BusinessDay 30 Oct 2019

Newly licensed Globus Bank eyes N50bn capital raise in 18mths ...targets national banking licence

BALA AUGIE & LOLADE AKINMURELE

G

lobus Bank Limited, a newly licensed regional c o m m e rc i a l b a n k , p l a n s t o

raise as much as N50 billion in the next 12 to 18 months as it takes steps towards becoming

a national bank, according to Elias Igbinakenzua, managing director/CEO of the bank.

billion in 12-18 months,” Igbinakenzua said in an exclusive inter view with BusinessDay at the bank’s Victoria Island,

“Obtaining a national banking licence was always the play and while we have enough capital to obtain one now, we still plan to raise an additional N50

Continues on page 38

businessday market monitor

Biggest Loser

Biggest Gainer GLAXOSMITH N6.30 8.62pc

MTNN N126.95 -1.59pc 26,244.39

Foreign Reserve - $40.687bn Cross Rates - GBP-$:1.29 YUANY-N 51.16 Commodities Gold

Cocoa

US$2,524.00

₦3,332,720.44 +0.22pc

Crude Oil

I

N300

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 £-N 456.00 456.00 €-N 392.00 401.00

$1,488.40 $61.89

news you can trust I **WEDNESDAY 30 OCTOBER 2019 I vol. 19, no 424

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

g

Market

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

362.11 306.95

3M -0.02 12.26

NGUS DEC 24 2019 362.68

6M

L-R: Ade Bajomo, executive director, IT and operations, Access Bank plc; Patrick Akinwuntan, CEO, Ecobank Nigeria; Rabiu Olowo Onaolapo, commissioner for finance, Lagos State; Segun Aina, president, Fintech Association of Nigeria; Aishah Ahmad, deputy governor, financial system stability, CBN; Mary Uduk, acting DG, SEC; Hakeem Popoola Fahn, commissioner for science and technology, Lagos State; Uche Olowu, president, CIBN, and Tunbosun Alake, SA to the governor on innovation and technology, at the 4th National Fintech Conference themed ‘Surviving with Fintech Innovation’, in Lagos.

Pic by Pius Okeosisi

0.00

10 Y -0.05

20 Y -0.20

14.11

14.12

14.30

5Y

-0.10 12.54

NGUS MAR 25 2020 363.53

@

g

www.

fgn bonds

Treasury bills

NGUS OCT 28 2020 365.50

g

MTN vs. AGF case adjourned to January 2020 ...as FG yet to file defence

NAICOM confirms 3 mergers in T insurance industry recapitalisation

JUMOKE AKIYODE-LAWANSON

MODESTUS ANAESORONYE

T

he National Insurance Commission (NAICOM) on Tuesday confirmed that three merger deals between six companies are currently going on in the industry’s

as 44 firms get no-objection on plans

panies to increase their paidup share capital by over 300 percent effective May 20, 2019.

The commission gave June 30, discussed following NAICOM’s 2020 as deadline.

BusinessDay last week redirective to underwriting comrecapitalisation exercise.

The merger deals are being

MARKETS

ported that Unitrust Insurance Company Limited, a Nigerian company, was in merger talks with another local company fol-

Continues on page 38

he Federal High Court in Lagos on Tuesday adjourned the case of MTN Nigeria against the Attorney General of the Federation (AGF) to January 30 and 31, 2020.

MTN, Nigeria’s largest telecommunications operator, filed a suit against the AGF over alleged $1.3 billion (N242 billion) import duties and withholding tax assessments. The telecommunications company is challenging the legality of the AGF’s assessment of its import duties, withholding tax and value added tax in the sums of $1.3 billion and its authority to deal with issues around tax and

Continues on page 38

2

Wednesday 30 October 2019

BUSINESS DAY

news Stakeholders raise concerns over PSC amendment bill …say law may stall $48bn planned investments in oil and gas Olusola Bello

T

L-R: Laoye Jaiyeola, CEO, Nigerian Economic Summit Group (NESG); Udeme Ufot, member of the board; Nkechi Onyenso, head, corporate services, and Yinka Iyinolakan, head, communications, at the NESG launch of a book ‘In the National Interest’, in Lagos, yesterday. Pic by Olawale Amoo

9M 2019: Seplat doubles profit on tax credit despite slump in oil & gas sales OLUWASEGUN OLAKOYENIKAN

I

nvestors and shareholders will be puzzled on how Nigeria’s largest listed oil and gas firm by market value, Seplat, was able to deliver more than double growth in net profit despite weaker oil sales in the first nine months of 2019.

According to the financials it presented to the Nigerian Stock Exchange (NSE), Seplat grew after-tax profit by 103 percent to N56.6 billion from N27.96 billion. The growth was supported by the management’s decision to cut the income tax rate to 1.84 percent in 9M 2019 from 57 percent in September 2018.

The Nigerian independent oil and gas company, which is listed both in Nigeria and London, noted that income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected

…revenue declines by 12.5%, share price falls 5% for the full financial year.

“The estimated average annual tax rates used for the period to 30 September 2019 were 85 percent and 65.75 percent for crude oil activities and 30 percent for gas activities,” Seplat said.

Revenue of the oil and gas firm shrank by more than one-third to N42.9 billion between July and September 2019, largely driven by 41.6 percent dip to N32.78 billion in crude oil earnings – which form a larger chunk of its earnings. This weighed on Seplat’s cumulative revenue which declined by 12.5 percent from the start of the year to N151.88 billion as against N173.71 billion recorded last year.

Austin Avuru, Seplat’s CEO, said the decline in the firm’s third-quarter earnings was attributable to lower production and crude oil prices.

Brent crude traded at $62.03 per barrel on the average between July and September 2019, compared with an oil price of $68.47 per barrel in the preceding three months, thanks to weaker oil pricing that followed the escalation of the trade spat between the United States and China, as well as a surprise build in the former’s crude stockpiles.

“The core business remains highly cash generative and with four rigs now operational in the field we expect to quickly regain momentum. This is reflected in our decision to declare an interim dividend of $29 million,” Avuru noted.

Four drilling rigs are now operating across Seplat’s portfolio to drive liquids working interest production to an expected exit rate of 30,000 bopd with three oil

wells (Sapele-29, Sapele-33 and Jisike-06) being drilled and completed to date.

Seplat announced plans to commence the process of drilling two additional oil wells (Ovhor-18, Sapele-34) and a gas well (Oben-48) while two additional oil wells (Ovhor-19 and Sapele-35) are expected to be completed by early 2020.

Seplat expects its net oil production to rise by 7,000 bopd to achieve a 2019 exit rate of 30,000 bopd.

In the face of the dwindling revenue, Seplat tamed cost of sales by 12 percent to N70.6 billion from N80.2 billion, resulting in a gross profit of N81.22 billion in the first nine months of the year as against N93.5 billion recorded in the same period a year earlier.

•Continues online at www.businessday.ng

Reps urge Buhari to stop Army’s planned Operation Positive Identification JAMES KWEN, Abuja

T

he House of Representatives has urged President Muhammadu Buhari, in his capacity as the Commander-in-Chief of the Armed Forces, to stop the Nigerian Army from commencing the planned Operation Positive Identification (OPI) scheduled for November 1 to make way for further consultations.

This is coming on the heels of a BusinessDay story on Tuesday which quoted security experts and human rights activists as raising concerns that the planned military operations would lead to rights abuses and violations. The experts had also said the frequent use of the Army in what should ordinarily be civil operations could undermine the integrity of the Army.

In calling on the president to stop the planned exercise, the House resolved that the Army should develop pro-people strategy in confronting the nation’s security challenges instead of measures that will further victimise the people.

The Green Chamber also mandated its Committee on Army to interface with the Chief of Army Staff to determine the purpose of the operation and report back to the House for further legislative action.

These resolutions were reached at the resumed plenary of the House on Tuesday following a motion of urgent public importance moved by the minority leader, Ndudi Elumelu, who described the exercise as a recipe to possible militarilisation of Nigeria.

Elumelu, while presenting the motion, said the www.businessday.ng

House is concerned that many Nigerians, particularly those living in the rural areas, would be victimised as there has not been enough public sensitisation for such security operation.

He said the House is further concerned that “though the nation is faced with serious security challenges and of course, appreciates the efforts by security agencies to safeguard lives, the planned implementation of OPI across the nation would worsen the situation in the country”.

“The House is aware that it is not the duty of the Army to fight crime, rather their duty is to protect the territorial integrity of the country against aggression,” he said.

Contributing in support of the motion, Ahamadu Jaha (APC Borno) said if the country’s security chiefs were out of ideas, they should let Nigerians know so that they

can voluntarily give way for other people who have new ideas on how to fight insecurity in this country.

Jaha argued that “travelling from Abuja to Maiduguri before they link to their various local government, it takes them not less 14 hours to reach Maiduguri, that is under normal circumstances”.

“In the event whereby you have to ask them to identify themselves in different military checkpoints before they proceed, for God’s sake how many days will it take them to move from Abuja to Maiduguri or from Maiduguri to Chibok, or from Maiduguri to Damboa or Maiduguri to Gwoza? So this is basically not the work of the military but the work of immigration service,” he said.

https://www.facebook.com/businessdayng

•Continues online at www.businessday.ng

he Deep Offshore and Inland Basin Production Sharing Contracts (Amendment) Bill, 2019 recently passed by the Senate, if passed into law, portends serious danger for investments in the oil and gas industry, according to stakeholders in the sector.

They said passing the bill into law could stall US$48 billion currently planned oil and gas investments as these investments may no longer be economically viable.

BusinessDay gathered from some industry operators that one of the problems they have with the bill is the introduction of an additional price-based royalty and increasing water depth-based royalties on revenues already burdened with a plethora of other taxes, fees, levies and other tariffs that would worsen Nigeria’s competitiveness.

The operators said there are another US$43 billion of future deep-

water investments that will also not likely occur due to the lack of competitiveness in Nigeria’s fiscal policies. This will means that the Nigerian contractors will not have work and the thousands of jobs that would have been created from the projects will not materialise for Nigeria.

Some of the prospective deepwater projects which developments may be stalled are Total’s Ikike, O w o w o, B o n g a S o u t h West, and Preowei projects. The final investment decisions (FIDs) of three of these are expected to be made by 2020, with first oil from Preowei scheduled for 2022. There is, of course, the Zabazaba and the Etan fields which Eni/ Agip is working on.

The non-implementation of these investment plans could result in significant decline in oil production and government revenues by 2023.

•Continues online at www.businessday.ng

Weak growth in Nigeria’s trade sector worries analysts ...sector may reenter recession in Q3 for 4th consecutive year BUNMI BAILEY & IFEANYI JOHN

T

he Nigerian economy has been struggling to grow since tumbling into a recession in 2016 and the trade sector may be a key reason why. Nigeria’s trade sector, which is the second largest sector after agriculture, accounting for up to 16 percent of GDP in the country, has witnessed negative growth in eight of the last 12 quarters.

After suffering negative growth in second quarter (Q2) of 2019 for the first time in four quarters, the trade sector is now at risk of reentering a technical recession for the fourth consecutive year.

Analysts told BusinessDay that they see no growth catalyst in sight for the sector as headwinds from poor government policies and weaker consumer spending continue to subdue growth in the sector.

“We expect the trade sector to remain weak in Q3.

The impact of the exchange rate revision for duties payment should continue to bite hard while the closure of the border in August would obviously impact negatively @Businessdayng

as all exports and imports must now be done via the ports increasing congestion of activities within the ports,” said Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers.

“The trade sector will drag because import and exportation will be affected because all forms of trade have to go through,” Akinloye said.

The government had recently partially closed the country’s border with Republic of Benin to block the smuggling of goods into the country. What started as a partial ban has now morphed into a total closure of Nigeria’s land borders to the movement of all goods from Benin, Niger and Cameroon, effectively banning trade flows with its neighbours and hurting the local trade sector.

Eronmosele Aziba, consumer analyst at Tellimer Group, said it is very possible that the sector will record another negative because of the border closure. However, he does not think the effect of the border closure will be too significant on the economy.

•Continues online at www.businessday.ng

Wednesday 30 October 2019

BUSINESS DAY

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Wednesday 30 October 2019

BUSINESS DAY

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BUSINESS DAY

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Wednesday 30 October 2019

BUSINESS DAY

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@Businessdayng

Wednesday 30 October 2019

BUSINESS DAY

53 7

Live @ The STOCK exChangeS Prices for Securities Traded as of Tuesday 29 October 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Company

Volume

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. UNITED BANK FOR AFRICA PLC ZENITH BANK PLC

261,257.41 196,646.67 533,740.39

7.35 5.75 17.00

0.68 -1.71 -0.29

OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC

179 202 386 767

37,244,191 6,562,931 43,063,706 86,870,828

190,245.05

5.30

-

TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC

143 143 910

9,428,851 9,428,851 96,299,679

2,584,005.43

126.95

-1.59

BUILDING MATERIALS DANGOTE CEMENT PLC LAFARGE AFRICA PLC.

61 61 61

521,271 521,271 521,271

2,487,914.08 231,146.87

146.00 14.35

-4.01

35 56 91 91

33,411 538,891 572,302 572,302

304,225.84

517.00

-

36 36 36 1,098

55,019 55,019 55,019 97,448,271

EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC

REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND VALUEALLIANCE VALUE FUND

CROP PRODUCTION FTN COCOA PROCESSORS PLC OKOMU OIL PALM PLC. PRESCO PLC FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC.

1,710.00 10,175.81 13,074.52

85.50 40.70 4.90

-

1 1 1 3 3

30 8 150 188 188

411.91 3,312.39

552.20 103.20

-

0 0 0 0 3

0 0 0 0 188

440.00 52,417.35 38,400.00

0.20 54.95 38.40

-

0 16 4 20

0 29,544 8,510 38,054

0 0

0 0

8,520.00

4.26

-

1,380.00

0.46

-

2 2 22

100,364 100,364 138,418

741.24 214.03 1,903.99 42,680.39 17,287.78

0.28 0.55 2.93 1.05 6.00

2.94 -

1 0 0 47 32 80 80

2,000 0 0 5,596,322 184,310 5,782,632 5,782,632

711.32

4.79

-

0 0

0 0

24,486.00 165.00

18.55 6.60

-

7 0 7

17,332 0 17,332

2,780.28

1.07

-

6 6 13

26,368 26,368 43,700

954.53

0.20

-

BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. GOLDEN GUINEA BREW. PLC. GUINNESS NIG PLC INTERNATIONAL BREWERIES PLC. NIGERIAN BREW. PLC.

0 0

0 0

7,986.09 242.22 52,240.63 108,307.86 369,856.72

1.02 0.89 23.85 12.60 46.25

0.43

FOOD PRODUCTS DANGOTE FLOUR MILLS PLC DANGOTE SUGAR REFINERY PLC FLOUR MILLS NIG. PLC. HONEYWELL FLOUR MILL PLC MULTI-TREX INTEGRATED FOODS PLC N NIG. FLOUR MILLS PLC. NASCON ALLIED INDUSTRIES PLC UNION DICON SALT PLC.

9 0 58 5 44 116

317,000 0 222,241 21,640 5,107,505 5,668,386

111,250.00 124,200.00 63,555.88 7,533.69 1,340.10 766.26 39,344.16 3,321.07

22.25 10.35 15.50 0.95 0.36 4.30 14.85 12.15

-

FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. NESTLE NIGERIA PLC.

0 37 50 18 0 1 11 0 117

0 213,919 251,521 519,170 0 5,000 22,030 0 1,011,640

18,030.74 967,040.63

9.60 1,220.00

-

23 31 54

97,357 16,108 113,465

1,680.31 4,377.95

22.10 3.50

-

PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. UNILEVER NIGERIA PLC.

0 12 12

0 175,680 175,680

21,837.62 153,391.64

5.50 26.70

-

BANKING ECOBANK TRANSNATIONAL INCORPORATED FIDELITY BANK PLC GUARANTY TRUST BANK PLC. JAIZ BANK PLC STERLING BANK PLC. UNION BANK NIG.PLC. UNITY BANK PLC WEMA BANK PLC.

21 18 39 338

192,523 32,202 224,725 7,193,896

130,281.81 48,677.66 750,495.07 13,258.91 57,580.84 205,301.31 7,364.28 23,144.68

7.10 1.68 25.50 0.45 2.00 7.05 0.63 0.60

-1.18 -2.67 -2.50 0.71 1.69

29 53 274 7 420 18 9 24 834

222,520 6,137,938 42,280,095 721,023 34,768,780 165,122 156,203 1,029,140 85,480,821

DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. JOHN HOLT PLC. S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. BUILDING CONSTRUCTION ARBICO PLC. INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. ROADS NIG PLC. REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC

HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. VITAFOAM NIG PLC.

INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC AIICO INSURANCE PLC. AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC CONTINENTAL REINSURANCE PLC CORNERSTONE INSURANCE PLC GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC LASACO ASSURANCE PLC. LAW UNION AND ROCK INS. PLC. LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. NEM INSURANCE PLC NIGER INSURANCE PLC PRESTIGE ASSURANCE PLC REGENCY ASSURANCE PLC SOVEREIGN TRUST INSURANCE PLC STACO INSURANCE PLC STANDARD ALLIANCE INSURANCE PLC. SUNU ASSURANCES NIGERIA PLC. UNIC DIVERSIFIED HOLDINGS PLC. UNIVERSAL INSURANCE PLC VERITAS KAPITAL ASSURANCE PLC WAPIC INSURANCE PLC

4,117.00 4,781.84 17,325.00 3,008.10 24,894.59 6,628.28 909.99 1,228.00 487.95 1,904.09 1,933.35 4,080.00 2,234.55 10,561.01 1,547.90 2,745.10 1,333.75 1,668.16 4,483.72 2,582.21 2,800.00 516.46 3,200.00 2,773.33 4,550.13

0.20 0.69 1.65 0.37 2.40 0.45 0.20 0.20 0.38 0.26 0.45 0.51 0.20 2.00 0.20 0.51 0.20 0.20 0.48 0.20 0.20 0.20 0.20 0.20 0.34

9.52 0.42 9.76 3.03

www.businessday.ng

1 29 7 0 2 6 0 0 0 5 9 3 2 3 2 1 0 2 0 0 0 0 0 0 18 90

50 1,424,314 255,000 0 1,250,000 510,500 0 0 0 49,999 171,243 100,000 174,000 21,845 1,187,800 1,000,000 0 16,279 0 0 0 0 0 0 457,707 6,618,737

MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC

2,721.10

1.19

-

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC.

2 2

4,360 4,360

4,200.00 7,370.87 5,796.93 2,265.95 2,949.22

1.00 0.50 1.39 0.20 3.02

-

0 0 0 0 0 0

0 0 0 0 0 0

7,800.00 32,056.16 660.00 31,684.34 1,029.07 387,517.72 12,240.00

3.90 5.45 0.44 1.60 0.20 37.00 2.04

2.09 -0.49

29 8 0 36 0 15 40 128 1,054

372,882 108,564 0 51,555,748 0 7,211 1,162,920 53,207,325 145,311,243

1,680.29 888.28

3.37 0.25

4.17

0 5 5

0 328,100 328,100

494.58

0.50

-

3 3

880 880

366.17 8,345.44 7,534.02 3,450.47 740.67 556.71 325.23

0.50 4.00 6.30 2.00 0.39 3.62 1.50

8.62 -

0 4 25 5 6 0 0 40 48

0 12,500 404,724 8,931 41,392 0 0 467,547 796,527

OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC HEALTHCARE PROVIDERS EKOCORP PLC. UNION DIAGNOSTIC & CLINICAL SERVICES PLC MEDICAL SUPPLIES MORISON INDUSTRIES PLC. PHARMACEUTICALS EVANS MEDICAL PLC. FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC

816.96

0.23

4.35

COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC

15 15

1,928,364 1,928,364

1,470.89

0.50

-

IT SERVICES CWG PLC NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC.

0 0

0 0

6,413.06 486.00 316.77

2.54 4.50 0.64

-

PROCESSING SYSTEMS CHAMS PLC E-TRANZACT INTERNATIONAL PLC

0 1 3 4

0 800 10,288 11,088

1,033.13 9,996.00

0.22 2.38

-4.35 -

13 0 13

2,560,000 0 2,560,000

1,157,510.66

308.00

-

9 9 41

282 282 4,499,734

2,173.68 17,885.00 208,981.67 313.43 1,769.32 1,156.20

7.50 25.55 15.90 0.59 2.23 9.40

-

6 11 23 0 0 0 40

15,928 5,325 249,724 0 0 0 270,977

2,256.91 2,465.85

2.09 1.40

-

0 10 10

0 49,148 49,148

26,898.49 388.02

53.80 9.10

-

0 0 0

0 0 0

100,754.14

62.50

-

CHEMICALS B.O.C. GASES PLC.

0 0 50

0 0 320,125

2,547.42

6.12

-

METALS ALUMINIUM EXTRUSION IND. PLC.

0 0

0 0

1,781.64

8.10

-

0 0

0 0

852.39

0.20

-

0 0

0 0

83.60

0.38

-

ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC

0 0 0

0 0 0

1,252.54

0.20

-

INTEGRATED OIL AND GAS SERVICES OANDO PLC

19 19

3,764,374 3,764,374

41,769.55

3.36

-1.18

PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC CONOIL PLC ETERNA PLC. FORTE OIL PLC. MRS OIL NIGERIA PLC. TOTAL NIGERIA PLC.

50 50

1,009,434 1,009,434

53,332.04 10,686.86 3,716.81 20,709.45 5,166.13 41,829.09

147.90 15.40 2.85 15.90 16.95 123.20

-0.62 -

16 11 7 29 3 25 91 160

62,916 18,381 63,258 242,170 5,908 21,384 414,017 5,187,825

1,820.01

0.41

-

0 0

0 0

17,551.17

1.80

-

0 0

0 0

294.09

0.25

-

0 0

0 0

2,623.26 393.83

4.45 0.84

9.88 -

9 2 11

200,125 9,050 209,175

642.33

0.20

-

0 0

0 0

4,723.78 2,224.31 7,862.53 41,042.18

3.05 1.07 3.50 5.40

-

MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC

0 2 0 0 2

0 13,680 0 0 13,680

4,800.00

0.40

-

PRINTING/PUBLISHING ACADEMY PRESS PLC. LEARN AFRICA PLC STUDIO PRESS (NIG) PLC. UNIVERSITY PRESS PLC.

0 0

0 0

205.63 856.31 1,183.82 474.55

0.34 1.11 1.99 1.10

-

1 2 0 4 7

3,600 31,944 0 12,540 48,084

729.39

0.44

-9.09

6 6

333,050 333,050

TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC BUILDING MATERIALS BERGER PAINTS PLC CAP PLC CEMENT CO. OF NORTH.NIG. PLC MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC CUTIX PLC. PACKAGING/CONTAINERS BETA GLASS PLC. GREIF NIGERIA PLC AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC

MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC.

ADVERTISING AFROMEDIA PLC AIRLINES MEDVIEW AIRLINE PLC AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC TRANS-NATIONWIDE EXPRESS PLC. HOSPITALITY TANTALIZERS PLC HOTELS/LODGING CAPITAL HOTEL PLC IKEJA HOTEL PLC TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC

ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC

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Wednesday 30 October 2019

BUSINESS DAY

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Wednesday 30 October 2019

BUSINESS DAY

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BUSINESS DAY

Wednesday 30 October 2019

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SMEs must improve on risk management SMALL BUSINESS HANDBOOK

EMEKA OSUJI

M

aking money and keeping it have always counted among the most serious challenges of humanity, especially those in the business of making money, but one is more serious than the other. Reading through the stories of the rise and fall of many financial empires, one cannot but notice that the source of their decline is usually not their inability to make money but failure to effectively manage money made. Keeping the money, one has made is sometimes harder than making it. This has been the bane of many entities, including nations.

I learnt long ago, while working for different corporate organisations, that it is not the amount of money they pay you that determines whether you retire rich or poor. It is more of what happens to that money while in your hands.

This is why one sometimes finds young officers, without any bribery or corruption, buy their first houses before their big bosses – effective management. An important part of resource management is resource protection. It is not enough to deploy resources in their best uses and earn optimal returns. Effective deployment happens only when such resources are safe and protected.

It appears the Small and Medium Enterprises sector has not learnt much from the bankers in regard to risk management, especially loss preven-

tion strategies. While the bankers have expanded their risk control and management dragnet to cover every imaginable risk, including damage to their reputation, SMEs are still on the defensive against risk. In other words, they just react to events of risk rather than take serious steps to prevent them.

Don’t get me wrong on the effectiveness of the risk management efforts of our banks. Granted a lot is yet to be done, going by the level of nonperforming loans in that sector, and even the frequency of fraud. However, much has been done by the banking industry to keep depositors’ funds safe.

Small business owners need to wake up to improved risk management.

The risk of loss through pilfering has become very high among small businesses, draining resources amid other serious leakages. It is as if every worker is looking for what to steal, and will definitely do so if the opportunity arises. This situation appears to be an overflow from the rampant stealing going on in the public sector but the private sector cannot survive under such haemorrhage. The need for a decisive response to pilfering in small companies is now urgent.

SMEs cannot continue to bear the hardship occasioned by employees waiting and plotting to steal everything, except those nailed into the floor or chained to the nearby iroko trees and electric poles. In-house stealing of cash, raw materials, spare parts and equipment have become very serious and endemic. From the comments of stakeholders I interact with, the sector needs to be supported with more risk awareness and management efforts from all of us, given the fragility of the sectors and the limits to its capacity.

What one finds at the moment is that many SMEs are not even aware of some of the major risks they face until such risks crystallise. To a large extent, this should be understandable given

the history and nature of the sector, particularly the way they come into existence and their challenge of low initial capital. Besides, as organisations differ, so do their internal chemistry, including staffing, culture and leadership.

Entrepreneurs face different risk matrices, which may vary in degree and composition, from one enterprise to another. Accordingly, there may be as many divergent strategies as there are companies. However, what is indubitable is that we are not dealing with low-level dishonesty in the SME sector with the commitment it deserves.

Granted the informal sector has its own challenges of identity, integrity and such, there appears not to be any coordinated or sector–driven effort to effectively confront the problem of pilfering.

Meanwhile, it may be useful to take a cursory look at some time-tested strategies that have helped organisations to combat fraud of all kinds among employees.

The first approach is based on the old adage, “prevention is better than cure”. We believe it is better to avoid trouble than to invite it and then go ahead to fight it with a sledge or any hammer at all. To prevent the entry of employees with questionable backgrounds to the company is the first law of fraud prevention. In this regard, it is essential to ensure that every employee is double-checked for good conduct before they are hired.

This is an ideal approach, which also requires that companies have effective working systems established and made truly functional. Unfortunately, the “Nigerian Factor” seems to have come heavily against this settled truth and taken the upper hand. That Nigerian factor is that even in companies with established procedures (which many SMEs don’t have) that require proper screening, it is not diligently followed through. At best the system works at

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SMEs cannot continue to bear the hardship occasioned by employees waiting and plotting to steal everything, except those nailed into the floor or chained to the nearby iroko trees and electric poles

This piece is largely excerpted from my book “Leading Essays on Microfinance” to be publicly presented on November 8, 2019 at NIIA.

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Our little victories

I

t’s important we celebrate our small wins in life as they contribute tremendously to our happiness and do our self-esteem a whole lot of good. There are few things which conduce more to our sense of wellbeing. Most of us have some so called “friends” who always find a way to underrate our wins and make them look insignificant. You know, those people who have a penchant for making us feel foolish for making our achievements look like a big deal. My advice to you? Stay clear of such friends. Trust me, you really don’t need them. Those who never see anything good in what you do and refuse to allow you to feel good about yourself are not friends.

By all means, go ahead and bask in your little victories because consistent small wins will eventually lead to big wins as your confidence to strive for more, higher and bigger, continues to grow.

It’s instructive to note that at times, all you need to achieving these small wins is discipline, consistency and focus. Doing the right things at the right time. Going for that evening jog even when you don’t feel like it.

Turning that television off and studying for your exams instead. The mere fact that you exercised the will to do that makes you feel good and it boosts your self-confidence.

The part self-discipline plays in building up one’s self esteem cannot be overemphasised. Learning to discipline yourself to do the right thing even when it’s not convenient, appealing or expedient strengthens your character and reinforces your belief in yourself and in your abilities. For others, their small win can be the first order they get in their newly established business. It may not

mean much to a Dangote but for you, it could be a significant step which assures you, you’re moving in the right direction. It may just be the tonic you need.

I remember the first time I was asked to give a talk at a school on Transformational Leadership and the considerable role character plays in achieving good success in life.

Anyone who knew me prior to that experience would readily tell you that I’m the last person who would ever volunteer to speak before a large group of people. Like my late dad liked to call himself, with obvious reference to his career path as a civil servant (ubiquitously felt but not seen), I’ve always been more of a “back room boy” by nature.

I’m in my element when left to write, putting my thoughts down in writing and attracting as little attention to myself as possible. But as God would have it, after getting up with much trepidation to deliver my talk on that day, I found myself flowing with the moment. Perhaps made easier because of my intense interest in the topic and my desire to do my bit in guiding our future leaders down the right path, nerves quickly gave way to passion.

Even more so, each time, I noticed how the faces of the pupils lit up when a point made struck a chord within them. The excitement that comes with gaining new understanding is difficult to describe but it was clearly written all over their faces as they put their hands up, competing to air their new found knowledge. To put it simply, I loved the experience.

That was indeed a small but significant win for me boosting my confidence to speak publicly to no end.

I was chuffed to bits. The last thing I would

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have wanted that moment as I celebrated my little victory would have been for a friend to underrate my achievement by telling me, “it’s no big deal! Just a week before, I spoke before a whole stadium of people without breaking a sweat so why are you making noise?”

Not all small wins are positive though.

Some make us feel good while we ignorantly destroy the fabrics of decency that should hold our society together. But what, may I ask, is a society anyway?

The Merriam Webster dictionary provides several definitions of a society. One says, “it’s an enduring and cooperating social group whose members have developed organised patterns of relationships through interactions with one another.” Of note here is the word “cooperating”. But how cooperative is a community where the next person is always trying to get one up on you? Constantly looking to “chance” you? And that little “victory” of “chancing” someone defines his day as a good one!

Like someone rightly said, a society must include a system of give and take relationships which create reciprocal roles in human life. He went further to insist that there is a difference between a society and a mere aggregate of people. One exemplifies cooperation and harmony which can only lead to progress when it works well but the other is a representation of disparate interests that may never coincide or overlap. The result is chaos, often scant regard for the rule of law, a “me only” attitude and retarded progress as a group. Even when each individual by his ominous antics believes he’s moving ahead, at what cost? Because our behaviour is so perfectly mimicked by others, the only

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the initial stages when it was emplaced and then be subsequently sidestepped, often by those whose duty it is to ensure its religious implementation.

There was a case of an oil service company that has a proper procedure for screening diesel supplied by contractors. After a while, those charged with the screening started accepting diesel without screening and talking them straight to site where manual screening by touch and feel was used to extort money from suppliers. Somehow, strangely, senior management knew of it and did nothing. Why would this happen when virtually everyone knows the dangerous implication of such an act? It is simple. Most SMEs employ members of their immediate and extended families, and friends and associates of the owners of the companies. There is nothing wrong in this since they are often the family’s way of reacting against unemployment. However, this makes it difficult to implement very impersonal system-driven rules of management, if not well handled.

At the end of the day, these organisations end up with people who neither contribute optimally to the growth of the company nor imbibe its good culture. It is essential therefore that while trying to fulfil their obligations to their primary stakeholders – family; SMEs must promote cultures that advance their ultimate objective of developing into successful companies in the future.

Ignoring pilfering by family members is not in line with this objective.

CHARACTER MATTERS WITH DAPS

DAPO AKANDE logical result is that we’ll spend far more time as victims of such behaviour than as victors.

The sooner we realise the better because in an environment where anything goes for one to get ahead, where guile and aggression have been elevated to virtues worthy of celebration, all indeed suffer. Each selfish act ebbs away our fragile sense of humanity while it unravels yet another thread of the civility which should fasten us together; until it can no longer hold. And here we are.

Big ups to Edmund Burke who lends me a perfect quote with which to close this discussion: “Society is in indeed a contract... it becomes a partnership not only between those who are living, but between those who are living, those who are dead and those who are to be born.” If it’s only one thing you take away from this article, please let it be this; our actions cannot but have consequences. And at times, it can be a deluge of consequences.

Changing the nation...one mind at a time.

Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

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Wednesday 30 October 2019

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Youth unemployment: Nigeria’s ticking time bomb OLANREWAJU RUFAI

T

here is no gainsaying that Nigeria is currently grappling with an unemployment crisis. The most recent unemployment statistical figures from the National Bureau of Statistics (NBS) reveal that nearly 25 percent of the Nigerian labour force is unemployed. That is, 21 million Nigerians willing and able to work were out of jobs as at the end of 2018.

This however is not the full story.

The distribution of unemployment across age groups is even more alarming. Unemployment in Nigeria is highest for the youth population i.e. job seekers in the 15 - 34 age group. In fact, it is estimated that 55 percent of Nigerians in this category are either unemployed or underemployed, more than twice the rate for the general labour force.

Overall, the figures are grim, and by any stretch, represent a severe problem, not only in terms of social cohesion but also as a matter of national security. Simply put, youth unemployment in Nigeria is a ticking time bomb which deserves the highest level of priority and attention.

There are multitudes of factors responsible for the high level of

youth unemployment in Nigeria.

Chief of them is a faltering economy which has struggled to create jobs for a fast-growing population.

