on ways to strengthen the Nigerian pension industry and boost wider participation by Nigerians. Fajemisin noted that the Retirement Savings Account (RSA) MultiFund Investment structure, which replaces the “one-size-fits-all” ar-

rangement that puts all active contributors into one RSA Fund, would resolve the challenge of asset-liability risk management faced by the operators. By aligning the age and risk profile of RSA holders to match the four funds, contributors would have a better chance to earn improved returns on their investments in proportion to their risk appetites. The different categories of the multi-funds structure are Fund 1, Fund 2, Fund 3 and Fund 4. Fund I is targeted at people of 49 years and below who in the quest for higher returns are willing to take more risks. Fund 2 is aimed at people who are

aged 49 years and below and still working but are satisfied with moderate returns and levels of risks. Fund 3 targets people 50 years and above but still working and have very low risk appetite. In Fund 4 are retirees who have the lowest risk profile of all categories. Among its other benefits include improved standard of living for the elderly, safety of funds and access to other incentives, such as mortgage facilities and health insurance. In addition are flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country.

Speaking on the micro-pension scheme, Fajemisin said it would help in deepening asset accumulation in the country, and provide the crucial capital required for investment in critical sectors of the economy. As an initiative designed to cover an estimated 70 percent of Nigeria’s working population in the informal sector, the scheme offers enormous benefits to the societyand ensure improved standard of living for the elderly, guarantee the safety of funds and may provide access to other incentives, such as mortgage facilities and health insurance, regardless of challenges associated with its seamless implementation.

Wednesday 30 May 2018

C002D5556

BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

‘It is bad risk management if we attempt all oil and gas business in Nigeria’ Oye Hassan-Odukale, managing director/CEO, Leadway Assurance Company Limited in this interview on the sideline of the company’s Annual General Meeting held in Lagos spoke on its soaring leadership position in the insurance industry, developments in the market, mergers and acquisition plans and why insurance companies are averse to volatile oil and gas risks. Excerpts Leadway in 2017 delivered another impressive result despite the challenges in the business environment, how were you able to do all of these? ell, we thank God for what we have achieved. We are simply doing what we know how to do best. We try to hold down our cost base, we try to monitor our management expenses. The business was very good over the past year and that is the result we are seeing. There are other insurance companies in the market that also posted comparable results. Our premium base and the profitability were very healthy, and we thank God for that. Could you tell us how much your retail business is contributing to your overall performance? We are a composite insurance company. We have life and non-life business, and if you look at our portfolio, our life segment is the biggest component of the business. We do a

lot of annuity and that is retail because you have to deal with a lot of individual clients here. So, the life business is pure retail and that is the largest chunk of our business. The non-life is general business and it is largely broker driven, as well as agency. We know as a company you are big, but there is this assumption that insurance companies in Nigeria do not have the capacity to play actively in oil and gas risks, what is your take on this? When I hear people say insurance companies don’t have the capacity to do oil and gas or those kinds of risks, I laugh. Oil business is an international business and you must have the big number to do it efficiently. So, insurance companies in Nigeria cannot do all the oil and gas business emanating from here, it is bad risk management. So, you cannot grow capital to do only oil and gas alone. That is wasting your capital. You have to take a proportion and share the rest to other parts of the world.

Oye Hassan-Odukale

For instance, insurers in London may probably have say 1000 risks, here in Nigeria; we have less than 100 risks. So, you don’t grow capital just to do 30 or 40 businesses, you don’t do that. Insurance is a business of large numbers. For example, you can’t build capital to insurer just NNPC, that is not insurance because you don’t grow capital to do one business. That is a very inefficient way of using your

capital. So, insurance companies in Nigeria should be looking at the traditional lines of business - fire, motor and all that. Look at the number of homes we have in Nigeria. If we can insure just 10 percent of homes, you can imagine what that we translate to, for the industry. It is a better pool for insurance companies than insuring oil and gas. In oil and gas, if one risk blows up anything can

happen. So, you want to participate in businesses that have larger pool, you don’t build capital for a few businesses. For example, if as an insurance company you ensure half of the homes in Ikoyi, you will be a comfortable insurance company. If one of the houses blow up, may be you pay N50 million or N100 million at most, but if one oil and gas blow up, billions of naira. With the passage of the 2018 Budget by the National Assembly, what is the likely impact on insurance business? Well, for government businesses that require budget approval to pay premiums, such businesses will be affected and insurance companies may start to receive their premium. So, that is positive for those businesses. Don’t forget that government is still the biggest business in Nigeria, so passage of the budget should impact the economy generally. There are a lot of fringe players in the market, do you think mergers and acquisition is necessary in

the industry? Of course, mergers and acquisition should be a natural thing. In every business, you need mass and synergy to compete effectively and more efficient. Over time, your expenses become steady and you need more premiums to weather it, and you also need capital. You have a minimum capital, and the shareholders will be asking, guys what you are you doing with the capital. So, you must make sure you are able to turn around the capital to add value because shareholders will also be looking at how well you utilize the capital. Now at Leadeway, are you considering any acquisition in the shortest possible time? We are always looking out for right opportunities. The opportunity must be right. There must be value added. Two plus two must be five; if two plus two is three, no deal. You can’t do that. If two plus two is four, okay there is nothing interesting there. But if two plus two will be five, then it makes sense.

Mergers, acquisitions may disrupt reinsurance market

he long-term business model of the reinsurance industry is being challenged by the inability of reinsurers to command pay-back following the losses of 2017, leading to a likelihood of more sector mergers & acquisitions, according to analysts from Morgan Stanley. Having visited Bermuda recently to meet with reinsurers, Morgan Stanley’s analyst team came away viewing the reinsurance sector as under increasing pressure and facing significant challenges. With the January 2018 renewals having disappointed many, the analysts now forecast the mid-year 2018 renewals will be flat to up 5 percent at best, while they now expect January 2019 will see rates coming under further pressure. A key reason for the pressure is the glut of capital in the sector, as tra-

ditional reinsurers have ample capacity at their disposal despite last year’s catastrophe losses, while the alternative reinsurance sector has grown strongly, following its impressive reload after the hurricanes and wildfires last year. Morgan Stanley’s analysts expect June and July reinsurance renewals will result in “underwhelming” rate movements, with renewal pricing flat in the main and up as much as 5 percent up where accounts were hit by losses. The hoped for rate increases have been dampened by the supply of both traditional and alternative capital, which “challenges the long-term business model of reinsurers” and is likely to result in more sector consolidation and M&A. Loss free accounts are expected to be renewed at the same terms as a

year ago, so flat, while the loss impacted are not now expected to command the rate increases that in the past reinsurers would have hoped for.

On rates, the analysts say, “A further deceleration at June 1 renewal could challenge the longterm property cat reinsurance business model

– reinsurers get payback in higher prices after large losses.” As a result, reinsurers are expected to increasingly consider their long-term

business strategy, leading to more M&A discussions, although the impending hurricane season could slow any deals from being consummated.

L-R: Sammy Olaniyi, executive director, Regency Alliance Insurance Plc; Anu Shobo, company secretary; Baba Gana Kingibe, chairman and Biyi Otegbeye, managing director, during the company’s 24th Annual General Meeting in Lagos

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Biofortification: Providing lifeline to Nigeria’s malnutrition JOSEPHINE OKOJIE

t the outskirts of Lokjogoma town i n Wu s h i s h i L o c a l Government area of Niger state is a small plot of maize farm belonging to Salamatu Haruna, a 33 years old widow and a mother of four. C h a l l e n g e d by t h e h a r s h economic situation in the country and the sudden death of her husband, Salamatu who had no education or skills could barely feed her family. Salamtu was forced to depend on the only small piece of land her late husband left behind as inheritance for survival. As a result, she constantly grows maize on the little piece of land to feed her children whose age ranges between two and seven years. “I feed my children with maize in different forms, since it is the only food I have and can afford. I ferment and grind the maize to make mosa for them; I feed them with boiled fresh maize and also prepare tuwo masara from the maize I blend into flour,” Salamatu says. Maize which is high in carbohydrate and also rich in phosphorus, magnesium do not contain the entire nutritional value for healthy living and growth, it needs to be added to other foods for a balanced diet. Salamatu, like most Nigerians who feed daily on what they can find to satisfy their hunger needs, has been driven by poverty to consume a single staple cropwhich cannot provide the essential vitamins and minerals for a healthy living especially for her children’s development. “We feed on this daily. But my children are very thin and fall sick too often. The doctor told me to change their diet, but I cannot afford any other meal for them apart from maize,” she says with tears flowing down her cheeks. Most Nigerian families can hardly

Biofortified maize with vitamin A

afford foods with high nutritional value, forcing them to feed mostly on starchy foods which are very high in carbohydrates and are often cheaper. Owing to this, there is rise in the number of malnourished persons in the country, with available statistics indicating that over 90 percent of Nigerians undergo diverse forms of malnutrition. This is coupled with the high rate of poverty which is not in any way showing signs of decreasing due to harsh economic situation, high unemployment rate and insurgency in the northern region of the country. According to the United Nations International Children’s Emergency Fund (UNICEF) about 2.5 million children under the age of five are malnourished and have stunted growth in Nigeria. To change the narrative of the burden of malnutrition globally, especially in children, scientists have pioneered a simple but transformative technique to increase the nutritional value of staple food crops, such as sweet potatoes, beans, maize, and cassava amongst others in Africa.

These improved varieties of crops provide higher amounts of vitamin A, iron, and zinc—the three micronutrients identified by the World Health Organization (WHO) as most lacking in diets globally. Recent studies have shown that crops pioneered by scientists have dramatically improve vitamin A status, reduce diarrhoea disease, improve visual function, and reverse iron deficiency in women and children. Malnutrition is easy to tackle with bio-fortification of crops already taking place across the world. Currently, minerals or inorganic compound are added to fertilizer by traditional plant breeding or biotechnology methods, though the application of fertilizers biofortified with micronutrients is the most simple of these methods, according to Kathleen L. Hefferon of the University of Toronto, Canada. Also, a new variety of biotech rice, which has the capacity to reduce the impact of vitamin A deficiency responsible for 500,000 cases of irreversible blindness and up to two million deaths each year, exists in many parts of the world and can help in Nigeria. With Biofortified maize, Salamatu’s children can get the daily nutritional requirement for their growth and development despite consuming a single staple food. Biotechnology has enabled countries such as China, India and the United States to develop healthier foods for their people. “With increasing vulnerability to hidden hunger, a condition where people do not get enough essential vitamins and minerals in their daily diets, cases of disabilities associated with micronutrient deficiencies, that is, poor immune system, low IQ, diarrhea, night blindness, anemia among others, will continue to grow

if not checked,” Paul Ilona, country manager, HarvestPlus, says. “In Nigeria where about 50 percent of the population lives in the rural areas, micronutrient malnutrition will lead to increased pressure on national health budgets and a weak labour force which can be addressed with the adoption of biofortified crops,” Ilona says. Ni g e r i a, a m o n o - c u l t u ra l economy, relies on oil for 90 percent foreign exchange and 75 percent revenue. However, efforts are now geared towards revenue and economic diversification with agriculture taking the centre stage. For this to happen, AfricanFarmer Mogaji, CEO, X-Ray Farms and Consulting Limited, says that bio-fortified seeds must be at the forefront to improve yields per hectare and reduce the number of children suffering from the devastating effects of malnutrition, through the fortification of their basic diets with essential micronutrients. Science of biofortification Biofortification is a feasible and cost-effective means of delivering micronutrients to populations that may have limited access to diverse diets and other micronutrient interventions. It is a process by which crops are bred in a way that increases their nutritional value, a procedure experts say is much cheaper than adding micronutrients to already processed foods. It has two key comparative advantages; its long-term costeffectiveness and its ability to reach underserved, rural populations. The Food and Agriculture Organization (FAO), a UN food agency, considers malnutrition— caused by a lack of essential micronutrients such as iodine, iron, zinc and vitamin A in diets—a threat

to millions of African lives. The long term consequences of insufficient amounts of essential micronutrients in human diets are devastating as it plays a crucial role in human development. Its deficiency can cause birth defects, permanent physical and mental impairment, as well as increased risk of death. Owing to this, plant breeders through constant research and science of genetics were able to select certain desirable traits in a plant to create improved varieties. HarvestPlus, a global biofortifier at the fore front of promoting biofortification, has screens thousands of different types of crop seeds stored in seed banks that have naturally higher amounts of iron, zinc, and vitamin A. “Our nutritional genomicists use tools such as marker-assisted selection to help speed up the breeding process,” Howarth Bouis a former economist with the International Food Policy Research Institute (IFPRI) in Washington, D.C says. “We use these more nutritious seeds to breed new crop varieties with higher micronutrient content that are also high yielding and have other traits farmers want,” Bouis said. Increasing yields Nigeria’s population is rising rapidly but food production is not moving in the same trajectory, sparking fears of food insecurity in Africa’s most populous country. Nigeria is populated by 190 million people who must be fed with staple foods ranging from yams, rice, cassava to beans, bananas and tomatoes. However, there is still much demand-supply gap in most of the staple foods, even as the population growth rate stands at 3.2 percent per annum. The country’s population is projected to surpass the 300 million people mark by 2050, according to The World Population Prospects 2017. Experts believe that Nigeria can alleviate some aspect of its food insecurity if bio-fortification is widely adopted across the country, as it helps improve farmers’ productivity. A bio-fortified sorghum varieties introduced by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) 12KNICSV-188, Improve Deko has an average yields of 2.4-2.8 tons per hectare, compared to the less than 1ton per hectare from other non bio-fortified local varieties. Farmers using bio-fortified crops varieties are harvesting more yields per hectare and earning more income selling the surplus.

Wednesday 30 May 2018

C002D5556

BUSINESS DAY

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Edo collaborates with World Bank on agric ...empowerment, private sector development also JOSEPHINE OKOJIE

do state government has collaborated with World Bank to boost agricultural activities in the state to accelerate economic growth and development. Godwin Obaseki, Governor of Edo state stated in a statement made available to BusinessDay, that agriculture, empowerment and private sector development are among the new deal being pursued by his administration with the World Bank Group. “The World Bank has gained deeper understanding of the issues in the state from the insights provided by the Edo State government,” Obaseki said after hours of strategy meetings with officials of the World Bank, during their visit to the state recently. He explained that specific interventions were identified at the expert meeting while clear timelines were discussed. “The meeting illuminated

R-L: Godwin Obaseki, Edo State Governor; Rachid Benmessaoud,World Bank Country Director for Nigeria, and Eme Essien, country manager, International Finance Corporation (IFC), Nigeria Office during a meeting between the governor and the World Bank team, at Government House in Benin City, recently.

the subject matter and cleared grey areas. We also discussed some variables that are largely extraneous but could impact on

our strategies. “We had a lot of takeaways from the session and the World Bank experts are now going to

Akinola calls for establishment of crop processing centres for Ogun farmers AMAKA ANAGOR-EWUZIE

olaji Akinola, a chieftain of the ruling All Progressives C o ng re s s ( A P C ) i n t h e Ifo/Ewekoro Federal Constituency of Ogun State, has called for the establishment of Staple Crop Processing Centres (SCPC) and cold chain solution for farmers in the State. Speaking in Itori, Ewekoro Local Government Area of the state at the weekend, Akinola said the setting up of SCPCs across the state will drastically reduce the wastages of agricultural produce, increase the state’s internally generated revenue and create employment for the teeming youths. He suggested that the Centres should be established in all the 20 local government areas and 37 local council development areas of the state to ensure ease of access to all farmers. “O g u n S t a t e i s w e l l positioned to lead the drive for diversification of Nigeria’s economy and reduce our overdependence on oil revenue. However, it is no longer the vogue to export raw materials or agricultural produce. The way to wealth is value addition. The Staple Crop Processing Centres will

help farmers add value to their produce before they are taken to the market,” Akinola said. According to him, the Centres will not only reduce wastages but seasonality of crops. “For instance, during rainy season, we see an abundance of certain crops but these crops suddenly disappear after the season. The SCPCs will help put an end to this development.” Akinola, who is also a maritime expert, said Nigeria must de-emphasise t h e e x p o r t at i o n o f raw agricultural produce, as “this does not help the national economy”. “The wealth is in the hands of those that add value to crops and to raw materials. For instance, Africa exports 70 percent of world’s cocoa yet it derives less than 5 percent of the $120 billion global cocoa GDP because it barely adds value to its cocoa before exporting. “Also, Africa exports about 50 percent of the world gold but accounts for less than 3 percent of the gold GDP for the same reason. Only those who add value to commodities derive wealth from it,” he said. Akinola also said that f a r m e r s i n O g u n St a t e will benefit tremendously from cold chain solution

as it will help post-harvest management of their crops. The state, according to him, needs a robust supply system that can improve farming income by reducing the considerable wastage that blights its rural areas. “Another critical need of our farmers today is an effective cold chain solution that will integrate the supply c ha i n s f o r ag r i c u l t u ra l commodities from their respective production centres to processing centres and consumption centres, thereby reducing physical wastages and loss of value of perishable commodities,” he said. He said farmers in the state will derive more benefits from their labour when losses that occur in the process of bringing produce to market are reduced through cold chain solutions and operation of crop processing centres. “We need to create more wealth for those who provide food for us. This is the way to attract our youths to farming. However, farmers’ income can only be increased substantially only when we help then increase the sales of their crops and increase the market rate of their agricultural produce. SCPC and cold chain solution are key enablers to make these happen,” Akinola added.

link their interventions with existing World Bank support instruments. “Over the next couple of

weeks, the state government will work together with the World Bank to fine-tune intervention towards activating

World Bank support along the three areas, which are: Job Creation through agriculture; Private Sector development; and curbing illegal migration through skills development,” the governor disclosed. He maintained that the s t at e g ov e r n m e nt t e a m highlighted the creativity of Edo youths and their readiness to leverage on the empowerment initiatives of his administration, such as the technology hubs and agricultural programmes, amongst others. “With our profile as an investment-friendly state, we are confident that more support growth instrument will be extended to us by the bank and other development partners,” he added. Obaseki noted that his administration is committed to reversing the trends fuelling illegal migration as it has claimed several lives of Edo youths in the Sahara Desert and the Mediterranean Sea.

Dizengoff’s monster tractors arrive Jigawa to boost productivity JOSEPHINE OKOJIE

two high capacity tractors from Dizengoff Nigeria has arrived Jigawa state to help boost sugar cane farmers productivity in the state. The tractors were received b y t h e G re a t No r t h e r n Agriculture Business Limited for the cultivation of its ambitious 12,000 hectares sugarcane farm in Jigawa state. The two CASE IH tractors delivered by Dizengoff are regarded as ‘monster tractors’ or ‘king of the fields’ have a massive combined 305 Horse Power (HP) capacity. “ We a re b e g i n n i n g operations with the cultivation of 300 hectares using subsurface irrigation system. And we hope to increase this quickly to 12,000 hectares within 2 years,” Wang Tingfu, general manager, Great Northern Agric said in a statement made available to BusinessDay. According to Tingfu, the company went for the monster CASE IH tractors distributed and serviced with genuine spare parts in Nigeria by Dizengoff because of its desire for performance. “Our vision is a ver y ambitious one. The terrain here like most parts of the north could be very challenging. The soil is hard and the conditions are tough.

“And so we knew we need the right kind of equipment to achieve our goals. From all indications We saw that the CASE IH tractors fits perfectly into the kind of equipment we need to get things done quickly and in the most efficient and cost effective manner,” he said. CASE IH tractor range was voted the ‘2017 Machine of the Year’ based on volume and market share. The C ASE IH tractor brand manufactured by Case Holland, are said to be built to meet the power, durability, comfort and productivity needs of farmers, bringing reliable technology to their business. The engines are designed to deliver maximum horsepower with efficient power. “ Th e i r i ng e n i ou s h i tech designs are crafted with inbuilt high efficiency catalytic selective reduction technology which delivers the highest power needed with the lowest fuel consumption and emissions. The engine power management is capable of boosting engine power to give additional horsepower to deal with difficult conditions,” Tingfu added. Giving insight, Damisa Enahoro, commercial manager, Dizengoff Nigeria said “we are not just supplying these machines. Dizengoff is fully on ground as partners to provide full technical support

and training to Great Northern Agric in terms of maintenance, including replacement parts and service.” Meanwhile, Antti Ritvonen, c h i e f e x e c u t i v e o f f i c e r, Dizengoff Nigeria while speaking on the company’s support plan disclosed that, beyond the machine, after sales service is integral to Dizengoff’s overall customer service delivery. “It is at the heart of our strategy. We don’t just sell tractors. We have the genuine parts and we back this up with maintenance service, in addition to providing expert advice and technical support services, such that the customer is never alone.” Antti expressed excitement about the bold move by Great Northern Agric. “I think this is really a welcome development for Nigeria’s agriculture. I congratulate Nigeria that a lot of investors including governments across the country are beginning to see the light. “ It i s h e a r t- w a r m i n g to see that some kind of understanding is beginning to emerge about how these things are done. For instance, t h e u n d e r st a n d i ng t hat you need the right kind of investment and technology to get modern agriculture right and to be able to tap the huge opportunities in the sector,” he further said.

28 BUSINESS DAY

Wednesday 30 May 2018

Leadership SHAPING PEOPLE INTO A TEAM

How do consumers choose in a world of automated ordering?

he term “frictionless commerce” is widely used to describe how digital technologies are blending product purchases seamlessly into consumers’ daily lives. In the ultimate manifestation of frictionless commerce, purchases will be automatically initiated on behalf of consumers (with their advance consent) using real-time, integrated data from known preferences, past behaviors, sensors, and other sources. Envision, for example, a “smart fridge” automatically ordering food items it senses are running low. That is not common as of yet, but ever since consumers were offered the option to shop online from home, rather than having to go to a store, technology has been rapidly removing the friction from commerce. As frictionless commerce accelerates, so will a momentous shift in the node of commerce. In the era of department stores and supermarkets, consumers selected brands from store aisles and shelves. Over the past several decades, the in-store experience has been increasingly displaced by online shopping, via home computer and mobile phone. As consumers become connected to everything, all the time, the node of commerce will be consumers themselves, rather than any distinguishable “channel.” THE DANGER OF DISINTERMEDIATION Frictionless commerce will test the emotional bonds that make consumers loyal to established brands. Already, consumers are being disintermediated from traditional brand choices via search engine and online retailer algorithms, which determine which products are presented to consumers, and in what sequence. That puts all brands in danger. Most consumers are at best passively loyal. When algorithms replace consumer emotions as the prime force shaping purchasing decisions, consumers could easily forego their customary brand choices in exchange for the speed and convenience of whatever is offered by the self-interested, digitally empowered parties now taking

control of consumer choice. To remain successful, established brands must give consumers a reason to interrupt the increasingly automated purchasing process and actively choose a brand, rather than passively accepting substitutes. We call this “building brand friction in a frictionless world.” Are brands adapting to this new reality? Our 2017 survey of 170 top Consumer Packaged Goods (CPG) and Retail CEOs, COOs, and CFOs revealed a conscious shift away from traditional mass production and mass marketing practices toward more personalized approaches. This certainly makes sense. As consumers become the node of commerce, companies will be challenged as never before to accurately perceive and seamlessly deliver what each consumer wants with unprecedented precision. Yet when viewed in the context of rapidly advancing frictionless commerce, the envisioned shift toward personalization appears modest. Do leaders grasp just how much adaptation will be required to build brand friction in a frictionless world? To begin, even the most capable and sophisticated marketing organizations will need to fundamentally change their mission and shape. Traditionally, marketing’s most important task was to broadcast the company’s brands to consumers. In contrast, as consumers become the

true node of commerce, marketing must first and foremost become a listening post. Analytics, which in many companies remains isolated from the core business, will be foundational to this listening mission, and so must be made central to the marketing function, rather than serving as marketing’s internal supplier. The most vital leap for marketing will be evolving into an exponentially more effective translator of consumers’ needs, preferences, and desires. Most companies have no shortage of consumer data. What many still lack is the insight required to use that data to decisively win market share. The best marketing organizations will effectively fill that void through an advanced synthesis of brain and heart. If this envisioned evolution proves accurate, marketing’s most important audience will be the rest of the company, as marketing becomes less an external advocate for the company and brand, and more an internal advocate for the consumer, guiding the formulation of myriad nuanced offers. Even greater adaptation will be required of the larger organization. Leaders of major CPG and retail enterprises readily acknowledge the difficulty of initiating fast action across silos. P&L and brand groupings that optimized efficiency in the age of mass production and mass

marketing often make it impossible for companies to nimbly react to consumer desires. INFLUENCE VS. AFFLUENCE We see peer influence as a growing force in determining where consumers spend money and what attracts them to brands. Affluence, the traditional source of consumer power, is being supplanted by consumer communities, shaped by shared interests and self-selected demographics. Persuasive individuals can now change the fate of brands with relative ease, underscoring the need to focus on how consumers think and what they value. In sum, the changing world in which CPG and retail companies compete offers clear imperatives to evolve from today’s omnichannel obsession to more consumercentric models. It is time to rethink everything you do from the consumer’s perspective. Stop resting on comfortable assumptions about the strength of your brands, your customer loyalty scores, or current success. Right now, complacency is your worst enemy. Here are a few ways to start adapting to the realities of frictionless commerce: USE DATA TO UNDERSTAND CUSTOMERS ON THEIR TERMS. Be prepared to offer consumers meaningful value in exchange for their proprietary data. Demonstrably use their data to enhance their lives.

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

REDEFINE YOUR TARGET MARKET. Traditional demographics are no longer sufficient. They will be increasingly replaced by “personagraphics” — the use of psychographics, anthropology and sociology to identity individual needs and desires across crisply defined consumer cohorts, around which future consumer decision models will be built. RELY ON LISTENING AND TRANSLATING MORE THAN ON BROADCASTING. Challenge the complacency that stems from having an abundance of consumer data. Build markedly more sophisticated ability to identify and anticipate the new keys to brand loyalty in a frictionless world. SHIFT FOCUS FROM CHANNEL STRATEGIES TO CONSUMER CENTRICITY. Digital connectivity appears destined to make channels all but indistinguishable. Strategically redirect resources away from understanding channels toward deeper understanding of consumers. TAP INFLUENCE. As the mass marketing age fades, create brand friction via increased use of membership models and event-driven marketing. Build a sense of community within target cohorts by facilitating a network effect for influencers. For the past century or more, technology has greatly empowered brands by connecting them with consumers on a mass scale. Now technology threatens to have the opposite effect, as the automation and algorithms of frictionless commerce disintermediate brands from the consumers they seek to serve. This crucial trend compels established CPG and retail brands to let go of much that is familiar and comforting. It is time to boldly experiment with new approaches, expressly aimed at building brand friction in a frictionless world. (Greg Portell is lead partner, Consumer Industries and Retail Practice – Americas Region at A.T. Kearney, the global management consulting firm. Abby Klanecky is chief marketing officer at A.T. Kearney.)

