BusinessDay 31 Jul 2018 by BusinessDay

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news you can trust I **TUESDAY 31 JULY 2018 I vol. 15, no 107 I N300

Sell

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

Spot $/N 361.78 305.90 %

Treasury Bills 3M -0.18 11.15

6M 0.08 12.81

as Fashola directs NERC to enforce transition charge

ISAAC ANYAOGU

igeria’s electricity distribution companies (DisCos) who had hitherto feared a 60 per cent revenue loss from the eligible customer directive issued last year by Babatunde Fashola, minister of Power, Works and Housing will now heave a sigh of relief as the

Inside L-R: Iyke Ejimofor, executive secretary, Nigeria-South Africa Chamber of Commerce; Kemi Leke Bamtefa, national sales manager, South African Airways; Bobby Moroe, acting high commissioner of South Africa to Nigeria; Osayaba Giwa Osagie, director, Nigeria-South Africa Chamber of Commerce; Ohis Ehimiaghe, regional manager, North, West and Central Africa, South African Airways; Omasan Ogisi, general manager, corporate affairs at MTN Nigeria, and Kikelomo Longe, principal, Capital Alliance of Nigeria, at the Chamber’s Breakfast Forum sponsored by South African Airways in Lagos, yesterday.

NASS says impeachment notice on Ortom throwback to dictatorship

he National Assembly and the People’s Democratic Party (PDP) have described as “a desecration of the legislative sanctity”, the on-going situation in Benue State in which eight out of the 30 members of the State House of

10 Years

20 Years

-0.07% 13.69%

-0.01% 14.28%

0.00% 14.22%

FMDQ shareholders approve N5bn capital raise …changes name to FMDQ Securities Exchange IHEANYI NWACHUKWU

MDQ OTC Securities Exchange has received the approval of shareholders to raise N5billion fresh capital. The proposed capital raise which will be through a mix of Rights Issue and Public Offer is aimed at boosting its operations. Shareholders who also were at t h e 6 t h A n nu a l G e n e ra l Meeting (AGM) of FMDQ OTC Plc approved the plan by the

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KEHINDE AKINTOLA & OWEDE AGBAJILEKE

5 Years

DisCos dodge 60% loss from eligible customer rule

“33” Export Lager Beer heeds United Nation’s call to friendship P. 33

fgn bonds

... PDP accuses Buhari,Oshiomhole, Akume of promoting anarchy Assembly commenced impeachment process against the Governor, Samuel Ortom.

A statement by Senate President, Bukola Saraki, Speaker, House of Representatives, Yakubu

Army habits die hard as Nigeria’s Buhari defies court orders P. 2

FBNH sees NPLs below 15% by year – end … to make 35% provision on 9mobile loan …customer deposits hit N3.3 trn, up 4.1% PATRICK ATUANYA

Dogara, on Monday, called on President Muhammadu Buhari to call the police to order and stop them from being used to achieve political purposes. The statement was jointly

BN Holdings Plc, Nigeria’s second largest bank by assets says it expects its non-performing loans (NPL) ratio to decline to less than 15 percent by year-end from 20.8 percent as at the half year 2018 period, due to credit restructuring

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2 BUSINESS DAY NEWS

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Tuesday 31 July 2018

Army habits die hard as Nigeria’s Buhari defies court orders BLOOMBERG

hen a Nigerian high court ruled this month that a former national security adviser should be freed on bail, it was the sixth such judgment since his detention in 2015. Authorities haven’t obeyed a single one. For critics of President Muhammadu Buhari, he’s picking and choosing which judgments to comply with, a stance that stirs uncomfortable echoes of his days as a military ruler in the 1980s. His government defends his actions as necessary to combat graft in the oil-rich West African country of almost 200 million people, a pledge that was key to Buhari’s victory in a 2015 vote -- and now to his hopes of re-election next year. “There is no constitutional basis whatsoever for disobeying a court order,” said Ernest Ojukwu, a professor of human rights and criminal law. “This is about impunity.” Buhari, 75, has complained that judicial niceties are getting in the way of his graft war. After ousting an elected government on New Year’s Eve in 1983, he ruled by decree, combining executive and legislative powers. Military tribunals were set up to try allegedly corrupt politicians, some of whom were sentenced to hundreds of years. After Buhari’s overthrow 20 months later, almost all the sentences were quashed by the courts or nullified by his successors. But through his actions he began to acquire the anticorruption reputation that helped get him elected three decades on. The next vote will be in February. Arguably the most high-profile detainee is Sambo Dasuki, once a security adviser to Buhari’s predecessor Goodluck Jonathan. Charged with offenses related to money laundering and diverting money supposed to be used to buy arms to fight Islamist militant group Boko Haram, Dasuki has been held for three years as bail

orders, including from an Economic Community of West African States court, have been ignored. He’s not the only one. A leader of Nigeria’s Shi’ite community, Ibrahim El-Zakzaky, and his wife have been held by state security forces since 2015, also in defiance of court orders for bail. Prior to his arrest, Nigerian troops are alleged to have killed more than 300 of his followers and buried them in mass graves in the aftermath of clashes between some Shi’ites and soldiers accompanying an army chief’s convoy. The treatment has extended to journalists. Jones Abiri, based in the southern city of Yenagoa, was arrested by secret police in July 2016, accused of involvement in the sabotage of crude oil pipelines by militants in the Niger River delta. Abiri was arraigned last week and taken back into the custody of the secret police after failing to meet “stringent” bail conditions, his lawyer, Femi Falana, said in response to a text message. His hearing is scheduled to begin on Aug. 2, he said. Before the arraignment, the New York-based Committee to Protect Journalists had expressed concern that the reporter hadn’t been seen in public, charged nor allowed visits from lawyers or family members. Successive democratic governments in Nigeria, where military rule ended in 1999, have tended to disobey court orders, said Ojukwu. “The trend diminished drastically under late President Umaru Musa Yar’Adua (in office from 2007 until he died in 2010) and it’s been a growing trend again since then,” he said. Contacted on the recent cases and allegations, Justice Ministry spokesman Salihu Othman Isah referred to a July 19 article published by Premium Times, in which minister Abubakar Malami was quoted as saying that it was in the public’s interest that court orders to grant Dasuki bail were ignored. Continues on wwwbusinessday online.com

