BusinessDay 30 May 2019 by BusinessDay

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JOSHUA BASSEY, Lagos, IGNATIUS CHUKWU, Port Harcourt, NEDO HABILA, Yola, ADEOLA AJAKAIYE, Kano, SABY ELEMBA, Owerri, ANIEFIOK UDONQUAK, Uyo, PATRICK ABANG, Calabar & NATHANIEL GBAORON, Jalingo

As President begins second term in office

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Sanwo-Olu, Wike, Fintiri, others promise improved economy

A reminder of Buhari’s ‘Next Level’ promises to Nigerians

re s i d e n t Mu h a m madu Buhari was on Wednesday, May 29, sworn in as president of Nigeria for another four-year term, alongside Vice President Yemi Osinbajo, at the

President Muhammadu Buhari (m) being sworn in by Ibrahim Tanko Muhammad, acting chief justice of the federation in Abuja, yesterday. With them is the wife of the President, Aisha Buhari. NAN

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Eagle Square in Abuja. This is Buhari’s second and final term in office as president of Africa’s most populous country, according to the provisions of the 1999 Constitution of the Federal Republic of Nigeria, as amended. Buhari, who was declared

winner of the February 23, 2019 presidential election by the Independent National Electoral Commission (INEC) after defeating his main challenger, Atiku Abubakar of the People’s Democratic Party (PDP), with 15.2 million votes to 11.3 million votes, had promised during

his campaign for a second term that he would take Nigeria to the ‘Next Level’. In the ‘Next Level’ policy document that formed the matrix of Buhari’s campaign, the 76-year-old outlined strategies he would deploy in 11 key secContinues on page 41

total of 29 state governors were sworn in on Wednesday for a four-year term, with many of them promising to improve the economies of their states and lift their citizens out of poverty. The newly inaugurated governors emerged victorious in the March 9, 2019 governorship elections in their various states. In Lagos State, Babajide Sanwo-Olu, the new governor, said his administration would anchor the pursuit of the realisation of the goal of ‘a greater Lagos’ on six pillars of Traffic Management and Transport, Health and Environment, Education and Technology, Making Lagos a 21st century economy, EntertainContinues on page 41

Inside The truths, half-truths and lies in FG’s claims on truck evacuation from P. 2 Apapa roads SPECIAL REPORT

Thursday 30 May 2019

BUSINESS DAY

news The truths, half-truths and lies in FG’s claims on truck evacuation from Apapa roads OLUWASEGUN OLAKOYENIKAN

he Presidency of the Federal Republic of Nigeria on Tuesday, May 24, 2019, in a series of tweets gave an update on the level of progress made

to ensure compliance of its order directing immediate removal of all trucks and trailers from bridges and roads within Apapa and all adjoining streets leading into Apapa. The Presidency had on Wednesday, May 22, 2019, ordered the “immediate clearing up of the Apapa gridlock and the restoration of law and order to Apapa and its environs within two weeks”. And so, the Presidency, using its verified twitter account (@NGRPresident), began what it called “UPDATE on Presidential Directive on the Evacuation of Trucks and Trailers off Lagos Bridges, Roads, Inner Streets and Free Access to Lagos Ports #ApapaOrder #Thread” at 8:46 AM on Tuesday. BusinessDay gathered five claims from the series of tweets.

CLAIMS The trucks and trailers are no longer on any part of Eko Bridge, from the Alaka entrance of the bridge in Surulere. The trucks and trailers are no longer on the Eko Bridge division to Ijora 7up at Costain axis. The trucks and trailers are no longer on the Eko Bridge division to Apapa at the Ijora Olopa, close to Iddo axis. The trucks and trailers at the Ijora Olopa axis of Iddo/ Ijora Olopa road were moved to the National Theatre gate overlooking the Lagos State Water Corporation at Ijora Olopa. The entire Costain roundabout on Funsho Williams AvenueinwardIponri/Surulereand the Nigerian Breweries, Iganmu axis are completely devoid of parked trucks and trailers. BusinessDay visited the locations on Tuesday and followed up on Wednesday. It was observed that the five claims contain truths, halftruths and lies. EVIDENCE BusinessDay got to the

FACT CHECK

Continues on page 41

Nigerian content drive in oil, gas upstream targets 300,000 jobs …but skills, infrastructure gaps remain STEPHEN ONYEKWELU

ine years after it was passed into law, the Nigerian Oil and Gas Industry Content Development Act has recorded some significant achievements and its regulator, the Nigerian Content Development and Monitoring Board (NCDMB), has set ambitious targets, among them to create 300,000 jobs by 2027. But gaps in skills and infrastructure in the industry remain. The NOGICD Act was meant to increase the quantity and quality of skills and raw materials sourced within Nigeria for exploration and production activities in the oil and gas upstream. Nigerian content has grown from almost zero to 30 percent in 2018. And the NCDMB wants to move this needle further, to 70 percent in the next eight years. “Local content is not Corporate Social Responsibility. It is Nigeria’s way of closing up gaps in the upstream oil and gas sector by building Nigerian competences and staying globally competitive,” said Tunde Adelana, director, monitoring and evaluation, NCDMB. French super oil major, Total Upstream floating, production, storage and offloading (FPSO), Egina, is to date the most visible testimony to

the value addition position assumed by the Nigerian content philosophy. Six of the 18 modules integrated on the FPSO were built by local companies and contractors. But Nigeria’s content drive faces significant challenges. The Board set out to achieve 60 percent Nigerian Content on the project but realised 50 percent, which Simbi Wabote, executive secretary of NCDMB, described as commendable because the execution of Egina set new benchmarks and domiciled new capacities and facilities in-country, one of which is the FPSO integration facility at the SHI-MCI yard located at the LADOL Free Zone, Lagos. “If we are to implement the Nigerian Content Law 100 percent, we will have to stop oil production in Nigeria, develop non-existing capacity, and then start production again. The Board enforces the law with pragmatism,” Wabote said. Africa’s most populous nation spends $10 billion annually to hire certified welders into the country, Sunny Eromosele, managing director, Mudiame International Limited, said in an interview early this year.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Joret Olivier, executive head, card & emerging payments, China, Standard Bank; Ayodele Ojosipe, head, enterprise banking and trade finance, Stanbic IBTC Bank plc; Wole Adeniyi, deputy chief executive, Stanbic IBTC Bank plc; Manessah Alagbaoso, head, Africa-China integration, Standard Bank Group, and Ralph Deng, general manager, Zhejiang International Trading Supply Chain Company Limited, at the launch of Stanbic IBTC Africa-China Agent Proposition in Lagos.

Apapa welcomes Sanwo-Olu with high expectations CHUKA UROKO

he Apapa community joined the rest of the 20 million residents of Lagos to welcome Babajide Olusola Sanwo-Olu, the state’s new governor, who was sworn in for a four-year term on Wednesday. The new governor, who emerged winner of the March 9 governorship election which he contested on the platform of the ruling All Progressives Congress (APC), is not a political neophyte, and he is not new to Lagos politics, economy, governance and bureaucracy having served as two-time commissioner in the state. To most Lagosians, SanwoOlu’s emergence as their governor is a return of the native. He knows and understands the terrain; it is believed that the opportunities and challenges

that define Lagos as Nigeria’s commercial capital and the largest economy in West Africa are not lost on him. It is on the basis of this, more than anything else, that the coming of the new governor was greeted with high expectations and, for the Apapa community which comprises the residents, business owners, port operators and users among others, this is most likely the coming of a Daniel to judgment. Apapa is Nigeria’s premier port city. It has the first Government Reservation Area (GRA) in Nigeria where the great legend, Obafemi Awolowo, lived along with many white men and middle-class natives who worked either in the ports or in the blue-chip companies on Lagos Island. Apapa was described as a “city of aquatic splendour” with an alluring and thriving environment for both

residence and commerce that revolved around port and other marine activities. The port city is home to Nigeria’s two busiest seaports that account for 75 percent of both import and export activities in Nigeria. Its economy is valued at N20 billion a day. But today, this port city, for all it stands for or used to stand for, is under siege. It is an occupied territory. It has lost its charm, its essence and, indeed, its soul, to mindless and uncontrolled activities of men without conscience. And so, it is no longer at ease in the port city. The residents and business owners particularly are not only traumatised and disillusioned, but also marooned like birds in a boundless desert which is why Sanwo-Olu comes as a glimmer of hope, a silver lining in the sky and a flicker of light at the end of the tunnel.

The expectation is high and made a lot higher by the new governor’s campaign promise to the Apapa community. “I will clear Apapa gridlock in 60 days,” he said, and the people believed him, not because he has any magic wand, but because, unlike others before him, the new governor has shown empathy for the plight of the people in this side of town. Clearing Apapa gridlock by whatever means is in the best interest of every stakeholder, but more to the Lagos State government. Lagos is Africa’s 7th largest economy. Its internally generated revenue (IGR), which comes mainly from taxes, stood at $1.3 billion in 2015 and this is three times more than the state with the second largest IGR and 39 percent of the total IGR by Nigeria’s 36 states.

Nigeria’s risk premium rises against peers amid economic uncertainty David Ibidapo

nvestors in the Nigerian fixed-income space remain uncertain about the economy as they demand higher compensation for higher risk. Analysts, on their part, continue to restate the need for market-moving economic policies and reforms upon President Muhammadu Buhari’s assumption of office for a second term. The uncertainty is evident as the spread between Federal Government of Nigeria (FGN) benchmark 10-year bond and the US 10-year bond stood at 12.03 percent a day before the President’s swearing-in. The FGN 10-year bond yield closed on Tuesday at 14.35 percent versus the US 10-year treasury yield which closed at 2.32 percent. While the widening spread

observed in 2018 was attributed to rising political uncertainty, fear of election which caused investors to demand a higher risk premium to remain invested in the local currency bond, investors currently still perceive Nigeria in a precarious state, hence the demand for higher risk premium. Against trends witnessed in other African countries like South Africa, Kenya and Egypt, where spreads are thinning, Nigeria has witnessed an upward pressure on yields for its 10-year dated national bond in the last three months from 14.19 percent. Although Nigeria lags Egypt in yield spread against the US 10-year bond, Egypt has seen yields decline from about 18 percent to 15.96 percent. Same trend was witnessed in South Africa and Kenya. Although Nigeria has been

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able to maintain a relatively stable exchange rate, thanks to the efforts of Central Bank of Nigeria Governor Godwin Emefiele, the decelerating growth in the nation’s GDP and the need for reforms are major factors pressuring up yields in the space. Economic growth in Nigeria has slowed down this year, growing at about 2 percent which significantly underperforms economists’ expectations at the beginning of the year, whereas in the US economic growth is now above 4 percent for the first time in decades. International Monetary Fund which correctly predicted that Nigeria would grow its economy in 2017 by 0.8 percent forecast economic growth for 2018 to be 2.1 percent. However, as at the end of the fourth quarter 2018, Nigeria’s economy underper@Businessdayng

formed the forecast, recording instead a 1.93 percent annual growth. The first quarter of the year 2019 saw growth slow quarteron- quarter to 2.01 percent from 2.38 percent in Q4 2018, as both oil and non-oil sectors declined in growth. Amongst several reasons for the slowdown, Emiefele in the last Monetary Policy Committee (MPC) meeting urged banks to turn on the taps and increase lending to stimulate the economy, or have access to a near-risk-free way of making money choked off. Other analysts tie the widening spread to a year-long risk off trade in emerging markets which in Nigeria’s case is fuelled by higher levels of political uncertainty.

•Continues online at www.businessday.ng

Thursday 30 May 2019

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Thursday 30 May 2019

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Thursday 30 May 2019

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INAUGURATION OF GOVERNORS

Governor of Lagos State, Babajide Sanwo-Olu (m) and Ibijoke Sanwo-Olu (r), his wife, being congratulated by Chief Judge of Lagos State, Opeyemi Oke (l), at the inauguration of Sanwo-Olu as the 15th Governor of the State, at the Tafawa Balewa Square (TBS), Lagos, yesterday.

Seyi Makinde, governor of Oyo State (m) taking oath of office before Munta Abimbola, chief judge of Oyo State, at his inauguration in Ibadan. With them is Omini Makinde, his wife. NAN

Nyesom Wike (r), governor of Rivers State, taking oath of office before Adama Iyayi-Lamikanra, chief judge of Rivers State, at his inauguration for a second term in office in Port Harcourt. NAN

Emeka Ihedioha, governor of Imo State, at his inauguration, at the Dan Anyiam Stadium in Owerri. NAN

Ben Ayade, governor of Cross River State, taking oath of office before Michael Edem, chief judge of the State, at his inauguration for a second term in office in Calabar NAN

Aminu Tambuwal, governor of Sokoto State, taking oath of office before Sa’idu Sifawa, acting chief judge of the State, at his inauguration for second term in office in Sokoto. NAN

Ifeanyi Ugwuanyi, governor of Enugu State (l), acknowledges cheers at his inauguration for a second term in office in Enugu NAN

Nasir el-Rufai, governor of Kaduna State, taking oath of office before Mohammadu Bello, chief judge of Kaduna State, at his inauguration for a second term in office at Murtala Square in Kaduna. NAN www.businessday.ng

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NEWS

HLSI contract to fight maritime insecurity, curb revenue leakage – Amaechi AMAKA ANAGOR-EWUZIE

inister of transportation, Rotimi Amaechi, says the Federal Ministry of Transport through the Nigerian Maritime Administration and Safety Agency (NIMASA) recently entered into a maritime security contract with an Israeli firm, HLSI Systems, to put an end to issues around piracy and other irregularities on the nation’s waters. The contract, he said, will put an end to revenue leakages caused by security challenges and other illegal activities on Nigerian waters. Speaking in Lagos on Tuesday at a stakeholders’ interactive session with shipping companies on the issues and progress in the sector, Amaechi said criminals must be chased out of Nigerian territorial waters to make the waterways safe and attractive for foreign investment. “The Federal Government is committed to this project, hence the need to collaborate with HLSI Systems in this way,” the minister said. According to Amaechi, the maritime security contract will allow for all vessels plying Nigerian territorial water to be identified and monitored from point to point through-

out the period of their stay in Nigeria in order to ascertain all their activities in Nigeria. During the session, the representatives of HLSI Systems Limited gave detailed presentation, on the theme, ‘Establishment of an Integrated National Security and Waterway Protection Infrastructure in Nigeria - Deep Blue Project’ in which the company reviewed the progress recorded in both the areas of procurement of maritime security assets as well as the human capacity aspect involving training of Nigerians on effective manning of the waters. Till date, C4I Systems Operator, Intelligence Systems Operator and Basic Infantry training courses have been successfully conducted with well-trained graduates emerging from those programmes while a timetable for the delivery of maritime security assets was laid out in the course of the presentation. An overview of the Deep Blue Project reveals the system as providing a 360-degree, eagle-eye view of Nigeria’s maritime domain thereby equipping NIMASA (as the Designated Authority) with comprehensive and real time information on every activity conducted by vessels within Nigerian waters.

IEA makes case for research into small modular reactors MIKE OCHONMA

ountries must make efforts to support innovative new reactor designs with lower capital costs and shorter lead times, such as small modular reactors (SMRs), if they intend to retain nuclear power as an option in their clean-energy transitions, International Energy Agency (IEA) says. The recommendation was made in a newly released report, titled ‘Nuclear Power in a Clean Energy System,’ released this week during the tenth Clean Energy Ministerial in Vancouver, Canada. Standardisation of reactor designs will be crucial, however, to benefit from economies of scale in the manufacturing of SMRs. No new nuclear capacity is envisaged for the period to 2030, representing a marked deviation from the current outdated IRP, which controversially catered for the introduction of 9,600mw of new nuclear capacity between 2023 and 2030. The report makes the case for sustaining nuclear, which currently accounts for 10 percent of global electricity generation, as an option to help meet global climate targets. The report asserts that, while a clean-energy transition with less nuclear power is possible, a substantial rise in investment in other forms

of power generation and electricity networks would be required. The IEA calculates that the electricity sector in advanced economies would have to invest an additional $1.6 trillion between 2018 and 2040. Securing investment in new nuclear plants would require a “more intrusive” policy intervention, however, particularly in light of the high cost of projects and unfavourable recent experiences. The report highlights the long delays in completing advanced reactor projects in Finland, France and the US. These have turned out to cost far more than originally expected and dampened investor interest in new projects. The main obstacles to new nuclear investments are listed as including: the sheer scale of investment and long lead times; the risk of construction problems, delays and cost overruns, and the possibility of future changes in policy or the electricity system itself. Interest is rising, therefore, in advanced nuclear technologies that suit private investment such as SMRs. “There is a case for gove r n m e n t s t o p ro m o t e i t through funding for research and development, public-private partnerships for venture capital and early deployment grants,” the report concluded. www.businessday.ng

L-R: Emmanuel Ezeani, relationship manager, Sigma Pensions; Chukwuma Amaonwu, head, business development division, East; Ophelia Alex-Iwuanyanwu, head, relationship management business developlment division, East, and Chidi Okafor, representative from PenCom, at a retiree forum organised by Sigma Pensions in Owerri.

Motorists warned to adhere to directive against indiscriminate parking or risk sanctions … as Edo JAAC shares N2.090bn allocation to LGAs in April

n a new drive to sanitise major roads and public spaces, the Edo State government has warned motorists to adhere to directives against indiscriminate parking on major roads and highways, noting that they are only allowed to park, drop and pick passengers at designated bus stops and parks in Benin City, the state capital. In a statement, Osarodion Ogie, secretary to the state government, said the warning became necessary to restore sanity on major roads and protect the lives of residents, who were exposed to danger when some motorists flout government directives and constitute nuisance on major roads and highways with indiscriminate

parking. According to Ogie, “The state government warns that commercial buses and other motorists can only park, pick and drop passengers at designated bus stops and parks in Benin City. Those who continue to flout the rule will face corresponding sanctions. This move is to restore sanity to our major roads and also protect the lives of our people who are endangered by the unruly conduct of some motorists, who park, drop and pick passengers indiscriminately.” He maintained that the move was in line with the Project Clean Up Edo campaign, through which the government engendered respect for law and order, cleanliness and sanity in public spaces across

Pascal Dozie to chair as Governor Udom launches biography on deputy KELECHI EWUZIE

hairman of MTN Nigeria, Pascal Dozie, Ray Ekpu, CEO of May Five Limited, will be among top dignitaries to grace the launch a biography of Moses Ekpo, deputy governor of Akwa Ibom State. In a statement made available to BusinessDay, Dozie will chair the occasion that will also feature a keynote address titled, Book as a Factor in National Development - A Biographical Perspective, to be presented by John Asein, director-general, Nigerian Copyright Commission. Udom Inoyo, executive vice chairman of ExxonMobil, will perform presentation of the book that will be reviewed by Ray Ekpu. The event scheduled for Friday, May 31, 2019 at Ibom Hotel and Resorts, will also feature an address by Akwa Ibom State governor, Udom Emmanuel, who will be the special guest of honour and the unveiling of a foundation in honour of the late wife and son of the deputy governor. According to the statement, Martha Udom Emmanuel, wife of the governor, will perform

unveiling of the book, titled, Trials and Triumphs. The book, written by veteran journalist, Uko Okopide, chronicles the many travails of Ekpo at different stages of his life, which he was able to overcome to forge ahead to achieve successes in different areas of endeavour, crowning with his election as deputy governor of Akwa Ibom State in 2015. The high point of the occasion will be the unveiling and inauguration of the Martha and Moses Jr, Ekpo Foundation by the state governor. Ekpo set up the foundation in 2019 to serve as a platform for the provision and funding of social projects and programmes for improvement of the lives of Nigerians in the areas of health, education and welfare. The foundation will provide and fund projects that would give easier access to quality healthcare delivery by Nigerians in the rural areas, especially in the treatment of preventable diseases as well as child and maternal health. It will also provide bursaries to medical and para-medical professionals, with special focus on those operating in the rural areas.

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the state. Meanwhile, the Edo State Joint Account and Allocation Committee (JAAC) has declared N2,090,981,490 as total allocation accrued to the 18 local government areas (LGAs) of the state from the Federation Account for the month of April and shared in May 2019. Chairman, Oredo LGA, Jenkins Osunde, said this at the end of the monthly JAAC meeting presided over by Governor Godwin Obaseki, at the Government House, Benin City, the state capital. Osunde, who is also chairman, Edo State chapter of the Association of Local Government of Nigeria (ALGON), said the total salaries for teachers and non-teachers

under the State Universal Basic Education Board (SUBEB) was N1,065,471,805, local government pension fund contribution stands at N285,870,195, while N100m was set aside for payment of pension arrears. “Total deduction from LGAs is N1,673,084,281; net allocation to LGAs stands at N1,090,647,948, while the total gross allocation amounts to N2,763,732,230. The total amount transferred to LGAs stands at N1,076,829,287,” he said. He explained that the internally generated revenue for the month was N123,211,284, while total money allocated to local government, which is a combination of gross allocation and IGR, amounts to N2,896,943,514.

Riby pushes for stronger cooperatives in first confab

inancial tech firm, Riby, recently held its inaugural cooperative conference, tagg e d Coop 1.0. The event was a meeting point for all sectors of the economy involved in the cooperative ecosystem to come and discuss different ways that the cooperative model could be improved to provide basic life needs, like food and shelter. Over 100 cooperative administrators were present at the event. Speakers included senior manager, Enterprise at the Bank of Industry (BoI), Eniola Akinsete, executive secretary of the Cooperative Financing Agency of Nigeria, Emmanuel Atama, and Sterling Bank’s head of microbanking, Opeyemi Oke. The BoI empowers these groups through its Social Intervention programmes and Akinsete revealed in her presentation that some of the things they had learnt included the power of numbers in these groups and that technology like Riby’s Co Banking platform was @Businessdayng

also important for empowering cooperatives. With the audience taken on a journey through the importance of cooperatives, cooperative bosses like Henry Hector-Amiwero of the Total E&P Cooperative and Yinka Ogunnubi of the CFAO Cooperative shared their valuable experience of how they had been able to generate wealth and how other cooperatives could emulate them. With financial education a key part of the process of empowering cooperatives, members of the media including BusinessDay senior associate, Lehlé Balde, and Business Insider editor, David Adeleke, were also present as moderators for the event. The conference also shed light on financial inclusion, with the CEO of Enhancing Financial Innovation & Access, Esaie Diei, the head of Business Development at CRC Credit Bureau, Peggy Chukwuma-Nwosu, and the CEO of Social Lender, Faith Adesemowo, all spoke at the event.

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Nigeria’s Infinity war on the economy

David Hundeyin

hanos the Titan is a fictional character from the Marvel Cinematic Universe, whose goal is to kill half of all living creatures across the universe, believing that allsocial and economic problems can be solved by killing exactly half of everything. Throughout the Avengers comic series, it is never clear why Thanos believes that committing a universal 50 percent genocide will solve everybody’s problems. In the event that he is successful, there is nothing to say that the problems will not simply recur after the populations rebound. He never appears to think this far though, going as far as sacrificing his own daughter in his quest to end half of all existing life. When he eventually achieves his goal, he destroys the infinity gauntlet that briefly made him the most powerful being in the universe, retiring to a quiet planet to become a lowly subsistence farmer. When the Scandinavian God of Thunder Thor tracks him down and chops his head off in a fit of rage, Thanos takes his fate with equanimity. Neither his fate nor the underlying senselessness of what he has done seem to make any impression on him. He did it just because. It may seem odd to draw parallels between the actions of a fictional genocidal maniac and the economic policy of a poor African country that

can barely fund its budget, but please stay with me as I examine why Nigeria’s leadership is leading the country to the most avoidable economic disaster of all time. This is not about MTN Several column inches and online conversations have been expended on the subject of the government’s constant harassment of Nigeria’s largest telecoms provider. This article will not go into the mechanics of an introductory listing versus an IPO, or the alleged bad faith listing on the part of MTN, because none of this is actually about MTN. What the MTN issue does it to provide a useful microcosm of how Nigeria’s government relates with investors and business people, and why this manner of behaviour is fundamentally self-defeating and bone-headed. In the space of barely three years, MTN alone has been hit with a multiplicity of fines totaling billions of dollars from different government agencies, in addition to having its brand name constantly associated with one alleged scandal or the other. Last week, the EFCC showed up a Yellow House in Falomo, ostensibly to greet their customers and wish them happy weekend, because as it turned out, MTN was not actually accused of any wrongdoing. Since oil is no longer paying as it used to, Nigeria’s government has decided that instead of changing its old habits, it is better off trying to use legalized extortion as its new ‘oil money.’As my fellow columnist Feyi Fawehinmi recently pointed out, the NCAA has also got in on the legalized extortion act, threatening telecoms providers with removal of their 7,000+ masts which were apparently unsafe from the standpoint of passenger flights. Once the providers agreed to

pay a requested fee however, the threat was lifted and the “dangerous” masts were suddenly fine again. “Business Regulation” a la Nigeria. What is more, this aggression, greed and unwarranted hostility toward Nigerian businesses goes far beyond MTN. I have a close friend who runs a media agency with a similar story. In his case, he had all his bank accounts frozen alongside an LIRS demand notice for N10 million in additional taxes. This figure was apparently arrived at by levying a flat percentage on all money that passed through his corporate account, which any tax accountant can tell you is transparent nonsense. The obvious fact that a media agency’s income is only a tiny percentage of all the money that passes through its hands fell on deaf ears until he agreed to come up with N500,000 in cash. Magically, the freeze was restricted, despite there being no evidence that said sum was actually paid into government coffers. Unsurprisingly, he now spends most of his time in the U.S., debating whether or not to keep running his agency in Nigeria that has 11 full-time employees. “Business regulation” a la Nigeria. President Buhari is not Thanos but… Unlike our fictional antihero, President Buhari does not of course, want to intentionally destroy Nigeria’s fragile economyand hurt 180 million people. What he does want to do however, is to impose his incredibly statist worldview on the economy at whatever cost, because as I have mentioned previously, his knowledge comes from an era when that was all the rage. The peak of the Cold War period was when Buhari and his contemporaries were at their most impressionable, hence to them there is still an argument between

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Investors – local and foreign – with intellectual and financial capital will find their way to more accommodating environments because the world is much bigger than Nigeria

private enterprise and overbearing state control of the economy. Those of us who are not stuck in the 1970s probably realise that this has not been a serious argument since the fall of the Soviet Union 30 odd years ago, but we have a president and an economic team who are apparently still mentally fighting the Cold War. It is not clear why they believe that state capture of the economy will solve any of Nigeria’s problems, especially as we have so much clear and recent history showing that this is simply not true. Like Thanos however, they are impelled by belief, instead of evidence. As a result, everyone from my friend in the U.S. to MTN, to people selling phone cases on Instagram are in the cross-hairs of the government for the egregious crime of being involved in private, profit-seeking activities. It is not just about shaking down the private sector for money to feed an increasingly cash-strapped government. It is also about establishing the primacy of government over private enterprise in Nigeria’s economy. The idea is that MTN may come and go, but the government will always be here, which makes it the top dog. “Business regulation” a la Nigeria. Eventually we will all suffer for this mindless, emotion-driven, unscientific and ahistorical view of the economy as the investors we desperately need stop coming in – condemning one quarter of Nigerians to continued unemployment – or those who have already been here for years start to explore the option of exiting. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng/ David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Focusing on the right thing Positive Growth with Babs

Babs OlugbemI

he recent economic growth prediction by the International Monetary Fund (IMF) that put Ethiopia as the fastest growing economy in Africa is an attestation that the Ethiopian government is focusing on her economy. According to the IMF, Ghana, whose economy is expected to grow ahead of other African countries, is now third due to the reduction in its estimated growth to 6.3% from 8.9%. The Ethiopia economy was predicted to witness an increase of 8.5%, followed by Cote d’Ivoire with 7.4% in 2019. The fact that countries like Ethiopia, Rwanda, and Tanzania that were once considered as weak and slow growing economies are now forces to be reckoned with confirmed the saying that what is focused on will be magnified if the focus is on the right thing. Recently, I wrote on how Rwanda has been tagged the “Africa’s biggest success story”, a country from the civil war to second in the ease of doing business with 100% enrolments into her primary schools. The same positive narratives have been noted for Tanzania, where the former president, Kiwete Jakaya, increased the budg-

etary education allocation to 20% and achieved 96% primary school enrolment. Ghana is another prosperous example from the days of the transformational Jerry Rawlings, who is still acting a common man directing traffic on the streets of Accra. Ghana is a country with consistent growth, moderate democracy and smooth transition of power without numerous court cases and deadly violence after elections. The question is, what has been the focus of the Nigerian leaders in recent time, and where are the results to show for their efforts? The harvest of insecurity in the North East, the kidnapping, the yahoo boys, the cattle rustlers and the incessant killings by the herdsmen are the products of what our leaders focused on or failed to focus on. The level of peaceful cohabitation and religion tolerance in the South West of Nigeria and the level of the region’s development are traceable to Chief Obafemi Awolowo’s focus on education for all the residents of the region irrespective of their tribes or ethnicity. What has been the focus of all the other leaders after the leadership of the nationalists that struggled for our independence? Nigeria, without a doubt, is blessed with resources and the uncontrolled population. However, it was the failure of our leaders to develop the human and material capacity of a potentially great nation. Unlike Lee Kuan Yew of Singapore, our leaders have been playing politics with our lives using the swords of religion and ethnic sentiments as the platform for the struggle for power and influence. They have focused on what divides people instead of harnessing the potential in our human capital. Our leaders have ruled a big country yet leave

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their primary constituencies in poverty with beggars flooding the streets of the country. They have focused on enriching themselves and sharing the wealth of the nation among a few political elites. The poor masses are not just victims but accomplices in the act that encourages focus on what is not in the best interest of all. We have danced, sang praises of elected politicians who used 10% of our money to build bridges with inflated prices and wasted others on themselves in the name of security votes, donations to the political parties, inefficient political structure and rewarding sycophants. We are reaping the reward of our leaders’ focus (pauperized citizens, insecurity, political nepotism, deteriorating public image, etc.) and the followers’ ineptitude for mediocrity instead of the demand for stewardship and accountability. I cannot agree less with Dr Remi Adekoya’s position that ‘Nigeria is a rich country’ is nothing but a myth given the value of the national budget to her population size. More pathetic is the fact that we are now a poor country amid abundant resources because of the poor focus of our leaders, political structure and the culture of mediocrity established and sustained by the ruling class. To end the myth, we need to hold our leaders accountable for the mandate given to them. It is time our votes are not taken as open cheques to unexplained wealth and freedom to enslave others. Recently, I demonstrated how holding public institutions could help us to move Nigeria forward. I was in the training room when one of the participants asked me to tell the class my unique selling proposition as a coach. I promptly answered without know-

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ing my answer will set me up. I replied, ‘I help individuals and organisations to focus on the right thing’. He further asked where I live. As I mentioned where I live, and he pointed out the obvious. The road along the expressway to my house was repaired by a top construction company in Nigeria but with a shoddy job done on one of the bridges. My unbearable participant became a pain in my neck when he demanded to know what I have done to make the company do the right thing. I was at first defensive. I told him companies and individuals need to be my clients before the opportunity to help them to focus on the right thing can become available to me. As uncomfortable as I was, I remember I had related with someone who’s an employee of the construction company when I was in the banking industry. I put a call to Victor in the presence of my audience and reported the bad work his company did on the bridge leading to my house. I demanded he ask the company’s technical team to drive and assess my complaint the next day. I stylishly follow my request with an unintended threat to write about the situation and his company’s poor execution of the contracted work if nothing is done within five days. Victor pleaded that I shouldn’t not write against his company. He said I dare not do that as his friend. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 30 May 2019

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Buhari and growing unbelief in Nigeria Remi Adekoya

t was to be expected President Buhari would promise to tackle insecurity, fight corruption and grow Nigeria’s economy during his second-term in office. These have been the standard promises at the start of all presidential terms since 1999. What is different for me personally this time is my complete lack of belief the incoming president, in this case Buhari, will make significant headway on any of these issues. This despite the fact I placed significant hope in a Buhari presidency back in 2015. Likewise, when first Yar’Adua and later Jonathan assumed the presidency, I felt a momentary surge of optimism about Nigeria’s future. Today, I can’t even pretend to believe a second-term Buhari government will be able to turn things around in this troubled nation. It is not that I don’t want to believe things will change for the better in these next four years, it is that I can’t believe. Sometimes, you may really want to believe a thing but find yourself unable to. Hence, there are atheists today who used to be devout Christians or Muslims. It would be no problem if only I and a few other malcontents felt this

way about Nigeria’s immediate future. Problem is, hardly anyone I know seems to expect much of a secondterm Buhari presidency, including folks who just voted to re-elect him. This is less connected to Buhari’s person than to a generally increasing pessimism regarding Nigeria’s future. Growing insecurity, mass unemployment, rising living costs, the visible multiplication of poverty all around, an economy clearly not working for the overwhelming majority and the seeming determination of a political class to remain unfazed by all this, is taking its psychological toll. Small wonder a 2017 Pew Research survey revealed 3-in-4 Nigerians - 74% - would emigrate given the opportunity, a much higher figure than in Kenya (54%), Senegal (46%) or Tanzania (43%). Citizens of the “Giant of Africa” now find their country more unbearable than Kenyans, Tanzanians and Senegalese find theirs. It is difficult to cite a more damning indictment of the Nigerian reality. There is now a resignation in the air I’ve never felt quite so palpably among usually incurably optimistic Nigerians. Personally, I have often felt frustration at the stubborn “E go better” philosophy of Nigerians even when there seemed no rational basis for it. In fact, I have long believed the greatest ally of the country’s do-little political class is the willingness of the average Nigerian to accept the present as is on the assumption a brighter future is surely to be. That, just like the biblical Israelites, we are somehow pre-ordained to reach a Promised Land after our equivalent 40 years in the desert. That Nigeria’s present is but a difficult phase that will inevitably pass. Hope requires no

evidence to believe tomorrow holds more promise than today. But while I still don’t believe successful countries are built on hope alone, I also know they have never been built in the absence of hope, bereft a popular sentiment in society that the country can work. I’m not talking about mechanically regurgitating in public patriotic-sounding platitudes about Nigeria’s great “potential”, I am talking about truly believing deep down in your bones that the country can actually be made to work. If the players in a football team no longer truly believe it can win, that team is doomed. Sure, the players will turn up for training, they’ll play matches, they’ll pass the ball around and insist they believe in victory, but deep down, none of them truly will, and you will never get one hundred percent from any of them because all they are really doing is just going through the motions. Privately, they’ll be on the constant lookout for transfer opportunities. Just like the 3-in-4 Nigerians who would emigrate tomorrow if they could. Irrespective declarations to the contrary, most Nigerians no longer believe Nigeria is redeemable. Worse, this belief does not belong only to those struggling financially but is shared by Nigeria’s elites. Remember the Rotimi Amaechi audio-recording that was leaked during the recent presidential campaign? We heard one of Nigeria’s most prominent politicians tell his friends: “This country cannot change…this country is going nowhere.” Make no mistake; bar a few authentic true believers in project Nigeria, this is how most Nigerians, rich and poor, feel about the country

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But while I still don’t believe successful countries are built on hope alone, I also know they have never been built in the absence of hope, bereft a popular sentiment in society that the country can work

today. And with good reason too; just how much disappointment can human faith absorb before starting to waver? This is the prevalent mood of the country President Buhari will be running for the next four years. By the end of his second term, he will have spent close to a decade as Nigeria’s head of state, surpassed only by Olusegun Obasanjo’s cumulative eleven years in the job. These next four years will likely determine Buhari’s historical legacy. An absolute must-do for him and his new administration is to restore hope among Nigerians that their country can actually be made to work, that Nigeria is not a lost cause. This would take far more than patriotic clichés no one believes in anymore, least of all the politicians who spout them. It would take the country literally seeing members of the incoming government working their backsides off to make the country safer, more prosperous, more just. Even if just by a bit. Nobody expects miracles. In fact, Nigerian expectations of government are the lowest they’ve been since I recall. But I also know Nigerians still want to believe in their country, and when people really want to believe in something, they will readily snatch at any half-good reason to do so. But words have stopped working Mr President, only actions will suffice now. Otherwise, whoever succeeds you will be presiding over a nation not of agnostics, but of full-blown atheists in the Nigerian cause. Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

Why education cannot be a source of IGR in Nigeria Dayo Awude

ducation is the process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits. It is assumed therefore, that everyone needs some level of education to function in an organized society. The quality and affordability are a different ball game entirely. The Federal Ministry of Education formulated an educational law that all Nigerian children should be given equal education opportunities. An Act (of 1974) provides that no State can deny equal opportunity to education to any individual for any reason.As such, education is on both the Concurrent and Residual Lists of the Constitution, making it the responsibility of the federal, states, andlocal governments, who are in charge of primary education. As the states get stiffened in their finances, they resort to scampering to every sector to shore up their revenue base. Unfortunately, the education sector has not been spared. However, should education be a revenue generating platform for governments? The reasonable answer will be an emphatic NO. Education is a micro variable that has direct macro effects on the system.The implication of inadequate funding is scary. Education, as a matter of compulsion, must be funded, yet it must be accessible. The problems Prior to Nigeria’s independence, the country had only two established post-secondary institutions, namely, Yaba Higher college (founded in 1934, now Yaba College of Technology) and the University College, Ibadan, now University of Ibadan, founded in 1948. Those were the days

before population explosion and the democratisation of education. Going by the available statistics, Nigeria has 43 federal universities, 48 state universities, and 79 private universities; 170 universities providing tertiary education.There are also about 82 federal polytechnics and 38 state-owned Colleges of Education. Our tertiary institutions are underfunded.Over the last three decades, we have witnessed a gradual degradation in infrastructure, quality of teaching staff, abilities of graduating students and access to qualitative education. Our successive governments have not done enough in funding the sector, with the federal government spending about7% of its overall budget on education. The states are not doing any better.Some have argued that this is largely due to the fall of oil prices or the instability of the market, and the need to reduce the huge and rising debt service obligations of the governments –federal and states. But are these excuses sufficient to price education above the reach of the populace? The Lagos and Ondo Scanrios The Lagos State government had to reverse itself after the outrage that followed the sky-high hike in fees in the state-owned tertiary institutions, particularly the Lagos State University (LASU) five years ago. The attendant crisis upon the astronomical increase of tuition in the Ondo State-owned institutions, particularly the Adekunle Ajasin University, Akungba-Akoko last year, (the crisis has resurfaced and most of the state institutions are presently shut),is a clear reference of how not to price education. The state government and the university management have had running battles with the students and their parents in the last one year. Below was my intervention and advice to government when the crisis started: ”First, we must acknowledge the fact that the government is intent on increasing the fees and naturally, students will always want the status quo

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to remain, (I’ve been there before). And I’ve always argued, not every governor can act like Olusegun Mimiko, who left unchanged a fee regime (less than N30,000) for 8yrs, for reasons of his convictions of education as a social leveler, which must not be priced above the reach of the common man. However, I must concede the fact that the Akeredolu administration has a right to review extant policies in line with its own developmental trajectory. Now, my piece of advice is that the government should not introduce an increment that will make life unbearable for the students and their parents. I suggest a gradual and graduated increment of say 10%-20% of existing fees annually over the next couple of years. That way, it will be a fair and realistic deal. A kii fi ojokansosoboomo t’,obaruyo. It will be uncharitable and a disservice to social equilibrium if any astronomical rate is forced on the students suddenly. ‘Every change must change something’, I agree, but this change must come with a human face.” A working framework In countries where tertiary education is paid for, the governments put in place financial frameworks to assist students through education loans, grants and outright scholarships. In many cases, students are allowed to work within reasonable time frame every week to be able to take care of themselves and aspects of their education. These aren’t available in Nigeria, therefore burdening parents with the huge responsibility of fully funding the education of their children.The cash and carry system that we run has made the acquisition of education increasingly difficult for the less privileged. In other climes, you don’t need to have money to go to school. States owe it as a duty to its citizens. As a form of intervention, every Nigerian must be made to contribute, indirectly, to the funding of education through minimal direct taxing of every

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purchase within the country. Unlike the Value Added Tax (VAT) and other sundry taxes, this one, like the Education Trust Fund (ETF) is dedicated strictly to funding education. This way, the burden is shared and light. Governments at all levels should put a deliberate seal on monies payable by every student at the various levels of institutions.The future of any country lies in the quality of its education. Education remains the major tool for national socio-economic development, individual socioeconomic empowerment and poverty reduction. It is a lazy argument to think that the way to improve education is to make tuition expensive. Education is a social capital that requires investment and commitment from governments.Wanting to solve economic problems with financial proceeds from education is like taking one step forward and two backwards. Even if it pays off in the immediate, it will certainly backfire on the long run. Education must be accessible and affordable. Our government must solve its economic problems without this easy but dangerous path of incessant tuition increments. A people not educated will destroy the structures you are building. No man can give what he doesn’t have. The search for the future lies in education.I conclude with the golden words of Tai Solarin: “Knowledge is light, Forever, it will be light, To guide humanity, As ignorance is darkness . . ., Equip yourselves with armour of light, For our mission to the world, Is to bear the torch aloft, And cry with all our might, That knowledge is light...” Dayo Awude, a socio-political analyst, writes from Akure

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Thursday 30 May 2019

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The next four years in the South East-2 The Public Sphere

CHIDO NWAKANMA

new political cycle commenced May 29 in the country and especially in four of the five states that make up the South East geopolitical zone. High expectations follow the new and returning governors for the period up to May 2023. After four cycles of administrative changes, citizens want to see development in its purest form in the region. They experienced some of that in the past under administrations with even fewer resources and rightfully expected that it should happen in the area given global developments. Development is the focus of citizens in the South East. OkwudibaNnoli and the scholars on development posit that development is about the capacity of a people to tackle and overcome the challenges that the political, social and economic conditions throw at them. It is not about the number of different gadgets available but the amount of real problem-solving deploying indigenous

resources, most notably human capital. The new era comes with many features. The first is the evolving political configuration. Officially, the political structure of the region equates that of others with authority levels at State, Local Government and Wards. In reality, there are many other layers of real authority with the capacity for citizen mobilisation and engagement. They also could be deployed for positives or negatives. The land of self-help has many towns unions, with spurs all over the country and beyond, as the active power at the grassroots. Disenchantment with poor representation and performance of governments has led in the social media age to the emergence of several groups, all aiming at the development of the motherland. They number anywhere from 20 to 50. Each of the many groups on social media takes their roles seriously as advocacy platforms and offer rosy pictures of what they can do for AlaIgbo. Except that many do not go beyond WhatsApp. Their middle-class members wax eloquent on the platform but often lack the prescience and courage to take the advocacy beyond those platforms. The more important consideration for the groups given the challenges ahead is the fact of similarity in mission. They need to differentiate and pursue distinct but complementary roles and services that would bring about the desired accelerated development. Luckily, abiding recognition and respect for

Ohanaeze as the “apex socio-cultural organisation” means that body could and should find the capacity to coordinate all the groups. The advocacy groups are useful, but their presence points to future challenges if not organised and harnessed. The power structure in the South East recognises town unions. Communities elect them and embed them in their social and political organisation. Not so the social media formations, some of whom are getting a footing in terra firma. They need to define areas of strength, focus and influence. They should be doing specifics and be more relevant. There should be a renewed focus on the two tiers of government, local and state to make them more accountable to citizens and communities. The primary focus would be the state governments. What would they do? How would they drive grassroots development? What frameworks would they adopt? We suggest adoption and implementation of the UN Sustainable Development Goals at state and local government levels in the South East states. The SDGs are robust, scalable and applicable to the structure and development patterns of the South East. It has provision for the incorporation of voluntary associations and development-focused bodies such as our towns unions and community development associations. The SDG Secretariat encourages partnerships and commitments to specific initiatives around the 17 goals. Groups would select which SDG and corre-

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The land of selfhelp has many towns unions, with spurs all over the country and beyond, as the active power at the grassroots

sponding targets towards which their initiative is working. Nigeria has done the routine of establishing an SDG implementation team headed by a Senior Special Assistant to the President. There is a Presidential Council on the SDGs as well as an Inter-ministerial committee on the SDGs. All Ministries Departments and Agencies of government have SDG focal points. States and local governments have keyed in. For some, it is a formality. There is also a private sector advisory group on the SDGs and a development partners forum that UNDP anchors. There are funds and incentives, as well. The Conditional Grants Scheme is part of Nigeria’s implementation of the SDGs. It incentivises governments to set aside - 50% for State Governments and 20% Local Governments- from the cost of SDG-related projects in their annual budgets. The FG should reimburse. Chukwuma Soludo’s description of our people as a global race earned plaudits and adoption across Igboland. Now is the time to begin to adopt and implement global paradigms for development. Let’s apply the SDGs as a collective to enable holistic development, promote accountability and engage our energies productively across the board. We shall continue next week. 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.