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Oil, gas pipeline, power-lines to leave railway corridor Page 31

Uber’s GLH is to improve customer experience, driver support’

Oil, gas pipeline, power-lines to leave railway corridor

Essential tips for the modern traveller Page 30

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Auto enthusiasts take Hilux to set paces …Riding on Toyota’s traditional strength and USPs Stories by MIKE OCHONMA

oyota, the leading global and Nigeria’s most-sortafter auto brand subject some of its models to the rigours and vagaries of offraod condition and this year’s version of the litmus test involving the Hilux Pick-up held at the exhibition pavillion of the art and culture ministry, Abuja, the federal capital was no exception. Simply put, the Toyota Hilux test was carried out with a clear objective of showcasing the traditional strength of the Hilux and unique selling points of the model from May 15 to 17. The brand has a special appeal to customers of different segments of the Nigerian market ranging from the armed forces, the police, and ideal for those engaged in the fast moving consumer goods (FMCGs) industry, NGOs and the construction industry amongst others. Citing reasons behind this year’s litmus test of the Hilux utility truck, inside sources at Toyota Nigeria Limited, said that since most of the businesses of the companies are usually carried out in difficult and tough terrains, it became necessary to demonstrate to the monitoring public once again, the uniqueness of the brand in terms of its ruggedity and durability as the model has evolved over the years as a model to beat in the segment both in product development and brand visibility. To demonstrate the model’s ruggedity and unique selling points, the test drive was carried out on different terrains artificially configured as smooth road, rough stony road, sandy road, marshy road, road with deep pot holes and hilly terrain While the three days litmus test lasted, three units of the revamped and retooled Toyota Hilux pick-up utility truck were deployed for the test drive exercise.The opening day of the event witnessed a modest turn out of

invitees with dealers’ representative also in attendance. Customer were driven through the configured terrains with the distinctive features of the new generation Hilux expected from a four-wheeler with lots of excitement expression about the superlative performance of the Hilux beaming on their faces. Particularly of interest and a major high point for the customers, was the switch system of engaging the four wheel drive instead of the traditional auxiliary gears. The second day of the event pulled a good number of customers that had come to have a feel of the vehicles including individual and corporate customers as well as officers and men of the armed forces.

Fleet buyers from the force headquarters and other corporate bodies were also on ground as they came early enough to see the demonstration of the vehicles on the configured track as they take their turns to drive the vehicle to confirm its strength and extent of ruggedness. Men from the army headquarters who were taken on the testdrive in batches during which some of the customers passed thumbed up on the model driven, even as they promised to visit dealer outlets of of Toyota brand to make future purchases in spite of a general rise in automobile cost. The third and final day of the event also witnessed an encouraging turnout of invitees such as repre-

sentatives from the Corp Marshal of the Federal Road Safety Corps. The team was quite impressed with the level of performance of the Hilux as it was adjudged to be of the highest safety standard. A team from the National Ecological Fund , Nigerian National Petroleum Corporation and National Aids Control Agency were also on ground to have a feel of the vehicle under tough road conditions given the terrain they covered. The three event was also interlaced with product knowledge training was carried out on daily basis by the manager in charge of marketing to all the Toyota Nigeria Limited dealers representative present.

LASG must overhaul LASTMA officials for efficiency

agos motorists have called on the management of the Lagos State Traffic Mmanagement Authority (LASTMA) to overhaul the organisation for better job delivery. In some parts of Lagos, it has been observed that the LASTMA officials working at the city center are more dedicated and have better human relations than other contemporaries at the suburbs. Checks reveal that many of the officials have spent many years on one location posting and thus have turned themselves into powerful elements before the motoring public. In some areas and at the heat of severe traffic gridlock, these LASTMA men walk in groups by the road side looking for private motorists under the frustrating traffic situation to contravene in one way or the other citing the state traffic laws whereas the commercial us operators derives pleasure in driving

against traffic. While some of the Lagosians who spoke to BusinessDay motoring expressed doubt about the professional training received by these officials despite the huge financial investment of the state government into LASTMA, others wondered the level of incentives and encouragement given to the traffic officers. There are reports that in some zones, there are insufficient operational vehicles and other materials for the officials to carry out efficient operations.

Ford reveals facelifted version of ‘global’ Ranger

ord of has spilled the beans on its facelifted model year Ranger line-up, which gets styling updates, additional driver assist gadgets, a new 2-litre twin-turbodiesel, a 10-speed automatic gearbox and an enhanced chassis. Following this developments, local models will be upgraded in 2019 for the South African and sub-Sahara African markets, but exact details and launch timing have yet to be confirmed. Although only two frontal pic-

tures have been released thus far, it is clear to see that the changes are rather minor, the highlights being a new grille that resembles some versions of the US-spec Ranger, as well as a revised lower bumper,

while XLT and Wildtrak versions get HID headlights and LED daytime running lights. Minor trim changes has alos been made inside the cabin. Yet the biggest news is that Ford’s new 2-litre twin-turbodiesel engine, first announced along with the Raptor earlier this year, will also be offered in XLT and Wildtrak models. The advanced new engine, which produces 157kW and 500Nm, is paired with

Ford’s 10-speed torque converter automatic gearbox. Although the exact model mix has yet to be announced, Ford SA has previously confirmed that the new 2-litre, which will be built locally, will also power other models in the range. A raft of new driver assist gadgets becomes available on Aussie-spec models, including pre-collision assist with vehicle and pedestrian detection and autonomous emergency braking, as well as traffic sign recognition and, for the first time in the seg-

ment, Ford’s ‘Active Park Assist’ semi-autonomous parallel parking assistant. Also in place to make life easier for the wider audience that Ford is targeting here is an ‘easy-lift’ tailgate mechanism for which the automaker claims a 70 percent reduction in the effort needed to lift the tailgate. In addition, Ford has made suspension changes across the range, aimed at improving the ride and reducing body roll. Any possible local changes are still to be confirmed.

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MTRAVEL

Wednesday 30 May 2018

odern

Uber’s GLH is to improve customer experience, driver support’ Not long ago, Uber opened Green Light Hub to provide unique drive-partner, customer commuting experience. Few years down the line, O’YOMA UKUEKU, Greenlight Operations Manager, Nigeria, Uber explains more insights on the service.

ilestones of Uber launch in Nigeria 3 years after It would be recalled that in 2016, Abuja became the 400th city in Uber’s growing global network allowing Abuja to join the list of smart transportation hubs in Africa. Since then, there have been many developments which we are proud of. Firstly, we have facilitated over one million trips and partnered with over 7000 driver-partners. We’ve also put in place a few partnerships which demonstrate our commitment to the driver-partners across Nigeria. We’ve partnered with companies like First Bank, and Germaine Autos to ease the barriers of car ownership for driver-partners, and provide valuable car maintenance and servicing plans, to ensure that driver-partners receive additional value. Another notable partnership is with AXA Mansard Insurance, a leading nonbank financial services institution in Nigeria. They provide driver-partners insurance cover against death, permanent, total or partial disabilities, medical and funeral expenses to riders during any trip with Uber in Nigeria. It also covers driver-partners and riders against damage to third party property that may occur while they carry out their Uber App initiated activities. Support for driver-partners and riders has also been a priority for us and although there have been many developments, the most notable to mention and one we are particularly proud of is the launch of our Greenlight Hubs (GLH). This is a support centre for potential and existing driver-partners. What is Greenlight Hub all about The Greenlight Hub is a support centre that provides drivers with established channels of communication to raise individual questions and concerns that they may have relating to using the Uber App. It offers information sessions, tailored workshops to drivers focusing on training and skills development such as safety tips, crime prevention and financial tips. Potential driver-partners are also assisted here through the vetting and on-boarding process. In Nigeria, we’ve opened two centres based in Abuja - Maitama and Lagos-Maryland. Areas which are both centrally located making it accessible to our driv-

er-partners. Why did Uber see a need to establish the Greenlight Hub Improving the overall experience of using our app for our driver partners is something we are highly committed to. As such, we launched the GLH in an effort to improve customer experience and driver-partner support. Having this hub also caters to more drivers who require face-to-face support. We wanted to provide them with a platform where they could ask questions about the app, get initial training and quality service retraining, where they can activate their vehicles and get background checks done among other things. We believe that this contributes towards better service to their riders as well and equips them with the entrepreneurial skills to make their businesses more sustainable. Who assists the driver-partners at the hubs At every Greenlight Hub location, we have a team of well-trained individuals called Greenlight Experts who provide onsite, real-time support to driver-partners. The experts aid driver-partners with anything from payment queries to app usage training, and also facilitate the daily information and onboarding sessions that further

simplify the sign up processes for driver-partners. What kinds of questions do drivers ask We help with anything and everything. If a driver-partner forgot to start a trip in the app when he started driving, we can show him how to handle that in the app. If another driver-partner had an issue like an unruly rider in their car, we are able to talk them through it to reach a solution and escalate their concerns to the proper departments. Driver-partners often ask about Uber’s plans for products moving forward, including marketing and in-app changes. Sometimes, they just want to talk. Is it open to riders, or is it just for driver-partner Greenlight Hub is only available for potential and existing driverpartners. We hav e put many measures in place for our riders through our Global In-app support which is available 24/7. If driver-partners require support outside of these hours, they always have access through our Global In-app support which, as it is for riders, is available 24/7. It’s great to be able to talk to someone face to face and have them leave the Hub happier than they came in.

Essential tips for the modern traveller

hen it comes to modern travel, the rules, guidelines, policies and procedures are absolutely overwhelming, and the evolution of travel by air has gone backwards. Do you need help figuring out the organized chaos of traveling today? Here are a few up-to-date travel tips Does your credit card offer travel benefits. Before you buy an airline ticket or pay for a trip, check with your credit card company regarding important points such as: If you have to cancel, does the credit card company offer a cancelation policy or insurance? If not, it might be to your advantage to purchase via your travel agent. Travel Boarding Pass. Check in earlier than you think. When booking an airline ticket, ask your travel agent what time you should check in at the gate counter. Rules have changed so much as most airlines now require two hours and reserve the right to cancel your ticket. Baggage Also, does your credit card allow you to check luggage for free or at a reduced rate? Many do. For example, Gold, Platinum and Reserve Delta SkyMiles Credit Card Members may enjoy

perks such as priority boarding and the option to check your first bag free some flights. Know the rules regarding banked mileage. When you or your agent is booking travel using your mileage, it is very important to know many new rules. In most cases you cannot just cancel and re-bank your miles. There is a possibility that you might lose them if you have to cancel. Does your car insurance cover car rentals. Find out if your car insurance covers car rental while you are on vacation, then you will know if you should purchase the rental car company’s insurance. Ask questions. Ask your travel agent about anything and everything that pertains to your vacation. They will help you with everything from proper attire to money exchange and much more.

Things you can hope to learn on your travels onfident Communication Travelling, particularly if you’re going solo, is a great challenge for your communication skills. Besides the trials of communicating in a foreign language, you will be forced to strike up conversations with near strangers on a daily basis if you are to enjoy any social contact. Finding new friends and building relationships, however fleeting, requires charisma, good body language and confidence. These are skills that will prove equally useful back at home. It can help you face that college interview, network at work or meet new people with new-found poise and self-assurance.

How to Cope in a Crisis Anyone who has travelled extensively has come across their fair share of tricky situations. Getting your bag robbed in a city centre street, finding that the train you were hoping to catch doesn’t leave until next week or struggling to find accommodation during a fiesta are all problems you may have to overcome. Facing these trials, working through them and deciding on the best course of action helps you to de-

velop your organisational skills in tough and new situations. A New Language Immersing yourself in a culture is a great way to learn a foreign language. Pushing yourself to communicate in that language every day and hearing it used in real life situations all around you can be much more useful to your language abilities than studying in a classroom. Even if learning a language isn’t the main purpose of your trip, it can make your travels far easier and interesting as you organise transport and accommodation from place to place and engage with the locals in their native language. How to Prioritise When you’re travelling you need to determine what is essential and what you can do without. You can’t carry everything in that one backpack, nor can you always afford to choose the most comfortable mode of transport or accommodation. You will make difficult decisions on a daily basis and learn to prioritise what is most important. Being able to manage your time and your resources in this way is a key skill for education, work and your day to day life.

Wednesday 30 May 2018

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BUSINESS DAY

Local and global rail news as it breaks

Oil, gas pipeline, power-lines to leave railway corridor Stories by MIKE OCHONMA

he recent progress report of the sub-committee on the relocation of obstacles affecting the on-going Lagos-Ibadan railway corridor standard gauge project work has identified 32 Oil and Gas pipelines which crossed the railway right of way in 25 locations for relocation. Apart from the solution earlier submitted to the Federal Ministry of Transportation by the Nigerian National Petroleum Corporation (NNPC), a proposal in the form of standard design for pipeline protection and relocation. The steering committee also directed the sub-committee and the Oil and Gas stakeholders (NNPC and their subsidiaries; Oil Serv) to harmonise all possible solutions as proposed by the parties with the aim of adopting the best solution for implementation in terms of safety, as a priority, and lower cost to minimize cost overrun/ variation of the project. The standing committee has also resolved the issue with the Lagos state ministry environment on the evacuation of sewerage along the affected corridor. The intended project drainage system will suffice as a substitute for the sewerage, even as the Chinese Civil Engineering and Construction Company (CCECC), are to continue with works in the affected areas. Recall that early this year, Rotimi Amaechi, the Minister of Transportation had expressed worry about a number of unforeseen

challenges affecting the construction of a standard gauge railway line between Lagos and Ibadan. The $1.5bn project, whose ground-breaking ceremony was performed last year by the VicePresident Yemi Osinbajo, was targeted to be fully completed in December this year. At the commencement of the project the China Civil Engineering and Construction Company, the project contractor had to contend with a number of obstructions on the rail line’s right of way such as houses, companies, gas pipelines, water pipes and overhead bridges. While the Federal and Lagos State governments have agreed to demolish two obstructing bridges in Lagos, including the relocation of the Lagos State Water Corporation pipelines, the Ministry of

Transportation is said to be discussing with relevant authorities to remove other obstructions on the right of way. Early this month, CCECC commenced the laying of tracks on the rail line. As at the time of filing this report, more than 11 kilometers of tracks has been laid beginning from the Papalanto axis of Ogun state all the way down to Lagos. Rotimi Amaechi said at Papalanto, Ogun state, after the inspection of the rail project three weeks earlier that, already 1.7km of the track had been laid. He allayed the fears that the rains could delay the delivery of the project by December this year, insisting that there was no going back on the delivery date, adding that, the Federal Government have received assurances from the con-

tractor and others whose organisations would be affected by the project. Accompanied by Lai Mohammed, the Information Minister during the visit early this month, Mohammed said, “I think one thing we have achieved in the last two hours we started the meeting is that the December date for the Lagos – Ibadan modern gauge is not negotiable and I am happy to say that both consultants, contractors and others involved have seen why it is important to meet this deadline.” Mohammed said the 1.2km track laying per daily was being achieved with just one machine, adding that the contractor could achieve 2.4km per day by the time it deployed the second machine at its disposal.

GE-Wabtec $11.1 bn merger shakes up supplier ranking

deal worth approximately $11.1 billion has been reached for GE Transportation to merge with Wabtec. This is even as the world’s largest railway equipment suppliers is set to change when the agreed merger between GE Transportation and Wabtec comes into force. The announcement comes six months after General Electric (GE) confirmed it was looking to sell or spin-off the “noncore” transport division to become “simpler, stronger and to drive more growth” and follows the sale of GE’s rail signalling business to Alstom in 2015. Rail equipment provider Wabtec said that combining with GE Transportation, a leader in locomotive production, will make it a “Fortune 500, global transportation leader in rail equipment, software and services”. It also highlighted opportunities for cross-selling between the two businesses, which are both headquartered in the United States.

Lagos-Badagry rail project slows down as traffic worsens

If the transaction closes as anticipated in early 2019 – the deal is subject to approval by Wabtec shareholders and regulatory approvals – Wabtec will have approximately $8 billion in revenues with around 27,000 employees and operations in more than 50 countries. However, $250 million annual cost savings are expected by 2022. Wabtec CEO Raymond Betler said that the two companies have highly complementary strengths and a “unique op-

portunity to drive tremendous growth in 2019 and beyond”. The merged GE Transportation Wabtec company will move up the world ranking of major suppliers. by IRJ. An examination of the 2017 financial results for the biggest suppliers shows that CRRC, China, is still the dominant player with annual revenue of $US 32.5bn. Siemens’ Mobility Division holds onto second place with annual revenue of $US 9.55bn followed by Alstom

on $US 9.37bn, with Bombardier Transportation in fourth place on $US 8.5bn. GE Transportation and Wabtec have combined annual revenue of $US 7.8bn, split equally between the two organisations, which will propel them into fifth position, but the merged company will move into fourth place when the Siemens-Alstom merger takes effect later this year. These major players are in a different league from other railway equipment suppliers, namely Hitachi and Caterpillar, which have annual revenues around half that of Bombardier. Unlike CRRC, but in common with Siemens, Alstom and Bombardier, the merged GE Transportation-Wabtec company will be a true international player with operations in 50 countries. The major difference though is that GE TransportationWabtec does not build passenger trains, focusing instead on locomotives, rail vehicle components and systems, as well as train control.

otorists and other commuters plying the Lagos-Badagry road may be in for very difficult and harrowing times following the perennial gridlock occasioned by the narrow portion of the road abandoned by the Chinese Civil Engineering Construction Company towards the Volkswagen of Nigeria (VoN) end of the road. There is no noticeable indication of any meaning presence of the corridor along the rail corridor between the Iganmu and Mile 2 apart from a very short distance laying of rail tracks between Suru -laba and Mile 2 apparently to enable the CCECC move their equipment.

Almost on daily basis, between the Military Cantonment Ojo and Volkswagen and remains a black spot for criminals, with Ilaje bus stop and its environment as the major spot where windscreens of private car owners are smashed without any challenge from the Police or any other relevant authority. Located very close to the Ilaje bus spot where innocent motorists are being dispossessed of their valuables while on traffic is the largest military barracks in West Africa while the Onireke and Ojo Police stations are located with a trekking distance. While the robbery has become a daily affair, men of the Nigerian police occupy themselves with the checking of motorists driving against traffic, apparently to avoid being caught in the web of the daily robbery activities of the miscreants.

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Wednesday 30 May 2018

FEATURE

GEEP MarketMoni: Closing the credit gap for microenterprises Last week in Kano State, Vice President Yemi Osinbajo presented monetary awards to over 12,000 beneficiaries of the MarketMoni. Adeola Ajakaiye writes that the presentation comes on the disclosure that the Federal Government Enterprise and Empowerment Programme (GEEP) MarketMoni scheme has successfully reached over 350,000 microenterprises in 36 states of Nigeria, and the FCT, believing that deepening financial inclusion is at the core of the GEEP MarketMoni initiative.

awal Mohammed sells plastic in a neighbourhood market in Kano called Wambe. He has managed his little store for over 30 years with no significant expansion because of poor access to funds. Mohammed says his faith discourages him to take a loan with interest, so even when the thought came to go to the bank for help, he immediately waved it. “I used to have nothing but a little store, but today I have two stores and I put my neighbour in one to help him,” he said. Mohammed got a N100,000 interest-free loan through the GEEP MarketMoni scheme. He was not only able to expand his business, he also empowered his neighbour. Microenterprises, like Mohammed’s plastic store, are said to be the building blocks of a nation’s economy. They are integral to economic recovery and poverty alleviation because they create individual wealth, which can be channelled into the community and then the nation. As Nigeria continues to recover slowly from the pangs of recession, the government is finally focusing more on microenterprises in a bid to strengthen the economy. It is breaking all barriers to bring interventions closer to the grassroot and help the poor and vulnerable build their business both in terms of capacity and capital. Unlike other aids devoted to MSMEs in the past, GEEP MarketMoni loans are completely interest-free and are hitting the right pockets. The National Bureau of Statistics (NBS) reports that there are 37 million Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. This estimate provided in 2013, puts microenterprises at 36.9 million, a strong indication that this category of business contributes significantly to employment and economic growth. In terms of employment, data reveals that over 80 percent of people in Nigeria’s labour force are employed by MSMEs; and economically, MSMEs contribute over 38 percent of Nigeria’s GDP. Despite the dominance, the growth of microenterprises in Nigeria has been plagued by a number of factors, which include inaccessibility to funds, lack of capacity building and high running costs. Of all these, access to funds remain the most challenging. The complexities of dealing with formal financial institutions are among the reasons why microenterprises have difficulty in getting loans.

Vice President Yemi Osinbajo and Abdullahi Ganduje, governor, Kano State, surrounded by beneficiaries of Federal Government’s interest-free loans dubbed GEEP-MarketMoni at an interactive session with the Vice President in Kano, recently.

Vice President Yemi Osinbajo (l) admiring the products of beneficiaries of the interest-free loans.

Having identified this barrier, the government decided to introduce GEEP MarketMoni interestfree loans, a financial measure that targets economically active small business owners such as market women, artisans, traders and farmers. It aims to support entrepreneurship and fight poverty by providing small loans to individuals and businesses that would normally have trouble accessing credit. Unlike other micro-credit facilities offered by financial institutions, with requirements hard to fulfil, GEEP MarketMoni only requires a valid account number, Bank Verification Number, a mobile phone and evidence that applicant belongs to a registered cooperative society. This scheme of the National Social Investment Office, executed through the Bank of Industry (BoI), is targeted at empowering the economically disadvantaged with the vision of transforming micro businesses into economic powerhouses. Most developed nations of the world that recognised the place of microenterprises and took steps to empower grassroot and micro businesses are reaping the returns today. In Japan, microenterprises employ 70% of the wage earners, while in Thailand, they employ 60.7% of the population and contribute 38% to the GDP. In China also, they contribute to over 68% of the exports and in the last 20 years, China has built more microenterprises than the total number in Europe and the US combined. The progressive growth of these small businesses was made possible not just through governmental policies like tax breaks and cuts, but by infusion of capital into the system to empower and grow them.

the growth of their microenterprises. Aisha Ali, who has relied on meagre self-finance for so many years to run her groundnut oil business, said she got the GEEP MarketMoni loan and since then things had greatly improved. “Sometimes, when I don’t have money, I stop selling. I lost my husband years ago and I have to send my children to school, it has not been easy, but with this loan, I am now able to buy half bag of groundnut at once. I pay weekly, so I don’t feel it.” Another beneficiary, Kehinde Ajayi, a farmer in Ondo State, said, “Before now, we run to cooperatives, but once you miss a payment, another person is affected, so it is a big burden. Also, the money might not get to your turn when you need it. With this one, we pay back with ease and are monitored to ensure we don’t divert the fund for personal gains.” The Federal Government, through the GEEP MarketMoni’ scheme has reached over 350,000 beneficiaries across the nation. GEEP MarketMoni has also provided employment opportunities for over 5000 agents who currently drive the scheme, acting as foot soldiers. Some of these agents were previously unemployed graduates. According to Sherifat Olajumoke Suleiman, the Head of Agent Networks, agents are recruited based on pre-set conditions, and they in turn go all out to scout for market associations and cooperative societies, sensitising the members and telling them how they can benefit from the loan scheme. “This scheme has helped many people, including graduates who were jobless before now. We are paid on commission basis, when these beneficiaries repay their loans. This drives us because, the

In Mexico, cash benefit transfers to poor Mexican farmers have been known to increase their agricultural investments, with longer-term income gains. It was also found that recipients were able to put to work at least some of the cash given to them to expand their businesses thereby creating additional income flows. It has also been observed that conditional cash transfers such as loans work even better in dealing with the root causes of poverty such as informal education within the small business sectors of the economy. Beneficiaries qualify to obtain loans between N10,000 to N100,000 repayable over six months with a one-time 5% administrative fee. The scheme is a unique opportunity for grassroot businesses because there are no hidden charges and the six-month repayment tenure eases the burden of servicing the loan for the beneficiary. The loan also comes with a two-week moratorium period with repayments starting on the third week of the life of the loan. Additionally, the scheme is one of the most laudable in the promotion of broad-based growth, in improving the wellbeing of the poor and women by providing significant income and employment generating opportunities. It is more particular about women in line with Sustainable Development Goal 5- Gender Equality. 60 percent of loans disbursed are targeted at womenowned businesses; due to the peculiar challenges and social vulnerabilities they face in running their businesses, especially in developing countries. Beneficiaries across the 36 states of the federation are attesting to how this loan has bolstered

more market women and artisans we help assess the loans, the higher our commission,” an agent, Ola, who coordinates over 70 market associations, said. The demography of its target recipients largely includes the underbanked and unbanked. Over 150,000 out of the 350,000 recorded beneficiaries were first time account holders. Most low-income earners still believe that saving money at home is easier and safer than banks. Literature supports that provision of micro loans to underserved segments is very effective in driving financial inclusion; GEEP MarketMoni is another proof. Meanwhile, the awareness of GEEP MarketMoni is fast growing. Stakeholders including the Vice President, minister for industry, trade and nvestment, Okechukwu Enelamah, special assistant to the President on Social Investment Programmes, Maryam Uwais, executive director of BoI, Toyin Adeniji, have been touring the country to see to the growth and spread of this laudable initiative. The most recent was Kano, where the Vice President, mingled with some of the 12,000 beneficiaries in the state. In Ondo and Anambra, thousands of market women and artisans from over 100 associations and cooperatives have also commended the government for the gains the GEEP MarketMoni loans have brought to their businesses. It is hoped that in time and with this much needed social intervention programme of the government, the Nigerian micro business industry will become reminiscent of China whose small business industry is one of the most vibrant in the world. Currently, GEEP MarketMoni is the largest microcredit finance scheme in Africa, and the most ambitious in the history of Nigeria.