The Nigerian economy has faltered badly in recent years and is still struggling to recover from its 2016 recession which worsened an already dire unemployment problem. The nation’s population growth on the other hand has shown no sign of slowing down.

Since 1960, Nigeria’s population has grown at an average of 2.6 percent per annum since 1960, almost double the global average. The link between the nation’s accelerated population growth and the nation’s unemployment problem is clear.

When population growth rate outpaces economic growth rate over an extended period, it is inevitable that the supply of labour will eventually outstrip the capacity of the economy to create jobs and absorb job seekers. This is the quagmire Nigeria currently finds itself.

In addition, the rise of automation means that many jobs, including low-skilled manufacturing and services jobs which hitherto were available to Nigerians are fast disappearing. Technological advances mean that more efficient machines and software have begun replacing low-skilled labour in the value creation process, thus further reducing the already insufficient job pool.

All of these have been further compounded by an inefficient system of education which fails to prepare people for success in the modern economy. The abysmal state of the Nigerian educational system means that majority of Nigerian youths are unfit for the

modern workplace as the technical and soft skills essential for success as job creators or job seekers in an ever-evolving world are not trained in the Nigerian educational system.

The current state of youth unemployment in the country should elicit concerns from policymakers, especially given the nation’s already worrisome status as the world’s poverty capital. A double whammy of unemployment and poverty will inevitably result in a rise in criminality. Already, the impacts of youth unemployment can be seen in the rising crime rate in Nigeria’s urban centres. The recent uptick in gang activities in Lagos bears testament to this.

Furthermore, as millions of unemployed youths lay idle, they will invariably become foot soldiers for criminal and terrorist organisations. In fact, it is not farfetched to draw a link between the increasing spate of violence and kidnappings across the country to rising youth unemployment.

To address the overall unemployment problem and in particular youth unemployment in Nigeria, there must be a concerted effort to grow the nation’s economy. A weak and unproductive economy will be unable to foster job creation. Therefore, there is a need for sustained growth of the Nigerian economy. To achieve this, all levels of government must incentivize and encourage private sector participation in various sectors of the economy. Given the current population growth and unemployment rates, the economy will need to grow 6-8 percent annually to reduce youth unemploy-

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The current state of youth unemployment in the country should elicit concerns from policymakers, especially given the nation’s already worrisome status as the world’s poverty capital.

A double whammy of unemployment and poverty will inevitably result in a rise in criminality

ment. Therefore, the government must address the structural issues inherent in the economy in order to ensure that such growth rates are attained.

Sustained economic growth must also be accompanied by significant investments in education. Investments in education, particularly STEM education, are critical in order to prepare the young generations for the jobs of the future. Thus, there is a need for sustained investment in educating Nigerian youths and children.

Furthermore, nation’s academic curricula must be redesigned with a focus on ensuring that future generations possess the necessary technical and soft skills to succeed in an evolving world.

Population control is also essential. The nation’s current population growth rate is unsustainable, vis a vis the nation’s limited resource.

Therefore, there is a need to address the nation’s uncontrolled population growth. A failure to do so will render any other initiative aimed at long-term development ineffective.

Overall, Nigeria’s youth unemployment problem is a ticking time bomb which could ensure that predictions of a bleak future for Nigeria become reality. It therefore behoves us to react quickly and confront what is fast becoming a threat to national security.

The future started yesterday, and we are already late. The time to work is now.

Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Closing of the Benin Republic border

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have read several arguments for and against the closing of the Benin Republic border. Here is my honest take: What’s Nigeria biggest existential challenge as regards its economy? In my years of staying on the data, it is the heavy dependence of Nigeria’s exports/FX on oil.

If there’s any battle that Nigeria should be fighting, it is how does it rebalance its export portfolio. When oil prices dropped in 1981, 2009 & 2014, we were witnesses to how the economy ran aground. The currency weakened, growth slumped, and we faced FX shortage except in 2009 when we had excess crude reserves to intervene.

Have you tried to imagine a scenario that oil prices dip to $30 in three months? All the foreign portfolio padding our reserves will be gone and we will be back to the reality of slump. We need to sort our export mess where 96 percent of its value is tied to oil.

I have seriously argued that Nigeria tries to play too small. It thinks it has an import problem, whereas it has an export challenge. How big is Nigeria’s import?

Around $35 billion. How big is South Africa import with a third of our population? over

$80 billion. But while Nigeria does around $42 billion in exports despite its famous oil, South Africa does over $100 billion in exports. I have maintained that the extreme poverty you see in Nigeria is because its people do too little to sell to the world.

Vietnam, China India are doing their all to plug into global marketplace because after China shut its border for years, it found out that export-led growth in a diversified manner is most sustainable way out of extreme poverty.

I am not for smuggling and practices of unfair trade but if we look deeply, have our own institutions not failed? Is the answer to smuggling solely the closure of borders?

We need to get our neighbours to act right, but this is an indictment on our institutions and failure of our infrastructure. We deserve to have varied trade practices but our obsession around rice is just funny to me. There’s no compulsion about why we should eat the rice we produce. Every country chooses to protect certain products but that’s in context of larger strategy around exports. If the comparative advantage of our land is to export sesame seed,

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soya bean or cow milk, why not focus on that?

You know why we aren’t export targeting and we are excited in this frenzy of import substitution. We have wasted our years of growth and right now, we aren’t ready to accelerate our reform. An exportled economy is extremely competitive, so you have to get the infrastructure (ports & access roads), processing, business registration and standardisation, education, skilled economy right. You are not competing against yourself; you are competing against the world. We aren’t ready for that hard work with all the elements moving in same pace.

It’s an export-led strategy not solely containing our size food importation (around $7 billion at its peak) that fixes a fundamental flaw in our economy. Food is not even the biggest drag on our imports, it’s refined crude. However, the signalling of CBN to contain FX is clear by choosing not to give foreign exchange to certain food products as we march on our import substitution strategy. So, in the end, we hope for $40 billion exports (still dominated by oil) and

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SEUN ONIGBINDE

maybe $25 billion in imports (less food and refined crude imports), that’s what I mean by playing and thinking small. Folks would say I am asking us to walk before we crawl but targeting exports as a policy is not sudden work but the signalling must be clear.

However, we can continue to drag with Benin Republic with 11 million population and a $10 billion economy or just learn how China’s boat lifted smaller economies around it such as Vietnam (with over $200 billion in exports). The world is aggregating towards influence of large economies. This is not our time to think small, but we are playing on a short-term strategy that packs emotive nationalist arguments.

The world is moving on and our structural flaw remains – the domination of oil in our exports not the size of food imports.

Onigbinde is the co-Founder and Director of BudgIT.

12

Wednesday 30 October 2019

BUSINESS DAY

EDITORIAL PUBLISHER/CEO

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

Bashir Ibrahim Hassan

Apply the lessons and reopen the borders

T

wo months after, the closure of Nigeria’s western borders has caused pain on both sides and taught many lessons.

Those lessons are instructive about the nature of the relationship between Nigeria and her neighbours, the structure of the economies of West Africa and the gaping holes in the management of our systems.

Nigeria should take the many lessons from the closure and open the border in line with our commitments in various treaties and agreements.

Customs boss Hameed Ali hammered further nails to the matter on October 14 when he declared that the closure of the land borders is now total and would be indefinite. Reopening it hinges on Nigeria agreeing with its neighbours on what can pass or not pass through our land borders.

The closure has had multiple ripple effects across West Africa. Prices of essentials

such as rice, tomatoes, poultry and sugar have continued to climb, adding to expenses for consumers. Our neighbours are worried. Ghana’s minister of foreign affairs and regional integration Shirley Ayorkor Botchwey lamented the financial losses Ghana suffered from the closure. She said West African nations would use diplomacy to bring about the re-opening of the borders. Soon after she spoke, Kasapreko Limited, the manufacturer of the popular Alomo beverage from Ghana, said it was losing $1million monthly to the closure.

Nigerian firms and consumers also feel pain. Many firms send goods to the West African region through our land borders but cannot do so now. Trade and interaction across our borders went beyond smuggling; the closure has put a temporary halt to all the positives. The lessons have been profound.

Many of Nigeria’s neighbours were officially complicit in the illegalities perpetrated by trad-

ers at our borders. They allowed it for so long as it brought in revenues to them and none to Nigeria. Benin Republic, with a population less than half of Lagos state, imported more rice than 40 African countries combined. The importers paid duties there while the country looked the other way as they evaded the same and smuggled the goods into Nigeria. Benin, Togo, Cameroon and Niger are all into the business of transhipment and smuggling of rice, vehicles, and sundries into Nigeria and have even made it part of their annual budgets and economic plans.

On their part, Nigerian businesses thwarted the intentions of the rice policy aimed at increasing production internally.

The government provided funding for owners of existing rice mills and new investors with proof of backward integration plans. The subsidy allowed such organisations to import rice at 10 percent duty and 20 percent levy, totalling 30 percent, while

merchants who only import would pay 70 percent (10 percent duty and 60 percent levy).

It played out differently.

Despite their gains from the Nigerian market, countries such as Ghana continue to play a lousy card against Nigerians in their country. Ghanaian legislation aimed at Nigerian entrepreneurs requires a minimum deposit of $200, 000 to start a business in the country.

Ghanaians have been trying to push out Nigerian small-scale entrepreneurs. Ghana’s trade unions have now called for a boycott of Nigerian made goods.

Closure of the border cannot be indefinite nor go on for two years as happened in Buhari 1.0 in the 1980s. Nigeria is a signatory to the ECOWAS protocol and to the new African Continental Free Trade Area all of which stipulate open borders.

We should apply the lessons learned to tighten and implement procedures at all entry points, but ensure continued trading with our neighbours.

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BUSINESS DAY

Wednesday 23 October 2019

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Strategy & Risk: Two sides of the same coin!

FRANKLIN NGWU

A

s we gradually approach the end of another year, it is a season of strategy formulation as many firms take stock of their performance and rethink their strategy for 2020 and beyond. Although it is the appropriate thing to do given the importance of strategy to the failure or success of a firm, there are concerns at the approach being used: the absence of risk disposition and limited inclusiveness in the strategy formulation of Nigerian firms.

While the absence of risk disposition leads to ineffective execution of strategies due to the inability to effectively mitigate the emerging and unknown risks that arise during strategy execution, the top-down approach mostly used in formulating strategies causes limited understanding and a lack of sense of ownership and responsibility during strategy execution.

Once the vision of a firm is defined, strategy comes in to help achieve the vision. Strategy is therefore, a set of plans that help a firm manage or mitigate the challenges or risks that might restrain it from achieving its vision. With this definition, the question then is: what kind of risks do firms normally try to address in their strategy formulation? To answer the question, it is important to note that

the risks faced by firms can be broadly divided into three; Known Risks, Emerging Risks and Unknown Risks.

In formulating a 3 or 5-year strategy plan for instance, firms are normally expected to scan the business/ economic environment through a SWOT (strengths, weaknesses, opportunities and threats) analysis.

With the SWOT analysis, a firm is able to better understand its strengths and how these strengths can be used to exploit the identified opportunities and address its weaknesses and threats. It provides good insights on the state of the firm in relation to factors that are central to its survival or failure.

From a risk perspective, the problem with SWOT or other frameworks such as PESTLE (Political, Economic, Social, Technological, Legal and Environmental) for scanning the business environment is that they focus and help in identifying more of known risks and a few emerging risks during strategy formulation. While this is fine and expected, there is a problem deriving from the differences in the types of risks identified and planned for in strategy formulation and those that the firm is confronted with during strategy execution.

To reiterate, while firms focus on mainly known risks and a few emerging risks in strategy formulation, the major risks that firms are confronted with during strategy execution are mainly emerging and unknown risks.

Interestingly, this is just a part of the dilemma of firms in their strategy formulation and execution process.

Another part of the dilemma is with the differences in the people that formulate the strategy and the ones that execute it.

From my wide engagement with Nigerian firms, it is very clear that of the three methods of strategy

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While firms focus on mainly known risks and a few emerging risks in strategy formulation, the major risks that firms are confronted with during strategy execution are mainly emerging and unknown risks

formulation (top-down, bottom-up and hybrid), many firms use the topdown approach. While they maintain that it is the most feasible method, which is a valid reason, but there is a problem with that. It creates a wide gap between those that formulate the strategy and those that execute the strategy especially customer interfacing employees.

Even though firms maintain that the formulated strategy is normally cascaded down to other employees including the customer-facing employees, research has shown that what is cascaded down is normally significantly diluted and lacks the required understanding, ownership and responsibility for effective execution of the strategy. In as much as this is the case, the question therefore is: what method should be used to ensure a better understanding and mitigation of risks on one hand and then effective execution of the strategy?

Of the three methods identified above, the most inclusive and effective is the hybrid approach. While it can be difficult and rigorous, it creates a better opportunity for a more robust understanding and involvement in the strategy formulation. The focus is on how to ensure that every head feels utilised and every voice feels heard.

Encouragingly, this is possible irrespective of the size or complexity of the firm especially in a business environment like Nigeria where the average level of engagement of private sector employees is discouragingly very low at only 12 percent. With about 23 percent of the employees actively disengaged and 65 percent disengaged, the most effective option to ensure a reasonable level of understanding and involvement of the employees in the strategy of a firm is therefore the hybrid approach.

When properly applied, it leads to a higher sense of ownership and responsibility during the strategy formulation and execution period and beyond. With the hybrid approach, the earlier identified differences in the risks addressed in strategy formulation and the ones faced by firms during strategy execution are better managed or mitigated.

At the moment, this is not the case as most employees are completely ignorant of the risks faced by their firm.

In a survey we conducted with a focus on the financial sector, most employees scored on the average about 1.5 over 5 in terms of risk awareness and practice. For the hybrid approach to work as an effective method of creating the required synergy between strategy and risk, certain steps must be taken.

First, every employee must be trained at least to be aware of the key risks faced by the firm and to see themselves as risk owners and managers.

Second, firms need to appreciate the benefit of approaching and formulating their strategy from a risk perspective. Once this is achieved, the use of the hybrid approach will provide the opportunity for everybody, especially those significantly involved in both the strategy formulation and execution, to appreciate and understand better the inherent known and emerging risks confronting their firm.

With such risk knowledge, they are better informed on how to plan and mitigate both emerging and unknown risks that might occur during the strategy execution period.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.

Improving port systems with technology applications and automations

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ver the past half century, the port and shipping industry has reinvented itself, ushering in containerisation, larger vessels, and electronic data interchange. Today’s technology and business model innovations are the driving force behind the Smart Port. Although determining which technologies, how to implement them and the way in which they can support the overall digital strategy of the port remains a challenge, findings shows it is also faced with a myriad of issues both technical and strategic.

Ports with a competitive edge mindset must maintain and implement smart-port technologies strategies to stay productive, customer friendly, efficient, profitable and competitive. Progressive ports are embracing this technology disrupting other industries, they are cloud-based services, mobile devices and apps, sensors and other Internet of Things’ (IoT) technologies, augmented reality, autonomous transportation, blockchain technology, and big data.

For example, IoT, represents a convergence between the physical and digital worlds, ultimately using data as a source of value. IoT technologies are being applied in diverse settings, from transport optimisation to warehousing and transport management systems. These developments have been accelerated by a centralised networks system that rely on distribution and analysis of information.

The Port of Shanghai in China – the largest and busiest Port in the world by cargo tonnage – and the Port of Singapore – the

second busiest port in the world by cargo tonnage – are examples of ports transformed by the application of technology.

It is not surprising that Port of Shanghai handled 744 million tonnes of cargo in 2012 including 32.5 million twenty-foot equivalent units (TEUs) of containers and comprised of 125 berths with total quay length of about 20km, it serves more than 2,000 container ships on a monthly basis and accounts for a quarter of China’s total foreign trade.

Seaports are playing catch-up with the large transport and logistics players when it comes to developing insight driven solutions and IoT applications. Recent details offer some initial attempts at enhancing value propositions through technologies applications and automations.

China’s Belt and Road Initiative has a communication counterpart running in parallel called Digital Silk Road, another structure put in place to boost Chinese economy through Port applications (also known as One Belt, One Road (OBOR)).

OBOR is one of President Xi’s most ambitious foreign and economic policies to date.

It aims to strengthen Beijing’s economic leadership through a vast program of infrastructure building throughout China’s neighbouring regions, part of Beijing’s strategic calculation and the main reason Chinese shipping firms are turning the initiative into reality with a series of aggressive acquisitions which is reshaping global maritime industry.

Cosco shipping ports and China Mer-

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chants Port Holdings have gone on a buying spree of late, snapping up cargo terminals in the Indian Ocean, the Mediterranean sea and the Atlantic rim, not long ago, Cosco finalised the takeover of the terminal in Zeebrugge, Belgium’s second-biggest port, it marked the Chinese firm’s first bridgehead in north western Europe. That deal followed a raft of other acquisitions in Spain, Italy and Greece in the last couple of years. Chinese state firms which once kept close to their home market are now controlling about one-tenth of all European Port capacity.

Port Stakeholders need to adopt new initiatives, strategies, technologies and embrace platforms and services that makes it easier for stakeholders to work together to promote greater efficiency of the ecosystem. Another example is at Germany’s Port of Hamburg where a wide range connected port initiatives have been adopted to double capacity by 2025 to reduce both operating and logistics costs for both operators and cargo owners.

Although the Smart Port and IoT initiatives are commendable, there is still a long way to go before we can truly speak of fully integrated ports that fully maximize the full potential of IoT, value added initiatives, strategies and insight driven applications.

Becoming a Smart Port means developing solutions to address the current and future challenges faced by seaports including spatial constraints, pressure on productivity, fiscal limitations, safety and security risks and sustainability.

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FESTUS OKOTIE The diverse nature of a port, having a wide variety of companies and ecosystems, operating different kinds of equipment and requiring different types of products and services creates a complicated environment with multiple stakeholders.

In addition to heterogeneity of data, a fear of transparency also remains a major issue because Ports are typically comprised of a cluster of competing companies, sometimes hesitant to share information with a central authority that has the ability to aggregate and distribute data amongst Port stakeholders in the ecosystem. Furthermore, the interaction with the surrounding environment, both ecologically and socially, adds an extra layer of complexity to Smart Port development.

Therefore, port stakeholders need to adopt port technology, automations and embrace platforms and services that will make it easier for stakeholders to work together to promote greater efficiency, productivity and to add more value within the port ecosystem globally.

Okotie, a maritime transport specialist, writes via fokotie. bernardhall@gmail.com, Fokotie@bernardhallgroup. com

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Poultry farmers ramp up production as demand for local chicken rises JOSEPHINE OKOJIE & BUNMI BAILEY

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igeria’s poultry farmers who have before now suffered huge losses owing to their inability to sell their poultry products are now smiling to the bank as demand for local chicken rises and price surges.

The situation has made poultry farmers ramp up their production to meet the increasing demand for chicken by the country’s 200 million people due to the recent government border shutdown.

Since the border closure nine weeks ago, the country has been able to reduce pressure on its foreign exchange reserves as Nigeria attempt to stop smuggling of frozen chicken and turkey.

“The demand for how local chicken has increased tremendously since the border closure. Buyers are visiting our farms daily to make orders which we have not experienced before,” said Onallo Akpan, directorgeneral of Poultry Association of Nigeria (PAN).

“We have sold all our

boilers and have restocked for December. Lots of farmers are now expanding their production to meet up with demand especially in December” Akpan said.

He stated that local production has increased to about 7,000metric tons while stressing that if the border closure persists, the country could cascade its production to 1.5metric tons in six months.

Prices of frozen chicken and life birds have also surged since the closure.

BusinessDay survey on some markets in Lagos shows that a cartoon of Nigerian chicken now sells between N12,000 and N12,500 as against N8,000 and N10,000 sold before the border closure. This shows a 25 percent increase in price.

Similarly, a cartoon of imported frozen ‘Orobo’

chicken formerly sold for N8,500 or N9,000 now goes for N15,000, showing a 67percent increase in price.

Prices of life whole broiler now sells for N3,500 as against N3,000 sold before the border shutdown, while layers now sells for N2,000 as against N1,700 eight weeks ago.

Ni g e r i a’s h e a d l i n e inflation accelerated to 11.24percent in September

from 11.02percent in August when the border commenced, while food inflation moves in an upward trajectory to 13.51percent from 13.17 over the same period.

Experts say the country will further experience price increases in poultry products as the festive season approaches, noting that the country cannot currently meet demand in chicken and turkey production.

The 2016 Agriculture Promotion Policy document released by the Federal Ministry of Agriculture puts Nigeria’s annual chicken consumption at 200 million birds and supply at 140 million birds, indicating a gap of 60 million birds.

The gap has constantly fuelled the smuggling of frozen chicken through the land borders into markets across the country.

But poultry farmers in Africa’s most populous country are optimistic that with the recent increase in local demand, the country will further boost its production as they are now expanding their operations.

They noted that investments in the sector

have been stagnated for years owing to low demand for their products.

“The recent rise in demand has led more farmers to open more farms to rear chicken especially for December thereby creating jobs,” said Olabode Adetoyi, managing director of HiNutrients.

“The Nigerian poultry i n d u str y ca n i n crea s e production to meet local demand. We have not been able to expand because farmers have been struggling to sell their products,” Adetoyi said.

He stated that feed meal producers are also expanding their operations as farmers are purchasing more feeds for their birds.

Dayo Gawati, chief executive, Fdot Far ms said: “At the moment I am planning to increase the production because local chicken is selling like hot cake, everybody wants it now.”

“Right now what we supply is unable to meet demand but with support for farmers in form of singledigit loans, we would boost production and bridge the gap,” he said.

SeedMoney expands product NEPC builds capacity for palm oil export in Cross River range with melon seeds MIKE ABANG, Calabar

JOSEPHINE OKOJIE

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eedMoney Africa has announce d the addition of melon seeds to the list of agricultural products that can be traded on its platform.

In a recent press briefing, SeedMoney Africa which describes itself as an agritech company that enables anyone from anywhere in the world to buy and sell African agricultural produce stated that it has started taking preorders for melon seeds. ”Clients who preorder on the platform will be given priority to buy selected produce once the next season kicks off in November, “ Simi Ajayi, CMO of SeedMoney Africa said in a statement.

“SeedMoney operates on a first come first served basis and by releasing the preorder function; we ensure more customers are allowed to invest when prices are at their lowest,” Ajayi said.

“We are constantly on the look-out for new ways to

extend our product offering so that our customers can make a good return throughout the year,” he added.

SeedMoney is focused on expanding and replicating its operations in selected African territories.

Catherine Lückhoff, co-founder in SeedMoney Africa, shared that the dynamic company is setting its eyes on operations in East Africa.

“If SeedMoney is going to compete globally, then we have to be resolute in our determination to establish a more structured and efficient market place that represents produce from across Africa using all the technology and skillsets we have at our disposal,” Luckhoff said.

According to a statement, the organisation is heavily investing in three key areas namely its platform, its product offering as well as its data analytics – powered by machine learning - to ensure its competitive edge in the market and returns for its customers. www.businessday.ng

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n its commitment to the diversification of the productive base of the Nigerian economy, away from the oil sector, the Nigerian Export Promotion Council NEPC on recently held a one day capacity workshop to position the oil palm sub sector in cross River State.

O lu s e gun Aw olow o, executive director of the NEPC said in the country imported 450,000 tons of palm oil to the tune of N116.3billion in 2017, which he noted is worrisome because of Nigeria’s previous position in the commit of global oil palm producing countries.

Awolowo said this in a keynote address at a one day capacity building workshop to encourage oil palm export in cross River State.

The chief executive officer who was represented

by Emmanuel Etim, trade promotion advisor, Calabar office at the event said the annual oil palm demand of

Nigeria currently stands at about 2.5 million metric tons whereas local production stands at 1.25 million tons, leaving a gap of 1.25 tons.

He says it was on that note that about N30 billion is being made available to stakeholders by the central Bank of Nigeria CBN to develop the sector.

According to Awolowo, apart from the ever growing demand, oil palm produce are highly priced globally, especially in non-producers.

He added that Cross River has huge oil palm potential across the 18 local government areas, stressing that the crop is category ‘A’ strategic export produce in the priority sectors in the

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zero oil plan.

Emmanuel Etim whose address was read by Ella Onoja assistant director at NEPC disclosed that the one day capacity building workshop on the is directed towards achieving greater output for export.

In a good will message Eta Ndoma Ndoma President Calabar Chamber of Commerce Industry Mines and Agriculture said Nigeria is the 5th largest producer of the crop globally, with an annual production of 970, metric tons annually and the state is second to largest producer after Edo State Ndoma whos e good will message was read

by Kenneth Asim Ita the @Businessdayng

executive secretary of the Chamber further disclosed that Cross River state produced over 200,000 metric tons of palm oil per annum with over 18,000 farmers involved in oil Palm cultivation.

Owali Illem, chairman o f O i l Pa l m G ro w e r s Association said the decline of oil palm production since the end of the civil war has been fast.

According to him, we are now depending on imports to satisfy our domestic needs.

He said in 2015, Nigeria had spent about N59.1billion per annum in importing the produce.

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AGRIBUSINESS ag@businessdayonline.com

Unlocking opportunities in cashew production …Hastom Farms creates investment window JOSEPHINE OKOJIE

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a s h e w a n important nut is fast booming in the Nigerian market as exporters are exporting a larger percentage of the crop to Asia, Europe and the United States of America.

Nigeria is a natural habitat for cashew and among the world’s producers and suppliers of the crop.

The country is currently rated as the fourth-largest producer of cashew nuts in Africa and sixth in the world, w ith 160,000 metr ic p er annum and is expected to reach 500,000 metric tons by 2020.

Besides cocoa, cashew is another major cash crop in Nigeria that has huge export potentials.

It has become a top-notch cash crop in Nigeria and is eaten and also serves as industrial raw materials in firms producing chemicals, paints, varnishes, insecticides and fungicides, electrical conductress, and several types of oil.

Ca s h e w e x p o r t e r s i n Nigeria made $300 million in 2016 and $350 million, according to Tola Faseru, former president, National Cashew Association of Nigeria (NCAN).

in the country has led to an estimated loss of eight million tons of the fresh fruits yearly.

Currently, Nigeria process less than five percent of its total cashew nuts, causing an annual estimated loss of N1.5billion yearly.

As a result, some agroallied firms are investing across the country’s cashew value chain to change this narrative.

Among them is Hastom Farms.

Hastom Farms is currently investing massively in the cultivation of the crop and with plans to start adding value.

Two good things about cashew are that its return on investment is as high as 55 percent and its payback time is just 12 months, say experts.

But despite the promises, the cultivation of cashew holds, the country is yet to fully harness the potential of the crop owing to several factors.

The country still exports about 95 percent of its cashew nuts unprocessed despite the huge investment opportunity in value addition.

Si m i l a r l y , i na d e q u at e storage facility for cashew fruits

Investing in integrated rice processing project OLUMAKINDE ONI

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he importance of food to any nation cannot be over-emphasized. It has been known that food occupies a prominent position in the social, political, economic and cultural aspects of the World all over.

Without food, there cannot be progress.

Food is very important to the rulers and the ruled. Both cannot communicate effectively with each other in the face of famine and hunger.

The ruler will be discredited while the ruled will be disgruntled.

To this end, the challenge before everybody is the provision of food both quantitatively and qualitatively. This write-up is a contribution towards solving the food crisis in Nigeria.

Justification The current ban of rice into the country through the land borders has created a scarcity of the product as the current supply is unable to meet the ever-growing demand.

The United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 million metric tons, while the Federal Ministry of Agriculture puts the country’s domestic demand at 7 million MT per annum.

This shows a demand-supply

gap of 2.2million MT which is insufficient for the country to feed its 200million people.

Nigeria needs to produce a minimum of 2.5 million metric tons to bridge the current gap.

Rice can be grown conveniently in Nigeria, the climate is good. It can be grown both in the forest and SavannahareasofNigeria.Theproject is, therefore, technically feasible.

The project is highly profitable.

The price of rice in the market is very good at the moment for the producers; hence the project is economically viable.

The potentials in investment in rice production in Nigeria cannot be over-estimated. This is why both indigenous and foreign investors are taking advantage.

Healthwise, it has also been found out that our local rice (ofada and abakalike for example) are more nutritious than the imported ones.

Production technology The whole idea about this project is to make it an integrated one.

The raw materials (rice paddy) will be grown and processed by the prospective investors.

The target is to produce 4,000 metric tonnes of finished (polished) rice per annum.

Requirements are land (about 1,000 hectares), plant and machinery, building structures, farm inputs (seeds, fertilizer, herbicides, and insecticides) and packaging materials.

The rice cultivation process

includes land preparation, planting/distribution, herbicides, and fertilizer application, harvesting, and threshing.

The harvested rice will later be processed in the factory. Rice processing includes parboiling, drying, de-stoning, dehauling, winnowing, polishing, and packaging.

Financial implication The project has been estimated to cost N250,000,000 broken known as follows: Farmland acquisition &cultivation: N100 million Establishment of factor y/ equipment: N150 million =========== Total N250 million =========== The project can be founded by Bank of agriculture, Bank of Industry and Central Bank of Nigeria.

Profitability The estimated revenue realizable by the project is about N400 million annually. Annual production costs have been put at N270 million. The annual profit of N130 million is guaranteed.

This project is therefore recommended for funding serious-minded investors can be assisted in terms of packaging to attract bank financing, project establishment, and management.

Author’scontact: 08023058045, olumakindeoni2@yahoo.com

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The farm has cultivated cashew trees on about 550 acres in Ogbomosho, Oyo state and making investments across the value chain.

“Cashew farming is one of the most profitable longterm agricultural investments,” Debo Thomas, chief executive officer, Hastom Farms said during a farm tour.

“Cultivation of the crop allows you to make other short term profits through intercropping with other crops,” Thomas added.

He noted that the country

is yet to fully harness the potential in the cultivation of the crop because Nigerians do not want to tie down their investments for a long period.

He added that with the spacing style employed by the Hastom in planting its cashew trees, the farm can intercrop with soybeans and cassava to earn short term profits.

The farms have also created a platform for individuals and corporations to invest in cashew trees and plantations.

Through its online platform individuals are now investing in

cashew trees with a guaranteed 20 percent return on their investment.

“From next month we will start our farm funding, where people will be investing in cashew trees. The price of our cashew tree is N12,500 and we sell a minimum of 10 trees,” he said.

The cashew crop can be grown in the entire South-West, South-South and South-East region, with Enugu with Oyo, Anambra, Osun, and Kogi having the largest production areas.

Nigeria’s cashew is usually harvested between FebruaryJune, though farmers stock the crop and export it all year round.

The farm is also heavily investing in setting up a cashew processing factory.

“The bulk of the profit in cashew production is in processing and that is why we intend to start processing our cashew nuts from next year,” Thomas said.

He noted that with more investment in the processing of the crop, the country will create jobs and fully harness the potentials of cashew production.

He urged the government to support cashew growers and processors with single-digit credit.

Also, he advised that attention to be giving to cashew just like other crops.

Eterno Project to create 600 agro-based jobs - Adelodun SIKIRAT SHEHU, Ilorin

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ma r Fa r u q O b a Adelodun, chief executive officer and co-founder, Heart and Capital Nigeria Ltd, has disclosed that the’ Eterno Project’, recently launched by the firm, will create over 100 direct and 500 indirect agro-based jobs.

Adelodun, who disclosed this at a conference, revealed that the project will generate billions of naira for investors and other stakeholders within the next 20 years.

He says that the project is aimed at ensuring food security in the country and creating more windows of opportunities for Nigerians to discover sustainable business acumen towards a reliable future.

“Since 2017, we have cultivated over a thousand acres of farmland and trained over 8,000 youths across the country on agribusiness, and now we have scaled from being just a crop focused company into consulting for livestock farms and food processing facilities,” he said.

“It will be noteworthy

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to also state here that our investment platform -Asset-Mart gives 15% ROI for all investors but more importantly created over 100 direct and indirect jobs,” he further said.

He stated that to contribute to the United Nations action goal, the firm has launched the Eterno Project.

Adelodun assured that Heart and Capital is committe d to boosting agriculture and encourages more youths to participate in agriculture.

Panelists at the event blamed Nigeria’s woes on mono-economy and overreliance on oil, failure to harness human capital development among others.

They posited that Nigeria has a positive environment but not currently utilise rightly as farming processes are not carried out in ways to protect the ecosystem.

They, however, suggested improved effort and more funds to farmers to boost food production and address poverty/hunger and as well ensure food security for the country. @Businessdayng

In his submission, Ahmed Kastina Muhammed, the Kwara State permanent secretar y, Ministr y of Agriculture, noted that Abdulrahman Abdulrazaq led administration is doing everything possible to profitably engage youths in innovative and improved agricultural practices beyond mere subsistence farming as well as bring up the small scale farmers to commercial level.

“A demonstration of this is evident in the facelift currently taking place at the Integrated Youth Farm Centre Malete and the rehabilitation of Duku Lade Irrigation Scheme to ensure all year round farming among others,” he said.

Mohammed had while observing that the world was currently facing multiple problems of food insecurity, global warming and low pricing of crude oil, of which Nigeria is not left out, recommended that “In order to unravel these issues, Nigeria as a country needs to ardently embrace agriculture as an alternative source of income as opposed to overreliance on crude oil.”

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Wednesday 30 October 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

INDUSTRIALS

Post-merger gains drive CCNN’s Q3 profit to N8.76bn amid rising energy cost …Shares see biggest gain in four-weeks OLUFIKAYO OWOEYE

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ement maker, CCNN is already reaping t h e ga i n s o f merger exercise with Kalambaina Cement Company consummate d earlier this year. Figures from its nine months result for the period ended 30th September shows that its net profit ballooned 118.3percent to N8.76bn from 4.01bn the same period in 2018.