2019: INEC to engage 1million ad-hoc staff … to adopt measures to check vote buying Iniobong Iwok

s preparation towards the 2019 general elections gathers momentum,theIndependent National Electoral Commission (INEC) has disclosed that it would engage about one million ad-hoc staff across the country for the smooth conduct of the general elections. Rotimi Oyekanmi, Chief Press Secretary to the INEC Chairman, Mahmood Yakubu, stated this yesterday while speaking on the commission’s preparedness for the 2019 general elections in an interview with Business day. “What we have estimated is that the Commission will require at least, one million ad-hoc staff members. About 800,000 ad-hoc workers were engaged for the 2015 general election and so many things have changed since then and we have new pooling units,” Oyekanmi said. “But INEC is looking at the protocols involved in the process of casting the ballot, the voting cubicles and how ballot papers will be folded on election-day. The plan is to make it very difficult, if not impossible, for a voter to be able to reveal which party he or she has voted for during the 2019 general

election,” Oyekanmi said. Oyekanmi said that the commission was strategizing on modalities for checking vote buying during the 2019 general election, adding it would adopt a method that would make it difficult to reveal which political party a voter was casting vote for. He said that the commission had intensified preparations for the 2019 general election in collaboration with its international partners, while dispelling insinuation that it was broke or had a budget of N254billion as being insinuated, for the general elections. “With regard to the 2019 General Election, all pre-election activities are being undertaken in full at the moment. Trainings and other preparations are going on across the country. We are being assisted by our development partners like the European Union, the UNDP, IFES, USAID and a host of others to carry out these preelection activities. It is not true that the Commission lacks money. “The Commission submitted its budget proposals to the Presidency and we are awaiting approval. Until the approval is given, it will not be useful to talk about the specific figures. It is not true that INEC has a budget of N254 billion,” Oyekanmi said.

L-R: Oluseun Lawal, brand manager, “33” Export and Stout Brands NB plc; Emmanuel Agu, portfolio manager, Mainstream Lager and Stout Brands NB plc; Chibuzor Azubuike, Nigerian rapper/singer, popularly called Phyno; Onyebuchi Nwangwu, brand support manager, “33” Export and Stout Brands NB plc., and Bidemi Adetoro, regional trade marketing executive, NB Plc, at the “33” Export City Of Friends Concert commemorating the World Friendship Day in Calabar.

Consumer spending drops despite growth in real income Omobola Adu & Emeka Ucheaga

n real terms, consumer spending fell year-on-year by around -0.99 percent in 2017 despite an 11.14 percent increase in employee compensation during the year according to the data compiled from the National Bureau of Statistics (NBS). Household spending behaviour in 2017 was contrary to economists’ expectation and conventional wisdom. One will expect that in a year when the economic growth rebounded from negative territory thereby boosting real wages in the country, consumer spending will increase significantly, however the complete opposite occurred.

BusinessDay found out that real wages started to pick up even before the economy pulled out of the recession in Q2 2017. Real wages increased by around 7.56 percent and 14.17 percent in Q1 and Q2 2017, respectively while national output on the other hand fell by -0.91 in the Q1 2017 before increasing by 0.72 percent in Q2. The growth in real wages in 2017 also made it the first positive year-on-year annual growth recorded in Nigeria since 2015. Consumer spending which had positive growth in the first (5.41%) and second (0.97%) quarter fell significantly by around -11.88 percent in Q3. This gigantic drop in Q3 was directly responsible for the full

year drop in consumer spending at year end 2017 as all other quarters of the year delivered positive growth. Ayodele Akinwunmi, Head of Research and Strategy, FSDH Merchant Bank explained that the decline in consumer spending could be as a result of lagged effects of the economic recession as well as seasonal effects that could have caused the massive decline in consumer spending in Q3. Henry Ogbuaku, Group Head, Asset Management, GDL told BusinessDay by phone that consumer spending is also dependent on the budget. The delayed implementation of the budget and release of funds could have impacted negatively on consumer spending.

Apapa: No respite five days after Osinbajo’s visit JOSHUA BASSEY

here is no respite yet for businesses and residents of Apapa five days after last Thursday’s visit by Vice President Yemi Osinbajo during which he met with stakeholders to find a lasting solution to the devastating gridlock in the area. Accessing Apapa, the host community of Nigeria’s premier and most utilised port, still poses a serious challenge, as the roads and Marine Bridge inward wharf from the Ijora end remained tight on Monday. Petroleum tankers and containerised trucks still parked on the bridge. This and the repair work ongoing on the bridge and the reconstruction of a section of Wharf road necessitating the cordon off a section of the road, brought traffic flow to a standstill yesterday. The Wharf road from the foot of bridge inward Apapa is being reconstructed by the combined efforts of AG Dangote, Flour Mills and Nigerian Ports Authority (NPA). The work which began early 2017 has been quite slow.

… chaos function of FG’s choice - Achese A truck driver who identified himself as Abdulahi told BuinessDay that he drove into Lagos on Friday, and has been on the bridge since then. “It took me three days from Eko Bridge through Ijora Olopa to get to Marine Bridge. We’re suffering but nobody seems to know,” said Abdullahi. Officials of the taskforce jointly set up by the Federal and Lagos State government, comprising the police, soldiers, federal road safety corps and Lagos State Traffic Management Authority (LASTMA) were, however, seen at work. The chaos is continuing as Achese Igwe, former president of Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) insists the government must provide parking spaces for trucks coming to Lagos to lift products. Igwe said since it was the Federal Government in the first place which chose Lagos as the only receiving point for imported products, and also granted licenses for tank farms within Apapa, it must therefore rise to the occasion by adopting measures to end

the menacing traffic situation. “What’s happening in Apapa is the consequence of the choice made by the government regarding fuel importation rather than local refining of the product. Imported products are discharged in Apapa, Lagos. Still within Apapa you now have tank farms. Trucks drivers did not take those critical decisions. Ours is to go wherever we’re told to go and lift fuel for distribution to Nigerians. If you choose today to tell tanker drivers to go to Onne, Calabar, Warri or any other state to lift fuel, they will go there. So what you’re seeing in Lagos is a direct result of the choice the government made of centralising all of this fuel import issues and tank farms within Apapa,” Igwe told BusinessDay. Osinbajo was in Lagos last Thursday as a follow-up to his earlier visit six days before then, to further discussion on a solution to the Apapa crisis, during which he promised approval for the full rehabilitation of collapsed sections of Oshodi-Mile2-Apapa expressway within two weeks, as part of measures to decongest Lagos.

Tuesday 31 July 2018

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BUSINESS DAY

4 BUSINESS DAY NEWS No hiding place for human traffickers in Edo - Obaseki

... as stakeholders dig deep for solution

overnor of Edo State, Godwin Obaseki, has vowed that his administration, in collaboration with stakeholders in the fight against human trafficking and illegal migration, will ensure the ugly trend is reduced to the barest minimum, saying there is no hiding place for traffickers in the state. Obaseki made the pledge at a conference organised by the Edo State Taskforce Against Human Trafficking to examine and proffer solutions to the root causes of the menace in the state. According to Obaseki, the major reasons people take to irregular migration are economic pressure, family pressure and unemployment, and his administration is working tirelessly to create jobs for the citizens. “As governor, I have vowed to reduce irregular migration in the state to the barest minimum before the end of my tenure with your help. “My administration has put in place measures which include resettling victims of human trafficking after they are rescued. We provide medical assistance to the returnees as well as training to assist

them to acquire skills,” he said. The governor restated that his administration is committed to taking governance directly to the people to provide them with opportunities, which was one of the reasons people embarked on illegal migration. He listed Uhunmwode and Orhionmwon as the local government areas with the highest numbers of persons engaged in irregular migration, and assured that measures had been put in place to boost economic activities in the areas. The governor commended the Oba of Benin, Oba Ewuare II, for his support in the fight against the menace and stressed that the Royal Majesty’s intervention had in no small way, discouraged many Edo people from embarking on the risky journeys. Social justice activist, Ayode Alakija, in her keynote address, said a total of 1,037 people travel from Kano State to Tripoli, Libya, daily. She urged governments at all levels to show commitment in solving the humanitarian crisis in areas that have high numbers of persons who embark on irregular migration.