BUSINESS DAY

Wednesday 30 May 2018

SHIPPING

LOGISTICS

MARITIME e-COMMERCE

SIFAX Haulage positions for greater productivity, quality service delivery …Invests over N1bn in acquisition of 20 new trucks Stories by UZOAMAKA ANAGOR-EWUZIE

etermined to deliver efficient and quality services to cargo owners especially shippers, SIFAX Haulage and Logistics Limited, a subsidy of SIFAX Group, has invested over N1 billion in the acquisition of 20 brand new trucks. The acquisition of the new trucks was to not only boost its operations and consolidate its position as a leader in Nigeria’s logistics industry, but to also ensure timely movement of cargo in and out of the ports. By specification, the trucks are European trucks with 420 horse power rating. Ten out of the 20 trucks were ‘6 by 4’ double axles while the other 10 are triaxle flatbeds with 48 tonnage capacity. The 20 new trucks were brought to complement the 55 trucks already existing in the company’s fleet, thereby bringing the total number of fleet to 75 trucks. Speaking at the official commissioning of the trucks in Lagos last week, John Jenkins, Group managing director, SIFAX Group, said that with the

L-R: Ezekiel Ajewole, executive director and senior special assistant to the GEVC, SIFAX Group; Adewale Adetayo, general manager, SIFAX Haulage & Logistics Limited; John Jenkins, group managing director, SIFAX Group; Henry Ajetunmobi, executive director, SIFAX Off Dock and Fola Rogers-Saliu, executive director, Human Resources and Administration during the commissioning of 20 new trucks recently acquired by SIFAX Haulage.

commissioning of the 20 new trucks, SIFAX Haulage, now lives up to the standard it was known for especially due to the fact that the company’s business acumen is geared towards meeting customers’ needs. “We understand the need for further investment to satisfy our customers. Today’s commissioning is in line with the company’s vision of making its brands and businesses the front liners in their respective sectors. It also shows our

commitment in constantly strengthening the logistics value chain of the maritime sector, which haulage is an important part,” he said. Jenkins further assured clients that with the new acquisition and relevant capacity development programmes that the staff has undergone, the quality of service to the clients will be a lot better going forward. Adewale Adetayo, general manager, SIFAX Haulage

Zenith Bonded Terminal grows cargo volume by 66.7% in 12 months

he volume of cargo throughput handled at the Zenith Bonded Terminal grew by 66.7 percent to 5,000 Twentyfoot Equivalent Units (TEUs) of containers within a space of 12 months, 2016 to 2017, Innocent Obele, managing director/CEO, has said. Obele, who disclosed this to newsmen in Lagos, recently, said that the volume of cargo handled in the terminal grew from 3,000 TEUs in 2016 to 5,000 TEUs in 2017. Zenith Bonded Terminal is strategically located around Maza-Maza area of Lagos State and has capacity to seat 1,000 TEUs of containers. The company, which became operational three years ago, is a fully indigenous bounded terminal that is owed by Zenith Shipping Company Limited. According to Obele, it was projected that the terminal will see further growth in vol-

ume to about 7,000 TEUs at the end of this year from the 5,000 TEUs that was recorded last year. Obele however disclosed that the company has put in place necessary equipment for cargo handling business to thrive, especially as the port area has failed to offer timely delivery of cargo to importers’ warehouses. “We are working at making Zenith a preferred destination for shippers especially with the traffic situation in and around Apapa Port city. We have also acquired the relevant cargo handling equipment to enable us offer efficient and effective services to our clients,” he said. Polycarp Oguchukwu, terminal manager of Zenith Bonded Terminal, disclosed that the facility has adequate cargo handling equipment to ensure smooth and speedy cargo delivery to its clients. Oguchukwu listed the

equipment to include two forklifts; two Kamal cranes and a fleet of trucks for clients that want their consignment transferred from the port or want to engage the company in moving the containers to the preferred destination. He said that the facility is compliant to the Nigeria Integrated Customs Information System (NICIS 2), a new Customs e-platform for processing of import/export documents. He added that all the security apparatus required at a conventional port were put on ground at the facility to ensure ease doing business for importers and exporters. Apart from the conducive operating environment, Oguchukwu stated there was adequate security put in place at the facility both independent security personnel and officials of the Nigeria Police Force (NPF).

& Logistics Limited, said the company’s decision to expand its fleet is a statement of intent by SIFAX Group to deliver better services to its clients and become an undisputed leader in the logistics industry. “The acquisition of these new trucks is a clear demonstration of the unfettered commitment of the management of the Group to achieving the strategic goal of repositioning its haulage business to greater productivity. It is also part of

the company-wide strategy of strengthening all the subsidiaries with the requisite capacities and capabilities to meet the corporate objective of delivering best value in all sectors we operate,” Adetayo said. According to him, the new investment has positioned SIFAX Haulage to compete favourably in this heavily competitive industry. He disclosed that the company’s haulage business is growing by the day as different clients were now signing deals with them apparently due to the quality of its customerfocused service – consignment transfer and nationwide delivery that is executed by well-motivated workforce. “This phenomenal growth has put us under pressure to build more capacity and we are glad today that these new trucks will help in fulfilling our brand promise as we scale up our capacity to meet our clients’ needs,” he added. Continuing, he stated that “With this acquisition, our transfer and delivery processes will be sharpened and we can now compete favourably in the movement of deadweights. We are poised to change the haulage and logistics landscape in

Nigeria with the expansion of our fleet. Our haulage team has been well prepared and equipped with various technical trainings to take charge of the operations of the new trucks.” Stating that the investment will enable increased revenue generation, reduction in service breakdown, increased turnaround time and a moresatisfied clientele base, Adetayo disclosed that the vehicles have been installed with video tracking devices that will enable the management to monitor their movements centrally from the office and other remote devices. Henry Ajetunmobi, executive director, SIFAX Off-Dock, who advised the drivers to handle the trucks as if they were owned by them, said the new acquisition will position the company to deliver goods to the right place, at the right and with the right speed. “In doing this, we must be the trailblazers that uphold quality service delivery to our clients. We must therefore continue to discharge our duties not only in an effective and efficient way, but also guided by the ethos of transparency and accountability,” he added.

Apapa Bulk Terminal wins Best Port Terminal Operator award

he Apapa Bulk Terminal Limited (ABTL) has emerged the Best Port Terminal Operator of the year at the Oil & Gas Lecture Series and Awards held in Abuja, at the weekend. The event tagged “Abuja 2018’’ with the theme: Nigeria’s Petroleum Industry Governance Law & Global Investment Opening in the Sector,” was organised by the Institute of Oil and Gas Research & Hydrocarbon Studies. The award was presented by Uko Akpatang, deputy

chairman advisory board of the Institute. Speaking on the award, Marvin Abe, managing director of ABTL, said the award represents the fact that the society recognises and appreciates the quality services being rendered by the terminal. According to him, there are other competitors in the same business, but ABTL must have been doing something different which has attracted such recognitions from the institute. Abe, who dedicated the award to the entire ABTL

L-R: Aghaenu Austin, mechanical maintenance manager, Apapa Bulk Terminal Ltd (ABTL); Adewusi Ebenezer, assistant accountant, ABTL; Marvin Abe, managing director, his wife Rhoda Abe and Akindele Aderemi, terminal manager, ABTL during oil and gas lecture series and presentation of best terminal operator’s award to ABTL in Abuja recently.

team, assured the company will not relent in rendering quality services but will continue its expansionary programme in the area of terminal management; cargo consolidation/operations and logistics services. Congratulating the company, Akpatang said ABTL has demonstrated excellence in dry bulk cargo operations; general cargo operations; liquid cargo operations and container services. Akindele Aderemi, terminal manager of ABTL, said the recognition is well deserved going by the innovation being introduced by the present management of the company. ‘‘Since Abe came on board, the company has been placing strong emphasis on safety. The award will definitely spur us to do more,’’ he said. Eghosa Osagie, the lead lecturer at the award ceremony, who spoke on the topic ‘Oil & Gas Industry, Economics &Politics in Nigeria,’ said good governance is required in the nation’s quest for diversification of its economy.

BUSINESS DAY

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Wednesday 30 May 2018

Tax Issues

FG says taxpayers rise to 19.3 million on VAIDS implementation

…30 days to deadline IHEANYI NWACHUKWU

he Federal Government has said that the ro b u s t i m p l e mentation of Voluntary Assets and Income Declaration Scheme (VAIDS) has driven an increase in the number of tax payers in Nigeria. Kemi Adeosun, finance minister who disclosed this in her May 27 tweet said the number of taxpayers i n c re a s e d f ro m 1 3 m i l lion before the assumption of office by the President Muhammadu Buhari administration to 14 million in 2016 and 19.3 million in 2018. This implies that an additional 6 million new taxpayers have been added to Nigeria’s tax bracket. This revelation comes barely 30 days to the June 30, 2018 deadline for taxpayers to utilise the tax amnesty opportunity. President Buhari had in April approved the extension of the Voluntary Assets and Income Declaration Scheme to June 30, making

it easier for corporates and individuals that have been defaulting in tax payments to take advantage of this amnesty scheme so as to avoid reputational risk. VAIDS is one of the key policies being used by the Federal Government to reposition the Nigerian economy and correct inherited underdevelopment. This tax amnesty scheme is not to persecute individuals and companies but an opportunity for everyone to regularise all their tax irregularities, according to Federal Government which has also empowered the taxman who has been busy digging into the financial transactions and wealth structures of individuals and corporates. The taxman is looking at the tax files, full time employee with multiple income sources, companies with understated revenues, use of offshore tax shelters, lifestyle inconsistent w i t h t a x p ay m e nt s, t h e entertainer, high networth family with complex tax situation, and retiree with unexplained assets.

This increasing desire to shore up tax revenue comes on the heels of statistics putting Niger ia’s tax-to-GDP ratio at 6percent, which is one of the lowest in the world. This ess entially implies that tax’s contribution to the economy is low. This was partially a function of the reliance on oil that saw us abandon the historical revenue collection systems and switch to a culture of shar-

ing resources, rather than generating them. T h e J o i n t Ta x B o a r d (JTB) in a communiqué issued at the end of its 140th meeting held from March 25 to 28, 2018 wants revenue authorities nationwide to ensure that all efforts are made to increase the ratio of national tax revenue to GDP to at least 20percent by December 31, 2018. The short extension of VAIDS after the original March 31, 2018 date was

based on the appeals of professional bodies and individual taxpayers. Federal Government insists no fur ther extension of time will be approved after June 30. The extension was given based on the conviction of the Ministry of Finance that the overall objective to increase compliance will be attained, and additional revenue will accrue. “For a nation of people who are competitive and driven, it is not a pride that we are the lowest performer in tax to GDP, not just in Africa, but in the world. Nigeria’s growth needs are such that every Nigerian must do his duty to his nation, to his neighbour, and to himself. Hiding monies overseas, evading taxes by manipulation, and other unwholesome practices, have never developed a country, and for Nigeria to attain her true potential, these must stop”, said President Buhari. T h e P re s i d e n t u r g e d Nigerian companies and individuals to join government in the rebuilding

mission, “and do the right thing by taking this window of extension to regularize.” He added that the right thing may not be convenient or comfortable, “but in the long run, we will all have a nation we can be proud of.” President Buhari further urged tax authorities to use the extension window to perfect plans to prosecute those who fail to regularize their tax status. Fe d e ra l G ov e r n m e n t had last year launched the Economic Recover y and Growth Plan (ERGP), and t h e VA I D S t a x a m n e s t y is first in the series of reforms that will transform our tax system and provide sustainable pre dictable funding for all tiers of government. Tax revenues will ensure that public infrastructure is provided, and public services are funded to improve the lives of the people and also redistribute wealth from those who have more to those who have less, and VAIDS is one of the windows to achieve such.

Country-by-Country initiative shows strong progress for BEPS Action 13 roll-out in June IHEANYI NWACHUKWU

he Organisation for Economic Co-operation and Development (OECD) has just released first peer reviews of the Country-by-Country (CbC) reporting initiative on Base Erosion and Profit Shifting (BEPS) Action 13. Country-by-Country reporting, with exchanges slated to begin in June 2018, will see tax administrations worldwide collect and share detailed information on all large MNEs doing business in their country. It demonstrates strong progress toward the imminent implementation of a key element in continuing efforts to improve taxation of multinational enterprises (MNEs) worldwide. Base Erosion and Profit Shifting refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate

tax being paid. The BEPS Action Plan which was adopted by the OECD and G20 countries in 2013 recognises that enhancing transparency for tax administrations by providing them with adequate information to assess high-level transfer pricing and other BEPS-related risks is a crucial aspect for tackling the BEPS problem. “The peer review outcomes and the launch of the global exchange of CbC reports in June

show that the BEPS measures are being implemented rapidly, consistently and globally,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration. The BEPS Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides a template for multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the information

set out therein. This report is called the Country-by-Country (CbC) Report. Since the Action 13 Report was released, jurisdictions have made great efforts to establish the necessary domestic and international legal and administrative frameworks for the filing and exchange of CbC Reports in accordance with the Action 13 minimum standard and the global landscape for CbC Reporting by MNE groups is still

evolving. The first annual peer review focuses mainly on the domestic legal and administrative framework, and reflects implementation as of January 2018. It is part of a phased approach which gradually monitors the domestic legal and administrative framework, the exchange of information framework, and the confidentiality and appropriate use conditions over three annual reviews (starting in 2017, 2018 and 2019). The recent peer reviews show that practically all countries that serve as headquarters to the large MNEs covered by the initiative have introduced new reporting obligations compliant with transparency requirements. The second annual peer review, covering all members of the Inclusive Framework, was launched in April 2018. It will focus on the exchange of information aspects, as well as the confidentiality and appropriate use conditions. CbC reporting is a minimum

standard of the OECD/G20 Base Erosion and Profit Shifting initiative, which aims to equip governments with the domestic and international instruments needed to ensure that MNE profits are taxed where economic activities generating the profits are performed, and where value is created. Information collected includes the amount of revenue reported, profit before income tax, and income tax paid and accrued, as well as the stated capital, accumulated earnings, number of employees and tangible assets, broken down by jurisdiction. More than 1400 bilateral relationships are already in place for CbC exchanges, with more to come throughout the year. Under the Action 13 Minimum Standard, jurisdictions have committed to foster tax transparency by requesting the largest multinational enterprise groups (MNE Groups) to provide the global allocation of their income, taxes and other indicators of the location of economic activity.

Wednesday 30 May 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

BusinessDay Radio programme; Financial inclusion today Aired yesterday by 11:30am on Rhythm 93.7 FM Themed: Bridging the gender gap in financial inclusion With Nwanna Joel Ezeugo, the Chief Commercial Officer at Accion MFB as the guest and BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor, anchored by Lehle Balde ccording to the World Bank Global Findex Database, Nigeria has a 24 percent financial inclusion gap between the male and female adults in Africa’s largest economy, this implies that the male adults in Nigeria are 24 percent more financially included that the female. Deliberating on how to include more Nigerian women into the financial circle, considering the widening gap from 20 percent in 2014 to 24 percent in 2017, Ezeugo stressed out ways to better bring in more women into the financial space and cited out ways Accion Microfinance

bank (MFB) have contributed to making this a reality. “Accion MFB started its operation in 2007 with the mission to economically empower micro entrepreneurs and low income earners, and for the past ten years we have seen that we have actually reached more women than men, although the products and services of Accion are not tailored specifically to women, but we have reached more women at about 68 to 70 percent for both savings and loans,” Ezeugo said. She stressed that when women are economically empowered, the whole family becomes also empowered, as most of their female customers who they have been able to reached out to in the past ten years, their families’ livelihood end up becoming better, with most of their children in school, owing to the fact that there is support from the women in the family. The commercial officer therefore said there is need to ensure more women are financially

included. However, the set 80 percent financial inclusion target by the Central Bank of Nigeria (CBN) was seen as unachievable by Ezeugo owing to what she called infrastructural defects which are mainly seen in the rural and not so urbanised area, as these defects do not allow the financial institutions to operate in those areas.

“For example, we are in 2018 and as such we expect that most of the things we do are digitally controlled but how do you do that when there are no lights in the villages, when there are no touch points, banks are not willing to go these areas, even in Lagos, the semi urban areas of the city do not have banks,” Ezeugo mentioned.

On the way to go in including more Nigerian women into the financial space the guest on the programme, Ezeugo said there is need to bring in more women in the rural areas as they are most affected. On how they intend to achieve this she said Accion MFB in collaboration with other stakeholders are going into the rural areas especially in the Northern part of the country, putting in mind the cultural and religious challenges in those areas. In collaboration with Efina, a global financial organisation, Accion MFB plans on using digital means to reach these women in the rural areas, as most of them have access to mobile phones. So without necessarily meeting with all of them in person, they can be reached through their mobile phones and also in the languages they best understand. This will enable them have access to credit, savings and loans which they can use to fi-

nance their small businesses, which in a long run will enable them help and support their families. On the barriers that hinders women financial inclusion in Nigeria, she cited lack of education, lack of infrastructure, cultural barrier among others and ways to manoeuvre through the challenges, she further stressed on the use of technology like mobile phones as it will create avenue to directly reach out to these women who normally are not allowed by their husbands and culture to do things for themselves. She concluded by saying there is deep need to bring in more women in the rural areas into the financial circle, as they are the most affected and excluded owing to the lack of infrastructure in those areas and the way to go in achieving this should be for the government to put up more infrastructure in those areas, as this will encourage more commercial banks to have their presence in the areas.

dustrial revolution and digital transformation. Telcos, who powered the penetration and adoption of mobile phones across the country and are today, one of Nigeria’s success stories, can also be considered fintechs since they have the capacity to lead the delivery of financial services, as they have in other countries like Ghana and Kenya. Google, Facebook, WeChat and co all provide financial services of some kind in other parts of the world. Paycom, creators of Opera Mini, one of the more popular web browsers in Nigeria, is rumored to be acquiring a Nigerian mobile money operator (MMO) in the coming weeks which will enable it also provide digital financial services. In short, the fintechs are here, whether we want them or not.

as a warning to the banks or their need to further up their ante? The reality remains that fintechs continue to evolve in the financial service sector largely as a result of unmet customer needs, especially needs relating to financial access, convenience, remoteness, timeliness, low cost-to-use and the ease of use. There’s a school of thought that says banking will change through collaboration and not the perceived disruption or threat posed by fintechs. Hence, rather than turf wars, what the ecosystem needs is collaboration. The evolution of Nigerian financial services rests on how fast or how soon the ecosystem fosters collaborative relationships. Rather than build moats, what we need is for both parties to build bridges, come to the table bearing gifts, ready to dialog and figure out ways to leverage each other’s strengths. “If you want to go far, go together.” - African Proverb What are your thoughts on the CBN governor’s statement? And what’s your view on the role and future of fintechs in Nigeria? Send us your thoughts at sustainabledfs@ lbs.edu.ng or Twitter: @SustainableDFS

Fintechs: Friend or Foe? IBUKUN TAIWO & OLAYINKA DAVID-WEST “Fintech is a threat to the nation’s banking industry” he preceding statement, made by the CBN Governor at the investiture ceremony of the Chartered Institute of Bankers, literally threw the financial services ecosystem into a frenzy. This is a puzzling statement coming from the highest ranking official of the governing bank especially in light of Nigeria’s brief history with financial technology (fintech) firms. The global financial crises as well as the increasing number of redundant city workers can be attributed to the evolution of fintech firms. Adopting digital technologies and business models, these new businesses led financial services innovation, developing new products and services. Likewise in Nigeria, since the entry of fintech into the financial services sector, the ecosystem has recorded significant progress in the areas of payments and the underlying infrastructure. Organisations like Interswitch and recent entrants such as Paystack and Flutterwave have complemented the industry, and in the process empowered thousands of Nigerians with the tools they need to drive the economy. In addition, their ability to attract capital has contributed to the quota of foreign direct invest-

ments in the country. Only last week, Lidya, the MSME lending platform, raised $6.9 million in Series A funding. Hence, it is safe to say that the entry of fintechs into the Nigerian banking sector was the dose of adrenaline the sector needed and has resulted in a win-win scenario for the ecosystem. So, how then can fintechs be regarded as threats or should they not be perceived as friends? In this piece we share opinions on some contrary arguments. In a bid not to be outdone on their own turf, traditional financial institutions (especially the banks) have also upped their game, adopting digital technology on most fronts of their service delivery. The positive side of this intrusion into the ecosystem has served as a wakeup call to the banks and the need to focus on innovation. ALAT, the digital bank powered by Wema Bank is a roaring example of such innovation. This realisation is spreading to other banks and resulted in the establishment of innovation spaces like the Access Bank Fintech Foundry. Let’s talk about financial inclusion. Fintechs have already proved their usefulness with the opportunities they bring in financial services, especially with their ability to reach the last mile and address financial inclusion. Looking at other emerging markets, fintechs

have been central to the progress and success of attaining financial inclusion targets. Fintech firms provide traditional financial services (savings, loans, payments, fund transfer, insurance and investment) using innovative, low-cost technologies and business models. This is important because high cost of financial services has been a deterrent to financial inclusion and the industry is looking to lower the cost of delivering financial services to previously unbanked populations. There have been several calls for forward thinking within the financial services industry, an industry that is notorious for its conservative approach to innovation and service delivery. The entry of fintechs into the banking sector, unbundled banking as a service. Most of the fintechs we see today focus on payments. This has led to a lot of activity and innovation happening within and around that

segment. Looking at the other aspects of banking as well as other financial services, we need more fintechs in areas like insurance, investment management and, financial advisory and so on; not less. The increased fintech penetration can unbundle those financial services and perhaps move the needle in terms of adoption and penetration. What should be clear by now is that any nation that is determined to improve not only its banking sector but its entire financial services ecosystem, needs to embrace the fintech value proposition and create an enabling environment for them. If the Central Bank is going to take a hostile stance towards fintechs, just how far does this stance extend? The line between technology companies, fintechs and run of the mill organisations blurs every day. This phenomenon is not unique to financial services, but is integral to the fourth in-

Impact of statement While the CBN cannot stop or let alone even control or tame the digital transformation wave, their statements and regulations can kill the mojo. Our fear with statements such as these is that it has the potential to influence investor confidence in the industry negatively. With fintechs being viewed as public enemy number one within the ecosystem, investors would be left dreading how this would influence future frameworks and guideline amendments the apex bank may be releasing in the coming weeks. Alternatively, could we flip the interpretation

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

36 BUSINESS DAY NEWS New MRO facility in Lagos will save Nigeria $90m annually - Buhari IFEOMA OKEKE

resident Muhammadu Buhari has disclosed that a new Maintenance Repair and Overhaul (MRO) facility with capacity for aircraft C-checks and other comprehensive levels of maintenance established in Lagos will save the country an estimated $90 million annually. In his Democracy Day broadcast on May 29, Buhari stated that the transportation sector continues to undergo a series of reforms in order to sustain the international best practices and ensure safety and security. The nation’s major airports have witnessed reconstruction of runways, installation of navigational equipment and new international terminals due for commissioning in Abuja, Lagos, Kano and Enugu, while Bilateral Air Services Agreements between Nigeria and the governments of other countries will significantly open up new flight routes, he said. The President observed that as a result of strict regulatory and compliance policies, Nigeria retained her Federal Aviation Administration (FAA) Category 1 status, after a routine international audit. According to Buhari, “Giant strides have been record-

ed over the past three years to improve road transport infrastructure in all geo-political zones of the country. “The Railway Sector has also received tremendous attention as this Administration is committed to the goal of linking all State capitals in the Federation by rail network to ease the movement of goods and passengers.” The President explained that the government recently conducted Focus Labs in three key sectors of the Economy namely, Agriculture and Transport, Manufacturing and Processing as well as Power and Gas which have yielded significant prospects for investments and Job creation to the tune of $ 22.5 billion with a potential for creating more than 500,000 jobs by 2020. He said these investment generation initiatives were expected to increase capital inflows in the form of foreign direct investment. The President added that there was a high prospect that the cumulative investments from this first phase of the Labs would hit $39.2 billion by 2025. Under agriculture, he explained that Nigeria continues to pursue a strategic food security programme built around self-sufficiency and minimisation of import dependency.

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Wednesday 30 May 2018

Edo tasks conference of NGOs on public trust, assures on good governance

Democracy Day: Obaseki lauds Edo people for unflinching support, as residents celebrate

overnor of Edo State, Godwin Obaseki, has pledged to work with non-government organisations, as his administration is open to ideas and public scrutiny, urging NGOs to defend public trust. Obaseki gave the assurance when he received the new executive members of Conference of Non-Governmental Organisations (CONGOs), who paid him a courtesy visit at Government House in Benin City, Edo State. He said, “Since we are elected to uphold public trust, we will continue to put tax payers’ money and other resources at our disposal to proper use in our mission to transform and develop the state and make life better for our people. “We will not relent in making public, government activities and information for scrutiny, because we have nothing to hide. We will tell you what we have spent on our projects,” the governor pledged. He assured CONGOs’ new executives that his administration would work with the group by ensuring that the group gets free access to government information on demand. He noted that his administration would not waste public wealth, as the administration remains diligent in expending public funds to develop the state.

He urged the group to be credible in carrying out its mandate to ensure that the public interest it represents was not replaced with self-interest. “You should not use this platform to access government and negotiate your own private benefits,” he advised. “We will support you to succeed because we believe in your organisation, in your cause and your mandate,” he added. He expressed optimism that the new executives will advance CONGOs’ interest in ensuring the group remains transparent, noting, “We believe with the calibre of people managing the affairs of the group, we will have a transparent partner in our dealings.” Earlier, the President of CONGOs, Daisy Idufueko Abiola, said they would work with Edo State Government on different thematic areas of development. “In line with the vision of the group we will work with the state government to drive development,” she said. She commended the governor for the state’s developmental strides and the success recorded in tackling illegal migration and human trafficking; job creation; education reforms; infrastructural development; improved traffic management system and in open governance.

do State governor, Godwin Obaseki, has commended residents and indigenes of the state for the peaceful Democracy celebrations, thanking them for their unflinching support for his administration and policies. Obaseki, who noted that his government was strengthening relevant institutions for democratic consolidation, applauded the serene and reflective mood with which the day was marked. He enjoined the people of the state to continue to play their role in deepening democracy by actively participating in the electoral process, which has improved over the years. He said the state government would continue to work for the people, by designing and implementing people-centric policies, assuring space for equal access to justice and ensuring economic growth and development. According to Obaseki, “This day is one of extreme significance in our history as a nation as it marks the 19th year of return of

power to the people under this republic. I therefore join Nigerians in the celebration. “For nearly two decades, our democracy has continued to mature, leading to strengthened institutions, social justice and economic development. Also, as our democracy is being progressively deepened, our electioneering process is getting better.” Noting that improved structures have deepened the dividends of democracy in Nigeria, he said, “In Edo, this advancement in our democracy has resulted in better infrastructure, improved education and health care delivery system, and a government that empathises with those dislocated by social crisis, many of whom unfortunately became victims of human trafficking and modern-day slavery but are now being reintegrated into society. “I use this opportunity to call on all Edo people, Nigerians and friends of our dear country to support our effort to enlarge the gains of our democratic journey.”

Buhari to sign ‘Not Too Young to Run’ bill into law TONY AILEMEN, Abuja

resident Muhammadu Buhari has assured that he will soon sign the “Not Too Young to Run” bill into law. The President stated this among others in his Democracy Day broadcast to the nation, to mark the third anniversary of his administration in office. The President, who used the opportunity to list his administration’sachievementsinofficeinthe last three years, said, “In few days to come, I will be joined by many promising young Nigerians to sign into law the “Not Too Young to Run” bill. The bill, which was passed since July 2017, had been undergoing several legislative processes as stipulated for the amendment of anysectionofthe1999Constitution. The bill, enacted by the National Assembly, seeks to amend Section 131(b) of the 1999 Constitution, which requires that “a

person is qualified to be President if he has attained the age of 40 years.” The Bill also amended Section 65(a&b), which stipulates 30 and 35 years as age that must be attained to contest for the Senate and the House of Representatives, respectively. The Bill finally received the nods of 24 states of Nigeria as required for the amendment of the Constitution in February this year. The President’s assent to the Bill will mean that Nigerian youths can now contest for the office of the President at the age of 35, while the Bill reduces the age required for governors or senators to 30 years, from the initial 35 and 40 years limit, respectively. This also means that 25-yearold people can now legislate in theNationalandStateAssemblies across the country, as against the earlier 30 years stipulated by the Constitution.

Mannir Ringim, regional bank head, North West1 Region, (2nd l); Ahmed Rabiu, commissioner for commerce, trade and industries, Kano State; Mohammed Balarabe, deputy managing director, Fidelity Bank plc; Mahmud Ado Bayero, district head (Hakimi), Fagge and Tafidan Kano, and Boniface Ibekwe, Eze Ndi Igbo of Kano, at the commissioning of the Sabon Gari, France branch, Kano, of Fidelity Bank plc recently.