CCNN recorded strong growth in revenue in Q3’19 up 38.5percent, buoyed by a ramp-up in volumes as capacity utilization increased at the Kalambiana plant.

However, energy cost almost doubled from N7.45bn in third quarter 2018 to N13.65bn the same period this year.

Kalambaina Cement plant uses primary fuels such as coal, heavy oils and AGO, which helps to solve the power problem with limited downtime and further opportunities for growth and expansion.

Before the merge r, C C N N o p e r a t e s a 500,000-metric tonne per year capacity cement plant, while Kalambaina Cement has a 1.5 million metric tonnes per year plant.

A f t e r t h e m e r g e r, CCNN’s installed capacity rose to 2.0 million metric tonnes capacity, strengthening CCNN’s dominance as North-West Nigeria’s largest cement company.

The Sokoto-based cement company’s Net cash flow from operations improved to N14.6 billion in Q3 from the N10.9 billion

in half-year. The improvement on this front was primarily supported by cash proceeds from sales of cement in the third quarter.

According to analysts at Cordros Capital, CCNN’s significant cost pressure did not come as a surprise considering its expensive imported coal which still

dominates its energy mix, and the fact that the company still relies on thirdparty transportation to move the coal to its plants. “ Thus, despite the s t ro ng t o p l i n e p e r f o rmance, the uninspiring PAT run-rate could spike a negative reaction to the stock in today’s trading,” the report said.

Shares of CCNN gained 6 percent on Monday to close trading at N15.00, the biggest daily gain in a month.

Damnaz Cement Nigeria Limited is a majority shareholder of CCNN Plc and it currently holds 50.72% of the Issue share capital of Cement Company of Northern Nigeria Plc.

The shares of Damnaz are held by Abdulsamad Rabiu and Bua International Limited.

Ab d u l s a m a d R a b i u , who chairs the board of CCNN, holds the majority equity stake in Damnaz while his company-BUA International Limited held the 100 percent stake in Kalambaina.

TECHNOLOGY

Bitcoin surges on China’s Blockchain embrace SEGUN ADAMS

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itcoin surged to its highest level in over a monthand even crossed the $10,000 mark momentarily-over the weekend, in the aftermath of praise from China for the blockchain technology that powers the cryptocurrency.

The most-traded cryptocurrency jumped from under $7,500 to as high as $10,300 on Saturday, a day after the Chinese president Xi Jinping emphasized that

importance of the integrated application of blockchain technology to new technological innovation and industrial transformation in China.

Bitcoin has rebounded about 26 percent to $9,424 in the early hours of Monday, from the lowest level since June which was established last Wednesday when Facebook CEO Mark Zuckerberg defended his cryptocurrency, Libra, before United States lawmakers.

Many technology stocks

on the Chinese exchange have also enjoyed gains following the announcements, although some experts say the Bitcoin rally which beat their expectations were not entirely due to Beijing’s comment.

“Bakkt, new but popular Bitcoin futures, traded its all-time high same day in a move not really related to the announcement

by China,” said Chris Ani, founder, and CEO of Digital Abundance and a cryptocurrency trader. “The rally also took place at a time we

were expecting a reversal in price from $7,200.”

According to Ani, by analysis, Bitcoin had already dropped from its 2019 high of $14,000 to $7,000 levels where it was expected to find support and increase to around $8,000.

Th e c r y p t o c u r re n c y however surprised analysts with its largest single-day move in Bitcoin history last week, he said.

In a related event, China Merchant Bank, a Chinese bank that conducts busi-

nesses domestically and internationally, announced an investment in BitPie, said to be the Bitcoin wallet with the longest history and most users in China.

The information which was made public Monday has been interpreted, alongside the passage of the cryptographic law by the Chinese government, to grant legitimacy to Bitcoin even though the official acknowledgment was for Blockchain technology.

Already, Li Wei, Head of the People’s Bank of China’s

technology department, has encouraged commercial banks to increasingly adopt Blockchain technology, as China, where more than 60 percent of the global Bitcoin mining takes place, seeks to stay ahead of the world in technology.

“As it stands we could see anything happen in the Bitcoin market. We currently have support at $9,300 and if it is maintained we would see a breakout to $10,000” said Ani. “Otherwise price would revert to $9,000 and $8,800 levels.”

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

Wednesday 30 October 2019

COMPANIES&MARKETS

BUSINESS DAY

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Business Event

CONSUMER GOODS

Nigerian Breweries Q3 profit hits N12.27bn as excise duty erodes revenue gains OLUFIKAYO OWOEYE

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igeria’s largest Beer maker, Nigerian Breweries (NB) plc continues to consolidate on market leadership with a 2.7percent surge in Q3 revenue to N259.92bn for the period ended 30th September 2019 as against N254.99bn recorded the same period last year.

However, gains were wiped off by the higher excise duty expense compared to last year, leading to flat net revenue growth of +0.1% yearon-year in the period. Excise duty expense ballooned to N24.24bn for nine months as compared to N16.93bn in the same period 2018.

Amid the growing competition in the beer market, Heinek-

en-owned Nigerian Breweries’ marketing and distribution expenses spiked to N57.48bn from N51.44bn in 2018. Its cost of sales, however, declined from N143.35bn in nine months 2018 to N139.50bn in the same period 2019.

In its Q3-19 trading update, Heineken NV (NB’s parent company) stated that Nigeria beer volumes grew lowsingle-digit with the premium portfolio growing double-digit, driven by brand Heineken Heineken NV said it is seeing increased volatility across a number of its markets despite seeing profits rise by 4.45% to €1.67bn, driven by beer volume growth of 2.3%, with brand Heineken surging 7.4percent.

The company said that it benefited from the doubledigit growth of its Heineken

brand in Brazil, South Africa, the UK, Nigeria, Romania and Germany.

While commenting on the results, Jean-François van Boxmeer, CEO of Heineken, said the beer portfolio delivered solid volume growth of 2.3percent in the context of a challenging comparison base given a very good summer last year.

“The growth of Heineken accelerated to 7.4percent. We are seeing increased volatility across a number of our markets, which we assume to continue for the rest of the year,” he said.

Looking forward to the rest of the year, the company said it expects operating profit growth of around 4% organically.

L-R: Mudashiru Obasa, speaker of the Lagos State House of Assembly; Emeka Anyaoku, Former Secretary-General of the Commonwealth; Uche Olowu, president, Chartered Institute of Bankers of Nigeria (CIBN); Adam Nuru, managing director/chief executive officer, First City Monument Bank (FCMB), receiving the honorary fellowship award of the CIBN, and Seye Awojobi, registrar, CIBN, during the awards ceremony of the CIBN in Lagos.

Continues online @www. businessday.ng

COMPANY RELEASE

Cititrust Holdings Plc bags 2019 BAFI Investment Holding Company of the Year

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ititrust Holding Plc, which operates as a holdings company for Citigroup, has been recognized as BusinessDay’s 2019 Investment Holding Company of the Year for its strategic agility in longterm value creation across different sectors of the economy in a way that is sustainable for its non-operating business model.

The excellence of service

by Cititrust Holding Plc was celebrated at the 7th Annual Banks’ & other Financial Institutions Awards (BAFI) organised by BusinessDay, West Africa’s most authoritative

news media organization.

Cititrust Holding Plc provides brokerage and asset management, local consumer lending, and special asset pool management.

Winning a BAFI Award is an attestation of Cititrust creativity, execution, leadership, and dedication to excellence.

It is substantive proof that the outstanding work Cititrust is doing has not gone unnoticed, the company said.

Yemi Adefisan, Group Chief Executive, Cititrust Holdings Plc at the event said the award was in honour of all its shareholders and investors across 11 African countries.

Adefisan promised that the company will continue to work hard to ensure Cititrust Holdings keeps delivering value to all its customers, shareholders and staff. He also assured more awardwinning performance from the management.

Cititrust Holdings Plc was assessed for their vision, execution, and market-leading propositions by BusinessDay media, which implemented an audit-based approach using financial reports of all nominees within the category.

Continues online @www. businessday.ng

COMPANY RELEASE

Detail focuses on building resilient enterprises at 9th Business Series

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etail, Nigeria’s first commercial solicitor firm to specialise exclusively in noncourt room practice has held its 9th Business Series with a focus to help people build resilient multigenerational enterprises.

Speaking during the 9th DETAIL Business Series on the Future of Family Business: Building Resilient Multigenerational Enterprises, Chukwudi Ofili, Associate Parter, Detail Commercial Solicitors, said: “Effective collaboration between founders, the next generation and non-family staff by utilising an effective corporate governance structure is essential for fool-proofing the future of a family enterprise.”

Executives, members of the next generation and advisors attended this interactive Business Series and were taken on a journey of how best to build

enterprises that would withstand the test of time.

This business series was hosted in collaboration with Nike Anani, a Nextgen coach, assisting NextGens (second generation family members in family businesses) in collaborating with the first generation business founders in building sustainable family enterprises.

Nike emphasised the importance of diversification. “To build resilience in our family businesses, we must diversify by building up a performing investment portfolio that has a low correlation with the existing family business, in terms of asset type, geography, industry and currency.

Audrey Joe-Ezigbo, CoFounder and Executive Director, FalconCorporationLimited,was an electric addition to the Business Series, sharing her expert insightsfrombeinginthedriver’s

L-R: Nnamdi Okwuadigbo, president, Institute of Chartered Accountants of Nigeria (ICAN); Okezie Ikpeazu, governor, Abia State and Ude Oko Chukwu, deputy governor, during a courtesy visit of the ICAN president to the Abia State governor.

seat of a resilient enterprise.

She emphasised the importance of intentionally managing your workplace and family relationship.

She went on to stress the importance of placing the right structures and frameworks in place to ensure that your business outlives you.

“You should have an institutionalisation framework.

Your systems, structures, policies, and procedures must be in place and you must be disciplined to follow them consistently.”

The panel discussion with Audrey Joe-Ezigbo and Nike Anani was engaging as both of their perspectives reflected the realities that exist between founders and the next generation.

Continues online @www. businessday.ng

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L-R: Oghenetejiri Bodeyan, Customer Service Manager, Access Bank Plc Orlu International Market ; Arinze Okafor, DiamondXtra N1million winner; and Chiedo Izuchukwu, Regional Sales Manager, Access bank plc Orlu, at the DiamondXtra Cheque presentation ceremony held in Orlu, Imo State recently

L-R: Chief Financial Officer, Vista International, Binod Mohapatra; Head Marketing, PZ Cussons Nigeria, Charles Nnochiri; Chairman, Higher Institutions Sports League (HiSL), Remi Ogunpitan; CEO, Higher Institutions Sports League (HiSL), Sola Fijabi; President Nigerian University Games Association, (NUGA), Prof. Stephen Hamafyelto; Team Captain, UNICAL Malabites, Ikponwosa Osarumen; Board Member, Higher Institutions Sports League (HiSL) Kachi Onubogu; Executive Director, Media Investment, Media Reach OMD, Yinka Adebayo and Head, Global Markets, Stanbic IBTC Bank PLC, Sam Ocheho, during the trophy presentation at the 2019 Higher Institutions Football League Finals at the Agege Stadium Lagos. Pic by Pius Okeosisi

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@Businessdayng

20

Wednesday 30 October 2019

BUSINESS DAY

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Wednesday 30 October 2019

BUSINESS DAY

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21

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Wednesday 30 October 2019

BUSINESS DAY

MARITIMEBUSINESS SHIPPING

LOGISTICS

MARITIME e-COMMERCE

Apapa Port handles 1.4MMTs of imports in August as container volume reaches 51,396 TEUs AMAKA ANAGOR-EWUZIE

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he volume of import cargo handled in the nation’s premier p o r t, Ap ap a, stood at about 1,442,832 million metric tonnes in the month of August, the Nigerian Ports Authority (NPA) operational report stated.

According to the report, ship traffic at Apapa Port in the month of August stands at about 90 ship calls with Gross Registered Tonnage (GRT) of 2,601,185 million metric tonnes.

Also, about 14 service boats with GRT of 29,149 metric tonnes and about 51,396 Twenty-foot Equivalent Units (TEUs) of containerised cargoes were also handled at the port within the period under review.

In terms of vehicular traffic, the number of vehicles received in Apapa Port within the period stands at 94 units.

Presenting Apapa Port Operational report at a stakeholders’ meeting held

BusinessDay Infographics - Toju Akapa in Apapa recently, Funmilayo Olotu, Port manager of Lagos Port Complex (LPC), said the piling up of overtime cargo and traffic gridlock around Apapa Port environment have been the major challenges facing users of port services.

“For overtime cargo, we are recording high volume of overtime cargoes such that at APM Terminals, the number of overtime containers presently stands at 2,259 boxes, which is about 3,000 TEUs,” she said.

She further said that ENL

Shippers Council resolves over 400 cases from PSSP in two years AMAKA ANAGOR-EWUZIE

T

he Federal Government has reiterated its readiness to increase the awareness and applicability of the Port Service Support Portal (PSSP), a dispute resolution platform in resolving trade-related dispute in the nation’s seaports.

PSSP is an online realtime complaint resolution platform for all players at the port, which also serves as a one-stop-shop for all complaints in the industry.

Speaking at a roundtable session on Nigerian port organised by the Maritime Anti-Corruption Network (MACN) in Abuja, Soji Apampa, CEO of the Integrity Organisation Limited, said the PSSP is a resolution mechanism built by Federal Government in 2016 to resolve conflicts and infractions of both the private and public players at the seaports.

Moses Fadipe, deputy director, Complaints Unit of the Nigerian Shippers Council (NSC), acknowl-

edged that the portal has been running since it was declared open by the Vice President, Yemi Osinbajo in 2016.

He said that about 400 different infractions at the ports have been resolved since the PSSP was unveiled.

According to him, data generated from the portal can be used by government for policy formulation and feedback mechanism for activities and operations at the ports.

“It also goes further to tell us who does what and the highest infraction recorded per agency in the industry. PSSP will help to know the highest dispute occurrences in the ports industry, which will be aggregated and report generated for the industry,” he said.

Citing example, he said: “We have just recorded some success where a vessel that is yet to berth had some challenges with the officials of the government, who were statutorily empowered to board the ship. While it was taking www.businessday.ng

too long for the captain of the vessel to bear, he quickly registered complaint on the portal and our team responded to him immediately.”

Fadipe said the NSC in a bid to popularise the existence of the portal in 2018, took the awareness campaign to Onne, Apapa and Warri ports.

Babatunde Ruwase, chairman of Lagos Chamber of Commerce and Industry (LCCI), who expressed surprise at the existence of the dispute resolution portal, said that people have not gotten the desired attention at the ports.

According to him, “If this has been working, a lot of problems that shippers have at the nation’s seaports would not have remained unresolved as a candle cannot be light and put under the table.”

He enjoined all the government agencies working at the port to do more work by letting people know that they can lodge complaint through the portal and resolution provided within hours.

terminal has huge cargo dwell time because of the project cargoes for the Lekki Deep Seaport that is yet to be evacuated from the port.

According to her, if the terminal is occupied with a high volume of overtime and abandoned contain-

ers, it would be difficult for boxes in laden vessels to be stacked at the terminal due to lack of space.

Olotu further stated that Apapa traffic, which is compounded by the ongoing road repairs around Apapa, was the major problem fac-

ing port users.

She said the Federal Ministry of Works has closed areas like Point Road due to the construction work, and is affecting port operations.

“The ministry once asked for 28 days to shutdown the Tin-Can Island transit parks. This will have serious implications but they have agreed to carry out some palliative measures on the road to ease cargo movement,” she said.

Olotu, who noted that the NPA has received complaint that Lilypond Transit Park is deliberately circumvented; said truckers recently demonstrated and insisted that their trucks must be allowed to move out of Lilypond into the port.

“Some people are being accused of flying trucks by not allowing them to pass through the normal procedure but NPA has made it clear that trucks that do not pass through the right movement procedure would be turned back at the port gate,” she warned.

Do not ignore rising threat of cyber security to shipping, IMO warns AMAKA ANAGOR-EWUZIE

T

he International Maritime Organisation (IMO) has warned member states to be cautious of the growing rate of cyber security threat to global shipping business.

Speaking at the Global Maritime Security Conference (GMSC) recently held in Abuja, Kitack Lim, secretary general of the IMO, said maritime nations should deal with cyber security, same way they deal with piracy and armed robbery at sea.

L i m h o w e v e r, a n nounced IMO’s readiness to assist its member states in enhancing their ability to address maritime security challenges.

Lim, who was represented by Lawrence Barchue, assistant secretary general of the IMO, said threat posed by piracy and armed robbery against ships has been on IMO’s agenda since the early 1980s.

“In the late 1990s and the early 2000s, the focus was on the South China Sea and the Straits of Ma-

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lacca and Singapore. Recently, the focus of pirate activity has turned to the African coasts, after the significant rise off Somalia and now the Gulf of Guinea,” he said.

IMO, he said, has developed guidance on the suppression of piracy for use by governments, shipowners and operators which has been supplemented by industry-developed “Best MW Practices”.

He said guidance has also been issued on investigating piracy incidents, which calls on states to investigate and persecute suspected perpetrators, and on using privatelycontracted armed security personnel, leading to an international standard being developed by the International Organisation for Standardisation (ISO).

“The security landscape continues to change, with emerging issues that include challenges posed by the embarkation and carriage at armed guards, their weapons and equipment; more widespread terrorism and violent ex@Businessdayng

tremism; the increasingly urgent need to address destructive and unsustainable levels of illegal, unreported and unregulated fishing, as well as trafficking in weapons, drugs, people and illegal wildlife products,” he said.

He further said that Gulf of Guinea region is noted for huge oil and gas deposit, large mineral reserves and abundant fisheries, as well as food and cash crops.

“This, combined with a geographically strategic location for shipping movements, makes this region a vitally important part of the global economy,” he said.

According to him, the incidence of piracy and armed robbery in the waters off West Africa has the highest reported rate globally, and it has become of very serious concern.

“Attacks have become increasingly violent, often involving firearms, and cases of kidnapping for ransom have become more common. This is a serious concern of IMO with respect to the safety and security of seafarers,” he said.

Wednesday 30 October 2019

BUSINESS DAY

MARITIMEBUSINESS SHIPPING

LOGISTICS

23

MARITIME e-COMMERCE

Here are reasons volume of business remains low at Kaduna Port AMAKA ANAGOR-EWUZIE

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o n y I j u Nwabunike, the national president of the Association of Nigerian Licensed Customs Agents (ANLCA), has said that the Kaduna inland dry port is currently yarning for patronage because importers are yet to understand the principles of the dry port operation.

Nwabunike, who said this recently at the roundtable organised by the Maritime Reporters Association of Nigeria (MARAN), noted that Through Bill of Lading (TBL) had been source of problems on low patronage of Kaduna dry port.

He stated that the Kaduna inland dry port was witnessing low patronage because shipping lines that were supposed to issue TBL were not doing that, adding that importers wanted to import and have the final destination of their goods and services at the dry port without going to Lagos, PortHarcourt, Warri or Calabar to pick their goods.

Tobi Afolabi (m), executive director, Ports & Cargo Handling Services Limited receiving special recognition award from Emeka Anyaoku (r), former secretary general of the Commonwealth on behalf of Taiwo Afolabi, Group executive vice chairman, SIFAX Group while Ibraheem Olugbade (l), executive director, SIFAX Off Dock looks on.

“Importers can’t pick their good at Kaduna without a Through Bill of Lading

that dedicates the goods to Kaduna. Now, the question is this, why is the TBL

not given to importers?” he questioned.

Nwabunike pointed out

logistics as another major problem to full utilisation of the port due to lack of capac-

ity on the part of the Nigerian Railway Corporation (NRC) to take goods to the dry port.

He said that the Inland Containers Nigeria Limited (ICNL), operator of Kaduna Port, wants to enter into partnership with a very big logistics company to provide trucking services by evacuating cargoes from the Lagos ports to Kaduna port at a particular price.

While identifying lack of sensitisation of the stakeholders as another reason the dry port was witnessing low patronage, he assured that the management of the dry port had commenced action in this regard.

According to him, Kaduna is less than 500 kilometers to Niger Republic and almost 2,000 kilometers from Cotonou but Niger importers prefer to use Cotonou because, Benin does not ask them for duty “We went to Niger Republic two times within one month to sensitise them that they can take delivery of their goods under transit cargo. We ask them to import through Nigeria, Kaduna precisely,” he added.

APM Terminals launches global customer alerts solution

I

n response to customers request for realtime information about exceptional circumstances or disruptions affecting a terminal, APM Terminals has launched a global customer alert system that enables customers to subscribe for terminal alerts via SMS or email.

Given the solution, terminals will only use the

alerts function for severe issues that have clear implications for customers, including labour shortages, bad weather warnings, congestion at the port or delays with Customs clearance.

Where possible, the terminal will provide an estimated resolution time, links to further information sources – such as gate cameras or live vessel

schedules – or when available, alternative solutions, such as extended free storage limits or longer gate opening times.

According to the company, customers who register for the service will be the first to know of any issue at the terminal, with emails and SMS messages being delivered to them directly, within

few minutes of the message being published on the website.

This real-time information will give customers as much notice as possible to help them adjust their schedules or take any additional action, APM Terminals says.

“Registering for alerts via APM Terminals website/alerts takes just a

couple of minutes. Customers can select from a number of options to ensure they only receive applicable alerts – such as gate, rail or vessel announcements – and choos e betw e en SMS message and email. Customers can also choose to receive alerts from one or multiple terminals,” the company further says.

It listed the service available for most APM Terminals’ locations and forms one-part of a broad range of online services to include real-time container track and trace information, being developed to provide more visibility and proactive communication to APM Terminals’ customers via the company’s website.

VESSELS EXPECTED AT LAGOS PILOTAGE DISTRICT SHIP

AGENT

PORT

TONNAGE/UNI

EXP

E. T. A

LENGHT

CARGO

ALRAINE APS BLUESTAR BLUESTAR BLUESTAR BLUE STAR C.C NIG C.C NIG GAC GOLDEN GOLDEN GOLDEN LANSAL

EKO/SUP ENL DAN.REF GDNL DAN.REF DAN.REF APMT APMT APMT ANTL ABTL ABTL APMT

15/40FCL 4525MT 758.611MT 27379MT 5775.125MT 14783.951MT 590FCL 500FCL 840FCL 52750MT 53333MT 44700MT 830FCL

-

31/10/19 31/10/19 15/10/19 05/10/19 06/10/19 15/10/19 31/10/19 31/10/19 26/10/19 31/10/19 05/11/19 02/11/19 04/11/19

132.2M 132M 142M 190M 164M 155M 261M 261M 261M 193M 193M 200M 260M

CONT F/FISH G/CARGO B/WHEAT G/CARGO G/CARGO CONT CONT CONT B/SUGAR B/WHEAT B/WHEAT CONT

249M 249.12M 249.12M 249M 249M 135M 183M 183M 183M 176M

CONT CONT CONT CONT CONT AGO PMS PMS PMS PMS

DATE ARRIVED

LENGHT

CARGO

REMARK T

26/10/19 23/10/19 18/10/19 26/10/19 23/10/19

260M 261M 249M 249M 228M

CONT CONT CONT CONT CONT

CRNAPP CRNAPP CRNAPP CRNAPP CRNAPP

S/N

1 2 3 4 5 6 7 8 9 10 11 12 13

UNI SEA GREEN CHILE FAN ZHOU 9 SANTY MEGA CARAVAN SHIMEI FORTUNE ANL WYONG NAVIOUS DEDICATION SEASPAN SAIGON DESERT SPRING DESERT RANGER KIA XUAN ZIM KINGSTON

14 15 16 17 18 19 20 21 22 23

MAERSK CAPE COAST MAERSK CASABLANCA MAERSK CUNENE MAERSK CABINDA MAERSK CABO VERDE BROOK NAVIG 8 TOPAZ TORM TROILUS ELEANDA BLU TORM LOIRE

SHIP

-

MAERSK APMT 340FCL MAERSK APMT 300FCL MAERSK APMT 300FCL MAERSK APMT 300FCL MAERSK APMT 300FCL PEAK NOJ 10000MT WAPS BOP 17154MT WAPS OANDO 37880MT WAPS OANDO 38000MT WAPS NOJ 12000MT MOTOR VESSELS AWAITING BERTH AT LAGOS AGENT

PORT

TONNAGE/UNI

. . .

PILOT

EXP

S/N

1 2 3 4 5

ANL WANGARATTA SEASPAN LEBU MAERSK CHENNAI MAERSK CONGO KOTA SURIA

1 2 3 4 5 6

LILAC VICTORIA MERONAS PACIFIC A DORODCHI ELKA ATHINA BURRI WECO JOSEFINE

C.C NIG C.C NIG MAERSK MAERSK PIL NIG

www.businessday.ng GREENLINK GREENLINK INTERSHIP INTERSHIP INTERSHIP SAMCHAM

APMT 520FCL APMT 600FCL APMT 350FCL APMT 520FCL APMT 900FCL MOTOR TANKERS AWAITING BERTH SBM 59957.168MT https://www.facebook.com/businessdayng ACJ SBM SBM SBM ENL

34824MT 8984.8MT 89287.128MT 89000MT 36074MT

-

03/11/19 02/11/19 10/11/19 09/11/19 05/11/19 ??

29/10/19 28/10/19 28/10/19 28/10/19 DISTRICT.

27/09/19 16/10/19 07/08/19 13/09/19 02/10/19 05/11/19

228M @Businessdayng 183M 250M 232M 238M 180M

PMS PMS PMS PMS PMS PET COAL

REMARK T

CRNAPP CRNAPP CRNAPP CRNAPP CRNAPP CRNAPP

24

Wednesday 30 October 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Can Nigeria achieve financial inclusion milestone without Telcos?

Stories by ENDURANCE OKAFOR

D

a t a by t h e International Monetary Fund (IMF) show that the correlation between average real GDP per capita and mobile penetration is positive in Africa. Similarly, the correlation between financial inclusion and mobile penetration is positive.

This suggests that the rollouts of Information and Communications Technology (ICT) could stimulate economic growth and financial inclusion.

“The results confirm that ICT, including mobile phone development, contribute significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion,” IMF said.

Nigeria’s quest to give financial access to 80 percent of its citizens has been largely driven by its bank-led financial inclusion model, but the largest economy in Africa has lagged its Africa peers who adopted the use of technology. Hence, the question of whether the country can reduce its high exclusion population without the Telcos.

Most recent data by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning that

as much as 36.8 percent adults still lack access to financial services.

As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system.

According to the World Bank’s 2017 Global Findex database, mobile money drove financial inclusion in Sub-Saharan Africa. The report stated that between 2014 and 2017, there was a significant increase in the use of mobile phones and the Internet to conduct financial transactions which contributed to a rise in the share of account owners sending or receiving payments digitally from 67 percent to 76 percent globally, while developing countries recorded 57

percent to 70 percent.

“Fulfilling the financial infrastructure gap in Africa, by using branchless banking services such as mobile financial services, is seen as a promising way to increase financial inclusion,” the International lender of last resort said.

On the reason for the a f o re m e n t i o n e d , t h e Washington-based Fund said it is because mobile telephony allows expansion and access to financial services to previously underserved groups in developing countries.

“It reduces transaction costs, especially the costs of running physical bank branches. The increasing use of mobile telephony in developing countries has contributed to the emergence of branchless banking services, thereby improving financial inclusion,” Peter Allum, a division chief at IMF said.

In the quest to achieve a 20 percent exclusion rate by 2020, the central bank on the 5th of October

2018 released an exposure draft guideline in which it proposed Payment Service Banks (PSB) aimed at deepening financial inclusion.

Since inviting Telcos and other industry players to apply for the mobile money licence over a year ago, the industry regulator has only granted Approval-In-Principle (AIP) to Hope, Money Master, and 9PSB to operate as payment service banks.

“Nigeria has a large mobile market, and the huge number provides an opportunity to use it in deploying easy-to-use technology that can improve access to financial services,” Oghogho Osula, financial expert and former MD/CEO of Coronation Trustees Limited said.

Data by Nigerian Communications Commission (NCC) analysed by BusinessDay revealed that the total number of subscribers per individual telecoms operator as of August 2019 stood at 176.89million.

PWC’s global survey highlights determinants of winners, losers in Fintech-driven business models

P

wC’s 2019 Global Fintech Survey polled over 500 financial services (FS) and technology, media and telecommunications (TMT) executives worldwide to figure out the factors that will determine the winners and losers in the race to develop and profit from Fintech-driven business models.

Analysis from the survey revealed that companies who have embraced Fintech are reshaping the marketplace and those that haven’t are being left behind.

Three-quarters of the FS and TMT executives surveyed said they’re stepping up their Fintech investment in the next two years. More than 90 percent are very or somewhat confident that Fintech will deliver revenue growth over the next two years. But focus, maturity, and speed to market vary.

“The really big changes have to be top-down. They have to be strategic. They have to be something that leadership, the board, and the executives are closely involved in and have decided the organisation needs to pursue,” Andrew S. Nevin, West Africa Financial Services Leader and Chief Economist PwC Nigeria said.

According to the PWC, FS, and TMT industries are using Fintech (financial technology) to sharpen operational efficiency, lower costs, improve customer experience, and heighten the appeal of their products and services. They are also carving out new commercial possibilities.

“Digital-only banks are offering redesigned client propositions and cost pro-

files. Investment managers are deploying fully customised robo-advice. Insurers are using sensors to monitor people’s health and drive illness prevention,” the financial service company said.

And according to the recent survey, consumers are ready for the digital shakeup, as such the question is no longer whether Fintech will transform FS, but the firms it will apply its best and emerge as leaders are now the focus.

The London-based organisation, therefore, recommended that FS should look to TMT for ideas about how best to use Fintech as the FS executives that were surveyed think that using Fintech to improve the ease and speed of their service will be key to retaining customers.

But people expect ease and speed, so firms that focus their Fintech efforts on these attributes might only meet customers’ expectations and not differentiate themselves, especially when competing with digitally sharp-intuitive TMT businesses, PWC stated.

Also from the survey, PWC was able to recommend that firms should push cross-sector fusion further– Among organisations that are planning to pursue an acquisition, strategic alliance or joint venture to drive growth via Fintech.

“At a time when FS firms are striving to sharpen their technology capabilities and TMT needs product and regulatory expertise to compete in the FS market, firms will miss opportunities if they don’t pursue more cross-sector cross-over,” PWC said.

Opportunity for Nigerian tenants as Kwaba announces rental financing platform

K

waba, rental financing, and property listing company that assists low-middle income Nigerians to access properties and financial services has announced the unveiling of its digital platform.

The start-up is targeted at changing the approach to rent payment by harnessing the power of financial technology and the internet to solve the bulk rent system of payment in Nigeria.

With the most population in Africa, Nigeria has more than 20 million housing deficit. The high cost of acquiring properties in the country where millions live on less than $2 a day has left over 130 million people as tenants.

“During our business validation phase, in four weeks, we had over 1500 renters requesting rental

financing of up to N300 million. This led to the development of our new user-friendly mobile app which will be released on the 6th of November 2019 on the google play store for android and the app store for iOS,” Obinna Molokwu, chief executive officer of Kwaba.ng said.

According to the Lagosbased company, Kwaba app has two available financial services platform. One of which is the Rent Now – Pay Later feature which avails users easy access to credit facilities towards paying their rent.

“Renters employ the services of Kwaba through the Kwaba app to help pay their rent, so they can pay back in monthly convenient instalments,” the company confirmed in mail response to BusinessDay. With an increasingly urban population at about

4.6 percent growth rate per annum and the fragile economic growth which has eroded the purchasing power of many Nigerians, renting has become more unaffordable.

“The other financial service available on the Kwaba app is an interesting target saving feature that offers users the opportunity to save a certain amount daily, weekly or monthly,” Molokwu said.

The Save for Rent feature is a proactive measure designed to create a feel of monthly rent payment as well as reward users for saving towards their rent monthly, with an impressive 10 percent interest per annum on the total amount saved at the end of their desired savings tenor, the company said.

According to Molokwu,

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Kwaba is looking to efficiently bridge property and finance seamlessly and redefine its impact with its product offering.

The rental financing services by Kwaba is at the moment available to only salary earners. However, the company has said it is optimistic that business owners and others in the informal sector will soon be able to access the service.

For a 6 percent interest rate, the rent repayment is spread between 6-12 months. “We are actively working to push the interest rate down to about 1percent but our current rate is due to the cost of funds. As soon as we get cheaper funds, the rate will become much lesser than what we have now,” the company said.

Other features on the

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Kwaba App include: Property search- through this feature, property hunters can gain access to various properties for rent, sale, including student accommodation across Nigeria.

Users are also able to rent, lease or buy properties of their choice from thousands of listed properties on the app with options to pay in full online.

Video viewing is another function of the app, according to the company, the Kwaba app comes with a live-video viewing feature which is a passable alternative to physical viewing or property inspection with agents, especially for busy, working-class individuals who are at work all day.

In his comment, Molokwu said the video viewing feature is also perfect for @Businessdayng

people abroad who want to rent, lease or acquire properties in Nigeria.

On how the Kwaba.ng works, Molokwu explained that the app and site have been designed for easy accessibility on mobile devices or laptops. In his words: Download App, sign up on the app, select service- find property/ rent now pay later/ save for rent, get sorted, and the app is completely free to use.