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Don laments poor funding of education OWEDE AGBAJILEKE, Abuja

university don, Sunday Menyaga Ichado, has identified poor funding of the education sector as a major hindrance to the nation’s economic development. Ichado, a professor of Educational Management, made the observation while delivering a lecture on ‘Formal Education as a Panacea for National Development’ at the 2018 convocation of the European-American University, Commonwealth of Dominica, in Abuja. He said quality education was vital for human resources development, which in turn promotes economic development. He emphasised the need for government to earmark 26 percent budgetary allocation to education, in line with the recommendation of the United Nations Educational, Scientific and Cultural Organisation (UNESCO). He further noted: “Teacher education is bedevilled by poor funding from all levels of government. This has resulted in the inadequate provision of teaching and learning materials, obsolete textbooks, dilapidated school buildings, overcrowded classes and ill-equipp6 classrooms lacking in sophisticated Information and Communication Technology

(ICT) systems. “In fact, it is sad to note that the Nigeria Government devote less than 26 percent of her national budget to education that is far below the standard prescribed by UNESCO. As a result, the quality of products from this system is in doubt. Even the allocation in budget are never released or released late.” To strengthen education in Nigeria, Ichado called on government to provide support for mobility and exchange of educators across tertiary institutions within and outside the country. According to Ichado, government should assist in training entrepreneurship educators, even as he called for continuous application and refinement of effective teaching methods. He also tasked tertiary institutions to broaden the entrepreneurship base of educators through training, workshops, seminars, and symposium, among others. “Graduates on completion of their programmes should be provided with soft loans to develop and practice education,” he recommended. Earlier in his address of welcome, president of the University, John Kersey, commended the honorands for distinguishing themselves in their various fields of endeavours.

Tuesday 31 July 2018

Edo Innovation Hub seeks more occupants for co-working spaces, outlines Q3 programmes

do Innovation Hub has opened its doors for entrepreneurs in Edo State and environs to take opportunity of its co-working spaces and other facilities made available at the technology cluster in driving innovation and strengthening the tentacles of the tech ecosystem in the state. The Edo Innovation Hub, a brainchild of the Governor Godwin Obaseki-led administration, is a fully-furnished cluster for technology companies, fitted with state-ofthe-art support structures including high-speed internet, power, indoor and outdoor workspaces, library, conference rooms, training rooms, among others. It also hosts the SouthSouth Innovation Hub, an initiative of the Federal Government, domiciled in the Vice President’s office for youths in South-South Nigeria to leverage technology in solving everyday problems. Senior special assistant to the Governor on Skills Development and Job Creation, Ukinebo Dare, said the Edo Innovation Hub was arguably one of the best equipped and furnished spaces to run a start-up company in Southern Nigeria. Explaining that Governor Godwin Obaseki is committed to equipping youths in

the state with the right environment to birth tech ideas, she said, “We are excited to be opening up the Edo Innovates cluster to budding entrepreneurs in Edo State and environs. “We are open to working with them, providing the enabling environment to nurture their start-ups, and training and other benefits of a co-working space.” She noted that some of the services provided in the hub include virtual office, shared desks, dedicated desks, private office and serviced office, all of which have access to services such as mail handling, electricity, business support, workshop and training and networking opportunities. She said some of the programmes outlined for the third quarter of the year at the hub are Microsoft and Tech4Dev digital skills training for entrepreneurs; Curators University’s Artificial Intelligence and Data Science boot camp for 49 budding developers; Microsoft’s Basic Digital Literacy for Teachers, and Oracle train-the-trainers programme for teachers. Others, according to her, include Butterflyworks Netherlands’s three-day cocreation event, which will engage the local community, youths and employers.

Tuesday 31 July 2018

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BUSINESS DAY

6 BUSINESS DAY NEWS

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Investors cheer CCNN, Dangote Sugar, FCMB results LOLADE AKINMURELE

nvestors are bidding stocks higher after a flurry of positive half-year corporate earnings by Nigerian companies last week helped the stock market climb by 0.58 percent, Friday. Among the companies that posted impressive half-year earnings last week include GlaxoSmithKline (GSK), First City Monument Bank (FCMB), Cement Company of Northern Nigeria (CCNN), Fidson Healthcare, and 11 plc (Mobil). Other companies that posted profit last week were Dangote Cement, Okomu plc, Transnational Corporation of Nigeria and Dangote Sugar. The flurry of positive half-year earnings comes at a time when a long standing sell-off, triggered by political uncertainty ahead of the 2019

Nigeria elections and rate hikes in the United States, pushes the market to a negative return of 4 percent year-to-date. “Despite the continued selloff in the equities market in recent times, we believe this presents decent entry opportunities in our quality names,” Investment One said in a research note to clients on Friday. “Furthermore, we could see investors take position in anticipation of the release of H1 2018 results and possible corporate action,” the financial advisory firm noted. The local unit of Diageo plc, Guinness, jumped 10 percent on Friday, the most since September 2017, with trade volume 63 percent the three-month daily average, as investors believe the parent company’s positive results will rub off on Guinness Nigeria. Cement maker, CCNN, also

gained 10 percent on Friday, after its financial results published same day showed a 155 percent jump in net profit to N2.6 billion from N1.02 billion. 11plc saw profit after tax rise 120 percent to N5.4 billion in the first half of 2018 from N2.5 billion in the same period of 2017. 11plc’s share price was unchanged at N180. Fidson Healthcare also recorded a jump in net profit, following an 11.8 percent rise to N521 million in H1 2018 from N466 million in H1 2017, while revenue was up 10 percent to N7.4 billion from N6.7 billion. Fidson shares were unchanged at the close of trading. GSK also saw profit rise 16 times to more than the N21.7 billion recorded in the first half of 2017 to N362 billion in the first half of 2018. Dangote Cement, the mar-

ket’s most capitalised company, also saw a 3.1 percent growth in bottom line to N113 billion in the first half of 2018 from N109.7 billion, while its revenue climbed to N482.4 billion, up 16 percent from N412.7 billion. Also, Transnational Corporation of Nigeria’s PAT rose 161.2 percent to N10.9 billion from N4.2 billion, as revenue from its power operations climbed. Meanwhile, FCMB’s PAT nearly doubled to N5.7 billion in H1 2018 from N3.018 billion. Transcorp’s share price rose 3.39 percent to N1.2 per share Friday, while FCMB gained 3.55 percent to N2.04. Dangote Sugar and Okomu Oil posted net profits of N12.7 billion and N6.0 billion, respectively. At close of market on Friday, the Consumer Goods Index gained 1.05 percent, largely driven by Dangote Sugar, which was up 10 percent.