Centre for Values in Leadership, Ugwumba Colloquium and Entrepreneurship

ik MUO

am a living example of the axiom that no prophet is respected at home. A few weeks after the 2019 (s) elections, I prophesied that it was not yet over and that the real elections would be conducted by the lawyers, judges, courts and tribunals. The media and the general public ignored such an earth-shaking and revolutionary prophecy. And now, not long after that prophecy, the come has come to become. INEC has withdrawn Certificates of Return from 25 candidates who had already gone for thanks-giving, settled their various ‘resource person’s (including the owners and managers of political structures), reconfigured their wardrobes and undergone crash programmes in Nigerian political mannerisms. In a similar vein, the Supreme Court has also sacked the governorship, senatorial and other candidates who won on the APC stable in Zamfara state, stating that they had ‘built upon sand’. INEC has again withdrawn and reissued the certificates of return. This is just as the courts re-awarded the victory of Mr Uzigbo (APC, Okigwe South) to Mr Echendu (PDP) and that of another APC candidate (Nwangele et al Constituency, Imo State) to an Accord candidate. I waited for the press to acknowledge me as the latest prophet in town but I heard nothing. That is why I decided to hail myself; after all the lizard that jumped down from the iroko tree decided to clap for himself since

nobody was willing to do so! But for now, I am taking a brief sabbatical from political commentary and I intend to pitch my tent in the first instance, on the entrepreneurial arena. On 14/5/19, the Pat Utomi powered Center for Values in Leadership hosted its 48th LWT Leadership Tribute Colloquium in honour of Chief (Dr.) Christopher Ikechi ‘Ugwumba’ Ezeh, MFR, Chairman of John Holt and founder of Christopher University, as he turned 76. The theme of the cerebral discourse was: Accountability and Venturing; An accountant as an entrepreneur. Chief Ezeh ‘chattered’ about 50 years and he is an accomplished entrepreneur, with special interest on social entrepreneurship. An intimidating team of resource persons was empanelled for the colloquium and these were Mrs C.Ugochukwu (Executive Director, Fidelity bank); Mr J Evbododaghe (Registrar, ICAN) Bashorun J.K Randle (needs no introduction) Mrs O Ademola (Former LASG Head of Service), Mr Ubong Essien (Dean, School of Elequence) and Prof Patito Utomi, the moderator. These diverse resource persons, firing from diverse perspectives generated new insights as to what is wrong and what we ought to do with Nigerian entrepreneurship and that is what I want to share today. On Friday, 24/5/19, one of my PG student presenting his assignment stated triumphantly that the greatest challenge of entrepreneurship in Nigeria (and is) finance. This is in line with the popular thinking. But the facilitators and participants at this colloquium made it unequivocally clear that there is money but there have not been ‘takers’ because those who seek the funds do not know where to seek, or how to seek. Mr Olagungu of BOI (he journalist turned banker) told the bewildered audience about the IFC/ World Bank $270m and the FG N300bn entrepreneurship funds that are grossly underutilized. The consensus was that the only way to minimize this funding supply-demand gap was to put capacity (knowledge, attitude, values) before capital, which is an opportunity for those willing to

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prepare potential entrepreneurs. The panelists regretted that our entrepreneurs have utter disdain for information and are reluctant to patronize professionals who could provide the needed technical support and that they are shooting themselves in the feet by manipulating their tax returns because the taxman (The Mathews of this generation) would eventually catch up with them and that poor record-keeping was a serious impediment to entrepreneurs The panelists also decried our entitlement mindset (where people are not interested in work, production, input and output), which is against the entrepreneurial spirit. For instance, they argued that the reason why some employers would prefer a third-class degree holder from UK to a first class degree holder from Nigeria is because the UK graduate would have learnt the culture of work, values, discipline and diligence, traits which are in short supply in Nigeria. Other issues canvassed at the colloquium included the tendency to be jacks of all trade, the alienation of the youths from the regulatory environment, paucity of original and innovative bankable ideas and the usual challenges of corporate Nigeria (infrastructure deficit, policy infidelity and instability, corruption (nobody has responded to audit query at Abuja since 1999), political uncertainty and all that. The honouree, who became an entrepreneur after years in the corporate circuit advised those who wanted to become entrepreneurs after the world of work to develop the entrepreneurial culture during their working lives so as to transit seamlessly on retirement. Attention was also drawn to the fact that things were not all that bad as shown in the commendable performance of the entertainment industry, where the government had no interest originally and the various pro-entrepreneurship programmes being run by the government. Entrepreneurship has become the inthing all over the world. However, becoming an entrepreneur is not the issue; it is getting it right. There are many perspectives on the

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challenges of entrepreneurship and how to get it right. We have just seen some of them and will continue to see others. The entrepreneur should thus gird his or her loins and continuously scan the environment so as to be equipped for the onerous task of identifying and profitably exploiting opportunities. Other matters: Corporate entrepreneurship; the OGBC Model We have entrepreneurs; we have intrapreneurs (organizational citizens with entrepreneurial perspectives) we have corporate entrepreneurs, and we have public sector IGR-driven corporate entrepreneurs. Ogun State Broadcasting Corporation appears to be one of these IGR-driven corporate entrepreneurs. But before you start clapping for them, just hear me out. Around 4.30 on 1/11/18, I got demobilized by the usual traffic gridlock on Lagos Ibadan express way and as a way to keep my mind off the frustrating situation, I was fiddling with my car radio until I accessed the strong signals of OGBC 90.5 FM. As I was settling down to enjoy the music, news or commentary, they went for a commercial break and guess what? They were advertising OGBC hygienic ice-blocks! A radio station selling ‘hygienic ice blocks’? Maybe if I had listened long enough, they would be advertising poor water! I took note of that and left it at that. But I heard the advert again this week and that is how it became my ‘other matter’. It was (is) good that OGBC is making efforts to be commercially viable. But methinks that going into ice blocks manufacturing is stretching it too far. They did not diversify into print media, media consulting, online newspapers, journalism training or research into effective mass mobilization. They went into ice block ‘manufacturing’ and before long, they would go into poor-water, if they are not already there. OGBC, I hail! Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@ yahoo.com ;muo.ik@oouagoiwoye.edu.ng ; 08033026625

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Thursday 30 May 2019

BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Making DisCos franchises work with limited rancour

he decision of the Nigerian Electricity Regulatory Commission (NERC), the electricity sector regulator, to allow third-party investors to distribute power within a franchise area earlier ceded to an electricity distribution company (DisCo), though belated, is commendable, even though it is ambiguous and leaves room for conflicts in the future. One of the flaws of the 2013 power privatisation exercise was the poorly conceived geographical franchise areas allocated to DisCos. They were unwieldy and unsustainable. Apart from Eko and Ikeja DisCos managing Lagos, other DisCos cover at least four states. Enugu DISCO operations cover the five states of the South-East and Ibadan DisCO cover seven states. A more pragmatic approach would have been unbundling PHCN assets along states. The proposed rules will even out coverage in neglected parts of a DisCos franchise areas. According to the 2017 Power Sector Recovery Plan, the national econ-

omy is losing $29.3 billion annually due to the lack of adequate power. It also estimates that the sector will require approximately $1.5 billion annually for the next five years (2017 to 2021) to achieve sector viability. In view of this, grasping at any flotsam in this sinking sector is a critical necessity. According to the proposed Franchising Regulation, Discos could grant a franchise to third parties (Franchisees) to undertake specific roles in the supply of electricity including procurement of additional electricity from embedded generators, management of metering, billing and collection activities, maintenance, upgrade and strengthening of the distribution system within the respective licensed coverage areas of the Discos. The franchisee will retain a portion of the revenue collected from consumers after deducting amounts payable to the Disco. The proposed rules also allow any unserved or underserved community the option of exploring the provisions of NERC’s Regulation on Independent Electricity Distribution Network (IEDN) in ending their supply challenges as may be

applicable. The proposed rules vest ownership of all distribution networks in the DisCo without explicitly including the fate of upgraded assets through investments made by a franchisee on the network. NERC needs to be explicit about this. Perhaps, it could assign some stakes to the Franchisee in the asset they help to upgrade to avoid litigation between the DisCos and sub-franchisees in future. The proposed regulation is not also clear on what kind of relationship DisCos and the franchisee would maintain with the Bureau of Public Enterprise (BPE) and what becomes of the obligation of DisCos under their Performance Agreements. What becomes of the obligation of DisCos to NERC, under the Distribution Licence; and to the Nigerian Bulk Electricity Trading Plc. (NBET) under the Vesting Contracts? Will the sub-franchisee be allowed to invest in off-grid power? This is important. The proposed regulation also does not provide clarity on whether a sub-franchisee would need to cut Aggregate Technical and Commercial Losses (ATC&C) losses as it

is in India where the rules were copied from. For this to work, it cannot just be about DisCos improving collections, It should also be about cutting losses, gathering data, metering and upgrading dilapidated assets. Maharashtra’s distribution utility (MSEDCL) tried it in India in 2006. It chose Bhiwandi, a power loom town close to Mumbai with a population of 1 million, for appointing franchisee. Prior to these, MSEDCL had technical and distribution losses of 45% and collection efficiency of 68%. It assigned Torrent Power as the franchisee for 10 years mandating it to perform its functions in the town. Torrent Power collected tariffs charged by MSEDCL, upgraded the networks and assets it created were taken back by MSEDCL at their depreciated value at the end of the contract. One year later, Torrent Power has been able to reduce losses by 30 percent, invested more than the minimum required and has replaced old mechanical meters with electronic meters outside the premise and in a sealed box. This too can work in Nigeria but it starts with getting the policy right.

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Thursday 30 May 2019

BUSINESS DAY

BUSINESS TRAVEL Bristow Nigeria increases fleet size to strengthen its client base Stories by IFEOMA OKEKE

ristow Helicopters Nigeria Limited, one of the leading providers of industrial aviation services in Nigeria has recently increased its Nigerian fleet size with the introduction of at least six additional aircraft in the past six months. These state-of-the-art aircraft which include the Sikorsky S76D & S92, the Leonardo AW139 & AW189 helicopters, and also the Embraer ERJ 145 Jet aircraft serve to provide much more resilience to its operations in Nigeria and further strengthen the company’s continuing support and commitment to its varied client base and particularly, to the Nigerian Oil and Gas Industry as a whole.

Bristow is the first and currently the only operator of both the Sikorsky S76D and Leonardo AW189 helicopter in the offshore Oil & Gas Market in Africa and currently the only operator of the Sikorsky S92 aircraft type in Nigeria with well over 32,000 flight hours flown on this aircraft type in Nigeria since its introduction to the country in 2008. The Sikorsky S76D helicopter represents the latest variant of tried and tested S76 Series. A proven aircraft type that has flown well over seven million flight hours since its first variant came into operation in 1977. This medium sized aircraft type and its variants is the workhorse of the industry. With its two Pratt & Whitney engines, composite blades, low noise signature, smaller D-Value, modern avionics

suite and 400nm range, the S76D (as with the S76C++ type) is ideally suited to support the daily shuttles to the Oil & Gas accommodation platforms and unmanned offshore installations in the Niger Delta. The Sikorsky S92 on the other hand, is the largest helicopter type supporting the Oil & Gas industry in Nigeria today and arguably the only ‘heavy’ type aircraft currently

Aero promotes healthy living among staff, holds health walk to mark 6oth anniversary

n a bid to celebrate its 60years of operations in Nigeria, Aero Contractors, one of country’s major carriers has created awareness on healthy living through its health walk. The health walk commenced from the company’ head office, Ikeja at the airport to Mary Land on Saturday last week. Speaking during the event, Ado Sanusi, managing director of Aero said the event was to mark the company’s 60th anniversary and ensure it created the needed awareness of health to its workers and clients. “There are so many things we create awareness on. Apart from healthy living, we also want to tell the public that we are back and 60th years in

existence as the oldest aviation company in Nigeria. “Throughout the month, we have been having health talks on various ailments and health. We have invited a lot of medical organisations to give us health talks. We are doing free tests on high blood pressure, sugar and other things. We are making awareness on cancer and the rest. We are giving our staff good awareness on healthy eating and rest because a healthy employer is also an assent to the company,” Sanusi said. On corporate social responsibility implementation, he said it is very important to Aero and the very fabric that binds the company to the society. “We love it and we feel that the society has given us

so much and it is time for us to give back to the society.” Speaking during the airline’s 60th anniversary ceremony in Lagos, Cecilia Ibru, a majority shareholder in Aero Contractors said that Aero Contractors the company is willing to take back staff that abandoned the airline during the period it went through hard times. Ibru attributed the current success of the airline to the staff that stayed behind to resuscitate the airline. She however, promised to take back those who abandoned the airline to its fate. “As we recover, we must forgive those who sent us into the pit in the first place. The story of our recovery process is being told today.

supporting the Oil & Gas industry globally. With its robust gear box design, 540nm range and 19Seat capacity, this aircraft is ideally suited to long range, crew change flights to offshore Rigs, FPSOs and also for Search & Rescue. Besides providing an ideal opportunity for client sharing, the aircraft’s internal seat configuration and large cabin space and cabin windows es-

sentially provide such room and comfort as to qualify it as an ‘airliner’. The Leonardo AW189 is a new 8-tonne helicopter that sits ‘midway’ between the S76D and the S92 in terms of its seat capacity, size and range. It has also been designed to comply fully with the latest international regulatory safety requirements EASA/ FAA Part 29 and JAR OPS 3/ EU-OPS.

A unique feature of particular importance to the AW189’s use for offshore and SAR operations is the fact that it’s main Gear Box has been designed to provide for a 50-minute run-dry capacity, well in excess of regulatory requirements. Bristow currently operates two of this aircraft types in Nigeria and has recently received the Nigerian Civil Aviation Authorities (NCAA) approval to include the type on its Operations Specifications after a very thorough certification and approval process. According to Dapo Oyeleke, Managing Director of Bristow, these additions to the Bristow Nigeria fleet signify the importance, growth potential and confidence the company has in the Nigerian market.

NAHCO appoints new CFO, two directors

he Nigerian Aviation Handling Company Plc. (nahco aviance) has appointed Prince Saheed Lasisi as Group Executive Director, business development and commercial; Adeoye Emiloju as Chief Financial Officer; and Abimbola Adunola Adebakin as Independent Non-Executive Director.

insurance, corporate finance, supply chain management, capital market and private equity, aviation and maritime. He had worked in Perpetual Assurance Company Ltd (now part of Standard Alliance Insurance Plc) as Financial Controller, Truebond Investments and Capital Limited as Group Head, Internal Control. He served as a director in various quoted and unquoted companies among which are; Nigerian Wire and Cable Plc, Guardian Health Care Ltd, Truebond Capital and Asset Management Ltd, Truebond Microfinance Bank Limited, Western Properties and Leisure Ltd, Golden Tophedge Investments Ltd among others. Adeoye Emiloju, whose appointment took effect May 1, 2019 as Chief Financial Of-

ship positions with the Company across multiple Finance and business functions at different times as Business Accountant, Head of Payroll, Senior Business Analyst, Chief Accountant, Business Finance Manager, and Finance Liaison Manager interfacing with both internal and external stakeholders including partners and government agencies. Abimbola Adunola Adebakin whose appointment

Air accident investigation gets boost as AIB, France partner

Prince Saheed Lasisi

Abimbola Adunola Adebakin

he Accident Investigation Bureau (AIB) and the Bureau d’Enquêtes et d’Analyses pour la Sécurité de l’Aviation Civile (BEA) France, in Paris, signed an Executive Technical Cooperation Programme geared towards fostering mutual cooperation between both countries in respect of air accident investigation and capacity building. Akin Olateru, commissioner/CEO of AIB while signing the Executive Technical Cooperation Programme (ETCP) in Paris, said that the pact was aimed at strengthening the relationship with its counterpart in France; with the intention of tapping into, and benefiting from its wealth of experience, expertise, and technical know-how in aviation accident

Prince Saheed Lasisi whose appointment took effect, May 1, 2019 is an alumnus of the University of Lagos, where he graduated with second class honor, (upper division) in Accounting and obtained his Masters of Science Degree also in Accounting from the same Institution. He is a Fellow of the Institute Chartered Accountants of Nigeria. His 17 years work experience spans a broad spectrum of the Nigerian economy. He was the Group General Manager; Business Development & Strategic Planning in SIFAX GROUP. He has been in investment banking, internal and external audit, management consultancy

took effect on April 26, 2019 as an Independent Non-Executive Director has over 29 years of professional experience spanning Stockbroking, Banking, Management Consulting and Training. She is a versatile trainer and proficient management consultant who has led consulting teams across a broad spectrum of assignments including strategy development, human resources management, organizational development and change management. She has developed and delivered many training topics covering strategic management, management and leadership development, corporate governance, entrepreneurship and workplace productivity.

investigation, for the common good of AIB and other African countries that might be happy to draw assistance from AIB’s resources. Impressed by the quality of work coming out of AIB Nigeria, relative to aviation accident investigation and the effectiveness of its service delivery, France through BEA, came up with the ETCP to assist and support AIB through capacity building, information sharing and knowledge transfer. Olateru said, “What we just did today is to help both countries fulfil our obligations as regards the International Civil Aviation Organisation (ICAO) convention on accident investigation and walk the talk with the theme ‘No Country Left Behind.” www.businessday.ng

Remi Jouty, the BEA director, commended the strategic direction and performance of AIB-N, particularly in the last two years. In his remarks, Jouty expressed joy at the sealing of the pact. “Akin, you are doing a great job here establishing a solid structure that will survive your administration,’ he said. The ETCP Agreement borders around cooperation in the conduct of aircraft accident and incident investigation, investigation training and sharing of information and expertise, consistent with Annex 13; and assisting each other in the use of air safety investigation, manpower, facilities, recorders, management organisation, Aviation Security and Safety.

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Adeoye Emiloju

ficer is a finance professional with diverse experience spanning over 32 years in Accounting and Finance management. He worked with LM Ericsson (Nigeria) Limited and Globe Reinsurance Plc before joining The Shell Petroleum Development Company of Nigeria Limited (SPDC) in 1993. He held progressive leader@Businessdayng

Thursday 30 May 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

NSE 30 capex up 16 percent to N113bn in Q1

Pg. 16

MARKET

Market boosting policies non-negotiable as stock investors’ excitement fades DAVID IBIDAPO

he Nigeria equ i ti e s ma rket is currently in dire need of clear economic policy direction and implementation to ensure a broad based improvement in listed stocks across the board. The last two weeks has seen the stock market mirror the performance of the major competitors in market capitalization; MTN and Dangote Cement, both of which have created an “artificial rally” but have not convinced investors to overlook broader economic concerns and stake in Nigerian business. “While we anticipate investors to take position in fundamentally sound stocks at cheap prices, we expect the negative performance to persist in the absence of any major catalyst,” a report from Afrinvest stated. The equity market faces currently, the possibility of returning to its previous state where investor’s negative sentiments weighed on performances. Analysis of the year to date performance of stocks listed on the NSE30 index

portrays to a large extent investors’ lack of impetus towards the market. However, good policies and moves by the government are expected to spur investors’ appetite towards the market. The strong negative sentiment is evident in the performance of NSE 30 stocks so far in the year. Of the 30 biggest companies on the exchange, just 4 company stocks recorded positive year to date returns. Major issues have been raised on the inability of private sector firms to access credit facilities from deposit money banks due to the high interest rate environment and banks’ increasing appetite towards the fixed income space. Nigerian policy makers however in the last MPC meeting, urged banks to turn on the taps and increase lending to stimulate the economy, or have access to a near-risk free way of making money choked off. Also, downstream companies in the oil and gas sector could benefit from the advocacy of deregulation if implemented as this is expected to improve their profit margin which has

been shrinking, evident in their financials. “The passage of the Petroleum Industry Bill (PIB) will see upstream companies boost revenue as they won’t need to compete with NNPC in crude oil production,” an analyst who didn’t want to be mention told BusinessDay.

Also, the NSE remains silent however on its plans to demutualize despite the bill was successfully signed by President Buhari in August 2018. This is however anticipated by analyst to provide a boost for the NSE. Highlighted by Oscar Oyema, CEO NSE, the demutualization of the NSE

is towards “facilitating the development of the capital market, improved corporate governance, availability of resources from capital investments, enhanced competitiveness, increased global brand and visibility of the exchange, investor participation opportunities and ability to build a more

sustainable institution.” The Nigerian Stock Exchange is aiming to complete its public listing this year, its chief executive told Reuters on Thursday. “We are shooting for this year for the demutualisation to be completed,” NSE chief executive Oscar Onyema said.

lion in 2019’s first quarter. This implies 590, 000 more participants registered within 12 months to March 2019, with 130, 000 from public sector and 460, 000 from private sector. 36 percent of 8.57 mil-

lion contributors are between 30 -39 age range, 28 percent between 40-49 years, 18 percent between 50-59 years, 10 percent below 30 years, 6 percent between 60-65 years, and 3 percent above 65 percent.

FUNDS

Pension fund climbs 14% to N9.03trn in Q1 ISRAEL ODUBOLA

he asset value of pension fund in Africa’s biggest economy reache d a record high of N9.03 trillion in the first quarter of 2019, data from National Pension Commission (PenCom) show, implying growing consciousness of pension savings among Nigerian populace. This represent 14 percent or N1.09 trillion increase year-on-year over N7.94 trillion reported in the previous corresponding period. Breakdown of the fund by schemes revealed that total Retirement Saving Account (RSA) fund worth N6.87 trillion, accounted for 76 percent in the total pension fund value, followed by Closed Pension Fund (13%) and Existing Schemes (11%). Pension fund are in-

vestment pools that pay for employee retirement commitment. Contributions are made both by the employer and employee according to 2004 Pension Reform act. As the Act stipulates, pension fund managers are mandated to invest a tangible percentage of the fund in fixed income securities, and are prohibited from equity market and other asset classes. RSA active funds (I, II & III) upped 16 percent to N6.27 trillion in 2019’s first quarter, while retiree funds (IV) jumped 123 percent to N732.4 billion. Analysis of the data by asset class unveiled that N6.51 trillion, which equates 72.1 percent, are invested in Federal Government of Nigeria (FGN) securities, N478.1 billion in corporate debt securities, N874.4 billion in local money market securities and N24.9 billion in mu-

tual funds. Of the 6.51 trillion invested in FGN securities, N4.46 trillion went into FGN bonds, N1.94 trillion in treasury bills, N94.1 billion and N12 billion into green bond and Sukuk bond respectively. The appreciation in the funds’ value outstripped that of the broader economy that grew 0.12 percent in the first three months of 2019 year-on-year basis, with the pension assetGDP ratio stuck at 28 percent. Nigeria’s pension assetGDP ratio is small when compared with African peers. South Africa’s figure at 56 percent doubled that of Nigeria, and Kenya at 48 percent, according to available statistics from World Bank. Even Namibia whose economy size is 29 times lower than Nigeria has 85 percent pension assets-GDP ratio. Even though pension

funds face headwinds from the low interest environment, Nigerians are becoming aware of the importance of retirement planning given the fact that the number of contributors grew 7 percent to 8.57 mil-

L-R: Adenireti Oyeniyi-Adebayo, CEO, Whyte Cleon Limited/chairperson of the occasion; Afolabi Abiodun, convener, and Bismarck Rewane, keynote speaker, at the TAMS Summit Awards in Lagos. Pic by Pius Okeosisi

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Thursday 30 May 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

MARKET

NSE 30 capex up 16 percent to N113bn in Q1 SEGUN ADAMS

igeria’s largest companies expended more on the acquisition of plants, property and equipment in the first quarter of 2019. The combined capital expenditure (capex) of NSE-30, the most liquid and capitalized stocks on the Nigerian Stock Exchange, grew 16 percent to N113 billion in the review quarter. Almost half of NSE-30 players elevated their spending on capital projects, with industrial goods player raising capex the most. Capital expenditure refers to the spending on the acquisition of new assets including the purchase of machineries, office furniture, and the fund spent on maintaining or replacing the same. A growing Capex is indicative of an expanding economy as the simple assumption is

that businesses have room to expand activities in times of boom. By the same token, they contract when the business environment is harsh. Capex however varies with industries as financial services firms would not likely spend as much on infrastructure as consumer goods and industrial goods firms. Analysts explained that companies committing their financial resources in fixed capital portray optimism about improvement in the broader economy and increased patronage for their products. The fact that the Nigerian economy slowed 2.01 percent in first quarter, and growth in capex upped 16 percent, indicates that the pickup in economic activities in the review quarter was below the expectations of companies. For Q1 2019, Dangote Cement accounted for 30 percent of total spending with

N34.1 billion, after skyrocketing capex by 580 percent to N34billion. Oil firms, Oando and Mobil increased capital spending by 200 percent and 461 percent respectively to N6 billion and N2 billion. Meanwhile, Total and Forte Oil reduced theirs by 57 percent and 55 percent respectively. Majority of consumer goods players reduced expenditure on capital projects due to the fact that consumers’ wallet which has been stifled since the 2016 recession, prompted them to remain cautious about spending big. Consumer goods firms are struggling to grow top-line as well as bottom-line as they are bedevilled with decrepit infrastructure, tough operating conditions and high cost of credit, which has left little reason for expanding operations. Dangote sugar, Dangote flour and Nestle cut capex by 51 percent, 52 percent and 76 percent respectively.

L-R: Jeremiah Ojediran, vice chancellor, Bells University of Technology, Ota; Chizor Malize, MD/CEO, Brandzone Consulting LLC/ guest lecturer, 10th Annual Lecture; Oluwafemi Enilolobo, dean, college of management sciences, Bells University of Technology, recently at the Bell’s University of Technology 10th Annual Lecture where Chizor Malize received an award as a Fellow of the College of Management Sciences, Bell’s University, Ota.

REAL ESTATE

Ibile Holdings, other partners deliver ‘The Campbell Centre’ to boost parking efficiency in Lagos Island …as Ambode commissions project MODESTUS ANAESORONYE

he Campbell Centre (TCC), a vehicle parking and entertainment facility located on Campbell street, Lagos Island, led by Ibile Holdings in partnership with the Lagos State Government and other private sector players has been commissioned by Governor Akinwunmi Ambode. The space, which used to be the first School of Nursing in Nigeria, has now become synergetic activities of Vehicular parking, Events hall, Restaurant, and Gymnasium, expected to give the environment a face lift and ease vehicle traffic congestion on that area. A m b o d e re p re s e n t e d by Olayinka Oladunjoye, Lagos State Commissioner for Commerce and Industry said the official inauguration of The Campbell Centre is a testimony to Governor Ambode’s commit-

ment to enterprise and mutual partnership between Government and the Private Sector. She said that the successful completion of the project is the fruition of the Joint Venture Partnership between Ibile Holdings Limited (IBILE) and private investments warehoused in Willao Nigeria Limited (WNL). She stated further that the Centre described as an “Infrastructure Wellness” Centre has a parking lot which supports Government’s transport infrastructure initiative of improving on the optimal utilization of our roads to ameliorate the traffic situation and the promotion of entertainment and tourism. “The aggregate of it all, she said is the promotion of commerce, employment, wealth creation, clean and safe environment and good health.” Abiodun Amokomowo, managing director, Ibile Holdings in his welcome remarks

said a major feature of the location is the high volume of traffic with attendant congestion, vehicular storage problems and pedestrian/ vehicular conflicts. A m o k o m o w o w h o e xpressed appreciation to the Lagos State government and all its agencies that contributed to the success of the project, said “the Campbell Centre has bequeathed Lagos State with a model multi-level parking facility to signpost traffic improvement, cleaner and safer environment in the state. Femi Williams, managing director, Willao Nigeria Limited who thanked all the partners for contributing to the success of the project said it is going to provide the social services of adequate car parking for Lagosians in that area, but also housing businesses, creating entertainment and jobs for a number of Nigerians.

L-R: Adedolapo Adebowale, trade marketing manager, Greater Lagos, Nigerian Bottling Company (NBC) Limited; Niyi Adeleke, assistant head of enforcement, Nigeria Lottery Regulatory Commission (NLRC); Jude Ogaga, head of monitoring and enforcement, NLRC; Emeka Mgbachi, country business manager, Monster Energy, and Olawale Faluyi, brand manager, energy and premium brands, NBC Limited, at the first round of draws to select 30 winners at the ongoing Monster Energy ‘Win a Chance to Party with 2 Kings’ Promo recently.

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COMPANY RELEASE

Nosak distilleries explore Cassava value chain for ethanol

n its quest to source raw materials locally, leading ethanol refinery, Nosak Distilleries Limited, a subsidiary of Nosak Group has taken steps to enhance the cassava industry value chain through the acquisition of over 6,000 hectares of arable farmlands in Edo State. Speaking shortly after the summit, the Group Executive Director, Corporate Services, Osagie Ogunbor expressed his delight at the organizers of The 4th Cassava and Starch Africa Summit with the theme, ‘Driving Sustainable Development through Innovative Value Chains’ held in Accra, Ghana. “The two-day summit was a good ground to learn new trends in the exploration of cas-

sava and its many by-products. We participated in this year’s summit as a result of our diversification in the agricultural sector and to explore the option of cassava to ethanol locally.” he said. Ogunbor disclosed that Nosak Group is expanding the frontiers through an investment of over N5 billion in the acquisition of farmlands for its backward integration scheme as well as a plant with a capacity of 100,000 liters per day of ethanol thereby empowering youths and farmers with employment in Edo state and other parts of Nigeria. Sharing his experience, the Managing Director, Nosak Distilleries, Osaro Omogiade noted that the summit was a noble www.businessday.ng

platform for industry stakeholders to discuss innovations in farm mechanization, new cassava processing projects, starch market opportunities, sourcing challenges faced by end users and many more. Adding further, Omogiade said that “Nosak Group has acquired over 19,000 hectares in Edo state for plantation purposes. These farmlands will enable the Group grow three of its subsidiaries: Premier Plantations Limited for cassava plantation and conversion to ethanol for Nosak Distilleries Limited while Nosak Farm Produce Limited and Saturn Farms Limited will increase their plantation base for palm oil, milling, and refining”.

L-R: Sekinat Ayeyemi, chief operating officer, Change-A-Life Foundation; Funmi Iyanda, founder, with Damilola Olatunji and Qoweeyah Buhari, beneficiaries of the foundation, at the 10th anniversary Children’s Day celebration in Lagos.

L-R: Oluseyi John-Okoh, brand manager, ball foods, Honeywell Flour Mills Plc; Tomi Otudeko, head innovation and sustenance, Honeywell Group; Maryann Ekanem-Akpan, public relation officer and education sponsorship co-ordinator, Little Saints Orphanage, and Nnenna Uche-Onyenacho, media manager, Honeywell Flour Mills Plc, presenting cheque and Honeywell products to Little Saints Orphanage Home in Lagos.

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Thursday 30 May 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Stakeholders see positive change in deepwater investments in Nigeria, Angola …even as global deepwater faces investment dip Stories by OLUSOLA BELLO

lobal Oil and Gas analysts have said that there will be changes in investments in the Nigerian and Angolan oil industries, especially in the area of deepwater operations, This is even as they have said that the increase in price of crude oil has not translated to higher investments in deepwater projects. “The oil price recovery has not yet translated into a rush of cash into challenging offshore environments,” according to the analysts. Shell Nigeria Exploration and Production Company SNEPCO, had earlier in the year called for tenders for the $10billion Bonga South West Aparo oil field. The project’s initial phase includes a new Floating, Production Storage and Offloading (FPSO) Vessel, more than 20 deep-water wells and related subsea infrastructure. There is also the Zabazaba field being worked upon by Eni. The analysts said the

world’s largest listed oil and gas firms are continuing to stress their financial discipline,showering their more buoyant cashflows onto shareholders through dividends and buy-backs, boosting acreage in the US shale basins and continuing to invest in renewable technologies. “What they are not rushing to do, though, is to make a splurge of investments in offshore deepwater projects, despite a consensus view that the global oil market needs investment in new barrels to

avoid a supply shock sometime before the middle of the next decade,” they said. The analysts include David Phillips, head of equity research, developed Europe at bank HSBC, who said: “The majors’ cash flow profile is improving, they are generating just under $500bn. Even after dividends, that is $200bn of free cash flow.” “There is a risk of a lack of investment and what gap that might leave in the supply picture globally in the mid-2020s.”

Olusola Bello, Team lead,

opportunity to thank and appreciate the Department of Petroleum Resources (DPR) for the timely directive stopping the inappropriate and indiscriminate installation of skid plants in petrol stations,” OgievaOkunbor said. He said the directive that all skid plants in filling stations be dismantled and removed was apt, considering the huge danger and risk they constitute to the public in the operations of LPG skid plants in filling stations. He, however, appealed for a proper and thorough implementation of the directive across the country. He also pleaded with t he g ove r n m e nt to c reate a more conducive and enabling environment for investors in the industry particularly now that deepe n i ng t h e c o n su mp t i o n of LPG in the country has

Graphics: Joel Samson.

become a major interest of the government. Ogieva-Okunbor said marketers were also geared toward ensuring the success of the programme by complementing the efforts of the government. “We therefore appeal for a reduction on import duty on L P G e quipment and accessories. The increased awareness of LPG usage has seen consumption in Nigeria growing from 50,000MT in 2007 to over 600,000MT in 2018 with more indigenous investments in LPG bottling plants. He said this would further ensure that majority of Nigerians enjoy the convenience of the proximity of LPG refill or exchange points. “We implore the Federal and State Governments to initiate a well- funded social welfare programme to expand usage of LPG,” he said.

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to compete for investment dollars in the next few years,” agrees HSBC’s Phillips. “I think investors are not correct that the rise of wind, solar and other renewables derails the need to invest in offshore oil and gas. That just means that we are going to have a cycle,” predicts TSE’s West. Evercore’s West agrees. “To encourage investment, I think you will see changes in Angola, in Nigeria, we have already seen changes in Brazil,” he says. “It is adjusting, but not nearly fast enough. I think 20pc received by the US exchequer from shale is generous, I think it is less than that—if they are paying taxes at all—which does make it very cost-effective.” But new private equity (PE) cash, which has been a major driver of shale investment, may start to look for alternatives, which could include deepwater, as might PE money coming out of US shale, if it can find an exit. “PE firms are trapped at this point and are having massive problems getting out of their shale investments, both on the OFSE side and the E&P side,” says Evercore’s West.

Africa, right destination for global oil, gas investors - says Seplat boss

LPG: NALPGAM commends FG on VAT removal h e Ni g e r i a n A s sociation of Liquefied Petroleum Gas Marketers (NALPGAM), has commended the Federal Government for the removal of VAT on Liquified Petroleum Gas (LPG). Its President, Nosa Ogieva-Okunbor, in a statement said that the Federal Government had signed the approval of VAT removal on LPG and gazetted same. According to him, clamour for VAT removal from domestically produced LPG otherwise known as cooking gas has been of a perennial concern to members of the association. “We express our profound gratitude and thanks to the Federal Government and all relevant government agencies for listening to our plea to remove VAT from LPG products sourced locally. “We also want to use this

In his own opinion as reported by Petroleum Economist, Rob West, founder and CEO of oil and gas technology research firm Thunder Said Energy (TSE), calls the “euphoria of dividends and buybacks, where anything you do outside of dividends and buybacks gets you into big trouble”, and against other opportunities, in particular shale and renewables. While James West, senior managing director at financial services firm Evercore ISI said: “Shale is not the panacea of cheap

oil that everyone thought it was going to be. Deepwater is coming back in a big way.” “As an operator, how do you weigh up the best in offshore versus the best in shale versus the best elsewhere? We have exposed shale as a fraud. I will say it again, it is fraud,” he said. According to Petroleum Economist, they all spoke at the Gulfquest’s MCE deepwater development (MCEDD) conference in London where they tried to make sense of the dichotomy between a reluctance to invest in the deepwater and the need for the barrels such investments could unlock. As far as they are concerned there is still a pressing need for conventional oil and gas, and that deepwater will play a prominent role as a supplier of these hydrocarbons. “The outlook is improving, becoming more positive for the offshore, because the industry has realised we need offshore,” says Evercore’s West. “The efforts the industry has done so far, reducing costs, changing business models, are really impressive. It means deepwater, in our view, is on a very good footing

eplat Petroleum Development Company Plc’s has described Africa as the continent where investment opportunities abound for oil and gas, adding that it is a huge and fertile ground for such investors. Effiong Okon, Operations Director, for the company who restated Africa’s stance as the destination for gas development and investment said: “The appetite for Africa oil and gas is still growing and continues to present significant investment opportunities as investors are attracted to the many recent and ongoing licence bid rounds judging by level of their participation in the exercise”. The Seplat boss who gave this insight during his keynote address at the Africa E & P Summit held in London recently, disclosed that most of the oil majors and the independent companies have continued to flourish with

some exporting not just oil but also gas out of the continent. Most companies he said had to restrategise portfolio balancing after the recent downturn in oil price just as assets have also been changing hands between the oil majors and the Independents. The Africa E&P Summit is an event on Africa, which brings together key players and senior executives in the oil sector and governments involved in African oil and gas business. Effiong Okon, in his keynote titled: ‘Oil and Gas Rising in Africa, provided an overview of the oil and gas landscape in Africa, stressing that there has been abundant discoveries of oil and gas reserves, which have over the years, attracted key international oil companies to the continent. Alongside these majors he stated is the rising of the independents who have also come into existence and have continued to grow in leaps

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and bounds. “Most of the oil majors and the independent companies have continued to flourish with some exporting not just oil but also gas out of the continent. Most companies had to re-strategise portfolio balancing after the recent downturn in oil price. Assets have been changing hands between the oil majors and the Independents.” Some challenges, according to the Seplat director, still exist despite the significant discoveries and impressive production of oil and gas across the continent, which has a good balance of the resources. He said Africa has a good balance of oil and gas but still faces the challenge of importing refined products because of lack of sufficient refining capacity. “Many people in Africa still do not have access to electricity. Lack of adequate infrastructure also still presents a problem,” he noted.

Thursday 30 May 2019

BUSINESS DAY

news

Singapore’s Supreme Court frees Nigerian Ejike from death by hanging Innocent Odoh, Abuja

Nigerian, Adili Chibuike Ejike, earlier sentenced to death for importing nearly two-kilogramme of methamphetamine, has been granted an acquittal by Singapore’s Supreme Court and released with no outstanding charges. The Nigeria High Commission in Singapore in a letter to the Ministry of Foreign Affairs, said, “A three-member panel that delivered the judgment was led by the Chief Justice of Singapore, Sundaresh Menon.” The letter was signed by head of the Nigerian Mission in Singapore, High Commissioner, Akinremi Bolaji. The mission said Ejike’s freedom from death by hanging by the court made history as the first time such a decision was made in a case involving a Nigerian. Ejike was arrested in November 2011 and had since been behind bars till May 2019, when he was discharged and acquitted. The letter partly read: “The High Commission affirmed that the prosecution had failed to establish that Ejike knew that the drug bundles in his suitcase

were in his possession. “In order words, Mr Ejike was not guilty of wilful blindness or deliberately shutting his eyes to the truth of his possession of the drugs. “The acquittal of Mr Ejike has been termed locally as a miracle of God and I am elated that his freedom from death happened under my watch here as the Head of Mission. “The trial focused on his knowledge of the substance; while the defence claimed he had no knowledge of the substance, the prosecutor claimed he knew about it. “However, both the prosecutor and the defence agreed that he was in possession of the drugs, which was sufficient to convict himandaffirmthedeathsentence earlier passed on him by both the lower and appellate courts.” Ejike, according to the commission, said his childhood friend in Nigeria gave him the bag that contained the drugs to be delivered to an unspecified person in Singapore. The mission said Ejike’s claim raised an important issue about how drug peddlers were using unsuspecting people as conduits to transport their consignments, at the risk of the

lives of the possessors of such substances. It therefore calls for joint awareness campaign for Nigerians travelling abroad not to accept to travel with any bags or container that they have not personally packed by themselves for the journey. “There is the need for the Ministry of Foreign Affairs to join hands with other Ministries, Departments and Agencies, especially the National Drug Law Enforcement Agency and the Nigerian Immigration Service to develop a framework to rehabilitate such Nigerians returning from abroad into the society. ``The Immigration Services of Singapore would release Ejike to travel to Nigeria on Wednesday, May 29, on board of Ethiopian Airlines and should be arriving in Lagos to join his family in Anambra, afterwards. ``Now, Mr Ejike is a free person and will travel to Nigeria unaccompanied, hoping he has learnt his lessons. ``That he would be wise enough not to subject himself in future to such circumstance that has kept him behind the bars for nearly eight years - from November 13, 2011 to May 27, 2019,” the mission stated.

Nigeria ranks low in health insurance scheme Gbemi Faminu

espite being in operations for over 10 years, National Health Insurance Scheme (NHIS) seems to be failing in meeting its stipulated objectives, as Nigeria still ranks low of 187 among the World Health Organisation (WHO) ranking of 191 countries. The NHIS was expected to provide social and financial risk protection by reducing the cost of health care and providing equitable access to basic health services to the most vulnerable populations in Nigeria, including children, pregnant women, people living with disabilities, elderly, displaced, unemployed, retirees and the sick. Although these vulnerable groups sometime benefit from free health care services and exemption mechanisms, however, they largely have to pay for health care services. Free health care services and exemption mechanisms are often politically motivated, and are poorly implemented, and do not become fully operationalised, and sometimes only last a few years. Key among its failures is the non-realisation of the objective of making health care available to Nigerians at an affordable cost as many Nigerians still pay out of their pocket for medical

expenses, a scenario which has continued to drive many families to catastrophic health expenditures and poverty. As of February 2018, the country was ranked 187 out of 191 countries in the world in assessing the level of compliance with the Universal Health Coverage (UHC), as very few of the populace are health insured, whereas even government provision for health is almost insignificant. The NHIS was set up with the objective of making health care accessible and affordable to many Nigerians. The scheme was aimed at providing easy access to healthcare for all Nigerians at an affordable cost through various prepayment systems and also to improve the health status of Nigerians, especially participants of the Scheme. A report by the second largest professional services firm in the world PricewaterhouseCoopers states that “Access to affordable healthcare continues to be a challenge for most Nigerians due to high levels of poverty and significant reliance on out of pocket payments. “Health Insurance coverage throughout the country has barely scratched the surface in terms of the country’s population,” the report noted. PwC the report further stat-

ed that several issues contribute to the failure of the scheme, which includes financial constraint, substandard services from the hospitals, poor patronage due to the reluctance of corporate bodies to engage in the scheme and many other reasons. Another report released by Axa Mansard Plc a member of the AXA Group, the worldwide leader in insurance and asset management showed that Nigeria’s NHIS which was first mentioned in 1962 and implemented 27 years later in 2005 is yet to fully deliver its purpose as a greater part of the populace is yet to access good healthcare much less health insurance. Another alarming factor was a report by NHIS, which revealed as at 2016 the scheme covered less than 5 per cent of the population and the 5 per cent was largely made up of Federal Government employees and their dependents. 10 years after its existence, the lofty objective of NHIS is still being undermined by many factors ranging from inadequate legal framework for a successful scheme, to poor implementation of the Act, poor government funding of health, Optional enrolment policy, inappropriate practices by the regulatory agency, and lack of political will.

Nigeria receives 240 firms’‎ applications to commercialise flared gas … evaluation of statements of qualification starts June HARRISON EDEH, Abuja

L-R: Clementina Doregos, founder, St. Bernadette School; Kadijat Adenmosun, founder, Konsol School/chairman, OMEP Lagos; Ibukun Adewale, elect-elect department, University of Lagos, and Bola Adebayo, chairman, organising committee, during the Organisation Mondiale Pour L’ Education Pre Scolaire (OMEP) World Organisation for Early Childhood Education in Lagos.

Ethiopian Airline aborts landing over poor weather IFEOMA OKEKE n Ethiopian Airline flight carrying 393 passengers Wednesday made air return after attempting to land at Murtala Mohammed International Airport (MMIA), Lagos, as a result of poor weather condition. The pilot of the flight, which had the former president, Olusegun Obasanjo onboard, decided to abort landing and made air return as precautionary measure. The airline described the incident as aborted landing due to bad weather. Other prominent Nigerians in the Ethiopian Airline Boeing B777-300 aircraft include

Ayoola Olukanni, directorgeneral of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Samson Tunde Adebayo, director of Ports Inspection, National Agency for Food and Drug Administration and Control (NAFDAC), as well as scores of Nigerians and other nationals. BusinessDay learnt that the flight ET-901 departed the Bole International Airport, Addis Ababa, at about 9:10am, Ethiopian time and arrived the Lagos airspace over four hours later but due to inclement weather the pilot, who had zeroed in to land aborted landing and gained altitude. The flight landed safely later. www.businessday.ng

Eyewitness account said after hovering around in the Lagos airspace, Air Traffic Control later cleared the flight to land. BusinessDay also learnt that some of the passengers were petrified despite the fact that what happened was due to bad weather, which is envisaged in flight operations. A passenger was reported to have commended the pilot, saying he was experienced to have aborted landing when he did. “Fortunately, the distance between when he realised the situation still permitted him to take off and renegotiate landing. These things happen. That is where the sophistication of

the aircraft and experience of the crew come in. The aircraft is one of the best you can have around and we are fortunate to have pilots who know their onions,” he said. BusinessDay also learnt that Obasanjo and Olukanni attended a Stakeholders Dialogue on Continental Trade and Strengthening Implementation of the African Continental Free Trade Agreement (AfCFTA), which ended on Tuesday in Addis Ababa. Both foreign and domestic airlines on Wednesday had their flights disrupted due to unfavourable weather marked by heavy downpour and heavy winds, which cast dark clouds in Lagos airspace.

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he Federal Government is upbeat about converting flared commercial gas to optimal energy utilisation as it has confirmed receiving statements of qualification from a total of 240 firms that ‎are prepared to key in into its gas flare commercialisation programme. Rabiu Suleiman, chairman, Ministerial Steering Committee, Nigeria Gas Flare Commercialisation Programme (NGFCP), who doubles as a senior technical adviser, Refineries, Gas, Power and Downstream to the Minister of State for Petroleum Resources, Ibe Kachikwu, confirmed this development in an emailed statement to BusinessDay. Suleiman confirmed that the interested parties submitted their statements of qualification package to the Nigerian Gas Flare Commercialisation Programme. “NGFCP is very pleased to advise that 240 SOQ (Statements of Qualification) were received. As you are aware, a Proposal Evaluation Committee and an Independent Observer Group have been appointed and inaugurated on the 11th of April 2019 by the Minister of State for Petroleum Resources, Ibe Kachikwul,” Suleiman said. Suleiman said the PEC and IOG would soon begin their work in evaluating the SOQS starting from June, adding that it was expected that the results would be released four weeks @Businessdayng

after the exercise within four weeks. He declared that the Nigerian government with Kachikwu as the Minister of State for Petroleum Resources, is keen on ensuring that flared gas translates to commercial use and better energy utilisation, as it keeps pushing for the companies to explore opportunities in the government’s gas flare commercialisation programme. The Federal Government’s gas flare commercialisation programme is expected to unlock and supply 600,000 metric tons of liquefied petroleum gas to about six million homes in Nigeria. BusinessDay findings revealed that the benefits of gas flare commercialisation are huge. “In terms of development impact, the NGFCP benefits are huge, ranging from an overall inward investment of around $‎3bn to $3.5bn; a potential annual revenue /gross domestic product impact of around $1bn/ annum,” Justice Derefaka, Programme Manager, NGFCP, told BusinessDay. It would be noted that oil and gas firms operating in the country flared a total of 282.08 billion standard cubic feet of natural gas in 2018, amounting to a potential loss of N224bn. As a result, Derefaka told BusinessDay that there was no going back on the government’s efforts to ensure flared sites are commercialised to contribute immensely to Nigerian energy needs and in line with climate change demands.