“With an emphasis on seamless user experience, aesthetics, and convenience, the new Kwaba Mobile App promises ‘bestin-class’ in mobile property search and rental financing services. If a tenant is unable to pay his/her rent in the current apartments they are living, we can come in and pay the rent on their

Wednesday 30 October 2019

BUSINESS DAY

PENSION today

25

In Association With

Accrued rights: Returning to the inglorious past where government owe pensioners

T

he Pension Reform Act 2004 as ammended in 2014 established the Contributory Pension Scheme (CPS) with one of the main objectives being to ensure that every person that worked in either the public or private sector in Nigeria receives his/her retirement benefits as and when due.

The main difference between new CPS and the old Defined Benefit Scheme is that most of the old pension schemes were not fully funded. Therefore upon retirement there were no ready funds to pay the pensioners, but this has been addressed

by CPS which is fully funded through contributions by both the employer and the employee.

The Pension Reform Act 2004 provided for a minimum 7.5 percent contribution of an employee’s total monthly emoluments by the employee and 7.5 percent by the employer, and with with the amended of the Act in 2014, these moved 8 percent by the employee and employer 10 percent.

Employees who were in the public service of the Federation and the Federal Capital Territory, before the commencement of the Pension Reform Act 2004, have accrued rights to retirement benefits protected through the issuance of Federal Government Retirement Bond. The Bond is to be redeemed upon the retirement of the employee. The Federal Government established a Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. The Federal Government by law is expected to pay into the Fund, an amount equal to 5 percent of the total monthly wage bill payable to all employees of the Federal Government and the Federal Capital Territory.

On retirement, an employee is expected to be paid a lump sum and monthly pension collected either through a programmed withdrawal or an annuity purchased from an insurance company, from the balance in his/her Retirement Savings Account (RSA).

These entitlements are paid from the balance in the employee’s RSA on retirement. The balance is made up of the total contributions of the employee and employer, the return on investments of the contributions over the years and the accrued

pension rights for employees who were already in service before the commencement of the Pension Reform Act 2004 in June 2004. The accrued right is gotten through the redeeming of the Federal Government Retirement Bond through the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria.

Here then lies the problem. If the Federal Government is in default of remitting into employees RSAs contributions deducted from the monthly salaries of employees and its own monthly contributions now running to ovwe a year and five months, then the Government has failed to comply with the provisions of Section 11 (3) of the Pension Reform Act 2014, which provides that “The Employer shall (a) deduct at source the monthly contribution of the employee; and (b) not later than 7 working days from the day the employee is paid his salary, remit an amount comprising the employee’s contribution under the paragraph (a) of this subsection and the employer’s contribution to the Pension Fund Custodian specified by the Pension Fund Administrator of the employee. Apart from not complying with the provisions of the Act, the Federal Government is short

circuiting federal public servants because there will be no money in their RSAs to be invested on their behalves.

Secondly, the implication of the Federal Government’s remittance of deductions from employees’ salaries and its own contributions as an employer, is also not adequately funding the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. If the Account is not being adequately funded, there will not be money to pay the accrued pension rights of employees who were in the Federal Public Service before the commencement of the CPS. The bulk of pension money for those who have put in over twenty years of service is in the accrued pension rights.

Lack of sufficient money in the Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria is the current cause for the delays in paying the pension of retired Federal Public Servants.

Fears, are therefore that we are gradually returning to the pre pension reform era, where under the Defined Benefit Scheme, retired public servants and pensioners were not sure when their retirement benefits and pensions will be paid.

The question therefore is what can be done to avoid the drift to the inglorious past, in the face of current economic challenges facing the nation.

The CPS introduced through the pension reform apart from being a vehicle for the eradication of old age poverty, has proven to be a very viable means of accumulation of long term investable fund. The pension industry, a no existing industry before the Obasanjo’s pension reform in 2004, is now an industry to be reckoned with when discussing long term fund for development.

The benefits of the reform have surpassed reform expectations. The Federal Government must therefore harness her multiple roles in the industry, first as the single largest employer in the country, then as the regulator and finally as the manager of the economy, to develop the political will to sustain the reform by ensuring that all those concern especially States Governments, key into the CPS and comply with the provisions of the Pension Reform Act 2014 and the various pension laws being enacted by the various States Governments. Part of the contributions by the Centre for Pension Rights Advocacy.

IS NOW RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@accesspfc.com Website: www.accesspfc.com

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This section is created to increase awareness and deepen knowledge about the Contributory Pension Scheme.

If you have enquiries or contributions, send to this e-mail: accesspfcbusday@yahoo.com

26

Wednesday 30 October 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

NSIA offers 30% equity ownership opportunity to local investors

…positive on meeting recapitalization deadline Modestus Anaesoronye

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SIA Insurance, part of NSIA Participations is positive about meeting the N18 billion minimum paid-up share capital requirement set for composite underwriting firms in Nigeria.

The NSIA Participations, currently present in 12 African countries including Benin, Cameroon, Congo, Côte d’Ivoire, Gabon, Ghana, Guinea, Guinea Bissau, Mali, Nigeria, Senegal, Togo, and controls about 96 percent equity stake in Nigeria’s NSIA has given their backing to recapitalize 70 percent of the equity and allow interested Nigerian investors come in and own 30 percent.

According to the company, if local Nigerian investors fail to take up this stake, the NSIA Participation joint shareholders will be prepared to take it up.

Ebelechukwu Nwachukwu, managing director/CEO of NISA Insurance Limited (Nigeria) said during an interview at her corporate head office in Lagos that “on the ongoing recapitalisation, be rest assured we will be capitalized and continue business after the exercise is completed in June 2020”, she said She stated “we have foreign investors talking to us. As a composite Insurance company we are expected to do N18 billion, we are looking at 10 billion capital injection, because NSIA joint shareholders have 96percent shares of the company

and we want this process to be the one that allows us have more local investors come in.

She noted that the group has already injected some additional money that is being processed right now because they want to continue to hold about 70percent, so, we are

Board Members of Linkage Assurance Plc at the Company’s Extra Ordinary General Meeting in Lagos where it increased its Authorized Share Capital to N15 billion to enable it meet the new minimum capital requirement set for underwriting companies in Nigeria.

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he Professional Insurance Ladies Association (PILA) has identified the role of youths in development of the insurance business in Nigeria, particularly in driving innovation and technology that are critical in deepening penetration.

The youths, PILA said are critical in driving growth in insurance industry, as they are also the future players, consumers and policymakers who need to embrace insurance and take career at this early stage in their life.

These were the observations of stakeholders at the 2019 Career Talk organized by PILA with the theme: ‘Together We Can: The Youths and Insurance held for secondary school students in Lagos State, at the Institute of Advance Legal Studies, University of Lagos.

Ose Oluyanwo, president of PILA in her welcome remarks said it is instructive, as the global market today is being driven by technological capability to drive competitive advantage, which is hinged on the youths, our millennial.

Oluyanwo said this program aims to go beyond its initial intention and expand to involve the youths in driving the technological growth within the Nigerian Insurance Industry.

“We thus hope that at the end of this year’s series, we will be looking at a new generation of insurance practitioners, who are poised to take the industry by storm bringing in to bear, their love and knowledge of technology, innovation and dedication.”

Segun Omosehin, managing director/ CEO, Mutual Benefits Assurance Plc lead speaker at the event with the theme: ‘Shaping The Future Of Insurance Career In Nigeria’ said that Nigeria has estimated population of about 200milion, with youths constituting 55 percent, so making them very significant to the future development of the nation.

Omosehin also said that youths in any society is the engine of growth supplying the labour force, reliable market for industries and bundle of creativity fueled by curiosity According to him, with the characteristics including guaranteeing of continuity of human race, innovation to excel associated with the youths, insurance shares same to continue to remain relevant and attain expected growth.

The PILA career talk is a programme with a strong responsibility to encourage and nurture students towards a career in insurance.

This edition of PILA Career Talk is highly historic as it marks the 30th Anniversary of the programme. The first was held on 16th August 1989 at Queens College, Yaba, Lagos. www.businessday.ng

Nwachukwu noted that NISA has always paid dividends to share holders, as there has not been any year we haven’t increased the value of business to shareholders.

On the potential of insurance business in Nigeria, Nwachukwu noted that insurance business though has underperformed at the moment, but in that under performance are a lot of potentials, and thinks that additional capital will enable operators maximized that potential and return value to shareholders and increase contributions to GDP. “We have to move insurance from the one that waits for businesses to happen to the one that makes businesses to happen” “In the foreign countries where you say insurance penetration is very high, credit is available because you can’t access credit without insurance, now you notice that Nigerian banks are beginning to offer more and more credit to customers, and then there comes the role of insurance to enable you access more credit and this will become dominant over time.”

For us at NSIA, we will definitely be working very hard to increase our penetration ratio. I think the opportunity is enormous for the industry, she said.

With its head office in Lagos, strong regional presence in Abuja and a large network in strategic states across the country, NSIA Insurance offers a wide range of insurance services at competitive rates to meet the changing financial, investment and lifestyle needs of its corporate, commercial and individual customers.

Sigma boss tasks industrialist on enhancing manufacturing output for economic growth

PILA identifies role of youths in insurance industry development Modestus Anaesoronye

just looking at 30 percent from additional investors to join the NSIA group.

“However, in the event that the local investors don’t align with our core values, because there have to be compatibility in terms of focus and vision, then we will accept the foreign investors”.

Modestus Anaesoronye

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he managing director, Sigma Pensions, Dave Uduanu has tasked manufacturers on enhancing industrial productivity citing it important for the growth of Nigeria’s economy.

Uduanu said this while speaking at the first CEO Business Luncheon organised by MAN in Port Harcourt recently which was sponsored by Sigma Pensions.

Representing Uduanu, the head of Investment, Sigma Pensions Limited, Pabina Yinkere, advised that for manufacturing industry to thrive and attract more investors and marketers, manufacturers must ensure standard products.

He also called for a viable manufacturing sector, noting that it might be tough to achieve but, when achieved, would turn around the economy of the country for good.

He said:” Nigeria’s manufacturing sector only accounts for about 4 per cent of our Gross Domestic Product (GDP). That is insignificant. If we look at the developed economy today, manufacturing accounts for more than 50 per cent of those economics. If you look at countries like China, manufacturing is the significant part of their economy.”

“Now, for an industry to get industrial-

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ised, it must have a viable manufacturing sector that is contributing a lot to the economy. Because it is in manufacturing that you can create the employment opportunities that help to drive economic activities. It is in manufacturing that you can position yourself to be competitive in particular items.”

“So, if you do not have a viable manufacturing sector, it is going to be tough for that country to become industrialised and if you do not become industrialised, it affects how well you can grow and how prosperous your citizens will be.”

He also charged MAN to tackle the impediments that affects the growth of the manufacturing industries in Nigeria.

The Chairman of MAN, Rivers/Bayelsa branch, Adawari Michael Pepple, in his speech, noted that for a business to thrive, the environment where it is done must be conducive, peaceful and free of fear of criminality.

Speaking on the theme of the business luncheon “Current Realities in the New African Common Market (AFCFTA): The Role of Nigeria Customs Service and other Business Support Organisation”, Pepple stressed that the meeting became necessary following the fact that the manufacturing industry has always been the key to economic growth and creation of employment in any country.

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Wednesday 30 October 2019

BUSINESS DAY

27

insurance today E-mail: insurancetoday@businessdayonline.com

Reinsurance market outlook positive this year - Operators Stories by Modestus Anaesoronye

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ptimism is high in the reinsurance industry this year, according to Brad Adderley, partner at offshore law firm Appleby, and there appears to be some confidence that the market’s outlook will improve further.

Adderley explained that long-awaited rate increases this year had driven some positive sentiment, but there is consensus that more is to come, according to reinsurance news.

“One of the key themes we are hearing is reinsurers saying that the market needs to be firmer. They can’t survive unless it’s firmer,” Adderley said. “Conversely, brokers are constantly saying that some markets might go down, or that there won’t be much change.”

“At the end of the day though, most reinsurers seem in agreement that ‘we need markets to harden to survive over the long term,” he noted.

“If that is true then, at some point, it would seem it has to move that way.”

After so many years of flat rates, the industry also seems to be more engaged with the developments it’s seeing, Adderley suggested.

“There definitely seems more to talk about,” he said.

“I think the mood at Monte Carlo this year is better than other years with more optimism and interest being generated.”

The outlook for the insurance-linked securities (ILS) market also appears to be looking up, Adderley said with cat bond issuance expected to increase following fairly muted activity so far in 2019.

“Without question, I think cat bonds are going to pick up throughout the rest of this year and into next,” he predicted.

“We’re going to see an increase over the next few

months until the end of the year. It will increase at the beginning of next year through the first six months of next year.”

Commentators have generally observed a ‘pause’ in the cat bond market this year, following the huge catastrophe loss figures from 2017 and 2018.

This has been accompanied by an unprecedented level of loss creep, particularly from complex events such as Typhoon Jebi in Japan.

Investors appear to have responded this year by exercising more caution, but Adderley noted that this kind of prudent behavior may entail

further complications for the market.

“If there is, in fact, a flight to quality then, it’s going to be harder for new start-ups and brand new funds to get off the ground because they won’t have the reputation,” he said.

Asked whether ILS managers are likely to find better solutions to dealing with loss creep and claw-back in future, Adderley said the response is likely to be varied.

“Some people will ask for claw backs and some won’t,” he concluded. “I think each ILS provider will deal with it differently. It’s going to be a mixed bag.”

African Alliance flags off three months awareness campaign

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o mark Nigeria’s Independence Day Celebrations this October and to further fulfill their commitment to improve the lives of Nigerians, African Alliance Insurance Plc kicks-off a 3 month Insurance Education Campaign with the Launch of a Mobile Experience Center(KIOSK) at the Ikeja city mall (ICM), Lagos.

This development became necessary after a recent rise in the need to educate more Nigerians on the benefits of Insurance.

Recent development shows that there is only a meagre 1 percent insurance penetration rate in Nigeria, which indicates that only about 3 million Nigerians have any form of insurance whatsoever. Reasons cannot be far-fetched as recent data has shown that more than half of the Nigerian population are living below the poverty line, and as such the idea of insurance is unthinkable to a significant number of Nigerians. In addition, consumer purchasing power continues to be negatively impacted by high inflation.

Speaking on the campaign and the need to Reeducate Nigerians about Insurance, Stella Osanebi,

children.

“Insurance should never be seen as a burden, for the rich, or something to only pay attention to when there is a lot of income, rather it should be seen as a means to survive the unpredictable economy and eventualities of live. At African Alliance, we have decided to come closer to the people, to share the benefits of Insurance and to also take time to explain the value of signing up for our specially crafted plans which cater to Risk protection, Savings and Investment plan.”

The campaign is scheduled to run for 3 months, with a Free Seminar every Saturday on Insurance Educationand a Special activity for Parents and Children every Sunday. Staffs and Representative of African Alliance will also be on ground throughout the week, to guide the audience on the best plans to invest in. From the Money appreciation Plan, Alliance Investment Plus Plan, Income Investment Plan, Alliance Smart Kid, Child Education Plan among other plans.

The KIOSK will be stationed at the Ikeja City Mall (ICM), Lagos from October 1st, 2019 to December 30th

L-R: Gboyega Oyetola, governor, Osun State presenting the Alumni Recognition award to Tope Smart, chairman, Alumni Golden Jubilee Organising Committee/managing director, NEM Insurance Plc with his wife, Tonia, during the 50th anniversary distinguished UNILAG Alumni awards/dinner in Lagos.

Onigbogi steps in as president of NCRIB

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istory is to be reenacted in the Nigerian Council of Registered Insurance Brokers (NCRIB) as the Council would be investing its second female President in 57 years of existence.

Bola Onigbogi, an astute Insurance professional and Broker for more than two decades will be taking over the mantle of leadership of the Council at a time when the Council needed to further entrench its position in the nation’s economy as an inevitable link in all insurance placements.

She had served on the Board of the Council on strategic committees, peaking with the position of deputy president from where she would be installed President.

The investiture would be attended by the crème of the professions, commerce, organized private sectors and government. It is expected that the Yemi Osinbajo, vice president would be the Special Guest of Honour while the Ooni of Ife, Enitan Ogun-

wusi would be the royal father, among others.

It will be recalled that Tinubu emerged as the 19th President of the Council in October, 2017, and he has served for a period of two years as stipulated by the constitution of the Council.

Tinubu’s tenure would be remembered for furthering institution building and effective manpower development of members, effective inter-industry and international relations, corporate process and procedures, giving the Council and its members an enhanced im-

Bola Onigbogi www.businessday.ng

age in the eyes of the public.

Aside from consolidating on the progress and accomplishments of her predecessors, Onigbogi’s tenure as president would most likely focus on enhancement of the image of Insurance Brokers for better acceptability and the promotion of professionalism to allow them stave off challenges besetting intermediaries from IT. Born in Ilesa, Osun State, she is a Chartered Insurance practitioner, educationist, hotelier and philanthropist. She had her secondary education at Ilesa Grammar School, from 1973 to 1977 where she obtained her West African School Certificate.

Her quest for the teaching profession prodded her to enroll at the Government Teachers Training College in 1977 and she obtained the Teachers Grade Two Certificate in 1978. She was also later admitted at the University of Ife (Institute of Education, otherwise known as Adeyemi College of Education, Ondo) where she obtained her Na-

tional Certificate of Education (NCE) in 1983.

Onigbogi had her one year compulsory National Youth Service Scheme as a Teacher at the Baptist Academy, Obanikoro Lagos. Still exploring the world of education, she was employed by the Lagos State Teaching Service and was deployed as a school teacher in Aje Comprehensive High School, Lagos, where she worked between1984 to 1992.

In a twist of fate and destiny, Bola Onigbogi found herself in the new field on insurance having gained employment with Limo Insurance Brokers Ltd as a Senior Superintendent rising from the position of Senior Superintendent to Assistant General Manager, General Manager and Deputy Chief Executive in 1996.

Fired by strong entrepreneurial spirit, Onigbogi started her own company, CBO Insurance Brokers Ltd, where she has been the Managing Director and CEO till date.

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African Alliance Insurance (AAI) has kicked off a 3 month Insurance Education Campaign for Nigerians with the launching of its first Mobile Experience center at the Ikeja City Mall.

Corporate Communications, African Alliance Insurance says it is important that Nigerians begin to see the role insurance plays in improving our lives and the lives of our

2019, and it will be open to new and existing customers for all enquires, while its offices will be open every day from Monday to Sunday, between 9am and 7pm.

Cameroon insurers welcome new AIO secretary, as Soares hands over

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he introduction of the new Secretary General of the African Insurance Organisation Jean Baptiste Ntukamazina has taken place in a brief cocktail ceremony in Douala, Cameroon’s economic capital where the AIO Secretariat is located.

Cameroon’s National Director of Insurance, promised the new AIO Secretary General, the full support of all insurance actors in the host market to enable him succeed in his mission. He paid homage to the outgoing Sec@Businessdayng

retary General, Prisca Soares, for her tactful management at the helm of the AIO and for bringing the organisation to the limelight as a major Pan African institution. “while promising you the total support of the Cameroon insurance market and institutions, I will encourage you to forge ahead with the noble missions of the African Insurance Organisation and maintain it as a veritable instrument of inter African cooperation” Engolo concluded.

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Wednesday 30 October 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The big idea: How VC can help more women get ahead REBECCA KADEN

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ne of the things I love about being an earlystage investor is the call to believe in change. Investing in businesses and teams that promise huge innovations, but are still at the starting line, requires a deep belief that something small or nonexistent today could become a fixture of how we live tomorrow. This optimism has led to some of the biggest advances in tech.

Now it’s time we harness this energy to tackle one of the most entrenched problems in tech: gender inequality.

At current rates of progress, equality in the U.S. is still 208 years away, according to the World Economic Forum. Venture capital can help bend that curve because it’s designed to reject linear growth and focus on exponential scale.

But speeding up change will require more women investors and more investment in female entrepreneurs by both men and women. Bringing more women into the tech ecosystem can create a wave of innovation — one that will change the future and the role of women in it.

Currently in the U.S., only 11% of VCs are women and 71% of VC firms have no female partners. Last year a mere 12% of venture capital dollars went to companies with a woman on the founding team, a decline from 15% in 2017.

This means that in a sector creating and fueling how we live, work and connect, women’s voices and perspectives often go unheard. We can’t build a world that values women equally if women aren’t a bigger part of the building.

I’m confident that we can take a dramatically different course, one with more women investors and entrepreneurs, morefunding for female-founded startups and more women leaders in technology. To get there, we need to direct our investments toward four goals: — Publicizing the data on where we currently are.

— Promoting models of successful female founders

and funders.

— Creating stronger communities for women in technology.

— Changing the gender ratio of venture capital partnerships.

First, we must look at the data on where gender equality stands in the technology ecosystem. We have to pressure our industry to understand that this isn’t about just equality and optics — it’s also about outcomes. Businesses and funds perform better if teams have diverse perspectives. A 2018 study by BCG showed that companies founded or cofounded by women had 10% more revenue over a five-year period. They were also simply better investments, creating 78 cents of revenue per dollar of funding; companies with allmale startup teams created 31 cents of revenue.

Sharing this data alone won’t create change, but it can help launch conversations and establish a common language.

That’s the goal of All Raise, a nonprofit focused on increasing the percentages of female founders and funders. (I’m a founding member of it.) We have a team devoted to collecting and disseminating data in order to answer questions like these: “If investment teams add women check writers, are their male colleagues more www.businessday.ng

likely to fund women?” and “In which rounds of funding could women use the most support?”

Getting the facts out there will help the technology industry get on the same page about where we need to go.

Second, we need to promote models of successful female entrepreneurs and investors, people who can encourage more women to enter the industry.

Humans tend to pattern match — to seek and emulate models of success. But we won’t change tech’s gender ratio by encouraging women to morph themselves into the male entrepreneurs or investors they see on stage. We will change it by creating a system where they can thrive as themselves.

In the last 18 months, the tech world has seen wonderful examples of success by women at the highest levels.

We’ve watched Jennifer Tejada take PagerDuty public and Julia Hartz lead Eventbrite’s initial public offering. We’ve seen more female-led companies reach $1 billion valuations than ever before: Emily Weiss with Glossier, Stephanie Korey with Away and Jennifer Hyman with Rent the Runway.

To turn these individual accomplishments into significant trends, we need to use them to inspire many more. Social media has made elevating other women easier than ever. We all

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have the ability to be each other’s promoters and advocates.

Find reasons to share with your community the accomplishments of women you admire.

Doing this encourages others to follow suit — and perhaps to do more than they thought they could.

Third, as we inspire more women to start a company, interview at a VC firm or join a startup, we also need to connect them to their peers. Entrepreneurship is hard, and survival requires access to resources and supportive communities.

This has been at the heart of All Raise’s efforts since our launch.

We’ve assembled a network of 200 female mentors who give advice, answer questions and connect with female founders.

Last, we need to improve the gender balance of the venture capital industry. This will not only help female founders and startups get more funding — it will also increase women’s power and influence in tech. Equal control of investment dollars will bring equal influence over the focus of innovation.

But changing the status quo in VC means helping women enter what has long been a hard-to-navigate, relationshipbased industry. Many venture capital firms are small partnerships, especially compared with the broader financial services industry, and they re@Businessdayng

quire deep trust to function well. As a result, they tend to be made up of people from similar backgrounds. That’s why we need to help women expand their networks to access new opportunities, show these firms they will lose out on better returns until they diversify their teams and fuel the growth of new firms started by a more diverse set of investors.

Access to investments and deal flow is the lifeblood of venture investing, and most often it is passed through trusted networks. We are deliberately saying to our industry: If you don’t have a female check writer on your team, you are missing out on valuable perspective as well as valuable deal flow.

VCs always have a reason to say no to a potential investment. Ventures are risky, metrics might be nascent, competition is fierce. But the most successful early-stage investors stand out not for when they said no, but for when they believed that something difficult, nonlinear and important could succeed. Bending the curve for women founders and funders is worth believing in and investing in. If we do, we will see exponential, worldaltering change.

Rebecca Kaden is a general partner at Union Square Ventures.

Wednesday 30 October 2019

Harvard Business Review

BUSINESS DAY

29

MANAGEMENTDIGEST

What do we do about the biases in AI? JAMES MANYIKA, JAKE SILBERG AND BRITTANY PRESTEN

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CONNECTING xercises such as implicit association tests and field experiments have long documented the reach of human biases. More recently, society has begun wrestling with how much these human biases can make their way into artificial intelligence systems — with harmful results. At a time when many companies are looking to deploy AI systems across their operations, being aware of those risks and working to reduce them is an urgent priority.

What can CEOs and their top management teams do to lead the way on bias and fairness? We see six essential steps: First, business leaders will need to stay up to date on this fastmoving field of research. Several organizations provide resources to learn more, such as the AI Now Institute’s annual reports, the Partnership on AI and the Alan Turing Institute’s Fairness, Transparency, Privacy group.

Second, when your business or organization is deploying AI, establish responsible processes that can mitigate bias. Consider

using a portfolio of technical tools, as well as operational practices such as internal “red teams” or third-party audits. Tech companies are providing some help here. Among others, Google AI has published recommended practices, while IBM’s “Fairness 360” framework pulls together common technical tools.

Third, engage in fact-based conversations around potential human biases. With more advanced tools to probe for bias

in machines, we can raise the standards to which we hold humans. This could take the form of running algorithms alongside human decision-making, comparing results and using “explainability techniques” that help pinpoint what led the model to reach a decision and understand why there may be differences in outcome. When we do find bias, it’s not enough to change an algorithm; business leaders should also improve the human-driven

processes underlying it.

Fourth, consider how humans and machines can work together to mitigate bias. Some “human in the loop” systems make recommendations or provide options that humans double-check or can choose from. Transparency about these algorithms’ confidence in its recommendation can help humans understand how much weight to give it.

Fifth, invest more, provide more data and take a multidisciplinary

approach in bias research (while respecting privacy) to continue advancing this field. Important efforts to make designers’ choices more transparent and embed ethics into computer science curricula, among others, point the way forward on collaboration.

Finally, invest more in diversifying the AI field itself. A more diverse AI community would be better equipped to anticipate, review and spot bias and engage communities affected. This will require investments in education and opportunities — work like that of AI4ALL, a nonprofit focused on developing a diverse and inclusive pipeline of AI talent in underrepresented communities through education and mentorship.

AI has many potential benefits for business, the economy and for tackling social challenges. But all that will be possible only if people trust these systems to produce unbiased results. AI can help humans with bias — but only if humans are working together to tackle bias in AI.

James Manyika is the chairman of the McKinsey Global Institute. Jake Silberg and Brittany Presten are consultants in McKinsey and Company’s San Francisco office.

You didn’t land your dream job. Now what? can start early on: When they notify you that you didn’t get the job, you can send back a warm note thanking them for the opportunity and letting them know you remain very interested in the company. You can add that, if they felt like it would be a fit, you’d be open to conversations about other roles that may become available.

It’s natural to get our hopes up about a professional opportunity that seems perfect — and to feel somewhat defeated when it doesn’t come through. But by following these strategies, you can leverage that rejection into even better opportunities.

DORIE CLARK WORK VS. LIFE o professional has a perfect record. At some point, you’ll apply for what seems like a dream job — and be rejected.

Taking a little time to wallow is natural. But eventually, you have to will yourself to move on. That doesn’t mean giving up on your dream, but it does mean recalibrating.

Here are four strategies you can use to overcome the disappointment and take action: 1. PUT YOUR REJECTION INTO CONTEXT: It can feel as if being turned down for a choice opportunity means you’re doomed. That’s rarely the case, but knowing that intellectually doesn’t help in the moment.

That’s why a useful step is to look back on your own history of failed efforts, and reflect on how they made other things possible for you.

2. CHANNEL YOUR FRUSTRATION INTO MOTIVATION: If you were turned down because you lacked certain skills or experience, this is the chance to harness your indignation productively. Learning a new computer language or completing a certification can be onerous and frustrating, but your anger can keep you moving forward: No one’s

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Dorie Clark teaches at Duke University’s Fuqua School of Business and is the author of “Entrepreneurial You.” ever going to reject you again because you don’t have that credential.

You can also consider a counterintuitive strategy from researchers Lauren Eskreis-Winkler and Ayelet Fishbach, who discovered that giving advice to people who are facing the same situation as you are helps increase your own motivation. You may feel more encouraged to put yourself out there again after counseling a fellow job seeker.

3. IDENTIFY ALTERNATE www.businessday.ng

MEANS TO ACHIEVE YOUR GOAL: For any goal you have, there are likely alternate paths that will work just as well, if not better. Ask yourself: — Is there a competitor who recruits for similar positions?

(Coca-Cola may not want you for its marketing department, but Pepsi might.)

— Are there adjacent roles that might still be a fit? (Would you be open to a role in sales, or communications, or distributor relations?)

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— Are there vendors, suppliers or related businesses you could work for? (Maybe you could get a job with an advertising agency that handles media buying for your ideal company.)

— Are there “feeder” roles you could take? (Examine the LinkedIn profiles of people who have the job you want. What was their career path? See if you can break into the jobs they had before their current one.)

4. FIND WAYS TO STAY ON THE COMPANY’S RADAR: You @Businessdayng

30

Wednesday 30 October 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Kidnappings reaches crescendo on Nigerian roads …Travellers safety on highways a serious concern

MIKE OCHONMA

MIKE OCHONMA Transport Editor

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or many years, there have been several attacks against commercial buses, suggesting sustained economic hardship is making anyone a target and kidnapping for ransom has long been a problem in many parts of the country and has typically targeted prominent individuals or their families.

Confronted by the deadly farmer-herder conflicts and Boko Haram insurgency conflicts, kidnapping and banditry are gaining a foothold on most Nigeria’s highways.

Most commuters in private and commercial vehicles on Nigerian roads are travelling under fear and feeling of uncertainty by road, with most of the cases happening on the highways following several shocking incidences and stories of victims of kidnappings.

It is no longer news that, most of the dilapidated road networks are no longer motorable due to the failure or the lack of attention from both the federal and states levels to maintain these failed portions of the road. Even the few kilometres of motorable stretch of highways and state roads are increasingly becoming unsafe for the motoring public as aresult of infiltration of kidnappers.

Many years ago, it would be recalled that, when the roads were relatively motorable, journey time from Lagos to Abuja for instance is estimated at a maximum of eight hours at 140 kilometers per hour, but as at the time of filing this report, it takes a commercial bus for instance not less than 14 hours to arrive at its destination.

On Tuesday, October 22, 2019, BusinessDay transport editor boarded a commercial bus that

Ongoing Abuja Motorfair plays host to new Ford Edge

departed the terminal by 7.05 am from Utako, Abuja, after his visit to the country’s federal capital for an official trip.

At about four and half hours into the trip, the bus was intercepted by a gang of dare-devil kidnappers along the LokojaOkene bypass following a rear end collision involving the commercial passenger bus with 14 passengers and another Toyota Land Cruiser SUV with Abdul Dogo, justice of the Federal High Court returning from Abuja to Akure, Ondo State and his driver.

Seconds after the crashed, both vehicles came under a heavy fire. A fully armed gang of over 10 members shot at the travellers from the front and rear end of the vehicle for several minutes.

At the end of the shooting with reminds one of a movie, the justice and his driver were commandeered into the thick forest.

He spent four days in captivity and was only released by 2a.m. at

Itakpe last Saturday.

And while no mention was made of any ransome paid or not to the kidnappers before the judicial officer and the occupants of the official SUV were released, no mention was also made of the fate of the passengers that were engulfed in the dastardly act.

In June this year, the Rivers state police command said that three passengers and a driver were kidnapped after gunmen struck at Evekwu and hijacked a bus along Emohua axis of the East-West Road.

Police Public Relations Officer in the state, DSP Nnamdi Omoni, while confirming the incident, said the armed men struck at Evekwu in Emohua. In September 2017, gunmen also kidnapped 19 bus passengers near Nigeria’s southern oil hub, Port Harcourt, the River State capital.

On March 13 this year, Muhammed Usman took a bus from from Gusau, the capital city of Nigeria’s north-west state of Zam-

fara, to see his family in Dangulbi, a small farming community about 50 kilometres away.

Half an hour into the trip, the bus came under a heavy fire. A fully armed gang of 18 members shot at the travellers from the front and rear end of the vehicle for several minutes. Usman grabbed a child who sat next to him and crouched down beneath the seat, covering him with his body.

Among the latest series of attacks, last September, at least, thirteen persons were reportedly kidnapped in two villages along Abuja-Kaduna highway between Saturday and Monday by gunmen.

Sources said seven persons were abducted on Saturday at Begiwa and six others on Monday at Dutse village, all in the Chikun Local Government Area of Kaduna State. During the attacks, eavily armed men invaded the two communities along the highway, shot and took away their victims to unknown destinations.

oscharis Motors, sole representative of Ford Motor Company in Nigeria will today inside the International Conference Centre Annex, Abuja, venue of the 20th Abuja International Motor Fair, unveil the new Ford Edge.

Abiona Babarinde, general manager in charge of marketing and corporate communications, Coscharis Group, said that Ford has come up with innovative features to the new Edge to deliver an even more sophisticated, modern driving experience. ‘’We at Coscharis are more than enthusiastic to unveil and showcase these exciting features to the delight of our teaming customers”.

The new 2019 Edge is defined by modern sophistication laced with an athletic new front and rear styling that reaches its ultimate expression.

It comes with an exhilarating 250 horsepower of performance-enhanced pleasure and plenty of smart new features as well.

Starting with Ford Co-Pilot360, a suite of standard driver assist technologies designed to help you confidently navigate your world.

A smooth-shifting rotary gearshift dial that puts you in control of the 8-speed automatic transmission.

A wireless charging pad that makes recharging your mobile phone hassle-free. And a B&O sound system with 12 high-performance speakers.