L-R: Victor Ehikhamenor, visual artist and moderator; Kadaria Ahmed, CEO, Daria Media; Kole Shettima, director, MacArthur Foundation; Fatimah Tuggar, Nigerian-American artist and guest, and Abubakar Suleiman, chief executive officer, Sterling Bank plc, at the debut edition of The Space sponsored by Sterling Bank in Lagos.

PENCOM to enrol, verify FG employees in South West CONRAD OMODIAGBE

ational Pension Commission (PenCom) has announced intention to conduct a verification and enrolment exercise for employees of Federal Government Ministries, DepartmentandAgencies,which are treasury funded in Lagos and Ogun states. According to a statement signed by Peter Aghahowa, head, corporatecommunications,PENCOM, the impending exercise is set to cover employees who are meant to retire within the January – December, 2019 period and have either spent 35 years in service or attained 60 years of age, or employees of tertiary institutions who have attained 70 years of age or spent 65 years in service. This process, which is for payment purposes of retirement benefits, also applies to those who have retired but are not enrolled. Prospective retirees are expected to show up at the designated enrolment centres with copies of their letter of appointment, evidence of transfer of service and acceptance where acceptable, birth certificate/declaration of age and promotion letter as of June, 2004.

Other requirements imperative for enrolment or verification include a letter of introduction from their respective MDAs, staff identity card, letter/evidence of retirement, letter of indemnity from the MDA and evidence of registration with a valid Pension FundAdministration(PFA)showing details of their Retirement Saving Account (RSA) and Personal Identification Number (PIN). The Commission requires the presence of a Pension Desk Officer to represent each MDA in order to verify documents presented, and also present documents on behalf of medically incapacitated members of staff who are exempted from the exercise, along with a letter from a qualified physician or medical board certifying the inability of the exempted staff from carrying out their official duties. Designated centres include the University of Lagos for employees in the Lagos and Ogun region, while the University of Ibadon will cater to Federal Government employees in Oyo, Osun and Ondo states. Qualified employeesarerequiredtoparticipate, as only those who enrol will be given the Federal Government Retirement Bond.

Tuesday 31 July 2018

Nigerians must get value for N123bn electricity stabilisation fund - Dogara KEHINDE AKINTOLA, Abuja

peaker of the House of Representatives, Yakubu Dogara, on Monday, harped on the need for Nigerians to get value from the N123 billion Nigerian Electricity Market Stabilisation Fund (NEMSF) provided by the Federal Government as subsidy to operators in the industry. Dogara stated this at the investigative hearing held by the House Ad-hoc Committee set up to interface with the Nigerian Electricity Regulatory Commission (NERC) on the Multi-Year Tariff Order (MYTO). The speaker explained that the investigative hearing became necessary with the view to critically examine and reassess all inputs and assumptions in the MYTO system in our electricity industry, and to come up with a draft realistic tariff regime. According to Dogara, the motion was in response to public outcry against the current tariff system. “I wish to note that the Multi-Year Tariff Order (MYTO) methodology was designed to provide correct pricing of electricity, taking into consideration the key principles of cost reflectivity, affordability, incentives for efficient operations and other assumptions such as price escalators, model building blocks/parameters, etc. “However, there has been a prolonged public outcry over the continuous increase in the unit price of electricity, which many believe is not in tandem with the current realities in electricity supply. The

tariff has continued to increase from an average of N10 per kw/h in 2007 to an average of N24.20 kw/h in 2017 without substantial improvement in power supply. “Despite, the N123 billion Nigerian Electricity Market Stabilization Fund (NEMSF) provided by the Federal Government as subsidy to the sector operators, the situation still remains unpleasant. “The House is concerned about the seeming injustice to the Nigerian public, and wishes to examine the possibility of redressing the trend. “It is needless to say that adequate electricity supply in our country will stimulate economic activities and reduce unemployment, which will invariably ameliorate youth restiveness and the high crime rate. “As stakeholders, we must all join hands to find a lasting solution the challenge of unstable electricity supply in the country, and in particular, the issue of excessive electricity tariff that seems to be incongruous with the quality and quantity of electricity supplied,” he said. In the bid to address the challenges bedevilling the power sector, he urged all the “stakeholders and participants to be open-minded, honest and constructive in their contributions. “The House expects also that the Ad-hoc Committee will take into consideration all submissions presented here today in making its recommendations to the House, so that we can proffer a lasting solution to the contentious issues surrounding electricity tariff.”

$25m World Bank loan to boost home ownership in Nigeria JONATHAN ADEROJU & OGHOGHO EDOSOMWAN

i g e r i a n g ov e r n ment has obtained a $25 million loan from the World Bank in order to orchestrate its plan of starting up a loan g u a ra nt e e p ro g ra m m e come 2019, with the hope of lending to low-income earners to boost home ownership. According to Bloomberg reports, the Central Bank of Nigeria is currently planning a project that will see to the start of a firm by the end this year called Nigerian Mortgage Guarantee Co., which the Nigeria Mortgage Refinance Company (NMRC) will be the first shareholder in the company. Speaking with BusinessDay, Dolapo Omidere, founder of Estate Intel, said, “NMRC just refinances loans that are being given by the mortgage firms, and people don’t go to them to get

loan majorly because of the risk involved as well as interest rate. The introduction of the Nigerian Mortgage Guarantee co will make loan available and more accessible to an average Nigerian as they will act as a guarantor to the borrowers if they default.” The NMRC is a private sector-driven mortgage refinancing company with the public purpose of promoting home ownership for Nigerians while deepening the primar y and secondary mortgage markets. The NMRC was basically established to redress the key barrier of lack of access to long term funding to catalyse growth in the market and promote home ownership. Africa’s most populous nation has a housing deficit of about 17 million units and its mortgage rates ranging betw een 7-10 percent for the Federal Mor tgage Bank 0f

Nigeria (NHF) and between 15-25 percent for commercial mortgage institutions is considered by industry experts as one of the highest around the world. D e sp i te t h e va r i ou s policies and strategies adopted by the FG aimed at combating the housing problems of the citizenry, not much as been accomplished. Current mortgage to GDP ratio in Nigeria is estimated at 0.6%, as opposed to 2% in Ghana, 31% in South Africa, 32% in Malaysia, 77% in the United States and about 80% in the United Kingdom. Despite this lingering problem, real estate experts are optimistic about the new development. The plan of setting up this firm by the central bank is to establish a mortgage guarantee product, targeted at lower income borrowers that will be used to guarantee some

of the credit risk for this special group of lenders. Also, Hakeem Sadiq, founder of Zama, a real estate investment advisory fir m, said, “Parameter that is being put in place makes it easier for an average Nigerian to walk up to the mortgage industry and apply within the scope given to them. “Having a guarantor is basically a good step, but there is still room for more improvement. “The said amount would not be enough to tackle the deficit in Nigeria but it is a start and a good one at that. It is something that can help mortgage industry that is way out of reach for the average Nigerian more accessible.” This initiative is set to be a life changing decision to the low-income earners thereby giving them the courage to seek for loans from mortgage banks without fear of the high interest rate.