What the US, China trade spat means for Nigeria sorghum farmers ENDURANCE OKAFOR

igeria, the world’s second-largest producer of sorghum after the US, could benefit from what may be a trade war between the Trump administration and the Republic of China. This is following retaliation by China on the US due to the imposed tariff by the US on $60 billion Chinese goods and limiting China’s ability to invest in the US technology industry. China, which has already implemented retaliatory tariff

of up to 25 percent on $3 billion in food imports from the US, is seeking Nigeria as its alternative source of sorghum as risk of a trade spat with the US. Unfortunately, Nigeria may be unable to fill the gap as violence in the producing regions leaves fields idle. This follows attacks by both the Fulani herdsmen and Boko Haram on the states that produce sorghum in Nigeria. While the Boko Haram insurgency is taking its toll on the North East, Fulani herdsmen are on the loose, destroying farmlands in North Central Nigeria, killing farmers and

their families and burning their villages and farm produce. As such, fighting has intensified this year between herders and farmers over grazing land across much of central Nigeria, displacing hundreds of thousands of farmers, many of whom grow sorghum and other grains. Nigeria produced 6.5 million metric tons of sorghum in 2017, second only to the US that had output of more than 8 million tons, according to the US Department of Agriculture. Nigeria’s agriculture ministry puts annual output at 11 million tons, which it says is not enough

for local demand of 12.5 million tons, raising questions about the capacity to export. Sorghum is a drought-resistant grain used in the food and brewing industry as well as livestock feed, and a staple in parts of the world. Experts see the potential trade war between China and the US as an opportunity for Nigeria to export to China, although they fear Nigeria may not be able to take it as the country’s capacity is dwindling because of all security problems in the agricultural belt of the country. China imposed a tariff of 179

percent on imports of US sorghum in April, after starting an anti-dumping and anti-subsidy investigation in February. It recently announced it was suspending the measure as the two countries seek to resolve their trade dispute. Meanwhile, buyers from China began making inquiries from Nigerian suppliers even before retaliatory tariffs with the US set in. According to the United States Department of Agriculture (USDA), the area planted with sorghum in Nigeria will decline 3 percent in 2018 to 5.2 million hectares (12.8m acres)

due to the resurgence of attacks by Boko Haram Islamist militants in major producing areas. China is the world’s largest sorghum market and the threats of a trade war with the US have provided sorghumproducing countries the opportunity to gain from the dispute between the world’s two biggest economies. Nigeria is Africa’s top oil producer and suffered its worst economic contraction in 25 years in 2016, after prices collapsed. It is seeking to diversify its crude-dependent economy by boosting agricultural exports.

Wednesday 30 May 2018

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NEWS Democracy Day: Saraki warns against abuse of office, selective trial OWEDE AGBAJILEKE, Abuja

s the 2019 general elections draw near, Senate president,BukolaSaraki, has cautioned against abuse of office and persecution of perceived political enemies. Saraki, who has been have running battle with the Inspector General of Police, Ibrahim Idris, also warned against stifling of free expression, undermining of democratic institutions as well as impunity. In his Democracy Day messageonTuesday,theSenatepresident also advised Nigerians not to take for granted the continued democratic dispensation the country had been enjoying for the past 19 years, but guard against actions, statements and moves that could truncate the political process. “That is why we cannot be celebrating Democracy Day without canvassing for caution on some recent negative developments in our polity, particularly as we prepare for next year’s general elections. These include abuse of office in a manner that suggests persecution and oppression of perceived enemies, stifling of free expression, undermining of democratic institutions, and impunity on the part of certain

persons who behave as though theyareabovethelawsoftheland. “These developments should be of concern to all democrats. Other political and opinion leaders who decided to veil their sight as if they are not seeing these infractions on democracy and choosetokeepquiet,shouldknow that they equally pose danger to the survival of our country,” Saraki said in a statement signed by Yusuph Olaniyonu, his special adviser on media and publicity. The lawmaker stressed that the 2019 elections must be freer, fairer and more peaceful than the 2015 polls, adding that Nigeria cannot afford to retrogress, having set high standards in the last exercise. While congratulating Nigerians on the 19th anniversary of unbroken elected government in thecountry,headvisedthepeople to always be vigilant and speak against anti-democratic policies and actions, capable of subverting rule of law. Healsocanvassedstrictadherencetotheprinciplesofruleoflaw, separation of powers, sovereignty of parliament, independence of the judiciary, and freedom of the press. “As we celebrate democracy today, I congratulate our people and express my conviction that this system of government is the

best so far invented. However, it goes beyond the conduct of elections to put leaders in office. Democracyinvolvesstrictadherence to rule of law as against the rule of men. It is about respect for due process and following laid down procedures. It is about respect for and building of institutions. “History will not be fair to us if we allow our complacency to jeopardise democracy. We all must be able to speak out with strong voice on issues that constitute a danger to democracy. Eternal vigilance, they say, is the price of liberty. “At this point, let us remember and salute our heroes of democracy, those who toiled and paid different prices for us to have elected government, particularly, those who paid the ultimate price with their lives. Their labour shall definitely not be in vain. “Also, it is important for us to quickly tackle all issues that can undermine our democracy, particularly insecurity and lack of good governance. We must immediately find solution to the security issues and ensure that we return the regime of peace, safety of lives and property in all parts of our country. In the same way, we must do all that is necessary to deliver good governance to our people and fight corruption at all levels.

BDCs to access $48m from CBN today HOPE MOSES-ASHKE

ureau De Change Operators (BDCs) today, May 30, will access foreign exchange to the tune of about $48 million from the Central Bank of Nigeria (CBN). About 80 percent of over 3,000 BDCs is expected to participate in tomorrow’s auction where each operator will access a total of $20,000 each. The operators are expected to fund their accounts every Tuesday to access forex on Wednesday, every Thursday for Friday supply and every Friday

CHANGE OF NAME

I, formerly known and addressed as Nwakwuo Chinwendu Hezekiah Sunday now wish to be known and addressed as Nwakwuo Chinwendu Sunday. All former documents remain valid. GT Bank and general public please take note.

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I, formerly known and addressed as Miss Chidimma Prisca Onuoha now wish to be known and addressed as Mrs Chidimma Prisca Chukwu. All former documents remain valid. General public please take note.

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I, formerly known and addressed as Miss Roseline Obukohwo now wish to be known and addressed as Mrs Roseline Kevwe Olori. All former documents remain valid. General public please take note.

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I, formerly known and addressed as Gloria Uyoyou Akpotegwa now wish to be known and addressed as Gloria Uyoyou Davies. All former documents remain valid. GT Bank and general public please take note.

for Monday’s supply. On Monday, about 80 percent of the total number of BDCs accessed $20,000 each from the CBN. Consequently, the naira/ dollar exchange rate moderated. Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), exchanged at N363 per dollar at the BDC segment of the foreign exchange market. The CBN had all BDCs shall access forex from CBN on Mondays, Wednesdays and Fridays, saying it is compulsory that all BDCs access forex at least three times weekly. “Any BDC that fails the forex window at least three times weekly shall its license reviewed by the CBN. Compliance is compulsory”,a statement signed by Isaac Okorafor, CBN spokesman reads. The CBN also mandated all deposit money banks to buy and sell foreign exchange to travellers (both customers and non-

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customers upon presentation of relevant, valid travel documents such as visa and ticket over the counter. The move is to ensure that eligible travellers are able to access foreign exchange and make liquidity available in the market. As a way of ensuring compliance, Godwin Emefiele, Governor of CBN on Monday visited some deposit money banks including First Bank, UBA and Zenith banks offices in Abuja to monitor sales of foreign currencies to customers. “The essence of us being here is to make sure that the banks are able to service not just their customers, but also those who are not their customers, particularly those who want to travel outside the country. “I want to seize this opportunity to let everybody know that there is dollar availability. If you want to travel, go to a bank. It doesn’t have to be your bank”, Emefiele said.

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I, formerly known and addressed as Miss Tobi Victoria Olosunde now wish to be known and addressed as Mrs. Tobi Victoria Uduak. All former documents remain valid.General public please take note.

I, formerly known and addressed as Thompson Osemekhian Oamen now wish to be known and addressed as Thompson Osemekhian Davies. All former documents remain valid. General public please take note.

CHANGE OF NAME

CORRECTION OF NAME This is to notify the general public that the name was wrongly written as Oyewumi Emmanuel Dimeji to my correct name Oyewumi Dimeji Oyediran. All former documents remain valid. General public should take note.

I, formerly known and addressed as Uloma Edith Hossou now wish to be known and addressed as Uloma Edith Emenye Emenye. All former documents remain valid. General public please take note.

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I, formerly known and addressed as Miss Chidinma Angel Okpal now wish to be known and addressed as Mrs Chidinma Angel Egbunu. All former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Sulyman Robiat Omobolanle now wish to be known and addressed as Sulyman Robiat Ayinke. All former documents remain valid. GT Bank and general public please take note.

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Buhari’s 2018 Democracy Day speech: 7 main claims under scrutiny

iving his second c o m m e m o ra t i v e D e m o c ra c y D a y speech, Nigeria’s President Muhammadu Buhari listed several achievements of his government during the past three years in power. Do his claims tally? President Muhammadu Buhari gave his second Democracy Day speech on 29 May 2018 to commemorate Nigeria’s return to civil rule in 1999.

L-R: Sola Adeeyo, independent director, Central Securities Clearing System (CSCS) plc; Haruna Jalo-Waziri, managing director/chief executive officer, CSCS plc; Oscar Onyema, chairman, board of directors, CSCS plc; Charles Ojo, company secretary, CSCS plc, and Bayo Olugbemi, non-executive director, CSCS plc, at the 24th annual general meeting of Central Securities Clearing System plc in Lagos.

Water resources grab-showdown looms in Senate OWEDE AGBAJILEKE, Abuja

here are strong indications of a looming showdown at the Senate on Wednesday over the National Water Resources Bill sponsored by President Muhammadu Buhari. Opponents of the bill say Clauses Three, Four and Five are aimed at handing over ancestral lands belonging to farmers and giving permanent grazing rights to herdsmen, who will commence expansionist agenda into the hinterland. According to them, when passed into law, it will invalidate the anti-open grazing laws passed in Benue, Ekiti and Taraba. They pointed out that this is an attempt by the Federal Government to introduce grazing colonies through the backdoor. Lawmakers are set to resume consideration of the proposal, which was stepped down by Senate President Bukola Saraki last week, following heated debates on the matter. Although the bill failed to pass Third Reading at the Senate last week, Saraki set up an ad-hoc committee to fine-tune the controversial areas. Clauses Four and Five of the bill provide that: “As the public trustee of the nation’s water resources, the Federal Government, acting through the minister and the institutions created in this Bill or pursuant to this Bill, shall ensure that the water resources of the nation are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all persons and in accordance with its constitutional mandate.” “States may make provisions for the management, use and control of water sources occurring solely within the boundaries of the state but shall be guided by the policy and principles of the Federal Government in relation to Integrated Water Resources Management, and this Bill”. In a telephone interview with

BusinessDay, an Abuja-based legal practitioner, Kayode Ajulo, threatened to challenge the upper legislative chamber in court should it pass the bill upon resumption. According to him, the bill violates the Land Use Act, which vests all lands in state governors. “It is unconstitutional. It is fragrant violation of the constitution. They (senators) ought to have amended some provisions of the constitution (before considering the bill). So, there is no way they can do that without amending the constitution.” “It will be challenged. Personally I will challenge it before the court. You don’t have to wait until when somebody wants to kill your child before it becomes a crime. Police don’t need to allow you to commit crime before you are apprehended. We are going to go to court to apprehend the legislators. They won’t go on with that”. Also in a chat with BusinessDay, human rights lawyer, Frank Tietie, expressed surprise that the Bill is coming at a time there are agitations across the country for devolution of powers to states. Tietie, who is the Executive Director of Citizens Advocacy For Social and Economic Rights (CASER), urged the Senate to jettison aspects of the proposal like Clause Three which provides that the Federal Government will use, manage and control ‘all surface water and ground water affecting more than one State pursuant to item 64 of the Exclusive Legislative List in Part 1 of the Second Schedule to the Constitution of the Federal Republic of Nigeria as amended’. “We have seen spirited efforts by those who control the Federal Government to seek to destroy the concept of the Nigerian Federation. This is another example of that exercise.” “Whereas efforts are being made to reduce the items on the Exclusive Legislative List, controlling local rivers by certain policies or regulations by the

Federal Government is actually going too far and speaks to concern about the unitary nature of the Nigerian federalism, which is antithetical to development.” “That is the reason you find out that government appears too far away. So, a federating unit should control local resources in terms of mineral resources. But to now also consider that even water resources will also be taken over technically, is going too far.” “Senators must stop this prevarication of taking away government from the locality and concentrating it on the centre where government does not work.” “It is a very sad commentary. And my message to the senators is that they must realise that they are saddled with the responsibility of devolution of powers, amending the constitution to devolve more powers to states and local governments.” “It is unthinkable that remote resources like water resources should now also be controlled by regulations and policy directions of Federal Government. If they must go ahead with this Bill, then they must jettison this particular aspect that reduces the concept of federalism in Nigeria”. Southern senators who opposed the bill last week included: Senate Minority Leader, Godswill Akpabio; Emmanuel Paulker, Adeola Olamilekan and Gbenga Ashafa. They cautioned the Senate to be wary of promoting a legislation that would create more problems in the country, adding that the upper legislative chamber should always aim at enacting laws that would stand the test of time. But lawmakers from the North who threw their weight behind the proposal included: Senate Leader, Ahmad Lawan, Ubali Shittu, Binta Masi Garba and Ibrahim Gobir. In their submissions, the proposed legislation only cover rivers that stretch across more than one state, insisting that they would be better managed by the Federal Government.

Claim “For the first time, 30% of the budget was earmarked for capital expenditure” Buhari outlined some of his government’s achievements during the past three years it has been in power, especially regarding the economy. “The commemoration of this year’s Democracy Day is a celebration of freedom, a salute to the resilience and determination of Nigerians and a recommitment by government to keep its promise to lead Nigeria into a new era of justice and prosperity,” the president said in a national broadcast. Here are the first of seven key claims we are fact-checking in Buhari’s speech. We will add to

Claim “The inflationary rate has consistently declined every month since January 2017”

the report as we complete the claims. In June 2017, Africa Check found a similar claim incorrect. In at least three years since 2008, the allocation to public projects on roads, power, railways and so forth exceeded 30%. This was in 2008, 2010 and 2013, according to budgetary data. The infrastructure share

Claim “The country achieved 5,222.3 MW representing the highest peak of power generated onto the national grid and delivered to customers in December 2017” during this time was the highest in 2008, at 37% of the total budget. The lowest allocation in that period was 11% of the budget in 2015, which was approved by Buhari’s predecessor, Goodluck Jonathan. Experts said that the use of these funds should be the main focus, as only a small proportion of the budgeted cash actually

reaches the intended agencies. In January 2017 inflation stood at 18.72%, according to data from the Central Bank of Nigeria. This was the highest it has been during Buhari’s term, which began in May 2015. At the time, inflation was recorded at 9%. In the 16 months prior to the new government the rate was between 7.7% and 8.7%. In February 2017, the rate fell to 17.78%. It has kept its Verdict

downward trend since, reaching 15.13% in January 2018 and 13.34% in March 2018. Buhari said this showed government’s progress in increasing the quantity and quality of power available to Nigerians. “Nigerians from all parts of the country continue to report better power supply and less use of generators,” he said. The country’s long-standing electricity deficit is persistently blamed for hurting economic growth. But power generation has in recent years remained approximately 4,000 MW, not significantly different from 2015. Verdict

We found no evidence that Nigeria recorded a power peak of above 5,000 MW in the December 2017. A February 2018 report by the National Bureau of Statistics and the National Electricity Regulatory Commission shows that the highest power generated in December 2017 was 105, 152 MWh/h (4,381 MW), on 8 December. Verdict

Nigeria’s highest generation ever took place on 25 August 2015 with 4,811 MWh/h produced. (Note: Quoting internal data, Nigeria’s vice president reportedly said the country hit a generation peak of 5,156 MW in December 2017. We have not been able to verify this. For more Researched by Africa Check

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Group accuses Umahi of poor performance …Says Governor does not deserve return INIOBONG IWOK

group, United Ebonyi People’s Development Forum (UNEBDEV) has accused the Governor of Ebonyi State, Governor David Umahi of poor performance and personalising the running of affairs of the state. In a communiqué issued by the group at the end of its meeting held recently and made available to our correspondent, the group berated the governor for lack of focus and policies that would improve the living conditions of indigenes of the state, while accusing the administration of being corrupt by refusing to disclose the budgetary expenditure of his administration since he assumed office. The group lamented the alleged neglect of the education sector in the state by the administration, adding that several schools had been shut in the state, while several others in the state could not hold

examinations due to lack of funds and logistics. “It is unfortunate for Ebonyi that in a period where many governors in Nigeria are striving to put their states on the global map of education, poverty eradication, and integrated development, through transparent leadership, Umahi has deliberately impoverished the people of the state, leading to monumental slump in every area of life – education, health, employment, human capital development, and the likes. “For instance, Ebonyi State’s budget has not been made public since the governor assumed office. Hence, finances of the state are shrouded in opacity. Funds are managed using what has come to be known in the state as the ‘compensation theory’, disbursed by the governor ‘as the spirit leads’, to his cronies and loudest praise-singers, not based on the needs of the state, but on whether the governor (or any of his brothers), thinks someone deserves to be compensated.”

Imo guber aspirant vows to industrialise state, create jobs

he Governor of Imo State, Rochas Okorocha has expressed concern at the emergence of democracy in the country before a state, saying that this has imposed sundry challenges on the nation and her citizenry. According to him, while democracy in the western world especially in United States of America had continued to flourish based on established moral values and ability to serve, Nigeria’s democracy is driven by sheer sentiment anchored on tribalism, geographical and religious backgrounds.

They also alleged that the unfavourable business policies of the administration had discouraged investors in the state, adding that existing companies had closed down resulting in high job losses and unemployment among the youth in the state.

Nwokedi

The business mogul, who did not reveal the political platform he intends to actualise his governorship ambition, denied being sponsored by a god-father, stressing that he was only interested in issue-based campaign rather than personality attack. “I cannot sit and watch my people suffering daily because of bad governance without any remedy; and that was why when I had the divine call from God I obeyed. It is time the youths take over power, what is happening is that our leaders are betraying the trust of the people and you can see the bad roads, schools everywhere as a sign,” Nwokedi added.

The group urged the electorate to vote out the administration in the 2019 general election, warning that the present situation would worsen if the governor is re-elected in 2019. “We have been seeking an explanation to Governor Umahi’s obvious hatred for (Basic) Educa-

Buhari celebrating his last Democracy Day as President - Secondus OWEDE AGBAJILEKE, Abuja

INIOBONG IWOK

governorship aspirant in Imo State, Chika Nwokedi, has said that his main focus would be to industrialise the state, and create jobs for the teeming youths in order to check rising poverty among the indigenes of the state, if elected the governor. Nwokedi, who is an Igbo leader in Lagos, and the president of Igbo socio-cultural group Ndigbo-BuruOtu Lagos, made the declaration in his office in Ikotun, Lagos, yesterday in the presence of large crowd of supporters who gathered to give support to his governorship ambition. The Ideato-born politician, who holds the title of Okpoko of Obodoukwu, said his decision to contest the governorship position was a divine calling from God, noting that if voted into power his administration would focus on transforming the education sector of the state and build cottage hospitals in the senatorial zones in the state. Nwokedi berated successive administrations in the state for betraying the trust of the people, while stressing that it was time the youth take over the mantle of leadership in the country.

Umahi

tion without success. The governor hates education so much that secondary school students in Ebonyi State did not write their second term exams; the reason most principals gave was that the government did not release money for printing question papers. He demands, through his cronies, payment of N1000 ‘Exam Fees’ from the students and failure to pay means the student does not write exams,” UNEBDEV stated. The group said such a regressive action at a time governors of other states are prioritising basic education does not augur well for Ebonyi. “Unfortunately, the governor does not see anything wrong with short-changing Ebonyi people in this manner as long as his interest is protected. He does not care whether Ebonyi state perpetually remains on the list of ‘Educationally Less Developed States in Nigeria’. That is why he must leave. Ebonyi State must move forward,” UNEBDEV further said.

he National Chairman of the Peoples Democratic Party (PDP), Uche Secondus has said that President Muhammadu Buhari was celebrating his last Democracy Day as Nigerian president. Particularly, Secondus said the country would be gifted with a new government, come May 29, 2019. In his Democracy Day message, the National Chairman lamented that President Buhari had put the country in jeopardy. In a statement signed by Secondus’ media aide, Ike Abonyi, Nigerians are anxiously looking forward to the opportunity to dispense with the governing All Progressives Congress (APC). The PDP boss said he was sympathising with Nigerians for finding themselves in such horrible situation where on a day they should be celebrating freedom and good governance, they are instead burying their innocent ones and groaning in avoidable hardship. He charged Nigerians to take

their destiny and swear never to pass the APC root again by collecting and properly using their PVCs to save democracy and indeed save Nigeria. “If democracy must survive in our country we must do away with APC and Nigerians are ready and willing to do just that because they cherish democracy as the best form of government. “Going by their poor record of performance in the last 36 months, and the determination of Nigerians to put the country in the right footing, this is the last Democracy Day this President

Secondus

will mark. “Their agenda now is to intimidate, harass and scare opponents to create a police state with the aim of turning the country into one party state but it must be resisted by Nigerians who passed similar road before and came out victorious. “ The next Democrac y Day May, 29, 2019 which Nigerians and indeed all lovers of democracy are anxiously looking forward to the smooth transition from confusion and purposeless governance to real democracy which the People’s Democratic Party (PDP) is returning to gift to the nation with”. Secondus said that the democracy PDP established and nurtured for 16 years has been grossly undermined by the intolerant and drifting APC government in the last three years. He called on the international community to show more than passing interest in the events leading to Niger ia’s general election in 2019 as the APC rigging strategy has already started through intimidation and harassment of political opponents across the country.

Okorocha decries Nigeria’s democracy …Urges politicians to tread softly SABY ELEMBA, Owerri

He spoke at an interaction session with newsmen to mark the 2018 Democracy Day celebration in Owerri, capital of the state, raised the alarm that religious sentiments had derailed democratic process in the country. “We do not see democracy as it should be. Here, the Boko Haram sect and Hausa/Fulani herdsmen con-

tinue to torment us and we have not come together to fight these monsters. Some people see the Boko Haram issue and that of the Indigenous People of Biafra as Hausa and Igbo affairs respectively but this perception cannot help us,” Okorocha said. The governor, who also faulted the conception of zoning of political offices in the state by some individuals, noted that the primordial sentiment of zoning had left the state in

perpetual bondage. Meanwhile, he has advised politicians angling for elective positions to tread softly and to play the game according to the rule in order not to overheat the polity. According to him, “I am marking a state of equilibrium in the politics of Imo State and I urge all politicians warming up for the 2019 elections to embrace peace and to go about their activities in line with the guidelines

provided by INEC because the beauty of power is the restraint in the abuse of power”. Okorocha recalled his miraculous victory at the polls in 2011 and in 2015 and the circumstances that emboldened him to join the All Progressives Congress and urged politicians from the opposition parties who recently defected to the APC to abide by the constitutional registration provisions of the party.

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FINANCIAL TIMES

Radical reform: Switzerland to vote on banking overhaul

Italian political turmoil weighs on markets Page A3

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World Business Newspaper

Treasury and BoE clash over City of London regulation after Brexit Officials say central bank deputy governor Jon Cunliffe has fallen out with Treasury GEORGE PARKER AND CHRIS GILES

he Treasury and Bank of England are at loggerheads over the future of City of London regulation after Brexit, with claims that relations on the issue are now “very, very bad”. Chancellor Philip Hammond wants to keep Britain close to the EU rule book to ensure maximum access for City institutions to the European market, while the BoE is opposing any compromise that would leave it as “a rule taker”. A fragile truce between the Treasury and the central bank has been shattered by the growing fear in London that the EU will not accept Britain’s original proposal for City regulation — a “mutual recognition” plan that would have given the BoE the regulatory autonomy it seeks. That proposal was declared dead at the outset by EU chief negotiator Michel Barnier. The search for a Plan B has generated acrimony, with the BoE believing that Mr Hammond, in the hope of securing an EU trade agreement in financial services, is willing to sign up to a deal that would give Brussels significant sway over the City. A number of officials have confirmed that Jon Cunliffe, the BoE’s deputy governor for financial stability, has fallen out with the Treasury on the matter. One BoE official said: “The fear is that the Treasury is going to give it all away.” Another said: “It is very, very bad. The bank wants to have as much control as possible and doesn’t want to be

a rule taker.” Another official close to the Brexit negotiations said: “It’s terrible. Relations between the BoE and the Treasury on this are at new lows.” Tensions were manageable for as long as both were able to unite behind a proposed system of “bespoke dynamic mutual recognition”, under which the BoE would agree with Brussels regulatory outcomes but have freedom to set its own rules to achieve them. The bank wants autonomy to set its own regulatory regime because of the sheer size of Britain’s financial services sector. Mark Carney, governor, said last year: “We do not want to be a rule taker as an authority.” Mr Hammond, backed by the Treasury’s head of financial services Katharine Braddick, is exploring ways of coordinating regulation with Brussels to try to secure an improvement for the UK to the EU’s equivalence regime, a limited deal currently offered to third countries such as the US. The chancellor said in March that the EU had “legitimate concerns” about the future regulation of the City, saying he was ready to engage with Brussels. He has been careful to reject only “automatic” rule taking by Britain after Brexit. The BoE denied there was any rift with the Treasury and insiders at the finance ministry said the two institutions had worked together closely on Brexit on a range of issues. Decisions on the future regulatory regime for the City will be taken by the government. Prime Minister Theresa May hopes a free trade deal covering financial services, including regulation, can be agreed with the EU.