These and more features on the new Edge will be revealed as Coscharis introduces the new enigmatic Edge into the Nigerian automobile market.

Presidential Task Team denies involvement in Apapa mayhem MIKE OCHONMA

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lmost one week after the unfortunate incident that claimed the life of one person and loss of properties worth of millions of naira, the Presidential Task Team on the restoration of traffic law and order on Monday said it has nothing to do with the violence that erupted at the Nigerian Ports Authority (NPA) Lillypond Truck Transit Park at Ijora, Lagos state last Thursday.

In a statement signed by Kayode Opeifa, executive vice chairman of the Presidential Task Team on Apapa, and made available to BusinessDay on Monday, Opeifa exonerated the the team saying the violence was reportedly formented by miscreants opposed

to the operations of the Lagos State Environmental Sanitation and Special Offences (Enforcement Unit) task force in the area.

He urged anyone spreading false information on its involvement to desist forthwith.

He said: ‘’We are deeply saddened by the violence and commiserate with the family of the deceased and other victims of the unfortunate incident. But it is important to state categorically that the Presidential Task team was not involved with the unfortunate incident. We therefore call on those spreading such false claims to henceforth desist.’’

According to Opeifa, the Task Team empathize with the Nigeria Ports Authority (NPA) whose vehicles and offices were attacked or destroyed in the mayhem. www.businessday.ng

It also commended the efforts of the Nigerian Police, Lagos command, and the Lagos state task force on environmental sanitation

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and special offences (Enforcement Unit) task force for quickly bringing the situation under control, even as it commended the NPA @Businessdayng

management for not allowing the situation to adversely affect Ports operations. ‘’As partners in nation building, we want to urge our friends in the media to always cross check the veracity of their information before publishing so as not to propagate falsehood emanating from some quarters, and which could mislead the public who count on the media for objectivity and professionalism in its reportage. ‘’We also commend effort of the Nigerian media for resisting attempt by some vested interests at taking advantage of the incident to discredit the efforts of the federal government through the Presidential task team in sanitizing and restoring law and order in the Apapa axis’’. The statement added.

Wednesday 30 October 2019

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TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Lagos/Ibadan free train ride begins next month ... as Osinbajo lays foundation for Kajola factory

Transnet launches world’s longest production train

STELLA ENENCHE, Abuja

MIKE OCHONMA

n what may be described as a piece of good news to the commuting public, the Federal Government has scheduled November 30 as the date for the commencement of free train ride from Lagos(EbuteMetta) to Ibadan, the Oyo State capital.

The development will ease movement during the yuletide season, as well as reduce the gridlock on the the Lagos/Ibadan expressway.

Minister of Transportation, Rotimi Amaechi, made the disclosure, Monday, during the monthly inspection tour of the multimillion dollars Lagos-Ibadan rail project.

According to him, the free ride will commence with two executive coaches, in the first instance, pending the arrival of more trains from China.

While speaking on the progress of work on the rail corridor, the minister explained that the new policy introduced by the Chinese firm, will hasten the completion of the project.

His words: “It was good that they changed all their policies. Before now, they bring all materials from China and they have to wait for it to be imported before they start work despite their readiness to work.

“They have said that all materials will be gotten locally. Why do they have to import doors, windows from China? With the change

outh Africa’s state-owned rail company Transnet Freight Rail (TFR) last Thursday launched a 4 kilometer long train, with 375 wagons, officially making it the longest train in the world.

The train was driven by Lisa Clark and transported about 24,000 ton of manganese over a distance of more than 860 kilometer between the Sishen mine, in the Northern Cape, and Saldanha Bay. This breaks Transnet’s own record of a train with 342 wagons, which transports iron-ore along the same Transnet corridor.

Transnet previously reported that the 375-wagon train was decided on as a result of an increase in the production of manganese in South Africa.

Transnet transported about 14.01-million tonnes of manganese in 2018/19, compared with the 9.6-million tonnes transported in 2016/17. The train takes about eight minutes to pass one by from start to end.

The train is said to go a long way in lowering the cost of doing business in the country and migrating traffic from road to rail and will add R355-million in freight revenue yearly.

This will be achieved by optimising the use of existing assets, locomotives and wagons, and within the installed infrastructure constraints. Transnet operates more than 30,000 km of rail network across the country.

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of policy, the progress of work will improve”. He said.

Amaechi stated that, in signing the agreement between Nigeria and the Chinese company, Nigeria agreed with the Chinese government that, they should produce most of the materials they need locally and they said it would be a bit difficult for them. So we reached an agreement that they should start assembling wagons.

The minister said that, the vice president, Yemi Osinbajo, will soon lay the foundation for the establishment of a factory for assembling and manufacturing of

coaches and locomotives.

“Five years after that, they should start producing wagons and assembling coaches and locomotives and ten years after that, they should start producing locomotives and coaches here.

On the slow pace of work, he noted: “They said the reason for the delay is due to lack of clement weather. Their argument is that if they produce, we will buy from them instead of buying from outside and I told them that we will enter into agreement to buy from them. That way, we will be able to pay naira and save the scarce dol-

lars that we have.”

On the project ownership structure, the minister said: “We are not contributing anything to the establishment of the factory and the transport university. It is their own investment. The implication is for them to look at the benefit.

Amaechi said that the assembling state belongs to the Chinese.

The most important thing is that according to him is that, irrespective of who owns the factory, it will create employment and improve the economy which is our target at the end of the day.

ENYO sensitizes drivers, transporters on road safety skills MIKE OCHONMA

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nyo Retail & Supply, one of the leading fuels retailing company has concluded the second edition of its annual safety drivers and transporter’s forum.

The event held last Wednesday at Enyo service station, Ibafo, Ogun state was aimed at sensitizing its truck drivers and transport service providers on the importance of road safety and security in Nigeria.

Recognizing that more people ply the road during the Yuletide season, the forum had over 70 drivers and 14 transporters in attendance and focused on safety during the ember months.

Present at the event were the chairman of Federal Road Safety Corps (FRSC) and the Lagos State Traffic Management Authority (LASTMA) who brief participants on the need to exercise extra care and adhere to traffic rules when transporting fuel products during this period.

As part of the program, health professionals were present to sensitize the drivers on the importance of stress management as the

well-being of the driver is imperative to a good job performance.

Commenting on the initiative, Corporate Development Lead, Enyo Retail and Supply, Olabanjo Alimi, said the forum was organized to address the frequency of road accidents that arise as a result of driver’s negligence. He said safety at all times is key at Enyo Retail and that the company www.businessday.ng

is committed to transporting our products whilst observing global best practices. ‘’By sensitizing our drivers and transporters on safety measures to take during this period, we are letting them know that they are valued and what they do is very important”. He said.

Alimi also noted that the event was also an opportunity to com-

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mend ENYO truck drivers who have observed safe driving measures, thereby awarding consistency in their overall delivery.

“On behalf of Enyo, I am pleased to congratulate all our distinguished drivers for adhering to road safety rules and regulations.

As our unofficial ambassadors, we are committed to ensuring their lives and that of their circles of in@Businessdayng

fluence or communities are positively impacted. Their tenacity and continued pursuit of excellence are vital to the success of Enyo and are not taken for granted”.

Unit Commander, Mowe Ogun State, (FRSC), Lucas Oguntade commended Enyo Retail for its continued efforts at impacting the lives of blue-collar workers in the country.

According to him “It is vital to invest in this labour force as this contributes greatly to capacity building and our economic development. We are proud to be associated with Enyo and we look forward to doing more with them”, he added.

One of the beneficiaries, Godsway Abdul, expressed his appreciation saying, “I thank Enyo for hosting this event for my colleagues and I. We have learnt a lot regarding safety and security not only when transporting fuel products but also in our day-to-day life”.

Since its inception in 2017, Enyo has grown to a total of 80 stations and moves an average of 22 million litres monthly with an active fleet size of over 130 trucks, 14 transport service providers and intends to grow to 120 stations and double its fleet size by 2020.

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PRIVATEEQUITY &FUNDRAISING

Nigeria’s ease of doing business win presents opportunity which investment ministry might miss MICHAEL ANI

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here are concerns over the way and manner Adeniyi Adebayo, Nigeria’s new minister for industry, trade and investment, is piloting the affairs of the ministry as industry experts say they expect more, given how critical his sector is to the development of the economy.

Since his appointment to head the ministry of industry trade and investments, over two months ago, not much has been heard of him by the investing public, in terms of setting out an agenda that would attract more foreign direct investment, create jobs and boost economic growth in Africa’ biggest economy.

As at yesterday when BusinessDay was filing this report, the ministry is still having the names of both Okechukwu Enelemah and Aisha Abubakar, its former minister and minister of

states respectively, crested on its official Twitter account. However, there has not been a single tweet on any activity from either the new minister or his assistant, making analysts worry on whether Adebayo, has his eyes fixed on the sparrow.

One might ask do all this matter. Well, they matter because no other ministry should be more outwardfacing than that of industry, trade and investment, said Olu Fasan, a London-based lawyer, political economist and a visiting fellow at the London School of Economics noted.

“The industry, trade and investment is a ministry that has the whole world as its platform, and if foreign investors, traders and policymakers want to follow developments on Nigeria’s industrial, trade and investment policies, they might want to see what the minister and/or the ministry is tweeting,” Fasan said in a

Monday, 28 October publication in BusinessDay. Like other critical agencies such as the Finance Ministry, the Ministry for Industry, trade and investment is an agency that is very critical at a time when Africa’s largest economy is in need of foreign investments to create jobs, reduce poverty, close income inequality gaps and achieve inclusive growth in an economy still healing from a recession that occurred in 2016.

Investors’ confidence came cold after an acute dollar shortage that happened from the fallout of the recession, intensify capital outflows and made investors fly to other markets for safety. But the investment landscape is gradually becoming bright in the eyes of foreign investors especially with improvements seen in the World Bank ease of doing business ranking.

According to the World Bank, Nigeria in the last

one year recorded giant strides in areas of electricity, enforcement of contracts, registration of properties and enhancement of trade across countries, which helped in causing the improvement in the ranking.

Africa’s largest economy moved 15 places up from a previous ranking of 146th, to occupy the 131 spots, making the Washington-Based lender, named it among 10 major improvers in the ranking.

Analysts argue that Nigeria may have shined in the latest World Bank ease of doing business ranking, but it would take more than mere rhetorics to convert this favourable improvement into attracting actual Foreign Direct Investment inflows into the country.

In the last 17 years when the Washington based lender started tracking the ease of doing business across countries, there has been a strong positive correlation between improvements

in the ratings and direct capital inflows as investors, particularly Foreign Direct investors, use the metrics as a gauge when making investment decisions.

When Nigeria moved up 24 places from 169 to 145 in the 2018 report, Foreign Direct investment into the country jumped 21.69 per cent from $981 million in 2017 to $1.19 billion, making analysts argue a strong correlation exists between the indexes and investors’ confidence in a country.

But on the flip side, analysts say this improvement can only be a reality to translate into the much needed direct investments that would create jobs and boost economic growth if and only if, Nigeria’s trade and investment minister step up his game, but sadly, that has not been seen. “ Ni g e r i a’s i m p rov ements in the ranking may not translate to improved capital investment in light of the insecurity challenges,

huge infrastructural deficits and inconsistency in government policy that is still seen,” For Ayodeji Ebo, MD, Afrinvest Securities Limited, told BusinessDay on phone.

So far in 2019, Nigeria has recorded a total of $24.43 billion investment announcements, according to data tracked by the Nigerian Investment Promotion Council. This is a 66.6 per cent decline of from the $73.09 billion investment announced within the same time in the previous year.

This shows Africa’s largest economy needs more than just the ranking from the World Bank to drive investments, which the ministry must be at the forefront in pushing.

Otunba Adeniyi Adebayo, 61, is a Nigerian politician and traditional aristocrat. He was a former governor of Ekiti State and a son to the late military governor of the defunct western region, Maj. Gen, Adeyinka Adebayo (retd).

What the Twiga Foods Series B Financing means for Africa Venture Capital MAURIZIO CAIO & ANDREATA MUFORO, Partners, TLcom Capital

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wiga Foods (“Twiga”) announced one of the largest financing rounds of the year in the Africa VC space, a $40 million financing including the conversion of a $10.3 million note, an equity investment of $23.75 million of new cash into the business and debt for $6 million. Goldman Sachs and TLcom Capital were the two largest providers of capital, together with investments from Creadev, Wamda and the IFC. Why is a young Africabased company that is moving fruit and vegetables from farmers to street vendors in Nairobi attracting so much private capital? And what does this financing round tell us about the progress of the Africa VC space?

TLcom Capital has supported Twiga for many years: we believe that the ability to attract private capital from global investors such as Goldman Sachs, and add to commercial technology VC funds, such as TLcom, represents growing evidence of the value generation upside of techenabled business models that are successfully addressing

Andreata Muforo, Partner at TLcom Capital

challenges in the massive and inefficient consumer markets of Africa.

The key drivers of this upside are the attractiveness of the market served by Twiga, its business model and superior business strategy, and its exceptional management team and execution capabilities.

1. Targeting a large, growing, underserved and inefficient market: Twiga is operating in

a gigantic African consumer market (fresh fruit and vegetables and FMCGs) in which (a) the inherent fragmentation of the supply (farmers) and retail space (street vendors), and (b) the way fresh produce and FMCG products are transported and stored, together result in increased cost and lower quality products to consumers.

The average Kenyan spends an unsustainable 46 percent

of income on food, while the average Nigerian spends 56 percent. Twiga has harnessed technology to aggregate supply and demand of fresh produce and to optimize logistics to both lower the cost and increase the quality of products. For years, aid assistance has tried to solve supply chain market failures without achieving sustainable solutions. But technology offers a massive market solution when applied to bring down the price of fundamental goods and services in order to align with the reality of vast, and underserved, low income demand.

2. Designing and executing a robust business model based on technology at the service of strong business fundamentals: Twiga has developed a tangible competitive advantage based on a platform that combines cost leadership and massive improvement in customer value. Cost is optimized by aggregating a dramatically fragmented retail demand, which drives (a) a much simplified supply chain that frees up vast amounts of value that can be returned to farmers and vendors; and (b) predictability of offtake for the farmers, allowing investment, yield improvements and higher product quality. Value is delivered to vendors through frequent

delivery to the vendor’s duka (point of sale), eliminating the need for time-consuming and expensive self-supply from the Nairobi market, daily adjustment of orders and vendor financing. Technology enables simplification of the supply chain, optimization of delivery routing, mobile-based ordering, cashless payment, the growth of dukas as a result of their ability to serve local demand at lower prices with higher quality products, and greater profitability for the duka.

3. Strong management teams that align technology, capital and human resources for successful execution: One of the most outstanding features of Twiga is the management team, which is competent, experienced, committed and has a strong vision and strategy. In addition to a very high-quality C-level across the board, the two founders, Peter Njonjo — a seasoned FMCG distribution professional, and Grant Brooke, a thinker and starter — are complementary in many ways. Twiga has shown an ability to win not only in the food market, but crucially also in the relevant capital and labor markets. The leadership team also serves as a role model to motivate African tech entrepreneurs for

years to come.

TLcom believes that if Africa continues to generate companies of this caliber, more private capital will flow into the Continent and more entrepreneurs will be able to start and scale game-changing enterprises such as Twiga.

The company is growing fast in terms of revenues and employees, has shown the ability to scale, and can look forward to continued major growth in Nairobi and many more African cities. The management team does not hesitate to raise and invest significant capital to execute on a successful business model that leverages technology to serve a massive underserved market.

Capital markets will consistently reward propositions of this kind. The growth of African VC depends on this type of focus: on the magnitude of the opportunity, on business models characterized by winning strategies, and on teams that can use technology to scale fast across the Continent.

Africa VC needs more companies like Twiga, as well as private capital and boards that encourage risk- taking and support management teams that embrace strong trajectories of major value generation.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 30 October 2019

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tax issues Revenue drive: FIRS shifts focus to non-resident taxpayers Iheanyi Nwachukwu

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he Federal Inland Revenue Service (FIRS) recently said it has identified nonresident taxpayers as very important segment of the tax-paying public, adding that it is for the purposes of devoting to them specialised attention.

A non-resident person refers to a foreign company as defined in the Companies Income Tax Act (Cap C2, Law of the Federation of Nigeria (LFN) 2004 as amended) or an individual (who is resident outside Nigeria and derives income or profit from Nigeria) as defined in the Personal Income Tax Act (Cap P8, LFN 2004 as amended).

Recently, President, Muhammadu Buhari, presented the 2020 Federal Budget proposals to the Joint Session of the National Assembly, being his first budget presentation to the 9th National Assembly. The President, during his presentation stated that the projected Federal Government Revenue for 2020 is N8.15trillion against projected revenue of N7trillion in 2019

budget.

The projected revenue for 2020 is mainly driven by other revenue and non-oil revenue of N3.7tillion and N1.8tillion,

up 95.7percent and 30.6percent compared to 2019 estimate respectively. Meanwhile, oil revenue was revised downward to N2.6trillion.

The devotion of attention to non-resident taxpayers is to enhance tax certainty, promote voluntary compliance, reduce tax disputes and avoid incidence

of double taxation,” FIRS said in a recent public notice signed

by Tunde Fowler, its Executive Chairman.

In view of the forgoing, the FIRS had notified all non-resident persons operating in Nigeria and the general public that: Non-Resident Persons’ Tax Office (NRPTO) which will handle all tax affairs of non-resident persons (individuals or corporate) has been established.

Among others, the FIRS said that as from January 2020, all non-resident persons liable to tax in Nigeria shall submit every return, correspondence or enquiry relating to all the taxes administered by the Service to the Non-Resident Persons’ Tax Office. “Tax files of non-resident persons shall henceforth be domiciled at the NRPTO”, the notice reads.

In July 2014, the FIRS directed all nonresident companies (NRCs) to start preparing and filing their income tax returns based on actual profits basis.

The tax authority subsequently issued a public notice in January 2015 to provide some clarity on some of the concerns raised by stakeholders.

How a global tax reform ‘revolution’ will affect transfer pricing (2) Where executives are focusing uch of the abovenote d change is only coming into focus now. Still, the survey sheds light on where executives are noticing significant change to-date.

Fundamental transfer pricing: Overall, respondents say the greatest impacts of global tax reform will be felt in fundamental transfer pricing rules. Asked to rank the top three greatest impacts, this was the top (59percent) or second (28percent) choice among 87percent of executives overall — albeit 94percent for Asia-Pacific (64percent first and 30percent second).

The definition of PE was a first choice for 13percent overall, or a first or second choice for 42percent overall. Finally, thin capitalization rules and harmful tax practices or loss of local incentives were a first-plussecond choice at 27percent and 26percent, respectively.

Impact on supply chain, IP and treasury: The most frequently-cited business component

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impacted by global tax reform is supply chain (41percent).

Treasury operations and IP strategy tie for second place, both at 29percent.

Note, however, there is significant variance by geography. For US companies, IP is the area of greatest impact (37percent) with treasury and supply chain close behind (at 32percent and 31percent, respectively). In contrast, only one in five from Asia-Pacific (21percent) rank IP as their top concern.

Impact of the US TCJA: Aside from global tax reform, the survey took a deeper dive into the impacts of the TCJA. Here the statistics indicate, at least so far, that even among US companies, the TCJA is doing relatively little in terms of influencing executives to reallocate assets or functional locations. For example, most expectations for changes to functions, assets or risk management as a result of US rate reductions register only single digits. Vast majorities, in other words, plan no changes.

Finally, few companies, rewww.businessday.ng

gardless of geography, are reporting significant changes in their activities as a result of the US FDII regulations.

And while overall, only 16% say the TCJA is significantly impacting their tax planning and strategies, the figure climbs to 35% for US companies.

Forging a response What it all means, says Michalak “is that companies need to take inventory of all that’s happening and then do a fundamental reassessment of their transfer pricing strategies.”

In particular, he suggests, “businesses need to put a lot of thinking into how they create value and why the business is structured the way it is, then create TP documentation to support those hows and whys. You’ve got to be very clear, careful and strategic in this exercise, and then make certain your reporting and documentation is globally consistent.”

Moreover, says Michalak, “you have got to begin erring on the side of sharing more, not less,

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about your transfer pricing.”

Unfortunately, the survey shows that only a minority of companies are taking significant steps in addressing so much global change. For example, only 12% have combed through all of the changes and conducted sufficient modeling to the point where they are able to begin making decisions and business changes. At the other end of the spectrum, 38percent are still in the education phase (29percent) or have just completed a review and are now just beginning to build models (9percent).

According to Michalak, “this demonstrates a significant disconnect between today’s realities and the corporate response.”

Beyond adopting a more strategic and comprehensive approach to the whole of transfer pricing, Michalak insists companies must have their documentation ready for presentation to tax authorities at a moment’s notice.

“The more comprehensive the disclosure, the more thorough and consistent the discussion; and the faster this information @Businessdayng

is presented in response to an audit or query, the better are your chances the authorities will accept your side of the story.

Thorough documentation is your best, if not your one and only, opportunity to lead the narrative.”

In addition to keeping one’s own transfer pricing house in order, Michalak recommends that more businesses get more involved in influencing national tax policies. “In the past, it’s really been only the largest companies who get involved in discussions and lobbying.” But the degree and pace of change today “is so sweeping, that it becomes really critical that even mid-sized taxpayers should be keeping up and voicing their thoughts and influencing outcomes. Find out what is important to you and then educate officials so that when the rules are written, you’re not impacted unfairly.” Overall, Michalak says “companies of all sizes need to get more involved because this is no evolution, this is revolution.”

Griffin, is Global Transfer Pricing Leader at EY

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Wednesday 30 October 2019

BUSINESS DAY

cityfile Women blessed with potential to build nation- Arise Women ENDURANCE OKAFOR

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Members of the Cycology Club distributing items to the street sweepers, in Lagos

Lift for Lagos street sweepers as Cycology donates materials, cash JOSHUA BASSEY

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o many of the street sweepers in Lagos, Nigeria’s economic hub, Saturday, October 26, 2019 was remarkable.

It was day the street sweepers woke up to a pleasant surprise, as Cycology, a non-profit club of like minds, bonded by common interest in bicycle riding, took to the streets to identify with the sweepers through the donation of items, including cash in recognition of their efforts in keeping the streets of Nigeria’s commercial clean.

Tunde Laoye, captain

of the Cycology Club, told CityFile that in the days ahead, the club intends to collaborate with more corporate bodies to expand its scope of support to the street sweepers, whom he said give so much to the society but with little reward.

According to him, over 100 street sweepers received bags and cash gifts from the club and were very excited to be so appreciated.

“We are pr ivile g e d to see the hardworking highway managers as we ride every week. We thought it important to show appreciation to them for their diligence and hard work as they clean our roads and make

them safe for us cyclists and other road users,” said Laoye in an interview with CityFile, in Ikoyi, on Saturday.

The captain also informed of plans to foster alliance with relevant road traffic manager, including the Federal Road Safety Corps (FRSC), Lagos State Traffic Management Authority (LASTMA) to further drive its road safety campaign, tagged “Share the Road,” aimed at encouraging Nigerians to embrace the culture of fair usage of the road as a common asset.

“Our aim is to continually create awareness on the importance of observing basic courtesy and safely sharing the

road amongst motorists, tricycles, motorcycles, bicycles and pedestrians as provided in the highway code, through our ‘Share the Road’ campaign,” said Laoye, just as he lauded corporate bodies which supported the club to reach out the street sweepers.

“We are grateful to our sponsors because they enable us to take on these philanthropic initiatives.”

Founded in 2011 by 7 passionate c yclists, the Cycology Club has grown to 200 registered members, including expatriates and affiliate members in over eight countries, thus earning its place as the premier cycling club in Nigeria.

iving opportunities to women to become successful will have a multiplier effect on the nation.

This was the position of stakeholders at the just concluded 11th Arise Women conference, which held in Lagos. To spur economic growth and development, participants at the conference suggested that women should also be given roles that will enable them to fully utilise their talents.

“Giving a woman an opportunity will impact her family, the community and the society at large,” Dame Pauline, minister of women affairs and social development, said during her presentation.

Put together by Siju Iluyomade, convener and founder of Arise Women Initiative, a faith-based non-governmental organisation, this year’s edition of the women’s

conference took place at RCCG, City of David, Lagos, with the theme “Bloom.”

“Now is the time for women to bloom, and flourish like the full flower at the height of her glory,” Iluyomade said.

In her remarks, Ibijoke Sanwo-Olu, the first lady of Lagos state challenged women to join forces to support each other.

“I am happy that there is a lot of empowerment that been done through Arise Women. All of us are going to do it together, one person cannot do it alone,” she said.

According to the NGO, Arise Women is committed to accelerating nation building through the empowerment of women in society.

The organisation has also been passionate about the health of women and it’s been offering free preventive medical care to women in the area of HIV tests, eye tests, blood pressure, and blood sugar level tests.

FCT threatens to shut banks, others over illegal gates

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he Federal Capital (FCT) ministerial task team on traffic control has ordered banks and owners of shopping plazas around Dutsen Alhaji first gate to change their entry gates within 72 hours.

Chairman of the team, Ikharo Attah, gave the directives when he led officials of the Department of Development Control and Abuja Environmental Protection Board on a tour of the premises on Monday, in Abuja.

Attah accused the property owners of altering the plan by opening their entrances to the dual carriageway instead of the approved main entrance facing the street behind.

He also the banks and other business premises of converting the road shoul-

ders to their parking spaces, adding that short fences were constructed which stretched into the already congested road, now under reconstruction.

“After inspecting the area, we have issued a 72hour notice to the bank and owners of shopping plazas around the area to immediately seal off their current entrance gates with block walls or face severe sanctions,” Attah said.

Blessing Ugochukwu, Dutsen-Alhaji and Dawaki District Development Control Officer, also directed the officials working with her to mark the buildings for entrance point contravention.

“Bulldozers will soon be rolling in, if the property owners fail to do the needful,” she said.

Oyo community petitions FG over IBEDC’s failure to energise new transformers JOSEPHINE OKOJIE

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esidents of OkeOmi community, in O naAra local government area of Oyo State, under the aegis of Oke-Omi Community Development Association have petitioned the National Assembly, Minister of Power, Nigerian Electrification Management Services Agency (NEMSA) over the failure of the Ibadan Electricity Distribution Company

(IBEDC), to energise the new 500KVA/33/0415 transformers donated to them.

The transformers were donated by Emmanuel Folorunsho Ogunnaike, patron of the community and chairman of Fol-Hope Limited, as part of his corporate social responsibility to the community.

In a letter signed by their lawyer, Tunji Ogunrinde, addressed to the aforementioned authorities, a copy of which was

made available to the journalists in Ibadan, the community decried the attitude of IBEDC officials which it alleged was targeted at frustrating the CSR drive of the donor.

The community in the letter informed that after the installation of the transformer in April, 2019, some officials of IBEDC were invited for the inspection of the project and they certified the installation.

The letter further stated that after numerous

fruitless visits and written letters dated April 4, and April 30, 2019, by the donor and members of the community to get IBEDC to energise the transformers, of which were not replied, officials of the company told them that an approval from NEMSA was required to energise the transformers.

As contained in the letter, the donor of the transformers alongside members of the community visited the Western

zone area manager of NEMSA, who informed that the organisation had issued a circular in June 2019, placing an embargo on energising of 33KVA transformers.

“All efforts at explaining to the said Western zone area office that the installation of the said transformers preceded the issuance of the circular restricting the energising of 33KVA transformers fell on deaf ears, as they were hellbent on not energising

the transformers except with a directive from the CEO and chief electrical inspector of the federation of NEMSA to do so,” the letter states.

Residents of the community, while pleading to the government and other relevant authorities to lift the embargo placed on the energising of the transformers, said that the donor, who procured the transformers should be encouraged by energising the transformers.

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BANKING ‘We remind them of high ethical standard in banking profession’ After one year of his leadership at the Chartered Institute of Bankers of Nigeria (CIBN), Uche Olowu, president /chairman of Council, takes a review of the Institute’s activities and other issues in the banking industry, in this interview with Hope Moses-Ashike. Excerpts: Can you in brief say some of the things you have so far achieved in the Institute? ow, reviewing what we have done so far, on the first one which was roles and standards you are aware graciously the Bankers Committee has come out with the ethics and compliance certification which, as we speak today, about 15,000 people in the whole of the banking industry have written that examination; it is an annual pre-qualification like what avails in other climes that is renewed on a yearly basis.

We have started the pilot scheme from the managerial level where they have to take an online certification exam from the comfort of their offices.

The Bankers Committee approved it and it is running; every member of staff in the banking industry would have to pass through that training, so we have been able to start that but continuously we remind them about the high ethical standard of the banking profession.

We also reviewed our tribunal and investigative panel; some people are under investigation with a number found guilty. You would recall that we have delisted some members who have been found wanting and handed them over to the law enforcement agents to do their bit.

So these are areas of improving the ethical and moral conduct in our profession.

We are also on that initiative reviewing our extant law; the review of Act 5 of 2007 started last year when the Ninth National Assembly had not come in but now we are going to push for a review of that Act. On up-skilling competences of the institute, like I said, it is very important we are not left behind in the fourth industrial revolution which is based on technology and the tech space is changing with speed.

We need to get involved because the whole design is to make sure user experience is simplified and that is also affecting every aspect of our lives because the way we behave, the way

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we transact and all that we do shape bank technology, making it very critical.

We have come up with some great initiatives to leverage technology in upskilling the competencies of our members.

To that extent we have reviewed our syllabus and farmed it out to PWC to add content so that it is a globally accepted curriculum.

The end being that if you are a holder of that flagship qualification you can go to any other place and it would be accepted.

If you look at the CBN governor ‘s five-year policy thrust, he has talked about banks recapitalizing in the next five years. What roles can CIBN play in ensuring banks are fully recapitalized?

The CIBN is a body, looking at its skilled workforce and regulating conduct but the regulator is CBN, not us. The best we can do is to support by advocacy to make sure our corporate members align with the regulators.

But as to compliance to the apex bank’s directive the banks don’t have any objection because they also know the need to recapitalize for the emerging businesses.

They are going to the real estate sector and the MSMEs sector; if they have to fund these sectors then they have to recapitalise because one way or the other, if there are accidents along the way their share capital is the first buffer for the risk they are going to take. So for them to take additional risks in that space, they need to increase their capital and lucky enough the spectrum of 5 years is very optimistic that banks will comply and meet because it is for their own good that they do better businesses.

If your look at what has happened during Soludo’s era, it was N25 billion but now the naira has been devalued over time so the share capital vis-à-vis the kind of risk they need to take has to be increased.

So it’s perfectly aligned with that movement and change that is necessary and they have been given enough space and time to achieve this and I believe they would do so.

Are the banks not weary www.businessday.ng

folio would go in the direction of CBN’s LDR requirement.

It was not just a fiat, the banks bought into it, I think they reached an agreement in the bankers’ committee, the banks are all ware and jointly agreed on it.

The impact would be felt to make sure this economy grows in the right direction.

Uche Olowu

of the various contributions to different funds like the Agricultural Small and Medium Enterprises Investment Scheme (AGSMEIS) funds and others?

Banks are contributing in various interventions with the CBN spearheading it, but nobody has given credit to the banks for all they are doing.

I think they are playing in an economy that requires some dosage of intervention and it is not a shortterm view but a long term view because the impact of these interventions would lead to greater economic activities.

I want to look at the perspective of investors’ feeling overly taxed, but capitalism is also changing and a lot of discussions are ongoing in that regard; is capitalism just about taking money out of the system? Or having a dosage of impact on the people?

The point is that those interventions are designed to jumpstart economic activities and this foundation would lead to growth and the money would come back to the banking system and the banks are having a longterm view on this.

This is similar to what US, China and other economies that are doing well/have done. There has been a lot of subsidy in China to their various manufacturing outfits and today the country is proud even though it took

some time to reap the fruit of such efforts.

For me we should look from a positive view that this is going to lead to bigger returns for the Nigerian economy and the country’s financial system.

The LDR deadline is end of December which is very close, what are the strategies that banks putting in place to ensure compliance?

Fine, it’s clear that the banks have to review their portfolio. I don’t want to look at that directive as an over-regulation of the economy.

If you look at the regulation now it has some patriotic…designed to make sure that this economy gets jumpstarted.

The banks have been playing more in the fixedincome space, treasury bills and all that, borrowing the government and the government is exiting the domestic debt which means there is limited participation in that section of the market.

This is why they have to lend to the segment of activities that retain value for the economy like the real sector and the MSMEs. It is matter of banks rearranging their portfolios and I am sure they are doing that and are going to comply.

If you look at ongoing campaigns, banks are trying to lend more to agriculture and if they do that their port-

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There is an argument that the tier-one banks may not meet up with the directive, what is your take on this?

My point is this, there will be concerted effort. I agree with you because the big banks have lent out to the corporate sector, huge exposure to the corporate sector, and to rearrange the portfolio to suit the critical areas, the banks will have their 60 percent of deposits lent out. The big banks need it because they have huge liquidity so they are in a better position to meet the directive faster.

What that directive means is to lend, not particularly to the bottom of the pyramid, but to lend in other to create huge economic activities whether in corporate or retail ends.

I do not agree with those who say tier-one banks will not meet up; there is a misconception that 65 percent should go to MSMEs. It is 60 percent LDR. The agric space is there and with that alone the banks can near the loan requirement benchmark. The mining activities is there also. So the question will be to review the credit architecture, to de-risk the preferred sector in such a manner that they will be motivated to lending out more.