Thursday 30 May 2019

BUSINESS DAY

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Thursday 30 May 2019

BUSINESS DAY

INTERVIEW

â&#x20AC;&#x2DC;We will lend more to MSMEs to drive The Micro Small and Medium Enterprises (MSMEs) have been tipped as a key driver of growth for any economy. However, the sector has been limited by inadequate access to cheap credit and this necessitated the birth of the Development Bank of Nigeria (DBN) to provide entrepreneurs with finance. In this Interview, Tony Okpanachi, Managing Director of the bank explains to BusinessDay analyst, Michael Ani, on how the financial institution is helping to improve access to credit to MSMEs

ive us an overview of what your business as a developmental financial institution entails Development Bank of Nigeria (DBN) is a wholesale Development Financial Institution (DFI), set up to alleviate the financing need of Micro, Small and Medium Scale Entrepreneurs (MSMEs). Essentially, we focus on providing long term finances to this space. Our mandates are in three folds, we do lending activities by providing wholesale lending funds to financial institutions to on-lend to MSMEs. This is the core of our mandate. The second part of our mandate is to provide a partial guarantee to financial institutions to encourage them to be able to provide accessible credit facilities to MSMEs. That again, we have already set up a subsidiary of the development bank of Nigeria with the skill set for credit guarantee to focus on that. The third part of our mandate is on capacity building, on what we call rendering technical assistance to the financial institutions. And again, since we are a wholesale financing institution, we work through other financial institution so there is no direct access to the end borrower. At the end of three mandates, we want to act as a catalyst in ensuring that other financial institutions like commercial banks, microfinance institutions and others that interface in providing loans to the MSMEs are able to do that effectively. But ultimately, we do all this to be able to achieve our development objectives and what are they? off course in the Nigerian economy, for example, we want to see how we could create jobs because we know that the MSMEs are largest employers of labour so the more we are able to empower them, the more we create employment opportunities in the country. We also want to achieve diversification of the economy, youth empowerment, gender empowerment that have a developmental impact and that will translate in the long run into boosting the Gross Domestic Product (GDP) of the economy. What are those key things that differentiate the DBN from other financing institutions that are performing similar functions? First of all, let me point it out that the need for that segment of the economy is huge and no one financial institution can single handily do it all. So you have the development finance of the Cen-

tral Bank of Nigeria (CBN) coming with their own making the impact trying to stimulate a specific sector of the economy, you have Bank of Industry (BOI) focusing on industries and in some cases focusing on SMEs, you have NEXIM trying to provide funding to exporters, you also have Bank of Agriculture, focusing strictly on agriculture in terms of how funding could be provided to farmers. For us, the difference between DBN and all these financing institutions is that most of them focus on specific areas while we cut across all the MSMEs. If you are in the agric, tech, industry, any sector of the economy, we cut across them. The second distinguishing factor for us is that we are a wholesale DFI hence, our funding model is that we do all our financing through other financial institutions that already have a relationship with these MSMEs as the case may be. So for us, we are quite distinctive compared to other financial institutions because we are wholesale, and we are not sector specific. The philosophy in DBN is that we collaborate with all these financial institutions that are able to provide funding to MSMEs. What do you think is responsible for the scarcity of financing despite the pocket of support we have been seeing and how do you think we can bridge the gap in funding to the sector First and foremost, I will say that the financing need of that segment is quite big running into trillions. The available finance itself is pretty much truly inadequate hence, we need to get catalyst in getting more people and institutions to be able to finance. So, I will categorize the issue into the availability of funds, the risk profile of that segment and thirdly, the bankability of that business. As regards the availability of funds, the last data from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) shows that in 2017, there are about 37 million people operating in that segment which is quite huge. If you look at the number of people employed in that segment of the economy, it is the greatest employer of labour both full time and part-time. So, we can say it is a big chuck hence their importance cannot be overemphasized. In terms of the need from that area, it is quite huge. Most business will assume they have the idea but the major issue they have is about finances. So, both the effective and perceived need for financingâ&#x20AC;&#x201D;I call it effecwww.businessday.ng

tive because those whose projects needed to be financed and those who think that they have the ideas and financing should be made available to themâ&#x20AC;&#x201D;when you put them together shows that there is a huge demand in that sector. So I think that market is quite huge in terms of the requirement for it hence there is a need for there to be a concerted effort in meeting the demand for the sector and that is in the point of availability. The second part I talked about was in terms of the risk profile of that segment. If you look at it historically, most Small and Medium Scale Enterprises is where most commercial banks use to have the issue of Non-Performing Loans (NPLs) because historically, a lot of small businesses start their operations, they fail, there are issues about people not being able to differentiate between their business and the individual themselves, there are issues about going into business

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without proper feasibility study and then when they get finances, it goes to burst with several issues hence, because of the experience by most financial institution regarding that segment, they tend to shy away from that space. So you have the issue of the risk profile of that segment being high compared to the large corporates who are more structured, more organized and have a track record with a reputation they hope to protect overtime, they can dimension them in a way that their risk profile is better. Also, if you look at the risk profile in that segment itself, you are left with no choice but to profile it by pricing appropriately for the risk or you mitigate it by way of what mitigants usually put in to ensure that risk profiles are contained. So, given the fact that traditionally and historically that segment has a lot of issues as regards risk profiling, a lot of financial institutions have had issues as they @Businessdayng

have gotten their fingers burnt so they shy away from it so that is another reason why I feel they complain about finances not being made available to them. Another major issue is on the bankability of some of the projects itself and some of the financing requirements of the projects that the people in this segment are going into. Every entrepreneur gets up, have an idea, put them together and say I need the bank to finance it; I need finances to come through. Typically, you have to go through a process; you need to have it bankable for you to be able to receive finances from an institution. So, the bankability of this project, talking about how they do their feasibility study, on how they package their products to make it attractive to financing is also key. So if we look at it from those three key dimensions we could say that is why there has been a lot of ampere in terms to access to financing. Can you give us the breakdown of loans that you have disbursed since inception?

Thursday 30 May 2019

BUSINESS DAY

Nigeriaâ&#x20AC;&#x2122;s economic growthâ&#x20AC;&#x2122; In 2017, that was when we started our pilot lending with two microfinance institutions. But I will say 2018 is our first full year of operations and at the end of 2018, we did over N31 billion in terms of finance provided for on lending to MSMEs. In terms of numbers of loans done to end borrowers, we did 35,000 in 2018 which was our full year operations. But I can assure you that in the first quarter of this year we have done more than that but usually, we give our reports annually. However, the figures are already looking up because, by the end of the first quarter, we had gone beyond that amount. You aim to disburse about N7o billion in loans this year. Do you still feel you will hit this target? Definitely, we are going to meet it. With what we have done in the first quarter and this second quarter that we are in now, I can say we are very much on track to meeting it. You are a wholesale lender by going through other financial institution. In the event of NonPerforming Loans (NPLs), who does the recovery? Been a wholesale lender, the credit risk or the lending risk is on the participatory financial institutions. They do the credit appraisal, they do the pricing, if there are needs for collateral, they handle it. They have a relationship with the end borrowers so, in the event of bad loans, they also have the machinery to collect that. We are wholesale lenders as we provide wholesale for on lending and we do not have any interface with the end borrowers. We will be talking about nonperforming loans when the financial institutions them self that we are giving wholesale funds to have issues. That is when our own NPL comes in. However, because we also have an interface with them, when there are technical issues as regards NPL, we can come in to render some technical assistance. How many PFIs are you working with at present? We have about 29 participatory financial institutions working with us, cutting across commercial banks, microfinance institutions. Our plans and objectives are to get as many as possible that meets our eligibility criteria on board so that we can give alternative options to the end borrowers. As at today, we have about 10 commercial banks on board already with some of them at various stages of our onboarding exercise to bring them on board so that their customers can go to them to get DBN financing loan. For Microfinance institutions, the balance is there both the National and the state a lot of them that we have already on-boarded with funds disbursed to them. When I told you about our 35000 customers, about 85 per cent of them are Micro with an average loan size of about N170,000 while those of the Commercial banks is about N70 million that is why we cut across all of them. Most of the major banks in the country have been on-boarded. About 90 per cent of the Microfinance institutions that have met our eligibility criteria has been on-boarded so now the drive for us is to ensure that customers are able to go to those banks ask them for DBN loans and be able to get them. What are your eligibility criteria

Our eligibility criteria essentially are the same. First of all, we try to look at the financial institution and say, have they been profitable in the last two years. We look at their prudential ratio that is their non-performing loans and also how strong they are in the area of lending to the MSMEs. We do not want to take a financial institution that is not interested in them. We are very transparent on our eligibility status as it is on our website and once they meet those criteria we on board them. Give us the location where your operations are and how PFIs who wish to get onboarding can reach out In terms of location, our head office is located in Abuja and we also have a branch here in Lagos. Since we are a wholesale institution, we do not require branches. In terms of interface, with all the financial institutions that are working with us, we work with them from our head office. On coming on board, we wrote to all the financial institutions and to make access clear, we went to the process of automating these applications for the financial institutions so that they can go online and see what their eligibility criteria are. They also have a chance of filing a questionnaire and we get a response from them. The reason for this is to make it easier for them to get on board from anywhere in the world. Like I said earlier, we already have about 10 commercial banks that have gotten on board that shows that the engagement is on-going same for the microfinance institutions as many of them that met our criteria has gotten on-boarded. So in terms of engagement, we are reaching out to them and they are also reaching out to us and that is very much ongoing. However, people are going to be seeing more of our feasibility in terms of creating awareness that we have been doing before. How well do you track the lending activities of these participatory financial institutions? It is because we track their activities consistently, that is why we could tell you conveniently about their numbers. I can tell you where we started and where we are now. This is because we are not just giving them a loan but we also see who these customers are for us to disburse these loans to them. So we are able to know, For example, Bank A has a line of 1 billion with DBN and they want to access 500 million, they have to give us a break down of the customers accessing these loans because we have a template to see whether these customers fall into the MSMEs and whether they meet the entire requirement. After that, we always ensure that we do our monitoring and evaluation to ensure that these loans that the financial institutions have taken, they use it for the right purpose and the impact it is making as the case may be. We are developmental financial institutions hence we are not just giving out loans for the www.businessday.ng

sake of giving money; we want to see what impact it is making in their businesses and the impact on the overall economy. So, from the disbursement to the utilization and to the impact, we follow through. So I can tell you the 35000 that I had mentioned earlier, what the names of these customers are, their locations, their directors and the phone numbers of their businesses. Now, because we are relatively new, by the end of every year, we always go to do what is called annual due diligence, that is we go back to the financial institutions to check through the money they have collected from DBN comparing it with what they have loaned out. We also look at how their portfolio is performing. Yes for us we know that they will pay back in the event of default but ultimately for us, it is not just about paying back but impacting on the MSMEs. How well is your collaboration with agencies like the Chamber for Commerce and industry since they have many small businesses as members? We have a strategic alliance with all of them including the Chambers of Commerce, Nigerian Association of SMEs, which we are a corporate member. We believe we have a common objective and common goal which is how do we ensure we empower the MSMEs. How do we ensure that they have access to credit? So we all have a strategic alliance with them in the form of partnership. We interface with them; we attend presentations at their seminars when necessary to create awareness. We have been on a panel where they invite us to their conference. We need to also create that awareness that DBN funding is available through the banks and they have to go to the bank to get it. So we need to create that awareness which can come in through direct to them or through association that they belong to. So we tolerate them as we have a strong bureau committee that interface with them. Most financial institutions try to focus on a sector of the economy and try to master them but you focus on all sectors of the economy, is this not too broad for you Let me again rephrase the fact that being a wholesale lender, our own catchment segment is the MSMEs hence it is not a jack of all trade it is within a segment. For example, if a large corporate comes and needs a loan, DBN will not lend because we have a maximum amount of loan that we can lend. For Micro, it is N10 million, while the Small category is N150 million and when we get to Medium corporate about N600 million so we are limited when it comes to lending. By the time these businesses are growing to the point that we see they can stand on their own and can get access to bigger funding, they move out from that circle. The only reason why we are not going to be sector specific is that the MSMEs cut across all sectors of the economy and if we begin to narrow our scope, we would begin

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to cut out a lot of them and that is why we work with other financial institutions. As long as that customer is within the MSMEs, then we will deal with them whether they are in the power sector value chain or manufacturing or any sector at all. You joined the league of 140 members in the global financing of SMEs. How well is this going to impact on your operations? What we are doing by joining the forum is to ensure that we replicate and share in Nigeria global best practices. The forum is made up of both financial institutions and SMEs themselves across the different sector including Fintech companies etc. So, that forum enables us to see and have a feel of how the business is doing, what their funding requirements are and how it is done in other areas so that we can come in and use the experience of other areas to improve the way it is done here. So for us in Nigeria, we are the only financial institution that is a member of the global SMEs finance forum and we took that deliberate step to join because if we say we are a bank for the SMEs, then whatever concerns them, we should know all over the world. I must say that the learning from that experience has been insightful and helpful this is because whatever concerns SMEs in Nigeria like financing constraint and regulations, other countries must have gone through those stages and came out fine. So how did they do it, learning from them and what other new things are they doing that we can learn from so that at the end of it all SMEs in Nigeria would be able to stay afloat in business. Can you give us an idea of the size of your available funds and where we are sourcing these funds from? In terms of the size of funds available to us in dollar terms, we have about $1.3 billion and that is made up of debt and equity. The shareholders of the bank who have provided equity include the federal government of Nigeria who is the @Businessdayng

majority shareholder, the African Development Bank (ADB) and the European Investment Bank (EIB), then the Nigerian Soviet Investment Authority (NISA). In terms of regulatory capital, we have about N100 billion. In terms of debt, we have the World Bank, African Development Bank, KSW of Germany and the French Development Agency (FDA), are all providing us debt. The CIBN recently conferred you, fellow, how do you feel about this special recognition. I feel quite great. I think it is momenta given the fact that a profession that I have been in for almost 30 years recognized me and the highest level of recognition that you think of from a professional body. So I think it is great and I am really grateful and excited about it. I am grateful to CIBN for diming it fit to be conferred that fellowship and on my part, I will leave the idea that is expected as a fellow of the chartered institute of Bankers in Nigeria. Where do you expect DBN to be and what impact would he bank have created First, we want to look at our self that we will be lending about 12 per cent of the loaning in that segment but most importantly, with our credit guarantee and our N10 million capacity building. With these three, we want to act as a catalyst so that the overall need of that segment would not be one that commercial banks will be running away from funding it will be a question of them scrambling for it. So while our own direct lending to the segment will be 12 per cent of the market, it would be a catalyst that other financial institution will leverage on and in collaboration with several other initiatives from other DFIs who are providing different funding will ensure that the segment will become an attractive segment and access to credit would become an issue that is really not critical then we can begin to look at other issues outside funding.

Thursday 30 May 2019

BUSINESS DAY

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Thursday 30 May 2019

BUSINESS DAY

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Market capitalisation

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N11.721 trillion

Week open 17 – 05–19

31,924.51 28,871.93

N12.717 trillion

2,138.26

Week close (24 – 05–19)

30,881.29

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2,439.57

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,271.79 1,249.53

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130.95

723.46

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291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

806.91

1,255.43 1,265.61

354.30

114.66

641.87

258.76

2,013.53

1,054.20

1,094.61

347.85

116.01

622.76

257.07

2,083.00

1,118.71

1,046.31

805.27

Percentage change (WoW)

6.96

14.09

-1.75

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11.14

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1.44

0.81

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1.18 -8.28

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-16.84

-14.94

3.45 -6.76

6.12

-1.84

-9.63

-13.35

Q1 Fact Sheet: Market snapshot shows key indicators in red …MTNN to the rescue Iheanyi Nwachukwu

he Nigerian stock market may have started recouping some of its record losses but a look at its performance in the first-quarter (Q1) of 2019 shows all key indicators in the red. Total Market Capitalisation at N22.33trillion or $61.91 billion shows a decline of 10.21percent in the 52-week period (April-2018 to March-2019), according to the recently released Q1 Fact Sheet of the Nigerian Stock Exchange (NSE). Equities Market Capitalisation at N11.65 trillion or $32.30billion represents a 52-week decline of 22.34percent. Exchange Traded Fund (ETF) Market Capitalisation at N5.66billion or $15.70million represents a decrease of 26.55percent. Bonds Market Capitalisation at N10.64trillion or $29.50billion shows it increased by 7.93percent. Average daily value traded across all products on the NSE decreased by 53.24percent to N3.26 billion ($9.05 million), from N6.98 billion in the previous year. Similarly, in Q1 2019 the average daily volume traded decreased by 53.49percent to 323.52 million units in Q1 2019, from 695.65 million units in Q1 2018; while the number of transactions recorded during the quarter in review declined

L-R: Bhushan Akshikar, managing director, GlaxoSmithKline Consumer Nigeria Plc; Edmund Onuzo, chairman board of directors, GlaxoSmithKline Consumer Nigeria Plc, and Uche Uwechia, company secretary and General Counsel, GlaxoSmithKline Consumer Nigeria Plc, at the 48th Annual General Meeting of the company in Lagos.

by 37.27percent. Total Volume in Q1 at 20.704billion, down 52.76percent; total Value Traded (Q1) at N208.887billion shows 52.50percent decline; while Average Daily Transactions (Q1) at 3,769.72, represent a dip of 38.25percent. At the end of Q1 2019, the average price-earnings (PE) ratio of The Exchange’s listed equities stood at 17.92 compared to 24.91 in the

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previous year. The equity turnover velocity also declined by 4.55 percentage points to 7.17percent, from 11.72percent in Q1 2018. The dividend yield for the 52-week period ended March 29, 2019 was 6.15percent, compared to 4.61percent for the previous year. The market flows show that domestic investors accounted for 52.51percent of the transactions

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in 2017; 49.13percent in 2018; and 47.21percent in Q1’19; while foreign investors accounted for 47.49percent of the transactions in 2017, 50.87percent in 2018; and 52.79percent from January to March 2019. Leading up to the Nigerian general elections, the equity market witnessed a significant decline as investors sought towards more

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guaranteed investment asset classes. The nation also experienced declined external reserves amidst a weak global crude oil market which contributed to weakened investors’ appetite during the review period. The stock market has seen remarkable gains since the listing of MTN Nigeria Communications Plc (MTNN) shares on the Nigerian Stock Exchange in this second quarter (Q2) of 2019. On May 16, MTNN listed by introduction its 20.35billion shares at N90 per share. MTNN stood at N132 per share as at 1.50pm on Tuesday May 28, 2019; while the NSE equities market cap hovered at N13.616trillion. Since then it has witnessed remarkable increase which helped push the market capitalization to a new high and moderated the yearto-date (ytd) loss. “The equity market came alive with five days’ trading of MTN Nigeria. It was interesting to see some major bank stocks sell off against the market’s trend, with the effect of giving them cheaper valuations than before”, according to Coronation Research analysts in their May 27 note. In the review first-quarter ended March, the NSE-30 Index at 1,392.65 points in Q1’19, represents a decline of 25.70percent from a 52 week Continues on Page 25

Thursday 30 May 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

NSE-ASI records largest weekon-week gain in 2019, up 7%

he local bourse drew the curtain for the trading week to May 24 on a bullish note, as the market recorded gains in all the week’s trading sessions save for Friday. MTNN and DANGCEM were the major stocks that drove the cheery performance as both stocks recorded massive gains throughout the week save for the last trading day. Overall, the All Share Index rose by 7percent week-on-week (w/w) to close the week at 30,881.3 points, spurring YTD return to +0.1percent. Market capitalization for the week surged N885billion to finish at N13.6trillion. Similarly, activity level was overwhelming as average value and volume of stocks traded for the week surged 189percent and 589percent to end at N10.3billion and 1.6million units respectively. Sector performance for the week was mixed as 3 of the sectors under our watch closed

advanced over the week against 33 decliners. Given the recent bullish run in the market we expect some profit taking decision to clog trading sentiments this week. However, we do not rule out the possibility of intermittent gain in the market as investors hunt for attractively priced stocks on the exchange. Money Market: CBN renew liquidity tightening System liquidity conditions deteriorated through the prior week as overall outflows outweighed inflows. The major outflows for the week were in the form of weekly wholesale FX sales on Monday ($210.0mn), May-19 primary market Bond sales (N111.3bn) on Wednesday, new OMO issuance on Thursday (N360.7bn) and the bi-monthly retail FX sales on Friday. The key inflows were from OMO maturity (N106.9bn) and retail FX refunds to Bank, on Thursday. Additionally, after the repayment of its series 4

in the negative region. The telecommunication sector led gainers for the week buoyed by increasing demand for MTNN (+28.5percent). In the same vein, The Industrial (+6.1percent) and Insurance (+1.2percent) sectors also gained, largely driven by price appreciation in DANGCEM (+13.6percent) and AIICO (+6.2percent). On the flip side, the Consumer Goods (-3percent), Banking (-1.8percent) and Oil & Gas (-0.7percent) trended southwards w/w owing to price declines in NESTLE (-2.1percent), NB (-7.2percent), ACCESS (-7.4percent), ZENITH (-3.1percent), OANDO (-8.3percent) and FO (-1.9percent). Investors sentiments for the week as gauged by market breadth was underwhelming, closing at 0.9x as 29 stocks

paper, Dangote Cement Plc opened for subscription series 5, 6, and 7 commercial paper as it planned to raise c. N50billion to support its short-term funding requirements. In all, average interbank funding rates (Open Buy Back and Overnight rates) tracked the direction of system liquidity, up from 4.9percent to a high of 11.6percent at the close of the week. Meanwhile, interbank activities at CBN’s SLF/SDF window widened compared to the prior week as players continued to deposit excess fund with the CBN, especially before the new OMO sale on Thursday. Further analysis showed that demand at the OMO auction conducted during the week was positive as total bids worth 2.5x the total initial offered amount of N150billion,

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turned up - skewed largely to medium and long-dated bills with a bid-cover ratio of 2.0x and 3.0x respectively. Thus, average stop rates at the auction cleared significantly lower when compared to previous levels though still more attractive than NTB’s [91-day (11.40percent versus 11.72percent at the last auction), 182-day (11.68percent versus 12.77percent at the last auction) and 364-day (12.50percent versus 12.82percent at the last auction). In the secondary Nigerian Treasury Bills (NTB) market, market bears surfaced during in the later part of the week on the back of an OMO issuance on Thursday (the first in 9 sessions), offsetting the bullish interest that dominated the early part of the week which drove yields below 12percent levels. Accordingly, average yields added 1basis point (bp) w/w to close at 12.1percent. Bond OMO and NTB maturities of above N100billion are scheduled to hit the system. Additionally, while commercial papers from both Mixta Real Estate Plc (N9.8billion) and Flour Mills of Nigeria Plc (N8billion) matured in the prior week, both have announced intentions to raise additional N3billion and N12billion CPs via their respective existing programs. Accordingly, we expect the CBN to maintain its liquidity tightening stance this week. B on d Market : Rate s moderate significantly at the local primary market auction In the Bonds space, the Debt Management Office (DMO) successfully conducted its May-19 bond auction during the week, offering N100billion – shared between re-opened 5-year (N35.0bn), 10-year (N35billion), and 30-year (N30billion) notes. The DMO allotted 1.1x the initially offered amount via competitive bids as total demand at the auction was largely positive, with the bidto-cover ratio at 2.7x (higher than the last Apr-19 auction of 1.5x). However, most of the demand was for the 10-year and 30-year notes (Bid to cover ratio: 10-year; 3.5x and 30-year; 3.4x) while demand for the 5-year note was also positive at 1.3x the offered amount.

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

Fixed Income, Currency markets turnover declines month-on-month by 43.51% …to N16.37trn in April Iheanyi Nwachukwu

MDQ OTC Monthly, a report by the market development group of the OTC Securities Exchange shows that turnover in the Fixed Income and Currency (FIC) markets for the month ended April 30, 2019 was N16.37trillion. This record FIC turnover in April 2019 represents a 43.51percent or N12.61trillion month-on-month (MoM) decrease on the turnover recorded in March 2019 (N28.98trillion) and a 9.57percent year-on-year (YoY) increase. Total FX market turnover in April 2019 was $17.43billion (N6.28trillion), representing a 47.59percent ($15.83billion) MoM decrease from the turnover recorded in March 2019 ($33.26billion). Analysis of FX turnover by trade type indicates a MoM decrease by 34.36percent, 44.10percent and 59.01percent in FX turnover for InterMember, Member-Clients and Member-CBN trades

respectively. This is attributable to the normalisation in Foreign Portfolio Investment (FPI) inflows following the postelections surge recorded in March 2019. Turnover at the Investors & Exporters (I&E) FX Window in April 2019 recorded a 29.01percent ($2.17billion) MoM decrease to close at $5.31billion from the $7.48billion recorded in March 2019, whilst recording a YoY increase of 12.03percent ($0.57billion) from the turnover of $4.74billion recorded in April 2018. Analysis of FX turnover by product type showed a MoM decrease in both FX Spot and FX Derivatives by 50.33percent ($10.80billion) and 42.60percent ($5.02billion) respectively, with the MoM decrease in FX Spot accounting for 68.25percent of the total MoM decrease in FX turnover. The MoM decrease in FX Derivatives was driven mainly by decreases in FX Swaps and Futures turnover, jointly accounting for 71.51percent

of the MoM decrease. In April 2019, the 34th Nairasettled OTC FX Futures Contract (NGUS APR 24 2019) with total open contracts size of $431.16million matured and was settled, bringing the total value of OTC FX Futures contracts settled on FMDQ since inception to c $15.28billion; out of FX Futures contracts worth $23.23billion traded to date. A new 12-month contract (NGUS APR 29 2020) with a notional principal of $1bn and futures price of $/N362.41 was introduced. In April 2019, the Naira appreciated against the US Dollar at the I&E FX Window by N0.05 to close the month at $/N360.63 while the parallel market and the CBN Official Spot rates remained unchanged at $/N360 and $/ N306.95 respectively Despite the appreciation of the naira in the I & E FX Window, there was a decline in FX inflows from Foreign Direct Investment (FDI) and FPI inflows as market activities normalised following the postelection euphoria experienced in March.

Stock investors gained over N880bn last week Iheanyi Nwachukwu

nvestors in Nigerian stock market gained approximately N885 billion in the trading week to May 24, 2019 following increased demand in the shares of newly listed MTN Nigeria Communications Plc (MTNN) and that of Dangote Cement Plc. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation appreciated by 6.96percent to close the review week at 30,881.29 points and N13.602trillion respectively from preceding week low of 28,871.93 points and N12.717 trillion. Thirty (30) equities appreciated in price during the review week, higher than 16 in the preceding week. Forty (40) equities depreciated in price, lower than 42 equities in the preceding week, while 98

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equities remained unchanged, lower than 109 equities recorded in the preceding week. All other indices finished lower with the exception of the -, NSE 30, NSE Premium, NSE Insurance, NSE MERI Growth, NSE Lotus II and NSE Industrial Goods Indices that appreciated by - 0.81percent, 14.09percent, 1.18percent, 1.42percent, 3.45percent and 6.12percent respectively. The market recorded turnover of 1.698 billion shares worth N57.895 billion in 24,328 deals in contrast to a total of 1.172 billion shares valued at N17.887 billion that exchanged hands in the preceding week in 18,380 deals. The Financial Services Indust r y (mea sure d by volume) led the activity chart with 1.121 billion shares valued at N8.708 billion traded in 13,380 deals; thus contributing 66.01percent and 15.04percent to the total equity turnover @Businessdayng

volume and value respectively; followed by the ICT Industry with 324.332 million shares worth N40.717 billion in 3,330 deals; and Consumer Goods Industry with a turnover of 75.831 million shares worth N2.948 billion in 2,957 deals. Trading in the Top Three Equities namely, MTN Nigeria Communications Plc, Sovereign Trust Insurance Plc (measured by volume) accounted for 726.103 million shares worth N41.622 billion in 4,972 deals, contributing 42.75percent and 71.89percent to the total equity turnover volume and value respectively.

Thursday 30 May 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

ASHON urges members to conduct diagnostic test on their businesses ...unfolds 13-point survival strategies for capital market Iheanyi Nwachukwu

he Association of Securities Dealing Houses of Nigeria (ASHON), a Trade Group registered by the Securities and Exchange Commission (SEC) has urged its members to conduct diagnostic test on their businesses in order to review the models in view of the dynamic changes in the global financial market. Besides, they have identified lack of financial literacy as one of the challenges, militating against investors apathy to the capital market, calling for immediate action to step up comprehensive enlightenment programme to attract more participants, particularly, from the booming informal sector. ASHON had in its 2019 Capital Market Summit, held in Lagos recently, with the Theme, “ Financial Inclusion: The Capital Market Perspective”, proposed a 13-point agenda, jointly signed by its Chairman, Onyenwechukwu Patrick Ezeagu and 2nd Vice Chairman, Sam Onukwe respectively . The agenda articulated operational and regulatory issues that must be addressed in order to move the capital market forward with multiplier effects on the members’ businesses. ASHON sees urgent and compelling need for the Securities Dealers to review their business models by taking a cue from the Chinese Model, Pakistan initiative or Mexican model, each of which places premium on financial inclusion through creation of one-stop financial centers across the country, especially, the rural areas where there is high concentration of financially excluded people. It wants market operators to embark on the creation of innovative, flexible and affordable products that can satisfy the needs of existing and potential investors and tradable on userfriendly technology to promote financial inclusion by attracting investors of different dispos-

able income into the market. According to ASHON, lack of financial literacy has excluded many investors from the market; hence, the federal government, capital market regulators and operators should develop a comprehensive financial literacy curriculum, targeted at women, youths and physically challenged while Information and Communications Technology (ICT), NIPOST and other Channels are used for grass root development outreach. “ASHON should collaborate with other trade groups in the Capital Market to intensify advocacy role by engaging the Government, Legislators and Capital Market Regulators on the need to encourage trading in securities through investor-friendly legislation such as tax incentives and creation of enabling trading environment for market operators”, ASHON said.

It further noted the need for the Federal Government to take decisive steps to close the yawning gap between the Capital Market and the Money Markets which has continuously inhibited savings mobilization for long term capital investments in the country. In view of the far-reaching policies enunciated in the 10-year Capital Market Master Plan (2015-2025) of the Securities and Exchange Commission (SEC), ASHON noted that with other major stakeholders saddled with the implementation of the Master Plan, they should conduct regular review of the Plan to accommodate dynamic changes in the market, especially, given the disruptive power of technology and current trends in investor psychology. “In order to create a niche market and ensure products uptake and mass adoption, Capital

Market stakeholders and apex associations of financial services providers should collaborate without further delay”, ASHON added. ASHON’s initiative of floating the Lagos Commodities and Futures Exchange (LCFE) symbolizes corporate foresight for financial inclusion and a strategic move to encourage portfolio diversification in Nigeria. This laudable effort should be supported by SEC by way of reduction of transaction cost and regulatory bottlenecks when it commences operations in the unfolding commodities ecosystem in Nigeria. The Trade Group also called on the Federal Government to take deliberate steps to finance its infrastructural development drive through the Capital Market rather than budgetary allocation as the Capital Market option has multiplier effects of cost effectiveness and enhancing market liquidity. ASHON wants the SEC and the CBN to collaborate to bring the 35million currently in the BVN data base into the capital market as a first step towards broadening participation in the capital Market. It wants the Federal Government to regard investments in the Capital Market as long term savings necessary to achieve a vibrant economic growth and encourage market participants by waiving the multitude of taxation currently imposed on transactions as they are disincentives to capital formation and moblilsation. “High Transaction cost in Nigerian Capital Market remains a major impediment to investment as it is relatively higher than its international peers. There should be a downward review of transaction and listing costs to attract more individuals and institutional investors into the Capital Market. “ The Federal Government is hereby called upon to pursue accommodative fiscal and monetary policies to revive the ailing economy, renew investor confidence and put the Capital Market on a strong pedestal.”, the statement said.

IOSCO requests feedback on key considerations for regulating crypto-asset trading platforms

he Board of the International Organisation of Securities Commissions (IOSCO) is seeking comments on a consultation paper that describes the issues associated with crypto-asset trading platforms (CTPs) and sets forth key considerations to assist regulatory authorities in addressing these issues. The development of crypto-assets is an important area of interest for regulatory authorities around the world. Accordingly, IOSCO has published the consultation report titled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms, which describes the risks and issues that IOSCO has identified regarding CTPs. The report sets out key considerations that are intended to assist regulatory authorities in evaluating CTPs within the context of their regulatory frameworks. The primary topics covered include: Access to CTPs; safeguarding participant assets; conflicts of interest ; operations of CTPs; market integrity; price discovery; and technology. Many of the issues related to the regulation of CTPs are common to traditional securities trading venues, but may be heightened by

how CTPs are operated. Where a regulatory authority has determined that a crypto-asset is a security and falls within its remit, the basic principles or objectives of securities regulation should apply. The report, therefore, sets out that the IOSCO Principles and Methodology provide useful guidance for regulatory authorities considering the identified issues and risks. IOSCO will continue to monitor the evolution of the markets for crypto-assets to ensure the issues; risks and key considerations identified in this report remain relevant and

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Q1 Fact Sheet: Market snapshot ... Continued from page 23

appropriate. This approach is in line with the G20´s 2018 communique that called on international standard setting bodies “to continue their monitoring of crypto-assets and their risks, according to their respective mandates, and assess multilateral responses as needed.” In preparing this Consultation Report, IOSCO conducted a survey of the regulatory approaches to CTPs that are currently applied or are being considered in member jurisdictions. The report includes a summary of the findings of this survey.

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period (April 2018 to March 2019). In the same period, the All Share Index (ASI) at 31,041.42 point in Q1’19, represents a 52-week decline of 25.21percent. The NSE Premium Board Index at 2,203.76points in Q1’19 shows a 52-week dip of 25.30percent; NSE Main Board Index which stood at 1,420.06 points in Q1’19 also decreased by 20.86percent over a 52-week period. The NSE ASEM Index was also down by 18.34percent to 807.22points in Q1’19; NSE Pension Index lost 25.03percent of its 52-week level to 1,188.02 points in Q1’19. Also in the review period, NSE Banking Index closed at 403.96 points, representing a 52-week decline of 22.40percent ; NSE Consumer Goods Index stood at 711.29 points (-27.28percent), NSE Insurance Index closed the Q1’19 period at 125.98 points (-16.62percent); NSE Oil/Gas Index was down at 290.52points (-16.25percent). In like terms, NSE Lotus Islamic Index at 2,267.64 points was down by 15.98percent; NSE Industrial Index stood at 1,239.73 points in Q1 (down 43.45percent) while NSE Corporate Governance Index at 1,227.72 points represent a decline of 26.01percent when compared to the corresponding quarter in year 2018.

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Thursday 30 May 2019

BUSINESS DAY

FIXING NIGERIA Sectoral challenges

What government needs to do

Maritime

What Nigerian shippers, port users expect from Buhari’s second term AMAKA ANAGOR-EWUZIE

n recent times, shippers including importers and exporters, service providers and users of port services have been grappling with difficulties in trying to do business at the nation’s seaports. The difficulties experienced by shippers in the last four years, have been largely due to lack of infrastructural development within Apapa port city, which houses the nation’s major economic gateways, Apapa and Tin-Can Island Ports. As a result, virtually all roads, streets, bridges and under bridges that have connection with Apapa metropolis, have been turned into parks for heavy-duty vehicles. This created more problems for port users, as vehicular movement in and out of Apapa metropolis, became a hard nut to crack due to traffic congestion. With the congestion, entrance into the port became very challenging to not only importers but also to service providers. This has posed serious threats to smooth movement of goods, and also increased the cost of doing business as importers experience substantial man-hour loss, blamed by Customs and other service providers on having to report late to discharge their duties, such as shipment examinations due to the traffic situation. Apart from the infrastructural gap within the port environs, port users have also been challenged by the cumbersome cargo clearing procedure at the ports, multiple taxation as well as levies imposed on them by government agencies involved in cargo clearance. This has been attributed to the presence of multiple government agencies at ports as well as failure of officers of the Nigeria Customs Service (NCS) to fully deploy electronic equipment such as scanners and a Single Window for cargo inspection. Even though, the Office of the Vice President in partnership with the Nigerian Ports Authority (NPA) has shown commitment towards solving the ‘Apapa debacle’, port users who spoke with BusinessDay made some suggestions towards a lasting solution to the situation. “Government needs to either revive the refineries or make use of pipeline for the evacuation of petroleum products to stop tankers from coming to Apapa, in order to reduce the number of articulated vehicles coming there,” said Tony Anakebe, managing director of Gold-Link Investment Ltd. Anakebe further said: “Government needs to ensure that the contractor in charge of the reconstruction works on the failed portions

of the Apapa-Oshodi Expressway is mobilised to site, and fast track the work.” On his part, Kunle Folarin, chairman, Port Consultative Council (PCC), said the Apapa problem will only go away if government provides inter-modal (rail and water) transportation for cargo evacuation and rebuild critical transport/road infrastructure. “Until we develop a multi-modal system of transport and build other transport infrastructure at the ports, we would continue to have a recurring decimal of congestion at the ports. For instance, within the port environment, 4km from the port, should be reserved only for warehouses for cargoes, roads for movement of port cargoes by trucks or railway. There should also be a ring road exclusively reserved for the port,” Folarin said. Statistics have shown that over 70 percent of the cargo brought in and exported out of the country, passed through the ports in Lagos while Onne, Port Harcourt, Warri/ Delta and Calabar Ports struggle with the remaining cargoes. Pundits believe that congestion in Apapa was partly due to over reliance on Lagos ports, and for this reason, shippers want government to open up other ports to help redistribute the weight ports in Lagos, presently shoulder. “Government agencies must review tariff and charges on ships calling ports in the Eastern part of the country with imported cargo by at least 30 percent, to encourage effective utilisation,” said Iheanawww.businessday.ng

cho Ebubeogu, general manager in charge of Security at the NPA. According to him, if the cost differentials between Lagos and Eastern port is down by 30 percent, importers will be attracted to use those ports. “When I mean review of tariff across board, NPA tariff has to come down, NIMASA should review their Cabotage tariff, Customs tariff should also come down so that, people can be motivated. I do not want us to think that addressing security alone will achieve this,” he said. Eastern ports have also been faced with security challenges due to the reoccurring pirate attacks and sea robberies that discouraged oceangoing vessels from accessing those ports. To address this, Ebubeogu said there is need for synergy between NPA and other security agencies to ensure comfort to shipping and prevent host communities from interfering in shipping through piracy and other related crimes. On his part, Jonathan Nicol, president, Shippers Association, Lagos State, said, “Shippers need complete restructuring of maritime sector. We need professionals to take over agencies in the sector. We do not want Federal Government to put tags on the neck of agencies to generate whopping sums as revenue; rather they should be allowed to do their jobs. It is when Nigeria has enough cargo that governments can make more money. We do not want these agencies to enslave people to pay monies they https://www.facebook.com/businessdayng

ought not to. He pointed to the need for Customs to be manned by professionals, who will not be killing people on the high way. “We need a ministry of maritime to enable us pay serious attention to trade facilitation and service delivery in the sector. The National Transport Commission (NTC) is coming to checkmate cost of doing business, and Ministry of transportation is over-loaded. “We also need to bring back our importers, who have taken their businesses to other countries by making our trade platforms simple. Beyond the Presidential Enabling Business Environment Council (PEBEC), government needs to look at Ease of Doing Business. Shippers need a platform to discuss their challenges because government is for the people and by the people. BusinessDay findings show that six years after the expiration of the Destination Inspection (DI) contract formerly handled by private companies, the Federal Government through Customs, has failed to put an end to the collection of 1 percent Comprehensive Inspection Scheme (CIS), introduced at the beginning of the contract, to pay for the scanning services rendered by the DI service providers. By implication, the collection of one percent CIS charge together with the import duty on same cargo, means manufacturers bringing critical production inputs (raw materials) and other importers bringing finished products through the nation’s seaports, presently pay double taxes to Customs. @Businessdayng

At termination of the contract, the scanning machines were handed over to Customs, which till date have not been functional. This because the Customs Service prefers manual and 100 percent physical inspection of cargoes, instead of putting scanning facilities into use to fast track cargo examination at ports as done in other countries. “Today, importers are still paying the one percent CIS charge when the scanning machines that are supposed to go with it, are no longer functional in the ports and border stations,” said Anakebe. While questioning the continuous collection of the charge, he called on the management of Customs to define the purpose and to whom the money is remitted, adding that importers need to know if the monies are paid to government, retained by Customs or given to an unknown DI agent. “They need to scrap the one percent CIS charge because shippers cannot consign a contract with Customs for the job they are trained (and paid) to do. They went through the training school for HS-Code, risk assessment and duty preparation. Customs must as matter of urgency, resuscitate the scanners and put them back into use to fast track cargo clearance at ports,” Nicol said. Meanwhile, the NPA, Lagos State Government and Tolaram Group have been building a $1.5 billion Lekki Deep Seaport at the Epe area of Lagos State. As Nigerians anticipate the completion and take-off of the port, the promoters of the port project must push for the expansion of Lekki-Epe Expressway, Epe-Shagamu Road as well as the development of a functional rail line to ensure smooth movement of cargoes in and out of the port. The promoters also need to push for the establishment of truck and trailer transit parks within the Epe axis to serve as truck holding-bays where electronic call-up system will be used to streamline the number of trucks coming to the port to pick laden containers or drop empties. In addition, Federal Government needs to limit the number of oil tank farms licensed to be situated within the Epe axis while the existing tank farms as well as refineries should use railway or pipeline as alternative means of evacuating products. With the development of this critical infrastructure within the Lekki-Epe axis, Nigeria’s first deep seaport will become a destination hub for transhipment and local cargoes. More so, without recording incidents of traffic congestion that presently obstruct free movement of cargo in and out of Apapa and Tin-Can Island Ports, analysts say.

Thursday 30 May 2019

BUSINESS DAY

FIXING NIGERIA Sectoral challenges

What government needs to do

Aviation

Steady but slow growth, four years after IFEOMA OKEKE

he aviation sector in the last four years has recorded some successes but has also been bedevilled with challenges, making it difficult for the sector to compete favourably in comparison with developed countries. Four years after President Buhari’s first tenure, the aviation industry may not be at a perfect condition stakeholders desire, however, it has sustained some level of growth from what it used to be. Some remarkable achievements include the re-introduction of zero import duties on aircraft engine, introduction of same for spare parts, the removal of Value Added Tax (VAT) from all shared transportation including commercial flights, the timely intervention of Asset Management Corporation of Nigeria (AMCON) to rescue Arik and Aero Airlines, two of Nigeria’s major airlines from total collapse. Other notable achievements include the commissioning of Abuja and Port Harcourt new terminals, the part payment of severance and retirement benefits of former staff of the defunct Nigeria Airways, opening of new routes, increased passenger volume and the certification of Murtala Muhammed International Airport, (MMIA) Ikeja, Lagos and Nnamdi Azikiwe International Airport, Abuja. The present Accident Investigation Bureau (AIB) has also given a better image to the industry than any of the sector’s agencies. Accident reports are released within the standard time and there are reports of follow up on

implementation of safety recommendations. Despite these successes, Nigerians have raised concerns over why the national carrier was suspended after the government had reeled out plans and resources for the project to kick-off. In addition to this, the frequent fire incidents across airports; the laxity of airport security, giving room for activities of drug cartel in airports; the poor condition of scanning machines; absence of Maintenance and Repair Overhaul (MRO) for aircraft, and the absence of refineries for local production of aviation fuel continue to pose great challenges to the sector. Ado Sanusi, managing director of Aero Contractor believes there has been general improvement in the aviation sector, but thinks there are so many things that still need to be done to ensure Nigeria competes globally. “In form of infrastructure, we are not where we are supposed to be but I think there has been movement towards the right direction. In regulation, I think so many things have been achieved and I think we are still not there and a lot of things still need to be done. “In the area of air navigation service provision, there is a huge room for improvement. We are moving towards the right direction and I think the industry is now being looked at as one of the catalyst of growth and if we continue with this trajectory, we will address most of the problems of the sector in the next four years. However, some pertinent issues have been raised by stakeholders that demand urgent attention for the sector to grow at www.businessday.ng

the pace it ought to. Low funding from financial institutions Despite the capital intensive nature of airline business, operators have continued to find it difficult to get financial institutions that can effectively finance the business. According to Sanusi, financial institutions have not supported the industry the way industry expert expect, adding that the country needs to re-engineer the financing of aviation sector because the aviation sector is high risk but low profit, therefore, long-term loans with low interest rates are needed to break even. “There is a lot that needs to be done in financing projects such as hangers, aircraft, MRO and even the support services in aviation. I think most important is the fear of how airlines have gone under in the past. This may be part of the things making financial institutions to be wary in financing the sector. Aviation is very expensive, one aircraft can cost up to 200million dollars. The financial firms have to partner with international companies to finance this sector,” he explained. Multiple landings Some operators have argued that domestic airlines do not necessarily need the international routes to survive if government can reduce the multiple landings given to the foreign airlines to reduce their incursion into the domestic routes and invariably domestic market. John Ojikutu, an aviation security consultant and secretary general of the Aviation Safety Round Table Initiative (ASRTI), told BusinessDay that foreign airlines can be given multiple

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frequencies not multiple destinations and landing. According to Ojikutu, “Ethiopian airline’s multiple landing should be reduced to only two; Lagos or Abuja and any other. British Airways and Virgin Atlantic should decide which out of Abuja or Lagos to fly into but none of the two should fly to Lagos and Abuja as British airways is presently doing. The idea is to create markets for domestic airlines.” Airport concessions Some international airports have seen some improvements through remodelling but experts say they must be put into concession if they must sustain and retain the improvements already recorded. “I am expecting the concession of the airports to begin this year. We do not have any option than this but it must be for only nonaeronautical services. “The concession should include other domestic airports. The concession of Lagos or Abuja airport must each include five other airports. At least 10 airports have been installed with Instrument Landing Systems (ILS), which will improve night flying activities to these airports,” Ojikutu said. Airport perimeter fences/ runway construction Perimeter fences at most of Nigerian airports are very inadequate as security fences. Some airports do not even have perimeter fences, exposing them to unlawful acts against civil aviation. There are many airports that need fences and others that need their perimeter fences enhanced for security. Where this is not possible, secondary fencing may be required as security fence. @Businessdayng

Some airports still lack resilient runways to accommodate heavy-bodied aircrafts. While it is good news that the Enugu runway would be reconstructed and strengthened to carry more weight than it was originally built for, experts say this would require the airport to be closed for a while and could take longer than the Abuja airport, which took six months. National carrier The suspension of the proposed national carrier does not seem to have gone down well with stakeholders who were optimistic Nigeria would again own a carrier that will represent it across the world. However, as Sirika promises that the project will soon kick-off, stakeholders stress that the management and ownership must be private sector driven for it be to sustainable. According to Ojikutu, “I am expecting the national carrier to take off this year, with foreign technical investor partners; 45percent domestic investor, 25 per cent federal government, 10 per cent state government and 20 per cent to the public. Training There are concerns that training may have been lacking for the Nigeria Civil Aviation Authority, (NCAA) to successfully carry out its required oversight in the industry. The agency needs trained and skilled inspectors in a sufficient number. According to Ojikutu, “It is possible most times that the operators have field officer with more experience than NCAA inspectors and that explains why there are safety lapses in operation of some operators and some safety recommendations from accidents are not regularly implemented.