Graduate applications flood Deutsche and other banks Concerns of work-life balance and Brexit uncertainty fail to dim demand for bank jobs LAURA NOONAN

bout 110,000 students applied for Deutsche Bank’s graduate scheme this year in the most striking example of millennials’ appetite for careers at even the most troubled banks. The applications for Deutsche, which recently announced 7,000 job cuts to drop its workforce to less than 90,000, were up 20 per cent in a year when rivals including Morgan Stanley and Citigroup also saw significant increases in applications, data gathered by the Financial Times shows. Several other large investment banks would not reveal application numbers but said they had increased graduate hires. UBS said it increased its UK hires by almost 50 per cent, to 100, despite the uncertain climate created by Brexit. Graduate hiring has been a vexed

topic since the financial crisis, with banking steadily falling in popularity among the Ivy League and Oxbridge pools from which banks traditionally filled their benches. Brexit was expected to blunt London hiring. “We had all of the top universities pre-crisis … now [our demand] is more varied. We’re going broader in terms of the places where we source from,” said Manolo Falco, Citi’s head of Emea corporate and investment banking. Citi drew 60,761 applications for its corporate and investment banking programmes globally, up 12 per cent year on year. The candidates were vying for 520 jobs, which was down from the 575 offered a year earlier. Figures for Citi’s markets division are not available. Deutsche’s candidates were apContinues on page A2

Chancellor Philip Hammond, left, and Bank of England deputy governor Jon Cunliffe © FT Montage/Bloomberg/EPA

Soros on Europe: ‘Everything that could go wrong has gone wrong’ ‘Existential crisis’ gripping EU, billionaire financier says CAMILLA HODGSON

lobal politics are threatening to generate “another major financial crisis”, George Soros warned on Tuesday while also calling for a “reinvention” of Europe to solve its deepening flaws. In a typically caustic keynote address at a meeting organised by thinktank the European Council on Foreign Relations, the billionaire financier said the EU faced three key problems: the refugee crisis, territorial disintegration exemplified by Brexit and an austerity policy, prompted by the financial crisis, that has “hindered Europe’s economic development.” “The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said. To escape the crisis, “it needs to reinvent itself.” Hungarian-born Mr Soros is the founder and chair of pro-European Open Society Foundation, which donated £400,000 to anti-Brexit group Best for Britain after last year’s UK snap election. The Open Society Foundation also donated £303,000 to two pro-EU organisations, the European

Movement UK and Scientists for EU. Mr Soros said tackling the European migration crisis “may be the best place to start,” but stressed the importance of not forcing European countries to accept set quotas of refugees. He said the Dublin regulation — which decides which nation is responsible for processing a refugee’s asylum status, largely based on which country the individual first enters — had put an “unfair burden” on Italy and other Mediterranean countries, “with disastrous political implications.” While austerity policies appeared initially to have been working, said Mr Soros, the “addiction to austerity” had harmed the euro and was now worsening the European crisis. US president Donald Trump’s exit from the nuclear arms deal with Iran and the uncertainty over tariffs that threaten transatlantic trade will harm European economies, particularly Germany’s, he said, while a strong dollar was prompting “flight” from emerging market economies. “We may be heading for another major financial crisis,” he said. Meanwhile, years of austerity

policies had led working people to feel “excluded and ignored,” sentiment that had been exploited by populist and nationalistic politicians, said Mr Soros. He called for greater emphasis on grassroots organisations to meaningfully engage with citizens. Looking to Brexit, Mr Soros said negotiations were diverting the EU’s attention from the wider crisis. “Brexit is an immensely damaging process harmful to both sides,” he said. Although the economic case for the UK remaining in the EU is strong, he said, the bloc “needs to transform itself into an association that countries like Britain would want to join, in order to strengthen the political case.” To do this, the EU should more clearly differentiate between the EU and the eurozone and recognise that the euro has “unsolved problems” that “must not be allowed to destroy the EU,” he said. The “outdated” legislation by which new members are expected to join the euro should be repealed, he said, and countries outside the eurozone must not be made to feel relegated to second-class or “inferior” positions.

Foreign postings help us become more self-aware Living abroad can clarify which are personal values rather than those of our culture MICHAEL SKAPINKER

have lived in four countries: South Africa, where I grew up, the US, where I was a teenage exchange student, Greece, where I learnt how to be a journalist, and the UK or, more specifically, London, where I have now spent the majority of my life. Each of those places changed me, but did they make me more self-aware? Did they give me a better understanding of my values and how they interacted with the culture surrounding me? And does that make me a better, more insightful employee than colleagues who stayed in the same place? A group of academics from the Massachusetts Institute of Technology and Rice, North Carolina and Columbia universities conducted a range of studies on whether being an expatriate gave people greater personal insight and concluded that it depended on what sort of expatri-

ate they were. The researchers looked at global travellers’ “self-concept clarity” and whether those who lived abroad developed ideas of themselves that were “clearly and confidently defined, internally consistent and temporally stable”. These alert, self-aware people are the kind of employees and leaders that every organisation wants. Many companies send their most promising people abroad hoping that this is how they will turn out. But being thrown into an unfamiliar environment can be disorientating. Not everyone thrives. And some seem to come home unchanged, apart, possibly, from a firmer conviction that their way of doing things is best. The researchers constructed a range of tests, with MBA students and others, to look at how Americans were changed by living in other countries and how foreigners were changed by coming to the US. Some of the studies relied on

participants’ own views on how confident they were about their values, asking them to evaluate whether “I have a clear sense of who I am and what I am”. But, more significantly, the academics also studied how well their subjects’ self-assessments stacked up against the opinions of their peers. In general, as you would expect, they discovered that their subjects had found living in another country a self-clarifying experience. “No longer immersed in the values and norms that they take for granted, people are frequently faced with new situations that prompt them to reflect on the dissimilar values and norms of the foreign culture. Such recurrent reflections may strengthen self-concept clarity because they make people more confident in what they actually believe and, ultimately, who they really are,” they wrote in the Organizational Behavior and Human Decision Processes journal.

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NATIONAL

North Korea continues to raise foreign currency despite sanctions Ballooning trade deficit with China confounds economists DON WEINLAND

orth Korea’s trade deficit with China has ballooned, raising questions on how the reclusive state has been able to continue to generate foreign currency reserves despite the sanctions imposed against it. The deficit with China hit $1.9bn

in 2017, a 141 per cent increase on the year before and the largest deficit with its neighbour in at least 17 years, according to data compiled by Aberdeen Standard Investments. China’s imports from North Korea in 2017 fell to $1.7bn, a six-year low, while North Korean imports from China rose by about 6 per cent on the

year before to $3.6bn, the data showed. While a planned meeting between North Korean leader Kim Jong Un and US President Donald Trump in June could signal a loosening of sanctions on Pyongyang, the current restrictions are supposed to prevent it from carrying out a wide range of dollargenerating trade with other countries. In spite of those restrictions, the

regime has managed to continue raising foreign exchange to pay for imports from China, confounding economists following the country’s balance of trade. “That’s been a vexing question for a while,” says Alex Wolf, economist with Aberdeen Standard, noting that North Korea’s trade and finance networks operate unofficially and often beyond

EU plans €30bn funding shift from central and eastern Europe

Graduate applications flood Deutsche... Continued from page A1 plying for jobs across the bank, according to a person with knowledge of the bank’s hiring. The person said that Deutsche had hired 619 graduates globally last year, and that “we expect that to increase this year too”. Deutsche has spent much of the last year mired in crisis, culminating in the chaotic replacement of its chief executive in April and the announcement of another round of cuts that will largely fall on the investment bank, a popular destination for graduates. Its investment bank has been one of the most progressive in its graduate hiring techniques, using groundbreaking AI assessment tools to screen a broad pool of talent for those who are the best emotional and cognitive fit for the bank. Morgan Stanley attracted about 100,000 applications for about 1,000 places on its summer analyst programme for undergraduates and its summer associates programme for MBA students. The bank said applications were up 8 per cent year on year. Barclays International will hire about 500 graduates this year, up from 450 in 2017. “We continue to see high levels of interest in our programmes globally, including from students early in their university careers,” said Margaret Capote, head of Barclays’ International Graduate Resourcing and Development, adding that the bank had expanded its spring programmes in both the UK and the US. UBS would not give details of its application levels but said it had hired about 400 graduates so far this year, including about 100 in the UK. Last year, UBS hired about 400 graduates globally, of which 70 were in the UK. Citi’s Mr Falco said that banks’ efforts to promote work-life balance had “definitely had an impact” on application levels, but the jobs were still very demanding. “You can’t hide it; banking is a hard-working kind of industry … Even with all of what we’ve done, it’s high intensity over long hours.” Banks have rolled out measures including mandatory weekends off and flexible working arrangements to make life as a junior banker less gruelling and more attractive to talented graduates weighing offers from other sectors. Citi looked at whether the intensity and hours could be reduced by simply hiring more graduates but concluded that it would not work, Falco said. “When a client has a problem, the solution has to be the next morning, having more people wouldn’t obviously fix that, the client wants specific [directors or managing directors] and those people want people around them they can trust.”

the detection of regulators. The country has sold small arms, military training and other defence services to overseas buyers for many years, but has more recently upgraded those sales to include ballistic missile technologies as a means for generating significant foreign exchange income, said Mr Wolf, a former US diplomat who was based in China.

Proposed aid reforms risk regional tension by boosting spending in ALEX BARKER

Bank of Italy governor Ignazio Visco: ‘There is no justification, if not emotions, for what is happening today in the markets’ © FT montage; Reuters

Bank of Italy warns Rome is close to losing ‘asset of trust’ Remarks by Visco come after sharp sell-off in Italian bonds JAMES POLITI AND KATE ALLEN

he governor of the Bank of Italy has warned that the country was “a few short steps away” from losing the “asset of trust”, a rare intervention by the central bank into a political crisis that underlined the risk Rome faces as it stumbles to new elections. Ignazio Visco said any new government must respect EU treaties that bind eurozone countries into strict debt and deficit limits, a clear criticism of the two large populist parties that are leading in opinion polls and which recently called into question the Brussels-managed strictures. “The rules of the game can be debated, even criticised; they can surely be improved,” Mr Visco said in an annual speech on the state of the Italian economic and financial system. “Yet, we cannot disregard constitutional constraints: protecting savings, balancing the accounts and respecting the treaties.” Mr Visco spoke on Tuesday as investors accelerated their sell-off of Italian assets, with the government’s two-year bond, which is highly sensitive to short-term political risk, among the hardest hit. The sell-off exacerbated tensions between Brussels and the populist Italian politicians who had sought to form a coalition government before being thwarted by Sergio Mattarella, the country’s president, over the weekend. Günther Oettinger, the EU’s budget commissioner, expressed concern that “the coming weeks will show that developments in Italy’s markets, bonds and economy will become so far-reaching that it might become a signal to voters after all to not vote for

populists on the right and left.” His comments to broadcaster Deutsche Welle provoked a backlash from Matteo Salvini, the leader of the Eurosceptic League, who wrote on social media: “This is insane, they are shameless in Brussels.” Donald Tusk, the president of the European Council, tried to defuse the confrontation in an apparent rebuke of Mr Oettinger, tweeting: “My appeal to all EU institutions: please respect the voters. We are there to serve them, not to lecture them.” Mr Tusk was joined by Margaritis Shinas, the European Commission’s official spokesperson, who said he had noted “the unwise remarks attributed to Commissioner Oettinger”, adding: “It is the Italians and only the Italians that will decide on the future of their country. Nobody else.” In morning trading, the yield on the Italian two-year broke through 2 per cent for the first time since 2013, reaching as high as 2.731 per cent — a gain of 1.8 percentage points from Monday’s market close. The yield dipped to 1.655 per cent in midafternoon trading but the levels were still well above the yields at which Italian debt was trading a couple of weeks ago. The sharp jump in yields on Tuesday morning was the largest on an intraday basis since Reuters records began in 1996, trumping even the wobbles during the eurozone debt crisis and global financial crisis. If yields remain at current levels at the close, the increase will be the biggest since 1992. The yield on the benchmark 10year debt initially hit 3.388 per cent, up 70 basis points from the previous close, before paring back to 2.9 per cent Tuesday afternoon. Yields rise

when prices fall. Italian stocks also regained a little ground from a sharp morning sell off, which saw the benchmark index, the FTSE MIB, fall as much as 3 per cent before recovering slightly to trade 2.5 per cent lower. The index, which earlier this year was one of the bestperforming major stock markets in Europe, has now erased its gains for the year. “There is no justification, if not emotions, for what is happening today in the markets,” Mr Visco said. Mauro Vittorangeli, chief investment officer for conviction fixed income at Allianz Global Investors, called the market moves “a capitulation day”. “The political risk is becoming very complex and investors are squaring off positions,” he said. “Investors are scared by the volatility and the political situation that is totally unpredictable, and what you do when volatility rises is that you square off your portfolio.” Italy’s political classes have been scrambling to put the country on a steady path to elections as soon as September after Mr Mattarella vetoed the selection of a Eurosceptic finance minister by the anti-establishment Five Star Movement and the farright League, leading to the collapse of their bid to form a new coalition government. Carlo Cottarelli, a former IMF official, was tapped as a caretaker prime minister on Monday, and is due to present a list of ministers to form an interim government to Mr Mattarella on Tuesday afternoon. Mr Cottarelli is expected to lose a vote of confidence in the Italian parliament and then call new elections in either September or October.

russels plans to shift more than €30bn in EU funding away from central and eastern Europe, slashing Poland and Hungary’s share of “cohesion” spending while boosting support for Greece, Italy and Spain. The European Commission’s proposed reforms of the €330bn cohesion policy, which are to be unveiled on Tuesday, are one of the most significant and contentious elements of the bloc’s 2021-2027 EU budget. Draft documents seen by the Financial Times show the commission is revising its criteria for allocating funds, leaving central and eastern Europe facing a far bigger squeeze than the 10 per cent real-term cut envisaged for the overall cohesion programme. The precise figures are still the subject of a fierce political debate within the commission, with officials haggling over details of the formula for distributing money. But the model presented to EU commissioners proposes reducing Poland’s funding by 23 per cent, according to the drafts for Tuesday’s meeting. This amounts to a reduction of €19.5bn compared to the 20142020 period, when Poland was allocated a total of €83.9bn in 2018 prices. Jerzy Kwiecinski, Poland’s development minister, has warned such cuts would be “completely unfair” — a sign of how the budget proposals may further inflame east-west tensions within the EU. Hungary, the Czech Republic, Estonia, and Lithuania face 24 per cent reductions — the maximum permitted national losses before the commission’s “safety net” takes effect. By contrast, southern countries hit by the financial crisis see a freeze or increase in spending, even as the overall cohesion budget is cut. Spain’s allocation rises by 5 per cent to €34bn, Greece increases by 8 per cent to €19.2bn and Italy by 6.4 per cent to €38.6bn. The boost in funding for Athens was limited by an 8 per cent maximum ceiling on increases. The new criteria for financing ensure that most of the spending restraint in the cohesion policy between 2021-27 is shouldered by central European countries, which have disproportionately benefited from the programme since the big eastern enlargement of the union in 2004. The commission argues that its revised approach reflects the “evolution of disparities” in Europe since the financial crisis, while maintaining a focus on the most deprived regions and countries. Adjustments are included to protect funding for the poorest regions.

Wednesday 30 May 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Italian political turmoil weighs on markets Wall Street lower as havens of Treasuries, Bunds and yen attract buyers in flight to safety KATE ALLEN AND STEPHEN SMITH

hat you need to know • Italian bonds continue their sharp sell-off • US and European stocks in retreat • Euro hits lowest level since July 2017 • Treasuries and German Bunds rally • Other havens such as the yen also find buyers “Last spring, strong economic growth, market friendly results from Dutch and French elections and the assurance offered by the European Central Bank’s bond-buying programme encouraged investors to come back to euro assets in their droves,” said Jane Foley of Rabobank. “A year on, eurozone political turmoil is back, peripheral bond yields are soaring and demand for safe haven assets is at heightened levels.” Overview Italian markets continued to sell off on Tuesday as investors grappled with reverberations of the continuing Italian political strife. The yield on two-year Italian debt shot up as high as 2.73 per cent, up nearly 180 basis points on Monday’s close, according to Reuters data, before easing back to 2.12 per cent, up 123bp on the day. The yield on 10-year debt hit a fresh high of 3.38 per cent, up 70 basis points from the previous close, but has subsequently retreated to 2.99 per cent, still up 31bp for the session. The debt market sell-off ricocheted into currency markets with the euro slipping below the $1.16 level for the first time since November 2017. It is down 0.4 per cent to $1.1580 against the dollar after earlier reaching a 10-month low of $1.1511. Italy’s equity markets were markedly weaker for a second day. The FTSE MIB index of Italian shares is down a further 1.9 per cent having fallen 2.2 per cent in the previous session. US stocks are also succumbing to the broader mood of risk aversion with the S&P 500 down 0.6 per cent in midmorning New York trade. “Financial markets are being roiled by developments in Europe where Italy’s failure to form a government following the general election and a looming no-confidence motion in the Spanish government have triggered a wave of liquidation in peripheral

eurozone assets, driven the euro to a 10-month low versus the dollar and prompted a broader move out of riskier assets and into safe havens,” said Shaun Osborne of Scotiabank. Equities The Italian turbulence is rippling through other equity markets. In Madrid, the Ibex 35 index is down 1.9 per cent while the FTSE 100 index of leading UK shares is 1 per cent lower. The benchmark Euro Stoxx 600 is off 1.1 per cent lower with the UK’s Dixons Carphone leading the fallers, losing nearly 20 per cent after the retailer’s chief executive warned profits would fall sharply. Among Asia’s major bourses, the Nikkei 225 closed 0.6 per cent lower and Hong Kong’s Hang Seng fell 1 per cent. Fixed income and forex The pressure on Italian assets has begun to feed through into other eurozone periphery nations’ debt yields. In Tuesday’s trading, the yield on 10-year Spanish debt is 6 basis points higher while that of Portugal is up 12bp. By contrast, core government debt are attracting buyers. Yields on US 10year Treasuries are down 6bp to 2.88 per cent, marking a 24bp drop from a seven-year high of 3.1261 on May 18. Bund prices are also higher with yields on the benchmark 10-year German debt slipping 1bp to 0.33 per cent after reaching three-year highs above 0.80 per cent in February. Japanese stocks saw further pressure thanks to the firming in the yen. The currency — a haven at times of geopolitical uncertainty — is up 0.4 per cent to ¥109.01 per dollar. The dollar index, measuring the greenback against a basket of peers, was 0.5 per cent higher at its highest since November. Commodities The international oil price looked set to snap a three-day slide on Tuesday as traders mulled a looming production increase from several big producers. Brent crude is up 0.6 per cent to $75.73 a barrel, having retreated from $80.49 a barrel reached on May 22. But US West Texas Intermediate is down 1.4 per cent to $66.92 per barrel, after the Brent-WTI spread moved to its widest for three years. Gold prices were also among the early haven gainers but later surrendered its gains to trade flat at $1,297 an ounce.

Wall Street down, Treasuries rally on Italy concerns PETER WELLS

S stocks are on the back foot following a turbulent session in Europe where investors calculate the potential fallout from Italy’s continuing political crisis. Treasuries and the dollar remain supported as investors plumped for the relative safety of US government debt and avoided the euro. The S&P 500 was down 0.5 per cent an hour after the open, while the Dow Jones Industrial Average was off 0.6 per cent and the Nasdaq Composite eased 0.2 per cent. Utilities was the only S&P 500 sector in the black, and by a marginal 0.01 per cent, followed by consumer staples, another defensive sector. Energy was next best, down 0.2 per cent, although a handful of oil and gas stocks were among the benchmark index’s best performers. Financials were performing

worst, down 1.3 per cent. The overall declines follow a rough session for Europe, where Italy’s FTSE Mib was down 1.9 per cent. Germany’s Dax was down 1.2 per cent, France’s Cac 40 was off 1.1 per cent and Spain’s Ibex tumbled 2.1 per cent. The euro was down 0.4 per cent at $1.1575, having fallen below $1.16 on Tuesday morning for the first time since November. The drop in the common currency helped push the US dollar to a six-month high, with the DXY index up 0.5 per cent to 94.638. The index, which tracks the greenback against a weighted basket of peer currencies, punched through the 95 level for the first time since November. Investors veered toward Treasuries, pushing yields, which move in the opposite direction to price, lower. The yield on the benchmark 10-year US Treasury was down 5.6 basis points at 2.8785 per cent, while that on the two-year Treasury fell 4.4 bps to 2.4396 per cent.

Stocks to watch: Dixons, Smiths Group, Ocado, Devro, Centamin SoftBank could enter the auction for Regus owner IWG, says Stifel BRYCE ELDER

egus office owner IWG edged higher after rejecting a cash offer from a consortium led by US property investor Prime Opportunities. The Los Angeles-based company said it continued to “actively consider the possibility of making an offer for IWG and is confident in its ability to submit a further proposal to IWG’s board for its consideration in due course”. Prime Opportunities’ bid was in addition to approaches made to IWG this month from Lone Star, TDR Capital and Starwood Capital. The private equity groups face a Takeover Panel deadline of June 8 to confirm their intentions. “A take-out bid of up to 370p is possible, and potentially higher if the stars truly align,” said Stifel analysts, who speculated that SoftBank might emerge as a rival bidder. SoftBank’s $100bn Vision Fund invested $4.4bn in sector peer WeWork in August. “If the fund is willing to invest in WeWork, then why not IWG?”

said Stifel. “Acquiring IWG would provide SoftBank with global leadership in the flexible workspace market, and a business already generating profits and cash flow. It would also enhance the fund’s exposure to the secular growth in co-working, which is increasingly being embraced by corporates, through both the WeWork and Spaces brands.” Dixons Carphone slumped to a two-month low after warning that earnings for the year ending 2019 would miss expectations by about 20 per cent. Alex Baldock, Dixons’ new chief executive, said the retailer needed to address recent under-investment in the UK business against a backdrop of shrinking electricals and mobile markets. The warning pressured fellow retailer B&M European, which has full-year results due on Wednesday. Smiths Group led the FTSE 100 gainers after the engineering conglomerate confirmed it had held early-stage talks with US-listed ICU Medical about a potential merger

of their medical device businesses. “This has been the key value conundrum for the group over the last decade,” said Numis, which moved to “hold” from “reduce” on Smiths. However, the broker saw the speculated valuation of £2bn as “a very lowball figure” given Smiths had looked at spinning off the business at least twice in the past decade at a similar or higher price. While a £3bn pricetag on Smiths Medical would be “a far more realistic starting point”, the suggestion of a nil-premium merger was likely to “increase interest from other parties once more, potentially including private equity as previous”, it said. Banks led the fallers across Europe as political crisis in Italy sent bonds tumbling. Bond proxies such as Severn Trent and United Utilities also suffered. In the US, Kinder Morgan led the S&P 500 gainers after Canada’s goverment agreed to buy the group’s Trans Mountain Pipeline project for C$4.5bn, in a bid to force through a controversial expansion project.

China’s ‘national team’ sells $28bn of stock in first quarter Funds bought shares at behest of the government during 2015 market crash EMMA DUNKLEY

series of funds that bought Chinese shares at the behest of the government during the country’s stock market crash of 2015 have sold a significant amount of their multibillion-dollar holdings, according to new analysis. The sale during the first quarter of the year by funds including China Southern Asset Management and China Merchants Fund of Chinese A-shares, or those traded on the mainland’s exchanges, comes as a number of A-shares are about to enjoy a boost from their inclusion later this week in MSCI’s flagship emerging markets index. The funds made the purchases on behalf of a handful of state-owned financial institutions, including the China Securities Finance Corporation and known collectively as the “national team”, which Beijing deployed after the Chinese stock market began tumbling in 2015. According to Z-Ben Advisors, a Shanghai-based analytics company,

the five funds, which also include Harvest Fund, E Fund and China Asset Management Company, have disclosed redemptions in the first quarter amounting to $28bn, representing the bulk of their assets under management. The inclusion of Chinese A-shares into the MSCI index, which begins on Friday, is expected to fuel demand for the securities as vehicles that track the index are compelled to buy. The national team, which includes Central Huijin Investment and the State Administration of Foreign Exchange (Safe), still own A-shares worth about $210bn, according to Z-Ben, meaning that the sales by the five funds “represent a small portion of the equity overhang held by the national team”. The national team quietly reduced its stock holdings in the first half of 2016, while the domestic China share market was buoyant, according to a Financial Times analysis. Despite the anticipated boost to demand for more than 200 A-shares

from their inclusion by MSCI, other analysts have tempered expectations of a large selling by the national team. Strategists at Bank of America Merrill Lynch said the holdings of the five funds were “only a small portion” of the national team’s Ashare position, with 90 per cent of the stake held directly by Safe, the CSFC, or through brokers’ asset management arms. The total “known” holdings of the national team represent 3 per cent of the tradeable market capitalisation of the A-share market, compared with 3.4 per cent during the peak in the third quarter of 2015, BofA estimated. Between the second quarter of last year and the first quarter of this year, the national team cut its allocation to banking stocks by nearly 2 per cent, and cut holdings in pharmaceutical and telecom stocks, BofA said. Conversely, the team raised its position in insurance and construction stocks, as part of its “market stabilisation role”, the bank added.