7 NEWS

BUSINESS DAY

Tuesday 31 July 2018

Nigeria lags on deployment of LTE to full capacity …regulator undecided on 800MHz spectrum transfer to MTN JUMOKE AKIYODE-LAWANSON

he continued delay by the Nigerian Communications Commission (NCC) to transfer Visafone’s 800 MHz (Megahertz) spectrum to MTN Nigeria, after over two years of acquisition of the only Code Division Multiple Access (CDMA) in the country is, in several ways, hindering the speed of broadband penetration and the deployment of high speed Long Term Evolution (LTE) service in Nigeria, analysts say. LTE is a type of 4G that delivers the fastest connection for a mobile internet experience – up to 10 times faster than 3G, and is not the same as just 4G. In 2016, Visafone Communications Limited, with a Universal Access Service Licence (UASL), applied to the telecoms regulator for an approval to effect a change in its shareholding structure by transferring 100 percent of its shares to MTN Nigeria. Having fulfilled the conditions stipulated in the ‘Approval-In-Principle,’ the NCC, in line with its procedure granted a ‘Final-Approval’ to Visafone for the change in its shareholding structure. Visafone then applied for approval to transfer its licence to MTN, so as to allow the use of its spectrum for the roll out of 4G LTE (4th generation longterm evolution) service and, in turn, boost broadband service penetration. However, the

NCC is yet to take a decision on whether or not the request for transfer of licence would be granted. “The industry is still waiting for the regulator to get back to us its decision as to what will happen to the Visafone licence. It has still not been transferred to MTN up till this date,” Olusola Teniola, president, Association of Telecommunications Companies of Nigeria, told BusinessDay in a telephone interview. Although the NCC admitted that the matter was of significant interest to relevant stakeholders in the telecoms industry, and therefore held a public inquiry recently in order to elicit comments from the general public, especially telecoms operators, Umar Garba Danbatta, executive vice chairman, NCC, said, noting, “The commission has to embark on re-planning of some of its Frequency bands in order to reap the benefits of effective utilisation of spectrum as well as improve operational efficiency and regulatory excellence.” Danbatta said the commission re-planned the use of 800MHz band to accommodate technology development in the telecoms industry in 2013, and new spectrum assignments were conveyed to the operators according to their spectrum holdings in the 800MHz band. “Subsequent to the re-planning of the band, Visafone, one of the operators, who had

earlier been assigned 10MHz in the 800MHz band applied to the commission for transfer of its licence and spectrum to MTN,” he said. Tony Ojobo, director, public affairs, NCC, told BusinessDay that the NCC had not yet taken a decision on the application by Visafone to transfer its licence to MTN. “The NCC has only approved the shareholding structure by 100 percent and not a transfer of licence,” he said. Recall that in July 2016, Etisalat, now 9mobile, brought a legal action against MTN Nigeria and Visafone Ltd. challenging MTN’s use of the 800MHZ spectrum following the acquisition of Visafone. Even after the commission approved a new flexible regulation for trading spectrum and transfer of licence rights and obligation between operators in order to increase broadband infrastructure roll-out and deepen penetration levels, the NCC seems to be taking its time with the decision to approve the 800MHz spectrum to MTN, as other operators have raised objections. Airtel in its submission at the public enquiry said, “This arrangement will not only increase MTN’s market power, but will substantially lessen competition in the mobile voice and data market segments of the industry, which could lead to MTN becoming a monopoly.”

Nigeria, Kenya lead African market in real estate data, transparency - survey BUNMI BAILEY

igeria and Kenya have more data on their real estate sector than the rest of Africa, a survey conducted by Sagaci Research, a provider of African market data and analysis, and Grit Real Estate Income Group Limited (GRIT), a pan-African income real estate company, has shown. Both countr ies also emerged most transparent in collecting the data, the research firms say, while admitting that measuring data in Africa are quite challenging. In its 2018 GRETI, Nigeria was ranked 67th position out of 100 countries that was surveyed in 2017. It scored 3.7 out of 5 points, which meant low transparency. Scores with 1.00 is the highest possible score. Kenya was ranked 53rd. “In this year’s version, only 10 of the 15 African markets have improved, which has been led by Nigeria and Kenya. While African countries upward movement in Global Real Estate Transparency Index (GRETI) in 2014 and 2016 were notable, these were mostly off of a low base,” Jeremy Kelly, a director

within the Global Research Programmes Team, said. Kelly, recognised as a global thought leader and advocate for transparency and data across global real estate markets, will present the African chapter of their market leading Global Real Estate and Transparency Index (GRETI) to 600 of the continent’s leading real estate developers and investors, and lead the conversation on the importance of data and transparency at the ninth annual API Summit & Expo taking place in Johannesburg September 20 to 21, 2018. Charles Ballard, research director, Sagaci Research, said, “Measuring data is challenging in Africa, but dynamic. The challenge is that Africa’s youthful population, informality and rapid growth makes measurement challenging to measure but ‘particularly dynamic.’ “Younger consumers tend to be less conservative and more open to trying new things - the rapidity with which Kenyan consumers adopted mobile money is an excellent example of this trend.” To address the challenges of data in African countries, especially Nigeria, GRIT will launch a new data app at the summit.

“The app will be home to the most extensive collection of commercial property data points in Nigeria. We are confident it will change the way real estate decisions are made across the continent.” Dolapo Omidire, research analyst, GRIT said. Forward-thinking and embracing new technology to drive data acquisition and development to improve data access and decision making is an area in which Kelly believes Africa can use to leap ahead of other markets. Kelly further said, “Africa has an opportunity at this point to utilise blockchain for land registries or transactions; ‘smart’ buildings and infrastructure for facilities management or repair; or new database capabilities for collaborative data sharing between market participants to jumpstart the traditional methods of improving market data and building real estate markets that are fit for the future.” Kfir Rusin, managing director and host of the 9th API Summit & Expo, said, “Increasing data flow and transparency are absolutely pivotal to the development and deepening of investment in the continent’s property markets.