And again trying to create a credit culture by saying that borrowing from one bank you must pay that bank before you can access loan in another, thereby ending an era where debtors hop from banks to banks without settling obligations. The banks will be talking to each other and the credit scoring system is there and then of course if one is a bad debtor, that person would be listed and would not get credit. So it is just a mechanism that has come to change how we view borrowing culture in Nigeria so I am expecting a very exciting time because now business entities know when they borrow money they @Businessdayng

should pay back because for me if you borrow money and do not pay back you deprive others that have very genuine cause to contribute their own quota to the economy.

What other activities do you see driving the banking sector going forward?

We have only struck the surface; if we increase our ability to bring the unbanked to the mainstream of financial services, with the help of BVN and all the various things we have done it is a lot easier for us to intermediate properly.

The real estate sector which gauges the heart of every economy has not been any good framework and we are now coming out with a framework for lending there.

House ownership scheme is very critical because the multiplier effect of lending to the real estate sector is very huge.

We have the agric value chain, where we believe monetary policy and the fiscal policy will encourage domesticating value in Nigeria, so, that will have a lot of impact in the financial intermediation space.

We have the creative industry where the banks are looking to lend on account of our film industry being the third best performing globally. How do we export this?

How do we ensure we give them the right funding to bring value to this economy?

Right now any economy depending on commodity will fail. I went to Singapore which virtually imports everything but with the right economic policies, services is ruling the world, the technological space is there.

So we have to broadly diversify the economy as this government is trying its best to and this would result in increasing activities in the financial landscape.

I believe we have to be sincere and motivated in making sure we tackle the huge unemployment problem we have; the economy need stop grow above population growth rate and there is no way this can be done without good financial system.

And then the advice is also that this greedy approach to issues should be done away with.

This economy is huge. If we get it right this is the next frontier for investors.

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news

Bonded terminal owner, Lagos taskforce to dispose five containers of bad fish AMAKA ANAGOR-EWUZIE

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IFAX Group says it is perfecting arrangements with the relevant Lagos State government agencies to dispose the five containers of bad fish discovered at one of its off-dock terminals in Lagos.

These agencies include Lagos State Environmental Protection Agency (LASEPA), Lagos State Emergency Management Agency (LASEMA) and Lagos StateWasteManagementAgency (LAWMA), among others.

The five containers of rotten fish were discovered last weekend during the on-site inspection of the bonded terminal facilities by the Lagos State Emergency taskforce team.

Adekunle Oyinloye, group managing director, SIFAX Group, says the company was already seeking the necessary government approvals for the evacuation and safe disposal of the containers before the taskforce visited the terminal.

“As a responsible corporate citizen, SIFAX Group will not deliberately endanger the lives of its neighbours, whom we have had

excellent relationship with over the last 18 years that the terminal had been in existence,” he said.

According to Oyinloye, the terminal owner contacted the shipping line, consignee and the Nigerian Agency for Food Drug Administration and Control (NAFDAC) for possible collaboration in addressing this situation, when it discovered that the content of the containers had gone bad.

“As of this moment, NAFDAC is still conducting its investigation on the matter and being a bonded terminal, SIFAX Group couldn’t unilaterally dispose the rotten fish without approvals.

While we were waiting for NAFDAC to round off its investigation, we have to retain the services of a reputable fumigation company to constantly disinfect the affected containers in order to protect our neighbours from air pollution and other health hazards,” he states.

The intervention of the taskforce team is a welcome development capable of speeding up the disposal process that has been clogged by bureaucracy, he says.

CBN says e-Form ‘NXP’ for commercial exports commences October 31 HOPE MOSES-ASHIKE

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entral Bank of Nigeria (CBN) on Tuesday informed all authorised dealers, Nigeria Customs Service (NCS) pre-shipment inspection agents and the general public on the deployment of e-Form ‘NXP’, which takes effect from October 30, 2019.

The e-Form ‘NXP’ is web based and allows exporters to initiate the Form from their offices/homes and submit same to the authorised dealer banks.

In a circular signed by Nnaji O.S, for director, trade and exchange department, the e-Form ‘NXP’ will replace the hard copy Form ‘NXP’ for commercial exports (oil and gas and non-oil).

Consequently, all authorised dealers are required to ensure that the processing of Form ‘NXP’ can only be done

electronically on the trade monitoring system at CBN. Also, banks’ export customers are required to obtain a valid Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS)/Joint Tax Board (JTB).

The TIN is pre-requisite for customers to access the trade system for e-Form ‘NXP’ application.

The circular said a charge of N5,000 as fee per declaration for e-Form ‘NXP’ is applicable with effect from October 31, and henceforth.

Consequently, there will be a direct debit of the processing bank’s current account for each declaration, which should be recovered from the customer by the bank.

However, the charge on the customer for the e-Form ‘NXP’, the circular said should be separated from other bank charges.

Paul Adefarasin hosts Tonye Cole, Leke Alde, others at Leaders & Pastors conference Modestus Anaesoronye

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he House On The Rock is set to hold another conference to host leaders, pastors, ministers and gifted speakers in a conference that has been aptly themed “Intentional Leadership -Designing The Future Now.” The event is holding October 31, 2019, at The Rock Cathedral on LekkiEpe Expressway, Lagos.

Powered by the Petra Coalition, the conference is a strategic forum designed to provide purpose-driven leaders like yourself, with the inspiration, direction, knowledge and enabling environment to engage with other experienced leaders and glean the transformational, life and success skills requisite for impact in your industry, sector, church and generation.

Germane issues to be tackled in several sessions at the conference include Transformational Leadership, Building Entrepreneurs, Going Global, Fixing the Foundations of our History to Unlock the Power of our Collective Destiny and Support Leadership to name a few.

Speakers include Tonye Cole, co-founder, Sahara Group; Leke Alder, principal, Alder Consulting; Emeka Nwankpa, chairman, Intercessors for Africa; Olubunmi Aboderin-Talabi, executive council chairperson, Women in Management, Business and Public Service (WIMBIZ); Olasupo Shasore, partner, African Law Practice; Chris Ugoh, lead pastor, The King’s Assembly, and the convener and keynote speaker, Paul Adefarasin, senior pastor, House On The Rock. www.businessday.ng

L-R: Sam Egube, commissioner of economic planning and budget, Lagos State (representing the governor, Lagos); Chuma Ezirim, group executive, e-Business & retail products, FirstBank; Gbenga Shobo, deputy managing director, FirstBank; Zayyanu Hassan Ishaq, national winner of the 2019 Firstmonie Agent Awards, from Abuja - North Central; Adesola Adeduntan, CEO, FirstBank; Joseph Sanusi, former MD, FirstBank/former governor, CBN, - at the Firstmonie Agent Awards held in Lagos, which had 37 leading agents of the bank rewarded for their role at promoting financial inclusion in Nigeria.

Pic by Pius Okeosisi

NASS committee summons 17 oil firms over non-remittance of 3% budget to NDDC Solomon Ayado, Abuja

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or non-remittance of 3% of their budgets to the Niger Delta Development Commission (NDDC), the joint Senate and House of Representatives committee on Niger Delta affairs on Tuesday summoned 17 oil companies that have erred in compliance and directed them to appear before them within one week.

The NDDC law mandates that the oil companies remit to the commission 3% of their annual budget, but the companies have consistently rebuffed several attempts to provide copies of their budgets in order to determine the actual remittances.

During the budget defence of NDDC before the joint com-

mittee, Tuesday, it was revealed that non-remittance of the percentage by the oil companies have amounted to $273 million and N72 billion in both dollar and naira accounts, respectively.

The erring oil companies are Shebah Express Petroleum, Atlas Petroleum, Allied Energy, Frontier Oil, Seven Energy Limited, Belma Oil Producing Limited, AITECO Exploration and Production, Dubri Oil, Conoil Producing, Continental Oil and Gas. Others are Enageed Resources Limited, New Cross Exploration and Production, Pan Ocean Oil Corporation Nigeria Limited, Nigeria Petroleum Development Resources, Munipulo Petroleum Development Company, Prime Exploration, Production Company and Ni-

geria LNG Limited, respectively.

Chairman of the joint committee, Peter Nwaboshi explained that it became imperative to invite the erring companies to interface with the lawmakers and proffer reasons why they are not obeying the law.

“We have invited all oil companies indebted to NDDC to come and tell lawmakers why they will not obey the law of the country. Some of the have confirmed that they owning NDDC,” he stated.

Nwaboshi further disclosed that apart from the 17 oil companies that have failed to comply, a subsidiary of the NNPC - the Nigerian petroleum development corporation (NPDC) is also owing N54 billion.

He revealed that as at when last the committee checked,

Allied Energy owed $43 million, Pan Ocean Oil Corporation of Nigeria was owing $46 million while the Federal Government owed N1 trillion in the nonremittance.

Expressing dissatisfaction with the situation, Nwaboshi recalled how the 8th Senate made several effort to ensure that the companies complied but that it all failed because, he said, “most oil companies tamper with their annual budgets.”

Commenting on the order

by President Muhammadu Buhari for forensic audit be carried on NDDC, Nwaboshi said “we welcome forensic audit of NDDC because the 8th Senate did technical audit and our findings is very appalling.

We are going to do our own full investigation. We have resolved to do full audit of NDDC.”

NNPC to address economic growth at oil/ Transcorp records N6.7bn PAT in Q3, gas masters’ ball in Lagos maintains positive revenue outlook

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roup managing director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, is set to address effective economic growth of the nation and Africa at the Oil and Gas Masters’ Ball Africa (OGMB) 2019.

The event, which is slated for November 24 at the Civic Centre, Victoria Island, Lagos, will have a gathering of over 500 oil and gas magnates, national and foreign government representatives.

Kyari, who is the special guest of honour at the occasion, will be speaking on “Strengthening Industry Players on Effective Solutions for National Growth”. The panAfrican energy conference and Grand Ball aims to expand Nigeria’s investment terrain.

According to Oba Osoba, executive director of the parent organisation, the conference would help to optimise the nation’s economy for growth and business tourism.

Osoba said, “It will host

stakeholders with the aims to unite magnates in the energy industry as well as ensure highlevel networking.”

He said the Oil and Gas Masters’ Ball 2019 would also identify and honour distinguished players in the energy sector with Awards of Excellence in appreciation of their contributions to national growth.

Osoba said: “This epochmaking energy conference and Grand Ball aims to enhance business tourism in Nigeria and elevate the economy. This will be done in a relaxed and absolutely fun-filled, high networking environment while continuing to give back to the society.”

Oil and Gas Masters’ Ball (OGMB) is the flagship event of Oil and Gas Grand Ball Africa, an independent company dedicated to the organization of a diverse portfolio of events and initiatives tailored to the Oil and Gas industry in Nigeria specifically, and Africa in general.

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ransnational Corporation of Nigeria plc has announced its financial results for the third quarter ended 30 September 2019.

Highlights of the result show the Group recorded gross revenue of N58.28bn and posted a Profit Before Tax (PBT) of N7.36bn for the period under review. Total Assets increased from N297.14bn as of FY 2018 to N313.07bn representing a 5% YTD growth.

Transcorp’s hospitality business, Transcorp Hotels Plc (THP), grew notably by 16% in its year-on-year revenue and had a gross profit increase of 19% in comparison with the same period of 2018. Revenue from its power business, Transcorp Power Limited (TPL), however, declined during the period due to gas and transmission issues.

Commenting on the result, president/CEO of Transcorp, Valentine Ozigbo, stated, “Our Q3 result reflects our long term commitment to the sectors in which we play as we have had to @Businessdayng

focus on creating value for our shareholders while contending with significant operational challenges including severe gas shortages, mandated reduction in generation from the National Control Centre and importantly, revenue exposures from delayed payment of receivables in our power business.

“On our part, we have taken several actions aimed at proactively and sustainably addressing these issues. These include the recent activation of our Gas Supply and Aggregation Agreement, guaranteeing gas supply to our power plant in Ughelli; leveraging the Eligible Customer regime initiated by the Federal Government, which gives value to our stranded capacities; consummating the acquisition of Afam Power Plc and Afam Fast Power Limited, thereby raising our total generation capacity from 972MW to 1938MW; expansion into alternative power generation and mini-grid opportunities, among other things” he further explained.

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Wednesday 30 October 2019

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news Chevron seeks to reduce Nigerian presence with oilfield sales

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hevron is seeking to sell several Nigerian oilfields as part of a global drive to reshape its portfolio as it focuses on growing its US shale output, banking and industry sources said.

According to Reuters, Chevron joins rivals including Exxon Mobil and Royal Dutch Shell in a drive by foreign oil companies to reduce their footprint in Africa’s largest oil producer which has been mired in political and security instability in recent years.

The San Ramon, California-based company, Nigeria’s third largest oil producer, is looking for buyers for a number of its the onshore and shallow offshore fields, where local producers have expanded their presence.

Chevron did not respond to a request for comment.

Chevron’s Nigerian subsidiary operates and holds a 40% interest in 8 blocks in the onshore and near-onshore regions of the Niger Delta under a joint venture with Nigeria’s National Petroleum Company (NNPC), according to its website.

The discussions are being held directly with potential buyers and Chevron is not planning to launch a tender process for the assets at this stage, two of the sources said.

In 2018, Chevron’s production in Nigeria reached 194,000 barrels of crude oil per day, 233 million cubic feet of natural gas per day and 6,000 barrels of liquefied petroleum gas (LPG) per day, according to its website.

Newly licensed Globus Bank eyes N50bn capital...

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Lagos office.

The confidence of existing shareholders in the bank’s business model and management structure means a capital raising exercise will be relatively straightforward, according to Igbinakenzua, a former executive director at Zenith Bank and Access Bank.

Some of the bank’s existing shareholders include Austin Okere, founder of cloud services provider, C o m p u t e r Wa r e h o u s e Group, and Isioma Ezeachi, owner of indigenous engineering firm, Sermatech Ltd. Globus will target the underserved and unbanked with its innovative products in a bid to bridge a yawning gap in financial inclusion.

“In a market where about 40 million people are financially excluded, there is an opportunity for us to go where the big banks are afraid to tread,” Igbinakenzua said. “The fintech companies have shown that there is a massive loan deficit in Nigeria and that’s going to be our focus.”

Igbinakenzua roughly valued the retail loan deficit market at over N2 billion in conservative terms.

Prior to its official launch on November 1, Igbinakenzua said that Globus has already opened 200 accounts and that within the next five years, it would have opened 24 branches across the country.

The adoption of technology will play a big role in the bank’s future growth.

Asked whether the new CBN rules such as the minimum 65 percent Loan to Deposit Ratio (LDR) and

the ban on some firms from high-yielding Open Market Operations (OMO) bills would spur lending to the economy, Igbinakenzua said the CBN should be given some credit for trying to reverse government crowding out of the private sector.

“OMO bills should not be an investment option for the public. It is a tool used by the CBN to control liquidity, so preventing non-financial institutions and some individuals from playing in that space is the right thing to do,” he said.

He said the rules are a laudable step but much would depend on the way it is managed. He added that the regulator wants banks to be more rigorous in accessing credit-worthy customers so as to mitigate the effect of bad loans.

“We have five banks controlling 60 percent of deposits and their sheer size is breeding complacency,” he said. “Some of these banks don’t need to take too much risk to turn fat profits and that isn’t helping the economy. We must find a sustainable way to lend to the real sector and play a viable role in jumpstarting the economy.”

Commenting on the evolving banking landscape, Igbinakenzua attached particular importance to the increasing role of technology.

“We are entering into t h e f o u r t h g e n e ra t i o n era, and in the next five years, we will see only the players who are able to embrace technology survive the evolving business landscape,” said Igbinakenzua. www.businessday.ng

L-R: Ik Hyun Oh, general manager, Global Sales Team 2, Hyosung TNS Inc; Olufemi Muraino, executive director, Inlaks; Femi Adeoti, managing director/CEO, Africa Operations, Inlaks; Folashodun Shonubi, deputy governor, Central Bank of Nigeria, and Clarence Blay, head, payment system department, Bank of Ghana, at the maiden edition of the Inlaks Digital Summit in Lagos.

NAICOM confirms 3 mergers in insurance industry...

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lowing the exit of its foreign partners, Saham Group, a pan-African company with origin in Morocco which held a 40 percent equity stake in the local entity.

NAICOM said at an interactive session with shareholder groups in Lagos on Tuesday that the recapitalisation process was on course as the Commission has given 44 companies no objection to their recapitalisation plans, asked six firms to go back and rework their plans, two firms’ submission were still under review, while two were yet to make any submissions.

Meanwhile, in what can be described as a major move to get the support and cooperation of shareholders in the ongoing recapitalisation programme, NAICOM explained the benefits of the exercise to the shareholder groups.

The commission said the recapitalisation exercise would strengthen the capacity of insurance com-

panies to meet their obligations and deliver good returns to shareholders.

Sunday Thomas, acting commissioner for Insurance/CEO, NAICOM, said that one of the benefits of the ongoing recapitalisation is the increase in retention capacity and conservation of foreign exchange.

“A large proportion of the local risks are presently ceded outside because of low retention capacity. High retention means more premiums are retained by the companies,” Thomas said.

Thomas, who was represented by Pius Agbola, a director in NAICOM, said the recapitalisation exercise would lead to more value creation as there would be improved corporate governance oversight as a result of introduction of major players to the industry.

Another benefit, he said, was increase in liquidity and investment funds.

“There will be ability to meet current obligations as they fall due, and also availability of investment funds for higher returns,” he said.

MTN vs. AGF case adjourned to...

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customs duties.

When the case was called

by Justice Chukwujekwu Aneke on Tuesday, Wole Olanipekun (SAN) appeared for MTN (the prosecutor) while T. A. Gazali, chief state counsel, Federal Ministry of Justice, appeared for the AGF (the defendant).

Olanipekun informed the court that he and his client were ready to proceed with the trial but had been informed by the respondent that more time would be needed to further study the case and wrap up evidence. Gazali had also informed the prosecuting counsel that “he would not be able to proceed with this case at this time, as he is representing the government in another matter”, Olanipekun said. Hence a mutual agree-

ment was made for the end of January 2020.

“In a motion dated 23 September 2019 and filed on 25 September 2019, we asked for an extension of time to regularise processes and wrap up this case,” Gazali told the court.

“We are trying to micromanage time. We are ready for this case but we understand the reasons why the respondent may require some more time, so we have agreed on a convenient date. We served him yesterday, October 28, and he said he wants to go through,” the plaintiff said.

The telecommunications company resorted to taking legal action after receiving a demand notice from the AGF alleging unpaid duties and taxes between 2007 and 2017.

According to the law of the

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Other benefits include increased ability to hedge against risks arising from macro-economic environment, and capital restructuring.

“The capital base increase through increase in shares subscription would definitely dilute the capital structure of companies, which will bring more transparency and increased oversight,” Thomas said.

He said there was no doubt that insurance in Nigeria has huge growth potential as NAICOM has decided to put more emphasis on market development to enable investors have value for their investment.

“As a stakeholder in ensuring that investors have value for their money, NAICOM has made commitment to develop and deploy appropriate framework for enforcement of compulsory insurances, IT deployment in the insurance sector ; risk-based super vision; appropriate and relevant distribution models; improvement in insurance awareness; better corporate governance oversight; effective collaboration with

relevant sectors; reduction in the incident of fake insurance as well as effective and monitoring prompt claim payments,” Thomas said.

Suleiman Hassan, head of Financial Guidelines and Corporate Governance at the Securities and Exchange Commission (SEC), told the shareholder groups at the event that SEC would continue to bring reforms that would make the capital market investor-friendly.

He urged the shareholders to take position in insurance stocks, particularly now that most of them are selling below par.

Hassan also gave the assurances of the SEC to collaborate with NAICOM to ensure success of the recapitalisation exercise and protection of the investors’ fund.

NAICOM had asked underwriting companies to increase their paid-up share capital from N2 billion to N8 billion for life companies, from N3 billion to N10 billion for general business, from N5 billion to N18 billion for composite business, and from N10 billion to N20 billion for reinsurance companies.

Federal Republic of Nigeria, oversight for this is the responsibility of the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS) and not the Attorney General’s office.

The court heard arguments on the AGF’s preliminary objection on March 26, 2019. At the time, the AGF requested that MTN’s suit be dismissed because it was not filed within the appropriate timeframe, which the AGF asserted was within three months of receipt of the initial request for a self-assessment.

Having considered the matter, the judge determined that MTN’s suit was not statutebarred, as the company was only required to file its case within three months of receipt of the actual demand notice, which it did.

MTN Nigeria maintains its stand of being in full compliance with all extant tax

and regulatory obligations.

The company says that since incorporation in 2001, it has invested more than N2 trillion into the Nigerian economy and has paid more than N1.7 trillion in taxes, levies and other regulatory fees.

“It is important to note that even if the court ultimately rules that the AGF is within its rights to assess taxes and duties, it does not imply that the assessment that has been made is legitimate,” the company said in a statement sent to BusinessDay. The company which suffered reduced share prices as a result of the accusations, in September 2018, applied in the Federal High Court of Nigeria for injunctive relief restraining the AGF from taking further action in respect of their orders that the $1.3 billion in relation to the taxes be paid to the Federal Government of Nigeria.

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news

World Bank, NERC, NLNG, DMO set for 2019 Alaghodaro Summit

Oil bid rounds: Smaller African countries take Nigeria’s place

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arely two weeks to 2019 edition of the Alaghodaro Summit, more local and international players in the business scene have made commitments to be at the event, which has become a rallying point f o r Ni g e r i a’s b u s i n e s s community.

In a statement, Crusoe Osagie, special adv i s e r t o t h e E d o St a t e governor on media and communication strategy, s a i d t h e s t at e g ov e r n ment had gotten confirmation that the World Bank countr y director, Shubham Chaudhuri; director-general of the D eb t Ma nag e m e nt O ffice (DMO), Patience Oniha; chairman, Board of the Nigeria Electricity Regulatory Commission (NERC), James Momoh, would all be at the event.

Others are managing director, Nigeria Liquefied Natural Gas (NLNG), Tony Attah; country dire c t o r, DA I , Jo e Ab a h, and executive vice-chairman, Ibadan School of Governance and Public P o l i c y ( I S G P P ) , Tu n j i Olaopa, among others.

The governor ’s aide

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said the event themed “Delivering to the People: The Next Level,” is organised to mark the third-year anniversar y of the Governor Godwin Obaseki-led administration in Edo State, which has set the stage for private sector participation in the state’s economy.

According to Osagie, “We are celebrating the governor’s third year anniversary by hosting the c rèm e of t he bu si ne ss community. We also have those from the development finance sector, such as the World Bank, who have contributed immensely to the progress b e i n g re c o rd e d i n t h e state.

“There is no denying that Edo State has become the darling of investors and we are pushing to have more investors coming into the state to take advantage of the numerous reforms being implemented in opening up the business space.”

He added that the Alaghodaro Summit would feature the Edo Summit, Women’s summit, job fair, golf tournament, among others.

The state government ha s e v e r y t h i ng s e t f o r the expanded business and investment summit t a rg e t e d at t h e s t at e’s growing economy, which would host not less than 1500 youths for the youth summit as well as other business executives and investors, he said.

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Olusola Bello s Nigeria continues to allow investment opportunities in the oil and gas to slip away, more serious countries around the world and the African continent in particular are getting set to ramp up oil bid licensing rounds to enhance their ‘producibility.’

Countries like Angola, Uganda, Sierra Leone and Equatorial Guinea have between September 2019 and February 2020 to finalised arrangements for the bid rounds to take place.

Other countries across the globe, like Brazil and Ukraine, closed their shops to would-be investors between September and October this year, meaning that the real bid round can take place any moment from now.

Relatively unknown countries in terms of oil production in Africa are aggressively turning out policies and incentives that are attractive to investors. Hence, the countries are making waves now in respect of oil production, even though the volumes are small.

But unfortunately for Nigeria, the last time she had such an exercise was 12 years ago.

Bank-Anthony Okorafor,

HARRISON EDEH & CYNTHIA EGBOBOH, Abuja

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he Federal Government has targeted a 30 percent reduction in the cost of crude oil extraction, in a bid to ensure effective cost management in Nigeria’s oil sector.

Timipre Sylva, minister of state for petroleum resources, disclosed this in Abuja on Tuesday, stating that ensuring effective-cost management in the oil sector was critical to creating a sustainable economy as the sector had remained the mainstay of the nation’s economy.

Sylva said the effective management of the cost of production of crude oil was necessary to shore up revenue allocated to execute government projects as well as fast track inter-sectorial linkages to enhance value chain.

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since 2007, and we think that it is due for us to have a bid round in Nigeria,” he said, adding that the rounds will also be a way to raise revenue.

Experts have said urgent steps should be taken to avoid the country continuous slide in oil production, as this could lead to losing her prime position of being Africa’s top most producer because of declines in crude oil production.

This year annual budget is predicated on 2.2 million barrels per day, but the actual production has hovered around 1.8 million barrels per day in the last few years.

The Federal Government inability to organise licensing rounds has been a source of worry to a lot of stakeholders in oil and gas industry.

They are of the opinion that while the delay in conducting the much-awaited oil licensing rounds reportedly led to significant revenue loss, especially when it is estimated that signature bonuses of N112 billion could be realised from such exercise. About 211 out of 390 oil blocs in the country are currently idle.

Government earlier disclosed on conducting bid round, and promised to offer

oil blocs to Niger Delta indigenes as a way of dousing tension in the region, but there are indications that 12 oil blocs in Anambra; 39 in Benin City; 41 in Benue; 17 in Bida; 40 in the Chad Basin and 34 in the Niger Delta, as well as other blocs in different locations are open, even though all may not be viable.

While most stakeholders stress the need for bid round, industry players remain divided on going ahead with it in an uncertain fiscal and regulatory system.

Billions of dollars have been lost due to the government’s inability to conduct bid rounds for major and marginal oil fields, former co-founder and executive director, Pillar Oil Limited, Seye Fadahunsi, has said.

He explained that blocs were a mass of fields. “Imagine what the country could do with that, that’s why companies like Proton, Seplat, and the ND Western now have blocs, producing about 90,000, 70,000, 50,000 barrels per day, respectively.

It’s a substantial production and a major addition to the economy,” he said, adding: “They were only able to do that because there were assets available for them to bid and win.”

FG targets 30% reduction in cost of crude extraction

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president, Petroleum Technology Association of Nigeria (PETAN), says the country is not using its resources effectively and oil is diminishing steadily as a major source of economic of strength for countries, as they are turning to gas as alternative to crude oil.

He says carrying out licensing rounds would enable the country generate employments, create entrepreneurs and increase her reserve; our crude oil is not being used to diversify the economy so that other economic activities can spring up through it. “But unfortunately, we as country are not doing this while other countries are attracting investments to their oil and gas industries while Nigeria is not,” he states.

However, Timipre Sylva, minister of state for petroleum resources, like his predecessor in the last administration that said the licensing rounds would be before the end of 2018, recently said the government would hold an oil licensing round in 2020.

“The oil licensing round is definitely on the table for next year. Part of it is to raise revenue and also to expand the space in Nigeria. There has been no new bid round

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“In this regime of $50-$60 per barrel price of crude oil, a cost of over $30 per barrel is unsustainable and that is why we need to come up in this program with what we need to do to reverse the trend,” the minister remarked.

“In addition to reducing the cost of production, we have recognised the importance of reducing the contract approval cycle, enhancing transparency, reducing barriers to entry and regulatory transaction cost as necessary ingredient for optimizing the conducive business environment,” he explained.

The minister, who was represented by Moses Olamide, chief of staff to the minister, at the workshop on effective cost management in the oil and gas sector, organised by the Petroleum Technology Development Fund in conjunction with the Quantity

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Survey Registration Board of Nigeria, said that various cost drivers such as insecurity in the oil-producing regions, long contracting cycle, governance structure, fiscal policies, local content, and regulatory issues among others, are unique to the Nigeria economy and therefore requires sustainable solutions.

“To optimise cost, we must deploy flawless and disciplined cost control practice, embrace value improving culture before sanctions, Target price budgeting backed by historical metrics and benchmarking, as well promoting good risk analysis.”

Bello Aliyu Gusau, executive secretary, Petroleum Technology Development Fund, in his remarks, said the workshop tended to create an avenue to address the current trend as the cost exploration and production of crude oil are increasing exponentially with the decline

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in government and other producer revenue.

“From our industry skill and competency gap analysis, the issues of cost engineering, cost control, cost estimation as well as other cost management are amongst the areas of greatest challenge in the oil sector,” Gusau said.

Gusau further said the workshop was in furtherance of the government’s vision to reduce the cost of crude oil production adding that the PTDF was willing to partner and with industries in finding solutions to critical issues affecting the full realisation of the government’s vision for the sector.

“We are prepared to work with professional bodies and academia towards developing home-grown solutions to support the industry efforts to stay competitive through effective cost management,” he said.

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Wednedsay 30 October 2019

BUSINESS DAY

news FG launches chemotherapy programme to cut cancer treatment cost by 50% Godsgift Onyedinefu, Abuja

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ederal Government says Nigerians, particularly cancer patients, will now save up to 50 percent of treatment cost as it launches a pioneer Chemotherapy Access Treatment (CAP) Programme to increase access to high quality essential cancer drugs and enable thousands of additional patients access care.

The Word Health Organisation (WHO) estimates that 60 percent of patients with cancer in Nigeria will die, adding that Nigeria records over 70,000 deaths due to cancer yearly.

Minister of health for state, Adeleke Mamora, while launching the CAP at the National Hospital Abuja on Tuesday, said despite the statistics by the WHO, more than half of cancer patients cannot access treatment majorly because they cannot afford it.

Mamora also said some cancer drugs were out of stock in public hospitals forcing patients to obtain them from pharmacies where the prices were out of reach, and decried the abundance of counterfeit medicines in Nigerian market, which according to him, worsens rather than improve patients’ conditions.

To this end, he assured that the CAP, which will enable cancer patients in Nigeria

access lower-priced, high quality treatment at hospitals and pharmacies and reduce the burden of out-of-pocket payments.

The minister said the CAP was a public-private partnership between the Federal Ministry of Health, Clinton Health Access Initiative (CHAI), the American Cancer Society (ACS), Pfizer, World Wide Health Care and EMGE resources.

He informed that the medications available under the programme were of the same quality as those that would be received by patients in the US, Europe, Canada, Japan and Australia.

The programme aims at reducing the price of 16 priority and quality assured medicines by almost 50 percent in six countries in Africa, including Nigeria, Kenya, Ethiopia, Rwanda, Tanzania and Uganda.

The minister further explained that the programme will provide immediate payment to participating pharmaceutical companies and drug distributors to ensure sustainability of the system and stock replenishment. “This will enable Nigeria and other African governments to double the number of patients being treated with the same resources and reduce the catastrophic ex-

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penditure for patients paying out-of-pocket by reducing complexity in the distribution prices, stabilising prices, coordinating orders, streamlining registration of products and promoting the entry of international suppliers,� he explained.

He also informed that the programme is being rolled out in seven university teaching hospitals including; Ahmadu Bello university teaching hospital, Aminu Kano teaching hospital, Lagos university teaching hospital, National hospital Abuja, Obafemi Awolowo university teaching hospital, university college hospital Ibadan and University of Nigeria teaching hospital Enugu.

Jafaru Momoh, the chief medical director of the national hospital also speaking, noted that one of the biggest problem to accessing cancer care is the cost of treatment and most cases are presented very late which has made cancer to be the leading cause of morbidity and mortality.

Momoh said the national hospital in an effort to reduce the cancer burden have expanded cancer services, conducts regular screening, have procured two Radiotherapy equipment, increased the number of consultants in oncology and thereapy radiographers amongst others.

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Wednesday 30 October 2019

BUSINESS DAY

POLITICS & POLICY Nigeria, Africa must discontinue holding ‘undignified summits’ - Ex minister

…Says Nigeria must be cautious of relations with China INNOCENT ODOH, Abuja

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gnatius Chukwuemeka Olisaemeka, Nigeria’s former minister of Foreign Affairs, has condemned the rush with which Nigeria and other African countries attend foreign summits organised by single countries in Europe, America and Asia, describing it as “disgustingly humiliating”.

The former minister made the observation while giving his lecture on the theme ‘Nigerian Foreign Policy: Evolution, Trends and Prospects since Independence,’ organised by the Association of Retired Ambassadors of Nigeria (ARCAN) and chaired by Abdulsalami Abubakar, a former head of state, held in Abuja on Tuesday.

The former Nigerian ambassador to Israel said Nigeria and Africa must discontinue holding such undignified summits as ‘Franco-Africa’, ‘Sino-Africa’, ‘Africa-Japan’, ‘Africa-Turkey’, ‘India-Africa’

Ignatius Chukwuemeka Olisaemeka

rounds of meetings.

The minister was apparently reacting to a plethora of summits such as Forum for China Africa Cooperation (FOCAC), Tokyo International Conference on Africa Development (TICAD), Russia-Africa Summit that just ended in Sochi, among others.

He warned that if the continent does not desist

from such unproductive meetings, soon it would, with utmost respect, be ‘Iceland-Africa’ summit.

“The idea of fifty-four (54) African Heads of State trooping, cap in hand, to meet with one counterpart European or Asian Head of State, undermines the strategic importance of Africa in global politics, and not by any means flattering

How Buhari’s visits have greatly benefited Nigeria, by BMO

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re s i d e nt Mu ha m madu Buhari’s attendance of summits and other international fora is in the best interest of the country and aimed at exploring and expanding opportunities in security, trade and investment, science and technology, agriculture, transportation and oil and gas production, to mention a few.

The Buhari Media Organisation (BMO) made the above claim in reaction to criticisms from some quarters on the President’s trip to Saudi Arabia to attend the economic forum of the Future Investment Initiative (FII).