BUSINESS DAY

C002D5556

Wednesday 30 May 2018

ANALYSIS Trump confirms top North Korea official due in US

Flurry of diplomacy has revived hopes of Kim summit with US president next month BRYAN HARRIS AND SONG JUNG-A

Radical reform: Switzerland to vote on banking overhaul Supporters promise the proposal will end boom-and-boost, but critics say it is a dangerous experiment RALPH ATKINS

arly one recent sunny Friday morning, as many Swiss planned weekend hikes in the mountains, seven activists sprayed a slogan on hoardings near the Bern head office of Switzerland’s central bank. “Please remember why we created you,” it read in big red letters. The dawn action, a rare act of rebelliousness in the famously conservative Alpine state, coincided with the Swiss National Bank’s annual shareholders’ meeting. It was the latest protest by a group of Swiss economists and campaigners ahead of a referendum on June 10 on radical reforms to the way a modern economy functions. The campaigners’ proposals would ban commercial banks from “creating” money through their lending to businesses and consumers. As they see it, the objective is to stop bankers from — again — putting Swiss voters’ savings at risk by reckless lending that could blow up the financial system. Instead, they propose that the SNB should re-assume what they argue is its constitutional role — as defined in an 1891 referendum — as the monopoly provider of Swiss francs. “The will of the people has been forgotten,” reads their campaign literature. “The experts are convinced the financial system will crash again — they just don’t know when,“ says Raffael Wüthrich, one of the Bern activists. “If that’s the case, we should make sure our money is safe.” The campaign is resonating internationally because it has pitted the anti-establishment anger generated by the 2007-8 financial crisis against defenders of the global financial system — led in Switzerland’s case by the SNB. The proposals have tapped into a wide array of political currents, from the libertarian right, which has long debated the issue of how money is created, to leftist critics of the power of private banks. “Vollgeld [or “sovereign money” initiative] fits with a long-running debate among economists that re-erupted after the financial crisis — not just in Switzerland and Germany but countries from the US to the UK and Iceland,” says Nadia Gharbi, an economist at Pictet in Geneva. Thomas Jordan, the SNB’s chairman, warns the Vollgeld would be a “dangerous experiment” that would destroy a functioning banking model and could also damage the economy. Yet even critics admit the protesters have a point and are prompting a necessary post-crisis debate about the way that financial systems actually work. “The idea that we need to reform finance is mainstream — it’s not ab-

surd to think we could have a much better system,” said Hans Gersbach, an economics professor at ETH Zurich, a federal institute of technology. “But Vollgeld is the most radical option one could have.” The Swiss campaign has taken on even greater relevance because it coincides with the rise of cryptocurrencies — digital forms of payment, such as bitcoin, which use blockchain technologies — whose supporters have often echoed many of the same themes. Like notes and coins, cryptocurrencies could be backed by the central bank and supporters say their virtual format would allow them to circulate much more widely and to potentially replace ordinary bank accounts. As a result of the bitcoin mania, central bankers worldwide have started to debate whether they should one day issue e-versions of national currencies — even if the SNB is among the most vocal warning of possible dangers. “The origin of this [Vollgeld] initiative had nothing to do with e-money or cryptocurrencies issued by the central bank,” Mr Jordan told the FT. “But of course it also deals with the basic question of general public access to central bank money and the consequent impact on the financial system.” Switzerland has an outsized financial sector — despite its small size, it is the world’s biggest centre for managing cross border wealth. But it has become a test ground for such a radical proposal because, under its system of direct democracy, just 100,000 signatures are required to force a referendum. Vollgeld’s basic idea is to abolish “fractional reserve banking” — the basis for financial systems around the world. Under fractional reserve banking only a portion of deposits held by banks on behalf of customers are backed by “central bank money”, comprising of notes and coins, or the deposits that banks hold at the central bank. The result is that when banks issue new loans to businesses or individuals, they are often creating new money in the economy. Under Vollgeld, the amount of money injected into the economy would be overseen by the central bank — rather than profit-maximising banks — which, supporters say, would help prevent credit-fuelled boom and bust cycles. The SNB would also have the authority to allocate central bank money to the government — or even directly to the public — although this could fuel fears of inflationary monetary policies. Jean-Marc Decressonnière, a banker in Basel, was taken aback

when he realised he was responsible for creating money. “It was a surprise — we were simply not aware.” He is one of three managing directors at the Freie Gemeinschaftsbank in Basel, a not-for-profit finance house which focuses on lending to ecological, community and educational projects and tries to demonstrate “ethical” banking can work. “A client rang and mentioned the Vollgeld idea — and said ‘you create money, how can that be?’ And I said, ‘no, we don’t create money, we’re an intermediary’. But we were confronted by the Vollgeld initiative, which made us reflect on how far involved we are in the creation of money.” Instrumental in his thinking, Mr Decressonnière said, was a research paper published in 2014 by the Bank of England which pointed out that — contrary to popular understanding — most money in a modern economy was created electronically by commercial banks. In the UK, it is about 97 per cent, in Switzerland about 90 per cent, according to the Vollgeld campaign. Mr Decressonnière now believes money creation should be under the control of a state institution — not bankers eyeing their bonuses. “Our view is that money is a public good and it is right that there should be a macroeconomic perspective. A commercial bank has a very narrow perspective — namely, to make money.” But Mr Decressonnière is one of the few bankers in Switzerland backing the Vollgeld campaign. Nobody has worked out what the exact effect would be for Swiss banks — the referendum proposal leaves implementation details unclear. The country’s large private banks would be largely unaffected — managing the wealth of the world’s rich is their main business, not lending in Switzerland. UBS and Credit Suisse, the country’s two largest banks, have large international operations, which would also probably not feel much impact. Nevertheless, Swiss bankers in general believe the Vollgeld proposals would threaten their domestic business models, hamper economic growth — and put Switzerland at a competitive disadvantage. Nor would they prevent future crises, critics say. “It is not going to make the system 100 per cent safe,” said Daniel Kalt, chief Swiss economist at UBS. “There would be a reduced risk of bank runs caused by panicking savers, but the problem in 2008 was that banks lost access to wholesale funding, and that could still happen.” Sergio Ermotti, UBS’s chief executive, recently told journalists bluntly: “I don’t expect the Swiss people to be suicidal and approve it [Vollgeld].”

top North Korean official was heading for the US for preparatory talks before a potential summit between Kim Jong Un and Donald Trump next month, the US president confirmed on Tuesday. The trip comes amid a flurry of diplomatic activity from Pyongyang, as hopes grow that a June 12 summit between the US and North Korean leaders will take place as planned, despite Mr Trump officially pulling out of the event last week. Kim Jong Chol — a hardline military figure who is subject to US Treasury sanctions — flew to Beijing and purchased an onward ticket to New York, Yonhap news agency reported. Mr Trump later tweeted: “Meetings are currently taking place concerning Summit, and more…. The Vice Chairman of North Korea, heading now to New York. Solid response

The visit to the US by General Kim, who is officially vice-chairman of the Central Committee of North Korea’s ruling Workers’ party, is probably a reciprocal move for the two trips that Mike Pompeo, US secretary of state, made to Pyongyang in recent weeks. The general is considered to be a hardliner and is known for his combative language. He has been blacklisted by the US twice for his role in North Korea’s nuclear programme and would normally be banned from travelling to the US. His visit to New York suggests Washington has waived sanctions. “Both sides desperately need a deal now so they will probably discuss the extent of and methodology for denuclearisation,” said Shin Beom-chul, researcher at the Asan Institute for Policy Studies in Seoul. “I believe the Singapore summit will be held on June 12 and the two sides will reach a nuclear deal in

to my letter, thank you.” He was referring to the letter last week in which he abandoned plans for the summit because of what he described as North Koreas’s “tremendous anger and open hostility”, but advised Pyongyang that “if you change your mind having to do with this most important summit, please do not hesitate to call me or write.” General Kim is the most senior North Korean official to visit the US since Jo Myong Rok, a vice-marshal in the Korean People’s Army, met President Bill Clinton in the White House in 2000. It is still unclear whether General Kim will meet Mr Trump, who hopes a meeting with North Korea’s supreme leader Kim Jong Un in Singapore will begin a process of denuclearisation on the Korean peninsula. There has not yet been official confirmation that the summit has been rescheduled, although Washington, Pyongyang and Seoul all appear to be working on that basis. “If Trump meets Kim Yong Chol, it will be a very positive signal that the US-North Korea summit will be held next month,” said Lee Sunghyun, a researcher at South Korea’s Sejong Institute. “Kim Jong Chol is a close confidante of the North Korean leader. He will probably deliver a direct message from Kim Jong Un to Mr Trump. Delivering a message that reaffirms North Korea’s willingness for denuclearisation would be the best way to build mutual confidence ahead of the summit.”

principle. But they will face mountain after mountain to implement the deal given the complexities of verifying North Korea’s denuclearisation.” Earlier in the year, the former North Korean intelligence chief visited Seoul, sparking protests from South Korean conservatives. He is believed to have masterminded numerous attacks on the country, including the sinking of the Cheonan military vessel in 2010, which killed 46 sailors. Meanwhile, former US ambassador Sung Kim met North Korean officials on the northern side of the demilitarised zone between the two Koreas to hammer out the details of a potential summit agreement. Kim Chang Son - chief of staff to Kim Jong Un - also travelled to Singapore to meet White House officials, Japanese broadcaster NHK reported. North Korea has repeatedly said it supports the “complete denuclearisation of the Korean peninsula”, although it has not stipulated under which conditions. Mr Trump is keen to secure a quick deal, which he says can then be followed with aid and economic support. Pyongyang, meanwhile, favours a phased approach of sanctions relief in exchange for each step towards denuclearisation. Few analysts believe North Korea will truly abandon its nuclear programme and sceptics say the phased approach only serves to drag out the process.

BUSINESS DAY

Wednesday 30 May 2018

CityFile 3 nabbed for looting IDPs’ in Nasarawa

L-R: Paul Betiku, pastor, Christ Apostolic Church (C.A.C), Minneapolis Minnesota U.S.A; Dayo Akintunde, pastor, PFN Ifo Province ii; Tunde Olufowobi, general overseer, Behold The Glory of God Ministry, Akure, and Sunday Steven David, convener of “ONE RACE PROGRAMME”, Pentecostal Fellowship of Nigeria (PFN), during the Paul Betiku world outreach, C.A.C World Community Church Minister’s conference at Unity in Power Of God Church RafcoAboro Agbado Ogun State.

Another ‘baby factory’ uncovered in Lagos … 50-year-old operator to face prosecution JOSHUA BASSEY

he police in Lagos have uncovered another ‘baby factory’ where babies were born and sold to members of the public. A 50-year female traditional birth attendant has been arrested in connection with the discovery. It would be recalled that a similar discovery was made by in Lagos on February 5, 2018 and a couple, Adeola and Binta Adebayo who allegedly operated the centre, arrested by the operatives of Federal Special Anti-Robbery Squad (FSARS) following a tip-off from a journalist. Both husband and wife were alleged to have harbored young pregnant women at their No. 1, Treasure Palace Close, off Hand of Fair Bus Stop, Ikotun-Igando Road residence, from where they sold the babies after being delivered by their mothers. The latest discovery, according to Imohimi Edgal, Commissioner of Police (CP),

Lagos command, is similar to the former. Edgal, who briefed the journalists on Monday, said the 50-year traditional birth attendant was arrested after she allegedly sold one of the newborns for N250, 000. He said that at the baby factory, located at No. 96, Bunmi Ajakaiye Street, Ajangbadi, pregnant women were induced and their babies sold after birth. “On the strength of intelligence information, the DPO of Ajangbadi Division led operatives to the compound where the suspect was found administering intravenous injection (drip) to one Uju Nnamdi who claimed to be sick and five months pregnant. “When search was conducted, a set of drip-water bags and other related drugs were recovered. On interrogation, the suspect confessed that she is not a medical doctor but a traditional birth attendant. “She claimed that a 17-year-old girl was induced and she delivered a baby boy which she sold for N250, 000. “The baby buyer has been arrested, the

baby retrieved and taken to the hospital while the said mother of the baby is being trailed for possible arrest. Meanwhile, investigation is ongoing,” Edgal said. In another development, a 51-year man was arrested for defiling his sixyear daughter. Edgal said the suspect, a resident of Modupe Street, Ikeja, was reported to the police by a faith-based organisation. He said the gender section of the command found that the suspect brought the girl to Lagos from Ikot Ekpene in Akwa Ibom where she was living with her mother, sometime in January. The CP said that investigation revealed that the suspect usually keep the child with a carer anytime he was going to work. “However, on May 23 when the suspect came to pick up his daughter, the little girl refused to follow him. When asked why she doesn’t want to follow her father, she narrated the sexual ordeal she is going through in the hands of her father.” The suspects would be charged to court soon,” said Edgal.

Enugu moves to tackle multiple taxation …inaugurates LUC appeal tribunal

overnor Ifeanyi Ugwuanyi has inaugurated the Enugu State Land Use Charge (LUC) assessment appeal tribunal. Ugwuanyi said that the move was a step towards relieving incidences of multiple taxes on property owners in the state and in line with the LUC law of the state which came into force in 2016. The law consolidated all rates payable on landed property. The governor said that land owners had in the past complained on multiple taxation payable on their property.

Ugwuanyi said that with the law, the era of multiple taxation on landed property would be over. According to him, every property in the state would be enumerated and that property owners would, henceforth, pay a single charge on their property. The governor added that tribunal was an attempt to deliver on the agenda of his administration to make the state investor- friendly. The chief judge of the state, Ngozi Emehelu, said that the event was a significant aspect of the land use charge. Emehelu said that the judiciary would immediately orga-

nise a workshop for members of the tribunal in order to underscore the importance of the process. She said that members of the tribunal had the powers to summon anybody before it. “We have no doubt that members of the tribunal will imbibe the multi-door system to ensure that people who don’t want to waste time will just pay and go. “However, sensitisation of members of the public on this law is important,” she said. Emehelu said that members of the tribunal were professionals that had distinguished themselves in various endeavours. Chairman of the tribunal, Chigozie Nnadi said they were committed to achieving the objectives of the tribunal. (NAN)

peratives of the Nigeria Security and Civil Defence Corps (NSCDC) have arrested three suspects for allegedly breaking in and looting properties of Internally Displaced Persons (IDPs) in Keana, Nasarawa State. The houses were deserted by the IDPs in the wake of the recent killings by alleged armed herdsmen. Muhammad Mahmoud-Fari, the state commandant of the NSCDC, told newsmen in Lafia that the suspects were arrested on May 25 by officials of the corps. He said that the suspects were arrested with cooking pots and other utensils and that they confessed to have travelled from Lafia to Keana local government area to loot the houses under the guise of scraps collectors. The command said it also arrested eight suspects within the last one week for alleged criminal cases across the state, including theft, fraud, assault and illegal job racketeering. “The case of assault involved a middleaged young man who beat up his biological mother to a state of coma today in Lafia. We are still trying to ascertain the motive behind his action,” Mahmoud-Fari said, adding all the suspects would be charged to court to serve as a deterrent to other would-be offenders.

IPOB insists on sit-at-home order GODFREY OFURUM, Aba

he proscribed Indigenous People of Biafra (IPOB) has ordered everyone residing within the south-eastern Nigeria and some parts of the southsouth region, to remain indoors today, Wednesday, May 30, 2018 from morning to 6-00pm, to avoid being arrested and termed IPOB members. The group in a statement signed, by Emma Powerful, its media and publicity secretary, said it uncovered plans, by some unscrupulous individuals, to organise a rally at Oba, in Idemili South local government area, of Anambra State, today, to counter the sit at home event and to give the world the impression that Biafrans, have no regard for their heroes. Part of the statement reads: “It is therefore with a sense of shock and dismay that we received the news that two governors and certain unscrupulous individuals in search of money have decided to seek sponsorship from Aso Rock to organise a counter event to give the world the impression that Biafrans have no regard for their heroes. “We want to assure all individuals involved that their treacherous gathering scheduled for Oba on the May 30th, will be resoundingly rejected, by the people. The era of petty criminals and traitors running to Abuja, to fund subversive activities against the collective interest of the people ended with the coming of IPOB. “IPOB intelligence unit, uncovered the plans of these shameless individuals that wrote a memo to Aso Rock to solicit for funds to enable them hijack the sit-at-home exercise and endear themselves to the powers that be in Abuja. “In the absence of Nnamdi Kanu our leader, they figured this is an opportunity for them to shine before their political masters. It is unfortunate that Dozie Ikedife and Bishop Onubogu, allowed their names to be associated with a Nigerian government sponsored event designed to dishonor our brave Biafran heroes.” The group went further to say that any attempt to stop the sit at home event must be stopped and warned all those involved to be mindful. “Out of desperation these individuals have been busy preparing to desecrate the grave of the brave that made it possible for them to be alive today.

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Will Ibeto pull the plug on its $850mn Milost deal?

COMPANIES & MARKETS

LOLADE AKINMURELE

rivate equity group KKR has agreed to purchase US enterprise software company BMC from a consortium of rivals including Bain Capital and Golden Gate Capital for an undisclosed sum, the Financial Times reported Tuesday. Bain and Golden Gate bought BMC, an enterprise software provider that helps companies run their IT operations more efficiently, for just under $7bn in 2013. Such “club” deals have fallen out of fashion since the financial crisis, as firms increasingly prize the independence to call their own shots. Insight Venture Partners, hedge fund Elliott Management and GIC, the Singaporean sovereign wealth fund, also participated in the 2013 deal. “In an ever-changing IT environment that is only becoming more complex, companies that help simplify and manage this essential infrastructure for their enterprise customers play an increasingly important role,” Herald Chen and John Park of KKR said. At the time of the 2013 deal, activist investment shop Elliott had been agitating for a sale of the company. BMC blamed Elliott’s then-intervention for a downturn in its business.

beto Cement Limited, a Nigerian maker of the building material, shrugged off warning signs from Japaul and Unity bank, to ink a $850 million deal with Milost last week. Milost will provide $500 million in equity and $350 million as debt to Enugu-based Ibeto cement, Milost said in a statement on its website, alluding to a “binding” agreement between both parties. The deal comes three weeks after Japaul Oil and Maritime services backed out of a planned $350 million (N126 billion) deal with Milost, citing “numerous red flags associated with the proposed equity injection.” Unity bank also backtracked on a $1 billion deal with Milost in March, with the tier-two lender denying entering a binding agreement with the private equity firm, even as the latter claimed it received threat mails to back out of the deal. Unity and Japaul were reportedly coerced by regulators- the Securities Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) to pull the plug on the Milost deals. In the case of Ibeto Cement, a privately-owned company which is not listed on the NSE, it may not be that straight forward. The pattern in the break up between Milost and affected Nigerian partners suggests that only the firms under the regulatory watch of the SEC and NSE have denounced their deals. The unlisted and less regulated Nigerian firms like Primewaterview holdings and Femab properties haven’t moved a muscle yet and appear to be following through with their “binding agreement” with Milost. In the end, time will tell if the cement maker pulls the plug on this deal. Ibeto is said to have executed a binding MESA (Milost Equity Subscription Agreement) with Milost Global Inc., for a $850 million financing, of which $500 million is in equity and $350 million debt. As part of the deal, Ibeto will start the process of going public in a reverse merger in the United States in efforts to become a publicly traded company. “On Friday May, 25 the Nigerian Dollar Billionaire Chief Cletus Ibeto (Owner of Ibeto Cement) will personally consummate the acquisition of a publicly traded Company that he will use to reverse the assets of his cement business in America, the final acquisition and definitive agreements have already been executed,” the statement read. As Ibeto carries on with its newly

sealed Milost deal, Japaul has continued to lick its wounds, as the free fall in its share price has worsened since announcement it was axing its deal with Milost on May 9. Japaul’s share price plunged a further 8.3 percent Tuesday, May 29, to afresh low of 22 kobo, according to Bloomberg data, putting it in worse position than the 33 kobo it traded at before it was enveloped by the Milost controversy. Unity Bank and Aso Savings and Loans- have since distanced themselves from deals with Milost, with the former pulling the plug on a $1 billion financing agreement, while the latter (Aso Savings) insists a deal was never in place. All eyes have now turned to the companies that are following through on their deals with Milost. According to the public announcements that were made by Milost and the affected companies at the time an agreement was reached, real estate firms- Femab properties and Prime Waterview holdings- are the only two companies that remain on course with their dealings with Milost. Although it was reported April 10 on Milost’s website that one Williamsville Sears Management Inc. signed a Letter of Intent for the acquisition of PrimewaterView from Milost in an all-stock transaction subject to the approval by both companies. “The board of the company, at its meeting held on Thursday, March 29, 2018, deliberated on the proposed equity injection by Milost… and management resolved that it should in consultation with the company’s retained counsel, take prompt steps to pull out of the transaction in a nonprejudicial manner,” the May 9 statement signed by Akin Oladapo, Japaul’s acting managing director read. Termination costs are typically associated with financing deals that go burst last minute. They serve as compensation fees. Palewater Advisory Group Inc in New York and Banklink Africa Limited in Nigeria were reported to have arranged and negotiated both the

PRIVATE EQUITY WORD FOR THE WEEK Drawdown rate: The speed at which a general partner calls down the capital committed by its limited partners.

Japaul deal, but two phone calls to a number found on their website was not answered. A private equity lawyer with peripheral knowledge of the transaction said the settlement fees could be as high as N10 billion. That works out to 7.9 percent of the total deal reportedly worth N126 billion. Several phone calls to a New-York number on Milost’s website, to confirm if it will press for break-up fees from Japaul, went unanswered. Four companies, who did not want their name in print, also claimed to have pulled the plug on informal talks with Milost for a mix of debt and equity financing, after reading the BusinessDay report published March 12, 2018. The article titled “The Math doesn’t add up with Milost” picked holes in Milost’s announced $1.1 billion in real estate firm- Prime waterview, $350 million in oil and maritime services firm, Japaul and $250 million in mortgage bank, Resort Savings and Loans. Our calculations showed that Milost was offering to buy the shares of publicly listed Japaul and Resort at a premium and questioned the rationale behind a premium investment in a technically insolvent Japaul and a Resort Savings yet to release a financial statement since 2015. Japaul announced in February that Milost will invest $250 million in equity and add another $100 million in convertible loans, causing its share price to rally to multi-year highs. Given that its share price was 35 kobo and it had 6.2 billion outstanding shares, at the time of announcement, February 20, a $250 million (N90 billion) equity investment would imply paying N14 per share, a huge premium by Private Equity standards. The firm went on a 177 percent share price rally after the deal was announced, trading at N0.97 on Friday March 09, according to Bloomberg data. It all came crumbling down afterwards, as the shares collapsed to as low as 30 kobo, costing retail investors- who are the heavy hitters of penny stocks- over N3 billion. In its 2017 full year report, the auditors of the company questioned the going concern status of Japaul reporting that “a matter of uncertainty exist which may cast significant doubt on the Group’s ability to continue as a going concern.”

Japaul reported losses worth N13.08 billion for the full year 2017 period. Revenues declined 38 percent to N1.9 billion in 2017 from N3.07 billion in 2016. For Resort savings and Loans, which also announced a planned investment to the tune of N90 billion ($250 million) by Milost, the numbers also came short. The mortgage provider, which has a market capitalisation of N5.6 billion, said the Milost financing comprises $100 million (N36 billion) equity and $150 million (N54 billion) debt. Given that Resort’s share price is only 50 kobo (having been suspended since 2015) and it has 11 billion outstanding shares, Milost’s N36 billion equity injection implies paying six times more for each share (N3 per share). Total assets for the mortgage provider for the period came in at N10.1 billion. Milost’s injection and subsequent public listing in the US will allow Ibeto Cement to raise enough capital and put the company in the forefront of the cement industry in Africa, according to chairman, Cletus Ibeto. Ibeto plans to grow the company beyond west Africa through the acquisition of other profitable cement businesses outside Nigeria within the next 12 months, this will be done at the back for the development of the two new plants. “Our key strategic objective in the vast and extensive development of the cement business in Nigeria and the West African sub-region is to make cement affordable to all Nigerians and tiers of government in such a way that they should be able to develop modest homes for themselves and their families inclusive of road infrastructure,” Cletus said. Kim Freeman, Managing Partner & CEO of Milost Global Inc., also stated, “We expect this transaction to provide a template for our other investments in Africa which will continue to enhance the value of the companies we invest in as well as value for our investors.” Cletus Ibeto is an industrialist who was reputed for manufacturing brake pads. His brake pads company was later sold to Star Auto Industries Limited’s Chidi Ukachukwu. The company, however, shut down in 2004 owing to inability to repay its loans and compete with cheap Chinese products. Ibeto acquired the Eastern Bulkcem, a cement company, in Nkalagu, Ebonyi State in 2016. The firm was mired in legal disputes since 2012, but there was respite in mid-2016 when the Ebonyi State government resolved the crisis. In June 2016, a deed of understanding was signed between NigerCem and representatives of Nkalagu, Nkalaha, Umuhuali and Amaezu, which are the four host communities where the cement company is sited. Ebonyi State owns 10 percent equity in NigerCem in the new arrangement.

KKR snaps up software group BMC from private equity rivals LOLADE AKINMURELE, With Agency Report

Nigerian tech firm secures $10m grant from Swiss-based NGO JUMOKE AKIYODE-LAWANSON

ndigenous technology firm, O-Mobile Multimedia Limited, which specializes in financial and agricultural services development has secured a $10 million (N3.06 billion) grant from So Sue Ben foundation. So.Sui.Ben Foundation is a Swiss-based non-governmental organisation that promotes development in Africa and the grant was facilitated by UK-based Africunia Limited, an innovative banking technology firm. Benjamin Aduli, Chief Executive Officer of O-Mobile Multimedia Limited said the focus of the pact is to promote and deepen knowledge of the practice of digital-based services among Africans and thereby reduce poverty. “We are excited about this ground-breaking pact which involves the creation of awareness about digital banking opportuniContinues on page A7

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

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Wednesday 30 May 2018

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BUSINESS DAY

People & Perspectives Fund managers face these regulatory and legal risks in 2018

PRIVATEEQUITY & FUNDRAISING

aising a private equity fund in frontier markets is tough business. The sheer number of hoops and factors that a fund manager has to jump and consider, from fund formation to growing an investible pipeline, to investing, monitoring and exit - can be overwhelming, especially for first-time fund managers. With sustained efforts from industry organisations like the Africa Venture Capital Association (AVCA) in the area of regulatory engagement, capacity building and perception management, coupled with the recent improvements in local macro-economic conditions, it is expected that the fund formation environment will ease up in the short term. However, private equity fund managers will also face new regulatory challenges and, potentially, increased litigation risks in 2018 and going forward. Olubunmi Abayomi-Olukunle, Lead Transaction Counsel; Private Equity, Venture Capital and High Growth companies, at Lagos-based finance and investment law firm, Balogun Harold, highlights some of the legal, regulatory and deal structuring considerations that should be on the top of every private equity fund manager’s list for 2018. Merger Regulation – the Rise of the Consumer We expect to see a markedly different approach to merger regulation in Nigeria, in 2018 and going forward. The expected change in approach will be driven by the new Federal Competition and Consumer Protection Bill, (the Bill) which was recently passed by Nigeria’s Senate, with the overall objective of protecting Nigerian consumers. The Bill is Nigeria’s first, sector-wide competition law and provides criminal sanctions against persons involved in agreements with competitors that fix prices and restrict supply or allocate customers or markets. What does this mean for private equity? First, the scope of the Bill is wide and bears significant implications for private equity deal makers on a deal structuring level as well as from a portfolio risk perspective. For instance, the scope of the Bill covers ‘all businesses and all commercial activities within, or having effect within Nigeria’. The ordinary legal implication which this provision will have is to bring offshore acquisitions within the regulatory purview of the new Federal Competition and Consumer Protection Commission (the Commission). Accordingly, private equity dealmakers who prefer to structure investments in Nigerian companies as ‘offshore acquisitions’, may no longer be able to complete such transactions, without a layer of regulatory scrutiny from local regulators. In relation to mergers, the Commission will now, effectively, take over the merger control functions of the Securities and Exchange Commission (SEC). As defined in the Bill,

Olubunmi Abayomi-Olukunle

a merger occurs when one or more entities directly or indirectly acquire or establish indirect or direct control over the whole or part of the business of another undertaking. In terms of process, all qualifying mergers will now have to be notified to the Commission for approval and cannot generally be implemented without the approval of the Commission. The Bill adopts a threshold mechanism to determine which mergers are subject to merger control. With the new regime, private equity fund managers will need to implement an additional layer of diligence around the merger control implications of a private equity investment in or exit from, a Nigerian company, based on the provisions of the Bill and on merger guidelines to be subsequently issued by the Commission. Private equity fund managers will also need to pay close attention to the provisions of the Bill governing restrictive agreements, prohibition of minimum resale price maintenance, agreements containing exclusionary provisions, monopoly and price regulation. Based on a review of the Bill, it does appear that a majority of Nigerian corporates will have to adjust their operations to meet the standards set by the Bill. The management of portfolio companies and promoters of publicprivate partnerships, are advised to commission a full-scale review of existing business arrangements and of prospective portfolio, within the context of the provisions of the Bill to assure that portfolio company business arrangements will not be in conflict with the provisions of the Bill. It is useful to note that the Bill imposes an amount that is up to 10% of a company’s annual turnover, in a preceding business year, for offences committed by Nigerian corporates. Employment Law – The Rise of the Employee Employment law in Nigeria is cruising at break neck speed. There is definitely something to be said about the judicial activism that Nigeria’s employment court – the National

Industrial Court (NIC) – has now become known with. In the last 5 years, the NIC has upturned a significant portion of the corpus of traditional employment practices in Nigeria and is now installing a growing novelty of employment law standards and practices. In doing this, the NIC has largely relied on two ground rules - The first is the position that the jurisdiction of the NIC is invoked not for the enforcement of mere contractual rights, but also for preventing labour practices regarded as unfair. The ordinarily implication of this, is that the NIC will be willing to go beyond the letters of a contract or established doctrines to reach a finding in favour of an employee, who may have been treated unfairly. The NIC also relies heavily on section 7(6) of the NIC Act 2006 and section 254C(1)(f) and (h), and (2) of the 1999 Constitution which empowers the NIC to apply international best practice in labour, and conventions, treaties, recommendations and protocols ratified by Nigeria. In practice, the international best practice rule is treated as a question of fact, for which

evidence must be led. What the NIC has consistently done overtime, is to use these principles as a benchmark against which labour and industrial relations in Nigeria are measured. To cite a few instances – Nigerian employers can no longer generally terminate an employment with immediate effect as this action will suggest wrongdoing on the part of the employee. For that reason, an employer must now justify such action or risk being saddled with more than one month’s pay in lieu of notice. (See the case of Andrew Monye v. Ecobank Nigeria Plc. The NIC is gradually moving away from the common law doctrine that employers can terminate an employment without adducing any reason, as employers are now required to give a valid reason for terminating an employment relationship. (See the case of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) v. Schlumberger Anadrill Nigeria Limited). Also, employers can no longer generally dictate to an employee where to invest his/her computed gratuity benefit (See the case of Aghata N. Onuorah v. Access Bank Plc). There are a number of other noteworthy decisions - Employers can no longer compel an employee to bank with a specified bank chosen by the employer (See the case of Mr. Olabode Ogunyale & ors v. Globacom Nigeria Ltd); An employer now has an obligation to give an accurate, non-misleading work reference for its previous or existing employees ( See the case of Kelvin Nwaigwe v. Fidelity Bank Plc) and can no longer vindictively deny promotion to a deserving employee (See the case of Mrs. Abdulrahaman Yetunde Mariam v. University of Ilorin Teaching Hospital Management Board & anor ); An employer no longer has the general right to reject an employees’ letter of resignation( See the case of Ineh Monday v. Unity Bank). The NIC has also now acknowledged and applied the concept constructive dismissal into the corpus of labour jurisprudence in Nigeria. In the case of Mr. Patrick Obiora Modilim v. United Bank for Africa Plc), the NIC, held that an attempt to have the employee resign, rather than

outright firing the employee means that the employer is trying to create a constructive discharge. What does this mean for private equity? For private equity fund managers, the developments at the NIC is particularly significant, especially within the context of the extent to which a private equity investor and fund manager can be held liable for the liabilities or obligations of its portfolio companies. This brings to mind developments in American case of Sun Capital Partners III, L.P., et. al. v. New England Teamsters and Trucking Industry Pension Fund. In that case, the court reached the decision that two separate private equity funds managed by Sun Capital Partners (Fund III & Fund IV, collectively the Funds) were jointly and severally liable for the pension liabilities of a bankrupt portfolio company owned by the Funds. It is instructive to note that, the court held the Funds liable despite the fact that the Funds, each had an indirect ownership interest in the portfolio company that was less than the 80 percent ownership threshold for purposes of the controlled group liability rules of Title IV of the Employee Retirement Income Security Act of 1974 (ERISA). Based on recent developments at the NIC, it doesn’t appear that traditional corporate law doctrines will afford much defence to portfolio companies or their private equity investors, where the NIC considers that an employee will be subject to some level of unfair treatment. As it is, the international best practices rule can be deployed with maximum effect across a number of employeerelated issues. More than previously, private equity firms, looking to doing deals in Nigeria, now have to subject employment law and workforce management issues to a higher level of diligence as part of the M&A process and also, as an ongoing compliance point for portfolio companies. From a deal structuring standpoint, private equity fund managers must anticipate and exhaustively evaluate employer liability scenarios and build outcomes into the transaction structures to be adopted on every deal.