Thursday 30 May 2019

BUSINESS DAY

FIXING NIGERIA Sectoral challenges

What government needs to do

Agriculture

Pressing issues farmers want Buhari to address JOSEPHINE OKOJIE

s President Muhammadu Buhari begins another term of four years, farmers in Africa’s most populous country want him to address a number of problems limiting growth in the agricultural sector. They say that the country’s agricultural performance in the next four years depends on the commitment in addressing issues that have continued to limit farmers’ productivity and the sector’s contribution to growth and development. Farmers who spoke with BusinessDay, stressed the need for irrigation, innovation, single digit interest rate, infrastructure and mechanisation to change the fortunes of Nigeria’s economy through agriculture, with attendant exponential gains by way of earnings, employment, food security and other spin-offs. “We are hopeful of the next level agenda and we want irrigation and mechanisation on our farms to boost productivity,” Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN) said. “We cannot grow our agriculture using hoes and cutlasses anymore. Mechanisation and irrigation are vital if we are going to feed ourselves,” Kabiru said in a phone interview. Agro finance Nigeria’s expectation from its agricultural sector may not be actualised if banks remain unwilling to lend to the sector. Lack of access to adequate finance by farmers and other actors in the sector has remained a major impediment that prevents investments in basic farm inputs needed to raise productivity and sustain growth of the non-oil sector. As a result, yields have failed to increase significantly, leading to pervasive hunger and poverty. Similarly, agro entrepreneurs seeking to build businesses that could boost food production, continue to remain at a subsistent level in the country. “Funding is the biggest problem we have in Nigeria’s agriculture and we need it to put all the factors of production together to drive growth in the sector,” said AfricanFarmer Mogaji, CEO, X-Ray Farms Consulting Limited. “The interest rate on agricultural loans from money deposit banks in the country is unsustainable and no agro business can survive with such interest rate,” noted Mogaji who is the head, agric group, Lagos Chamber of Commerce and Industry (LCCI). Nigeria’s agricultural fundamentals are robust and include an estimated 84 million hectares of arable land out of which only 40 percent is cultivated and only 10 percent of the 40 percent is cultivated optimally.

But with adequate financing, the country can put its 84 million hectares of arable land to productive use, experts say. Inputs Prices of key inputs such as seeds, herbicides, pesticides, fertilisers and agro machinery will be the determinants of food prices in the second half of 2019. In addition, access to adequate, secured and timely supply of quality seeds is also a major hurdle on the nation’s quest to return to its heydays in agriculture. Poor seeds have been identified as the major challenge in crop cultivation for farmers, responsible for recording low yields. Despite efforts of successive government to give farmers access to improved seeds, farmers are still unable to get access to good and quality seedlings. Nigeria’s failure to invest in the seed industry has created a seed gap estimated at N525 billion, leaving farmers’ to low quality inputs that portend danger to crop production and the country’s food-sufficiency target. “Most of the seeds in the market today are imported and this is because we do not produce enough seeds. The research institutes that are mandated to produce improved varieties of seeds are not doing anything,” Abiodun Olorundenro, a farmer told BusinessDay. “There are lots of adulterated seeds in the country today because demand is much higher than supwww.businessday.ng

ply. The level of investments in the industry is low. To bridge the gap, a lot of merchants are importing these seeds for farmers,” he said. Despite the growth recorded in the numbers of seed companies in Nigeria, investments in the subsector is still low as farmers find it difficult to easily access improved seeds and seedlings to cultivate. The total national seed requirements for eight major crops, including maize and rice, in Africa’s most populous country stood at 388,690.64 metric tons (MT) in 2015, while the quantity available was 126,173 MT, leaving a gap of 262,518 MT. Experts in the agricultural sector say that the government needs to prevent the demand-supply gap from widening further to prevent creating a fertile ground for the proliferation of unregistered and incompetent operators who flood the market with fake or poor quality seeds. They explained that legal backing from the National Assembly would empower the National Agricultural Seeds Council (NASC) to carry out its statutory mandate of regulation and supervision of seeds more effectively and seamlessly. To bridge the gaps, experts have called for collaborations between the government and the private sector to drive investments in seed production in the country. The experts also urged the government to create an enabling environment https://www.facebook.com/businessdayng

that will spur investments in seed production while enforcing stronger regulations to protect local investments. Poor research funding Agricultural research institutes operating in the country are proving to be a weak link in Nigeria’s drive for rapid agricultural development. The institutes mandated to develop technologies and practices to improve farmers’ yields and ensure food security, have failed to improve farm output. Stakeholders attribute the inability of agric research institutes to reach their potentials to poor funding and total neglect of the institutions by the government. They say there is need for the government to address this if it wants agriculture to play a leading role in the diversification process. “Less than five percent of the yearly budgetary allocation for agric research institutes goes into core research, while 70 percent goes into salaries and emoluments, with the remaining going into procurements, renovation and overheads,” Baba Yusuf Abubakar, professor of Animal Science, Federal University of Abuja told BusinessDay in a telephone interview. “We cannot conduct effective research which such stipends. Research plays a pivotal role in transforming the agricultural sector and that is why we must take it very seriously,” Abubakar said. Data obtained from the budget@Businessdayng

ary allocation to the agricultural ministry shows that the research institutions got an average of N28 billion ($70 million) yearly in the last four years. Nigeria’s annual spend on its agric research institutes pales in comparison with India’s $2 billion, Brazil’s $1 billion and China’s $700million, BusinessDay findings shows. Despite the size of agriculture in Nigeria in relation to other African nations, the country lags its peers in the sector in terms of research funding. A 2015 ActionAid report shows that Nigeria only invests $0.42 into agric research for every $100 of agric output, as compared to $0.94 and $1.40 in Ghana and Uganda respectively. However, Nigeria has the largest agricultural research system in Africa, in terms of investments and number of researchers, with over 80 government and higher education institutes and over 2,000 researchers engaged in research. Despite these potentials, official fraud limits funds from reaching their points of critical need. Climate Change Extreme weather conditions have continued to impact negatively on Nigeria’s agricultural activities in recent years. The country’s 2018 agric output declined owing to the high volume of rainfall in many parts of the country, resulting in flooding which destroyed farmlands. This reduced the contribution of agric to the country’s GDP and a setback for the Federal Government’s diversification quest. The flooding affected Nigeria’s 2018 rice and sugar cane production among others. According to by the Nigerian Meteorological Agency (NIMET), the rainfall pattern in 2018-posed great risk to farmers in the areas that were affected most by the floods, while urging concerned government ministries to carefully manage the situation. NIMET is yet to give its seasonal weather forecast for 2019. Experts who spoke with BusinessDay have predicted that climate change will play a key role in farmers’ 2019 productivity. The experts says that extreme weather conditions are likely to affect not only the outcome of 2019 farming seasons, but also government’s plans to stop food importation which has been valued at over N1 trillion annually, or at least reduce it to the barest minimum. The extreme weather condition does not only affect crop production, but also livestock production. “The sign of climate change has become evidence daily in our lives and the impact has been massive on the agricultural sector. The weather conditions will affect the quality of crops and the pricing,” said Desmond Majekodunmi, an environmentalist.

Thursday 30 May 2019

BUSINESS DAY

FIXING NIGERIA Sectoral challenges

What government needs to do

Education

Poor teacher quality, funding inadequacies top education challenges Buhari must address KELECHI EWUZIE

he Nigerian education sector in the last four years has no doubt grappled with several challenges which accounted for the huge drawbacks in the process of knowledge impartation and learning outcomes for the sector. Among the drawbacks experienced at various levels of the education sector includes poor teacher quality, funding inadequacies, constricted access to higher education, instability of academic calendars, increasing level of out -of- school children among others. The United Nations Educational, Scientific and Cultural Organization (UNESCO) 2018 statistics puts Nigeria’s over 13 million out-of-school children record as the highest in the world. It highlights the pitiable state of public primary and secondary school education in Africa’s largest economy, characterised by overcrowding in schools, reduced quality of staff, and inadequate facilities. Above all, there is the problem of an absence of an academic standard that will develop pupils to be at par with their counterparts globally. Aside the infrastructural challenges and shortfalls in qualified teachers, poor funding remains a major challenge, as the Federal Government has not spent up to 15 percent of its total budget on education in the last 10 years. The highest allocation so far was in 2008, when it allocated 13 percent. Unlike most developed nations that make huge budgetary allocations to their education sectors, successive administrations in Nigeria have consistently and consciously denied this pivotal sector the needed funds required to groom globally competitive human capital. Industry experts in the field of education have insisted that for there to be any meaningful development in the Nigerian education sector, the government must among other things; ensure adequate funding for the education sector. “The poor budgetary allocation to education by the leadership of the country is disappointing,” said Oyin Egbeyemi, executive administrator, Foreshore School, Ikoyi, Lagos. “Many governors and leaders setting up private schools is indicative that they do not believe in our public education system, or are not willing to make the effort to improve it,” she said. “Careers in education are viewed as the last resort; salaries and incentives for teachers are discouraging; the youth seem to be more focused on acquiring money than acquiring knowledge and sustainability or providing solutions to problems.”

Egbeyemi opines that with this mindset, Nigeria’s education system is not going to move forward adding that as much as it sounds intangible, the Federal Government must in the next four years see education as paramount. Ejike Uchechukwu, an education analyst told BusinessDay that the issue of out-of-school children should be taken seriously, just as any forward-looking country would. He opined that providing millions of Nigerian children access to quality learning resources that promote effective learning not only aids the learning process, the provision of these resources themselves is often enough to entice learners into the classroom. According to him, “Embedding locally relevant and contextualised curricula that suitably prepare learners for a 21st Century globally orientated workforce, helps to guarantee future prosperity for learners”. Uchechukwu suggested that measures should be put in place by managers of education to provide a curriculum running from basic through higher education that will lead students to develop 21st century skills, which make them valuable members of society. On his part, Emmanuel Ibukun, an educationist maintains that to get out of the crisis that basic and secondary education is currently in, Nigeria not only needs to increase enrolment and access, but also needs to go beyond schooling to prioritise learning because schooling is not the same as learning. “Our education system should equip students with the skills they www.businessday.ng

need to lead healthy, productive, and meaningful lives. Our education system should equip students with foundational cognitive skills as well as higher-order cognitive skills such as reasoning, creativity and problemsolving”, he said. For Onyeka Jalobo-Ojigbo, an educationist, “No nation can achieve economic prosperity without a sound and functional education system.” According to her, “A nation develops in relation to its achievement in education” The inconsistency in Nigeria’s education system has remained in the last four years, according to Jalobo-Ojigbo, adding that no new policy that translated into quality education was implemented. She noted nothing was done to accommodate Vocational/Technical education, “in fact there is still no reflection of a good curriculum.” Jalobo-Ojigbo insists education must be well funded by government and public schools need to be adequately equipped with requisite quality infrastructures; only then can the desired change be realised and the goals of education in nation building met. Analysts say it is important to ensure inclusive and equitable quality education at all levels – early childhood, primary, secondary, tertiary and distance education, including technical and vocational training – so that all people may have access to lifelong learning opportunities. This will help them to acquire the knowledge and skills needed to access opportunities to participate fully in society and contribute to sustain-

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able development. Comfort Uyo, a university lecturer is of the opinion that Federal government can achieve success in the education sector as the incumbent embarks on the next four years if managers of the education sector implement the right policies. For example, since the introduction of the Universal Basic Education (UBE), the education sector at primary school is still characterised by poor performance and an increasing number of out-of –school children and one of the major explanations for this is the crisis of funding occasioned by inadequate preparation of the extent to which available resources could last. Again, widespread cases of arrears of unpaid teachers’ salaries - of up to six months in many cases, frequent industrial disputes and strike actions by university teachers as well as shameful cases of primary and secondary school pupils using tree shades as their classrooms are some of the manifestations of poor funding of Nigeria’s education. For Babatunde Oguntona, an educationist, the greatest investment in the education sector that the present government can give Nigerians in the next four years is to encourage development of teachers. According to him, “I strongly believe that only what is required from government is to make available resources that can be used for the training and retraining of teachers so that they can be well equipped with 21st century teaching skills to contribute to the development of students.” @Businessdayng

Oguntona further called on the Federal government to reverse the trend where universities in Nigeria no longer attract the best brains to classes, no thanks to poor motivation, a situation that has seen first class brains being lost to other sectors like banks, Oil and gas, telecom and others. Chukwuka Okonji, a professor affirms that the idea of achieving free and quality education lies hugely on government’s ability to acknowledge the role of education in economic development, this he believes requires buy in of the government in order to jump start, the revival of the educational sector in the country. “Government in the next four years should be able to define the problems of the educational sector in relation to the needs of the economy, society and promote innovations and partnerships that will help to fulfil these needs,” he said. Odion Omofonwan, an education analyst explained that the gross under funding of the educational sector in the country in general, neglecting maintenance of the physical facilities, and living conditions has led to deterioration in many of schools. Classrooms, libraries and laboratories are nothing to write home about, all leading to decline in academic standards. It is the view of stakeholders that the Federal government under the leadership of President Muhammadu Buhari must begin to look at ways to source for funds to focus attention on these problem areas if the nations’ educational system is to make any meaningful growth.

Thursday 30 May 2019

BUSINESS DAY

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Thursday 30 May 2019

Retail &

BUSINESS DAY

consumer business Luxury

Malls

Companies

Deals

Spending Trends

MALLS

Queues for Shoprite bread shrinks on stiff competition BALA AUGIE

here were long queues for bread at Shoprite nearly a decade ago that one would have to squeeze through a crowd of people lined up in a single file like the Amazon anaconda snake. One could also see twitch smiles on the faces of sellers who were clad in immaculate uniform while they attended to customers, but remained focused as the supervisors strolled across the hall More interesting was that the streets were occupied with hawkers selling the staple food to motorists in traffic gridlock However, as other bakers started growing their bakeries, the demand for Shoprite bread began to dwindle, that is to say the retail giant is gradually giving in to competition, an inevitable law of

demand and supply. “When a new product comes out, you will expect demand to be high, but when the product stays in the market for a while, you have had enough of it, and taste fades,” said Usoro Essien, head of Research at Vetiva Capital Ltd. “There are competitions in those places that Shoprite is located as newer and smaller Bakeries are coming up, thereby reducing demand for that location,” said Essien. These days, Nigerian entrepreneurs are starting bakery business with just N50,000 as many people operate the business from their backyards, as they continue to explore new opportunities in a distressed economy. The top five bakers in the country are: Appetizers Delite, Chocolate Royal, Candie Patisseries, Cold Stone Creamery, and Caffe Tranche by Araba. Shoprite Group recorded its worst results in 20 years,

blaming high inflation and a sluggish economy in countries like South Africa and Nigeria for the disappointing results. In Nigeria, the people are yet to recover from a precipitous drop in crude oil price

that stoked a sever dollar scarcity that crippled business activities and tipped the country in its first recession in 25 years. While the introduction of a new foreign exchange policy by the central bank and a re-

bound crude oil price helped the country exist a recession in the fourth quarter of 2017, the vast majority of people continue to wallow in abject poverty. Nigeria has emerged as the country with the highest

number of poor people in the world, overtaking India. According to a report by the Brookings Institution, data from the World Poverty Clock show that Nigeria now has over 87 million people living in poverty. The nation’s economy expanded more slowly in the first quarter of 2019 than it did in the fourth quarter of last year, the National Bureau Statistics said on Monday. The International Monetary Fund had, in its World Economic Outlook Update released in January, revised down the country’s Gross Domestic Product projection for this year to two percent from the 2.3 per cent projected in October 2018. The NBS, in its GDP Report for first quarter of 2019, said the GDP grew by 2.01 per cent in real terms in the first quarter, compared to 2.38 per cent in the fourth quarter of 2018.

consumer spending

How a sluggish economy undermines consumer goods firms BALA AUGIE

he hardest hit from a sluggish economy are the Fast Moving and Consumer G0ods (FMCGs) firms. Low consumer purchasing power, gridlock at the Apapa port, and unreliable power supply are increasing undermining growth, casting a pall on the future of the industry. Sales are receding whilst margins are shrinking, as experts fret that companies could results to downsizing workforce to stay afloat, a bad omen for a country where the vast majority of people are without a job. Nigerian unemployment rate has hit 23.10 percent as of the third of 2018, according to a recent by the National Bureau of Statistis (NBS); and Chris Ngige, minister for Labour and Productivity said the figure would reach 33.50 percent by 2020.

The largest consumer goods firms made N419.14 billion in March 2019, a 3.78 percent reduction from N435 billion realized in 2018, according to data gathered by BusinessDay. Combined net profit dipped by 11.17 percent to N33.02 billion in the period under review. Average net margins fell to 7.07 percent in March 2019,

from 9.17 percent the previous year; this means they are finding difficult to turn each Naira generated in sales into higher profit. Nigerian companies are also feeling the pinch of the tough and unpredictable macroeconomic environment as revenue increased by a mere 5.05 percent to N2.36 trillion in March 2019 from N2.48 trillion as at March

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2018. Combined net margins followed the same slow growth trajectory as it jumped by 4.65 percent to N362.35 billion in the period under review, from N379.22 billion a year ago. Samuel Adewale, a Lagosbased Stockbroker said the 5% growth in total revenue means some companies actually grew volumes instead of prices and even those who raised prices only did marginally. “This could translate into an improvement in the GDP figures when it is released next week,” he said. On the net profit that grew 4.65% at a slower rate to revenue, this suggests that costs either in the form of cost of sales, administrative expenses or finance cost grew during the period. According to Adewale, many companies have complained bitterly about the cost of doing business in Nigeria ranging from the cost

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of raw materials, the notorious Apapa gridlock, which is also reflective in their net margin which remained flat for the period. The PE ratio at a decade low of 7.14x implies that prices of stocks relative to the earnings they are churning is very low. The NSE ASI also declined 8% despite a relatively stable macroeconomic environment and stable crude oil prices and stable exchange rate. “Admittedly the market responded to pre-election jitters, however, it has been two months after the election and the market has not improved,” he said. Morgan Stanley Index is extremely low at 5.40x significantly below frontier index of 10.65x. “A huge claims expense can erode all the gains in subsequent quarters of the year for insurance players,” he said. “Companies in the Energy sector are still not profitable @Businessdayng

some make N200bn-N300bn as revenue and report less than 10bn as PAT, a margin of just 3-5%,” he said. Experts say the President Muhammadu Buhar led administration should formulate policies that will reflate the economy. Also, copious infrastructure bottlenecks hindering companies from thriving should be removed. Nigeria’s economic growth slowed in the first quarter after the oil sector, the country’s biggest foreign-exchange earner, contracted. Gross domestic product in Africa’s largest oil producer expanded by 2.01% in the three months through March from a year earlier, the Abuja-based National Bureau of Statistics said in a report published on its website Monday. That compares with 2.4% expansion in the fourth quarter. The median estimate of five economists surveyed by Bloomberg was for growth of 2.6%.

Thursday 30 May 2019

BUSINESS DAY

Retail &

consumer business consumer spending

Lower price points, rise in internet, drive phone sales in Nigeria amid low consumer purchasing power OLUFIKAYO OWOEYE

he continued economic woes and shrinking wallet have forced phone users in the country to patronise cheap Asian phones. In a report by e-commerce giant, Jumia, titled Nigeria Mobile Report 2019, the availability of lower price point phones remains a major driver of smartphone penetration. According to report, there were over 5 billion unique mobile subscribers across the globe in 2018. Out of this figure, 60percent of the connection was through smartphones, while the number of mobile internet users peaked at 3.6 billion. In Nigeria, there were over 172 million mobile subscribers, accounting for the penetration rate of 87% of the population, representing 6.4percent growth increase, compared to 162 million subscribers in 2017. Over 112 million Nigerians had access to the internet in 2018, representing 56% of the population. This accounted for an increase of 14.32% year-on-year from 2017. At the end of 2018, there were over 36 million smartphone users, representing a penetration of 18.37%. While the number of smartphone users has increased year-on-year, its penetration is still very insignificant. The report also noted that growing internet

connectivity and the availability of affordable smartphones continue to drive an increasing uptake of social media networks. The number of active social media users rose from 17 million in 2017 to 24 million at the end of 2018. This represents a 12% penetration of the country’s population. Currently, 44 percent of mobile subscribers in Nigeria are using 3G technology and 4 per-

cent are using 4G technology as compared to over 18 percent 4G penetration in South Africa and 16 percent in Angola. The Jumia report predicted that the country will contribute 4percent of the estimated 700 million new global mobile subscribers, making it the only country in Africa marked with a significant contribution to increasing mobile penetration in the world.

By this quota, it is expected that 28 million new mobile subscribers will emerge from Nigeria between 2019 and 2025, that is, an average of 7 million new mobile subscribers annually if the country is to meet its quota. The Nigerian phone market has seen Asian brands enjoy massive patronage because of their Africa-specific strategy of introducing a lower price point smartphones into the Nigerian market. In 2018, Fero, Samsung, Nokia, Infinix, and Tecno remained the customers’ favourites and the top-selling mobile brands on the ecommerce platform. The telecommunications and information services a sub-sector of the Information Communications Technology (ICT), contributed 77 percent of the entire sector’s contribution to the GDP, while the mobile telecommunications sub-sector contributed 7.4 percent to the country’s total GDP in 2018, compared to 5.5 percent in 2017. The report further added that Nigeria’s GDP growth leapfrogged from 0.8 percent in 2017 to 1.9 percent at the end of 2018, even though the growth was below the projected 2.3 percent, majorly due to variations in prices of crude oil and its output. The country’s economic growth, for the first time, was hinged on non-oil sectors such as Agriculture, Information and Communications Technology, Manufacturing, and Transport Storage, the report added

consumer spending

How night trading boosts local retailers’ daily sales DAVID IBEMERE

he high cost of getting a shop, economic uncertainty and slow sales are forcing local retailers to embrace night trading in Lagos, Nigeria’s commercial capital. A new exploratory report entitled “Lagos night markets: At night in Lagos, trades too don’t sleep” which was carried out by BusinessDay Research and Intelligence Unit (BRIU), the research arm of BusinessDay shows that local retailers survive low sales during the day through night trading in strategic locations in the state. According to some of the market traders, they trade at night in order to meet up the needs of millions of working class Lagosians who could not shop during the day because of their work schedules. “At the outset, we set the tone of the research by asking some major fundamental questions. To start with, why does this market exist? How big is the Lagos’ night market? What kinds of goods are sold and where are the best locations for night market? Again, what are the socio-economic characteristics of its players? What impact incomes made from night market activities have on poverty alleviation? “, the report stated.

Statistics from the National Bureau of Statistics (NBS) reveals that Nigerians spend an average of 40 hours working in a week, and people still prefer going to buy their items physically as they are yet to fully embrace online retail purchase despite huge online presence. Nigeria currently ranks fourth behind South Africa, Morroco, and Kenya respectively in online retail purchase according to a recent report by the Boston Consulting Group. The night traders strategically chose locations that enhance their visibility, typically roadsides, besides the bus terminals, and railway lines to display their goods ranging from basic needs to non-essential products. The thriving night markets within the metropolis, the report reveals, are located in

Orile Iganmu, Oshodi, Ojuelegba, Abule-Ado, Lagos-Ota Toll Gate, Yaba, Ketu, Maza Maza, among others. Insights from the 32-page report reveal that retailers arrive at the night markets at about 6 pm and trade into the wee hours of the night. Why most of the traders interviewed blamed the worsening economic situations in the country as the reason they engage in the growing night trading, specifically, the traders attributed their participation in the night market activities to astronomical rents being charged by owners of lock-up shops. In the last few years, traditional open markets in Lagos have been demolished to pave the way for modern markets and malls. The effect is that most of the traders displaced from the old markets found it difficult to go back to their former shops because they could not raise the fund to secure the newly built lock-up shops. According to Tomide, one of the traders that featured in the report, she said a large number of people passing through certain paths has prompted traders to stay late into the night because most people arrive late at some of their locations due to heavy traffic, hence they prefer to buy their dinner or other items by the roadsides.

“I have been selling at Ojuelegba for the past 20 years. We sometimes sell late into the night because of low turnover; the motivating factor is the late arrival of workers on their onward journeys to their various homes”, Tomide said. The International Monetary Fund (IMF) in its Working Paper WP/18/17, “Shadow Economies around the World: What Did We Learn Over the Last 20 Years?” defines shadow economy as “All economic activities which are hidden from official authorities for monetary, regulatory, and institutional reasons.” Speaking on the report, Teliat Sule, head of BRIU, noted that the interest in the night market stemmed from the fact that many countries in the world are working hard to unravel the size, players and intricacies surrounding their shadow economies. For Nigeria, Lagos is the largest state economy will be a good starting point. According to him, the report will give better understanding to government agencies on how individuals in Nigeria’s largest state economy, Lagos State, earn their livelihoods. Other information contained in the report will help public officials to have a better understanding of the nation’s ever-expanding shadow economy.

Analyst: Bunmi Bailey Graphics: Fifen Eyemisanre Famous www.businessday.ng

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Thursday 30 May 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Justice administration expected to make positive impact in Lagos State under new administration …Enormous work done to guarantee this, says outgoing AG

Justice administration inWith the advent of a new administration in Lagos State, BusinessDay Law Editor, THEODORA KIO-LAWSON caught up with the immediate past Attorney General and Commissioner for Justice in Lagos State, ADENIJI KAZEEM, SAN to take a retrospective look at the administration of justice system in Lagos State in the last 4 years and what the future of law and justice could be in the state. This interview reveals a scorecard of law reforms, prison and traffic congestion, among various other developments EXCERPTS…

hat has your administration left behind for the new government to work with, with specific regard to law reforms? We brought into effect some major policy thrusts for the people of Lagos State - 14 Bills were passed into law while 12 are currently undergoing drafting process. Also, under our administration, the Ministry of Justice in January, 2017 organised a stakeholders summit themed the “Contemporary Trends: Catalysts for Justice Sector Reform in Lagos State;” where stakeholders from the public and private sector critically brainstormed on the collective ways to review the existing system and to introduce contemporary reforms in the justice system of Lagos State. The report on modalities to implement the proposed reforms has since been forwarded to the appropriate authorities including the National Judicial Service Commission, Chief Judge of Nigeria (CJN), Attorney General of the Federation (AGF) and the Chief Judge of Lagos State for input and contribution. What impact have you recorded with some of these reforms

prevent any person or entity from acquiring legitimate interest and possession of property, to the barest minimum. To this end, we created a Special Taskforce on Land Grabbers, known as the ‘Omo Onile Taskforce’. The mandate of this task force was to rid the state of these notorious land grabbers. Since its establishment, the task force has received several petitions and carried out countless criminal prosecution cases against suspected land grabbers – with several of these cases currently ongoing in different Courts.

and laws? Other than the reform process itself, we understood the critical importance of sensitizing citizens and residents of Lagos about the newly passed laws and so, we created a web portal where all Laws & Regulations of Lagos State are available online. The dedicated web portal is regularly updated with all new laws and regulations and has since the launch recorded an average of 100,000 us-

ers every month and over 10,000 downloads of the laws of Lagos State. Also, we are all witnesses to how the activities of Land Grabbers popularly known as ‘Omo Onile were almost completely stifling commercial activities in the State before we came on board. There was need to check this menace. There was need to eliminate this practice by these miscreants who use force and intimidation to dispossess or

Was your administration successful with any reforms towards the elimination of undue delays and elongated periods with which criminal matters are dealt with? Indeed we were. To deal with this challenge, we had to utilize the Plea Bargain protocol and this has drastically reduced the time spent on criminal cases, as well as the decongestion of courts and prisons. The Plea Bargain Protocol was launched in 2017 with a view to driving quick and effective resolution of criminal cases and in turn decongest the prisons and court dockets.

Tell us more about your effort towards the decongestion of prisons as this is still a huge setback to the administration of justice, not just in Lagos but across the country As part of efforts to overcome prison congestion and ensuring accelerated hearing for minor offences, we facilitated collaboration between the Ministry of Justice and the Prison Fellowship to explore the adoption of restorative justice measures as part of sentencing options for designated relevant offences. With this initiative, which was geared towards the elimination of excessive use of prison sentences for minor offences, we embarked on a pilot scheme to assess the feasibility of Restorative Justice Options rather than imprisonment. Furthermore, the Lagos Criminal Information System also known as Criminal Case Tracking System was initiated in 2018 by this administration. This is a crime data register, which serves as a repository of biometric data of persons that have been in contact with the Criminal Justice System. To date, over 8,000 entries have been captured in the LCIS database in the Prison, Police and within Continues on page 34

New governor of Lagos state to partner NBA-SBL towards 13th annual business law conference

he governor of Lagos State, Babajide Sanwo-Olu has pledged his unalloyed support to the Council of the Nigerian Bar Association Section on Business Law (NBA-SBL) and members of the Conference Planning Committee (CPC) of the 13th Annual Business Law Conference, towards the success of the forthcoming conference. Sanwo-Olu who made this pledge while speaking to a delegation of the NBA-SBL at his office, stated that his government was happy at the possibility of a collaboration with the Section on Business Law. He said, “We would love to partner with the NBA-SBL for value addition to the system and governance process; and also towards achieving global competitiveness.” Sanwo-Olu thus assured the NBA-SBL of the support of Lagos State government towards the success of the conference. Congratulating the governor and his deputy, Dr. Femi Hamzat on their victory at the recently con-

NBA-SBL Chairman in a handshake with Gov- L-R, Endurance Uhumuavbi; Administrator of the NBA-SBL; Chinyere Okoroernor Babajide Sanwo-Olu. cha, Council member; Ayuli Jemide, Vice Chairman of the NBA-SBL; Seni Adio, SAN, Babjide Sanwo-Olu, Governor of Lagos State; Femi Hamzat, deputy governor; Babasola Alokolaro, fund raising committee chair; and Dr cluded general elections, the NBAAdeoye Adefulu, conference planning committee chair during a courtesy SBL Chairman, Seni Adio, SAN call on the governor to brief him on the forthcoming conference in Lagos.

who led the delegation, thanked the duo for their warm reception, expressing hope that the collaboration between the NBA-SBL and the state government will be greatly impactful not only to the state but to members of the NBA Section on Business Law. Other members of the delegation were the Vice Chairman of the NBASBL, Ayuli Jemide; Chairman of the Conference Planning Dr. Adeoye Adefulu; Chairman Fund Raising www.businessday.ng

Sub-Committee, Babasola Alokolaro, Council Member, Chinyere Okorocha and the Section’s Administrator, Endurance Uhumuavbi. Dr. Adefulu informed the governor and his Deputy, Dr. Hamzat of the 2019 theme: “Growth, Investment and Employment: Beyond Rhetoric”, adding that the conference would focus on the factors, steps and actions required to ensure

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economic growth, increased rate of investment and employment in Nigeria. “The role of legal practitioners and the opportunities for business growth and professional capacity development would also form a major thrust of discussions,” he said. Sharing a brief outline of the programme, the Conference Chair stated further, that the Conference @Businessdayng

would be a unique opportunity for the government, multilateral institutions and investors, the private sector to discuss frankly, on strategies to attract the right kind of growth and investment into the Nigerian economy. According to him, there would be a session where discussants would attempt a ‘triage’ on the Nigerian economy, There would also be a debate session on whether sexual harassment in the work place is prevalent in Nigeria; as well as a session on Health, Security and Education (HSE), amongst several others. Expressing the importance of collaborative effort, the Vice Chair of the Section, Ayuli Jemide urged the Governor-elect to identify areas where the NBA-SBL could be of assistance to the Lagos State Government and that the NBA-SBL would be willing to help, particularly in the area of training which he said would hone the skills of Lagos state law officers as well as their capacity for operational efficiency. This, he said, the NBA-SBL would do at no cost.

Thursday 23 May 2019

BUSINESS DAY

LEGALINSIGHT

LegalBusiness

Oil and gas industry indigenous content development law revisited

he impact of the Nigerian Oil and Gas Industry Content Development Act, 2010 (“the Act”) on indigenous participants in the Nigerian Oil and Gas Industry, and on the larger economy especially, remains dismal when compared to the size of the entire oil and gas industry itself. The above development has resulted in the on-going legislative initiatives to amend the Act to achieve more optimal development in the competitive capacity of indigenous participants in the Oil and Gas Industry. The Amendment initiatives also seek to block the inimical loopholes that are currently exploited to undermine the principal objectives of the Act. Some highlights of the provisions of the Act with some of the proposed Amendments to the provisions of the Act are provided in this paper to enable you have a better appreciation and understanding of this subject. New Definition – Nigerian Indigenous Company The Nigerian Oil and Gas Industry Content Development Bill (“the Amendment Bill”) seeks to now de-

indigenous exclusiveness is also reserved for Insurance, Reinsurance, Legal and the employment of junior and intermediate cadre employees.

scribe a Nigerian Company under the Act to be a Nigerian resident incorporated company with its entire shareholders, directors and asset owners made up solely of persons who are of Nigerian descent. This is in contrast with the description in the Act which describes a Nigerian Company as a company incorporated in Nigeria with not less than 51% equity shares held by persons who are of Nigerian descent.

PHOTOFILE

GC POWERLIST GE Africa’s General Counsel, Adesua Dozie (R) receiving a certificate in recognition of GE Africa’s inclusion on the ‘GC Powerlist Africa Teams 2018’. This presentation was made by Sandra Oyewole, Partner, Olajide Oyewole LLP.

First Consideration and Exclusivity The Bill reinstates the provisions of the Act which requires first consideration to be given to Nigerian indigenous operators in the award of Oil Block Licences, Oil Field Licences, Oil Lifting Licences and in all other contract awarding aspects of the Nigerian Oil and Gas Industry. Exclusive consideration is also granted to Nigerian owned indigenous service companies with demonstrable ownership of equipment, qualified personnel and capacity to execute work on land and swamp operating areas of the Nigerian Oil and Gas Industry. Such

Indigenous Content Plan All commercial participants in the Nigerian Oil and Gas Industry are now contemplated in the Amendment Bill to submit a Nigerian Indigenous Content Plan (“the Plan”) which Plan must fulfil the minimum Nigerian Oil and Gas Indigenous content requirements, some of which are enumerated above. The Plan is therefore no longer restricted only to Operators in the Oil and Gas Industry; especially as the Bill has expanded the meaning of “Operator” to include all Oil and Gas participants. Also, all Indigenous Content Plans must be pre-qualified and pre-approved by the Nigerian Content Development and Monitoring Board (“the Board”) using the first consideration, exclusivity and other indigenous content development criteria before any commercial award can occur in the Nigerian Oil and Gas Industry. Content Development Fund In the Act, a sum equal to One Per Cent (1%) of every contract awarded in the upstream of the Oil and Gas Industry must be deducted at source and paid into the Nigerian Content Development Fund (“the

Conclusion Some of the key content development provisions in the Act and in the Amendment Bill, which delegates government indigenous manpower development responsibilities to Oil and Gas Practitioners, who are also required to pay taxes to government, are an illogical long-term strategy. Lopsided legislation by itself will not enable real, competitive, indigenous manpower development in the Oil and Gas Industry, and in the larger economy. The proposal to disburse seventy per cent (70%) of the Fund to private indigenous companies, instead of to specialised government established and funded vocational schools and institutions, will be counterproductive, encourage fraud and corruption.

OSEROGHO & ASSOCIATES

Justice administration expected to make positive... Continued from page 33

the Criminal Justice Administration Sector and this includes their personal, physical and bio-metric details. Also, working towards building a ‘citizen-centric’ criminal justice system for the purpose of ensuring efficient and effective justice delivery, we published and distributed the sentencing guidelines to ensure uniformity of punishments imposed on convicts by all the judges and magistrates handling criminal cases in the state. What other justice sector developments took place dur-

ing your tenure, which in your opinion could bring major changes in the system if maintained or improved upon by the current administration? One of such developments would be the establishment of a DNA Forensic Centre. For us, the DNA forensic centre was another landmark achievement of this administration. The centre, which was set up on the 3rd of May 2017 is of world class standard and the first by any government in Nigeria. Our ultimate aim of setting up the centre was to create an enabling environment for proper investigation, prosecution of crimes, adjudication and the administration of Justice in

WOMEN IN LAW: Brazil Summit Legal 500, in association with BMA, Machado Meyer and Pinheiro Neto, recently hosted an evening at the Women in Law: Brazil summit, celebrating Brazil’s outstanding female lawyers. See some photos from the event here:

R - L: Olasupo Shasore, SAN (Partner, ALP Legal, Chairman of the Nigeria International Advisory Council, CWEIC), Professor Yemi Osinbajo, SAN (Vice President of Nigeria), Alan Gemmell, OBE (Chief Executive, CWEIC), Obinna Anyanwu (CWEIC Country Head – Nigeria) on a recent visit to the office of the Vice President and Chairman, National Economic Council www.businessday.ng

Fund”). In the Amendment Bill to the Act, it is further proposed that not more than 10% of the contributions in the Fund should be spent by the Board on its general and administrative operations. Seventy per cent (70%) of the Fund is to be disbursed to qualified Nigerian Indigenous companies for these companies to undertake in-country capacity development in the oil and gas industry.

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the state. We also set up a viable system for monitoring the prosecution of Sexual offences in the State; a Sexual Offences and Child Justice Unit; an online platform for the Lagos Public Interest Law Partnership (LPILP) to give room for accessibility; a Rapid Tax Prosecution Unit, to support the work of the Lagos State Internal Revenue Service (LIRS); and new courts in Ajegunle and Badagry. Speaking of more developments, in 2018, we designed and created an online platform for the Lagos Public Interest Law Partnership (LPILP) to give room for accessibility. Through the LPILP, we have facilitated easy access to justice by firming out Pro Bono matters to private chambers and Legal Practitioners. The private chambers take up civil/criminal suits on behalf of LASG and defend/ prosecute the said suits for the good of the public free of charge. Would you confidently say that residents of Lagos state currently have unhindered access to justice as a result of the work you have done? With the implementation of all of these initiatives and programmes and our dynamic law reforms, we believe that under the Governor Ambode-Led administration, justice sector in Lagos state gave the people of Lagos greater access to justice. I must however state, that we owe most of our achievements and successes to the cooperation and support received from State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives. Therefore, the current access to justice enjoyed by Lagosians was achieved through collective effort by all of the above.

Thursday 23 May 2019

BUSINESS DAY

PERSPECTIVE with Mofe Tayo-Oyetibo

LegalBusiness

Summary procedure- a new opportunity to save time and money in arbitrations in nigeria

he Need for Speed Since the enactment of the Arbitration and Conciliation Act in 1988 arbitration has increasingly gained prominence and acceptability as a reliable mechanism for the resolution of commercial disputes in Nigeria. In addition to other key characteristics such as party autonomy, confidentiality and flexibility, the speed of arbitration as a dispute resolution process is undoubtedly a decisive factor that has contributed to the growth of arbitration in Nigeria. However, in the last few years, there has been a growing perception that arbitration is not or no longer as speedy a process as it is often made out to be, having regard to the fact that some of the delay factors that have historically plagued litigation have crept into the arbitration process. Whilst this perception is not necessarily true (it is not true), there is never smoke without fire and perhaps the wheel of arbitration in Nigeria is due for some reinvention to reinforce its characteristic as a speedy dispute resolution mechanism. It is against this backdrop that the question of whether arbitrators have the power to make ‘summary awards’ in the nature of summary judgments in litigation becomes relevant. The Summary Judgment Procedure The summary judgment procedure is one that has existed in the procedural rules of trial courts in Nigeria for virtually as long as the courts themselves have been in existence. Essentially, the summary judgment procedure is designed to enable a party, especially in liquidated demand cases, to obtain judgment without the need for a full trial where the other party cannot satisfy the court that it has a good defence to the action and as a result should be allowed to defend it. In UBA v JARGABA (2007) 11 NWLR (PT. 1045) 247 Mohammad, JSC described the procedure as one “… for disposing with dispatch, cases which are virtually uncontested. It also applies to cases where there can be no reasonable doubt that a Plaintiff is entitled to judgment and where it is inexpedient to allow a Defendant to defend for mere purpose of delay. It is for the plain and straight forward, not for the devious and crafty.” Invariably, by virtue of its nature, the summary judgment procedure in litigation is the speediest way of obtaining a meritorious determination of a dispute that ordinarily would be the subject of a plenary trial. A successful application by a party to the court for summary judgment can and will usually have the effect of trimming the lifecycle of a case in court by several years. Consequently, it is a potent procedural tool available to a Claimant in a case where the claim is unassailable. Can an Arbitrator Make a ‘Summary Award’? Generally, the question of whether an arbitrator has the power to make a ‘summary award’ in the nature of a summary judgment in litigation is not one that is settled or has an unequivocal answer either way. In

any particular case, the first point of reference for determining whether an arbitrator can make a summary award will be the arbitration agreement of the parties. In most cases, the arbitration agreement will contain no express provision empowering the arbitrator to make a summary award but on the rare occasion that such a provision or clause exists, the presumption would be that the arbitrator can make a summary award. For instance, in the English case of TRAVIS COAL RESTRUCTURED HOLDINGS LLC V ESSAR GLOBAL FUND LIMITED [2014] EWHC 2510 (Comm), Mr Justice Blair held that the question of whether an arbitrator can make a summary award is a substantive one that depends on the terms of the arbitration agreement and the procedure in fact adopted by the Tribunal. The court reached the conclusion that the arbitral tribunal in that case acted within the scope of its “wide powers”, by virtue of the fact that the arbitration clause provided, inter alia, that: “The arbitrators shall have the discretion to hear and determine at any stage of the arbitration any issue asserted by any party to be dispositive of any claim or counterclaim, in whole or part, in accordance with such procedure as the arbitrators may deem appropriate, and the arbitrators may render an award on such issue.” However, typically, an arbitration agreement will not contain a provision or clause specifically giving an arbitrator the power to make a summary award, which means that in many cases the question of whether this power exists will be determined by the provisions of the law of the arbitration or the applicable procedural rules. In an arbitration under Nigerian law, specifically the Arbitration and Conciliation Act (ACA), there is sufwww.businessday.ng

ficient reason to hold the position that, even in the absence of an express agreement to that effect, an arbitrator has the power to make a summary award where the case is one of the nature in which such an award may be made. In this respect, the power of an arbitral tribunal to make a summary award can be situated within its general powers under section 20(1) of the ACA in respect of the arbitral proceedings. This is because by section 20(1) of the ACA an arbitral tribunal is, subject to any contrary agreement by the parties, empowered to decide whether the proceedings shall be conducted either by holding oral hearings for the presentation of evidence or oral arguments or alternatively on the basis of documents or other materials or both. In addition, pursuant to Article 15(1) of the Arbitration Rules in the First Schedule to the ACA (ACA Rules), the arbitrator is empowered to conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated equally and that at an appropriate stage of the proceedings each party is given a reasonable opportunity to present its case. The phraseology of both section 20(1) of the ACA and 15(1) of the ACA Rules suggest that, subject to the express agreement of the parties, the arbitrator has a wide discretion as to how the arbitration proceedings will be conducted, including as to the making of a summary award in a deserving case. Consequently, although unlike the High Court Rules in litigation, the ACA and ACA Rules have no express provisions empowering arbitrators to make summary awards, in suitable cases arbitrators can make summary awards pursuant to their general pow-

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ers under the ACA and ACA Rules. The interpretation of the arbitrator’s general powers under the ACA and ACA Rules in this way is not at all out of this world, having regard to the fact that a similar interpretation has been given to Article 22 of the International Chamber of Commerce Rules of Arbitration (ICC Rules) in the ICC Note to Parties and Arbitral Tribunals On the Conduct of the Arbitration Under The ICC Rules of Arbitration 2019 (ICC Note). Article 22 of the ICC Rules provides, inter alia, that: The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute. In order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties. The ICC Note provides guidance on Article 22 of the ICC Rules by stating that applications for the expeditious determination of “manifestly unmeritorious claims” may be addressed within the broad scope of that Article and further specifically states at Paragraph 75 that: “Any party may apply to the arbitral tribunal for the expeditious determination of one or more claims or defences, on grounds that such claims or defences are manifestly devoid of merit or fall manifestly outside the arbitral tribunal’s jurisdiction.” For arbitrations under the Lagos State Arbitration Law (LSAL), which provides for the Lagos Court of Arbitration Rules (LCA Rules) as its default arbitration rules and has provisions similar to section 20(1) of the ACA, the ICC Note’s interpretation of the ICC Rules is particularly relevant because of the material and obvious similarities between Article 22 of the ICC Rules and Article 20(1) of the LCA Rules. Article 20(1) of the LCA Rules provides, inter alia, that: “The Arbitral Tribunal, in exercising its discretion, shall conduct the proceedings in a manner that avoids unnecessary delay and expense and provides a fair and efficient process for resolving the parties’ dispute.” It is apparent from the foregoing that, in appropriate cases, avoidable delays can be mitigated, if not eliminated from the arbitration process through the conscious exercise by arbitrators of their wide discretionary powers to make summary awards in the nature of summary judgments in litigation in the conduct of arbitration proceedings under both the ACA and LSAL. In the absence of an express agreement by the parties to the effect that the arbitrator can make a summary award, by adopting a liberal interpretation of the ACA Rules, the benefits of the summary judgment procedure in the litigation process can be applied to the arbitration process, and for good reason. Although there does not appear to be a reported Nigerian case on this specific issue, the decision in the English case of TRAVIS COAL RESTRUCTURED HOLDINGS LLC V ESSAR GLOBAL FUND LIMITED and the liberal interpretation given to Article 22 of the ICC Rules provide the basis for an irresistible argument for the introduction of such an innova@Businessdayng

tion in arbitrations conducted under the ACA and LCA Rules. Notwithstanding the foregoing, there is no doubt that the absence of express provisions in the relevant arbitration agreement, applicable law or procedural rules empowering arbitrators to make summary awards leaves room for significant debate and inevitable doubt as to whether arbitrators can make such awards. These reservations are fueled by the fact that certain provisions in both the LCA and ACA Rules appear to mandatorily require arbitrators to hold a hearing if any of the parties so requests. As a result, there is the significant likelihood that arbitrators may be continue to be reluctant to make summary awards under the ACA and LCA Rules for the fear that such awards may ultimately be unenforceable in the courts. At the international level, in the face of the need to restore the characteristic speediness of arbitrations, such considerations perhaps influenced the amendment of international arbitration rules such as those of the Singapore International Arbitration Centre and Arbitration Institute of the Stockholm Chamber of Commerce to include express provisions for summary procedures. Looking Forward Certainly, these converse issues reflect the practical reality of the arbitration process in Nigeria and are undeniable reasons to believe that there are possible inherent enforcement risks in an arbitrator making an award on the basis of a summary application. However, for contracting parties for whom speed in the arbitral process is an overriding consideration, it may be useful to consider the express inclusion of summary procedure as an option at the time of preparing the arbitration agreement. Generally speaking, for arbitration in Nigeria to seize back its glory as a faster and consequently cheaper commercial dispute resolution process than litigation, there is no doubt that two important things need to occur. Firstly, there is the need to amend the LCA and ACA Rules to include summary procedures, which should be done without much delay. Secondly and in any case, arbitrators should be more readily disposed to exercising their wide discretionary case management powers to consider summary applications and make summary awards in deserving cases. No doubt, it is not in every case that a summary award is appropriate or may be made. However, the availability of such a procedure in commercial arbitration will certainly enhance the ability of arbitrators to expedite the completion of arbitrations where it is clear that a full hearing will achieve no better purpose than delay the expeditious resolution of the dispute. MOFESOMO TAYO-OYETIBO, ACIArb is an experienced commercial dispute resolution lawyer and the Managing Counsel of the law firm of Twelve Legal.