Nigerians paid more for jollof rice in 4 months CHINWE AGBEZE

rice of major ingredients used in preparing a pot of jollof rice for an average Nigerian family grew by 8.3 percent in four months, according to an SBM Intelligence report. According to the report made available to BusinessDay, the national average price of cooking a pot of jollof rice rose marginally to N6,545 in June 2018, from N6,040 in March 2018. SBM Intelligence, a strategic intelligence analysis firm, said in its July 14 report that the index rose steadily from March 2018 to June 2018, indicating a steady increase in food prices. By the end of June, SBM Intelligence said the index had risen to the highest ever since we began tracking in July 2016. This, it said, indicates that food prices are still rising despite the slowdown in inflation, and Nigerians are reacting accordingly. The firm noted in its March 2018 report that the average national price had begun to rise again, after declining in late 2017, which was also significantly higher than the base price from

July 2016. ‘‘As we warned at the time, inflation was beginning to pick up again and this has been primarily driven by food prices,’’ the report said. The Consumer Price Index (CPI), which measures changes in the price level of consumer goods and services purchased by households, increased by 12.48 percent (year-on-year) in April 2018, according to National Bureau of Statistics (NBS). This is 0.86 percent points less from the 13.34 percent recorded in March 2018. On a month-on-month basis, the headline index increased by 0.83 percent in April 2018, up by 0.01 percent points from the rate recorded in March. SBM Intelligence said some states paid significantly more than others, with Kano maintaining its position as the town with the highest average cost of a pot of Jollof at N7,140. ‘‘The ingredient responsible for this still remains turkey, as a kilogram of turkey in Kano’s Sabo Gari market costs significantly more when compared to other markets,’’ it said.

BEDC commissions 1,694 transformers to boost power supply in Edo

enin Electricity Distribution Company (BEDC) says it has added a total of 1,694 distribution transformers to ensure power supply improvement in Edo State since the new management took over in 2013. The company, which disclosed this in a Customer Information Update on Edo State released over the weekend, also said power availability had also improved from two hours in 2013 to between 6-10hours in some locations within the state, with severe infrastructure limitations, including Okada, Oluku, part of Sokponba, Evbuotubu, Oliha and Siluko. BEDC equally asserted that improved power was also recorded from 8hours to between 12-15hours for locations with more improved infrastructure such as Auchi, Government Reserved Areas (GRA), Ugbowo, Okhoro, and New Benin in Benin City. According to the update: “ Some of these improvements can be seen in large companies, hotels, teaching hospital, central hospital, universities, government establishments including Government House, High court and State House of Assembly.”

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How to stem rising cases of CKD in Nigeria Chinese Yuan sells for N39 in open market below CBN rate CHINWE AGBEZE

31-year-old Lagosbased barber, Onigbinde Oluwaseun, was diagnosed of chronic kidney disease (CKD) in May 2018. He was told he needed a kidney transplant, but his family could not afford the high cost. So far, Oluwaseun has been able to raise between N70,000 and N82,000, with assistance from family and well-wishers, for his weekly treatment. ‘‘I undergo dialysis once or twice a week together with blood transfusion. I am also taking drugs prescribed by my doctor,” Oluwaseun said. For 43-year-old Joseph Nnagbogu, who has been on dialysis since 2016, life could not be any worse. Nnagbogu needs N13 million for a kidney transplant, but, like Oluwaseun, raising that money has been a huge challenge. To remain alive, he spends N150,000 weekly for a treatment he says has left him bankrupt, indebted and his children out of school. Oluwaseun and Nnagbogu are just a fraction of many Nigerians battling with CKD. According to available statistics, about 20 percent of Nigerians are down with kidney diseases. Figures from the Nigeria Association of Nephrologists pegged the number of Nigerians suffering from renal failure at

25 million. Out of this number, Ebun Bamgboye, president of the association, says about 18,000 will need dialysis every year, which costs about N30,000 per session. CKD, a situation when the kidney becomes damaged leading to a build-up of waste in the body, is becoming prevalent in Nigeria. The spate of this disease, which is said to be common in the elderly, but has now trickled down to the youths, is unsettling. Recently, the disease was reported to have caused the deaths of many residents in the North-Eastern states of the country, most of who are in their early thirties. In the last four years, Kano Kidney Foundation said Aminu Kano Teaching Hospital lost 80 percent of its kidney patients who were undergoing dialysis. The footprint of the disease is also seen in other parts of the country with sufferers battling to stay alive. Sadly, there seems to be little hope for those battling with CKD as the cost of treatment is out of the reach of many, and the facilities to adequately manage the ailment is lacking in Nigeria. In middle-income countries like Nigeria, treatment with dialysis or kidney transplantation creates a huge financial burden for the majority of the people who need it. In another 112 countries, many people cannot afford treatment at all, resulting in the death of over 1 million people annually from untreated kidney failure.

10 percent of the population worldwide is affected by CKD, and millions die each year because they do not have access to affordable treatment. More than 80 percent of all patients who receive treatment for kidney failure are said to be in affluent countries with universal access to health care and large elderly populations. According to The National Kidney Foundation, majority of the 2 million people who receive treatment for kidney failure are treated in only five countries – the US, Japan, Germany, Brazil, and Italy. These five countries represent only 12 percent of the world population, and only 20 percent are treated in about 100 developing countries that make up over 50 percent of the world population. The number of cases of kidney failure is estimated to increase disproportionately in developing countries, where the numbers of elderly people are increasing. Experts say undetected CKD could lead to renal failure, a situation whereby the patient either needs to under dialysis or transplant. It could also lead to death when associated with cardiovascular diseases. Toyin Amira, associate professor and consultant nephrologist at the Department of Medicine, Lagos University Teaching Hospital (LUTH), IdiAraba, said,

HOPE MOSES-ASHIKE

hinese Yuan is seen trading at an average rate of N39/one yuan at the black market, below the N53.35k issued by the Central Bank of Nigeria (CBN) to importers. The CBN had said that forces of demand and supply would flexibly determine the exchange rate at this window. However, the volume remains lower in the open market on the back of low demand. BusinessDay checks across open markets in Lagos revealed that Chinese Yuan or Renminbi was traded by a very few black market dealers. At the Lagos Airport on Monday, one Chinese Yuan was sold at between N29 and N31. It was exchanged at the rate of N30 at the Eko Hotel, N50 at Festac and N55 at Apapa area of Lagos. The CBN on Friday, July 27, 2018, injected a total of $340 million into the interbank retail Secondary Market Intervention Sales, and CNY69 million in the spot and short tenored forwards. Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), told BusinessDay that BDCs were yet to sell Yuan, as the CBN had not stated disbursement to them. He said Yuan was being disbursed to importers of ma-

chinery in key sectors of the economy, and confirmed that Yaun was sold in the open market but in a small volume. “We want to partner with the CBN to be issuing preloaded cards in Yuan,” Gwadabe said. He disclosed that the BDC numbering between 2,500 and 3,000 on Monday collected their first weekly $20,000 allocation from the CBN. The nation’s currency on Monday strengthened against the dollar by 0.14 percent to close at N361.78 per dollar compared with N362.28k/$ traded on Friday at the Investors and Exporters forex window, data from FMDQ show. While naira traded stable at N305.90k since last week Tuesday, it appreciated by 0.11 percent to close at N361.60 per dollar as against N362/$ on Friday at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX). At the Bureau De Change segment of the foreign exchange market, naira was quoted at N360 to the dollar. Against other currencies it traded at N480 against the British Pounds and N419 against the Euro at the BDC segment. The CBN in May this year, signed $2.5 billion three-year currency swap deal with the People’s Bank of China to facilitate trade between the two countries and boost its reserves.