Nigerian tech firm secures $10m grant... Continued from page A6

ties, educating governments and the general public about digital banking opportunities. We will be developing applications that will help Africans utilize digital banking technology and reduce poverty in the continent,” Aduli said. Aduli added that the company would offer its multimedia business academy and provide free, digital and multimedia training to all interested micro, medium, small and small enterprises in Nigeria through a network of 1,200 O-Mobile academy centers that are currently being set up across the country. Don Chancellor, President of Africunia bank said the time

has come to tackle poverty in Africa using every available means adding that technology will help do this. “Development needs to be fast-tracked in Africa and we are committed to the continent’s growth through digital banking products and services. We are very elated about this opportunity to develop MSMEs across Nigeria and Africa and make them globally competitive in this era of technology. We have already started the hardwork. Working with O-mobile and So.Sui.Ben affords us the opportunity to quickly reach the unbanked and unconnected and give them access to firstworld banking infrastructure

and services. We believe that our partnership with a firm that already understands technology and has wide presence in Nigeria will help us quickly accomplish our goal,’’ Chancellor said. Speaking further, Aduli stated that the company had already commenced work and hoped to sign-up at least 500,000 digital banking customers within 90 days globally. He said O-mobile had already commenced rolling out the first agency group network in Africa that will take financial, telecoms, insurance, educational, agricultural extension services and data mining services to the unbanked and unconnected in the continent.

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FOR THE RECORD President Buhari’s 2018 Democracy Day address

y Dear Nigerians! Today marks the 19th year of our nascent democracy and the 3rd Anniversary of this administration. I am thankful to Almighty God for bringing us thus far. This administration came at a time that Nigerians needed Change, the Change we promised and the Change we continue to deliver. We have faced a lot of challenges on this journey and Nigerians have stood by us in achieving the three cardinal points of this administration namely; Security, Corruption and the Economy. The commemoration of this year’s Democracy Day is a celebration of freedom, a salute to the resilience and determination of Nigerians and a recommitment by Government to keep its promise to lead Nigeria into a new era of justice and prosperity. Public safety and security remains the primary duty of this Government. Before this Administration came into being 3 years ago, Boko Haram held large areas of land spanning several Local Governments in the North East. Today, the capacity of the insurgents has been degraded leading to the re-establishment of authority of government and the release of captives including, happily, 106 Chibok and 104 Dapchi girls, and over 16,000 other persons held by the Boko Haram. In order to minimize the impact of the insurgency on Internally Displaced Persons, Government has established secure IDP Camps and has improved the mechanism for the distribution of basic aid, foods and essential commodities using various strategies in collaboration with local and international Organizations. Efforts are in process for resettlement of IDPs in their home communities by providing schools, hospitals, clinics, water and sanitation to facilitate a quick return to economic activities. Government is similarly implementing de-radicalization and rehabilitation programmes to facilitate sustainable peace and development. The unfortunate incidences of kidnappings, herdsmen and farmers clashes in several communities which have led to high number of fatalities and loss of properties across the country is being addressed and the identified culprits and their sponsors shall be made to face the full wrath of the law. All the three tiers of Government are presently engaged with communities and religious organizations to restore peaceful co-existence among Nigerians. I want to commend members of the Multinational Joint Task Force drawn from Niger, Benin, Chad, Cameroon and our own country in collaboration with the International Community who are assisting in the fight against insurgency in the North East. I also commend the gallantry of members of our Armed Forces and other security agencies that have continued to provide security for lives and properties

President Muhammadu Buhari

across the country. State and Local traditional authorities are helping with much needed intelligence in this fight against insurgency. This administration is pained over the grievous loss of lives and properties occasioned by the carnage of insurgency and other forms of criminality in the country. I wish to assure Nigerians that we will not rest until all criminal elements and their sponsors are brought to justice. Government is boosting the capacity of our security agencies through recruitment of more personnel, training and procurement of modern equipment, enhancement of intelligence gathering as well as boosting their morale in the face of daunting challenges. The Niger Delta Region has enjoyed relative peace through social inclusiveness and cooperation of the Elders and the good people of the region. Government is committed to implementing the comprehensive peace, security and development plan for the region. The environmental clean up of the region, which commenced with the launch in Bodo, Ogoni in June, 2016 is progressing satisfactorily. Furthermore farming assets are being revived and investors in cocoa and palm oil plantations are showing serious interest. The second primary object of this Administration is to fight corruption headlong. Like I have always said, if we don’t kill corruption, corruption will destroy the country. Three years into this Administration, Nigerians and the international community have begun to applaud our policies and determination to fight corruption. We are more than ever before determined to win this war, however hard the road is. I therefore appeal to all well-meaning Nigerians to continue to support us in this fight. Various policy measures already put in place to stem the tide of corrupt practices are yielding remarkable results. Some of these key reform policies include: The Treasury Single Account (TSA) has realized Billions of Naira being saved from maintenance fee payable to banks. N200 Billion has also been saved from elimination of ghost workers in public service. The Whistle-Blowing Policy has helped to recover over N500 Billion; The Presidential Initiative on Continuous Audit set up with a mandate to validate controls, assess risks, prune personnel costs, ensure

compliance with Public Financial Management reforms has helped to identify and remove over 52,000 ghost workers from the Federal Government MDAs Payroll; The Voluntary Asset and Income Declaration Scheme (VAIDS) aimed at expanding tax education and awareness has offered the opportunity for tax defaulters to regularise their status in order to enjoy the amnesty of forgiveness on overdue interest, penalties and the assurance of non-prosecution or subject to tax investigations. The Sovereign Wealth Fund project portfolio has been expanded with an injection of US$650 million so as to strengthen its investment in local infrastructure, power, health, re-construction of Abuja-Kano road, Lagos-Ibadan Expressway, East West Road (Section V) and the Mambilla Hydro-electric Power project as well as the construction of the 2nd Niger Bridge. The fight against corruption through the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Offences Commission has resulted in recoveries of Billions of Naira, as well as forfeiture of various forms of assets. This alongside other efforts has improved Nigeria’s international image and regional cooperation. We have retained the services of one of the world’s leading assets tracing firms to investigate and trace assets globally. This is in addition to the exploitation of provisions of existing Treaties, Conventions as well as Bilateral Agreements with Multilateral bodies and Nations. Nigeria has also signed Mutual Legal Assistance Agreements to ensure that there is no hiding place for fugitives. This Administration has therefore focused on revamping the ailing economy it inherited in 2015. In 2016, Government executed an expansionary budget and developed the Strategic Implementation Plan. For the first time, 30% of the budget was earmarked for capital expenditure, which represents an upward review when compared with the 2015 budget. The SIP was followed by the development of a comprehensive medium term plan – the Economic Recovery and Growth Plan 2017 – 2020. The broad strategic objectives of the ERGP were to; Restore and sustain economic growth; Build a globally competitive economy; and Invest in our people. The

implementation of the ERGP has started yielding results. The National Bureau of Statistics reports that the economy grew by 1.95% in 1st quarter 2018, which is a good performance when viewed against -0.91 in 1st quarter 2017 and -0.67% in 1st quarter 2016, respectively. Our foreign reserve has improved significantly to 47.5 billion USD as of May, 2018 as against 29.6 billion USD in 2015. The inflationary rate has consistently declined every month since January 2017. Recently, Government conducted Focus Labs in three key sectors of the Economy namely, Agriculture & Transport, Manufacturing and Processing as well as Power and Gas. These have yielded significant prospects for investments and Job creation to the tune of US$ 22.5 billion with a potential for creating more than 500,000 jobs by 2020. These investment generation initiatives are expected to increase capital inflows in the form of foreign direct investment. There is a high prospect that the cumulative investments from this first phase of the Labs will hit $39.2 billion by 2025. Under agriculture, Nigeria continues to pursue a strategic food security programme built around self-sufficiency and minimization of import dependency. As a result, rice importation from other countries has been cut down by 90%, which has a direct impact on foreign reserves. The Social Investment Programmes (SIP) has been created as a means to graduating our citizens from poverty through capacity building, investment and direct support. The major strategic objective is to restore livelihood, economic opportunities and sustenance for the poor across the country. The SIP programmes and projects include: Home Grown School Feeding Programme - About 8.2 million pupils are currently being fed from 24 States of the Federation with over 75,000 Catering Staff engaged under the programme. The Conditional Cash Transfer has so far recorded over 297,000 caregivers and being trained by 2,495 Community Facilitators in 21 states. Less privileged Nigerians are now being paid N5,000 monthly stipend in 9 pilot States of Bauchi, Borno, Cross River, Ekiti, Kwara, Kogi, Niger, Osun and Oyo. Eventually the scheme will cover all the 36 states of the federation including the FCT. Under the Government Enterprise Empowerment Programme - About 264,269 loans had been disbursed to 4,822 societies in the 36 States and FCT, while another 370,635 are awaiting release of funds. N-Power Job creation Scheme - is targeted at providing jobs for unemployed young graduates and has so far recruited 200,000 youths while the next batch of 300,000 have been selected, verified and would soon be deployed across the 36 States and the FCT. Furthermore, 20,000 non-graduate volunteers have also been selected

to kick off the N-Build programme in collaboration with the National Automotive Design and Development Council and the Council of Registered Builders of Nigeria. In the area of power generation, Nigerians from all parts of the country continue to report better power supply and less use of generators. This underscores the effectiveness of the methodical plan to deliver incremental and uninterrupted power supply to our homes, markets, offices and factories. The countr y achieved 5, 222.3MW representing the highest peak of power generated onto the national grid and delivered to customers in December, 2017. With new facilities, repairs and rehabilitations by Government and private investors, generation capability now exceeds 7,500MW. This Administration is committed to lawful interventions to ensure the operators of the distribution business live up to expectations especially in the areas of distribution capacity, service delivery, collection efficiency, and metering to eliminate contentious estimated billing. The Transportation Sector continues to undergo a series of reforms in order to sustain the international best practices and ensure safety and security. The nation’s major airports have witnessed reconstruction of runways, installation of navigational equipment and new international terminals due for commissioning in Abuja, Lagos, Kano and Enugu. Bilateral Air Services Agreements between Nigeria and the Governments of other countries will significantly open up new flight routes. As a result of strict regulatory and compliance policies, Nigeria retained her Federal Aviation Administration (FAA) Category 1 status, after a routine international audit. Recently, a new Maintenance Repair and Overhaul facility with capacity for aircraft C-checks and other comprehensive levels of maintenance was established in Lagos. This would save the country an estimated $90m annually. Giant strides have been recorded over the past three years to improve road transport infrastructure in all geopolitical zones of the country. The Railway Sector has also received tremendous attention as this Administration is committed to the goal of linking all State capitals in the Federation by rail network to ease the movement of goods and passengers. The Education Sector especially at tertiary level has continued to witness expansion in order to improve access to higher education by millions of youths in Nigeria. Over the last three years, Government has approved the establishment of 1 new Federal Polytechnic, granted licenses for the establishment of 4 State and 14 private-owned Universities as well as 12 private Polytechnics. This address continues in the online edition of Business Day @https:// businessdayonline.com

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NEWS YOU CAN TRUST I WEDNESDAY 30 MAY 2018

Opinion

Larry Ettah at UACN (2) OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

arry Ettah took over as Group Managing Director and CEO at UACN Plc in January 2007 after working in multiple roles including Executive Director for the previous nineteen years. He set about refocusing and refining the group’s strategy, resources, businesses and governance aimed at improving performance and efficiency. He modernized the reporting templates from all the subsidiaries, divisions and departments to ensure strategically-relevant data was transmitted up the organization and streamlined the governance structure of the entire group such that the Group CEO served as chairman of the subsidiaries as against a previous dysfunctionalsystem in which different group (non-executive) directors chaired boards of the sub-

sidiaries. After initial efforts at strategy redefinition, Larry turned his attention to business expansion. The primary strategic mechanism he opted for was to leverage UACN local market knowledge, distribution and logistics competences and legacy profile to attract international partners into joint ventures in various parts of UACN’s target businesses. This strategy led to the partnership with Tiger Brands of South Africa in UAC Foods Ltd; and with Imperial Logistics in MDS Logistics. These approaches from UACN point of view were less-resource intensive and minimized risks from greenfield investments. It also gave the group access to global know-how and best practices at relatively low cost. UACN also began to make acquisitions-in Portland Paints and Products Nigeria Plc to consolidate its paints portfolio; and Livestock Feeds Plc to complement the leading competitive position of Grand Cereals and Oil Mills Ltd. The group also shed non-core and low-value

investments in automobiles, registrars and pension businesses while working to optimize difficult aspects of its portfolio. As the re-positioning of UACN continued, Larry focused on branding and reputation, refreshing and sharpening its logo and fashioning a new corporate pay-off line, “doing good”. I wrote an article at the time, “Can companies do good?” examining the implications for corporate strategy and Corporate Social Responsibility (CSR) of UACN’s bold claim to good deeds and enduring corporate citizenship. I have had extensive opportunity to observe Larry’s commitment to corporate governance and sustainable behavior as a consultant to the group and as a director at CAP Plc. My views on corporate governance in Nigerian firms generally is that many Nigerian firms misunderstand the essence of corporate governance, appearing not to understand that the principles and concepts embodied in the field and usually encapsulated these days in various regulatory codes of

corporate governance were created to help companies succeed, and are not technical stipulations which a company may comply with in form while evading the substance thereof. For instance companies are advised to have independent directors because persons who have expertise and independence will usually add value to the deliberations on a board of directors, and are more likely to speak the truth to executives. The attitude of the usual Nigerian board is however rather to find individuals who satisfy the technical (but not the mental) definition of independence, and who really are cronies of the chairman or other powerful insider! As CEO at UACN, Larry was chairman of UAC Proper ty D evelopment Company Plc (UPDC Plc), Chemical and Allied Products Plc (C AP Plc), Livestock Feeds Plc, Portland Paints and Products Plc, UAC Foods Ltd, UNICO CPFA and Warm Sp r i n g s Wat e r Ni g e r i a Ltd. He was also a director at Grand Cereal Oil Mills Ltd and Coronation

Merchant Bank Ltd. Larry Ettah made his positive impact on the industr y and economy beyond the narrow confines of his work at UACN-he served as Vice-President (Multinationals) at Manufacturers Association of Nigeria (MAN), Council Member of the Lagos Chamber of Commerce and Industry (LCCI) and is the current President of Nigerian Employers Consultative Association (NECA) serving his second term. As NEC A President, Larr y Ettah re-invigorated and revitalized the organization improving the quality of its interventions in national economic and policy conversations. They say behind every successful man is a woman and there is Ekemere, Larry’s quiet and effacing wife giving him support on the home front and allowing him focus on UACN, and his passion for fitness, sailing and squash! Larry and I have rarely disagreed over any important issue, but we did over the Nigerian polity in 2015! Even though he is yet to formally con-

cede, I have long since declared victory!The weight of evidence in my favour is now overwhelming! Larry Ephraim Ettah joined UACN as a management trainee in 1988. He worked in various businesses within the group including Kalamazoo, Mr. Biggs/UAC Restaurants and UAC Foods until he became an Executive Director/Head of HR in 2004. Three years later in 2007, he became Group Managing Director/CEO until December 2017, a tenure of eleven (11) years!Larry worked in the UACN group for almost 30 years, serving half of his career on the board and is leaving behind a business that is younger, fresher and more strategically relevant; combined group revenues are approaching N100billion; and the group has leading businesses in foods, cereals and grains, paints and decoratives, logistics and real estate. Even as he steps down as CEO, Larry Ettah is just 54 years old, a relatively young man with great experience behind him and a significant future ahead of him.

trary to the Igbo worldview that allows for contestation of ideas and the space for such ideas to flourish. Underlining that protest, however, is the need to look inwards. While the Awka Declaration is essential as a bargaining position for the Igbo, there is a greater need for Ndigbo to begin to hold conversations internally. Many issues beg for attention beyond the external. They concern the matter of developing at their own pace that the Igbo consider foundational. A fundamental question for instance, for both the dominant Ohanaeze and the IPOB, is how ready are the states of the South East and the region for a regional government or an independent countryshould other regions concur today and it becomes a reality? What is in place for any of the scenarios? What is the strategy and what are the plans to drive that strategy? There is a vastgulf between the elders and the youth of Igboland on many issues but primarily concerning future direction

and strategy for the region. Unfortunately, no one is bridging the gap, and it is worsening daily. It is critical for the area that the youth demographic, being the dominant one as well as the future, should be in alignment with the current leaders on critical issues. The matter of unity also applies to the leaders in the political space. The Ohanaeze Summit on Restructuring featured only the host Governor Chief Willie Obiano of Anambra State. Why were the Governors of the brother states of Abia, Ebonyi, Enugu and Imo absent? Imagine the impact if they had a united stand and presence at the event. As these things go, it is coincidental that Prof Chukwuma Soludo read the Awka Declaration. Soludo had an Awka Exposition last year in his declaration of the concept of Ndigbo as a global tribe. The promise and challenge of Ndigbo as a global tribe and how to realise that potential should be one of the key focus areas for Ndigbo everywhere. We will continue listening to the East…

Listening to the East (1) CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

eaders and the people of the South East took a bold step May 21, 2018, with the Awka Declaration. The Igbo affirmed their resolve to continue to play a significant role in building Nigeria as well as their willingness to consider options should the need arise. The statement was keen on the imperative of restructuring Nigeria to work better for all constituent units. The highlights of the Awka Declaration included a call for a single-term of six years for the President and Governors, the rotational presidency and the introduction of Vice Presidents

representing each of the six geopolitical zones of the country. Ohanaeze posits that such Vice Presidents would also serve as coordinating ministers for a set of ministries. They also affirmed the imperative of resource control, regional government, fiscal federalism and making local government creation and funding the business of individual states rather than a federal concern. Ohanaeze also remembered to pitch for merit as a principal criterion for appointments and elevations in Nigeria’s public service. In doing so, they also recognized the necessity for affirmative action to ensure representation of all groups. It was heartwarming to see that the gathering included significant players representing various social institutions in the South East, from religion through education to traditional leaders. It also drew representation from the South-South, South West, the Middle Belt and Southern Kaduna. The Awka Declaration

represents the Igbo position in the anticipated negotiation and conversation of various groups in Nigeria. It focused on externalities. Professor Chukwuma Soludo heads the 100-person Planning and Strategy Committee. Th e Aw ka D e c l a rat i o n drew from work over the years by Ohanaeze Ndigbo and various Igbo think tanks. It incorporated the submissions of the Igbo Leaders of Thought for the 2014 National Conference; Igbo positions for the 1994 constitutional conference and 2005 and 2014 national conferences; the report of the committee set up by Southeast governors on the review of the 1999 Constitution. Also noted were the report of the World Igbo Summit by the Igbo Renaissance Centre, Uturu; various submissions/reports by Aka Ikenga; Izu Umunna; Nzuko Umunna; the Igbo intelligentsia; the World Igbo Congress; reports of various meetings and conferences of Igbo stakeholders and leaders. “The Ohanaeze Planning and Strategy Com-

mittee and the Organizing Committee for the Summit on restructuring also embarked on town hall-style consultative meetings in Abuja, Lagos, and Enugu to collate inputs from major segments of Igbo society. Memoranda and inputswere also received from over 40 pan-Igbo groups, NGOs, and individuals. A draft was presented and debated at the National Executive Committee and the Imeobi of Ohanaeze Ndigbo. “Ndigbo want a Nigeria that works to maximize their security, prosperity, and happiness. Igbo also want a Nigeria that allows every part of Nigeria the latitude and opportunity to develop at their own pace. We want a national conversation to create a new and better Nigeria for all Nigerians.” As the Oha na di Eze met at the Ekwueme Square, a group representing a large body of the dominant demographic in the South East stood outside in loud protestations. The youth did not want the Summit to hold in the first place, con-

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

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power

Wednesday 30 May 2018

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BUSINESS DAY

POLICY

Sanctions sets jitters through global oil market Page 5 finance people appointments

L-R: Alaye Dokubo, head, Government and Community Relations, The Shell Petroleum Development Company of Nigeria Limited; Evans Krukrubo, head Community Interface, and Jerry-Gaultney Udjo, Community Interface Coordinator, at the media presentation of the 2018 Shell Nigeria Briefing Notes to Journalists in Warri, Delta State recently.

Debrief

Ghana’s Petroleum receipts hit $4bn Page 6 OPEC weekly basket price DAY

PRICE

25/5/18

76.26

18/5/18

75.2

11/5/18

73.5

4/5/18

70.75

27/4/18

70.92 Source: OPEC

Nigeria’s crude overhang heads to Asia despite setback FRANK UZUEGBUNAM

espite competition from US grades, Asian tenders continued to mop up some of the overhang of Nigerian crude from June. Indonesia’s Pertamina took Nigerian Agbami in addition to the US grade Bakken in its latest tender for August and early September delivery. Petroperu also launched a tender to buy two 380,000-barrel cargoes of West African, Latin American, or US crude for delivery in July at Talara and Conchan

while Thailand’s PTT is looking to buy between 300,000 and 1 million barrels of light sweet crude for delivery between mid-July and mid-August. There are still between 15 and 20 cargoes of Nigerian crude that remain unsold from the June loading programme, out of a total of 60 but down from closer to 30 a week ago. Nigerian July loading programmes are still emerging. Brass River will load 100,000 barrels per day in July on four cargoes while Escravos will load 153,000 bpd on five cargoes. Meanwhile, Nigeria’s crude oil export suffered a setback as Shell

Petroleum Development Company of Nigeria Limited (SPDC) shut down production following the discovery of leaks on a pipeline in Delta State though exports at the Forcados shipping hub were running as normal. Traders said that the impact has not been felt. According to the statement, the cause of the leaks is yet to be determined and the SPDC is working on further site preparation and mobilisation of specialised equipment to the swamps for safe excavation of the pipeline for inspection. Delays on Forcados loadings had already been building up due to the week-long

shutdown of the Trans-Forcados pipeline, the main export pipeline that has restarted. Prior to the declaration of force majeure on Bonny Light exports, the nation’s crude shipments were already witnessing delays following a leak on the 200,000 to 240,000 bpd TransForcados pipeline that shut down earlier this month, effectively cutting deliveries of Forcados, one of the nation’s largest crude grades. Exports of Bonny Light are expected to run at around 195,000 barrels per day next month, making it Nigeria’s third largest crude oil stream, behind Forcados and Qua Iboe.

02 BUSINESS DAY WEST AFRICA Outlook Nigeria: Oranto to work with Russia’s Rosneft in 21 oil assets in Africa

igerian oil and gas explorer Oranto Petroleum will collaborate with Russia’s Rosneft in 17 African countries for the development of 21 oil assets. This could be a big move for Russia’s largest oil producer as it seeks to expand its limited footprint in the continent which boasts of holding more than 120 billion barrels of proven oil reserves. “Oranto is planning a big cooperation with Rosneft, that collaboration is going to include upstream, midstream and downstream in Africa. We’re looking at 21 oil assets in 17 African countries,” an official from Oranto said on the sidelines of the St Petersburg International Economic Forum. “We are looking at how Africa is go-

ing to be a big part of Russian investment.” The official added that the company expected to sign a memorandum of understanding with Rosneft on these projects soon. Russia’s engagement with Africa’s oil sector has

been low, but with oil prices picking up, the investment climate is looking more encouraging. In Africa, Rosneft is currently engaged in the super giant Zohr gas field offshore Egypt and also has prospective projects in Mozambique.

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The Oranto official said that the company is not discouraged about US sanctions on Russia and these projects will be transacted either in Naira or Rubles and not the US dollar. “Sanctions are not an issue. Oranto does not have any problem. We will do business in rubles we will do business in naira, we must not do business in dollars,” the official said. Oranto Petroleum along with its sister company Atlas Petroleum International currently holds 22 oil and gas licenses in 11 African countries. In October, Uganda issued two new oil exploration licenses to Oranto Petroleum, paving the way for the Nigerian company to start exploration activities in the country’s Lake Albertine rift basin.

Africa: S/Korean refiners replace Mideast crudes with Africa, US supply

outh Korea’s purchases of sweet crudes from Africa and United States are growing as its refiners snap up spot cargoes to replace more expensive Middle East grades. South Korea’s four refiners, SK Energy, GS Caltex, S-Oil and Hyundai Oilbank, typically import more than 80 percent of their crude from the Middle East for the stability of buying feedstock oil via long-term contracts. But with ongoing OPEC-led output cuts and worries over Iranian crude supply driving up Middle East crude prices, the refiners, except for S-Oil whose top shareholder is

Saudi Aramco, are increasingly seeking alternative sources to cushion the impact of higher prices on their refining businesses. “South Korean refiners are focusing on the eco-

nomics of crude purchases,” said Cho Sang-bum, an official at the Korea Petroleum Association, a representative group of South Korean refiners. GS Caltex, the country’s

Wednesday 30 May 2018

second-biggest refiner, has bought 2 million barrels of Saharan Blend from Algeria. GS Caltex is also set to receive a total of 5 million barrels of US crude for June to August delivery. Hyundai Oilbank is looking for various crudes that are economically viable to import as well. It recently made rare purchases of Canadian crude and Norwegian condensate. In the first four months of the year, the Middle East accounted for 77.7 percent of South Korea’s total crude imports, down from 85.9 percent over the same period last year, according to the latest data from staterun Korean National Oil Corp (KNOC).