MOFES OMO TAYO-OYETIBO, ACIArb is an experienced commercial dispute resolution lawyer and the Managing Counsel of the law firm of Twelve Legal.

Thursday 30 May 2019

BUSINESS DAY

GARDEN CITYBUSINESS DIGEST

NEPC positions south-south youth entrepreneurs on export promotion ...42 trainees primed in PH on diversification through export IGNATIUS CHUKWU & SAM ESOGWA

bout 42 entrepreneurs persons from the South-South geo-political zone have benefited from the ‘Zero to Export’ training series organized by the Nigerian Export Promotion Council (NEPC). The scheme seeks to grow people with zero background in export business to become exporters. The 42 persons trained in the South-South received their certificates of participation last week Thursday at a graduation ceremony held at Aldgate Hotel, Sani Abacha Road, Port Harcourt. Experts who assessed them said Port Harcourt was ready to storm the export business. NEPC management said the south-south offered special interest to the council because of the need to prove that beyond oil, the zone was capable of other aspects of the economy. Addressing the graduands during the ceremony, executive director and CEO of Nigerian Export Promotion Council, Segun Awolowo, urged them

L-R: Kolawole Awe (consultant), Joe Itah (deputy director, corporate communications), Pauline Ndulaka (assistant director).

to apply the knowledge they acquired during the training towards the quest for diversification of Nigeria’s economy by exploring the export business. The CEO who was represented by Joe Itah, deputy director, corporate communications, said NEPC would continue to create opportunities for Nigerians to imbibe the culture of exportation through capacity-building training programmes as it celebrated the passing out of 42 trainees of

PORT HARCOURT BY BOAT

IGNATIUS CHUKWU

or most of last week, the executive chairman of the Rivers State Internal Revenue Service (RIRS), Adoage Norteh, and some of his top team members held engagement series with different professional bodies and trades groups in the informal sector. Journalists covering the sessions realised that the mindset of the executive chairman at the onset may have been enhanced as events developed, all due to diverse information garnered and gleaned from the interactions as the days wore on. Most government policy makers and implementers usually sit in their cosy offices and call for memos with which they build policies and regulations plus implementation guidelines. At most, they invite ‘experts’ to submit papers from which they pick few points. Policy is ready. Action follows. This is most so in tax matters where the bosses seem to have fixed notions. It is in the field that things run into hitches. Of course, they will ram the policy through and blame the hitches on the masses, the targets or the opposition. This seems not same with this

‘Zero to Export’ Capacity Building Programme’. Awolowo said that the Zero to Export Programme had been part of the Council’s efforts to reposition the non-oil sector, enforcing the narrative of the Council through job creation and inclusive growth – thereby making it a major contributor to the Gross Domestic Product of Nigeria. He assured the graduates that, “NEPC will continue to encourage Nigerians to take

advantage of the diversification process of the Federal Government through the promotion of non-oil export activities”. According to him, “Zero to Export programme is an effective tool of introducing companies into the export business, because NEPC recognized the fact that many companies desired to go into the export business but lack the capacity and skill to embark on the business successfully”. The Council announced a

provision of N500,000 to the Co-operative Society formed by participants of the graduating batch as seed capital. The programme is anchored on a Public Private Partnership (PPP) arrangement led by the consultant, Kola Awe, of EPT Logistics International Limited. The South-South (Niger Delta) zone in particular is said to be of particular importance to the development and promotion of non-oil export as a major contributor to Nigeria’s GDP, NEPC stated. “If nothing, but to show that apart from oil there are other products that Nigeria can rely upon to grow her economy. “So far the programme has trained and graduated over 200 trainees from the Lagos, Port Harcourt and Abuja centres. Most of the trainees have formed registered Cooperatives, and are already exporting. Earlier in her opening remark, Pauline Ndulaka, who represented the Regional Coordinator, South-South, said the Zero to Export programme of NEPC was meant to create a pool of investors. She urged the graduands to effectively utilize

the knowledge they acquired. Congratulating the participants, the Project Coordinator, Kola Awe, urged them to dig deep and bring what they learnt. “Port Harcourt has shown itself to be ready for export. Port Harcourt is the flagship of the South-South,” he added. Emmanuel Nwankwo, who represented the permanent secretary, Rivers State Ministry of Commerce, assured the participants of adequate Cooperative Society grooming by the Ministry which he said would improve their skills. Nwankwo revealed that the Ministry of Commerce, which he said is SME-friendly, would soon open an SME Clinic in the state. Most of the participants expressed gratitude to the NEPC. Abraham Princewill Chibueze, who served as course representative during the training, described the programme as essential and eye-opening, adding that they were taught how to start the export business and use it to improve their lives while also contributing to the diversification of Nigeria’s economy.

Tax drive: Small sense that may become big sense RIRS boss. The Rivers State Government had desired to roll out a tax drive in the informal sector over the years but the climate seemed not right, until now. Now, the Service did its home work and got set to roll out the drive; a set of taxes operators in the informal sector would pay. The essence is to expand the tax net of the state in both the formal and informal sectors with the hope to probably double the internally generated revenue (IGR) base of the state which at the moment is said to be about N10Bn per month, up from about N6.5Bn that Norteh may have met in 2017. Just when everything seemed set from official point of view, Norteh, perhaps the only man that knows how to be both jovial and strict at the same time, paused to do one more thing; to meet with various informal sector groups first. To him, it was just to inform them of what the RIRS was about to do, educate them on the modalities, and probably make it clear the difference between professional tax collection and touting going on all over the place. He may have felt that with some thorough education and explanations, it would be all. He particularly wanted to change the orientation in the state where traders and artisans paid whatever tax they cared to pay through unions who also demanded or commission. He felt the tax collector had been pushed out of his professional duty and its time to change all of that; just with some education. Northing yet distorted this notion www.businessday.ng

‘‘

RIRS Boss, Adoage Norteh

when he started with lawyers, then other professional groups such as medical doctors, chartered accountants, estate managers, surveyors, builders, engineers, etc. These ones toned down their rhetoric and observations. When this got down to the days for traders, artisans, pool agents, etc, the language assumed swifter tone and a bit militant. Despite the tone, Norteh seemed to find something good; raw idea of what is wrong and how to solve it. The likes of Melford Don Pedro (President, Pools Agents Associations) and Egberi Odiri Mackson of the Table Water Producers Association spared no jabs in pouring their emotions. Some showed readiness for fisticuffs. The tax master usually bears the brunt of anger aimed at political leaders that spend the tax. The tax payer is an angry man any where, any day. Within the groups, the likes of Ihen-

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He particularly wanted to change the orientation in the state where traders and artisans paid whatever tax they cared to pay through unions who also demanded or commission

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nacho Hyacinth, an engineer and computer association chairman, who is the CEO of MODODAS Advanced Technologies Ltd, and Emeka Onyekwum, President, Pillars of Association, tried to balance the perspectives. They proved that a meeting would solve many problems; database especially and confidentialities. The major thing being pointed out was the need to create a platform to look at all the things that usually make such taxes and drives to fail or result to violence and how to sidestep them and still harvest taxes. Some gave hints of huge sums likely ahead, if… Norteh began to hear the voices of real field marshals in tax collection and grassroots understanding. He could do with some raw insight without surrendering the right to determine rates and collecting them to anybody. He promised to set up a committee where the suggestions would be reviewed and more ideas added to create a pool of intelligence and ideas and a better approach. Tension crashed and happiness spread round. Why? Just because of the hope for a place to meet. Should this approach be well explored, the dreaded informal sector tax drive may rather turn to a good experience. It may also create access to the womb of the informal sector and a chance for government to resolve the numerous disputes, crisis and intrusions into the leadership of most markets and traders unions. This ‘little’ sense may develop into ‘big’ sense.

Thursday 30 May 2019

BUSINESS DAY

Investing in Rivers State Shell says spent N17Bn in infrastructure in Rivers Stories by Ignatius Chukwu

he Shell Petroleum Development Company of Nigeria Ltd (SPDC) has spent a total of N17Bn on the Global Memorandum of Understanding (GMoU) clusters in Rivers State, giving communities a highly valued opportunity to decide and implement projects and programmes that have a lasting impact on people’s lives. The funding, since the GMoU concept took off in 2006, has enabled the 19 clusters in Rivers State to embark on projects covering health, education, water and power supply improvement, sanitation and infrastructure development. Under the terms of the GMoU, SPDC and its joint venture partners provide secure five-year funding for communities to implement development projects of their choice, which are managed by Cluster Development Boards under the guidance of mentoring NGOs. Currently there are 39 active GMoU clusters in Rivers, Delta, Bayelsa and Abia States and since inception in 2006 a total of $239 million (N44.36 billion) has been disbursed to these clusters to fund development projects. “The success of the GMoU initiative has proved what could be achieved when government, international oil companies, communities

L-R: Chidube Nnene-Anochie (GM, Safety and Environment, SPDC), Igo Weli (GM, External Relations), Gloria Udoh (Manager, Social Investment), and Vincent Nwabueze (Manager, Ogoni Restoration Project) presenting Shell Report 2019 in Port harcourt.

and NGOs worked together for the common good.,” said SPDC’s General Manager, External Relations, Igo Weli at a presentation of the 2019 edition of the Shell in Nigeria Briefing Notes to journalists in Port Harcourt on Friday. Shell in Nigeria Briefing Notes is an annual publication detailing the activities of the business interests of the global energy giant in Nigeria covering SPDC, Shell Nigeria Exploration and Production Company, and Shell Nigeria Gas. On another level of social investment in Rivers State, Weli listed the Community Health Insurance Scheme (CHIS), which was established in 2010 in partnership with

the Rivers State Government, as an SPDC JV flagship project that delivers affordable integrated health care to beneficiaries. Clients in the scheme pay N10,000 per annum which covers about 95% of the people’s primary and secondary health care needs including child birth, seizure disorders, diabetic and ophthalmic care at the Obio Cottage Hospital. “10 other hospitals in Rivers State also enjoyed ‘robust health intervention scheme by SPDC JV.” In education, he cited the establishment of the first centre of excellence in Marine Engineering and Offshore Technology at Rivers State University in Port Harcourt established in 2017 which runs an

18-month Master’s and Diploma programmes in Marine Engineering, Naval Architecture as well as Offshore and Subsea Engineering. This, he said, was in addition to the many SPDC JV scholarship schemes which date back to the 1950s. In enterprise development, SPDC JV has trained more than 460 young men and women from Rivers State under the Shell LiveWIRE programme between 2013 and 2018. The Shell LiveWIRE programme was introduced in 2003 to help young entrepreneurs to convert their bright ideas into sustainable businesses, creating wider employment and income opportunities for communities. LiveWIRE was extended to Ogoniland in 2014, with the objective of raising living standards and reducing crude oil theft through the promotion of sustainable alternative livelihoods. Supporting Ogoni youths in sustainable alternative livelihoods is in line with one of the recommendations of the 2011 United Nations Environmental Programme (UNEP) Report for the restoration of the Ogoni environment. In 2018, 100 Ogoni youths from communities near the Trans Nigeria Pipeline participated in training with 80 top performing trainees receiving business start-up funding totalling more than $90,000 (N27.27 million). To date, the LiveWIRE programme has trained 7,072 Niger Delta youths in enterprise development and provided business

start-up grants to 3,817. To mark Nigeria’s centenary anniversary, SPDC and its JV parties donated a modern public library to the Port Harcourt Literary Society in November 2016. Equipped with books, internet access and reliable power supply, the library to which SPDC contributed around $5 million (N1.58 billion), has continued to deliver significant benefits to many residents of Port Harcourt. On the general development of the Niger Delta, Weli noted that between inception of the Niger Delta Development Commission in 2002 and the end of 2018, Shell companies alone contributed N375.16Bn to the commission for the purpose of facilitating the rapid, even and sustainable development of the Niger Delta region into an area that is economically prosperous, socially stable, ecologically regenerative and politically peaceful. He said, “We’re proud of our extensive social investment footprints in Rivers State, which in some cases even stretch beyond the SPDC joint venture. He noted that the responsibility for the development of communities, societies or states resides primarily with government and community stakeholders themselves. “It stands to reason therefore that abdicating that responsibility for development to the private sector either fully or substantially is, in my assessment, one of the key issues militating against sustainable development not just of Rivers State but of the Niger Delta.”

Port Harcourt City Chambers flags off quarterly business forum series • Explores business linkages to create value to companies

he plans by Nabil Saleh to push the Port Harcourt Chamber of Commerce, Industry, mines and Agriculture (PHCCIMA), to world-class city chamber status may be rearing their heads to reality. This is measured by the excitements of the first quarterly business forum which was held on Thursday 23rd of May 2019. The event witnessed top-notch value addition, eye-opening expositions, quality networking, strategic business linkages, key presentations, the unveiling of the PHCCIMA App and membership portal and presence of high profile personalities, government agencies and corporate entities. Reading his welcome address, the chief who took over late last year with high expectations within the organised private sector said; “The event is not just in fulfillment of one of the requirements of the constitution, but also provides an opportunity for interaction and networking between members, agencies, regulators, government officials and other members of OPS”. The event dwelt on ways of “Enhancing Members Operational Business Strategies: Imperatives for Higher Productivity”. According to him, the Quarterly Business Forum will not only provide one of the benefits of being a PHCCIMA member, but the theme is a topical subject that would increase the business performance and opportunities for all present and grow the economy of Rivers State.

He said for the members to remain relevant and profitable in their businesses, they must continue to update their knowledge; and appreciated the presence of key presenters, federal agencies, regulators and valued members. He added that together the members would continue to explore ways and methods to grow businesses, eradicate poverty and unemployment. In her remark, the outgoing Rivers State Commissioner for Commerce and Industry, Nancy Nwankwo, represented by a director of special duties in the ministry, Paul Dorgba, commended PHCCIMA for organiz-

ing such a high profile event that would add value to its members and the business community in the state. He assured that the ministry would continue to collaborate with PHCCIMA to ensure that businesses thrive while ensuring that the Governor Nyesom Wike administration sustains the momentum in entrenching a business-friendly environment. In his presentation titled: ‘Government Reforms And Ease of Doing Business In Nigeria’, the Executive Secretary of Nigeria Investment Promotion Commission (NIPC), Yewande Sadiku, who was represented by a director in the Commission,

R-L: Nabil Saleh (president), Oriaku Oyet-ille (financial secretary), Mercy Abu (publicity secretary), Chineyere Nwoga (2nd vice president), Lola Afolabi (council member) Mike Elechi (1st deputy president). www.businessday.ng

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Aminu Takuma, said the NIPC was established since 1995 to encourage, promote and coordinate investments in Nigeria. She disclosed that the Commission houses 27 agencies to facilitate investments and reduce the time required to process regulatory approvals and permits, provides assistance with information and requirements from incorporation to expansion and also supports with business visa facilitation. The executive secretary commended the Saleh-led administration for providing space at the one-stopshop for NIPC, saying in the southsouth NIPC is only domiciled in Edo State, but the belief is that Rivers State is more vibrant, central and with more potentials. He frowned at the Bureau of Statistics projection that Bayelsa and Rivers are among the highest poverty-ridden states in the country despite their potentials; adding that Rivers State has the potential to be the greatest economic hub if she is willing to drive the various process. Speaking on the theme of the day titled: ‘Enhancing Members Operational Business Strategies: Imperatives for Higher Productivity’, the professor, Vincent Anigbogu, a consultant with ROI Institute and Director-General for the Institute for National Transformation, quoted Lee Kuan Yew of Singapore in how he made his country to pursue advantages in making businesses operate from Singapore. @Businessdayng

While the principle of business success lies in the development of competent workers, he said a lot of people invest in their business but had persistently failed to invest in training staff that would be central to achieving their business objective. He identified ‘time’ as very important for higher productivity and the prospect of doing the right thing at the right time efficiently. Speaking on the ROI methodology, he identified six types of measures: Reaction and Planned Action, Learning, Application, Business Impact, Return on Investment, Intangible measures including a technique to isolate the effects of the programme or solution. He said The ROI Methodology has been adopted by hundreds of organizations in manufacturing, service, nonprofit, and government settings in over 50 countries. According to him, the process has been refined over a 20-year period; over 60 books have been developed to support the process; adopted as UN impact measurement tool for over 10 years. The highlight of the event was the launching of PHCCIMA APP, Membership Portal and e-ID Card by the past president, Vincent Furo. There were also presentations by Sponsors of the event, Goddy Chemical International Limited, Valia Galleries, GGI Int’l Limited, Skysat Technologies Nigeria Limited.

Thursday 30 May 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Children’s Day, Nigeria….

How can corporate interventions spur govt to greater responsibility? ONUWA LUCKY JOSEPH

here ought to be more poignancy around Children’s Day commemoration in Nigeria than is seen in most other parts of the world. The reasons for this are obvious and numerous as well. Besieged on every side by some sad reality or the other, it’s a wonder that the Nigerian child makes it out of childhood and, for a lot of them, into fairly balanced adulthood. According to someone who should know, Hammid Bobboyi, the Executive Secretary of Universal Basic Education Commission, UBEC, Nigeria now has 13.2 million out of school children, the largest in the world. (Sigh). These out of school kids are for the most part hawking or idle or involved in vices inappropriate for any age but more so for individuals of such tender years. These underage commercial hawkers are in their millions and they are everywhere in Nigeria, with some of them doing it full time, while for others it’s a part time vocation to help their parents make ends meet. In doing this, many a child has been raped, abused in other ways physical and emotional and with some paying the ultimate sacrifice with their young lives, case in point being the ritual murder occurrences that happen all over Nigeria and with children being the preferred targets. Add to this the number of children felled daily by preventable diseases. Many parents do not bother with taking their kids to hospitals because even when the costs are not exactly expensive, it is still prohibitive and well out of reach for poor parents and guardians, many of whom have no wage to talk about, let alone minimum wage. It is largely for this reason that Nigeria contributes a whopping 27% of global malaria cases, other notable ailments being Pneumonia, Tuberculosis, Diarrhoea, Meningitis, etc. The national burden of poverty is borne mostly by kids. It is the ultimate slayer of innocence. It brings in stark relief the blunt reality of a discombobulated world where nothing exactly makes sense. Kids are privy in a very intimate way to the struggles of their parents, some of whom still make the effort, and some of whom have long given up on any hope of any kind of good life. The parents’ frustration is vented on these hapless kids who can now no longer make any connection between the fairy tales they are told in the storybooks, the seeming fairytales they see on TV from life as lived in other countries, and the reality that stares them in the face every day. These have become adults, bearing adult burdens while they are yet, figuratively speaking, in their diapers. And how many Nigerian children have been eye witnesses to armed robberies, to kidnappings, to ritual murders, to armed conflicts, to vehicular accidents, to suicides, etc. Currently trending, for instance, is the story of an undergraduate who hacked an 8 year

old girl, daughter of his neighbour, for body parts. So traumatized are these kids that some of them have become the perpetrators of the most heinous crimes. And can we honestly say that the drug epidemic in Nigeria came out of nowhere? It so happened that some of our children, having not much to look forward to, chanced on a high, or got introduced to a high. And now they will listen to no one until Mr/Mrs Moralist can point them to something as good or better than the high they are being asked to forsake. It’s not difficult to sermonize and to rattle off the dos and don’ts. But the question that leaves folks stumped is “what do you have for me?” The story will yet be told some years hence by sociologists and psychologists currently not doing what they are trained to do as to how Nigerian kids got stuck on a cloud, and happily drift with it day and night. What are the root causes? What is stoking the fire? The answers might seem obvious, like we just tried to provide, but it might surprise us how deep they are and for how long they’ve been tunneling through our collective psyche

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and imprinting themselves on our sub conscious. But isn’t it a mystery how Nigerian children, despite the deprivation they are accustomed to still end up on top of the pile everywhere they go? Now this is not just the patriot in me speaking. We just blow everyone away everywhere we go. Only two weeks ago, there was the well reported story of a Nigerian child, Tobechukwu Philips who shattered a 125 year academic record in the United States if America. We are just like that, you know. Someone might say that she did that because she isn’t resident here and so not subject to the stress that kinfolk her age have to face every day. Not quite true, that, because a lot of young Nigerians still leave these shores having faced all of our issues head on and still end up exceling wherever they go. And they are going! Which is something we should find alarming! The good life is not here. It’s anywhere else but here. Just ask the kids. So at whatever level they are they have plans for ‘the abroad’ wherever that is, be it Kyrgyzstan, Kazakhstan, Afghanistan, Libya, India, not to mention Canada, USA, UK,

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Germany, France, wherever. The not so educated are leaving. The educated are leaving. The Labour Minister, Dr. Chris Ngige, caused an uproar recently, when he said with respect to Nigerian doctors migrating abroad, that ‘we have a surplus in the medical profession in our country. I can tell you this. It is my area, we have excess. We have enough, more than enough, quote me’. Does he really live here, one is tempted to ask. Today, it is the case that many a parent is working hard to relocate their kids abroad. Anyone making what’s considered a decent living wants their kids out of here. That can’t be good in the long run. We can’t run down the country and expect that the kids would live in uncertainty in perpetuity. No, they won’t. It’s not in human nature to not self preserve. And for those who have gone abroad to return to the chaos, their mind having been bludgeoned with the unending problems that spring up from every inch of Nigerian soil, they would just rather not, thank you! And what is the Nigerian government doing? Oh, every Children’s Day and other some such days, the govern-

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ment reels out its stale tales by moonlight promises, to deceive the ‘leaders of tomorrow’, just in the same way that they are deceiving their fathers and mothers. Despite the promises, you can be sure that there will be no power next year and the year after that, on and on. You are sure there will be bad roads nationwide as there have been from before the kids were born. You can be sure that there will be schools without roofs, without teachers, without blackboards and whiteboards and without chairs. You can be sure that thousands of kids will die of preventable and curable diseases. You can be sure that government says what it says knowing that it will say the same things next year and the year thereafter, on and on. Corporates are not always the saviours that we crave, self-interest being a prime constituent of their makeup. That is a fact that’s not at variance with what should be. But their nation building role is becoming increasingly important. Even when the children may not look up to them for salvation it is heartwarming that corporates understand that they have a duty to their stakeholders, of which the kids will become increasingly important as the years go by. They constitute, if nothing else, the bulk of the labour pool. They will constitute the bulk of Nigeria’s future armed forces, police, bankers, journalists, lawyers, accountants, builders, architects, sportspeople, politicians, civil servants, and civil society activists. As secondary enablers, so to speak, one must commend the numerous corporate organisations that are backing our kids with scholarship awards, grants, employment, mentoring, volunteering, clinics, not to mention critical interventions like payment of hospital bills for indigent folks, rehabilitation for miscreants and deviants, shelter for the homeless, and welfare input into IDP Camps to help our internally displaced kids live a little easier. Corporates are clearly hamstrung as they are not and cannot be government. However, it is important that in realizing the critical roles these kids will play in the long run, that they ratchet up the pressure on governments at all levels to live up to their primary responsibility of being net enablers of a better society as well as providers for children to whom they swore under oath to provide for and look after. Corporates might be able to do more in this regard even if it now seems like uncharted territory. Seeing as individuals have been unable to get our governments to budge, corporates should take up the challenge of pointing the government to its responsibility. And the better way is when Organised Private Sector gets together to not just mull over short term consequences of government policies but also the long term ones. Profit won’t be the main item on that agenda. It would be about sustainability of the Nigerian enterprise which as it thrives can provide the umbrella under which individual enterprises can blossom and flourish. Long live the Nigerian Child!

Thursday 30 May 2019

BUSINESS DAY

Corporate Social Impact

Maternity/Paternity Leave

Meadow Hall Foundation inspires six teachers with N5.2m

Guinness does good by its women, and its men too ONUWA LUCKY JOSEPH

uinness Nigeria Plc is leading the charge towards making the workplace as warm and as cozy as the home place. And in doing this, the company has taken the unprecedented step of giving its female staff 26 weeks leave with full pay while its male staff whose better half are pregnant now get four weeks leave, fully paid. Wow! That’s a whole beautiful lot to look forward to. As it now stands, of the commotion that happens around pregnancy time will pipe down considerably amongst members of the Guinness family. The women are henceforth challenged, even more than before, to put in their best for the company before putting to bed, knowing what great sacrifice the company is making to ensure they have enough time to recover from the stress of pregnancy and delivery and also a lot more time than was hitherto the case to bond with their newborn kids. It’s a huge plus for advocates of women’s rights in the workplace. And while this may not have met all their expectations, it is truly unprecedented. This is clearly an improvement on what Access Bank started in 2018 when it granted its male staff one week fully paid leave to be with their new kids. The expectation at the time was that Access would equally increase the period for maternity leave. It didn’t. Guinness has raised the bar quite high. And it’s a good thing if other

corporates consider this the new benchmark that they must strive to match and if possible surpass. The company says this new HR policy is about inclusion and its keen sensitivity to the needs of its diverse workforce where barriers to career progression are removed and talent is retained and nurtured. Baker Magunda, Guinness Managing Director, said, “We are committed to our focus on inclusion and diversity, and this takes various forms – from supporting and empowering graduates and female leaders within the business to this parental leave policy change. We believe it is a truly forward looking decision to accelerate our work in equality for employees and their families.” Bola Olajomi-Otubu, the company’s Human Resources Director, also noted with delight that “it

is a pleasure to be a part of the team facilitating this change in the business. Parental leave gives both mothers and fathers the chance to spend quality time with their child in the important first months of life, creating a bond that will last a lifetime. Employers can reap the benefits too – flexibility in work is proven to create happier, more loyal and more productive workforces.” The company said and it is clear to see that its commitment to championing diversity and inclusion across its business is driven at the very highest level. Women currently make up 30% of the Board and 45% of the executive leadership team. These efforts are supported by a range of dedicated employee networks such as the Guinness Nigeria Spirited Women’s network; creating opportunities for women not just within the business, but in the wider society. The company says it is proud (deservedly so, we might add), to have received many ‘Great Place to Work’ Awards; most recent one being the 2018 ‘Great Place To Work’ Master Awards Hall of Fame. ‘Big ups’ to Guinness. Let’s see more companies equal this new standard or go one better.

Buhari Challenges Wealthy Nigerians to Invest in Critical Sectors

riday, May 24th 2019, President Muhammadu Buhari hosted top businessmen to Iftar (breaking of the day’s Ramadan fast) at the State House in Abuja. And he used the opportunity to encourage businessmen to invest in what he called critical areas of the economy. What areas are those, exactly? Not stated; but one would imagine power, health, infrastructure, etc. The other thing not stated is that wealthy Nigerians don’t see those sectors as exactly worth their while. It is the president’s belief that if this is done, there will be massive job generation and consequently, wealth creation. So why are the big hitters not hitting this supposedly sweet spot of the economy? That should be the question. Truth be told, this administration has not been good for business. A lot of businessmen and women will tell you that without much prompting. The high decibel war on corruption has been more noise and

President Buhari

more of a disincentive in the sense that most businesses have become chop spots for the EFCC and other anti-corruption agencies. Rather than tackle actual corruption cases, businessmen particularly those toeing the straight and narrow have been subjected to undue grilling www.businessday.ng

that have left businesses unable to function optimally. The president needs to allow businesses function, whether these businesspeople are openly supportive of the party in power or not. Bolstering the economy is what should be of prime consideration.

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he Meadow Hall Foundation (MHF), recently lit up the lives of six teaches who it believes have been sources of inspiration to their students and the wider community, during the third edition of its Inspirational Educator Awards (INSEA) and Education Convention held in Lagos recently. Cash awards were presented to the six winners as follows: N1,250,000 to Mrs. Akinbami Modupe Adebola as the winner of the Inspirational School Leader of the year; N1,250,000 to Mrs. Charity Tony-Ubah also as the winner of the Inspirational School Leader of the year; N500,000 to Mr. Tajudeen Ayofe Amusan as the runner-up of the Inspirational School Leader of the year; N850,000 to Mr. Soji Megbowon as the winners of the Inspirational Teacher of the year; N850,000 to Mr.

Lanre Abolaji Oguntoye also as the winner of the Inspirational Teacher of the year; and N500,000 to Mr. Olusegun Michael Adeniyi as the runner-up of the Inspirational Teacher of the year. The INSEA is a merit-based annual award aimed at elevating the teaching profession and motivating teachers and school leaders to continue to strive for excellence in their profession. The award is open to teachers in Nigeria who teach in public or private schools (primary or secondary) and participation is free. The award is in two categories: The Inspirational School Leader of the Year Award and The Inspirational Teacher of the Year Award. The winners were selected based on pre-defined criteria and were rewarded for their commitment and passion.

Behold Mike Sonko, The Highway Cleaning Nairobi Governor!

here was a time when Nigerian governors and leaders were like Mike Somko. Whenever it was environmental Sanitation Day, which was once a month, they would join the ordinary folks to clean up their immediate and other sorroundings. Now, sadly no longer is that the case. The only interaction most citizens have with their leaders is when they chase them off the road with their blaring sirens and the break neck speed of their convoys. Not so Nairobi governor Mike Sonko who Sunday, May 26 took off his suit and tie to engage in some manual work in the CBD to the surprise of motorists. Sonko, who has been overseeing the beautification project in the city, was spotted in casual laborer’s outfit as he took to the Uhuru Highway to pick up litter while inspecting the vegetation along the busy road. In a series of tweets seen by TUKO.co.ke, the governor divulged that he personally took to inspect the progress of the programme to ensure it was all running accordingly. And what better way to make his presence felt than to actually get down to business and engage in a clean-up exercise himself. Astonished motorists cold not help but snatch at the chance to @Businessdayng

engage their governor in a rare public appearance without the typical security detail. The clean-up exercise comes in timely fashion as Nairobi is set to host he 1st UN-Habitat Assembly from Monday, May 27 at the UNHabitat headquarters. It also came as a surprise to see the governor up and about barely a day after he had to dramatically intervene to quell a group of goons allegedly hired to attempt to evict church members in Buruburu estate. This is what politicians do to feel the pulse of regular citizens. This is what politicians do who want to model the right values. Sonko might be populist a politician who engages with citizens is infinitely better than one who sits aloof and expects others to come pay obeisance like he were some emperor from feudal times. (Adapted from msn.com)

Thursday 30 May 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

ServiceDesk Plus features to enhance IT teams’ productivity, says ManageEngine FRANK ELEANYA

n a bid to increase the efficiency of the IT desk in eve r y o rga n i s at i o n , ManageEngine, an enterprise management IT management software company, in partnership with Tranter IT, has unveiled new features on its ServiceDesk Plus solution. The unveiled held in Lagos at the ManageEngine ServiceDesk Plus Workshop 2019 on Thursday, 23 May, 2019. Built on ITIL (Information Technology Infrastructure Library is the most effective standard in IT service management) version 4.0 framework and ISMS (information security management system), Ser-

L-R: Carlton Ayoola, assistant sales manager; Adewale Saka, chief operating officer; Melanie Ayoola, executive director; Solomon Raj, regional sales (Africa) ManageEngine; David Okeke, senior technical sales; Magdalene Ugho, sales manager, and Olaitan Olumo, system engineer.

viceDesk Plus is designed to deliver top of the range automated helpdesk ser-

vices to organisations. One of its objectives, according to Adewale Saka, chief op-

BBM finally shuts down tomorrow CALEB OJEWALE

he Blackberry messenger will finally shut down tomorrow after 13 years. Some people may be surprised the service “still exists”, but BBM has it is more commonly called has struggled to keep users who have now found preference in other platforms, particularly WhatsApp. Described by Blackberry as “one of the most loved instant messaging applications”, the love for BBM has since faded, and now the company is also moving on. Many Nigerians may remember with nostalgia, how owning a blackberry device was a prestige of

sort, and the BB Pin was the next thing owners of the device would usually have to commit to memory, after their phone numbers. The company in a blog post, stated that three years ago, it set out to reinvigorate BBM consumer service, as a cross-platform service where users can not only chat and share life experiences, but also consume content and use payment services. “We poured our hearts into making this a reality, and we are proud of what we have built to date,” read the post, noting that “The technology industry however, is very fluid, and in spite of our substantial efforts, users have moved

on to other platforms, while new users proved difficult to sign on.” In what could pass for an emotional goodbye, blackberry said “the time has come to sunset the BBM consumer service, and for us to move on.” Some good news for users who may have inapp purchases yet to be utilised, as it was indicated under one FAQ, that people who have BBM Stickers can issue refunds of their in-app purchases as per Apple App Store or Google Play store documentation. It also clarified in another FAQ, that the announcement of the BBM Consumer service closing down for devices using Android and iOS will not have any effect on the BBM service operating on BB10 and BBOS devices as that service is operated by BlackBerry Limited and will continue. Also, as an alternative, BlackBerry Limited says it has launched BBM Enterprise (BBMe) which can be installed on devices using Android and iOS which users can download. BBMe is compatible with BBM on BB10 and BBOS devices.

erating officer of Tranter IT in an interview, is to help organisations deliver busi-

ness objectives through low-cost and optimised IT services. The IT service desk in any organisation is intended to be a primary point of engagement between users and the organisation. It is the single point of contact (SPOC) between the service provider (IT) and users for day-to-day activities. The ServiceDesk Plus provides great visibility and central control in dealing with IT issues to ensure that businesses suffer low downtime. The ServiceDesk Plus can be deployed on cloud and on-premise. “ServiceDesk Plus integrates with other IT functions,” said Karthik Ananda Rao, head of ManageEngine Sales. “You can make informed decisions based

Firm introduces LS Retail to help Nigerian businesses optimise operations, payments CALEB OJEWALE

eploying Point of Sale (PoS) machines by businesses is a common strategy in ‘going cashless’, a goal for many businesses in Nigeria, driven by a quest for operational efficiency. ITWorx, a technology firm in Lagos says it has secured a partnership with LS Retail, headquartered in Iceland to deploy its PoS technology in the Nigerian market. The solution, commonly used by retail outlets and restaurants, automates the entire customer experience from making orders to payment; eliminating errors and delay in between. For businesses, they get to manage all aspects of their business with a single platform, instead of having software for different purposes. “Hubmart a fast growing retail and QSR store, currently in four locations is one of our customers using LS Retail,” said Taiwo Efuwape, managing partner, ITWorx in a chat “We support them albeit the solution was deployed by Indians but immediately they found us they jumped

on board.” Established in 2015, ITWorx says having understood the gap and needs of the Nigerian market, the company has gone through the processes and training to bring this solution to the country. Securing the partnership was more or less, occasioned because some retail companies and restaurants reached out to the LS Retail head office (in Iceland) for the solution. As its partner, LS Retail has started to forward these prospects to the company to follow up, BusinessDay learnt. Efuwape describes LS Retail as the number one and premium integrated retail and hospitality solution in the world. It has been in operation for 25 years in 66,000 stores and restaurants in more than 130 countries. “The endemic issue of big chain companies having consolidated view/insight and control as they expand is addressed with LS Retail,” he said. He explained that most companies have to maintain different systems for their POS, Accounting, Warehouse management, ordering, delivery, e-com-

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

on data arrived at using S e r v i c e D e s k Pl u s. You don’t also have to jump between consoles; you can do all the service on the ServiceDesk console.” The latest feature of the cloud version of Ser viceDesk Plus is Zia, a customised virtual support agent which can be the first point of contact for the service desk. Zia helps perform simple ser vice desk activities and fetch information, so customers do not have to rely on a technician. “With access to a conversational virtual support agent, technicians in the field can now perform service desk activities with simple hands-free voice commands,” Tranter IT noted in a statement.

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merce and loyalty. But with LS Retail and hospitality, all these are provided on one platform; helping to save cost from SLAs, licenses and implementation fees. For businesses in the hospitality and restaurant sector, the LS Retail platform can give consumers all the information they want and allow them to choose how their dishes should be prepared. Role-based workflows and connection to the kitchen can help not only to deliver faster, more efficient service, but also to eliminate mistakes – which means more, satisfied customers. Making all this available through mobile devices literally puts time in the hands of customers and restaurant staff. Customers can order quickly with instant access to the information they need; staff can offer speedy, efficient and convenient service as orders are sent directly to the kitchen; and when it is time to pay there is no need for customers to queue at the counter. With the right POS in place, diners can pay quickly and securely in the way they want, leaving staff free to get on with attending to other customers.

Thursday 30 May 2019

BUSINESS DAY

news A reminder of Buhari’s ‘Next Level’... Continued from page 1

tors that would enable his

administration get back on track the economy that is slowly recovering from a recession it slid into in 2016 due to a fall in global oil prices and restiveness in the Niger Delta region. Even though Buhari’s swearing-in on Wednesday was devoid of the usual inauguration speech where the incoming outline plans for the next four years, BusinessDay revisited the ‘Next Level’ document which contains Buhari’s promises. Below are some of these promises. Job creation President Buhari in his ‘Next Level’ document promised to engage one million graduates in the N-Power programme. N-Power is a Federal Government programme that addresses the challenge of youth unemployment by providing a structure for largescale and relevant work skills acquisition and development while linking its core and outcomes to fixing inadequate public services and stimulating

the larger economy. “It would also skill up about 10 million Nigerians under a voucher system in partnership with the private sector,” the document said. Buhari also promised that his ‘Next Level’ would provide $500 million innovation fund to tech and the creative sector which would in turn create 500,000 jobs. In the next four years, Nigerian youths are desirous to see the Buhari administration tackle unemployment that has more than tripled since the President came to office in 2015. The calculated unemployment rate was 23.1 percent as at the third quarter of 2018, representing an increase of 22.9 percent from the 18.8 percent recorded in the same period in 2017, according to data from the National Bureau of Statistics (NBS). Underemployment stood at 20.1 percent, and the combined unemployment and underemployment rate was 43.3 percent. “In my next four years, my administration will train about

200,000 youths for outsourcing market in technology, services and entertainment,” Buhari promised in the document. Even though the document did not spell out how these plans would be achieved, the electorate are gearing up to hold President Buhari accountable for the 18 million Nigerians he promised to lift out of poverty through job creation. Infrastructure Amongst other things, President Buhari promised to continue to revitalise the dilapidated infrastructure across the country. He said he would complete the IbadanKano phase of the LagosIbadan-Kano rail; complete Eastern Rail (Port-HarcourtMaiduguri), taking the network through Aba, all SouthEast state capitals, Makurdi, Jos, Bauchi and Gombe; complete the coastal rail (LagosCalabar), and complete the 2nd Niger Bridge connecting Anambra and Delta States. Buhari in the ‘Next Level’ document also promised to complete the East-West Road connecting Warri, Delta to Oron, Akwa-Ibom State, through Kaiama and Port-

Harcourt in Balyesa and Rivers, respectively. He further said he would complete the link bridge on Itakpe-Warri rail to Abuja through Lokoja. Power On power, President Buhari said he would provide a minimum of 1,000MW new generation incremental power capacity per annum on the grid to bring a total of a minimum of 11,000MW. Buhari also promised to increase the distribution capacity in the power sector to 7,000MW under the distribution expansion programme and provide nine universities with uninterrupted power supply. Furthermore, he said he would execute the Nigeria Electrification Project (NEP), a $550 million Rural Electrification Programme which is supported by the World Bank/African Development Bank to create a pipeline of private local investments and financial incentives to catalyse the Nigerian off-grid market for standalone solar solutions. Economy and SMEs For entrepreneurs who operate in the small and medium scale space, Buhari

said his ‘Next Level’ policies would, amongst other things, provide soft loans of up to N1 million to small traders and commercial drivers. The President also promised to take the current 2.3 million traders, farmers and artisans under the Trader Moni, Market Moni and Farmer Moni schemes to 10 million Nigerians under the People Moni Scheme, as well as provide soft loans to support business ideas across the different value chain. Ease of doing business After moving 25 places up the ladder, Nigeria dropped a spot to 146th among 190 countries in the World Bank’s 2019 Doing Business Index (DBI). This is despite the country making an improvement in the ease of doing business score from 51.52 to 52.89. To upscale this, President Buhari said his second term in office would legislate and enforce deadlines for the issuance ofgovernmentlicencesandpermits and simplify investment, Customs, immigration, trade and production procedures. Security and anti-corruption

Sanwo-Olu, Wike, Fintiri, others promise... Continued from page 1

ment and Tourism, and

Security and Governance, which are encapsulated in the acronym ‘THEMES’. Sanwo-Olu, who was sworn in as the 15th governor of Lagos at the Tafawa Balewa Square (TBS), promised to devote a lot of energy to tackling the hydra-headed congestions around Apapa and its environs by building a 5,000-capacity trailer park and ancillary service centre as a measure to rid the roads and bridges of articulated vehicles and their devastating impact on the Lagos economy. In his inaugural speech, the governor said his administration would also strive to provide the enabling environment for optimal economic growth and business development. “We will do this by focusing on those areas of infrastructure that will help businesses to flourish but which only government can ably provide,” he said. In addition to transportation infrastructure, SanwoOlu said his government would also pay attention to the provision of power by encouraging private sector initiatives to boost generation, transmission and distribution. The new government also

plans to address the bottlenecks associated with land transactions in Lagos, and would further strive towards making affordable housing accessible to the people. Sanwo-Olu also assured of plans to partner telecom sites for the deployment of additional 2,000 stand-alone and integrated CCTV cameras to cover strategic areas in the state within the next four years. In Rivers, Governor Nyesom Wike, who was sworn in for a second term, unveiled a Marshal Plan, green revolution, and set new economic agenda for the state. Speaking in a long inauguration speech that showed experience and touched on almost every aspect of governance, Governor Wike said his last term would focus on various aspects of the economy including agriculture, job creation, more road constructions, flyovers, and loans to entrepreneurs. “We will therefore adopt a holistic approach to development by partnering with relevant national and international agencies and expertise to initiate and implement a 25-year ‘Marshall Plan’ for economic transformation and development to guide and accelerate the future develop-

The truths, half-truths and lies in FG’s... Continued from page 38

Alaka entrance of Eko Bridge in Surulere at 3:20 PM on Tuesday and discovered that there was no truck or trailer parked on the road from Alaka Junction to Eko Bridge division. This caused free flow of traffic along the road. The situation remained the same on Wednesday. However, while the road remained free to Eko Bridge

division, trucks and trailers of different kinds were seen parked about 150 metres from the Eko Bridge division to Ijora 7up at Costain axis. This line of trucks and trailers terminated at the Police checkpoint at Ijora Junction, but continued 50 metres from the junction to Apapa port. No improvement was noticed on Wednesday; rather, the situation worsened. Further checks by Busiwww.businessday.ng

In the fight against insecurity and corruption that are casting shadows in the reputation of the country, the ‘Next Level’ promised to decentralise the funding of police operations and implement a direct transfer of funding to the Police Division all across; execute the second phase of the Farmer-Herder and National Livestock Policy to end the decades-long conflict between farmers and herders, and eliminate the scope of systemic corruption by emphasising technology enabled e-Governance. Technology In the area of technology, Buhari promised to create a vibrant Gig economy around business process outsourcing, technology, creative sector with flexibility, e-lancing and freelancing as key features. The President promised to drive the procurement of start-up services by promoting quota for tech startups; support private sector-led technology hubs by providing grants, equity and loans, and move broadband coverage to 120,00km of fibre network across Nigeria.