Edo, NYSC strengthen ties on education, health care delivery in rural areas

do State governor, Godwin Obaseki, has said the state government would strengthen existing partnership with the National Youth Service Corps (NYSC) in the state to drive his administration’s reforms in education and health sectors to benefit people living in rural areas of the state. Obaseki disclosed this when he received the new state Coordinator of the NYSC in the state, Adebayo Ojo, at the Government House, in Benin City, on Monday. He said the state government would work together with the NYSC as partners to deliver more value in terms of education and healthcare to people residing in the rural areas. He noted, “My administration is committed to supporting you. We will include you in our plans to ensure that our people feel your impact. We understand you have some challenges, and we have you in mind. “I want to assure you that officials posted to the state are not strangers in our land; We will treat you as one of us as we see you as part of us. The services of corps members who serve as teachers and doctors posted to rural areas will greatly help our people,” he said.

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APC: Now the plots & counter plots thicken

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

igeria has experienced a couple of incomplete military coup d’états. An incomplete coup is one in which the intended objectives are not fully accom-plished in one fell swoop. In Nigerian history, we have seen all types of coups-attempted, aborted, failed, phantom, incomplete and complete. They are all different, though they all share a common foundation. Nigeria’s first incomplete coup was the one led by the majors- notably Chukwuma Kaduna Nzeogwu, Emmanuel Ifeajuna, Adewale Ademoyega and their co revolutionaries on the 15th of January 1966. Their critical objective was to overthrow Balewa’s government, release Awolowo from prison and en-throne him as the Prime Minister. Due to the poor performance of some of the team members and the resistance of some officers like Lt-Col Chukwuemeka Odumegwu -Ojukwu in Kano and the counter moves of General Thomas Aguiyi-Ironsi in Lagos, the coup became incomplete. Balewa

STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

e live in a country where the acquisition of debt has become as easy as preparing pepper soup. It has always been the way of life for Nigerian governments to borrow since the 1980s. Almost a year ago, the Minister of Finance, Kemi Adeosun, complained publicly that Nigeria’s huge do-mestic and foreign debt was becoming unsustainable, and that the Federal Government (FG) should show caution borrowing. At the time the Minister spoke, only economists would have understood her frustration especially when the nation was barely coming out of economic reces-sion. For politicians in the government, the Minister was only generating noise. Yes, many poli-ticians in the government will consider the Minister of Finance as a noise maker because of sev-eral reasons: Firstly,

was overthrown but Awolowo was not installed as Prime Minister then. But following a se-quence of events initiated by this incomplete coup, Obafemi Awolowo was subsequently released from prison and made the defacto Premier under Yakubu Gowon’s ‘presidency’ Another example of an incomplete military coup in Nigeria was the one organized by Col Buka Suka Dimka on the 13th of February 1976. They planned to overthrow General Murtala Muhammed and install their own government. But following the intervention of guys like Ibrahim Babangida, the coup became incomplete. Murtala was overthrown but Murtala’s guys led by Olusegun Obasanjo & Theophilus Danjuma remained in power. A classical example of a successfully completed coup was the one carried out by TY Danjuma and his co-conspirators on the 27th July 1966, when they succeeded in dethroning Thomas Aguiyi Ironsi and changing his government, installing Yakubu Gowon as the head of state. This coup instigated a series of events that led to the Nigeria-Biafra War of 19671970. On the other hand, a classical example of a failed coup was that executed by Gideon Okar and his altruistic group in 1990. It failed on the two counts. It could not overthrow IBB and therefore could not install a new government. However some commentators have opined that if Orkar’s coup had succeeded, may be the problem that has held

The legislative ‘coup’ of 24th July was incomplete. It is certain that the last minute Gestapo-type effort to abort the ‘coup’ and perhaps stage a pre-emptory ‘coup’ similar to that of the five majors, may have delayed the completion of the original ‘coup’ and continues to hold Nigeria down would have been long solved. Last week on the 24th of July 2018, something that looked like a civilian equivalent of an incomplete military coup happened in Nigeria. From the scenes of celebration at the National Assembly and in many parts Nigeria you would think Nigeria just won the World Cup. In one single day 14 Senators (15-1) and 36 Federal Representatives decamped from the ruling APC to the opposition parties, mostly PDP. Something similar had happened in 2014 in the run up to the 2015 General elections with the formation of nPDP, a breakaway faction of PDP, but it was not as dramatic.

What happened last week was an epic drama full of plots and counter plots. The first act was enacted with the formation of rAPC a few weeks ago by the same elements who formed nPDP, except that this time they were more virulent. They knew where they were going but decided to act out the drama script. What heightened the theatre and suspense was the rather belated attempt by President Muhammadu Buhari( PMB) to abort the ‘coup’. He held several meetings with leaders of the legislature especially Senate President. He should have hired IBB, who has tremendous experience in aborting coups. But that may not have been possible, because those who know how to read signs tell me IBB was part of the coup plot. But then PMB hired Comrade Adams Oshiomhole, who these same fellows with clairvoyant powers tell me is the one assigned the role of finally liquidating the APC. While PMB was trying to placate and do damage-control, Adams was blaring on all cylinders threatening fire and brimstone. Not only was he abusing, cursing and threatening the ready to decamp, decamping and des-camping legislators, he was threatening to help some ministers decamp! APC must find a way to exorcise the spirit of trade unionism activism from Comrade Oshiomhole before the prediction that he is the APC undertaker finds early fulfilment. The legislative ‘coup’ of 24th July was incomplete. It is certain that the last minute Gestapo-type effort to

abort the ‘coup’ and perhaps stage a pre-emptory ‘coup’ similar to that of the five majors, may have delayed the completion of the original ‘coup’. It is alleged that a pre-emptory ‘coup’ was going to happen. Saraki & Ekeremadu were to be prevented from going to the Senate Chambers that morning. They had been invited late 23rd evening to appear at different police offices to answer some questions and while there, the planned defections would not have held, rather the two would have been removed from office. Thus an event that would have held on Thursday, the last legislative date before the long recess seemed to have been moved forward to Tuesday with premature adjournment to frustrate the pre-emptory ‘coup’. Therefore for now, some of the objectives of the legislative coup have been achieved. In the Senate for example, the number of Senators in opposition exceeds the number still in the ruling party. I suspect this may be similar to what now obtains in the House of Representatives. This will certainly change the balance of power in both houses. What is more, more defections and perhaps much weightier ones may happen at resumption. Who knows, this legislative ‘coup’ may then be brought to a full and successful closure and the 2019 political equation would have become more easily solvable. Send reactions to: comment@businessdayonline.com