In a statement signed

by Niyi Akinsiju and Cassidy Madueke, chairman and secretary, respectively, BMO said that these meetings are no ordinary gatherings but avenues to attract potential investors and showcase the economic opportunities that abound in the country.

“As President Buhari makes a three-day state visit to Saudi Arabia to strengthen the diplomatic, trade and economic relations between the two countries, some had condemned the trip as unnecessary since the President just came back from Russia few days ago after a successful Russia-Africa summit. The summit was aimed

at strengthening bilateral relations in areas such as solid minerals, reviving steel rolling mills (Ajaokuta and Aladja), rail transportation, security cooperation, oil and gas, agriculture (Wheat production and fertilizer) and education, to mention a few.

“It is worthy of note that the President is not only visiting and signing MOUs, the MOUs are being realised in physical projects such that in 2018 8Billon dollars came into Nigeria as Foreign Direct Investment (FDI) with 65 projects across the country.

“We recall also that President Buhari’s working visit to China last year yielded additional investments in Nigeria exceeding $6billion. A total of $1billion is to be invested in the development of a Greenfield expressway for AbujaIbadan-Lagos. Similarly, Mambilla Hydro Power Project, which is capable of generating about 2,600 Megawatts of electricity, will, when completed, be the biggest dam in Africa.

Like the rail project, the Mambilla Hydro Project was conceived several years ago, precisely in 1982.

“President Muhammadu Buhari’s visit to Morocco has helped to revive abandoned Nigeria fertiliser blending plants. So far, 18 plants have been revital-

ised under the Presidential Fertiliser Initiative (PFI), with a total capacity of about three million metric tonnes of fertiliser which has created about 50,000 jobs across the value chains of Agriculture.

“President Muhammadu Buhari also signed nine different agreements, including the Extradition Treaty between Nigeria and the United Arab Emirates (UAE) aimed at strengthening Nigeria’s anti-corruption campaign, Transfer of Sentenced Persons, Mutual Legal Assistance on Criminal Matters and Mutual Legal Assistance on Criminal and Commercial Matters, which include the recovery and repatriation of stolen wealth.”

According to BMO, what is obvious is that President Buhari is working to strengthen diplomatic relations, trade and the security of our nation. He has held series of meetings with serious investors and has fetched us investments in the range of billions of US Dollars.

“These are a few of the many outcomes of the President’s visits. Instead of condemning these visits, all Nigerians should be proud to have a President like Muhammadu Buhari who never loses an opportunity to showcase the country’s potentials at international fora.”

to the image of the African continent and its leaders.

Indeed, it is disgustingly humiliating,” he said.

He however, lamented that the vulnerable economic situation of most African countries exposes them to such exploitation even as he called on the continent to adopt a more effective way to boost their economies.

The former envoy also noted that Nigeria’s Foreign Policy is too “foreign’’ and far too unduly externally focused and not sufficiently internally directed, which he attributed to Nigeria’s desperate search for identity and international recognition.

“We are, therefore, inclined to see foreign policy as a rather detached and abstract exercise, not sufficiently related to tangible, concrete, internal domestic needs and objectives,” he said.

He also averred that Nigeria is yet to conceive foreign policy as an instrument of national develop-

ment. “Our Foreign Policy has not sufficiently, to the degree desirable, served core internal needs, as it should or ought to have been doing. The fault lies not only in the lack of sufficient awareness of the full potential of foreign policy as an instrument for national development, but more in the absence of an overarching policy to attain these goals through diplomacy and foreign policy engagements,” he said.

He also bemoaned that foreign policy has not been consciously used as instrument for forging and promoting national unity, “hence our entrenched ethnic and religious proclivities.”

He also advised that Nigeria should widen its policy of naturalisation in order to narrow the bridge of ethnic and religious differences by enhancing a healthy competition with other nationalities.

The former diplomat urged the Nigerian Government to be cautious of

its approach with China, saying, “While we appreciate the fact that they are reaching out to Africa with a new approach to development, we must bear in mind the adage that says ‘once bitten twice shy’.

“It is therefore, our responsibility to engage China with clearly outlined interests and appropriate strategies for advancing and achieving them. We cannot afford to have Africa ensnared in another round of imperialism,” he warned.

In his remarks, Abubakar praised the meritorious service Olisaemeka rendered to the nation, adding that the event was very important and timely especially when development at the global stage tasks Nigeria’s diplomacy.

President of ARCAN, Oladapo Fofowora, lamented that inadequate funding has contributed to the general decline of the Nigeria’s foreign policy, which has been widely described as ‘tepid.’

Lagos Assembly approves Sanwo-Olu’s request for budget re-ordering INIOBONG IWOK

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he Lagos State House of Assembly on Tuesday approved the reordering of N93,742,530 billion from the 2019 Budget size.

Babajide Sanwo-Olu, state governor, had requested the reordering of 2019 Budget size, saying there was shortfall in revenue.

In a letter read on the floor of the House, Sanwo-Olu had lamented lack of new revenue sources for the remaining months of the year, and requested for re-ordering of 2019 Budget which stands at N873.532 billion.

He noted in the letter that budgetary provisions of both recurrent and capital budget of ministries, departments and agencies are not likely to be utilised before the end of the year and the sum of N34.050 billion can be reordered.

The breakdown, he said, showed that the recurrent is N24 billion while the capital is N10.050 billion.

Sanwo-Olu, in the letter, noted that the 2019 Budget had been partially implemented by the last administration before the tenure came to an end on 29th May, 2019.

The governor stressed that the present administration is confronted with the need to keep its electoral promises to the citizens and resolved to take advantage of clement weather condition in the later part of the year to complete various projects.

“The state shall be raising a total of N250 billion broken down into a fixed rate bond of N100 billion from the capital market and an internal loan of N150 billion,” he said.

The speaker, Mudashiru Obasa had committed the governor’s request to the joint committees on Finance and Budget and Economic Planning.

Presenting the report of the joint committee on Tuesday, Chairman of the House Committee on Budget and Economic Planning, Gbolahan Yishawu said that the 2019 Budget size stood at 71 percent as at August.

According to him, the recurrent performance was 80 percent while the capital was 46 percent.

In the motion which was moved by Tunde Braimoh, the House approved the capital of N74, 824,648,162 and recurrent 18,918,059,368 to be reordered.

Braimoh said that the passing of the re-ordering had become necessary for the continued efficiency of the administration.

“We need to expeditiously consider the request of the governor. The Committee had done justice, so let’s approve it so that the people of Lagos can feel our impact.”

Another lawmaker, Jude Idimogu also applauded members of the committee for a job well done, while urging his colleagues to make sure that it was passed.

Speaker Obasa said that the approval for the re-ordering of budget was unanimous among members of the House, stressing that the re-ordering was necessary for the administration to implement policies that would impact on Lagosians.

“It is a unanimous decision. Let’s pass the re-order so that the governor and his team will continue to do the good work for Lagos residents,” he said.

Wednesday 30 October 2019

BUSINESS DAY

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news

Customs impounds containers of expired rice packaged for a company …containers of tramadol, unregistered pharmaceuticals, others with N2.7bn DPV

AMAKA ANAGOR-EWUZIE

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he Nigeria Customs Service (NCS), Tin-Can Island Port Command, has intercepted 54 containers of expired foreign parboiled rice and other contraband items imported into the country with Duty Paid Value (DPV) of over N2.7 billion.

Among the intercepted consignments was 25 by 20-foot containers of expired foreign parboiled rice imported from Thailand and packaged for Master’s Energy Commodities Trading Limited, with office location of No 31A Remi Fani Kayode Street, GRA Ikeja, Lagos.

Briefing newsmen in Lagos on Tuesday after showcasing the seizure at Tin-Can Island Port, Hameed Ali, comptroller-general of Customs, said the seizure comprised a total of 33 containers of rice and another one container of rice concealed with spare parts; 11 containers of unregistered pharmaceutical products; two containers of used tyres and four containers of refined vegetable oil in retail packs.

According to Ali, a total of 54 containers comprising of 15 by 40foot containers and 39 by 20-foot containers were seized in line with the provisions of Customs & Excise Management Act Cap C45 LFN 2004,

Section 46 and 161.

He said the significant thing about the seizure was the fact that virtually all the rice was expired while some other containers of imported Jasimine Rice- Dr. Chang Brand, packaged for Yunfei International Trading Co. Limited of No. 103 Ebittu Ukiwe Street, FCT Abuja, would expire in 2020.

“Also remarkable is the seizure of Tramadol variants and unregistered performance enhancing drugs among other pharmaceutical products. The Service has raised alarm and drew the attention of the public to the fact that most of the imported rice is expired,” he said.

Ali, who said rice importation through both the seaports and land borders remained banned, said the Central Bank of Nigeria (CBN) had in the last three years refused to issue Form M to importers of rice in line with the Federal Government policy of making Nigeria sufficient in rice production.

He insisted that importers of such dangerous items do not mean well for Nigerians, as one could imagine the health havoc, which consumption of repackaged expired rice and unregistered pharmaceutical products could cause for Nigerians.

Nigeria’s Nkiru Balonwu, Duchess of Sussex, Meghan Markle, Stormzy, Lewis Hamilton and others named in Powerlist UK 2020 International Award

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igerian entrepreneur and activist, Dr. Nkiru Balonwu, was named alongside Meghan Markle, the Duchess of Sussex and rap sensation Stormzy at the 2019 Powerlist Black Excellence Awards 2020 Awards in London. The annual awards, which was held on Friday 25 October, celebrates 100 of UK’s most influential people of African and Afro Caribbean heritage in business, the public sector, science, technology, sports, media and the arts.

Of the 100, only the top 10 names are ranked with Balonwu, British Vogue Editor, Edward Enninful OBE; Rap Sensation, Stormzy; Microsoft’s Jacky Wright; BT’s Micheal Sherman and Makeup artist and Founder Pat McGrath Labs, Pat McGrath in the top 10. Others making the top 100 but not ranked were Duchess of Sussex Meghan Markle; Formula 1 world champion, Lewis Hamilton MBE; boxing

champion, Anthony Joshua; Tech entrepreneur Nneka Abulokwe OBE; Impact X CEO, Eric Collins; as well as actors Idris Elba and John Boyega.

Now in its 14th year, the 2019 Black Excellence Awards dinner was held at London’s prestigious 8 Northumberland Avenue West end, with only five honorees receiving the evening’s five awards.

Ismail Ahmed, the Somaliland-born founder and chairman of WorldRemit, a digital money transfer company with over 4 million users worldwide received the 2020 Powerlist No. 1 Award.

Mr. Ahmed’s revolutionary work at WorldRemit has made it possible for people in remote parts of Africa to receive money using their mobile phones. Dr. Nkiru Balonwu was awarded the Powerlist UK International Award, which is given to a person based outside of the UK who is considered to have distinguished themselves as a change-maker, innovator,

inspiration and person of considerable influence. She received the honor for her work as founder and chair of African Women on Board (AWB), an independent, African women-led non-profit organization focused on advancing narratives and improving realities of women and girls of African heritage around the world. AWB works with partners such as Ford Foundation, Wikimedia, Bank of Industry, Nigerian Stock Exchange and other organizations on initiatives that advance narratives and improve realties for women and girls of African heritage globally While accepting her award, Dr. Balonwu challenged the audience to look beyond stereotypes about women of African heritage.

“What do you think of when you think of African women?

Do you think of our unsung talents? Or the women on the African continent who have the highest rates of female entrepreneurship in

the world?” she asked. “What if the solution to many of Africa’s problems were its women? Because clearly, you cannot win any game playing half your team” said Balonwu. As “African women we do not leave the fate of our children to our men alone, therefore she said, we cannot leave the fate of our continent to our men alone. African women need to get on board to create a brighter future for Africa and our children. We must begin by believing in ourselves and owning our strengths.”

The other three awards of the evening went to US businesswoman Ursula Burns, the Chairman and CEO of VEON, who was presented with the Lifetime Recognition Award.

Tech educator and founder of the Urban Teacher, Mark Martin MBE who won the PwC Purpose Award; and Lord Simon Woolley of Woodford, founder and director of Operation Black Vote, who received the Powerlist 2020 Community Award.

BusinessDay’s Odinaka Anudu wins biggest fact-checking award in Africa ….runner-up in West Africa business reporter of the year award in Ghana

Odinaka Anudu

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usinessDay senior journalist Odinaka Anudu has emerged as the winner of the 2019 Africa Fact-Check of the Year Award. He won the biggest fact-checking award on the continent with his investigative story, ‘Ongoing Projects in the South East: Truth Vs Lies’ at a ceremony in Johannesburg, south Africa.

Anudu’s entry defeated those of journalists from BBC Kenya, Adom TV Ghana, AFP, and Section27 of South Africa, among five other finalists from across Africa.

Hisstoryinvestigatedclaimsby a Nigerian minister that there were 69 ongoing federal government projects in the South East Nigeria.

His fact-check found that out of the 20 projects investigated, only seven were actually ongoing. Mayowa Tijani of AFP Nigeria was the runner-up for fact-checking claims by a minister that there were enough doctors in Nigeria. He found the claim to be false.

Also, Anudu finished as a runner-up in the business category in Ghana at the 2019 West African Media Excellence Awards for his story, ‘Dollar in the Mills’.

Earlier this year, he had won the Citi Journalistic Excellence Award (CJEA) and MAN Reporter of the Year award. He also won a United States Department of State’s nomination for an International Reporting Tour

in the United States and the Netherlands.

Odinaka Anudu, BusinessDay’s Senior Editorial Analyst, edits the Industry and SMEs sections, supervising a widelyread section produced every Monday called ‘Start-Up Digest’.

He has won a number of local and international journalism awards, fellowships and grants.

Internally, he won the 2018 BusinessDay Top Performer for the Editorial Department, making him the best journalist for the newspaper last year.

He has won some nominations outside Nigeria, notable among which was his 2017 selection by the University of the Witwatersrand, Johannesburg, South Africa, for a fully-funded investigation in Guateng.

Anudu is a trained economist and philosopher. He is also an entrepreneur, public speaker and former school teacher. He was educated at Nnamdi Azikiwe University, Awka, and the United Nations Institute for Training and Research (UNITAR). He was formerly the secretary-general of the National Drug Abuse Control Association, receiving several training programmes in journalism, locally and internationally.

He has two books to his credit, ‘Top-Class English for Schools and Colleges’ (2009) and ‘Drug Abuse and Our Future: Who Will Bell the Cat?’ (2010).

In its tradition, BusinessDay has produced other awardwinning journalists, including Patrick Atuanya (editor), Chuka Uroko, Obinna Emelike, Iheanyi Nwachukwu, Daniel Obi, Teliat Sule, Josephine Okojie, Isaac Anyaogu, and Caleb Ojewale, among many others.

BusinessDay is Nigeria’s leading business and financial newspaper, covering business, finance, economy, banking, politics, health and arts, among others. www.businessday.ng

Nkiru Balonwu

Ambode’s probe: Court summons Obasa, others JOSHUA BASSEY

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Lagos High Court in Ikeja has ordered Mudashiru Obasa, speaker of Lagos State House of Assembly, to appear before it in connection with the ongoing probe of procurement of 820 buses by the administration of the former governor of the state, Akinwunmi Ambode.

The state House of Assembly accused Ambode of breaching the Constitution by investing billions of state’s funds to purchase the 820 buses without legislative approval. Ambode has neither denied the allegation nor confirmed it, as invitation extended to him by the committee set up by the House to investigate the matter has not been honoured. The House has threatened to issue a warrant of arrest against the former governor if he failed to appear before its committee on Wednesday, October 30, 2019 However, on Tuesday, the former governor instituted a suit against the Assembly, contesting the consti-

tutionality of the probe of the buses, which he claimed were procured based on budgetary approval.

In an order dated October 29, 2019, issued by Justice Y.A Adesanya after hearing a motion ex-parte moved by Ambode’s counsel, Tayo Oyetibo, ordered the speaker and other defendants to appear before the court at 9am on Wednesday, October 30. Others include A.A Sanni, clerk of the House; Fatai Mojeed, chairman of the ad hoc committee set up by the house to probe the procurement, and all members of the committee. They include Gbolahan Yishawu, A.A Yusuff, Yinka Ogundimu, Mojisola Lasbat Meranda, M.L Makinde, Kehinde Joseph, T.A Adewale and O.S Afinni.

Justice Adesanya ordered the originating processes and all the accompanying processes filed by the claimant (Ambode) be served on the defendants and subsequently fixed Wednesday October 30, 2019, for hearing of motion for interlocutory injunction.

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NASS stops Judiciary from disclosing details of budgetary sums James Kwen, Abuja

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he Senate and House of Representatives Joint Committees on Judiciary on Tuesday stopped the agencies under the Federal Judiciary from going into details of their proposed sums for the 2020 budget and appraisal of the performance of the 2019 budget during defence before the committees.

The normal practice has been that Ministries, Departments and Agencies (MDAs), appearing for budget defence, provide details on the performance of the budget of a preceding year, and give a breakdown of the figures proposed for the current year. They also state the capital and recurrent expenditure with their subheadings such as personnel cost, overhead cost, allocations to individual capital projects among others.

However, at the budget defence of the Judiciary, comprising the Supreme Court, Court of Appeal, @Businessdayng

Sharia Court of Appeal, Customary Court of Appeal, Federal Capital Territory High Court, Federal High Court, National Industrial Court, National Judicial Institute, National Judicial Commission and Body of Benchers, chairman of the Joint Committee, Opeyemi Bamidele (APC, Ekiti) asked the Accounting Officers not to read out the details.

Bamidele said since each of the agencies had submitted full details of their budgets, they should just present major highlights, particularly on their challenges while other details would be discussed at an executive session between heads of the agencies and the lawmakers only.

“With due respect, because we have other assignments to do, you can just go into the highlights such as the rehabilitation of court complex, rehabilitation of Justices’ quarters. We want to know our challenges. We have this document. We are going to see the details in the executive session,” he instructed.

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Wednesday 30 October 2019

BUSINESS DAY

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@Businessdayng

Wednesday 30 October 2019

FT

BUSINESS DAY

47

FINANCIAL TIMES

World Business Newspaper

LAUREN FEDOR IN WASHINGTON

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White House official who listened in on the July 25 phone call between Donald Trump and his Ukrainian counterpart will tell Congress he was “concerned” about the exchange and reported his unease to a National Security Council lawyer.

Alexander Vindman, a US army officer and Purple Heart recipient, joined the NSC last year, reporting to Fiona Hill, Mr Trump’s former top Russia adviser.

On Tuesday Mr Vindman will tell the House of Representatives committees leading the impeachment inquiry into the US president that he listened in on the July 25 phone call from the White House situation room alongside other administration officials.

According to a draft of Mr Vindman’s opening statement, first published by The New York Times, he will say that he was “concerned” by the call, in which Mr Trump asked Volodymyr Zelensky to investigate Joe Biden and Hunter Biden, the former vice-president’s son. Hunter Biden had held a board position with Burisma, a Ukrainian oil and gas company.

“I did not think it was proper to demand that a foreign government investigate a US citizen, and I was worried about the implications for the US government’s support of Ukraine,” Mr Vindman will tell the impeachment inquiry. He will also say that he reported his concerns to John Eisenberg, the NSC’s lead counsel.

A whistleblower complaint

White House official was ‘concerned’ about Trump’s Ukraine call US army officer to tell Congress he reported his unease to National Security Council lawyer

A whistleblower complaint centred on the July 25 phone call with Ukraine’s president sparked the wide-ranging impeachment inquiry into Donald Trump © AP

centred on the July 25 phone call sparked the impeachment inquiry into Mr Trump. The White House released a memorandum based on the phone call this month. But Mr Vindman, whose family fled the Soviet Union for the US in 1979, will insist on Tuesday that he is not the

Shares open down more than 20% on Wall Street as IPO lock-up expires

Long-awaited partial privatisation is core to Prince Mohammed’s push to reshape kingdom’s economy

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audi Aramco is to launch its initial public offering on November 3, as the kingdom’s crown prince Mohammed bin Salman pushes ahead with a long-awaited listing of the world’s most profitable company, people familiar with the matter have said.

The shares would be priced in early December and start trading on Saudi’s domestic stock exchange, the Tadawul, on December 11, the people said.

The partial privatisation of Saudi Aramco is the centrepiece of Prince Mohammed’sambitionstoreshapethe kingdom’s economy. However, since Riyadh first disclosed the intention to IPO in 2016, the plan has been beset by delays and concerns over whether the company would achieve the $2tn valuation coveted by the prince.

The new timetable, which was first reported by state-owned broadcaster Al Arabiya, comes after plans to kick off the process this month were delayed. Saudi Aramco executives were caught by surprise by the news on Tuesday in a further sign

MILES KRUPPA IN SAN FRANCISCO

of how the government is assuming greater control of an IPO that has most of the world’s major banks, including JPMorgan and Goldman Sachs, working on it.

Saudi Aramco, which made $111bn in net income in 2018, is expected to sell about 3 per cent of a company that competes with the likes of BP and ExxonMobil.

Riyadh has approached major global institutional investors, including sovereign wealth funds, and has been pressuring many wealthy Saudi merchant families — many of whom had relatives detained in the Ritz-Carlton in 2017 as part of Prince Mohammed’s anti-corruption crackdown — to buy shares as anchor investors.

However, global investors have expressed scepticism at Prince Mohamed’s quest to achieve a $2tn valuation, with western bankers believing $1.2tn to $1.5tn is more realistic. Saudi Aramco is to hold further meetings with investors as it seeks to bridge this valuation gap ahead of finalising the pricing for the listing, a person familiar with the matter said.

Under the new timetable, the price range would be announced on November 17 and the share sale would begin on December 4, the people said. www.businessday.ng

Kurt Volker and then-US national security adviser John Bolton.

He will say the meeting was “cut short” by Mr Bolton after Mr Sondland “started to speak about Ukraine delivering specific investigations” to secure a meeting between Mr Trump and Mr Zelensky.

Private backers set for Beyond Meat payday

Saudi Aramco to launch its IPO on November 3 ANDREW ENGLAND, SIMEON KERR AND AHMED AL OMRAN IN RIYADH AND ANJLI RAVAL IN LONDON

whistleblower.

Mr Vindman will also describe a July 10 meeting in Washington involving Ukrainian politician Oleksandr Danylyuk, the US ambassador to the EU Gordon Sondland, US energy secretary Rick Perry, then-US special envoy to Ukraine

According to Mr Vindman, during the meeting Mr Sondland “emphasised the importance that Ukraine deliver the investigations into the 2016 [US presidential] election, the Bidens and Burisma”.

The officer will say he told Mr Sondland that his statement was “inappropriate” and his requests to investigate the Bidens “had nothing to do with national security”. Ms Hill also reported her concerns to Mr Eisenberg, Mr Vindman will say.

Last week William Taylor, the US chargé d’affaires to Ukraine since June, told the impeachment inquiry that the release of US military aid to Ukraine was contingent on Mr Zelensky opening an investigation into the Bidens and alleged Ukrainian interference in the 2016 US presidential election.

On Monday Nancy Pelosi, the Democratic Speaker of the House, said members of Congress would vote this week on a resolution formalising the impeachment inquiry.

“We are taking this step to eliminate any doubt as to whether the Trump administration may withhold documents, prevent witness testimony, disregard duly authorised subpoenas, or continue obstructing the House of Representatives,” the Speaker said.

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arly investors in plantbased food pur veyor Beyond Meat were set for large paydays as the company’s shares became freely tradable on Tuesday, promising a test for one of this year’s most divisive stock offerings.

Up to 80 per cent of the company’s shares became eligible for trading, giving venture capital firms such as Kleiner Perkins and Obvious Ventures the ability to cut their positions and return money to investors.

Fears of significant sales by early investors sent shares down more than 20 per cent in early Wall Street trading on Tuesday, despite the company announcing its first-ever quarterly profit late on Monday.

Many early investors are sitting on eye-watering gains. The company, valued at $1.3bn in private markets, rose to a market capitalisation of $12bn in July as investors bet its meat substitute products would steal business from traditional food producers.

KFC announced in August it would test “Beyond Fried Chicken” nuggets in partnership with Be-

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yond Meat, the latest in a series of fast-food chains to try new meatless products with the company.

But some analysts and investors recently turned on Beyond Meat, sending its shares below $100 last week for the first time since June. The company has attracted the interest of shortsellers betting its shares will fall on Tuesday, when the lock-up period following its May initial public offering expired.

Beyond Meat’s slide has also drawn the attention of early investors anxious to cash out. Mark Yusko, chief executive of Morgan Creek Capital Management, said his fund’s initial investment in Beyond Meat had increased about 100 times and signalled he was preparing to sell.

“It’s going to go down 90 per cent and still be overvalued,” Mr Yusko said this month at the Sohn Investment Conference in San Francisco.

Mr Yusko did not respond to emails about his remarks, and Beyond Meat did not respond to a request for comment on the lockup period’s expiration.

Among the investors being closely watched is Kleiner, which owned about 12.8 per cent of the @Businessdayng

company before its IPO. Kleiner has said its initial investments increased 80 times, based on the average closing price last week.

One person close to the VC group’s decision-making said it was planning to sell shares.

Union Grove Venture Partners co-founder Gregory Bohlen said the group has made about 50 times its private investments in the company. Mr Bohlen, who serves on Beyond Meat’s board, said he has no influence over whether Union Grove sells any shares but hopes the firm will maintain its position.

“I’m a believer in the company, absolutely,” Mr Bohlen said. “Am I a believer in the stock? I don’t think you can separate the two.”

He added: “Just because 80 per cent of shares are in private hands doesn’t mean we all run to the market on Tuesday.”

The venture firm Obvious, which owned more than 9 per cent of the company before its IPO, declined to comment on its plans following the lock-up’s expiration.

Beyond Meat stock was the most expensive to borrow for shorting this week, according to data from S3 Partners, which said 43 per cent of the company’s available shares were out on loan.

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Wednesday 30 October 2019

BUSINESS DAY

FT

NATIONAL NEWS

Quinn takes his turn at reshaping HSBC Interim chief has set out on familiar path and is planning to go the distance DAVID CROW IN LONDON

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nvestors in HSBC might experience a little déjà vu as they digest the broad outline of a new plan from Noel Quinn, interim chief executive, who has pledged to “remodel and reshape” the UK-based lender.

It is just over four years since former chief executive, Stuart Gulliver, unveiled an attempt to revive the bank by reducing assets allocated to less profitable markets such as Europe and the US, and using the headroom to build up its business in fast-growing Asian economies.

As Mr Quinn announced a disappointing set of third-quarter results on Monday, he said: “We need to reduce the amount of capital that’s associated with [the US and Europe] and try and redeploy some of that into higher growth, higher return opportunities elsewhere.”

His language was almost identical to that used by HSBC in 2015, when Mr Gulliver unveiled a “reshaping” that involved “redeploying resources to capture expected future growth”.

Despite HSBC’s best efforts to complete what Mr Gulliver described as a “pivot to Asia”, the bank still has much the same problem as it did in 2015. It generates the vast majority of pre-tax profits in Asia — 96.3 per cent in the third quarter — but still has almost half of its assets adjusted for risk allocated to the US and Europe.

In fact, the proportion of assets trapped in these two geographies has barely budged since Mr Gulliver announced his overhaul in 2015, underscoring the difficulty of repositioning a bank as large as HSBC, which employs roughly 237,000 staff in 65 countries. Investors sometimes joke that HSBC is not only too big to fail: it is too big to manage.

Mr Quinn, who was installed as interim chief executive in August following the ousting of John Flint after just 18 months, is hoping he can succeed where his predecessors failed.

He declined to give the full details of his new strategy, preferring to wait until the bank’s full-year results announcement in February, but offered enough clues — or “a steer” as he put it — to signal the direction of travel.

Mr Quinn’s plan has two distinct parts. Firstly, he wants to reduce assets in Europe and the US, either by divesting businesses such as the French retail bank, which is up for sale, or by shrinking its operations. Secondly, he intends to attack HSBC’s bloated cost base by removing “some of the complexity”.

Both parts will involve sizeable job cuts and a reduction in the lender’s headcount. Staff at the investment bank — known internally as the global banking and markets division — and in its London-based head office are expected to bear the brunt of the cuts, according to people briefed on the proposals.

This month, the FT reported that the plan, which could take as long as two years to implement, threatens up to 10,000 jobs.

“I’ve pointed to continental Eu-

rope and the US, where a big proportion of risk weighted assets is in global banking and markets — they will be a focus,” Mr Quinn said in an interview on Monday.

The overhaul will prove costly, as HSBC takes a string of impairment charges — described as “material” by chief financial officer Ewan Stevenson — to cover the cost of redundancies. The bank has also abandoned its main profitability target of achieving a return on tangible equity of 11 per cent next year.

Underpinning Mr Quinn’s plan is the belief that HSBC is still operating in the straitjacket it was forced to wear after it was fined $1.9bn in 2012 for breaching sanctions and helping Mexican drug cartels launder money, according to people briefed on his thinking.

As part of a deal to avoid prosecution, the bank entered into an agreement with US authorities that led it to expand its financial crime department and introduce several layers of bureaucracy. Mr Quinn believes the bank now has better compliance controls but that some of the leftover bureaucracy is hampering its ability to win new business. It is a theory that is often supported by complaints from front-line staff and customers.

HSBC’s investors greeted news of the plan with weary scepticism.

Shares in the bank closed down 4 per cent.

“Shareholders should brace themselves for further heavy restructuring charges and possible writedowns,” said Eric Moore, a fund manager at Miton, a London-based asset manager that has a stake in HSBC. “This is pretty harrowing given the years of restructuring that shareholders have already had to endure.”

He added: “HSBC [is] still trying to identify its proper footprint ten long years after the credit crunch.”

One top 20 investor questioned whether the bank could afford big restructuring charges without cutting its dividend or letting its core equity tier 1 ratio — a key measure of balance sheet strength — fall below its target of 14 per cent.

“They have limited room for manoeuvre,” the investor said.

HSBC said on Monday that it would maintain its dividend, but Mr Stevenson held open the possibility of allowing the CET1 level to dip below target for a “very, very limited period”.

Another investor asked whether Mr Quinn would still be in the job when HSBC executes the plan, noting that it was unusual for interim bosses to preside over an abrupt change in strategy. They added that one of the reasons Mr Flint struggled as CEO was because he had inherited Mr Gulliver’s plan rather than drawing up his own. “What happens if someone inherits this?”

Mr Quinn is the only internal candidate for the permanent job, according to people briefed on the process, although HSBC is also considering external contenders. When he was appointed in August, the bank said it would take 6-12 months before a permanent successor was named. www.businessday.ng

© AFP

Macron’s labour market changes begin to bear fruit

French president enters second half of term with economy proving resistant to global slowdown HANNAH COPELAND IN PARIS AND VALENTINA ROMEI IN LONDON

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mmanuel Macron is the latest in a decades-long succession of presidents to seek to tackle France’s persistently high unemployment — but as he enters the second half of his five-year mandate, labour market data offer hopeful signs.

The French economy is proving more resistant to the global economic slowdown than more trade-dependent nations such as Germany, and economists surveyed by Reuters expect Wednesday’s figures for third-quarter gross domestic product to show a 0.2 per cent expansion.

That is reflected in France’s labour market. The level of joblessness, while still the highest in the EU after Italy, Spain and Greece, fell to its lowest in a decade in the second quarter of 2019: 8.5 per

cent of the workforce, or 8.2 per cent excluding France’s overseas territories. In another hopeful sign, the previously pervasive use of temporary contracts has been declining since early 2018.

“Chances are high that thanks to Macron’s labour policies France looks much better by 2022,” said Florian Hense, economist at Berenberg, an investment bank.

Stéphane Carcillo, head of the jobs and income division at the OECD, said of Mr Macron’s target to reduce unemployment to 7 per cent by 2022 that “it’s not impossible”.

“His plan is more systematic and consistent than previous governments,” he said. “So many aspects of labour codes are being tackled at the same time.”

Mr Macron has made long-term contracts less onerous for employers by capping the cost of unfair dismissal, and reformed taxes and benefits to make low-wage work more attractive.

He is also making short-term

contracts more costly for some employers, accelerating training and skills initiatives including a five-year, €15bn scheme to train long-term and young unemployed, tightening unemployment insurance with reduced payouts for high earners and requiring a longer work history to claim benefits.

He plans to replace 42 pension schemes with a single system and push the French to work beyond the retirement age of 62.

While an OECD report published earlier this year said it was too soon to conclude that Mr Macron’s reforms were responsible for the drop in unemployment, they have led to changes in the French labour market.

France now has a more flexible market for permanent workers in terms of the rigidity of their employment protection than Germany, Italy and Sweden, according to the OECD, and the second-lowest effective tax rate at the minimum wage level in the OECD after Japan.

UK heads for December general election in bid to end deadlock Labour party backs Johnson’s call for snap poll after no-deal Brexit taken off table GEORGE PARKER, SEBASTIAN PAYNE AND LAURA HUGHES IN LONDON

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ritain is heading for a December general election after prime minister Boris Johnson won the backing of the opposition Labour party for a poll designed to break the deadlock over Brexit.

Jeremy Corbyn, Labour leader, declared on Tuesday that his conditions for an early election had now been met and that he was satisfied that a “no-deal” Brexit had been taken off the table.

Mr Johnson’s decision to hold a pre-Christmas election before he has delivered Brexit is a huge political gamble, which gives Remain voters a final chance to stop Britain leaving the EU.

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If Mr Johnson wins the election, he says he will deliver the Brexit deal he agreed in Brussels this month, but it is far from clear that he will secure the convincing House of Commons majority he needs to push through his plan.