L-R: Mauricio Alarcon, MD/CEO; David Ifezulike, chairman, and Bode Ayeku, company secretary, all of Nestle Nigeria plc, at the company’s 50th annual general meeting in Lagos. Pic by Pius Okeosisi

ment of our state,” Wike said. “We are already doing great to close the existing deficit in infrastructure but the need to deliver more roads, bridges and modern jetties to connect our cities and communities, improve our economy, accelerate our development and improve the general wellbeing of our people. This we will do with greater vigour and commitment,” he said. In Cross River State, Ben Ayade, who is returning for another four-year tenure,

promised to deliver on his signature projects which include the Bakassi deep seaport, 275km superhighway, the garment and Calabar pharmaceutical factories. He said he would achieve these by making himself project manager of the state. Ayade said before the end of his second tenure, the state would move from a thirdworld to first-world state. In Kaduna, Governor Nasir El-Rufai, who got another term, urged the residents

to imbibe the spirit of living peaceably with one another for the benefit of the state. “Let us cherish our diversity while embracing equal citizenship, the rule of law, and respect for the lives and livelihoods of all who call Kaduna State home,” he said. In Ogun, Dapo Abiodun, who was sworn in as fifth governor of the state, pledged to deliver accountable governance. In his inaugural speech, Abiodun offered himself as a tool to bring the greatest

good to the people of Ogun regardless of creed, gender and political affiliation. “You will always find in me conduct of Omoluwabi (hood character) expected of a teacher’s child who I am. I will govern with character, make your interests the core of governance, serve you diligently. I will neither personalise nor abuse your mandate and I will not betray your trust,” he said.

nessDay revealed that the Eko Bridge – starting from the Eko Bridge division inward Marina – was not totally free of trucks and trailers as another set of trucks was seen lined up from the beginning of the road which diverts from Eko Bridge to Apapa at Ijora Olopa, close to Iddo axis, causing gridlock around Lagos State Water Corporation. This was despite the presence of officers of the Nigeria Police. No truck or trailer was parked from Alaka Bus-stop to

Costain roundabout through Funsho Williams Avenue. A similar trend was also observed from Costain roundabout to Nigerian Breweries (under bridge), and from Iganmu axis linking Apapa road. However, heavy presence of trucks and trailers resurfaced 50 metres from Nigerian Breweries on Apapa road to the police checkpoint at Ijora Junction. This extended to Apapa port through 7up Bridge. When BusinessDay revisited Nigerian Breweries to

Ijora Junction and also Eko Bridge division to Ijora Junction on Wednesday, there was no movement on the highways as there was heavy presence of trucks and trailers on both roads. CONCLUSION Based on these observations, the claim that the trucks and trailers are no longer on any part of Eko Bridge, from the Alaka entrance of the bridge in Surulere, is HALF-TRUE. However, the claim by the Presidency that the trucks and

trailers are no longer on the Eko Bridge division to Ijora 7up at Costain axis is FALSE. Furthermore, since some trucks and trailers were seen queued on Eko Bridge, extending beyond police checkpoint to access Ijora Olopa leading into Apapa, the claim that the trucks and trailers are no longer on the Eko Bridge division to Apapa at Ijora Olopa close to Iddo axis is FALSE.

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Thursday 30 May 2019

BUSINESS DAY

NEWS

PENGASSAN warns against attacks on oil facilities in N/Delta JOSHUA BASSEY

etroleum and Natural Gas Senior Staff Association of Nigeria (PENGASAN) has warned against acts capable of plunging the nation’s economy into further hardship, including attacks on oil facilities in the Niger Delta region. PENGASSAN, while reacting to the recent allegations by the Federal Government and Nigeria Police Force of plots to attack and destroy oil facilities in the region and threats to the nation’s democracy, said any such attacks would not be acceptable to Nigerians. The oil workers’ union, in a statement signed by Lumumba Okugbawa, its general secretary, and made available to the media, Wednesday, therefore warned all aggrieved groups and politicians to stay away from oil and gas facilities, as the sector remains the engine that drives the country’s economic and social development.

“With a current population of about 200 million citizens, Nigeria cannot survive another internally instigated war. We counsel all aggrieved politicians to be patient and await the outcome of the various litigations pending at the electoral tribunals or wait till 2023 when another window of political activity will be lifted,” it said. PENGASSAN noted that the union, and indeed, the citizens would never engage in or support any acts capable of plunging the country into an abyss of pain and destructions. There has also been accusation, counter accusation and denial between the government and the opposition parties over the alleged plot to overthrow the present administration of President Mohammadu Buhari. The union said: “We however view these outcries as serious and treasonable acts punishable on conviction with maximum penalty as prescribed by the nation’s laws and other internationally recognised conventions.”

Analysts see bleak future for Nigerian real estate despite exiting recession Bala Augie & Israel Odubola

espite the real estate sector getting out of the woods as it broke its 12 consecutive quarters of decline by posting a 93 basis point growth in the first quarter, analysts are sceptical that the industry will thrive in the near term. Prior to last quarter, the industry had been on a consistent decline since the first quarter (Q1) of 2016 averaging a contraction rate of 5.4 percent within that period. It is disheartening that after 58 years since independence the nation has not met on the physiological needs (shelter) of its people as postulated by the great management scientist, Abraham Maslow.

“It is good news that the sector moved to positive growth territory, but I am not sure if this growth can be sustained through the year end as Nigerians are becoming poorer, with economic growth still below population growth,” said Oluwadamilola Ijalade, Broker with PWAN Homes. Nigeria, Africa’s largest economy, with 17 million housing deficit, has been hobbled by structural issues that have hindered it from delivering affordable housing for its teeming population. Despite efforts by the Goodluck Jonathan-led administration to resolve acute housing challenge through the establishment of Nigerian Mortgage Refinance Company (NMRC), housing shortage sees no improvement in President Buhari’s first tenure as his admin-

istration failed to consolidate on the initiative. With 87 million people living below $1.98 dollar a day, as evident by a GDP growth which is still below population growth, as well as increasing inflation that has undermined disposable incomes, owning a home in this part of the world is like passing the donkey through the eye of the needle. High mortgage interest rates are a cut throat for a civil servant or workers in the private sector whose monthly salaries have been eroded by inflation. This is why Nigeria has one of the world’s lowest mortgage to Gross Domestic Product (GDP) rate of about 0.6 percent, which lags behind Ghana’s 2 percent, South Africa’s 30 percent and crawls after the U.S and UK rates

of 60 percent and 70 percent, respectively. “High interest rates for mortgages as well as high cost of housing in urban areas particularly high brow areas would continue to pressure aggregate demand for real estate in the long run. Thus, we struggle to see any sustained growth in the real estate sector in the near to medium term,” said analysts at CSL Stock Brokers Ltd. A savvy investor will not put his money in mortgage institution with a low interest rate when they can get up to 16 to 18 per cent returns in Treasury bill. Investors and stakeholders, however, expect Buhari-led administration to come up with reforms that would drive affordable home ownership to an average Nigerian.

EKO Innovation Centre to boost tech innovation, job creation in Lagos Modestus Anaesoronye

head of his inauguration Wednesday, the Lagos State governorelect, Jide Sanwo’olu commissioned the EKO Innovation Centre, a co-hub working space established to raise a new generation of young Nigerian start-ups that will drive solutions to make Lagos a 21st Century economy. The centre, which was the building housing one of Sanwo’olu’s campaign office on Awolowo Road Ikoyi, which has been converted to co-hub, is to complement the new governor’s campaign promise of raising youths who have creative minds to start up new enterprises from start to commercialisation. Sanwo’olu in an interview with journalists said, “This used to be one of my campaign of-

fices. It used to be a place where I had a lot of young people burning very long nights. We have developed a lot of concepts out of here; campaign promises, campaign ideas, strategies and all that.” He said part of the things that he has promised Lagosians is that whatever resources needed, if it is available here, let’s tap from it.” “We have said to ourselves, what is the best use we can give this place? Let’s turn it to a techhub where people can come back and learn the best ways of doing things. That’s what the young men have put together and have called it an innovation centre. They have all the ideas of what the place would have potential of becoming, and we have seen some of the partners they want to work with to build this future, he said.

Global passenger demand records solid growth in April IFEOMA OKEKE nternational Air Transport Association (IATA) announced global passenger traffic results for April 2019 showing that demand (revenue passenger kilometres or RPKs) rose by 4.3 percent compared to April 2018. April capacity (available seat kilometres or ASKs) increased by 3.6 percent, and load factor climbed 0.6 percentage point to 82.8 percent, which was a record for the month of April, surpassing last year’s record of 82.2 percent. Regionally, Africa, Europe and Latin America posted record load factors.

Comparisons between the two months are distorted owing to the timing of the Easter holiday, which occurred on April 1 in 2018 but fell much later in the month in 2019. “We experienced solid but not exceptional rising demand for air connectivity in April. This partly is owing to the timing of Easter, but also reflects the slowing global economy. “Driven by tariffs and trade disputes, global trade is falling, and as a result, we are not seeing traffic growing at the same levels as a year ago. However, airlines are doing a very good job of managing aircraft utilization, leading to record load factors,” Alexandre de Juniac, IATA’s directorgeneral/CEO, said. April international passenger demand rose 5.1 percent compared to April 2018. All regions recorded year-over-year traffic increases, led by airlines in Europe. Total capacity climbed 3.8 percent, and load factor climbed 1.1 percentage points to 82.5 percent. www.businessday.ng

Abubakar Malami, outgoing attorney-general of the federation and minister of justice (l), presenting a hand-over note to Dayo Akpata, solicitor-general of the federation and permanent secretary Ministry of Justice, during the inauguration of the Board of Parastatals and Agencies under the Federal Ministry of Justice and the handover of the outgoing minister, in Abuja. NAN

Group calls for disincentive to stop gas flaring IDRIS UMAR MOMOH, Benin

n environmental group, Environmental Rights Action/Friends of the Earth Nigeria (ERA/ FoEN), has urged the Federal Government to put in place adequate disincentive measures geared towards stopping gas flaring by oil companies in Nigeria. Godwin Uyi Ojo, executive director of the group, made the call in a press briefing in Benin City, titled, “Environmental Governance: Double Standards in Oil Sector Management in Nigeria.” Ojo said payment of fines for gas flared in addition to payment in monetary terms of the value of the actual volume of gas flared remain disincentives for the oil industry to continue to indulge in the illegal acts. Fines are merely imputed as operational costs and not payment from profits to the oil companies, he said. While noting that the new gas flaring law recently passed by the National Assembly prohibits gas flaring in any new petroleum project

on commissioning, noted that gas flaring was outlawed in Nigeria decades ago, but the Federal Government through the office of Minister of Petroleum wielded so much power, such that putting a complete stop to it had been continuously postponed. He also urged the Federal Government to put in place contingency plan of action to bring the oil companies to account by ensuring the clean up of decades of pollution of the environment within the next two years. He also wants the government to declare Niger Delta as ecological disaster zone as well as environmental emergency. He explained that despite the ongoing petroleum sector reforms, the oil sector lacked transparency and remained mainly characterised by massive environmental degradation and human rights violations. He said Shell, Chevron, Total, ENI/Agip as well as several multinational and local oil companies had been implicated.

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Nigeria-Malaysia trade corridor creates new partnership, opportunity Seyi John Salau

resident, Nigeria-Malaysia Business Council, Michael Aderohunmu, says Nigeria must articulate new growth story around mining, agribusiness value chain development to create jobs, reduce costs of living and take the economy to the future through planning, partnership, technical cooperation for a changing agro-allied industry and profitability. Aderohunmu made the observation at an event tagged ‘Nigeria open for business’, which took place in Malaysia, convened with support by the Malaysia External Trade & Development Corporation (MATRADE). Discussions at the meeting focused on flow of trade and investment between Nigeria and Malaysia. The president of the council emphasised on the need for Nigeria to articulate the priority area as formulated in Government Economic Recovery and Growth Plan (ERGP). He further noted, “To move forward and to remain @Businessdayng

relevant, Nigeria must take cognisance of the world’s key trade and investment trends- trade war between the US and China, Brexit and the European economy, etcand build strategy around it.” He added that the new agribusiness value chain development with Malaysia is a mutually beneficial strategy that offers tremendous opportunity for growth. Malaysia is one of the world’s top trading nations. Some Malaysian government executives, who spoke on the sidelines of the meeting, said they saw trade and investment as a game changer in agricultural and mining sectors. An expert on trade and investment, who spoke on condition of anonymity, said: “With emphasis on the Nigeria-Malaysia Trade Corridor, and taken into consideration that the world economy is market-driven, may take away from the meeting is how Nigeria can ride the tide, by adding value through processing of our primary products, creating jobs and reducing costs of living of Nigerians.”

Thursday 30 May 2019

BUSINESS DAY

RESEARCH&INSIGHT

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

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Why every investor wants MTN shares ...as RMB puts target price at N147 TELIAT SULE

Source: RMB Nigeria Stockbrokers

MTN consistently delivered strong performance Supported by Nigeria’s big market size, growth rate, high urbanisation at 3.4 percent, according to the data provided by the United Nations Development Program (UNDP), and with 56 percent of the population aged between 16 and 65 years, you would but agree that the future is very bright for the company. MTN Nigeria has maintained a 12 percent year-on-year revenue growth from 2006 to 2018, and in the last financial year, total revenue by the company stood at N1.04 trillion, information extracted from a report prepared by RMB Nigeria Stockbrokers, entitled “ A ‘behemoth’ with upside, initiate at OW”, stated. Its revenue as at 2018 was about 15 percent of Nigeria’s annual budget. According to the RMB report, the growth in revenue was supported by new revenue streams in the data and digital space. Gross revenue is projected to reach N1.18 trillion in 2019; N1.30 trillion in 2020 and N1.43 trillion in 2021. In 2013, out of the N794 billion gross revenue, voice services-airtime & subscription, interconnect and roaming, accounted for N646 billion, representing 81.3 percent of the gross revenue. Data generated N94 billion; SMS, N19 billion, other services earned N33 billion while handset and accessories generated N2 billion. Fast forward to 2018, gross revenue from voice services increased to N784 billion; data, N165 billion; SMS, N14 billion; digital, N41 billion;

VAS, N31 billion; others, N5 billion while no income was generated from handset and accessories. All but digital are expected to rise in the coming years, according to RMB Nigeria Stockbrokers’ projections. Earnings before interest, tax, depreciation and amortisation (EBTIDA), which is a measure of a company’s performance, IAS 17, rose by 27.2 percent from N356 billion in 2016 to N453 billion in 2018. This is projected to rise to N521 billion in 2019; N575 billion in 2020 and N630 billion in 2021. Net interest income(NII), IAS 17, increased by 64 percent from N89 billion in 2016 to N146 billion in 2018. Based on RMB Nigeria Stockbrokers’ forecasts, NII will further increase to N211 billion in 2019; N274 billion in 2020, and N311 billion in 2021. MTN Nigeria paid N123 as dividend per share(DPS) in 2017; N251 DPS in 2018 while in 2019, it is projected that the company will pay N8.8 dividend per share. The sharp drop in its dividend per share was as a result of increase in its shares in issue. Between 2016 and 2018, MTN Nigeria’s shares in issue were 407 million. The shares in issue were increased to 20.4 billion to allow more local individual and institutional investors benefit from the progress the company has made overtime in Nigeria. How RMB Nigeria Stockbrokers arrived at N147 per share target price The target price of MTN Nigeria was put at

Factors in favour of telecommunications sector in Nigeria Telecommunications services, especially data services, have the potential to grow from its present state as a result of a number of favourable factors to the telecoms sector. On top of the list is the Nigeria’s low internet penetration. In 2018, data penetration was 57 percent. It is expected to increase to 59 percent in 2020 and later to 61 percent in 2020. Another factor is the underserved rural communities. A study carried out some few years back by Google which was prepared by Dalberg Global Development Advisors showed that 25 percent of Nigeria’s rural dwellers did not have access to cell coverage and might have to travel between 1 and 10 km to access telephone services. What’s more, smartphone affordability has greatly improved. The average price of new smartphone has declined by about 35 percent while there is increasing usage of fairly-used smartphones in the country. 12734BDN

veryone now wants the shares of MTN Nigeria. The demand for this stock is so strong that hardly will any discourse take place on radio, TV or social media without its name being mentioned. The positive sentiment is because its financial, demographic and economic factors point to a stock that fits into the investment objectives of bargain hunters, ethical and growth investors. So, on Thursday May 16, 2019, MTN Nigeria recorded another “first” as it became the first telecommunications company to be listed on the Nigerian Stock Exchange (NSE). At the price of N90 per share, its listing on the NSE added another N1.83 trillion to the market capitalisation of equities. Without MTN, the NSE might have probably turned to a bond market because on May 15, 2019, the bonds market capitalisation closed at N10.82 trillion compared with the equity market capitalisation that closed the day at N10.37 trillion. MTN Nigeria was set up in 2001 with a view to tapping the opportunities in the Nigerian telecommunications sector following a successful liberalisation program by the federal government which paved the way for private sector players to come in. The firm paid $285 million to secure one of the four available digital mobile licenses (DMLs) in order to operate the global system for mobile telecommunications popularly called GSM for an initial 15-year license. The license allowed it to operate a 900MHz and 1,800MHz second generation (2G) DML within the country. Leveraging on the technical expertise of its parent company, MTN Group Limited which is based in South Africa, MTN Nigeria set the pace for others as it established itself as the market leader. It strengthened its base in 2007 when it launched a 3G service following the payment of $150 million. Its expansion program received the blessings of the regulators, the Nigerian Communications Commission (NCC), as it was the first telecoms firm to build 10,000 base stations in the country. In March 2019, MTN Nigeria controlled 37.52 percent of the GSM market, having 60.3 million mobile and data subscribers, while data subscribers alone amounted to 46.5 million, which is about the population of Kenya, East Africa’s biggest economy.

N147 per share with an overweight rating. But how did RMB Stockbrokers arrive at this figure? It was the outcome of a combination of different valuation models. The analysts at RMB Stockbrokers adopted the enterprise value (EV) to EBTIDA multiple; price to earnings ratio; price to sales ratio, discounted cash flow (DCF) methods; Ghana IPO transaction before the equity mean value (median) was arrived at. The EV is computed when a company’s market capitalisation is added to its preferred shares, minority interest, debt and latter subtracting its debt from the result. Therefore, the EV/EBTIDA resulted in a mean valuation of N3.070 trillion with a low of N1.77 trillion and a high of N4.37 trillion. Price to earnings method gave a mean valuation of N2.705 trillion. Price to sales method resulted in a mean value of N2.66 trillion while the discounted cash flow (DCF) and Ghana IPO transactions valuation estimates were N4.20 trillion and N3.29 trillion respectively. The median equity value stood at N3.07 trillion. The mid-point MTN equity value came to N3.002 trillion while that of enterprise value came to N3.58 trillion. Eventually, equity value price per share was N147 while enterprise value per share was N175. At the close of business on the Nigerian Stock Exchange on Monday May 27, 2019, MTN Nigeria shed 7.11 percent to close at N130.05 per share. Compared with the current market price, the target price of MTN Nigeria shows that the stock is presently trading at a discount.

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Thursday 30 May 2019

BUSINESS DAY

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

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How N675bn was shared among 36 states in first quarter TELIAT SULE

he 36 states of the federation received N675.20 billion in the first quarter of 2019, according to the data on the monthly disbursement of the national revenue by the Federation Account Allocation Committee (FAAC) which was published by the National Bureau of Statistics (NBS). In January 2019, the 36 states (excluding FCT Abuja) shared N223.67 billion. The allocation increased by 3.1 percent to N230.66 billion in February but declined by 4.2 percent to N220.87 billion in March. On the flip side, these states paid N85.21 billion for the repayment of external debt, contractual obligations (ISPO) and other obligations during the quarter. Out of the 36 states, 10 states: Delta, Akwa Ibom, Rivers, Lagos, Bayelsa, Kano, Edo, Kaduna, Ondo and Oyo in that order, got 46 percent of the total disbursement in January. These states received 47 percent of the February 2019 FAAC allocations while they also got 48 percent of March 2019 FAAC disbursement to states. Put differently, the ten aforementioned states received N103.68 billion, N107.92 billion and N106.14 billion in Janu-

Source: NBS, BRIU

quarter of 2019, the Delta State Government had N652.26 million at its disposal. Akwa Ibom State received N15.62 billion in January, N15.67 billion in February and N16.39 billion in March to have N47.68 billion in the first quarter, thereby accounted for 7.42 percent of the total FAAC disbursed to the 36 states in Q1 2019. At any given day during the first quarter, the state had

the reference period. Lagos State, Nigeria’s biggest state economy and its commercial capital, received N429.13 billion in first quarter of 2019, which amounted to 6 percent of the total FAAC revenue shared to the 36 states. Lagos allocation in January stood at N13.73 billion and it was N14.21 billion in February, while in March, it got N13.26 billion. Bayelsa State was the fifth biggest recipient of

Source: NBS, BRIU

ary, February and March 2019. Individually, Delta State in South-South region got the lion’s share in each month. Its N18.53 billion allocation in January 2019 amounted to 8.29 percent of the total FAAC disbursement to the 36 states in that month. It received N19.85 billion in February and N20.32 billion in March to have N58.70 billion as total allocation in the first quarter of 2019. By implication, for every day in the first

N529.81 million. Rivers State came third as the state got N41.27 billion as total FAAC in the first quarter of 2019. The monthly breakdown of the first quarter FAAC disbursement showed the it received N13.14 billion in January; N13.98 billion in February while in March its allocation was N14.14 billion. Its total Q1 2019 FAAC receipts translated to 6.41 percent of the total disbursement to the 36 states. Daily, the state had N458.55 million during www.businessday.ng

FAAC allocation in Q1 2019 as it got N429.13 billion, representing 5.97 percent of the total FAAC disbursement to the 36 states. January allocation amounted to N12.27 billion and that increased slightly to N13.16 billion in February; N13.16 billion was given to it in March. Fifteen states got less than 2 percent of the Q1 FAAC disbursement to states. These states are Plateau, Anambra, Enugu, Adamawa, Cross River, Zamfara and Yobe. Others

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are Ogun, Taraba, Osun, Gombe, Nasarawa, Ebonyi, Ekiti and Kwara. The total Q1 FAAC disbursement to Plateau State amounted to N13.68 billion, which translated to N152.09 million per day or 1.99 percent. Anambra State got N13.57 billion or 1.98 percent of the total Q1 FAAC to states representing N150.83 million per day. Enugu State received N13.40 billion or 1.96 percent of the Q1 FAAC disbursement to states representing N148.98 million per day. Allocation to Adamawa State during the first quarter amounted to N13.19 billion or 1.92 percent which translated to N146.62 million daily. Cross River got 1.92 percent or N13.81 billion which amounted to N146.45 million per day. Allocation to Zamfara was N13.16 billion or 1.91 percent which translated to N146.32 million per day. Yobe and Ogun states got 1.88 percent and 1.87 percent, or N12.96 billion and N12.93 billion respectively of the Q1 FAAC disbursement to states, which amounted to N144.08 million and N143.73 million daily revenue. Taraba received N12.54 billion or 1.82 percent; Osun got N12.37 billion or 1.80 percent; Gombe received N12.37 billion or 1.80 percent; Nasarawa received N12.06 billion or 1.74 percent; Ebonyi got N11.91 billion or 1.73 percent; Ekiti received N11.90 billion or 1.73 percent while Kwara received N11.84 billion or 1.72 percent. Regional disparities in FAAC allocations in Q1 2019 As earlier indicated, Lagos State received N41.19 billion to account for 6.1 percent of the revenue shared from the Federation Allocation Account Committee(FAAC) @Businessdayng

in the first quarter of 2019. This is a state where almost half of the Nigerian economic activities take place. As far back as 2017, it was reported that about 55 percent of the Value Added Tax (VAT) was generated in Lagos. Other states on the VAT chart are Rivers, Kano and Kaduna. The North Central regional economy received N82.10 billion, representing 12.2 percent of the Q1 FAAC. This amounted to N912.28 million per day for the six states in the region. The North East regional economy got N82.71 billion in first quarter, representing 12.3 percent and which amounted to N919.07 million daily. The North West regional economy got N111.96 billion or 16.6 percent of the Q1 FAAC allocations to the 36 states of the federation, and that translated to N1.24 billion per day. In the southern hemisphere, the South East regional economy received N69.48 billion or 10.3 percent of the Q1 FAAC, which amounted to N772.08 million per day. The South-South regional economy received the lion’s share as the six states in this regional economy received N217.37 billion or 32.2 percent of the total Q1 FAAC disbursement to states, representing N2.41 billion per day. The South West regional economy (excluding Lagos) received N70.35 billion or 10.4 percent which translated to N781.71 million per day. Debt repayments gulped N85.21 billion From the first quarter 2019 FAAC revenue, the 36 states paid N85.21 billion for different debt obligations. Debt repayment by states took the forms of external debt, contractual obligations (ISPO) and other deductions. In January, the 36 states paid N28.21 billion representing 12.6 percent of FAAC gross allocation. Debt repayment in February gulped N28.70 billion or 12.4 percent of total FAAC disbursement to states, while in March, N28.29 billion was paid representing 12.8 percent of March FAAC disbursement. Lagos State, which paid N11.88 billion in Q1 2019, accounted for 13.9 percent of the total debt repayment in Q1 2019. Other states are Osun, N7.27 billion; Bayelsa, N4.64 billion; Cross River, N4.61 billion and Ogun, 3.62 billion. The states with the least debt repayment in Q1 2019 are Kebbi, Enugu, Jigawa, Anambra and Yobe. Kebbi paid N916.97 million; Enugu paid N794.44 million; Jigawa paid N576.03 million; Anmabra, N418.51 million while Yobe paid N375.28 million.

BUSINESS DAY

SPECIAL REPORT

FINTECH IN NIGERIA Revolutionizing the Financial Services Sector

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector Cowrywise set to help 10 million Nigerians invest in Mutual Funds with its retail Mutual Funds’ platform Named as one of the top 50 emerging startups to watch in 2019 and backed by Y Combinator, Cowrywise is democratising access to premium financial products. RAZAQ AHMED, CFA, CEO/Co-founder of Cowrywise revealed in this interview with DOLAPO ASHIRU on how the Fintech company is leveraging technology to deliver on its vision of empowering the mass market with guided access to savings and investment products.

owrywise was established in 2017, a difficult year for Nigeria. Tell us how it has been running a successful fintech business so far?

funds, what else are you changing?

As with any other business in a developing country, it has been a mix of electrifying and exigent experiences. Electrifying because we have enjoyed massive reception from various quarters, who feel quite elated about our product offerings that help them do better with building wealth when compared to traditional options. On the other hand, it has been a demanding experience as we have had to commit extra effort to promoting trust in the platform and also intensive education for the masses on planning money so as to help them do better with saving and investing. Interestingly, these demands have provided us with the opportunity to introduce groundbreaking in- ment experience of Nigerians. It novations into the ecosystem. has been a positive sum game so far and the customers are hapDuring the early days pier for it. of fintech businesses in Cowrywise was listed as one of Nigeria, it was believed the 50 global startups to watch that they were here to out for in 2019. Tell us more displace the existing play- about your journey to that enviers. What was Cowrywise able recognition. approach? We are really honoured to be Was it to disrupt the sta- recognised among the 50 comtus quo? panies across the world in the Kairos 50 companies published The definition of disruption is in Inc Magazine. It is a big boost often limited to a quest for the to the Nigerian startup and findisplacement of existing play- tech ecosystem. It is a recogniers. That is far from the truth, tion of the work we are doing disruption can also be about in democratising access to precreating new processes that mium wealth management sermake it possible for existing vices by making services such as players to function better with financial planning, savings and the help of the new but efficient investment easily understood players. In essence, our disrup- and accessible by everyone. It is tive approach has been focused about building shared prosperon building bridges. A number ity through innovative approach of traditional players have rigid to financial inclusion. processes but are still trusted by the masses, while firms like ours Tell us about how this offer seamless processes we bat- disruptive approach has tle against trust. What we have played out so far? done in the past two years is to build partnerships with the old Pretty well I must say. For examboys so as to overhaul the invest- ple, at the start of our journey www.businessday.ng

Retailing the funds is one thing, connecting people with best-fit funds and facilitating hassle-free purchases represent a different set of challenges. As we built the platform, we considered this and integrated a short but effective risk assessment to suggest funds tailored to the risk appetite of the clients. Also, we have significantly cut down on the traditional process, making it possible for people to start investing securely within three to five minutes. Tell us about your expansion outlook? We have a couple of great goals, you know?

we wanted to offer our clients the same security structure as pension funds regardless of the amount invested. To achieve this we had to partner with Meristem Trustees; bear in mind that we were the first fintech to explore this security feature. It is a move we are totally proud of. Today, a number of fintechs have taken a cue from us and are using the exact structure for the security of their funds. I think the most interesting benefit of this approach, so far, can be seen in our recent partnership with high-flying investment houses to retail mutual funds at NGN100 and make it extremely simple to understand for the mass market. Mutual Funds at NGN100? That sounds interesting. Can you expand on this? (Laughs) Sure, I mean it’s surprising that you can now purchase mutual funds for the same price as two sausage rolls, right? Well, as I mentioned earlier we are focused on building

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bridges. Prior to this offer from us, it cost between NGN2,000 to NGN10,000 to participate in the mutual funds’ industry. That price peg was a complete disregard for the reality of the regular Nigerian. Aside the price peg, millions of Nigerians hardly understand what mutual fund is or how it works. It is seen as a black box. We are breaking down those barriers by making it super simple to understand and invest in. That drive to make the capital market easily understood by the mass market led us to negotiate partnership and collaboration agreements that will make the decision of buying into any mutual fund as simple as buying a pack of noodles. Currently, we have funds from Meristem Wealth Management Limited, Afrinvest Asset Management Limited, Lotus Capital Limited and United Capital Asset Management Limited. More mutual funds will be added as we are making Cowrywise a single source of truth for all mutual funds in Nigeria.

I’ll just state two of them for now. By 2025, we want to be the most credible digital wealth manager directly helping over 10 million Nigerians to invest in mutual funds alone. Looking at the current figures which sit at less than 400,000 we are looking at a boost of 2,400% to make this happen. It sounds like a far reach, but given our experiences in the last two years, we are confident that it is possible. Secondly, we hope to be a pan-African wealthtech in the coming years as we look to expand our reach to African countries already demanding for our services. With the low level of talents in the ecosystem, how do you go about finding talents?

I honestly do not believe that we lack talents in the ecosystem, I just believe that founders need to be patient enough to groom talents from their raw states to fine diamonds. Now, this is not to disregard the evident brain drain of fine talents from the ecosystem, it is just to remind us of the fact that a lot of times we are focused on seeking out refined talents. Though it is tough, the process of identifying potentials and working closely with them to hone their skills has been the major talents Aside from retailing these feeder for us. @Businessdayng

Thursday 30 May 2019

BUSINESS DAY

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Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector

Evolution of the Nigerian Fintech Sector

he history of financial technology in Nigeria has some parallels to the growth of the global financial industry and the developments in digital technology. Customers were going to dictate the new way of doing things and to meet the new needs financial institutions would need to rely on technology. First, while the term Fintech derives its origin from a Citigroup initiative in the early 1990s designated the â&#x20AC;&#x2DC;Financial Services Technology Consortiumâ&#x20AC;&#x2122; which aim was to facilitate technological cooperation among industry players, its application can be traced back to the period between 1866 and 1933 when the first Atlantic cable was laid in London. Between 1866 and 2008 the history of finance has become intertwined in a mutually reinforcing way with technology. From the electronic payment, bank ATMs, electronic stock trading, bank mainframes, and record-keeping systems in the 1960s to 1980s, financial technology evolved to the internet and e-commerce business models and the introduction of online stock brokerage websites in 1990s. Retail financial services have further digitized via mobile wallets, payment applications, robo-advisors for wealth and retirement planning, equity crowdfunding platforms for access to private and alternative investment opportunities and online

lending platforms. In Nigeria, it wasnâ&#x20AC;&#x2122;t until the turn of the millennium that fintech began to look like a serious space, with independent players providing services in different segments. Prior to then, the space was largely a domain for banks and their software vendors. In fact, fintech was then known as electronic payment. Nigerian banks quest to trans-

form their services leveraging new technologies contributed in no small measure to the advancement of the fintech space in the country and led the foundation of the digital banking era in the country. According to Olaniyi Yusuf, Managing Partner of Verraki, the rise of Fintech in Nigeria is not surprising, given the youthful demography of Nigeria, commercial acumen and

energy, the convergence of mobile telephony, internet, increased access to computing facilities and storage facilities, and of course, the impact of Nigerians in the diaspora some of whom returned home with interesting ideas, global knowledge and network. Prior to the fintech era, most of the early start-ups in the financial service sector were hardware

box providers, before they evolved into software solutions. Some of these companies include Computer Warehouse Group, CHAMS (dubbed Computer Hardware and Maintenance Services), and Inlaks among others. Then, what most did was to buy software like core bank applications and ERP products from international organizations and resell to banks.

Role of Amazon Web Services (AWS)

irst launched in 2006, Amazon Web Services (AWS) is the subsidiary of Amazon that provides on-demand cloud

computing platforms to individuals, companies, and governments, on a metered pay-asyou-go basis. The AWS played a pivotal role in the growth of fintech start-ups in Nigeria. Prior to AWS, Nigerian start-ups were almost dependent on banks for everything including 100 percent of their revenue generation. The more aggressive ones who could garner enough banks as loyal customers survived but others who were not able to, packed up and moved to other business ventures. Running financial services was almost unthinkable giving the enormous cost implications. To own a successful service online in those days, required owning a data center; which means hardware purchase like servers, generator, storage, etc. It was very expensive. T h e c o m i n g o f AW S

changed the dynamics for as- service. They could sell the piring fintech start-ups. With service on top of the software AWS they did not need to set with less than $20. up a data center to sell their Till today, companies are www.businessday.ng

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building innovations in Nigeria using cloud infrastructure. Firms like SystemSpec, CHAMS, Interswitch do not @Businessdayng

have a data center in Nigeria, it was cloud infrastructure that helped build some of the early innovations they are notable for.

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector

nified Payment and Interswitch: Birth of collaboration The story of fintech in Nigeria will never be complete without Unified Payment and Interswitch. Both companies are a testimonial of what could be possible when players in the financial services sector come together. Nigeria’s foremost payment processing company, Unified Payment was founded by a consortium of banks. The banks came together to form the company as SmartCard Nigeria Plc and as the first financial technology company in Nigeria. That was in 1997. Because it was formed by the banks, it was to serve the interest of the banks and the banking community in Nigeria. There were certain needs that needed to be met. Then banking in Nigeria was at its rudimentary stage. Even branchless banking where one can have an account in one bank and go to another branch of the same bank to carry out a transaction was seen to be an innovation. The only means of retail payment in Nigeria then was cash. So the banks saw the need to establish a company that will be used as an industry platform to meet the needs of the market. According to Agada Apochi, the fourth and current chief executive officer of UP, at that time, the company had to pioneer electronic payments for goods and services in Nigeria. It was the first payment scheme in Nigeria, it had its own branded plastic card called ValueCard. The first PoS ever to be deployed in Nigeria was done by UP. That was the first means of electronic payments for retail in Nigeria. Interswitch which came later, began as a project in then TELNET. Spearheaded by the project leader, Mitchel Elegbe who became the first CEO, Interswitch was started in 2002 in partnership with seven Nigerian banks which seeded N200 million. The seven banks include First Bank, STB (later United Bank for Africa (UBA), Zenith Bank, Guaranty Trust Bank (GTBank); First City Monument Bank (FCMB); and Wema Bank. Other shareholders of the foremost electronic payment switching company were Accenture and Techinvest, the investment arm of Telnet, which initiated the company. At the time, its major service was providing a switching infrastructure to connect the different banks in Nigeria. According to Olaniyi Yusuf of Verraki, who was with Accenture at the time, it was decided at the onset that Interswitch will be different from other prior attempts at establishing a Financial Technology company by ensuring its ownership was broadbased, including banks who will be ultimate users, Telnet the technology provider and Accenture the consulting company that orchestrated the deal. In an attempt to acquire a majority stake in the company, Helios Investment partners, an Africa-focused investment firm, made a generous offer to shareholders, which prompted the banks to either sell all or some of their shareholding in the company. One of the banks which invested N30 million hitherto had 20 percent shareholding in the company, agreed to sell 15 percent to Helios for N4.3

directly regulate the start-ups a larger number of whom are mere technology companies providing services in the financial sector.

billion, thus reducing its shareholding to five percent. Two other banks with five percent shareholding each an initial investment of N5 million agreed to sell everything to Helios for N1.1 billion. Investigations further revealed that all the banks sold part of their holdings in the company and as a result, Helios ended up with 69 percent majority shareholding in the company. In 2008, Interswitch went on to launch Verve, the first chip and pin debit card by any local start-up in the payment space in Nigeria. Verve replaced the magnetic stripe debit card. At the time it was launched, 21 out of 24 Nigerian banks adopted it, making it the first chip and PIN card accepted across multiple payment channels including ATMs, Point of Sale (PoS) terminals, online, mobile and at banks. The three remaining banks later joined the network of Interswitch to make it the only transaction-switching network to have 100 percent of Nigerian banks connected to it and the only Nigerian e-payment company to have real-time online connections to all the 24 banks in Nigeria. It also featured the largest range of value-added services. In 2013, there were more than 20 million Verve cards in circulation with access to over 119,631 PoS terminals, 11,287 ATMs and over 1,000 online merchants. The success of Interswitch was perhaps that it led to the founding of new fintech start-ups and was a reference to the opportunities that exist in the space. Some of the start-ups include Flutterwave, Carbon, Piggybank, Lidya, Cowrywise, SureCredit, Paystack, and Riby Finance. SystemSpec: The Outlier SystemSpec is one of the oldest indigenous technology firms in Nigeria which foundation goes as far back as 1991. However, it started as a business to a business firm selling software to organizations. It was a five-man partner agent and value-added reseller for SunSystems, an accounting package developed by Systems Union, UK. The company developed HumanManager, a payroll Human Resource Management (HRM) and goal management software package. It was adopted by over 200 organizations across Africa as of 2004. Remita an e-payment and e-collections platform developed by SystemSpecs became the federal government payment platform. Remita facilitated the CBN’s collection of funds on behalf of the Federal government. It was also www.businessday.ng

used by 22 commercial banks and over 400 microfinance banks in Nigeria. Threats to Fintech start-ups in Nigeria As much as fintech start-ups have become poster children to how digital technology can transform the lives of people anywhere and anytime with speed, their path to survival - and possibly expansion - is filled with many sharp bruising pebbles. The pebbles come in different shapes and sizes, from poor internet service, epileptic power supply, weak regulatory environment to lack of business skills and big tech companies. Internet service The internet is to fintech what air is to life. It is so central that the definition of fintech on Wikipedia would not be completed without inserting “internet”. It defines it as, “the new applications, processes, products, or business models in the financial services industry as an end-to-end process via the internet.” Some other definition of fintech breaks it down to “internet of finance”. Unfortunately, internet service in Nigeria has for many years remained abysmal despite a reported increase in broadband penetration from 3 percent in 2013 to 33 percent in 2019. The Nigerian Communications Commission (NCC) said it has surpassed the 30 percent target set in the National Broadband Plan set in 2013. By January, the commission said Nigeria now has 33 percent broadband penetration. Nevertheless, investigations have revealed that much of the 33 percent comes from mobile penetration, whereas fixed broadband remains untapped. Operators in Nigeria’s fixed broadband market say that there is no shortage of capacity. There are about 40 terabytes of broadband lying on the country’s shores as a result of the five submarine cables brought into the country by organizations like MainOne, Glo, Ntel, Dolphin Telecoms owners of ACE cable and MTN owners of WACS cable. Together these fixed assets have the capacity to deliver over 40 terabytes of internet traffic capacity. However, only less than 10 percent of the capacity is utilized today. Mobile broadband is by nature limited unlike fixed wireless, meaning with a population of over 114 million internet users (NCC’s latest internet user data) like Nigeria has, the quality of the internet is bound to be a problem. Failure to address the

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fixed broadband challenge is largely responsible for the fluctuations, outages and costly data businesses in the fintech space. Poor power generation Nigeria is at the bottom of the pyramid of nations with a large population and sufficient power supply. The country requires not less than 180,000 megawatts of electricity to fully deploy its industrial revolution according to Sunday Oduntan, the executive director of the Association of Nigerian Electricity Distributors (ANED). Currently, the electricity capacity is at 3,604MW according to latest data from Nigeria Electricity System Operator (nsong.org). At that level of capacity, fluctuations and blackouts are inevitable. Without an adequate supply of electricity, fintechs, as well as small businesses, cannot function or even survive. A few experts have recommended that tech clusters like Yaba be recognized as special industrial zones and given prime electricity supply attention but that remains a dream. Clarity over the regulatory environment The Central Bank of Nigeria (CBN) is the regulator of the financial services sector in Nigeria and thus is responsible for players in the fintech space. Over the years and with the growth in digital banking, the apex bank has released different guidelines aimed at creating a level playing field for all stakeholders and sustaining momentum in fintech. As such there are various aspects of fintech guidelines issued by the CBN. These include categories like digital payments; mobile money or ewallets; international money transfer; fintech testing; data protection; cyber security; and consumer protection. However as many experts have pointed out, there still does not exist a comprehensive fintech regulation contained in one document. This could have implications in terms of licensing, funding and taxing companies in the space. Second, some aspects of fintech such as cryptocurrency and crowdfunding, open banking are not regulated. Third, some of the existing guidelines are crafted in a way that does not reflect the interest of start-ups. In essence, they either seem to protect the interest of banks or are targeted at big-spending non-bank organizations. There have also been concerns by fintech stakeholders on whether the CBN should @Businessdayng

Government There is the challenge that the regulatory environment so far created is not far-reaching or unifying enough in the sense that states where the start-ups operate to come up with different rules that are contrary to what the central government has given. This often led to multiple business taxation and harassment by agencies set up by state and local governments. In the same vein, the government’s failure in providing basic infrastructure is also impacting negatively on fintech start-ups. This has in many ways multiplied the cost of doing business in Nigeria as the start-ups like other businesses have to provide their infrastructure in order to meet their customers’ innovative expectations. Big Tech Companies This perhaps represents the biggest existential threat to every start-up. The fintech market is attracting significant investments from big technology organizations like Microsoft, Google, Facebook, Alibaba, Transsion and many others. In some cases, the organizations are satisfied with holding an equity stake in the fintech start-ups but quite a few are already at advanced stages of developing their fintech products which they hope to release to their users here in Nigeria once they get the green light from the regulator. Facebook-owned WhatsApp has released its payment feature in India and hopes to do the same in markets like Nigeria. Transsion the manufacturer behind Tecno, Infinix, and iTel recently launched its payment product PalmPay. What is Fintech – Fintech is basically technology-based companies that enable or collaborate with Financial Institutions. The Nigerian fintech sector offers a wide range of products including peer-to-peer lending, nextgeneration payments, insurance and wealth management. These products are majorly accessed through mobile/ online platforms provided by Fintech companies. Much of the market transactions are however centered on payment systems and applications, which by-pass the requirements of holding cash or transacting through a bank account. Strengths of the Nigeria economy for Fintech Investors • Massive financial inclusion potential • A large percentage of Nigerians have mobile telephone lines/smartphones • Youthful and fasting growing population The initial forerunners of the Nigerian Fintech sector were companies focused on payment services, while in the next wave we will see Fintech companies making greater in-roads into peer-to-peer lending, blockchain, digital banking, and financial inclusion. Key Challenges for the Fintech Sector in Nigeria • Need for regulatory framework and support • Lack of government incentives and investor-friendly policies • Need for more incubators, accelerators and innovation labs that will provide a steady pool of talent for the sector

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector Why we pioneered USSD payment in Nigeria – E-Tranzact boss NIYI TOLUWALOPE, managing director and CEO of E-Tranzact, one of the leading switching companies in Nigeria in this exclusive interview with BusinessDay’s FRANK ELEANYA revealed why the company pioneered the Unstructured Supplementary Service Data (USSD) payment in the country and the first mobile money transaction in Nigeria.