Libya: Libya cuts oil output by up to 120,000 bpd due to power problems

ibya’s National Oil Corp cut oil production by about 120,000 barrels a day as its eastern subsidiary AGOCO faced power problems due to unusually hot weather, a company official said. AGOCO hopes to gradually resume production, which has fallen to 146,000 bpd, when the weather gets cooler, the official said. Production has been halted at the Massala field and the Sarir field also has power problems, he said. Temperatures hit 49 degrees Celsius. The historical daily average ranges from 15 to 24 degrees Celsius. The Raguba field further west had a “minor distribution delay” but production was unaffected despite threats from protesters, state oil firm NOC said in a statement. Protesters in the remote Marada region of eastern Libya have demanded that authorities urgently deal with grievances over the absence of government, a shortage of healthcare and other services. The nation has been in turmoil since the toppling of leader Muammar

Gaddafi in 2011. Libya, a member of the Organization of the Petroleum Exporting Countries, has not released a production figure for months but industry sources had put it at one million bpd before the power cut hit AGOCO. Distribution from the 5,000-barrels-per-day (bpd) Raguba field to the port of Brega was halted recently, but production was uninterrupted and output was stored on-site, the NOC said. Oil production at Raguba is ongoing despite threats by local protesters to shut down the field, the statement said. “No technical or infrastructure damage to the field or wells was incurred.” In a potential escalation, the protesters said they had called on workers at a second oilfield, Waha, to halt output and ask for state support. It was unclear whether production at Waha had stopped. A pipeline of the Waha oil company, an NOC joint venture with foreign firms, running through Marada feeds the Es Sider port. Waha pumps around 260,000 bpd, officials have said.

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gas

ENERGY intelligence

Global LNG prices firm on Chinese, South Korean demand

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Brief

sian spot liquefied natural gas (LNG) prices breached the $9 per million British thermal unit (mmBtu) mark, a three-year summer season high driven by crude oil gains, production outages and demand from key Asian consumers. Spot prices for July LNG-AS delivery in Asia were at $9.20 per mmBtu this week, gaining 50 cents from the previous week and the highest in more than three months. Demand from buyers in South Korea, China and India supported prices at

BUSINESS DAY

price spread is widening enough to fuel a resurgence in cargo diversions from Atlantic to Pacific markets, the prospect of which has helped keep European gas hubs, facing depleted inventories, buoyant, traders said. South Korea’s Korea Midland Power Co Ltd (KOMIPO) likely bought a cargo for July 21 to 25 delivery at $9.30 per mmBtu, traders said. The state-owned utility has reissued a separate tender seeking two cargoes for delivery in November and January, a tender document showed.

Carbon emission: Shale gas no panacea, UN report finds

hale natural gas serves as a bridge to a lowcarbon economy, but it is still a fossil fuel that could contribute to climate risks, a UN report said. The UN Conference on Trade and Development said natural gas could contribute to a “smooth transition” to a low-carbon economy because it emits 40 percent less carbon dioxide per unit of energy produced than coal. Carbon dioxide is a potent greenhouse gas. The main component of natural gas, however, is methane, which is far more potent than CO2. Mukhisa Kituyi, UNCTAD Secretary-General said shale gas is attractive now, but countries looking to capitalize on the resources should understand the pros and cons. “Climate change means that all countries must, as a matter of strategic urgency, move away from burning fossil fuels, including shale gas,” he said in a statement. The US Energy Information Administration

estimates the world total of technically recoverable shale gas reserves is enough to meet 60 years’ worth of total global consumption. About half of that total is in five countries, with the United States in the leadership position. US President Donald Trump has put energy dominance at the top of a national security strategy. The United States became a net gas exporter last

year. The British economy is looking to capitalize on its shale gas assets as it tries to break away from foreign suppliers. Offshore wind, however, is a growing component of the British energy mix. The United States, for its part, is advancing offshore wind in Atlantic coastal states and the sector is evolving beyond the nascent stage. Beyond emissions,

UNCTAD’s report said hydraulic fracturing processes use large volumes of water and carries with it risks of groundwater of surface water contamination. A study from the US Geological Survey, meanwhile, found the disposal of oil and gas-related wastewater is the “primary reason” for an increase in seismic activity in central states like Oklahoma. That process is different from hydraulic fracturing.

Algeria: Sonatrach hopes for Exxon Mobil deal on shale gas

a time when maintenance in Angola is expected to curb supply. Higher prices for fuel oil, which can also be used for power generation, are also lending support to LNG prices. Japan will see warmer weather over June-August, the official forecaster said, which could stoke LNG demand. In Europe, the gas

China’s offshore oil and gas companies, CNOOC and PetroChina, are also bidding for several cargoes to be delivered during the summer months, traders said. PetroChina, the country’s top gas producer, has curbed supplies of the fuel to some industrial users in northern and western regions, which has driven up demand for LNG in China.

ommission released a market intelligence briefing on the US liquefied natural gas market. Two years ago, the United States transitioned from an importer of LNG to a net exporter. All told, the LNG plants in operation or under construction represent about 13 percent of total gas production in the United States. “Over $30 billion in construction capital has been invested by the two firms with operational LNG plants,” Amir Zaidi, the di-

rector of the CFTC’s office of market oversight, said in a statement. “Further,

significant investments in support of these plants have been made in new natural gas pipeline assets.” The CFTC’s report found that LNG is gaining a bigger market footprint and its US LNG exports that look to have the most rapid growth rate and the most competitive price. That growth means North America broke a land lock to gain a position in the global market. The US Energy Information Administration reported total LNG exports quadrupled in 2017 from

the previous year. Four more terminals are expected online within the next two years, boosting export capacity from 1.94 billion cubic feet per day last year to 9.6 billion cubic feet per day. LNG from the United States is reaching the Asian and European markets. The National Defense Authorization Act said US efforts should promote energy security in Europe, stating Russia uses energy “as a weapon to coerce, intimidate and influence” countries in the region.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Ethiopia’s waste-to-energy success points way for West-African nations STEPHEN ONYEKWELU

aste management, that is, the collection, processing and disposal of solid waste is one of the biggest challenges facing many African countries; Ethiopia is showing how this can be transformed into asset. Waste-to-energy uses trash as a fuel for power generation. Similar to other power plants (just using trash rather than other fuels like coal, oil, or natural gas), the fuel is burned in an environmentally sustainable manner, in a combustion chamber to heat tubes of water in boiler walls. The water is heated until it turns into steam, which is then used to drive a turbine generator that produces electricity. Prior to the launch of the Reppie Facility in Addis Ababa, the Koshe dump site was the only landfill in Addis Ababa. As the city grew, so did Koshe, until it was the size of 36 football pitches. Thousands of people scavenged the dump site, often in dangerous conditions. In 2017, tragedy struck when a landslide killed 114 people. By burning waste the new factory should make Koshe safer for everyone. Ethiopia’s new Reppie Facility will burn over 1, 400 tons of waste a day to power 25 percent of Addis Ababa’s homes, and provide electricity to over 3 million people, while creating hundreds of jobs. Three million bricks will be made from ash produced by the facility and 30 million litres of water will be recovered from the trash. Its owners say converting the city’s carbondioxide is the equivalent of planting 900, 000 trees a year. The factory’s creator

is Samuel Alemayehu, one of the World Economic Forum’s 2018 Group of Young Global Leaders. This plant is Africa’s first. “The Reppie project is just one component of Ethiopia’s broader strategy to address pollution and embrace renewable energy across all sectors of the economy,” said Zerubabel Getachew, Ethiopia’s deputy permanent representative to the United Nations in Nairobi. “We hope that Reppie will serve as a model for other countries in the region, and around the world.” In a recent report, the World Bank estimated that around the world, waste generation rates are rising. In 2012, the worlds’ cities generated 1.3 billion tonnes of solid waste per year, amounting to a footprint of 1.2 kilograms per person per day. With rapid population growth and urbanisation, municipal waste generation is expected to rise to 2.2 bil-

lion tonnes by 2025. This is could be converted into an enormous source of power in developing countries. In Liberia, the World Bank has committed $10.5 million to improve waste collection and construct a new sanitary landfill and transfer stations. In Burkina Faso, the Bretton Woods institution has supported the solid waste sector with over $67 million in loans since 2005, supporting waste sector planning and construction of two landfills. The capital city, Ouagdougou, now collects an average of 78 percent of waste generated, which is significantly higher than the 46 percent average in Sub-Saharan Africa. This could go a step further, as the Reppie Facility in Addis Ababa has shown. Meanwhile, in Lagos over 20 million inhabitants generate 13, 000 metric tonnes daily according to Lagos State Waste Management Authority, (LAWMA). Studies have

shown that burning waste at dumpsites produces air toxins. Typically, burning occurs at low temperatures (250 to 700 Celsius) in oxygen-starved conditions. Hydrocarbons, chlorinated materials and pesticide compounds under these conditions produce a wide range of toxic gases harmful to the environment and public health. This currently constitutes environmental nuisance, yet holds opportunity to generating significant energy. The World Health Organisation (WHO) has estimated that environmental exposure contributes to 19 percent of the incidence of cancer worldwide. Ethiopia’s waste-toenergy project was developed by British firm, Cambridge Industries Limited and the China Electrical Engineering Company (CNEEC). It will prevent the emission of 46,494 tons of greenhouse gases, every year and points the way to other African nations.

Wednesday 30 May 2018

power

Zambia: GET Fit to employ 200MW of renewable power

ulticonsult has been selected to implement GET FiT Zambia. The programme aims to realise investments in 200MW of renewable energy. Multiconsult will manage the secretariat for the GET FiT programme in Zambia and provide comprehensive commercial, technical and administrative support in an effort to realize up to 200MW of small- to-medium scale renewable projects. For 4.5 years, Multiconsult has had the same role as Implementation Consultant for GET FiT in Uganda, where the programme has leveraged some $439 million in investment, leading to 17 renewable energy projects now in operation or under construction. During this period, Uganda has emerged as one of Africa’s most attractive renewable energy in-

vestment destination and the country with the most renewable Independent Power Producers (IPPs) currently under development. The German development bank KfW is now looking to tailor the program in an effort to roll out the success to Zambia. Multiconsult will take up the role as the Implementation Consultant, a comprehensive and multi-year role covering everything from policy and regulatory support to tender implementation and construction supervision.

Indonesia: Indonesia makes strides in solar power

ore than $150 million in loans will help Indonesia build its first utility-scale solar power plants, the Asian Development Bank said. ADB said it would offer financial support for a project led by Vena Energy, the largest power producer in the AsiaPacific, to advance renewable energy projects in Indonesia. The first phase of the project calls for the construction of a 72 megawatt wind power plant. The second phase calls for a combined 28 MW in solar power plants, the first ever envisioned for the country. “Vena Energy is leveraging our regional project development track record,

technical capabilities, and economies of scale to generate low-cost clean energy to support the government initiative, as well as create employment opportunities and drive economic growth in local communities,” Nitin Apte, Vena Energy CEO said in a statement. The Indonesia government pledged to use renewable energy resources like wind and solar power for 23 percent of its total energy mix by 2025. Indonesia is an onagain-off-again member of the Organization of Petroleum Exporting Countries, suspending its membership most recently in November 2016. Since then, the county has made consistent advances in lowcarbon energy options.

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POLICY

BUSINESS DAY

Sanctions sets jitters through global oil market ISAAC ANYAOGU

ithin the last one year, sanctions have been placed on countries such as Russia, Venezuela and Iran and they have been rubbing oil markets off the wrong, causing bellyache in boardrooms as oil prices climb north of $80. Analysts say this widespread use of sanctions can be destructive to global oil markets, posing risks to future oil supply security and potentially pushing oil prices to record highs. The countries currently suffering sanctions could see their energy security plans threatened, affect economic projections and have negative impact on oil demand and prices. Igor Sechin, CEO of Russian top oil producer Rosneft, estimated the US sanctions against Iran, Venezuela and Russia, either already in place or under consideration, could

result in new oil prices records in the near future as they are targeting a third of combined global crude reserves. “This is a sort of a negative global record, that has never happened previously,” Sechin said according to a report by Platts.

“The policy of sanctions and ultimatums in respect of hydrocarbons markets cannot help but establish a ‘sanctions premium’ to the price,” he said. “I don’t rule out that quite soon we’ll be able to talk about a sanctions commodity super-cycle and we’ll see new

Snapshot

$7/b Estimated rise in oil prices due to geopolitical tensions, including potential re-imposition of sanctions against Iran

price records shortly.” Oil prices have reached their highest since November 2014, with Brent crude breaching the $80/b level recently as supply risks related to Venezuela and Iran have buoyed the market. Besides the companies involved, there are also implications for international oil companies as these sanctions limits their opportunities. Total says it may exit from the deal on Iranian South Pars oil and gas field in the face of US sanctions, unless it gets a waiver. “It’s a huge global challenge,” he said. “Our role is to build bridges by new projects.” Shell CEO Ben van Buerden said his company “simply cannot go into places with sanctions in place,” adding “it’s not as if we really need to go into countries with a lot of problems to keep ourselves going.” Sanctions is also setting in increased high oil prices which on the face of it may look positive but may have unintended consequences.

Higher oil prices could limit demand and economic growth leading to greater volatility. Russia and France’s leaders, have criticized unilateral use of sanctions, calling for greater trust and cooperation globally. Putin said sanctions is unprecedented protectionism, saying that they can stall economic growth globally. However, higher oil prices also have some benefits. In the case of Nigeria, the Federation Accounts Allocation Committee (FAAC) last week said that members resolved to transfer about N24.5 billion from the revenue for the month in the excess crude account (ECA), the first since the country’s economy went into recession two years ago. While Nigeria is not currently at the receiving end of any sanctions so that presents an opportunity to utilise the funds judiciously. The wisest options is to put the excess funds into an investment vehicle to create value for the country after all the sanctions will not last forever.

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WEST AFRICA

ENERGY intelligence Brief Algeria’s Sonatrach says no plans to buy more foreign refineries

lgerian state energy firm Sonatrach has no plans to buy another foreign refinery after purchasing the Augusta refinery in Italy, Abdelmoumen Ould Kaddour, the company’s Chief Executive said. “For now it is not our plan to buy another one overseas,” Kaddour said, adding that the capacity of Augusta along with Sonatrach’s Algiers and planned Hassi Messaoud

refineries would enable Algeria to cover its needs. Sonatrach bought 175,000 barrel-per-day Augusta refinery in Sicily from ExxonMobil this month, the companies said. Algeria, an OPEC member that exports oil and gas but has limited refining capacity, imported $16 billion in fuel products from 2011 to 2017, Sonatrach said in a presentation on its Augusta purchase. “We import a lot of naphtha and fuel products,” said Mazighi Ahmed, a Sonatrach executive. “Its an astronomic bill.” Sonatrach also said Algeria’s energy exports rose to $9.8 billion in the first quarter after $8.4 billion a year earlier as higher oil prices offset a stagnant crude production.

BP to cut 3 percent of upstream jobs by year-end

ritish oil giant BP Plc said it plans to cut 3 percent of jobs in exploration and production, as part of a restructuring of its global upstream business to make the division more efficient and competitive. A BP spokesman said the cuts of around 540 jobs from the company’s 18,000-strong total upstream workforce will be carried out by the end of the year.

The move is part of an ongoing process to simplify the company’s structure and increase efficiency, following the $50 billion worth of divestments over recent years, BP said in a statement. It did not comment on any possible cost savings associated with the redundancies. BP held out the prospect of a first dividend increase since 2014, after first-quarter profits beat forecasts earlier this month, thanks to rising oil and gas prices and production. The 110-year old company is undergoing its fastest growth in recent history with new oil and gas fields from Egypt and Oman to the US Gulf of Mexico, riding a tide of higher oil prices following the 2014 downturn.

Wednesday 30 May 2018

finance people appointments

Ghana’s Petroleum receipts hit $4bn

hana’s total petroleum receipts since the beginning of commercial production up to 2017 is $4.009 billion which was realised from the sale of 253,085,873 barrels of crude oil. Ghana received the highest annual petroleum revenue in 2014, earning $978.01million as against the lowest revenue of $247.18 million in 2016. Price fluctuations on the global crude oil market largely caused the poor oil revenue income in 2016. Royalties (5-12.5 percent), surface rentals, corporate tax of 35 percent, carried and participating interest (15 percent minimum) as well as other avenues such as bonuses, licencing fees and additional entitlements constitute the sources of petroleum revenues to the state. Distribution of the to-

tal oil revenue realised between 2011 and 2017 are $1.6966 billion to Annual Budget Funding Amount (ABFA); $1.2393 billion to GNPC; $776.54 million to the Ghana Stabilisation Fund (GSF); and $323.72 million to the Ghana Heritage Fund (GHF). According to the Pub-

lic Interest Accountability Committee’s (PIAC) report, allocations to the various areas are slightly higher than receipts because of the transfer from the GSF to ABFA. Steve Manteaw, PIAC’s Chairman said the four priority areas government selected to spend ABFA

(2011-2016) were agricultural modernisation, amortisation, capacitybuilding and roads and other infrastructure. He however indicated that there were some allocations outside the four designated areas. “These included the GH¢5million and GH¢10million financial support to the Venture Capital Fund in 2012 and 2013 respectively; GH¢35million to MASLOC in 2011; GH¢2million to MUSIGA for research in 2011; GH¢2million recapitalisation for Exim Guarantee Company Ghana in 2012; and GH¢556,655 printing and transportation of stationery to seven regions in 2013,” Dr. Manteaw stated. PIAC, he noted, is concerned about the use of petroleum revenues to cover too many areas, especially outside the four priority areas.

Top Service: Total strives to make its 560 stations customer-centric STEPHEN ONYEKWELU

ustomer satisfaction, commitment to improve the quality of service and products it brings to the market, are factors that drive Top Service Campaign, part of Total

Nigeria Plc’s customer service strategy to offer premium value. Total Nigeria Plc is a marketing and services subsidiary of Total; a multinational energy company operating in more than 130 countries and committed to providing sustainable prod-

ucts and services for its customers. “Service to the customer is part of our DNA and everybody at Total knows this. Whether you are at the service stations or at the headquarters, service to customer is first. This is why we go to the service stations to serve the customers ourselves, to know what their needs are and how we can best align our operations to their expectations” Jean-Phillipe Torres, the managing director of Total Nigeria Plc said at the end Top Service exercise, May 24, Lekki Phase II service station in Lagos. One of demonstrating commitment to customer satisfaction the MD said is by nice service stations, well trained staff and ensuring the pumps and equipment are in perfect working condition in order

to make sure customers have the best service and products. The Top Service Campaign exercise is conducted as often as possible. “We have two official exercises like this per year. Sometimes it is not as official as this. We visit our service stations, because it is important to always be in contact with our customers” Torres said. Three years ago Total Nigeria Plc had 370 service stations and this has grown to more than 560 service stations in Nigeria. The objective of Total is to continue to expand, and increase its network of service stations in order to be everywhere in the country and serve customers. “We invest in this country and we make sure we render the best service to our customers” Torres said.

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marketinsight

Oil prices slump as OPEC, Russia consider output boost

il prices fell about $3 per barrel as Saudi Arabia and Russia discussed easing supply curbs that have helped push crude prices to their highest since 2014. Brent crude futures fell $2.69, or 3.4 percent, to

$76.10 a barrel. The contract hit its highest since late 2014 at $80.50 last week. Brent was on track to fall about 3.1 percent this week, which would be its largest weekly percentage loss since early April. US West Texas Intermediate (WTI) crude fell $3.04 to $67.67 a barrel, a 4.3

percent loss. Following six weeks of gains, WTI was set to lose about 5.1 percent for the week, which would be its biggest loss since early February. The energy ministers of Russia and Saudi Arabia met in St. Petersburg to review the terms of a global oil supply pact that

has been in place for 17 months, ahead of a key OPEC meeting in Vienna next month. Global crude inventories have fallen over the past year because of the OPEC-led cuts, which were boosted by a dramatic drop in Venezuelan production. This comes even as US crude production has risen. The United States in February produced 10.3 million bpd, a record. Speaking in St. Petersburg, Saudi Energy Minister Khalid al-Falih said any easing of restrictions on pumping levels would be gradual to avoid a shock to the market. The prospect of renewed sanctions on Iran after Trump pulled out of an international nuclear deal with Tehran has further boosted prices in recent weeks.

Oil producers boost 2019 hedging

il producers have picked up the pace in hedging against further production in 2019, with an average price at about $60 a barrel, which limits upside but protects against volatility, according to Gold-

man Sachs. For 2018, about 48 percent of oil production is hedged at an average price of $57 a barrel, Goldman said in a note. Sixteen percent of 2019 oil production is hedged at $60 a barrel, versus 9 percent at the end of the

fourth quarter, in line with the historic average for hedging several quarters in advance. Oil producers use futures contracts to hedge their exposure to production, in an effort to keep themselves protected from losses should the price of crude fall suddenly. Both hedging levels are below current futures contracts prices, which are averaging around $70 for the second half of 2018 and $66 a barrel for 2019. Hedging at lower levels limits the ability of producers to take advantage of a subsequent rally in prices - but it also protects them if the price of oil should fall to lower levels. That kind of volatile trading pattern was present throughout 2017, so producers remained protected even after oil dropped off from an ear-

ly-year rally. That in part helped production in the United States continue to grow, eventually rising to an all-time record late in 2017 of more than 10 million barrels a day. In 2018, oil has been steadily rising, which presents a risk for producers if they hedge at levels below the current price, so some companies elected not to hedge. Hedging could restrain ramping activity and increase focus on “capital discipline,” Goldman said. “We believe producers may continue to tactically add oil hedges at current futures to mitigate oil price volatility in 2019, which could support greater CAPEX,” the investment bank said in its note. It said the majority of production growth in 2018 was expected to come from producers hedged above 50 percent.

BUSINESS DAY

OPEC Flakes OPEC, Russia to consult with various countries on size of oil output quota cuts

he OPEC-led coalition plans to conduct consultations with various countries on potential gradual increase in oil production ceilings within the next weeks, with the changes likely to be implemented in the second half of the year, Khalid Al-Falih, Saudi Arabia’s energy minister said. OPEC has begun consultations with Russia and plans to contact other countries in coming weeks to discuss po-

tential change in the production cut quotas as the group is close to reaching its goal of market rebalancing, Falih said. “At end of the day, as important as Russia and Saudi Arabia are in terms of the largest countries, we have to be sensitive to views of all countries and will be consulting with all of them,” Falih told a key energy session at the St Petersburg International Economic Forum. He reiterated the group plans a gradual increase in production, but concrete figures are yet to be specified to ensure “the supply is adequate.” “What I can tell you is that different numbers have been looked at,” he said, adding that all the decisions are to be taken by the ministerial meeting of OPEC and nonOPEC countries in late June in Vienna.

Democrats urge Trump to “stand up to OPEC” amid rising oil price

enate Democrats are urging President Donald Trump to rein in OPEC with pump prices at a three-year high, and even send his energy secretary to the cartel’s June meeting to reinforce the message. The reality is that Trump has few tools at his disposal to make life more bearable for motorists as the summer driving season approaches, other than reversing some major foreign policy efforts, such as sanctions on Venezuela or walking away from the Iran nuclear deal. Chuck Schumer, US Senate Democratic Leader exhorted the president to “stand up to OPEC” at a press conference in Washington. In a letter to the president,

Democrats including Rob Menendez and Ed Markey called on Trump to send Energy Secretary Rick Perry to next month’s OPEC summit in Vienna to press the case for stable crude prices, a suggestion shrugged off by analysts. “The influence of the US on an OPEC meeting is basically zero,” said Thomas Cape, senior analyst at Evercore ISI in New York.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 30 May 2018

talking points

In association with

Nigeria’s cooking gas market faces old foes as demand grows STEPHEN ONYEKWELU

emand for Liquefied Petroleum Gas (cooking gas) in Nigeria has been increasing but the sector still struggles with some old foes, such as high cost of steel, foreign exchange bottlenecks and cost of imported raw materials needed to manufacture gas cylinders. Nigeria’s LPG market has witnessed massive growth from less than 70,000 metric tonnes consumed in 2007 to the current 400,000MT, a 471.4 percent increase within 10 years. Some of the challenges that must be addressed to enhance the cooking gas market include: availability, affordability, acceptability and accessibility of the product. Functional terminals are a critical component of the solution. The retail side of the business is not growing as fast as it should because of affordability. Experts say the product is not delivered to consumers at the right price because of sharp practices and the bottlenecks at the jetties. Also, limited number of trucks for distribution of the product is a challenge. The roads are bad leading to delayed deliveries and accidents in extreme cases. In 2008, the Nigerian Gas Master Plan (NGMP) came into force to provide for conditions necessary to drive domestic gas market and encourage local consumption. The NGMP provided that multinational oil and gas companies necessarily channel certain proportions of the gas production to the local market. On case-by-case bases this ranges between 20 percent and 35 percent. The Master Plan also provided for a gas pricing strategy aimed at expanding gas infrastructure and sustaining the domestic gas market. Next is provision for power supply. While all three provisions together would great sustainable market environment, the first two have direct bearing on domestic gas market.

Industry operators call for a policy that will drive the sector. “There is an urgent need for an LPG road-map in Nigeria that would drive development and growth in the market, otherwise, there would be limitations to the attainment of the desired position that should be seen,” said Ken Abazie, corporate services and strategy, Techno oil Limited at a stakeholder conference recently. Nigeria currently relies mostly on gas from NLNG to meet local demand but even that suffers from delays due government’s decision to prioritise petrol in discharge to jetties and limited number of jetties and terminals. Nigeria is a net exporter of LPG. We produce more than five million metric tones of LPG per annum and we are exporting over

four million metric tones. Nigeria only consumes about 500,000 metric tones when we have the capacity to consume five million tones. The LPG market is a $10 billion industry with many multiplier effects, including employment. Average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) decreased by -1.55 percent month-onmonth and by -15.24 percent year-on-year to N2,058.19 in April 2018 from N2,090.64 in March 2018. States with the highest average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas were Borno (N2,428.57), Yobe (N2,387.01), and Kogi (N2,207.14). States with the lowest average price for the refilling

of a 5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) were Jigawa (N1,812.50), Abuja (N1,800.00) and Ebonyi (N1,783.33). Similarly, average price for the refilling of a 12.5kg cylinder for Liquefied Petroleum Gas increased by 0.36 percent month-on-month and decreased by -11.62 percent year-on-year to N4268.95 in April 2018 from to N4, 253.73 in March 2018. States with the highest average price for the refilling of a 12.5kg cylinder for Liquefied Petroleum Gas were Benue (N5,000.00), Niger (N4,583.33) and Imo (N4,571.43). States with the lowest average price for the refilling of a 12.5kg cylinder for Liquefied Petroleum Gas were Ogun (N3,966.67), Oyo (N3,947.50) and Lagos(N3,752.94).