Labour and the Scottish National party are promising a second EU referendum that could see Brexit reversed, while the Liberal Democrats say they would revoke the Article 50 exit process if they won a majority.

Although Mr Johnson is still haggling with opposition parties over the precise date of the election — it is expected to happen between December 9 and December 12 — Labour’s backing means it is now almost certain to happen.

Mr Corbyn had dragged his feet over supporting an early vote — @Businessdayng

many Labour MPs fear the party could be heading for a drubbing — but ultimately he concluded that he could no longer resist growing political pressure for a poll.

The Labour leader said: “We have now heard from the EU that the extension of Article 50 to January 31 has been confirmed, so for the next three months, our condition of taking no deal off the table has now been met.

“We will now launch the most ambitious and radical campaign for real change our country has ever seen.”

Mr Johnson is bringing forward legislation for an early election on Tuesday and is now confident of winning cross-party support. He has promised that he will not try to reintroduce his Brexit deal to parliament before an election.

Wednesday 30 October 2019

BUSINESS DAY

49

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

US Federal Reserve rate decision: 4 things to watch Chairman Jay Powell expected to deliver third interest rate cut BRENDAN GREELEY IN WASHINGTON AND COLBY SMITH IN NEW YORK

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he US economy is “in a good place,” Fed officials say: Unemployment remains at a half-century low, with little pressure on inflation. And yet after the Fed slashed its benchmark policy rate in July and in September, investors expect another cut this week.

Fed officials have described the cuts as an insurance premium, to prevent a global slowdown in trade and manufacturing from dragging on American consumers.

Here’s what to look for when the Fed’s Open Market Committee concludes discussion of its policy rates on Wednesday: Has the insurance premium been paid?

Traders have priced in a 95 per cent likelihood of another 25 basis point cut this week, according to an analysis of bets on the Fed’s policy rate by the CME Group.

Fed policymakers have said little that would discourage them. That would make 75 basis points of easing since July.

Michelle Meyer, chief US economist for Bank of America Merrill Lynch, said that’s the norm for insurance cuts, and will be watching for language from chair Jay Powell’s press conference on whether insurance is still the right metaphor.

“Now that they’ve delivered their insurance cuts,” said Ms Meyer, “what are they looking for in the real-time data?”

Tim Duy, professor at the University of Oregon said the Fed may be done fending off the trade war, and is going to have to lay out what the conditions are for any further action. “A lot of things seem to be going right,” he said, “It just doesn’t look to me like there’s any strong evidence that there’s anything falling off a cliff.”

Markets have come round to the idea the Fed could pause after this week’s cut to have another

look. According to the CME Group, investors are pricing in just a onein-five chance of another quarterpoint reduction in the benchmark policy rate in December.

A new adjective for consumer spending The US Department of Commerce will release its first read on third-quarter growth on Wednesday morning, hours before the Fed releases its decision. Jim O’Sullivan, chief economist at High Frequency Economics, said that growth data would probably show consumer spending had slowed.

If it does, he said, the Fed may change its adjective for consumer spending, from “strong” to merely “solid”.

It’s a small change that could make a big difference. This adjective, paired with how chairman Jay Powell expands on consumer spending in his Wednesday press conference, will show how worried the Fed is about the main engine of US growth, and offer a clue for December’s meeting.

Just how bad are the data on business investment?

The GDP data will show whether US businesses, uncertain of the path of the trade war, continued to hold off on making decisions on new plants and equipment.

Growth in business investment collapsed this year, and even contracted in the second quarter.

Gregory Daco, chief US economist at Oxford Economics, said it would probably shrink again in the third quarter. “That would be actually the first back-to-back contraction since the last recession,” he said. The Fed takes this number seriously; a paper by economists at the Fed’s Board of Governors in September showed how uncertainty can drag on business investment and, eventually, economic growth.

“If [business investment] is substantially more negative, you’re into the world where you’re looking at another rate cut in December,” said Mr Duy.

African trade finance group delays London listing in blow for bourse African Export-Import Bank cites ‘unfavourable market conditions’ as it postpones IPO MYLES MCCORMICK IN LONDON

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he African Export-Import Bank blamed “unfavourable market conditions” as it put the brakes on its plans to raise $250m through a London flotation in a blow to the UK stock market, which has been struggling with low levels of new listings.

The pan-continental trade finance provider, also known as Afreximbank, said on Tuesday it would postpone its plans to list its global depositary receipts in London, despite “significant” investor interest but would continue to “monitor the markets to find the appropriate window” to proceed with the listing.

The announcement will be a blow to the London bourse, which has seen lacklustre volumes and

delistings lately, with more companies leaving the LSE’s main market this year than joining.

The decision comes just two weeks after Afreximbank said it would push ahead with the listing, which it had planned to use to fund its expanding operations and take advantage of growing trade across Africa.

It had expected to raise $250m through the process, with the option to add a further 15 per cent’. Admission to the LSE had been expected to occur next month.

A person close to the process had previously told the FT that the bank, which is already listed in Mauritius, saw London as a still-compelling destination to raise capital despite the UK’s impending exit from the EU — given that it operated in dollars and conducts its business internationally. www.businessday.ng

A street shack that accepts EcoCash to buy goods in the Mbare neighbourhood in Harare, Zimbabwe. EcoCash counts as much as 90 per cent of the adult population as customers © Getty

Mobile money is not helping Zimbabwe’s hyperinflation EcoCash’s agents sucked dollars out of the hands of the population, turning them into digital balances IZABELLA KAMINSKA

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yperinflation is making an unwanted return to Zimbabwe. We don’t know how bad it is because the government has suspended publishing official figures until 2020. But an IMF mission to the country in August put the rate at close to 300 per cent annually.

More recent market estimates based on local currency depreciation imply rates as high as 400 per cent.

This, sadly, is not new for Zimbabwe. Between 2007 and 2009, the country experienced one of the world’s worst cases of currency collapse, with inflation rates as high as 90 sextillion per cent year-on-year in November 2008.

But there’s an important distinction between now and then.

This time hyperinflation is hitting an almost fully digitised monetary economy due to the proliferation of mobile payments in the country.

EcoCash, Zimbabwe’s equivalent of Kenya’s better-known M-Pesa sys-

tem, counts as much as 90 per cent of the adult population as customers. It is an open question whether that scale of digitisation will act as a brake or an accelerant on inflationary forces. But so far it is not looking very beneficial.

Last time, the hyperinflation crisis was eventually tempered by an official transition to a multicurrency framework. This amounted to an informal dollarisation of the economy.

By 2016, however, a serious lack of foreign currency in circulation began to threaten the system’s stability. EcoCash, by facilitating demonetisation, may have heightened those pressures.

As it was growing in popularity and serving the unbanked, EcoCash’s nationwide network of agents sucked dollars out of the hands of the population, turning them into digital balances. This amounted to the transfer of foreign cash stock from citizens to the banking system, with the money ending up in the control of the central bank. That’s all fine if you trust the core banking system.

Not so much if you do not.

The government has also encour-

aged the demonetisation by paying salaries in EcoCash. As the dearth of dollars intensified over the course of 2016, officials began to experiment with local alternatives to ease pecuniary pressures. The first step was electronic Zim dollars, known as zollars, backed by theoretical US dollar credits on a one-to-one basis.

A so-called bond note and bond coin followed. But nobody really trusted the credits were actually there, putting pressure on the dollar peg.

By 2019, the illusion of a peg was long gone. So the government took more drastic action, creating a quasi currency called the RTGS dollar and declaring it official local tender.

It also banned the use of foreign currencies except for special-use accounts. All government salaries and official contracts were redenominated immediately.

The exchange rate at that point was set at 8-to-1 to the US dollar.

But the demand for paper US dollars never went away, encouraging a free-market exchange rate that has since reached as much as 21-to-1 to the US dollar.

Automaker GM warns of $2.9bn blow from US factory strike Group slashes 2019 profit forecast even as quarterly results exceed analyst expe MAMTA BADKAR AND MATTHEW ROCCO IN NEW YORK

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eneral Motors on Tuesday warned it will take a nearly $3bn blow from the 40-day strike at its US factories, prompting the US automaker to slash its 2019 profit forecast.

The Detroit-based automaker lowered its full-year adjusted earnings outlook to between $4.50 to $4.80 a share, down from its previous projection of $6.50 to $7 a share. GM said the strike would result in a hit of roughly $2 per share, or $2.9bn.

In the third quarter, the labour action reduced GM’s profits by $1bn. The results arrived days after workers at GM’s US plants voted to approve a new labour contract, ending the strike. The walkout halted production starting in

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mid-September and affected about two weeks of production, though GM had built up inventory before the strike to limit supply disruptions.

GM’s operating profit in North America grew to $3bn in the third quarter, as US sales rose 6 per cent over last year on the back of demand for high-margin trucks and sportutility vehicles.

“Despite the strike, GM had a lot working to the company’s advantage in the third quarter,” said Jeremy Acevedo, senior manager of insights at Edmunds, ahead of the results.

“The company is finally reaping the benefits of shedding many of the cars from its line-up and getting Silverado production fully online.”

GM has seen its earnings strengthened by consumers’ appetite for trucks and SUVs, two of the @Businessdayng

more profitable segments for automakers. The shift has helped GM offset declining demand overall in the US and weakness in China, where the industry has struggled against an economic slowdown amid trade tensions with the US. Rival Ford cut its full-year profit outlook last week, saying headwinds for the fourth quarter had picked up due in part to lower sales in China and higher discounts in North America. The company, which is in the middle of an $11bn restructuring, saw its global revenue fall 2 per cent during the September quarter.

GM, America’s largest automaker, said its joint ventures in China registered a $300m decline in equity income, down $200m as expected, with sales down 17.5 per cent yearover-year.

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Wednesday 30 October 2019

BUSINESS DAY

ANALYSIS

FT

The factory workers at the frontline of US-China relations Fuyao’s investment in Dayton is a test case for Donald Trump’s manufacturing proposition PATTI WALDMEIR

“T

hey have fat fingers”.

That is one of the most striking lines in one of the most striking documentaries of the year, American Factory, which has become the unofficial film of the Trump trade-war era.

It is the first film distributed

by Barack and Michelle Obama’s production company for Netflix, and is set in Ohio, the state whose surprising capture in 2016 catapulted Donald Trump into the White House.

The allegedly fat fingers are those of the American workers at the Chinese-owned Fuyao automotive glass plant outside Dayton, Ohio. The plant was closed by General Motors in 2008, and brought back to life by Fujian-based Fuyao in 2015. Fuyao’s investment in Dayton has become a closely watched test case for Mr Trump’s proposition that America can be made great again by attracting foreign investment in manufacturing.

American Factory begins with high hopes for the plant to become an instrument of peace between the two great warring manufacturing powers. It ends with the Chinese company battling local workers, and regulators, over issues including unions, workplace safety and working hours.

The scene about the fat fingers, in which a frustrated Chinese manager complains that the girth of local workers’ digits affects their speed on the assembly line, is just one of many in a beautifully crafted film that captures the yawning cultural gulf at the heart of Mr Trump’s Make America Great Again project.

It gives us a rare glimpse of

just how intractable those differences can be, even when both sides profess the best intentions.

Fuyao’s chairman and founder, Cao Dewang, orders his employees to do things the American way, using a traditional Chinese expression which roughly translates as, “when in Dayton, do as the Daytonians do”. Fuyao employees even mounted something of a charm offensive with the local community, building houses in 97 degree heat for Habitat for Humanity, and serving hot meals to victims of a recent tornado.

But hopeful early examples of cross-cultural bonding — one American Fuyao worker takes his Chinese colleagues home for Thanksgiving dinner, teaching them to shoot his guns and ride his Harley-Davidson — quickly give way to darker scenes. Fuyao pressures American workers not to unionise and is accused of cutting corners on safety.

So what is it like these days for the Chinese workers at Fuyao, who leave families and home behind to spend a year or two marooned deep in Trumpland in the midst of a trade war? Recent opinion polls suggest that the American public is, in general, far more negative towards China than before Mr Trump decided to pick a fight with the middle kingdom. An August poll from the Pew Research Center found that 60 per cent of Americans now have an unfavourable view of China (up from 47 per cent last year and the highest level since Pew began asking that question).

Fuyao workers are on the frontline of US-China relations, because, unlike most citizens of the two warring cultures, they come into daily contact with nationals from the other side.

Boeing boss to admit ‘mistakes’ before Congress Muilenburg to begin two days of testimony, his first since fatal crashes of the 737 Max KIRAN STACEY IN WASHINGTON

B

oeing’s chief executive will on Tuesday tell the US Senate his company “made mistakes” with the design of the 737 Max aircraft, as he testifies in front of Congress for the first time since two of the jets crashed within five months, killing 346 people.

In a written statement to the Senate commerce committee ahead of the hearing, Dennis Muilenburg said Boeing made errors which it was now fixing as it tries to get hundreds of grounded Max aircraft back in the air.

In his statement, Mr Muilenburg said: “We know we made mistakes and got some things wrong. We own that, and we are fixing them. We have developed improvements to the 737 Max to ensure that accidents like these never happen again.”

Mr Muilenburg will this week seek to restore Boeing’s reputation as he testifies over two days for the first time since the accidents.

Peter DeFazio, the chairman of the House of Representatives transport committee, revealed on

Monday he had originally asked the Boeing chief executive to appear before his committee in June, but Mr Muilenburg had refused. According to Mr DeFazio, Boeing did not want to take part in hearings before the Max was back in the air — a stance it has now abandoned following multiple delays to the re-certification process.

Boeing did not respond to a request to comment.

Mr Muilenburg will speak to the House committee on Wednesday, but in his testimony to the Senate he said the company had made multiple changes to the anti-stall system which investigations suggest played a role in both accidents.

Earlier this month the company completed a test run of the new system, and Mr Muilenburg said it was still working with regulators to tackle other potential problems.

“We are also making additional changes to the 737 Max’s flight control software to eliminate the possibility of even extremely unlikely risks that are unrelated to the accidents,” he said.

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Robert Friedland, China and the rush for copper in the DRC The mining mogul’s venture relies on Chinese cash, despite fears over Beijing’s influence in resource-rich countries HENRY SANDERSON IN KOLWEZI

W

hen the new president of the Democratic Republic of Congo visited Washington in April, the mining billionaire Robert Friedland was waiting in a room at the Willard Intercontinental Hotel to greet him. Also there were the US ambassador to the DRC and Sun Yufeng, the head of China’s state-owned Citic Metals, the largest investor in Mr Friedland’s company Ivanhoe Mines.

Mr Sun and Mr Friedland wanted support for a new copper venture in the DRC that is set to solidify China’s influence over the resource-rich country — something that would not have skipped the attention of US officials taking part in tense trade talks with their Chinese counterparts across the city on the same day. Mr Sun told President Felix Tshisekedi about Citic’s ability to build large infrastructure projects, including roads, railways, ports and bridges, in the country — something few western mining companies could match. Since then Citic has agreed to invest an additional C$612m in the Torontobased Ivanhoe.

The importance of the meeting for Mr Friedland was clear. Having helped discover two of the world’s largest mines, now, off a dusty unpaved road in the DRC, he believes he may have found a third: KamoaKakula, a huge untapped copper deposit worth at least $10bn.

A university friend of Steve Jobs, the late Apple founder, and movie producer whose credits include Crazy Rich Asians, Mr Friedland has made a career out of securing funding for, and then exploiting, mines in far-flung corners of the world and selling them for large sums of money. “Every time I go and see him I first zip my pocket,” says Pierre Lassonde, a Canadian mining veteran, of Mr Friedland’s ability to persuade investors to part with their cash. “He has that magnetic effect on people.”

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But to finance this latest venture, which the 69-year-old calls “unquestionably the best copper development project in the world”, Mr Friedland has turned almost exclusively to China.

Chinese companies already own some of the richest deposits of copper and cobalt in the DRC and beyond, metals that are critical to the switch away from fossil fuels to renewable energy. They have invested at least $8bn in Congolese mining assets since 2012, with miner China Molybdenum buying the Tenke copper and cobalt mine from Freeport-McMoran for $2.65bn in 2016.

The control and dominance over global supply chains that this potentially gives China has triggered concern in the US. Secretary of state Mike Pompeo announced in September an initiative to help governments in resource-rich countries better attract investment from US companies by improving their regulatory standards. The state department’s Energy Resource Governance Initiative says it wants to “encourage a level playing field surrounding the critical minerals that underpin clean energy technology”, and includes the DRC as a “participant”.

But fearful of operating in the DRC, one of the world’s poorest and most corrupt countries — it ranks 161 out of 180 on Transparency International’s corruption perceptions index — western mining companies have stayed away from Mr Friedland’s mine. Investors have also declined to become involved.

Instead he has turned to China’s Zijin Mining and Citic Metal, two of the best-connected Chinese mining companies, to generate the more than $1bn he needs to build Kamoa-Kakula.

“There is a reasonable slug of evidence,” says one London-based fund manager, “that shows to operate there you need to do things western shareholders do not allow their management teams to do.”

But such queasiness is overdone, says Paul Gait, an analyst at @Businessdayng

Bernstein. “The capital markets are closed for mining investment in the west. [In effect] we have decided that we are conceding control of industrial production to China.”

Stretched across the south-east of the DRC into Zambia, the copper belt is one of the world’s richest sources of both that metal and cobalt. Mined by the Belgians at the beginning of the 20th century, copper from the city of Kolwezi was used in shells fired in battle during the first world war in France. Congo became one of the largest producers in the world in the 1960s, with output peaking in 1976. But by 1995, production was down by 90 per cent.

The industry had fallen further into disrepair under Congo’s former dictator Mobutu Sese Seko and in the late 1990s, as his regime crumbled, miners rushed to sign deals with rebel leader Laurent-Désiré Kabila, who came to power in 1997.

In the brief interlude before the outbreak of another conflict in 1998, Mr Friedland obtained licences to explore about 14,000 sq km of land in the Congolese copper belt.

He decided to look further west of Kolwezi, the capital of Lualaba province, at an area which had never been mined before because it lacked any surface indications of copper, such as a break in the vegetation, or the presence of distinctive bright turquoise malachite rocks that contain the metal.

But in 2008, five years after the end of Congo’s brutal civil war — which left more than 5m dead — geologists began to drill the deposit. Rock cores suggested the presence of a large orebody and Mr Friedland announced the discovery in April 2009.

“The financial crisis had melted everything else down . . . we were the only company that stayed [in the DRC]. Drilling companies phoned me up saying: ‘Do you need any drills?’” says David Broughton, the geologist who helped discover Kamoa-Kakula. “We were living in tents and mud . . . But when you make a discovery like that you’re in the clouds for two years.”

Wednesday 30 October 2019

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Wednesday 30 October 2019

BUSINESS DAY

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Wednesday 30 October 2019

BUSINESS DAY

53

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 29 October 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 261,257.41 7.35 0.68 179 37,244,191 UNITED BANK FOR AFRICA PLC 196,646.67 5.75 -1.71 202 6,562,931 ZENITH BANK PLC 533,740.39 17.00 -0.29 386 43,063,706 767 86,870,828 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 190,245.05 5.30 - 143 9,428,851 143 9,428,851 910 96,299,679 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,584,005.43 126.95 -1.59 61 521,271 61 521,271 61 521,271 BUILDING MATERIALS DANGOTE CEMENT PLC 2,487,914.08 146.00 - 35 33,411 LAFARGE AFRICA PLC. 231,146.87 14.35 -4.01 56 538,891 91 572,302 91 572,302 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 304,225.84 517.00 - 36 55,019 36 55,019 36 55,019 1,098 97,448,271 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 30 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 1 8 UPDC REAL ESTATE INVESTMENT TRUST 13,074.52 4.90 - 1 150 3 188 3 188 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 3 188 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 52,417.35 54.95 - 16 29,544 PRESCO PLC 38,400.00 38.40 - 4 8,510 20 38,054 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,380.00 0.46 - 2 100,364 2 100,364 22 138,418 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 1 2,000 JOHN HOLT PLC. 214.03 0.55 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 42,680.39 1.05 2.94 47 5,596,322 U A C N PLC. 17,287.78 6.00 - 32 184,310 80 5,782,632 80 5,782,632 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 7 17,332 ROADS NIG PLC. 165.00 6.60 - 0 0 7 17,332 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,780.28 1.07 - 6 26,368 6 26,368 13 43,700 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,986.09 1.02 - 9 317,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 52,240.63 23.85 - 58 222,241 INTERNATIONAL BREWERIES PLC. 108,307.86 12.60 - 5 21,640 NIGERIAN BREW. PLC. 369,856.72 46.25 0.43 44 5,107,505 116 5,668,386 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 111,250.00 22.25 - 0 0 DANGOTE SUGAR REFINERY PLC 124,200.00 10.35 - 37 213,919 FLOUR MILLS NIG. PLC. 63,555.88 15.50 - 50 251,521 HONEYWELL FLOUR MILL PLC 7,533.69 0.95 - 18 519,170 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 5,000 NASCON ALLIED INDUSTRIES PLC 39,344.16 14.85 - 11 22,030 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 117 1,011,640 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,030.74 9.60 - 23 97,357 NESTLE NIGERIA PLC. 967,040.63 1,220.00 - 31 16,108 54 113,465 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,377.95 3.50 - 12 175,680 12 175,680 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 21,837.62 5.50 - 21 192,523 UNILEVER NIGERIA PLC. 153,391.64 26.70 - 18 32,202 39 224,725 338 7,193,896 BANKING ECOBANK TRANSNATIONAL INCORPORATED 130,281.81 7.10 - 29 222,520 FIDELITY BANK PLC 48,677.66 1.68 -1.18 53 6,137,938 GUARANTY TRUST BANK PLC. 750,495.07 25.50 -2.67 274 42,280,095 JAIZ BANK PLC 13,258.91 0.45 - 7 721,023 STERLING BANK PLC. 57,580.84 2.00 -2.50 420 34,768,780 UNION BANK NIG.PLC. 205,301.31 7.05 0.71 18 165,122 7,364.28 0.63 - 9 156,203 UNITY BANK PLC WEMA BANK PLC. 23,144.68 0.60 1.69 24 1,029,140 834 85,480,821 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 50 AIICO INSURANCE PLC. 4,781.84 0.69 9.52 29 1,424,314 AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 7 255,000 CONSOLIDATED HALLMARK INSURANCE PLC 3,008.10 0.37 - 0 0 CONTINENTAL REINSURANCE PLC 24,894.59 2.40 0.42 2 1,250,000 CORNERSTONE INSURANCE PLC 6,628.28 0.45 9.76 6 510,500 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 - 5 49,999 LAW UNION AND ROCK INS. PLC. 1,933.35 0.45 - 9 171,243 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 3 100,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 2 174,000 NEM INSURANCE PLC 10,561.01 2.00 - 3 21,845 NIGER INSURANCE PLC 1,547.90 0.20 - 2 1,187,800 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 1 1,000,000 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 2 16,279 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 516.46 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,550.13 0.34 3.03 18 457,707 90 6,618,737

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MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,721.10 1.19 - 2 4,360 2 4,360 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,800.00 3.90 2.09 29 372,882 CUSTODIAN INVESTMENT PLC 32,056.16 5.45 - 8 108,564 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 - 36 51,555,748 ROYAL EXCHANGE PLC. 1,029.07 0.20 - 0 0 STANBIC IBTC HOLDINGS PLC 387,517.72 37.00 - 15 7,211 UNITED CAPITAL PLC 12,240.00 2.04 -0.49 40 1,162,920 128 53,207,325 1,054 145,311,243 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 888.28 0.25 4.17 5 328,100 5 328,100 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 3 880 3 880 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 8,345.44 4.00 - 4 12,500 GLAXO SMITHKLINE CONSUMER NIG. PLC. 7,534.02 6.30 8.62 25 404,724 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 5 8,931 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 740.67 0.39 - 6 41,392 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 40 467,547 48 796,527 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 4.35 15 1,928,364 15 1,928,364 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 1 800 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 3 10,288 4 11,088 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 -4.35 13 2,560,000 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 13 2,560,000 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,157,510.66 308.00 - 9 282 9 282 41 4,499,734 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 6 15,928 CAP PLC 17,885.00 25.55 - 11 5,325 208,981.67 15.90 - 23 249,724 CEMENT CO. OF NORTH.NIG. PLC MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 40 270,977 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,465.85 1.40 - 10 49,148 10 49,148 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 50 320,125 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 19 3,764,374 19 3,764,374 INTEGRATED OIL AND GAS SERVICES OANDO PLC 41,769.55 3.36 -1.18 50 1,009,434 50 1,009,434 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 16 62,916 CONOIL PLC 10,686.86 15.40 - 11 18,381 ETERNA PLC. 3,716.81 2.85 - 7 63,258 FORTE OIL PLC. 20,709.45 15.90 -0.62 29 242,170 MRS OIL NIGERIA PLC. 5,166.13 16.95 - 3 5,908 TOTAL NIGERIA PLC. 41,829.09 123.20 - 25 21,384 91 414,017 160 5,187,825 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 294.09 0.25 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 9.88 9 200,125 TRANS-NATIONWIDE EXPRESS PLC. 393.83 0.84 - 2 9,050 11 209,175 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,224.31 1.07 - 2 13,680 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 2 13,680 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 205.63 0.34 - 1 3,600 LEARN AFRICA PLC 856.31 1.11 - 2 31,944 1,183.82 1.99 - 0 0 STUDIO PRESS (NIG) PLC. UNIVERSITY PRESS PLC. 474.55 1.10 - 4 12,540 7 48,084 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 729.39 0.44 -9.09 6 333,050 6 333,050

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Indian economy: Problems pile up for Narendra Modi

The prime minister has room to stimulate growth but must avoid policy mis-steps of his first term Amy Kazmin

N

e w D e l h i ’s Gandhi Nagar market is one of India’s largest garment wholesale hubs, jammed with inexpensive, readymade garments for the aspirational but price-sensitive lower middle class. The vast array of kids’ party wear, elaborately-embellished jeans and other clothes draws traders from across north India, who stock up on merchandise to sell in small-town shops and rural bazaars.

Typically, the run-up to the annual Diwali festival is the market’s peak season, when the narrow lanes are so jammed with buyers hauling clothes it is difficult to move. But this year, traders complain, the festive shopping season has been gloomy, with sales falling precipitously as a deepening economic slowdown hurts ordinary Indians.

Hit by lay-offs, pay cuts and reduced earnings, anxious consumers are tightening their belts. “For common people, these are luxury items,” says Sahil Nangru, 26, whose small business makes children’s outfits, selling them wholesale for around Rs500 ($7) a set. “People do not have money in their hands these days. Businessmen do not have money to invest.”

Weak consumer demand is fuelling a vicious downward spiral. In recent weeks, Mr Nangru and his partner, Pradeep Chawla, have shut down two of their four small garment-making workshops, and laid off 25 workers. “For the last three or four months, we’ve had absolutely no work,” says Mr Chawla. “Now because of Diwali we’ve had some orders. But if we have no business, we have to let the workers go, it is natural.”

The gloom at the market reflects the malaise in India’s economy, now under the spotlight after the hoopla of prime minister Narendra Modi’s securityfocused re-election campaign — and his triumphant victory just six months ago.

Not that long ago India was revelling in its status as the world’s fastest-growing large economy. It seemed on the cusp of its aspiration of growth rates of 9 to 10 per cent — the pace economists say is necessary to create sufficient jobs for the estimated 12m Indians enter-

ing the workforce each year.

But since the second quarter of 2018 — when gross domestic product grew at a brisk 8 per cent year on year, India’s economy has steadily lost steam.

GDP growth sank to just 5 per cent in the three months to June 2019, its slowest pace in six years. And as the economy skids, India’s millions of self-employed, vulnerable contract workers and farmers have all taken a hit.

“People’s businesses have collapsed,” says Nidhi Varma, who runs a small shop in a Delhi mall, and has watched as other shops shut down around her in recent months. “People don’t have enough profit to pay rent.”

Before the election, Mr Modi’s government had brushed aside warnings of economic fragility, dismissing them as too pessimistic and politically motivated.

But with the deepening economic distress impossible to ignore, debate is mounting over precisely what ails the economy, the root cause of the slowdown, and how long it will last.

India economy chart, wholesale price index has fallen sharply New Delhi insists the difficulties are a cyclical blip, brought on by tumultuous international conditions. But many economists believe the slowdown is of India’s own making — the result of policy mis-steps, sluggish market-oriented reforms and Mr Modi’s failure to resolve problems in the financial system left by over exuberant lending during the previous Congress administration.

“Blaming it all on the outside is too easy,” Raghuram Rajan, former Reserve Bank of India governor, said in a recent lecture, his first on the state of the Indian economy since leaving the job in 2016.

“India is poor. It has a lot of potential for growth on its own, without relying on the outside. Why aren’t we growing at 7 or 8 per cent?”

Private investment has been muted for nearly a decade since the global financial crisis. New Delhi has little fiscal firepower left for stimulus, with an annual public deficit — including the centre, states, and stateowned entities — estimated at nearly 10 per cent of GDP. Now, private consumption is faltering, as the public mood darkens, and easy consumer credit dries up after last year’s shock collapse of Infrastructure Leasing & Financial Services, a major finance company.

According to the most recent RBI consumer confidence survey, Indians’ optimism about their future prospects is ebbing away.

Families have been living beyond their means, drawing down savings and taking loans, expecting better days ahead, government statistics show. From 2012 to 2018, household savings fell from 23.6 to 17.2 per cent of GDP. Household debt has risen sharply, though at 11 per cent of GDP it remains low by regional standards.

“There is a general environment of extreme risk aversion,” says Gagan Banga, vice-chairman of Indiabulls Housing Finance. “Today we have a situation where the business community in general is scared to invest, the consumer is scared to

consume, and lenders are scared of lending both to business and consumers because they feel that the money will get stuck.”

India’s automotive industry — which accounts for around 40 per cent of manufacturing GDP — suffered a contraction in passenger and commercial vehicle sales of 23 per cent year on year from April to September. Sales of motorcycles and other twowheelers — often a leading indicator of the strength of the rural economy — contracted 16 per cent. Other industries, from fast-moving consumer goods to aviation, are slowing.

India is forecast to grow 6 per cent this financial year, but some see that as overoptimistic. Arvind Subramanian, the government’s former chief economic adviser, dropped a bombshell in June, when he argued that India’s official GDP statistics probably overstated growth by 2.5 percentage points a year from 2011-12 to 2016-17.

Though the government has rejected his claim, many economists in India and abroad have questioned the credibility of India’s headline GDP growth in recent years, which have often appeared at odds with weaker underlying data. Mr Subramanian, who says he raised his concerns about the data when in government, believes India has been struggling since the global financial crisis. “ The malaise is not recent,” he said recently.

“Essentially, India never recovered from the global financial crisis. Investment and exports — the main engines of growth for de-

veloping countries — have never recovered.”

India economy chart, non-performing assets, percentage of total Others believe Mr Modi’s policies — to clean up and formalise a notoriously corrupt business culture — have also taken a toll, inflicting severe disruption on two of the country’s most employment-intensive sectors.

His draconian 2016 cash ban — through which 86 per cent of the country’s currency in circulation was invalidated overnight — and the chaotic rollout of a new tax system were knockout blows for millions of small, informal enterprises that had operated beyond the tax net. Many could not cope with either the goods and services tax’s technical or financial demands. Real estate was also hard hit, leaving developers with a vast inventory of unsold and unfinished buildings.

“The sequence of demonetisation and the GST essentially was the straw that seems to have broken the Indian economy’s back,” Mr Rajan said.

The aggressive anticorruption drive has also unnerved corporate India, deterring investment. Businessmen say officials seem to view all entrepreneurs as inherently suspect, and treat corporate distress as evidence of deliberate malfeasance.

“Many parts of business in India were like a dirty white shirt,” says Uday Kotak, chief executive of Kotak Mahindra Bank. “India needed to clean it with soap and a wash, but we must take care that in the wash

process, we avoid tearing the shirt.”

But it has left many businesses struggling to deleverage and survive the crunch.

“There was an underlying shakiness and shoddiness in lending and governance standards,” says Saurabh Mukherjea, founder of Marcellus Investment Managers. “The general prosperity in the country and the abundance of black money masked that shoddiness. As the tide of black money goes out, you can now see who is standing naked.”

It is a far cry from the kind of job-generating economic boom Mr Modi was expected to deliver back in 2014, when he promised to bring “good days” to a young, restless population.

“It’s a crisis,” economist Abhijit Banerjee said days before he won the Nobel Prize this month. “People are poorer now than they were in 2014-15.”

In public, Mr Modi, and his cabinet, still talk grandly of India — now a $2.9tn economy — growing into a $5tn economy by 2024.

Finance minister Nirmala Sitharaman has blamed the auto industry’s woes on millennials, who prefer using Uber to car ownership. A government minister pointed to the strong box office take for the latest Bollywood films on their opening weekend as evidence of India’s sound economic fundamentals. Members of Mr Modi’s Bharatiya Janata party insist that the recovery’s “green shoots” are visible.

Independent economists warn that India’s many serious vulnerabilities — including overstretched public finances and the fragile financial system, including shaky shadow banks — will continue to weigh on the country’s prospects.

They say New Delhi has failed to recognise the severity of the financial system’s nonperforming loan problem, or the risks posed by the fragility of shadow banks and housing finance companies, which are themselves big borrowers from mainstream lenders.

Rating agency S&P has also warned of the rising risk of contagion from the possible collapse of shadow banks.

India economy chart, savings rates, per cent “The financial system is jammed and firms are reluctant to invest — and this is at the heart of India’s challenge,” Mr Subramanian said, calling New Delhi’s “under-recognition of how serious the problem is” a major hurdle.

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