Tell us about your background started out as an accountant at PricewaterhouseCoopers (PwC), joining the audit and advisory team back then. I worked on a couple of privatization deals which I was asked to oversee. I also did some advisory work in PwC, like the purchase of Starcomms; I actually led that transaction. The work I did at that time was what picked my interest in core corporate finance and investment banking. On some of the transaction we worked on I partnered with some of the investment banks at the time. I marveled at their approach, metrics and the quality of the stuff they were talking about. I started researching how to get into that world. I went for MBA at the University of Virginia and graduated as a Dean’s scholar. I joined investment banking quickly at Citi Group, in their mergers and acquisition department where I worked for 12 years. After that I got an opportunity to go to London and head the alternative business focusing on Africa. But I wanted to stay back in Europe so I went to join JP Morgan’s investment banking team. I was there for a couple of years and moved to Credit Suisse with focus on power (energy). My father is a professor and his specialty is in power systems, so I had always known a lot about Nigerian Electric Power Authority (NEPA). I had the intention to raise a fund that I will invest in power sector. But the power sector in Nigeria is a different dinosaur; it is beyond fund raising. I came back to Nigeria in 2010-2011 and had a small stint with the Honeywell Group. I was advising them on the sale of their investment in Airtel at that time. At $10 million, it was the biggest transaction in telecommunications in Nigeria. I worked on that transaction with one of the shareholders who owned 20 per cent of the business. Shortly after, I was approached by Capital Alliance who is an investor in E-Tranzact. They had an investment and they needed a chief of finance (CFO) to come and do. I had the requisite background for financial accounting, corporate finance, investment banking, and private equity. Also my big 4 PwC background; as a chartered accountant, was what they needed because they have been in investment for a while and they needed a CFO that will guide them to exit. In private equity you invest for a while and you exit. That was what they wanted. I knew nothing about fintech then. One of my key strength growing up was being a fast learner, once I understand the dynamics. I am a numbers person; if can always see it in everything and if can tell the numbers story I can easily tell a great story and the strategy becomes clearer. Those were the things that have gotten me to where I am today. Joining E-Tranzact in the early stages, we struggled a bit with profitability. This was largely because we were doing so many products, being a very innovative business. I felt that we were not optimizing our ability to sell them properly and dominate the market. One of the things we did quickly was to streamline our products and look at what was profitable and what wasn’t. We focused on that and things started to change. Our remittance business, mobile banking business, corporate banking business everything transformed into profitability over the last couple of years.

fastest growing channel today is the USSD. I have clients that started in December 2018, doing 35,000 transactions a day on that channel; today they are doing 78,000 transactions a day. It has more than doubled because everybody is doing it. It is so easy the CBN has even pegged it to N20, 000 once and N100, 000 a day. Before now, people who wanted to transfer N100, 000 could send it once. But today you have to do it five times. So it is increasing transaction activity and also security. If you want to do more we can profile you to do a lot more. That is bringing a lot more people into the banking sector. Today, loans are done by USSD. These are all the cumulative things that have built what everybody is driving now.

What is the other innovation you created? The other innovative thing that came was the USSD (Unstructured Supplementary Service Data) which includes the *389* and the *737*. That innovation started from here in 2012.

What was the relationship with banks back then being a non-bank entity coming into a space they dominated? How has the relationship evolved over the years? Yes we are a non-bank financial institution giving a license switch by CBN. Nevertheless, we are the only CBN entity with about 6 to 7 licenses. We have a switch license which is the entry we have here and in the banks that allows you to move money from your account in GTBank to another account in First Bank, for instance. It also allows people to send money from abroad or through Western Union directly into your account or your wallet using our PocketMoni. Back then no one knew anything about switching. All the transaction that happened was, print out a statement send it to National Clearing Service (NCS) which is now NIBSS, who disburses the money to the different bank and send a message to the customer. That is why in those days it takes two to three days for money to clear. A switch allows you to send money directly to someone who gets instant value without money actually moving. To achieve that you needed the banks. One of the entry strategies we had was to buy all the equipment that the banks will need. We say to them, “this is what you want to do, take it we sell it free. Use it for three months, if you like it, pay us.” The rest is history. You have to be bold to crack the market. Look at the records today, in 2018, there were about 800 to 900 million individual inter-bank transactions, this year the target is about 2 billion because the growth is there. Already, this year we have done about – year-to-date- 400 million in the first four to five months, which is already about half of what was done last year. I believe we should exceed the target as an industry.

How did it happen? We were having a conversation. Steve Jobs, when he created iPod he was just passing by and saw the Discman people were using. He thought, “Why can’t you create a solution that on two to three clicks you can hear the music?” That was the birth of the iPod. That was what we thought about here, why can’t we make payment just “*” this, press Enter”, with fewer clicks. We started from here, register, debit your account and recharge your phone with airtime, it started right here. When that came out it created a direct access to get the other hundreds of millions of Nigerians that did not have smartphones to be able to have USSD streams they can build transactions on. Look at how that has evolved over time; practically every bank has a USSD stream and we power switching transactions for all the banks. The

Talk to us about PocketMoni and how the name was originated? One of our major focus as a brand here is financial inclusion. The focus has always been on the 20 to 30 million bank accounts – but those guys are already banked. They understand electronic payment. They are the ones that are doing all these transactions I am talking to you about. There is data that we always use here when we do our strategy and our focus. There are about 180 to 200 million Nigerians and we have about 40 million bank accounts. When we streamline it, a couple of Nigerians have two to three bank accounts which make up the 40 million. By the time you add it up, and look at the BVN; one BVN can have about 5 accounts – you might get about 20 to 25 million authentic BVN accounts which also brings the number of people that are actually banked to 20 to 25 million.

Niyi Toluwalope

What specific problem was ETransact created to solve? Electronic payment; at that time – around 2002 to 2003 – Nigeria was heavily cash dependent. Suddenly the influx of telcos and mobile phone created new opportunities. Based on the issuance projections, it was expected that about 20 million people within the next five years will have mobile telephones. At that time also, if you looked at the number of bank accounts it was probably less than 20 million. Hence, the expectation was that mobile telephones were going to grow quick. But the country was still heavily cash dependent and if we wanted to move transactions to digital, mobile might be the best way to do so. So we began to think and develop a solution around mobile money and mobile banking. That was what E-Tranzact was founded on, to leverage on the growth potential of mobile phones, mobile subscribers and create solutions that can allow them use their mobile phones and devices to do transactions. Tell us about your first electronic product Our first product was mobile and it was largely SMS based. Look at the challenges we had then when we all started using mobile phones. I send you an SMS today and you can only get it the next day. I remember some of the patents the founders gave the Central Bank of Nigeria (CBN). They did the transaction there and nobody got the SMS, but the next day they received it. You need infrastructure to be right for these solutions to really grow and perform. When you travel abroad and you are buying something at the till, you just swipe your card and cashier gets it. If you card is going to be declined, it will be done immediately and if it is going to be successful, it is immediately. You don’t see “approval”, “resending” “authentication” etc that you spent almost 2 minutes making a transaction. It is all based on infrastructure. Even though things have significantly improved but we are still far away. The backbone we need is still not there so we still need a lot of investment from government, telcos and people like us, into infrastructure to ensure seamless and convenient payment flow and through. So we started a mobile SMS based. At the time not a lot of people bought into the story. There is a Nigerian culture which is still prevalent today; we have that need to feel cash. A lot of it has to do with trust. If www.businessday.ng

you are making a payment to the average person out there, he wants to take that money or give you that money while he is looking at you in the eye so there will be no stories. For instance, if I am I did a transfer and told you I have done it, you can tell me you did not receive it or I tell you it’s done even though I didn’t do it. There are trust issues that hinder the growth of digital payments. However, this is an innovation hub; we are market leaders in innovation. That can be verified. Over time our development team realized that we can actually build apps that rely on data to do this. So the apps and the data made it easier to provide the solutions rather than relying strictly on SMS. There is a school of thought that sometimes SMS is not secure. Gradually, SMS side of things is in decline, that today it is only for notification of credit and debit alert. But it is still a big business. Transactions however have evolved into smartphones using the apps. The people who can afford smartphone apps, sadly, are just two per cent of the market while the bulk of the market is still using Nokia 3310 and black screen phones – feature phones. That was the market we were trying to break into. We realized that the people who can afford smarpthones probably already have bank accounts, and they do bank transactions.

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So what happens to the about 160 to 150 million Nigerians? You have net-number after streamlining, about 90 to 100 million people in the country without an account. Let’s assume that all those that have mobile phones have bank accounts. So if you take 25 million from 90 million you have 65 million. This 65 million people have mobile phones and they are making calls; to do that you need to put hand in your pocket and buy airtime. That means they are making money. Why are they not banked? They don’t trust the banks or the banks do not have the infrastructure in the area or the people are not educated enough. On the other hand they do contributions, esusu and ajo because there is always one person in that rural community they trust. They can give the person their money and expect to get it back. They understand the trust issue and the fiduciary relationship in the person they see all the time. Hence those who have exemplified themselves as a trusted entity within the community can become banks. You just need to find a solution that enables that person function as a bank in the rural areas. That is where the ETranzact agent bank comes in. We find those kinds of people, train them, equip them with the solution where they can collect cash and have it as electronic float. They can pay out cash from their e-wallet as well, and three they can do transactions for those rural people. They can then recruit everybody in that community to own a wallet. So they do not need to call the agent all the time for transactions. The only thing is you can come to them and say take N5,000 cash and load in your e-wallet or you can even do it yourself. That is what a PocketMoni came out to achieve. We got our mobile money license in 2011 but we started providing mobile money since 2005. CBN did not have a clue then. One of the examples we like to give, is the World Bank assisted project where some of the executives here went to Kano State and they faced the cattle rearers and traders. We were presenting this e-wallet that day and one Alhaji stood up and said “So you can put money in this wallet and I will travel and nobody knows there is money in it? And when I get there I can use it?” All of us said “Yes”. The man brought out N200, 000 cash and said, “Put this in the wallet.” We signed him up immediately. He was probably one of the first people we had back then. Today we have about 15,000 agents and 3-4 million registered users on the PocketMoni app. Activity can be a bit low sometimes; you still need a larger agent network to create transaction activity and the specific location where people can go and fund their wallets. What wakes us up every day is “How do we make wallet funding easier?” Unlike MPesa in Kenya through Safaricom – Central Bank in Kenya does not cover that – they could use airtime to move your wallet as cash. In Nigeria there is a regulation that forbids that because the Central Bank has to control financial inclusion. If that is not there you need to think of other ways to fund the wallets. We have created several ways to achieve that but much of it still flows from the population that is banked. With their cards, they can fund their PocketMoni today and from there can transfer to any other PocketMoni account or to any bank account in the country. We need to have agents every length and breathe of the community to keep activities flowing more regularly.

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Thursday 30 May 2019

BUSINESS DAY

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector

Fintech companies

Flutterwave lutterwave was established in 2016 by Iyinoluwa Aboyeji and Gabriel Agboola. The company provides technology infrastructure and services to enable global merchants, payment service providers and pan-African banks accept and process payments on any channel (web, mobile, ATM and POS).

lion in a Series-B funding round led by London-based Global Innovation Fund, with participation from Goodwell Investments, Unreasonable Capital and Omidyar Network, along with Mauritius-based Adlevo Capital. The round of funding brought the total raised so far by Paga to $34.7 million in four rounds.

Paystack Paystack was founded in 2016 by Shola Akinlade and Ezra Olubi. The start-up provides a multi-channel payment option for merchants across countries to enable them to accept credit and debit payments from customers around the world. In November 2018, the company announced that it processes over N10 billion ($27.5 million) worth of transactions every month. Over 23,000 businesses use its platform including big names like Taxify, MTN, Lagos Internal Revenue Service (LIRS), Iroko TV, BusinessDay Media, Betway, among many others. Paystack recently secured $8 million Series A round of funding from Visa and Stripe. It has been making plans to expand its services to Ghana.

PiggyVest PiggyVest was launched in 2016 by three entrepreneurs Somto Ifezue, Joseph Chibueze, and Odunayo Eweniyi. The company provides an online savings platform – like the traditional piggybank – to help users become better at saving their money. Using a saving process, Piggyvest makes periodic (daily, weekly, and monthly) deductions as stipulated by the user from the user’s account and saves it on their behalf. The deducted amount is stored in a digital wallet at an interest of 10 percent per annum. There are over 230,000 users on Piggyvest whom the company has helped to save over N1 billion in January 2019 alone. In June 2018, Piggyvest announced it has raised $1.1 million from a group of investors led by Olumide Soyombo, founder of LeadPath Nigeria.

Paga Paga was founded in 2009 and publicly launched in 2011 by Tayo Oviosu. The company works as a digital platform to transfer money, pay bills, and buy things. The company acts as a mobile wallet where any user equipped with a mobile device can conduct transactional activities using their device. In 2018, the company raised $10 mil-

Carbon The company formerly known as Paylater owe its roots to One Credit which was founded in 2012 by brothers Chijioke Dozie and Ngozi Dozie. Paylater itself was unveiled in 2016 as the first digital lender in Nigeria. The company introduced instant loans and later added services such as bill payments, airtime purchases, free credit reports, investments, www.businessday.ng

personal finance management, and digital wallet that will come to make transacting cheaper and completely seamless. The company rebranded to Carbon in April 2019 to reflect a deliberate transition to a fully-fledged digital financial services platform that now offers bill payments, fund transfers, and savings products, in addition to loans. Prior to the rebranding, Carbon had also secured a $5 million investment from Lendable, a technology-enabled funding provider, completed the acquisition of Amplify Pay and became the first African fintech start-up to secure credit ratings in 2018. CowryWise Although work began on CowryWise in 2016, the start-up was eventually launched in 2017 by Razaq Ahmed and Edward Popoola. The goal of the company is to democratize asset and wealth management services and make them available to everyone. In that sense, CowryWise provides a high yield automated platform allowing users to deposit their money and cultivate a consistent savings and investment habit. In 2018, the company was listed as one of the 50 Global Emerging Start-ups by Kairos, a New Yorkbased early-stage investment fund. Riby Finance Founded by Abolore Salami in May 2016, Riby Finance is a personal finance platform that offers cooperatives, company groups, employees, individuals, associations, and financial development institutions solutions to manage their financial

activities. The solutions can be customized to solve specific client problems. Riby was part of the FINTECH100 2017, a list of the top 100 start-ups in fintech across the globe compiled by KPMG and H2 Venture. The company was also one of the 20 finalists for the 1776 Challenge Global Cup. Riby currently has over 1 million users on its cooperative banking system. Renmoney Renmoney was founded by Stephen Jennings as part of the Renaissance Group. The company offers sameday loan origination and disbursement and was the first regional lender to use cloud technology from a traditional core banking vendor to lower its operational costs and support product innovation. Customers can quickly access loans of up to N4 million with Renmoney Micro-Business Loans. Renmoney has over 18,000 customers and operates from seven branch locations across Lagos state. SureCredit SureCredit a platform from SureGift – a gift card company founded by Adeoye Ojo, Babafemi Lawal, and Olaoluwa Samuel-Biyi – was launched in 2016 to enable employees to obtain voucher loans with which they can pay for all they need at about 50 online and offline merchants without overstraining their salaries. Employees can purchase a wide range of products, go on vacation, pay utility bills and access numerous services among others with a payment plan spread over a couple

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of months without incurring highinterest rates as they would when they approach banks and other credit service, providers. Lidya Lidya was founded by Tunde Kehinde and Eric Eksin, co-founders of Africa Courier Express (ACE) in 2016. The company was set up to help users of ACE initially open accounts, save money, build credit profiles, and access credit of between $500 to $15,000 to grow their businesses and handle short term personal needs. Since inception, Lidya has granted more than 1,500 loans to help customers engaged in agriculture, hospitality, logistics, real estate or health in Africa. In 2017, the startup raised $1.25 million investment from Accion Venture Lab. It further announced another investment worth $6.9 million in a Series A round from Omidyar Network and Alitheia Capital. Remita Remita is a multi-device payment platform created by SystemSpecs in 2005. The platform enables users to view their bank balances from different banks on a single screen, transfer money to one or more beneficiaries, pay bills, and view transaction reports. It also allows businesses to receive payments from customers through nine different channels, including the Remita Mobile app and website, internet banking, Point of Sales (PoS) terminals, debit and credit cards, merchant’s website, bank branches, mobile wallets and standing order and direct debit.

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Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector With the feedback from customers, we will continue to create convenient products and services to meet their needs Renmoney is a fintech lending company operating under a micro-finance banking license in Lagos, Nigeria. They are passionate about making financial inclusion count and their loans and investment products are designed to offer clients convenience and value. OLUWATOBI BOSHORO, Chief Executive Officer of Renmoney , in this interview with DOLAPO ASHIRU speaks on the various issues regarding the Fintech sector of the Nigerian economy.

ow has it been running a fintech business so far?

Running a fintech business has given me the opportunity to work with a team that has a very clear focus on delivering value to our customers. I have worked in similar organizations in the last 10 years but Renmoney is really exciting, and the fulfillment comes from knowing that our solutions are impacting lives and also supporting the economy.

branded as a result. Is that something your company is considering? What other services are you likely to provide in future? As a business, we continuously listen to and act on our customer’s feedback, to learn more about their needs and build solutions to meet these needs. We recently launched MicroBusiness Loans for small business owners. With the feedback from customers, we will continue to create convenient products and services to meet their needs.

During the early days of fintech businesses in Nigeria, it was believed that they were here to displace the banks. What was the Renmoney approach? Was it to disrupt the status quo? We are a very collaborative business and we work with commercial banks to deliver our convenient solutions to customers. A lot of fintech companies partner with various players in the finance and payment space to deliver services that improve the life of the average Nigerian. What are some of the hurdles of operating in the lending space and what does the industry need to do to surmount them? One of the challenges of operating in the lending space is the quality of data that’s available. You either find that data is not available and when it available, it is fragmented. We currently have to connect to several data sources to get a full picture of each customer. If we had access to a database that gives quality information about customers on time and every time, this will increase the speed with which we respond to requests. Another implication is that with less quality data available, a customer that could have accessed a one-million naira loan may only get two hundred thousand

As you’ve just mentioned, Renmoney extended credit facilities to include loans for business owners. What has the customers’ response been like?

Our depositors are very happy with the market leading interest rates we offer and over 80% continue to invest with us after their initial deposits. Renmoney made the London Stock Exchange Group list of ‘Companies to Inspire Africa’ for 2019. How did you earn this recognition? The first thing we did right last year was to become an outside in organization. This means that we listen to our customers and then work our processes to fit the needs of these customers. With this, we served our customers better and we were able to provide about 100,000 loans within the year. This got us noticed by the LSEG team.

Oluwatobi Boshoro, CEO, Renmoney

‘‘

I believe consumer finance will be a major driver of economic growth. Over 70% of the workforce in Nigeria is employed by MSMEs so, this means that bridging the gap between these business owners and access to funds will not only grow their businesses but also boost the country’s GDP

naira. Thankfully, the CBN and other regulatory bodies are quite open and willing to understand how the industry is evolving and together we can surmount these challenges. Tell us about your use of artificial intelligence in providing your services. We employ the best technology and partnerships to reach qualified individuals and build learning algorithms that rely on both traditional and alternative sources of data to make credit decisions in seconds. With all of these we are able predict customer behavior and determine which customers are eligible for loans, how much they can get and how likely they are to repay. Recently, we have seen some fintech companies expand their portfolio of services and some have re-

As I said earlier, we are keen on making financial inclusion count, particularly for underserved segments of the market. Over 70% of Nigerians are employed by micro, small and medium enterprises so, if we want to impact the economy directly, that segment needs to have access to credit to grow. A lot of research, testing and hard work went into creating this product, and during the 6 months period of testing this product, we reviewed over 30,000 applications and issued over 6,000 loans. The response has been positive so far. How much funding have you got from investors and what role have they played in getting you to where you are now? We take in fixed deposits from investors which supports our lending business. The deposits we’ve received from investors have helped fund over 200,000 loans to individuals in Nigeria.

With the low level of talent in the ecosystem, how do you go about finding talents? There are a lot of great talents in our ecosystem. They’re just a little bit harder to find. Good people know good people, so we leverage the connections of our existing employees to connect with the right talent. We also partner with recruitment companies to reach out to great talent for vacant roles. What’s your prediction for what your sector will look like in the next 10 years? I believe consumer finance will be a major driver of economic growth. Over 70% of the workforce in Nigeria is employed by MSMEs so, this means that bridging the gap between these business owners and access to funds will not only grow their businesses but also boost the country’s GDP.

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector Ecosystem Coverage of the Nigerian Fintech Sector

echnology is shaping the way people live, communicate, work, play, interact and transact business in a country like Nigeria which has the highest population in Africa. Although there are still some sectors that are yet to catch up with technological advancements, many have however evolved with technology resulting in ease of operations and better customer service. The financial industry is one of such sectors that have grown at an exceptional rate. For one thing, there was a need to eradicate the long queues in banking halls, make cash transactions easier and faster without a visit to the banking hall and resolve other issues associated with payments and financial transactions. Financial Technology or Fintech as it is fondly called is the use of technology to carry out financial transactions in a seamless and affordable manner. Start-ups Fintech is a rapidly evolving segment of the financial services (FS) industry where technology-focused start-ups and other new market entrants are disrupting how the industry operates. Fintech start-ups function by innovating the traditional products and services provided by FS industry. This innovation is achieved by introducing technology-driven applications which transform customers’ expectations and create opportunities in the underserved market. As such, Fintech is gaining significant momentum and causing disruption to the traditional FS value chain. BusinessDay categorized Fintech start-ups based on the products they have and the services they render: Paytech: payment transactions through the use of technology (Paytech). This is one key area where Fintech leverage on to render services to Nigerians, With the rapid adaptation of card payments in Nigeria, platforms like Remita, a payment platform designed by SystemSpecs which is used by government and its MDAs to receive payment from the general public, Flutterwave and Paystack are taking the lead role in making it easy for businesses to start accepting online payments with the click of a button. These companies allow both individuals and business to accept payments over mobile and web. They aim to integrate payment process in websites and apps and transfer the money directly to their bank accounts or digital wallets. Lendtech: leveraging technology platforms to disburse loans has fuelled the growth of alternative lenders which offer both higher yields to investors and faster, cheaper, more convenient loans for borrowers compared to traditional banks. Lenders who use the services of Lendtech firms can easily apply online for a loan and get the fund sent to their bank account in less than an hour without having to go to a branch of the financial service provider. Private lenders like Carbon, Quick-

Check, Kwikcash, Lidya, Renmoney, and infracredit, etc. coupled with some Fintech companies established by commercial banks are injecting millions into alternative-lending space in Nigeria making it easy for anyone to access quick loans (business or personal) when needed. These Fintech companies also help individuals to invest their surplus funds to earn returns greater than fixed deposit or savings account interest rates. Finance manager: The Fintech startups in this space provide products designed to help its users track and manage their finances. The tech start-ups are introducing simple ways to easily enable people to manage their spending. Instead of relying on a pen and paper or spreadsheet, Nigerians through platforms like Piggybank, Cowrywise, Invoice NG, Kliqr, etc. can now use digital financial solutions to manage their finances in real time. Users The users of the financial products created by the Fintech start-ups in Nigeria cuts across board: the elite, less educated, financially included, under included and most importantly the financial excluded segment of the society. From buying airtime through the use of mobile apps to sending money and accessing a loan, there are now products that meet each of these needs. This means that anyone in Nigeria, as long as the person has the will to carry out any of the aforementioned transactions and has some basic requirements, can leverage on the products by the Fintech start-ups to have a seamless transaction. Nigerian customers have shown an unexpectedly fast rate of adoption to www.businessday.ng

Fintech offerings in the last few years. Investors To many investors, the Nigerian Fintech industry is a sleeping giant that can give a high return on investment. In recent years, investors’ appetite for the industry has increased beyond expectation and most recently foreign investors are entering into the Nigeria market space to get a share of the high growth industry. Nigerian Fintech funding exceeded $250 million investment in 2018 alone, making it the most of any period, figures from industry sources show. Some start-ups that raised big ticket funding in the review year include: Branch which raised $70 million in Series B; Cellulant secured $47.5 million in Series C to expand into more countries; Mines got $13 million Series A investment to hire talent, expand into Africa and beyond; Paga raised $10 million in Series B2 to expand into Africa and other markets; Paystack raised $8 million in Series A to expand into other markets; SureRemit raised $7 million in an ICO to develop its noncash remittance platform; and Lydia secured $6.9 million in Series A to hire skill and expand its loan book. Armed with increased investment, some of these start-ups have launched ambitious products and services targeted at both existing banking customers and the millions of unbanked Nigerians. According to a recent report by Partech, a global investment firm, financing a wide range of technologies, out of the total $1.163 billion in Venture capital (VC) funding raised by African

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tech start-ups in 2018, $582 million from over 64 transactions was channelled to the financial sector. This represents half of the total fund raised in the year. Financial institutions The emergence of Fintech companies may have been a threat to Nigerian banks but the financial institutions are not throwing in the towel as they have increased their investment, reviewed their digital banking strategies and unleashed new technology-driven products and services into the market. Traditional banks have therefore joined forces with Fintech companies to utilize more financial technology offerings. Checks by BusinessDay revealed that Nigerian commercial banks are taking fintech into consideration and it is reflating in their bottom line. In 2018 investment in financial technology by 11 Nigerian banks earned them about N124.45billion revenue from electronic transactions. This represents a 43.2 percent increase when compared to the corresponding period of 2017 when it reported revenue of N86.7 billion. Government/Regulators The Central Bank of Nigeria (CBN) is the regulator of the Fintech industry. In a recently drafted policy document, CBN recognized products by Fintech companies are gaining reception but argued their emergence would heighten existing risks in the financial system. In the quest to address the emerging issues such as risk management and capital adequacy, the apex bank raised a new policy which will require Fintech start-ups to have minimum shareholder funds ranging from @Businessdayng

$275,000 to $14 million before obtaining licenses for their operations. To industry sources, it represents a significant barrier to entry for new Fintech businesses which-like most start-ups; depend on revenue growth and investor backing after they launch to scale operations. Most Nigerian early stage start-ups raised well below the CBN’s new financial requirements even before taking into account their operating costs and expenses. While the apex bank offers a blanket reference to Fintech companies, the regulation will mostly impact start-ups looking to offer digital banking services, as there will be confidence in the service providers as much as there is in the conventional commercial banks. Industry sources are of the opinion that the move by the central bank is to avoid situations where people lose money but they also argued that the apex bank has to find balance in ensuring it protects the interest of the people and also encourage more companies to operate in that space. University & Research Institutions A cutting edge fintech eco-system needs to prioritize on innovation and thus leverage on academic bodies such as universities and research institutes to help build an entrepreneurial mind set in Nigeria’s young technical talent. Incubators, Accelerators & Innovation labs The fintech sector has witnessed an upsurge in mentorship programs for young tech entrepreneur s which has contributed hugely to the growth of the Nigerian fintech eco-system.

Thursday 30 May 2019

BUSINESS DAY

FINTECH IN NIGERIA Revolutionizing The Financial Services Sector

Fintech as a disruptor

n the last five years, banking and fund transfer/payments are the sectors most disrupted by Fintechs. This sector has witnessed an increase in the number of technology-driven payments applications and processes, mobilephone enabled digital applications that facilitate easier payments, alternative processing networks and increased use of electronic devices to transfer and save money. Many of the platforms are also driving the financial inclusion program of the apex bank which sees to achieve an 80percent financial inclusion by 2020. In 2017, leading payments, mobile money business platform, Paga and

the Nigerian Postal Service (NIPOST) announced a partnership aimed at making financial services available to all Nigerians by leveraging on all the NIPOST offices across the country as robust financial services points. FinTechs in the country have found a way to analyze the creditworthiness of borrowers and approve loans in minutes without physical contact. Recently, in an effort to gain more customers into the financial inclusion ‘net’, Visa, a credit card company, announced a partnership with Branch & Carbon (formerly Pay later) to introduce virtual cards which can be used on ATMs by their unbanked borrowers. Realizing the seeming threat posed

by these FinTechs, lenders in the country have also woken up from their sleep as many of them are now moving towards non-physical channels by implementing operational solutions and developing a new strategy to reach, engage and retain customers, thereby simplifying their once cumbersome processes to improve customer experience. The partnership between traditional financial services and Fintechs will help provide a way to harness their capabilities and strengthening their competitive advantage. Factors essential to the creation of a Successful Fintech Hub

- Innovative and entrepreneurial mind-set - Technological backbone - Regulatory support - Adequate funding - Government programs and incentives Opportunities associated with the rise of Fintech - Cost efficiency - Additional stream of revenues - Improved customer retention - Differentiation Government initiatives that can further develop Fintech in Nigeria

1) Develop a robust digital infrastructure 2) Offer soft loans and other financial incentives to fintech start-ups 3) Designate areas that Fintech start-ups can cluster together i.e Fintech Parks 4) Organize regular seminars/ workshops for coding and entrepreneurial development Regulatory initiatives that can further develop Fintech in Nigeria - Establishment of a support desk that focuses only on the regulatory needs of Start-ups

Digital innovations of Fintech in the financial services sector Financial Inclusion intech has been a major catalyst for bridging the financial inclusion gap in Nigeria. By providing solutions to the financial services and product need to the millions of unbanked population, this ecosystem has created a good number of economic opportunities along with the value -chain. For instance, a 2016 report by KPMG shows that M-PESA in Kenya accounts for over 25 percent of the country’s gross domestic product (GDP). For Nigeria, Fintech continues to meet up with the challenge of achieving a 20 percent financial exclusion rate by 2020 through service offered in the payment space utilizing more accessible platforms like the USSD and mobile money. Fintech has also been able to facilitate the provision of credit to small and micro enterprises by using technology to match creditors and the businesses (P2P), also capturing information such as credit history, to help determine the risk profile of those that need credit, thereby opening up the informal sector and the unbanked region to banking services hitherto not enjoyed.

Bank In A Box Bank in the box is an all in one solution that provides a platform for corebanking operations leveraging service providers or third party software infrastructure to do so. The new way of banking was initially adopted mainly by non-traditional institutions that did not have the capacity to manage the complexity and technology requirement of traditional banking. The Software as a Service (SaaS) model brought the institutions much-needed efficiency and platform to simplify the banking process. Bank in a box provides a simpler model to efficiently transit to the deposit-accepting segment at an accessible and competitive level without the backlog that comes with traditional banking models. The cost saving gains in the model has now seen traditional banks exploring

opportunities to access new markets via the revolutionary solution. Robo-Advisory Robo Advisory is the use of automated algorithmic systems to offer advisory services for investment management with minimal human intervention. In other words, Robo-Advisory is an online financial advisor that leverages technology to provide advice directly to end users at a lower cost than traditional means. Whether in investment banking, account rebalancing, portfolio planning, asset allocation or risk assessment, Robo Advisory brings customers oneclick-away from their fund accounts. The artificial intelligence became popular after the global financial crisis of 2008 and by 2015 a number of financial advisers and managers had adopted the technology. Big corporations like Vanguard, BlackRock, and Bank of America were early adopters of the innovation. By reducing the cost for fund management institutions, Robo Advisory provided fund managers, the opportunity to accept smaller businesses and reduce the entry point for investors in the lower income bracket. This naturally came with the ability to serve a larger market and increase asset under management quite significantly than for traditional fund managers. Betterment one of the oldest Robo Advisory firms have $13.5 billion in assets under management. The fund manager places no minimum balance to open a new account and offers a free year of management depending size of the initial deposit. Accounts are managed at an annual fee of 0.25 to 0.40 percent. Despite the revolutionary change the technology brings, there is still a need for human interaction and expertise to handle complex issues and provide richer services to clients. P2P Lending Peer-to-Peer lending enables individuals to obtain loans directly from

other individuals, cutting out the financial institution as the middleman. It is a popular alternative to traditional banks; most P2P loans are personal loans which borrowers can use for a variety of personal purposes. It is also known as social lending. BlockChain Blockchain is a distributed, decentralized, public ledger technology that can record transactions between two parties efficiently and in a verifiable and permanent way. The technology creates records of transaction which are readily available to all parties to a contract at the same time. The record created are immutable in such a way that records cannot be altered unilaterally without changing all subsequent blocks. Any attempt at tampering with the records would not be corroborated by the digital footprint available to other computers with access to the block. Although the technology was initially adopted for cryptocurrency transac-

tions, there are many other potentials of blockchain in smart contracts, inventory management, identity management, and financial accounting, to mention a few. Biometrics and Cybersecurity The increasing adoption of information and communications technology over the last few decades especially the application in financial services has left many institutions vulnerable to cyber-attacks globally. According to 2019 Official Annual Cybercrime Report by Cybersecurity Ventures, Cybercriminal activity is one of the biggest challenges that humanity will face in the next two decades. Consequently, Global spending on cybersecurity will exceed $1 trillion cumulatively for the 5 year period from 2017-2021, according to Cybersecurity Ventures. In line with its objective to protect the country’s monetary system, the Central Bank of Nigeria (CBN) launched the Bank Verification Number (BVN)

project in 2014. The essence was to minimize the incidence of fraud and money laundering in the country’ s financial system as well as enhance financial inclusion through the Know Your Customer KYC process. The CBN in 2016 also required banks to integrate biometrics data from BVN to payment cards to create an airtight security system for customers. Banks have also upped their game and provided an extra layer of security in the form of fingerprint login requirement for their mobile applications. The chasm still remains as reports by Kasperky Lab, a global cybersecurity company with deep threat intelligence and security expertise, show four African countries made the list in terms of top 10 countries by share of users attacked by mobile malware – Nigeria in third place at 37.72%, Algeria in fifth place (35.06%), Tanzania in eighth place (31.34%), and Kenya in ninth place with 29.72%. This provides the opportunity for Fintech solutions across different payment platforms.

BusinessDay SPECIAL REPORT Editor (OLUDOLAPO ASHIRU) - Others FRANK ELEANYA, OLUFIKAYO OWOEYE, ENDURANCE OKAFOR , SEGUN ADAMS... Graphics: OGAR DAIVD OJIE

Thursday 30 May 2019

BUSINESS DAY

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Thursday 30 May 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

KADHIM SHUBBER

obert Mueller is set to break his years-long silence on Wednesday morning and make his first public statement on the Russia investigation. The special counsel will deliver remarks at 11am but will take no questions, according to the Department of Justice. A justice department official said Mr Mueller’s statement would be “substantial”. Mr Mueller wrapped up his almost two-year probe in March without bringing any charges alleging a criminal conspiracy between Donald Trump’s campaign and Russia. His extensive report detailed numerous instances of possible obstruction of justice by the president. Democrats in Congress have sought Mr Mueller’s public testimony for months but have so far been unable to secure an appearance by the special counsel. Democratic lawmakers have been keen to focus the public’s attention on Mr Mueller’s final report and probe him on how William Barr, the attorney-general, summarised his findings. The former FBI director said in a private letter to Mr Barr in March that the attorney-general’s initial disclosures about

Mueller to make first public statement on Russia investigation Special counsel to deliver ‘substantial’ comment on Wednesday

the findings of his investigation had caused “public confusion” about the conclusions. Mr Barr defended his actions during

US Treasury rally accelerates as market jitters mount

Ten-year yield on government debt falls to lowest level since September 2017

ADAM SAMSON AND PAN KWAN YUK

he rally in US government debt has picked up pace, sending yields on the benchmark 10year Treasury note to a 20-month low amid mounting concerns about the US-China trade war and growing expectations the Federal Reserve will be forced to cut rates. Investors have bought into the highly rated bonds over the past few days as they have shifted from other investments viewed as more risky, given uncertain political and economic conditions. The move has sent yields on bonds, which move inversely to prices, to levels last seen in early 2018, according to the Barclays aggregate index that tracks $53tn worth of global investment grade paper. The 10-year Treasury yield fell as much as 4.3 basis points on Wednesday morning to trade at a low of 2.22 per cent, its lowest level since September 2017. The yield had climbed above 3.2 per cent in November. Across the Atlantic, German Bunds of the same maturity were trading with a yield of minus 0.167 per cent, just above their record lows of 2016. Negative yields mean investors who hold the paper to maturity are guaranteed a loss. Global stock markets faced a fresh bout of selling that sent MSCI’s broad measure of developed mar-

ket equities down 0.85 per cent on Wednesday. It has fallen 5.1 per cent this month, leaving it on track for the heaviest fall since the ructions that swept global markets at the end of last year. Central banks around the world, led by the Fed, have this year moved towards embracing more dovish policy. Trading in federal funds futures, which are used by investors to hedge against or speculate on potential Fed moves, now point to odds of 49 per cent that the Fed will reduce rates two times this year, exceeding expectations of a single cut for the first time. A similar situation has played out in Europe amid mounting concerns that the continent may suffer collateral damage in the trade and technological dispute between the US and China. Expectations for subdued growth and inflation this year in large economies such as Germany have also sparked speculation among some analysts that the European Central Bank may need to consider tweaks to its bond portfolio, or even consider a new round of bond purchases should the situation deteriorate further. In a sign of the angst among global investors, the yield on the US 10-year Treasury note is now almost 13bp below that on the three-month bill, a level last seen in August 2007 in the lead-up to the financial crisis. Historically, an inverted yield curve has foreshadowed recessions. www.businessday.ng

a Senate hearing, in which he called the letter “a bit snitty”. The remarks on Wednesday will be the first time that

Mr Mueller has spoken publicly about his work as special counsel. The famously taciturn 74-year-old prosecutor gave no

interviews or press conferences during his 22-month investigation into Russia’s role in the 2016 US presidential election.

Huawei warns ban will hit 1,200 US suppliers Chinese telecoms group says cyber security vendors among those at risk LOUISE LUCAS, JAMES KYNGE AND SUE-LIN WONG

ashington’s move to blacklist Huawei is set to hit about 1,200 US suppliers to the Chinese telecoms group, including companies that provide most of the backbone of the company’s cyber security system. Senior executives told the Financial Times that the Trump administration’s decision to add the Chinese group and 68 affiliates to its prohibitive “entity list”, which effectively bars US companies from selling to them, would have ramifications beyond Huawei. The ban is due to come into force in mid-August, following a three-month reprieve granted by Donald Trump, the US president, to allow American companies to manage the disruption. Huawei, which is already facing the prospect of being shut out of Google’s Android smartphone operating system, warned that the impact of the ban could extend beyond handsets to software used in its equipment and other businesses. “It is a huge impact but not a crisis because we have been preparing for this since a long time ago,” said Dang Wenshuan, Huawei’s chief strategy architect, in an interview. Huawei’s vulnerabilities to a sudden loss of access to US suppliers include two critical areas: cyber security and semiconductors, accord-

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ing to people with knowledge of the company’s operations. Two-thirds of the 19 commercial cyber security software tools that Huawei uses come from US suppliers and one-quarter of the roughly 200m smartphones it shipped last year contained chips from Qualcomm, the US company, according to the people with knowledge of the company’s operations. Huawei spent about $11bn last year in buying components and services from US companies. The company’s heavy usage of US cyber security tools, including scanning tools Nmap and Nessus, reflects American dominance in the field. One of the people with knowledge of the company’s operations said the contracts were usually signed annually, meaning many would run beyond Mr Trump’s three-month reprieve. A factory tour in Dongguan revealed that some US companies also provide the equipment that Huawei uses to make its latest P30 smartphone. Machines bearing the logos of Dell and Camalot Prodigy, equipment produced by an Illinois-based company, were seen on the 130-metre production line. Executives said the company has built up stockpiles of key US components while preparing to find alternatives before the ban comes into effect. This includes almost six months of smartphone inventory and nine to 12 @Businessdayng

months of 5G base station inventory, according to estimates from CLSA. Song Liuping, Huawei’s chief legal officer, warned that the ban would hit what he claimed was the Chinese group’s 3bn customers and said other companies could be similarly targeted. “When such things happen, the consequences would disrupt supplies and related services to customers,” he said. “Today, it’s telecoms and Huawei. Tomorrow it could be your industry, your company, your consumers.” Washington’s actions are already affecting non-US companies. Several, including Japan’s Panasonic, have said they will stop shipping some components amid fears they could be caught up in the ban given their own use of US technology. Huawei also faces losing its place in industry standards bodies. JEDEC, which sets guidelines for semiconductors, said Huawei suspended its membership and the SD Association and Wi-Fi Alliance restricted Huawei from their industry bodies late last week. Nevertheless, the Chinese company is confident it can cope with the disruption. “We are looking into all possible measures to solve this issue,” said Catherine Chen, a board director. “But I don’t know if a single company is capable of doing that. And it seems the US government has little intention to solve this issue. They want only to take us down.”

Thursday 30 May 2019

BUSINESS DAY

NATIONAL NEWS

Boeing’s 737 Max unlikely to resume service until August, Iata says Decision is in ‘hands of regulators’, says chief of aviation industry’s trade body SYLVIA PFEIFER

oeing’s 737 Max is unlikely to return to commercial service until August in the wake of two deadly crashes, according to the head of the industry’s trade body. The company’s bestselling aircraft has been grounded by regulators since March after a second fatal crash in Ethiopia and is unlikely to resume flights until at least 10 to 12 weeks from now, according to Alexandre de Juniac, the chief executive of the International Air Transport Association. “We are preparing a meeting between regulators, the aircraft manufacturer and the operators to make an assessment of the situation,” Mr de Juniac told reporters ahead of Iata’s annual meeting in Seoul on Wednesday. “But it is not in our hands. It’s in the hands of regulators,” he added. His assessment echoes that of US airlines that have said they do not expect the Max to return to commercial service until August. Speaking after a meeting of global safety regulators on Thursday, the head of the US Federal Aviation Administration (FAA) refused to commit to a firm timetable for a resumption of service. Daniel Elwell, acting administrator of the FAA, reiterated the

agency did not have a timetable but indicated separately that airlines that had taken the grounded aircraft out of their schedules until August did not need to extend those flight cancellations. Both Europe’s and Canada’s aviation safety agencies have said they will conduct their own review of Boeing’s proposed changes to the Max before allowing it back into the sky. The US company has been working on a software fix to the flight-control system implicated in both crashes but has not yet submitted it formally to the FAA. Airlines, while regulators and Boeing will meet in five to seven weeks to try and set a common timeline on when the Max could return to service, Mr de Juniac added. Separately, Mr de Juniac said the past six months had been “tough” for airlines. “Global trade has weakened, trade wars are intensifying and fuel prices have risen significantly,” he said. Despite that, however, demand has been holding up with 4.3 per cent year-on-year passenger growth recorded in April. The air cargo market, however, is suffering on the back of global trade tensions. Air freight markets declined 4.7 per cent in April compared with a year ago.

China’s oil imports from Iran jump 21% before US waiver removal

Analysts expect Beijing to continue importing Iranian crude despite sanctions SIDDARTH SHRIKANTH, ARCHIE ZHANG AND NAJMEH BOZORGMEHR

hina’s crude imports from Iran jumped by a fifth last month before the US removed sanction waivers on oil purchases from the Middle Eastern country, Financial Times calculations show. Data from China’s General Administration of Customs show the country imported 3.24m tonnes of crude from Iran in April, a yearon-year rise of 21 per cent. The figure soared 46 per cent in April from March. In the year to date, China’s purchases of crude oil from Iran remain below last year’s levels. The surge in imports came before the US ended sanctions waivers on Iranian oil for eight nations including China in April, in an effort to pressure the regime in Tehran and bring Iran’s crude exports “to zero”. The US extended the waivers by six months ahead of the anticipated start of sanctions late last year. Iran was China’s seventh-largest crude supplier in 2018, accounting for about 6 per cent of imports. Analysts said China was unlikely to eliminate oil imports from Iran entirely. Li Li, director of research at ICIS, a petrochemical consulting firm, said she expected China to continue purchases, saying “a big drop in volumes would be fine” to placate US authorities. “We may see a drop in China’s oil imports but they will continue

purchases whether officially or unofficially,” said an Iranian energy sector businessman with links to the political establishment. The Chinese government voiced strong opposition following Washington’s decision not to extend the waivers, saying its dealings with Iran were “reasonable and legitimate”. It condemned unilateral sanctions and warned the move would destabilise the international energy market. Since then, Sino-US trade tensions have worsened, throwing China’s compliance with US demands over Iran further into doubt. “Everyone knew the waivers were up so it was natural to buy more ahead of time,” said Lin Boqiang, energy expert at Xiamen University. Chinese oil companies exhibited a similar bump in purchase volumes ahead of the expected start of sanctions last year. “But it may be inconvenient to buy more now,” he added. On the Iranian side, the export of crude to China is seen as a lifeline under current circumstances, with the economy in recession and inflation soaring to nearly 35 per cent as oil production has dipped. The Islamic republic’s hopes of withstanding US sanctions will receive a boost if China continues buying oil, even in smaller volumes than before. However, Iran’s oil ministry said it would not disclose details even to regime insiders on how it was circumventing oil sanctions on fears the information could leak to the US. www.businessday.ng

John Bolton blames Iran for oil tanker attacks in Gulf

US national security adviser warns of a ‘very strong response’ SIMEON KERR AND NAJMEH BOZORGMEHR

ohn Bolton, the US national security adviser, blamed Iran for the sabotage of four oil tankers off the United Arab Emirates, warning of a “very strong response from the US” against the Islamic republic and its proxies. “I think it is clear these [tanker attacks] were naval mines almost certainly from Iran,” Mr Bolton told reporters in Abu Dhabi on Wednesday. “Who else would you think is doing it? Somebody from Nepal?” “There is no doubt in anybody’s mind in Washington who was responsible for this,” he said. “It is important for the leadership in Iran to know that we know.” Mr Bolton’s statement threatens to reinflame tensions with Tehran after weeks in which the Trump administration has mixed threats with statements playing down the odds of a US-Iran conflict. Iranian officials have described the tanker attacks earlier this month as suspicious. Mr Bolton said US special forces had contributed to the investigation into the incident, which damaged Saudi, Emirati and Norwegian vessels. The UAE has yet to apportion blame for the attacks.

Mr Bolton said they were connected to at least three other incidents over the past month, including a drone strike on a Saudi pipeline claimed by the Iran-allied Yemeni Houthi militia, a rocket fired into a park near the US embassy in Baghdad and a failed attack on the Saudi port of Yanbu. Earlier this month the White House said the US was sending an aircraft carrier strike group and B-52 bombers to the Middle East after intelligence suggested Iran might be preparing to attack American forces. Last week US President Donald Trump said the US would move an additional 1,500 troops to the region. Mr Bolton said the US deployments were designed to act as a deterrent and had so far been successful. “The point is to make it clear to Iran and its surrogates that these kind of actions risk a very strong response from the United States,” he said. The US would be “prudent and responsible” in its approach, he added. Iran is seeking to resist US pressure without provoking Washington. But there is anger in Tehran at Saudi Arabia and the UAE, which are perceived to be encouraging the Trump administration to punish Iran. Iran’s President Hassan Rou-

hani said on Wednesday that doors were not closed to negotiations with the US if it showed “in practice” that it could adhere to “justice and law” in dealing with Iran. Mr Bolton said the Iranian Revolutionary Guards’ overseas Quds Force, and its leader Qasem Soleimani, were using Shia militia groups in Iraq to indirectly attack US diplomatic facilities in Iraq. “We have made it clear that we are going to hold the Quds Force responsible if we see attacks like the one in Baghdad, whether it was intended as a signal we don’t know,” Mr Bolton added. “But we know who sends these rockets into Iraq, we know who trains the Shia militia groups, we know who finances the Shia militia groups, we know who to a large extent directs their activities,” he added. “We will hold them responsible if they make the mistake of going further.” The four attacks were consistent with US intelligence that prompted the deployment of more US forces in the region. Mr Bolton said Iran had no reason to break the limits on enriched uranium and heavy water agreed as part of its nuclear deal with global powers, unless that was part of an effort to reduce break out time needed to produce nuclear weapons.

South Africa’s Naspers sets date for European listing Vehicle will house Tencent stake and international internet businesses JOSEPH COTTERILL

outh Africa’s Naspers said it aims to list assets that would rank as Europe’s most valuable consumer internet business on Amsterdam’s Euronext bourse in July. Africa’s biggest company by market value intends to list the vehicle, which will house its 31 per cent stake in China’s Tencent as well as other international assets, on July 17, it said on Wednesday. Johannesburg-listed Naspers plans to retain 73 per cent in the as-yet-unnamed vehicle, which will also include its stakes in Russia’s Mail.ru and India’s Swiggy among other internet businesses, such as classifieds.

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Naspers shareholders will have the option to receive the other 27 per cent of the new company, which will have a secondary Johannesburg listing, or to receive more Naspers shares. Naspers will hold a shareholder meeting in June. “ W hat w e’ re l i s t i n g i s a new global consumer internet group . . . we are convinced that it will maximise shareholder value over time,” Bob van Dijk, Naspers’ chief executive, said. The listing is among measures Naspers is taking to reduce a significant discount in the valuation of its shares that is driven by the sheer size of its holding in Tencent, which Naspers acquired in 2001. Naspers’ market capitalisation @Businessdayng

of around $95bn is dwarfed by the valuation of the Tencent investment, at about $120bn. As Tencent’s stock has risen, South African institutional investors in particular have had to sell their Naspers shares as the company’s value expanded to represent a quarter of Johannesburg’s stock market. Naspers sold $10bn of its Tencent shares last year and has also listed its African pay-TV arm MultiChoice in Johannesburg. Shareholders “are happy that we’re reducing some of the concentration risk,” Mr van Dijk said. The listing is also expected to attract global tech investors as well as Europe-focused funds coming to Naspers for the first time.

Thursday 30 May 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

FirstGroup walks tightrope as activist investor pushes for split UK rail operator under mounting pressure over Greyhound and US school bus business JOSH SPERO

he Greyhound buses that criss-cross the US and the yellow school buses that ferry American children to school are recognisable across the world. Few outside Britain, however, are likely to have heard of South Western Railway and Great Western Railway. What unites them is their owner: FirstGroup, a FTSE 250 company. The logic of the UK company owning them all has been questioned by some shareholders ever since FirstGroup’s £3.6bn acquisition of Laidlaw in 2007 brought it Greyhound and a bigger presence in the US school bus business. The argument that investors would benefit from splitting the UK and US businesses has been taken up belligerently in recent months by Coast Capital Management, a US activist investor with an almost 10 per cent stake in FirstGroup. Earlier this month the fund, which is based in New York, said it would seek to remove six of FirstGroup’s 11 board directors and install seven of its own. Having a vocal activist on FirstGroup’s shareholder register increases the pressure on Matthew Gregory, who has led the transport group since November, to lay out the case for holding the company together when its full-year results are published on Thursday. Gerald Khoo, an analyst at Liberum, said Coast’s campaign had “upped the pressure” on Mr Gregory to produce a “meaningful response” over its strategy. “While the problems and challenges faced by FirstGroup significantly predate Matthew Gregory’s tenure at the firm, let alone as CEO, shareholder patience is starting to run out.” Analysts expect FirstGroup to report a 10 per cent rise in revenue to £7.1bn for the year to the end of March 2019, while earnings before

interest, tax, depreciation and amortisation are forecast to increase 2.9 per cent to £711m. The case for separating the businesses, say its advocates, is that FirstGroup’s share price is depressed by the less profitable UK rail businesses and fails to reflect the strength of First Student, its US school bus business. First Student, the biggest provider of school transportation in the US with a fleet of 42,000 buses, had an operating margin of 8.8 per cent in the 12 months to the end of March 2018. UK rail, by contrast, had one of 2.9 per cent. The more recent travails of the UK rail business include delays stemming from infrastructure work at London Waterloo, the UK’s busiest station, and predicting losses of as much as £106m over the remaining life of its Transpennine Express contract. Nandeep Bamrah of West Face Capital, a Canadian asset management group and FirstGroup shareholder, said First Student had “significant potential” but this was not reflected in FirstGroup’s share price. “The status quo is not sustainable,” he said. The company’s shares have fallen almost 80 per cent since the Laidlaw acquisition and are at levels last seen in the late 1990s. Meanwhile, James Rasteh, Coast’s chief investment officer, said Greyhound’s property portfolio is worth far more than FirstGroup’s share price currently reflects. Any cultural resonance Greyhound buses may have has proved no defence against competition from low-cost airlines. A review of the business last year saw a decision to pull out of western Canada, as well as sell property in Chicago in January for $38m. Another in Denver went up for sale last month. However, the company decided to maintain Greyhound’s national network across the US.

anada kept interest rates on hold on Wednesday, however, the country’s currency took a leg lower after policymakers remained steadfast in their waitand-see stance despite signs that second-quarter growth will pick up following a weak start to the year. The Bank of Canada held its benchmark rate steady at a 10-year high of 1.75 per cent, as widely expected. In the accompanying statement, the bank said it was seeing growing evidence that the economic slowdown seen in late 2018 and early 2019 was temporary and that the economy is poised to bounce back this quarter. But the bank noted even as the domestic economy is recovering, macro-headwinds — in the form of mounting global trade tensions and growing uncertainty over the outlook for global growth — are rising. “Overall, recent data have reinforced Governing Council’s view that the slowdown in late 2018 and early 2019 was temporary, although

global trade risks have increased,” it said. “In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate.” The Bank of Canada rattled the market in April when it cut its outlook for growth this year and dropped its previous language on future rate rises. The dovish turn followed a sudden and dramatic slowdown in the country’s economic growth at the end of 2018, when lower oil prices, slowing household consumption and weaker investment spending knocked the wind out of what had been a resilient run. The BoC raised rates five times between July 2017 and October 2018. Wednesday’s decision marks the fifth straight time the bank has kept rates on hold. The Canadian dollar reversed a 0.1 per cent gain to trade down by as much as 0.4 per cent on the news. It briefly hit a five-month low of C$1.3547 before paring back its losses to C$1.3508. www.businessday.ng

Global stocks fall as investors seek ‘havens’ PHILIP GEORGIADIS AND DANIEL SHANE

lobal markets dropped as investors sought the relative safety of Treasuries amid fears over persistent trade tensions between the US and China and concerns about a slowing global economy. The S&P 500 opened 0.7 per cent lower on Wall Street, following European and Asian markets. The broad Stoxx 600 index in Europe deepened declines during the day and recently traded 1.5 per cent lower, taking its losses for this month to more than 5 per cent as it headed for its biggest monthly drop since December. The Frankfurt-based Dax and London’s FTSE 100 fell 1.5 per cent. Oil prices also fell as Brent crude shed 2 per cent to $68.82 a

barrel. Last week the benchmark price had its biggest decline of the year to hit a two-month low. Trade frictions between the world’s biggest two economies have shown little signs of cooling off. On Tuesday, China’s powerful planning body threatened to use rare earths exports as leverage in the trade war. That came after Donald Trump, the US president, said in Tokyo that the US was not ready to reach a trade deal with China. But the US Treasury stopped short of declaring China a currency manipulator in its twiceyearly report on foreign exchange practices, a move that avoided ratcheting tensions a notch higher. Investors have sought safety in Treasuries, with yields on US 10-year sovereigns sliding to their lowest level since September 2017.

Bond yields fall as their prices rise. German sovereign bonds also rallied, sending yields on 10-year Bunds to a two-and-a-half-year low of minus 0.169 per cent. Investors also moved into UK government bonds, sending the yield on 10-year gilts to its lowest level since October 2016. Paul Donovan, chief economist of UBS Wealth Management, said: “The uncertainty caused by trade policy is likely to continue to delay investment, slowing economic growth. It is logical for bond markets to react to this. It is not logical to price in a recession.” Japan’s Topix index fell 0.9 per cent, Australia’s S&P/ASX 200 was down 0.7 per cent and South Korea’s Kospi dropped 1.3 per cent. China’s CSI 300 and Hong Kong’s Hang Seng fell 0.2 per cent and 0.5 per cent respectively.

Freelance workers in the dark about IR35 tax reforms Business slow to contact hires about changes to limited company rules, survey finds EMMA AGYEMANG

Canadian dollar drops after BoC holds rates, reiterates wait-and-see stance PAN KWAN YUK

Those calling for a separation of the UK and US businesses say FirstGroup’s share price is being weighed down by the less profitable rail business © FT montage; Bloomberg; Dreamstime

reelance workers are being left in the dark by hiring companies about far-reaching tax changes starting next year, which business groups have warned will embroil workers and groups in disputes and red tape. From April 2020, all companies — apart from those with fewer than 50 employees or less than £10.2m annual turnover — will be required to assess the employment status of any contractor they use. The policy will bring the private sector in line with the public sector, which has been operating in this way since 2017. At present, contractors who use a limited company structure to offer work to private sector clients decide whether they are subject to regulation known as IR35. The new rules are designed to tackle tax avoidance by contractors who HM Revenue & Customs believe would be employees if they were not using a company structure and should therefore be paying employee taxes. But despite the upcoming change, 92 per cent of contractors had not been contacted by their client or recruitment agency to discuss

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the reforms, according to a survey by Qdos, an adviser on contractor taxes. Seb Maley, Qdos chief executive, said businesses were likely to be waiting for the results of a government consultation into the reforms, which closed on Tuesday. But he was worried about the lack of time between now and next spring. “Accurate IR35 decisions are made with joined-up thinking and input from each party in the supply chain,” Mr Maley said. “Therefore, we urge the businesses engaging contractors and the agencies placing these workers to start preparing for IR35 reform now, irrespective of any potential tweaks to the legislation.” Andy Chamberlain, deputy policy director at the Association of Independent Professionals and the Self-Employed, a trade body, said he estimated that the draft legislation on the policy would not be published until July at the earliest. “It is no surprise that clients haven’t spoken to their contractors about these impending changes. They simply don’t know what the new rules will be,” he said. “What we have seen so far [of the new rules] is too complex, totally unfit for purpose, and with so many variables @Businessdayng

that haven’t been decided. I am at a loss how businesses are expected to put processes in place in less than a year.” Qdos’s research, published on Tuesday, also pointed to the reforms leading to a potential increase in business disputes, with 86 per cent of the 1,000 contractors surveyed saying they would challenge IR35 decisions made by their clients that defined them as employees. Meanwhile, a survey of 500 companies by Brookson Legal Services, a law firm focused on IR35, found that 59 per cent were considering taking a blanket approach to assessing their contractors — because they did not have the time to make decisions about contractors individually. “That a majority of firms are planning a blanket approach to IR35 assessments, is deeply alarming — and in direct contravention of the government’s stated intention,” Mr Chamberlain said in reaction to the research, also released this week. “The government needs to hit the pause button. It cannot push ahead with the reform while there are clear indications that businesses will not be able to comply with the new rules.”

Thursday 30 May 2019

BUSINESS DAY

ANALYSIS

‘Hell’ for Nissan boss as merger plan raises the stakes Prospect of Renault-Fiat Chrysler deal creates new problems for Hiroto Saikawa KANA INAGAKI AND LEO LEWIS

ust two months ago, in a bid to put the mayhem of Carlos Ghosn’s arrest behind them and convince the world that the future was bright, the leaders of Renault and Nissan linked hands on stage, beamed for the cameras and declared the “restart of the alliance”. For Hiroto Saikawa, the Nissan chief executive whose leadership hung by a thread and whose future depends on navigating a global company through crisis, it was a crucial show of unity. But for his counterpart in the handshake, the Renault chairman JeanDominique Senard, the word “restart” had a much greater meaning than a friendly sound bite. Unknown to Mr Saikawa and the Nissan leadership, Mr Senard was already in serious talks with the Fiat Chrysler Automobiles chairman, John Elkann, that would take the two European giants towards a full merger proposal and fundamentally rebalance the relationship between

months since the November arrest, Mr Saikawa is already preparing to face his third annual meeting of shareholders as CEO. The key to his survival, say people close to Nissan, was his hardline negotiating powers against what was seen as an aggressive push towards a merger by the French government. But it was precisely Mr Saikawa’s unwavering tough stance, said people close to Renault, that eventually prompted Mr Senard to dramatically pivot his focus away from Nissan to FCA. As Mr Saikawa prepares for his alliance board meeting with Mr Senard on Wednesday, he has signalled he would be open to talks to strengthen the partnership. The big question facing Mr Saikawa is whether he is prepared to take the group, which is now 43 per cent-owned by Renault, into a convoluted French-Italian-AmericanJapanese minefield where its voice will be less represented than in the current alliance. “It was hard to understand Renault alone. Now talks will get even more

Show of unity: Renault chairman Jean-Dominique Senard, left, with Nissan chief executive Hiroto Saikawa in March © Reuters

Renault and Nissan. As a sign of how soured things have become within the alliance, advisers to FCA even refer to Renault as an active beneficiary of their abrupt intervention: the Italian company’s merger proposal, said one banker involved, “offers Renault a reset of its relationship with the Japanese”. While that reset, after months of frustrated efforts to advance merger discussions between Nissan and Renault, may seem attractive to Mr Senard and straightforward to FCA, for Mr Saikawa it represents a colossal additional burden on management abilities that analysts judge to be already very stretched. “It’s hell for Mr Saikawa whether he says yes or no [to the FCA-Renault deal],” said Koji Endo, head of equity research at SBI Securities. “It’s going to be a very tough negotiation for Mr Saikawa as he faces a Renault that will gain bigger bargaining powers by combining with FCA.” Officially, Mr Saikawa had taken over as CEO when he was handpicked for the role in 2017. While Mr Ghosn was around, all-powerful and straddling the chairmanships of Nissan and Renault, say analysts, Mr Saikawa’s powers were constrained; with the former chairman now ousted, he has been forced not just to meet the full demands of the role but to reshape Nissan’s entire position in the alliance without the one person who once glued it together. On one view, the mess has been galvanising. Against early predictions that he would not last more than a few

complicated,” said one person close to Nissan’s board. “But it has always been Mr Saikawa who has been negotiating with Renault and he has the connections, so in that sense, his role will become even more critical.” If Renault combines with FCA, analysts say Nissan’s position within the alliance will visibly weaken. In its existing alliance with the French carmaker, its leverage came from the bigger profits and sales it generated from two core markets that Renault was a minor participant in: the US and China. But if the merger takes place, Nissan’s sales of €94bn and profits of €3bn will be dwarfed by the merged entity’s sales of €170bn and profits of €8bn. Because of those factors and the fact that FCA’s proposal has emerged from Nissan’s rebuff of Renault’s merger efforts, said CLSA analyst Christopher Richter, it could be argued that under Mr Saikawa, Nissan has been blind to the possibility that its stance could ultimately leave it in a weaker position. “You could argue that Nissan has been looking for more independence but they lose that if their voice becomes secondary,” said Mr Richter. Some Nissan executives remain sceptical about the latest deal since they were kept in the dark until a few days before FCA announced its merger proposal for Renault. People close to the talks explained that the decision was based on their belief that they should be able to clearly lay out the benefits of the FCA-Renault merger for Nissan before approaching the company. www.businessday.ng

UK politics: the epic fight to the Brexit finish line With the two-party system cracking up, the routes out of the impasse are likely to be a general election or another referendum GEORGE PARKER

igel Farage is cleareyed and deadly serious. The leader of Britain’s newly-founded Brexit party has just led his party to a stunning victory in the European Parliament elections, but uncharacteristically he has not been spending his time celebrating. Instead, Mr Farage is already planning his next mission — to lead an assault on Westminster and the mainstream parties that have failed to deliver Brexit. His new mantra: “They aren’t scared of us. They’re absolutely terrified of us.” Across the river Thames, a genteel crowd gathered to celebrate a very different triumph. Vince Cable, the outgoing veteran leader of Britain’s pro-Remain Liberal Democrats, is bowing out after seeing his party come second in the European elections, after campaigning under the unsubtle slogan: “Bollocks to Brexit.” The Lib Dems have never previously finished in front of both the ruling Conservatives and opposition Labour party in any national elections. It is a snapshot of a country that is bitterly divided and a traditional two-party political system that is cracking up under the pressure of Brexit. Conservative and Labour politicians who promised and failed to deliver Brexit are in full panic mode, as the electorate switches to parties that offer a clear alternative: for or against leaving the EU. Brexit now defines British politics. Theresa May, Britain’s prime minister, was broken by the Conservative party’s divisions over Europe, just as the EU weakened or brought down David Cameron, John Major and Margaret Thatcher. Her resignation on June 7 will clear the way for a new Tory leader to try to break that dismal cycle, although few at Westminster can see how. When Mrs May gave her resignation speech in Downing Street last week she made a forlorn appeal for both sides of the EU debate to bury their differences, citing the words of Nicholas Winton, organiser of the Czech Kindertransport rescue of mostly Jewish children before the second world war: “Life depends on compromise.” After this week’s European elections, compromise seems an unlikely outcome of the Brexit saga. Esther McVey, a Eurosceptic, former television presenter running for the Tory leadership, summed up the hard new mood. “The message from our voters is clear — we must leave the EU on October 31 with a clean break, nothing else will wash now. People

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saying we need a Brexit policy to bring people together are misreading the situation. That is clearly not possible.” While the Conservatives seem set on a path to becoming a hardBrexit party — the next leader will be chosen in July by 160,000 party activists, many with strongly Eurosceptic views — Jeremy Corbyn, leader of the opposition Labour party, is under huge pressure from his own side to get off the fence and campaign unequivocally for a second referendum and to remain in the EU. Mr Corbyn, whose north London Islington constituency voted Lib Dem in the European elections, has been punished for his ambivalent position on Brexit, as Remainers desert the main opposition party en masse. The life-long Eurosceptic Labour leader has promised to deliver Brexit while offering a second referendum if a final “Tory deal” is not to his liking. Tom Watson, the party’s deputy leader, said that after the “disastrous” results, the party needed “a change of direction urgently”. The European elections illustrated again that Britain is a country that is polarised on Brexit. The results are exerting a centrifugal force pushing both Conservatives and Labour towards opposite ends of the debate and away from the centre ground that Mrs May belatedly tried — and failed — to occupy. For the two rival camps, it is shaping up as a fight to the finish: an epic battle that will play out over the coming months. The big question is who will prevail? There is a danger in over-interpreting the results of European elections, where voter turnout tends to be roughly half of that in a general election, and where those who do vote tend to be taking the chance to protest. However, the entrails of these polls have been picked over exhaustively for omens of what will happen next in British politics. The Brexit party and Ukip, Mr Farage’s old party, collectively polled 35 per cent with their demand that Britain must leave the EU without a deal now. The antiBrexit parties — Lib Dems, Greens, Scottish and Welsh nationalists and Change UK — jointly polled 40 per cent. The Conservatives, now firmly identified with Brexit, polled 9 per cent, the worst performance in the party’s history, while Labour scraped together 14 per cent. The centre ground on Brexit was eviscerated. Amid the ruins of the Conservative campaign, Ms McVey was not the only Tory leadership contender who argued that the only way to stop Mr Farage’s advance was to @Businessdayng

deliver Brexit on October 31 — the latest official exit date — with or without a deal. A willingness to deliver a “no-deal Brexit” has become the totemic test for any aspiring Tory leader, just as “the Treaty of Rome” used to be the only acceptable answer to the question routinely put by Tory members to wannabe candidates: “Which is your least favourite European treaty?” Boris Johnson, former foreign secretary and the frontrunner to succeed Mrs May, said last week that Britain would leave the EU on Halloween night “deal or no deal”. In private 20-minute meetings with fellow Tory MPs, Mr Johnson insisted that only he could beat Mr Farage. Dominic Raab, former Brexit secretary, declared: “We must demonstrate unflinching resolve and calmly leave the EU on October 31 at the latest.” Mr Johnson and fellow Eurosceptics insist they will be able to secure a better deal with the EU, claiming that the remaining 27 member states would ultimately renegotiate Mrs May’s withdrawal agreement rather than face the disruption of a disorderly Brexit. “People know Boris in Brussels and they know he’s serious about leaving without a deal,” says one ally. There is a problem with this theory, leaving aside the question of whether EU leaders would ever be willing to cut a special deal for Mr Johnson — who is viewed with disdain in Europe for his role in the 2016 EU referendum campaign and behaviour as foreign secretary. Mark Rutte, the Dutch prime minister, and about the closest Britain has had to an ally in Brexit talks, said after Mrs May’s resignation announcement: “The withdrawal agreement is not up for renegotiation.” The EU has said it is willing to renegotiate the non-binding political declaration on future relations, but not the “divorce settlement”, which includes the backstop plan to avoid the return of a physical border in Ireland. Xavier Bettel, Luxembourg prime minister, told the BBC on Tuesday that a change of prime minister was not a magic solution to the Brexit problem. Speaking ahead of an informal EU summit in Brussels, he said: “That would be too easy: change the UK prime minister, change the Brexit deal. That’s not how it’s going to work.” Yet all of the leadership challengers claim that with renewed effort, a fresh mandate and goodwill from Brussels it will be possible to unite the Conservative party and MPs from other parties behind a revised Brexit deal. This is despite the fact that Mrs May’s last attempt to win cross-party backing for her deal on March 29 failed by 58 votes.

Thursday 30 May 2019

BUSINESS DAY

MADE in aba

How Ikpeazu pushes Aba brand GODFREY OFURUM

ver the years, Aba has always been known as a hub of production. So, when Governor Okezie Ikpeazuled administration came on board, it recognised that the city needed just a push to enable it to diversify and grow the state’s economy. This led to the MadeIn-Aba campaign. In drafting the ‘five pillars’ of his economic blueprint, Ikpeazu, in conjunction with his economic team, considered those economic activities that the people of the state did better than others in Nigeria, those things that the state had both comparative and competitive advantages over other states. Trade and commerce were two of those activities. Aba, the commercial hub of Abia State, has the largest population of any city in the South-East/South regions of Nigeria and it is the commercial hub of the regions. Its industrial prowess could be seen in the production of finished leather goods-shoes, belt and bags, garments, steel works, plastics, paints, cosmetics and pharmaceuticals. T h e c i t y ’s A r i a r i a International Market is one of the biggest markets in Nigeria and West African sub-region and attracts patrons from the West Coast and Central Africa. It is, however, the governor’s belief that trade and commerce cannot thrive in the absence of infrastructure, including good road network and security, which serve as enablers to economic development. Consequently, the state government is investing in infrastructure, especially roads and security, to open up the state and make it safe for investment. And in doing roads, the Ikpeazu-led administration,

also built roads that could outlive his administration. The Made-in-Aba campaign has so far attracted over N3 billion in direct orders into Aba, while ensuring the employment of about one million new employees and apprentices in the markets around the state. Recall that the Nigeria military ordered 50,000 pairs of boots, which was made in Aba and recently, the Gambian Government has also ordered that their country’s military boots be made in Aba. This is after a visit to Gambia by Governor Ikpeazu and shoemakers in Aba. The Abia State governor observed that the Made-In Aba campaign has opened new doors of opportunities for

producers in Aba, the state’s commercial hub. For Sam Hart, senior special adviser to Abia State Governor on Micro, Small and Medium Enterprises (MSMEs), the ongoing campaign on Madein-Aba goods is geared towards rebranding Aba to improve quality of goods and ensure that artisans gain confidence in embossing their logos on their products, rather than use foreign names to identify their products. “Aba needed to be rebranded, because Made-in-Aba at a point was synonymous with fakeness. You’ll see Gucci with one C, you’ll see Prada with O, Prado. So, we had to ensure that they took identities of their products and we started rebranding

Made-in-Aba. “To boost confidence of the artisans, the governor from his swearing-in till date, everything he has worn has been Madein-Aba. “So, that gave the artisans confidence. He took their products to former President Olusegun Obasanjo. I led a delegation to Senate President Bukola Saraki and we took these products to influencers and they were proud to wear them. “Aba is no longer known for fakeness. People are now proud to emboss made-in Aba labels on their products. They now own their products”. He, however, decried informal export, which goes on in Aba and urged artisans

Okezie Ikpeazu, governor, Abia State

to formalise their businesses by registering with relevant government agencies to boost their businesses. In his words, “What has not worked in Aba is the formalisation of our efforts. A lot of Aba exports are still informal. Federal Government agencies’ approach to Aba has been more of revenue generation, than trade facilitation approach”. He appealed to agencies like the Standards Organisation of Nigeria (SON) and the National Agency for Food and Drug Administration and Control www.businessday.ng

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(NAFDAC) to help the artisans to improve the quality of their products. “If NAFDAC, SON and NEPC are coming to ask for licensing fees, how much is the man making to pay all those bills? So, the bulk of our exports are still informal, thank God for what PDF 11 has done to get accurate data. Nobody has the accurate number of our export volume, because nobody has been able to get them together, because of fear that it would be taxed exorbitantly,” he said.

Thursday 30 May 2019

BUSINESS DAY

POLITICS & POLICY

Sule mounts the saddle in Nasarawa, promises rapid development Solomon Attah, Lafia

nother landmark feat in the political history of Nasarawa State was recorded with the formal handing over and inauguration of Abdullahi Alhaji Sule as the executive governor of the state, which indicated the formal exit of the former Governor Umaru Tanko Almakura and his deputy Silas Agara from the State Government House. The swearing-in of Sule, which marked the fourth of its type in series of governance since the present democratic dispensation in 1999 and the sixth since the creation of the state in 1999, was held amidst joy, cheers and admiration, as people from all walks of life turned out to witness the change of power from the out-gone Governor Alamkura to the new Governor Sule. The event, which took place at the Lafia-Square, in the heart of the state capital saw in attendance of elder statesmen from the state, various political, cultural and interest groups, friends and business associates of Engineer Sule, business community from within and outside the country, technocrats, members of the diplomatic corps, aca-

demia, members of the state traditional institution, Hon. Speaker and members of the state House of Assembly, former members of the state executive council under Almakura, former and serving members of the National Assembly, among others. In his inaugural speech, Sule assured he would take the state to another level of development, where he hoped to address immediate issues confronting the people of the state within his first 100 days in office. He however, said within the next 48 hours of his government, he would distribute grinding machines and other incentives to women in particular as part of efforts to empower them to a fulfilled life. Governor Sule also pledged to address critical issues bordering on pension and gratuity, where he said that he would commence the payment of salary arrears, complete the Lafia Airport project and would embark on the construction of rural roads and electrification in the state. Sule listed security, education, health services, agriculture, social development, real estate development, mineral development, youth and women empowerment, structure of governance, industrialisation and civil

Abdullahi Alhaji Sule

service as some of the areas his administration in the next four years was going to focus on. While he pledge to encourage industrialisation as one of the “cardinal objectives of our government”, he stated that, “employment and wealth creation will be integral part of the overall industrial policy of this administration. We will adopt an integrated employment creation strategy, whereby industrial, agricultural, commercial, vocational and such other related ventures are encompassed. To this end, small, medium and large

Makinde appoints Ilaka, chief of staff REMI FEYISIPP, Ibadan

overnor Seyi Makinde has appointed, Oyebisi Ilaka as his Chief

of Staff. Ilaka, who hails from Oyo East Local Government of

Oyo State, was the senatorial candidate of the People’s Democratic Party (PDP), in the February 23, 2019 National Assembly election which was won by Teslim Folarin. The new governor made the announcement shortly after the handing-

over ceremony at the Governor’s Office, Secretariat, Ibadan, yesterday He had wanted to inaugurate him on Wednesday but the officials were not prepared. It was however, postponed till Thursday.

Inuwa Yahaya sworn in amidst tight security in Gombe REMI FEYISIPP, Ibadan

n Gombe State, Muhammadu Inuwa Yahaya has been sworn in as the fourth elected executive governor of the state at the Pantami Stadium. Yahaya took the oath of office around 11am amidst heavy presence of security personnel. Residents, who trooped out en-masse to witness the occasion were thoroughly

screened while personnel of the Federal Road Safety Commission (FRSC) were seen controlling the traffic.

Inuwa Yahaya www.businessday.ng

The 12, 000-capacity stadium was filled up as supporters of the All Progressives Congress (APC) were seen in the party’s colour dancing and celebrating within and outside the stadium. Traditional and religious leaders were present at the ceremony including the Emir of Gombe, Abubabar Shehu-Abubakar III. Yahaya, born on Oct. 9, 1961 in Jekafari Ward, Gombe State, succeeded Ibrahim Dankwambo.

scale industries shall be encouraged.” According to the new governor, “it is conventional to talk about recording some achievements within the first 100 days in office by new Administrations. We shall not be an exception to this. We have, therefore, identified some high impact projects to achieve this objective in the interim before medium and long-term arrangements take effect.” He mentioned that his government would set up the State Economic Management and Investment Advisory Council, Review

and reform “our civil service structure, review the payment of pension and gratuity and commence payment, visit the payment of salary arrears with a view to commence payment; completion of the Lafia Cargo Airport, Kwandare; commencement of the construction of rural roads in each of the 13 local governments and commencement of rural electrification in at least, three villages in the state.” Other projects he hopes to accomplish within his first 100-day include the commencement of the construction of 2km solar power street light projects in each of the Local Government Areas, commencement of the construction of Technology Innovation Hubs in Lafia, Akwanga, Keffi and Karu; provision of state-wide free medical outreach; screening and training of youths for small scale agricultural and trading enterprises in partnership with the Central Bank of Nigeria (CBN), supply of fertilizer and other agricultural inputs to farmers for the current farming season and construction of some classroom blocks in the local governments. On the internally generated revenue (IGR), he said: “Government will develop innovative strategies and deploy technology for the

optimum generation, collection and management of all revenues due to the state. Government will also incentivise tax payers by laying out infrastructures for Micro, Small and Medium Enterprises (MSMEs) and similar entities. He added that his government will design enlightenment and sensitisation programmes for the people to understand the need for them to meet their tax obligations so that they could get more from government. “Government shall adopt a robust investment policy and drive which will be structured on interim, short, medium and long term arrangements. Government will establish a one stop shop Special Purpose Vehicle (SPV) to process, regulate and manage all investments of the state and to also drive our investment initiatives. We shall explore the PublicPrivate Partnership (PPP) approach for special infrastructural development projects in the areas of railway services, health, energy, water supply and roads. We assure our potential investors that government will deploy strong political will and consider granting some special support and incentives to our pioneer investors,” he said.

We’re determined to do more in second term – Ortom …Swears-in SSG, Chief of Staff BENJAMIN AGESAN, Makurdi

enue State Governor, Samuel Ortom says he is determined to do more for the people of the state in his second term. Ortom, who made the promise during his inaugural address shortly after taking oath of office for his second term as governor, said that his government, is “determined to do more than ever before to pay back the love and abiding faith which the good people of Benue have shown by giving us a second chance.” The governor said that he would emphasise inclusiveness with regular consultation with stakeholders including farmers, traders, market women, traditional rulers, religious leaders, student leaders, unions and associations while transparency and accountability will remain the trade mark of his administration. “There will be increased

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welfare of staff and salaries will be paid as and when due,” Ortom said, while commending workers, civil servants and pensioners in the state for their understanding, insisting that by the grace of God, the problem of wages, pensions and gratuity will be resolved in his second term. He is confident that the recently passed New Pension Scheme Bill into law by the State Assembly will help in addressing the protracted issue of pensioners and pension arrears. “We are hopeful that this law and all the necessary ingredients of good governance will be deployed. Our government will be small, smart and prudent,” he said. The governor names other areas of focus in his next four years to include: Reconciliation, peace and security; widen the scope of rural and urban critical infrastructures; revitalisation of agricultural industrialisation; promotion @Businessdayng

of human capital development with emphasis on steam based quality education and unveiling the Benue of our dream with can-do spirit. Ortom, who itemised his achievements in the last four years according to the five thematic areas of his policy direction, said that “strength does not come from what you can do. Strength comes from overcoming the things you thought you could not do.” While reiterating his call to those who contested the 2019 Benue Governorship election with him and other political leaders to join hands with him to move Benue forward, Ortom adds that “we have gone past the time for politicking. I assure all of you that by the Grace of God, I remain the governor of those who voted for me. I am the governor of those who did not vote for me. I am the governor of those who did not vote. I am the governor of all.”

Thursday 30 May 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 28 May 2019

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Company

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 225,712.18 6.35 9.48 326 41,771,132 UNITED BANK FOR AFRICA PLC 213,746.38 6.25 9.65 296 20,276,441 ZENITH BANK PLC 657,756.54 20.95 9.11 551 52,096,280 1,173 114,143,853 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 265,625.17 7.40 5.71 258 44,684,027 258 44,684,027 1,431 158,827,880 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,697,990.70 132.55 1.96 357 7,168,989 357 7,168,989 357 7,168,989 BUILDING MATERIALS DANGOTE CEMENT PLC 3,435,366.29 201.60 5.00 183 6,591,291 LAFARGE AFRICA PLC. 168,326.46 10.45 4.50 46 371,013 229 6,962,304 229 6,962,304 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 323,585.66 549.90 5.75 40 68,775 40 68,775 40 68,775 2,057 173,027,948 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 1 20 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 1 20 1 20 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 20 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 70,589.34 74.00 - 6 12,581 PRESCO PLC 58,000.00 58.00 - 4 666 10 13,247 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,620.00 0.54 - 3 199,776 3 199,776 13 213,023 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 3 57,000 JOHN HOLT PLC. 182.90 0.47 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 47,558.15 1.17 3.54 56 2,796,943 U A C N PLC. 20,025.01 6.95 9.45 66 4,153,112 125 7,007,055 125 7,007,055 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 31,020.00 23.50 2.17 43 351,082 ROADS NIG PLC. 165.00 6.60 - 0 0 43 351,082 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 10 122,280 10 122,280 53 473,362 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 8,612.45 1.10 - 5 11,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 110,614.33 50.50 - 33 81,292 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 12 25,620 NIGERIAN BREW. PLC. 479,814.12 60.00 3.45 38 2,374,006 88 2,491,918 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 83,000.00 16.60 - 64 568,585 DANGOTE SUGAR REFINERY PLC 160,800.00 13.40 0.37 60 715,390 FLOUR MILLS NIG. PLC. 54,740.07 13.35 -2.91 120 1,256,556 HONEYWELL FLOUR MILL PLC 8,643.92 1.09 - 12 174,200 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 20 NASCON ALLIED INDUSTRIES PLC 47,424.95 17.90 5.29 25 403,214 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 282 3,117,965 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 38 127,821 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 3.57 96 340,990 134 468,811 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,316.09 4.25 - 7 30,574 7 30,574 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 32,160.86 8.10 -4.71 29 289,448 UNILEVER NIGERIA PLC. 193,606.68 33.70 - 21 62,797 50 352,245 561 6,461,513 BANKING ECOBANK TRANSNATIONAL INCORPORATED 222,029.57 12.10 10.00 96 7,372,114 FIDELITY BANK PLC 51,285.39 1.77 -1.12 96 9,335,185 GUARANTY TRUST BANK PLC. 971,228.91 33.00 5.43 276 67,123,989 JAIZ BANK PLC 14,142.84 0.48 2.13 29 3,282,800 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 59,596.17 2.07 - 31 4,360,186 UNION BANK NIG.PLC. 205,301.31 7.05 2.17 41 391,925 UNITY BANK PLC 8,299.43 0.71 - 8 181,051 WEMA BANK PLC. 23,916.17 0.62 -1.61 48 2,188,980 625 94,236,230 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,712.54 0.68 - 16 430,000 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 6 41,608 CONSOLIDATED HALLMARK INSURANCE PLC 1,869.90 0.23 - 1 500 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 2,945.90 0.20 - 3 65,320 CORNERSTONE INSURANCE PLC GOLDLINK INSURANCE PLC 909.99 0.20 - 1 500 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 500 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 12 352,229 LAW UNION AND ROCK INS. PLC. 1,890.39 0.44 - 0 0 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 7 103,483 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 4 116,666 NEM INSURANCE PLC 12,461.99 2.36 - 10 58,610 NIGER INSURANCE PLC 1,547.90 0.20 - 4 133,934 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 - 14 11,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 2,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 7,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 10,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 2,000 WAPIC INSURANCE PLC 5,486.92 0.41 5.13 21 253,693 104 1,589,043

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BUSINESS DAY Thursday 30 May 2019 www.businessday.ng

Huawei v the US: Trump risks a tech cold war Curbs on the Chinese company play into the trade war rhetoric. But American industry fears it has a lot to lose from the dispute Richard Waters, Kathrin Hille & Louise Lucas

resident Donald Trump’s latest confrontation with China’s most important tech company may just have plunged the world into a technology

cold war. Efforts to limit the ability of Huawei to buy from suppliers reliant on American technology threaten to tie the hands of a company that aimed to become a key global supplier in the era of 5G mobile communications. China’s control of information within its borders, through restrictions on access to the global internet, had already put it in a separate digital universe to much of the rest of the world. Now, by cutting off Huawei, the US has taken a retaliatory step that points towards a near-total tech split. But if this turns out to be a defining moment in Washington’s efforts to isolate an economic and political adversary, it has touched off an uncomfortable reaction in the global tech industry, which now finds itself on the frontline of a conflict that looks profoundly bad for business. In a barely veiled attack on the White House, the US Semiconductor Industry Association this week called on its government to act on national security “in a manner that does not undermine the ability of the US semiconductor industry to compete globally”, adding that it needed to protect the country’s “leadership in key areas such as artificial intelligence, quantum computing and next-generation telecommunications”. There are also worries that limiting China’s access to global tech markets will usher in more perilous economic times. “If the US resorts to how it dealt with Russia in the cold war, this is the wrong playbook,” says one China tech executive. Trying to shut out a country with a $13tn economy and 1.3bn people “creates more risks for the global economy and security system”. At the same time, the White House is facing a profound lack of confidence in its own ability to prosecute a successful economic war. Many executives support the idea of challenging China over its tech strategy, says one veteran US policymaker. But he adds: “A lot of us don’t have the confidence that this administration has the vision, the sophistication or the judgment to do so effectively.” The Trump administration has been bent on taking its fight against Huawei to a new level. And the fallout over the telecommunications equipment company has been quick to ripple through the supply chain far beyond US and Chinese borders, accentuating a schism already opened up by the trade war between the two countries. Non-US companies that sell products with at least 25 per cent American content are also caught by the new restrictions. Panasonic, the Japanese electronics group, has already stopped shipping some components to Huawei, and UKbased chip company Arm has halted licensing its designs. The realignment in the global tech industry is already apparent in key hubs

such as Taiwan. The island’s companies manufacture and assemble the lion’s share of the components that go into everything from notebook computers to data centres to smartphones. Over decades, they have built networks linking US patents and designs with Chinese labour to serve global markets. That is now changing. Large Taiwanese server producers like Quanta and Wistron have moved production lines out of mainland China in recent months in response to concerns from customers, such as Google and Facebook, that servers produced in China could be compromised. The US-China clash is “a big opportunity, and we are well placed to benefit from it in the long term,” says a senior official in Taipei. “But there will be a lot of shortterm pain.” When it comes to confronting Beijing, Mr Trump has shown himself to be more concerned with issues of trade and economic rivalry, than national security. But for the China hawks in his administration, hobbling Huawei has been a key step in what Washington sees as a long-term race for technological supremacy. It also represents an alliance of convenience with White House aides such as Peter Navarro, the adviser on manufacturing, who want to force a more profound decoupling of US technology from China for trade reasons. Two sources familiar with the situation say the president decided to sign the order against Huawei after his negotiators accused China of reneging on a trade deal. At a hastily-called meeting in the White House, he said he wanted to hit Huawei hard to create leverage for the trade talks. And he ordered the commerce department to add it to the so-called entity list, which makes it harder for US companies to provide hardware and software to the Chinese group. The decision has brought the president into line with both the trade and security hawks in his administration. But it remains unclear whether he will continue to maintain a tough stance on Huawei, and other Chinese companies that could be hit by the executive order, once he strikes a trade deal. “Longstanding concerns about Huawei, though well deserved, have definitely hitched a ride on the larger platform of the US-China trade talks,” says Michael Allen, managing partner at

Beacon Global Strategies, a national security consultancy. “A debate previously confined to crowded national security circles — about whether China could tap into US communications — is now a part of the Trump ‘economic security is national security’ narrative.” If the White House’s march towards a tech cold war has moved by fits and starts, and Mr Trump’s own objectives are not entirely clear, the US is at least starting from a position of considerable strength. Chinese rivals are still a long way from reaching a position of self-reliance, despite the country’s recent successes in advanced technology research. Sebastian Hou, an investment analyst at CLSA, estimates that Huawei, which accounts for 8-9 per cent of global semiconductor consumption, produces only around 30-35 per cent of its chips, excluding memory, in-house. The company believes it can accelerate this to reach 90 per cent self-reliance. Mr Hou estimates this will apply to 100 per cent of smartphones and around 80 per cent of telecoms infrastructure equipment. But without access to the widely used US software, Huawei would find it hard to find buyers for its equipment. Google’s decision this week to stop selling its Android operating system to Huawei for new handsets makes little difference in China, where Huawei should be able to convince buyers to switch to its operating system, now under development. But customers are more wedded to Android in international markets. Independent analyst Richard Windsor estimates it will lose all those sales, roughly half of the 200m smartphones it shipped last year. Chinese companies are well aware of their vulnerabilities. Speaking at Tencent’s Global Digital Ecosystem Summit on Tuesday, founder and chief executive Pony Ma, said: “If we do not continue to strengthen our efforts in fundamental research and core technologies, our digital economy would become a tall building built on sand and could not stand intact, let alone facilitate digital transformation into the new economy.” Although the US looks to be in a strong position, a tech cold war could still rebound on it. Beijing’s push for technological self-reliance has been given new urgency by the heightened tensions. For many US policymakers, that is a

price worth paying. “If the technology industry in the US and China decouples to a certain extent, we are going to be OK,” says one US official. Beijing has scope for retaliation. Levers at its disposal include blocking access to its market — a move that Goldman Sachs analysts estimate could reduce Apple’s earnings per share by nearly 30 per cent — delaying M&A deals or dumping US Treasury bonds. The importance of Chinese manufacturers in the electronics supply chain also puts the country in a powerful position to disrupt economic activity beyond its borders. Gao Feng, a Chinese commerce ministry official, warned on Thursday that the US actions might pose “a great threat to the security of the global industrial and supply chain”. This adds to the US tech sector’s feeling of exasperation with its own government. “[Trump] has underestimated how deeply intertwined we are now,” says one US industry figure. Already unhappy about the higher tariffs on imports from China, US tech companies that sell to Huawei are also being forced to abandon a significant global customer. The reverberations are being felt most strongly in the semiconductor sector. Hopes for a second-half bounce in demand had driven the main index of chip stock prices up by 50 per cent in the first four months of 2019. Over the past four weeks, it has fallen back by nearly 20 per cent. Mr Trump made efforts on Thursday to sound more conciliatory, by suggesting that there might still be a way to bring Huawei back into the fold as part of a wider trade deal. Though at the same time, and with no apparent awareness of any contradiction, he insisted the company was “very dangerous, from a security standpoint”. Even if Mr Trump can secure the elusive end to the trade war he started, it may do little to resolve deeper issues. Most US tech executives sound resigned to a continuation of the status quo, rather than any serious concessions by Beijing to open its markets or end its internet blockade. For China, the episode has reinforced an important lesson: tech security can only come from self-reliance. The White House may just have taken a fateful step towards a tech cold war that lasts for years.

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