Burden of national debt on future generations Nigeria is an oil producing country. So why bother? There would be US dollars to repay the loans borrowed. Secondly, the country needed money to provide infrastruc-ture for 200 million people. Since China has told those in the government that what Nigeria needs for economic emancipation is infrastructure! Infrastructure! Infrastructure! Why can’t Nigeria borrow funds to provide infrastructure? Thirdly, other regimes borrowed; why can’t the APC-led government also borrow? Over the years, Nigeria’s national experience with huge foreign debt has not been a pleasant one. In the past three decades, Nigeria has found itself in a precarious situation twice when it was un-able to either service or repay its domestic and foreign debts. On those occasions, the country would have almost been technically declared bankrupt. It was ex-president Olusegun Obasanjo’s (OBJ’s) regime that bailed the country out of its debt. It’s unbelievable that Nigeria’s debt which was written off by the Paris and London Clubs barely ten years ago during OBJ’s regime is now N22.73 trillion (US$ 66.70 billion), according to the Debt Management Office. Out of this debt, the foreign component is US$ 17 billion. Since OBJ left the villa, the country has been going abroad to borrow funds to finance annual

budget deficit and for infrastructure development. In fact, China is Nigeria’s major lender and it’s one of the few countries willing to lend money to Nigeria. With the debt burden, Nigeria was advised recently by the International Monetary Fund (IMF) that the country’s debt level would create some vulnerabilities, if not checked. The Bretton Wood Institution further advised that vulnerabilities in the economy would create financial instability as time goes on. To justify the huge debt, policy makers argue that Nigeria’s debt to Gross Domestic Product (GDP) ratio is low in comparison to that of developed nations. And that Nigeria needs funds to improve the nation’s infrastructure. Yes, it may sound brilliant for policy makers to compare Ni-geria’s debt to GDP ratio to that of developed nations. But those developed nations with high debt to GDP ratio being referred to have sustained economic growth and highly productive econ-omies with high revenues to boot. There is no need comparing Nigeria to developed economies when it comes to debt to GDP ratio because those countries in the latter category are more prosperous nations. These are nations whose societies and economies use more advanced technologies in everyday life and economic production activities. In the case of Nigeria, it is an import-dependent economy and the seventh most populous nation with a human development index

that evokes no admiration. Nigeria has the largest number of children out of school in the world coupled with high mortality rate, and soaring unemployment figures. In the face of these challenges, Nigeria expends about 66 percent of its revenue to service its debt, according to policy analysts. What then is the implication? With rising population and fragile economy, one may not be incorrect to say that the future of Nigeria is murky as a result of huge debts. There is hardly anything to show for being an oil producing nation with almost 200 million people. If there was accountability and transparency, one would have expected successive governments to justify huge loans the country took in the past. Rather than use loans to create enabling environment in which businesses would thrive, most firms in Nigeria have laid off some of their staff because of the political uncertainty and lack of infrastructure. If OBJ had not taken a bold and courageous step to liquidate the country’s foreign debt of US$ 18 billion in 2007, Nigeria’s debt profile would have been worse now and virtually unsustainable. Servicing a huge national debt with 66 percent of the federal government’s revenue is not sustainable. One may argue that there is nothing wrong in borrowing for projects especially when the nation’s economy is fragile. But we need those in the government to be accountable, transparent, and

not wasteful. Drawing inspiration from the scriptures, we are in a world where the rich rules over the poor and the borrower is servant to the lender. A debt of US$ 66.7 billion is huge for a nation recently la-beled as the poverty capital of the world. The DMO has been releasing warning shots in the last three years that Nigeria has moved from a low-risk debt distressed country to a mediumrisk debt distressed one. For an agency of the federal government to make repeated warnings, calls for concern. Such warnings must be given the attention it deserves. If Nigeria sustains huge debt profile without appreciable infrastructure, it will definitely pose a financial burden to the coun-try. The implication is that the country has a financial portfolio highly sensitive to external shocks. It is the country’s responsibility to ensure that foreign loans are tied to projects. No mat-ter what happens, the lender will get its money back even when it has been squandered. Nigeria should slow down the rate at which funds are borrowed. We should not continue to mortgage the growth and prosperity of future generations on the altar of debt. Future generations deserve something better from us but not a nation crippled by huge foreign and domestic debts.

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[#StopTheKillings] Would foreign banks be beneficial for Ethiopia? (2)

RAFIQ RAJI “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Aid is not free he upheaval in the majority Oromo areas that birthed Mr Ahmed’s premiership re-mains; albeit subdued. Long suppressed by the hitherto ruling Tigray minority, Oromos took to the streets in spite of almost sure death, imprisonment or torture, indicating they had had enough. Mr Ahmed, an Oromo and thus a beneficiary of their struggle, has thus far not disappointed them. He has perhaps been moving too fast, though. But in light of the recent attack at a rally of

his supporters, which is widely believed to be a failed assassination attempt and one of many planned attacks to cripple the economy, he may have rightly judged speed to be of essence. Thankfully, there is no sign that he has been cowed by the unfortunate incident. Instead, he seems even more energized. The Ahmed government does not seem to be in a hurry to liberalise the banking sector, however. That is probably a mistake. Unless Ethiopians begin to see meaningful change in their standard of living, it might be only a matter of time before his popularity begins to wane. Without a doubt, an immediate solution to the foreign exchange shortage and myriad economic problems crisis would be to liberalise key sectors of the economy. Allowing foreign participants into the banking sector would allow for new FX flows and expertise needed to develop the country’s virtually non-existent capital markets. The consequent change could be potentially overwhelming for a bureaucracy and political class long nur-

The Ahmed government does not seem to be in a hurry to liberalise the banking sector, however. That is probably a mistake. Unless Ethiopians begin to see meaningful change in their standard of living, it might be only a matter of time be-fore his popularity begins to wane tured on a cautious approach. Thus, the necessary quick changes the Ahmed administration has to put in place are fraught with huge risks; for him, the stability of his government and indeed a somewhat pampered socialist-oriented populace. All indications suggest Mr Ahmed is up to the task, however. But he is only one man. For the needed changes to materialise, he would have to carry an old-school bureaucracy along.

Even so, the aforementioned troubles would not entirely prevent the economy from growing at what are still remarkable growth rates. But unless something drastic is done, erstwhile double-digit growth rates would be increasingly elusive. Still, the International Monetary Fund (IMF) reckons the Ethiopian economy should grow by about 9% in the current year. That would be a slowdown from the remarkable heights of the past decade. Foreign exchange reserves are just enough to cover about 2 months of imports or less; about $3 billion. In fact, imports have been four times as much as exports in recent years. Without at least as much exports, the differential has to be filled from external loans and aid. The new administration currently enjoys some goodwill, however. In mid-June 2018, the United Arab Emirates (UAE) deposited $1 billion with the central bank and pledged another $2 billion in investments to the country. The government says the investments would be in tourism, agriculture and renewable energy. All these came

about during a visit by Crown Prince Mohamed Bin Zayed of Abu Dhabi in the month. It is believed the generosity of the prince may not be unconnected to Mr Ahmed proving to be an excellent host. But the goodwill is not going to last forever. And the aid, like almost every other, is not likely to be entirely free: The UAE might be desirous of certain considerations. Just nearby, in Djibouti, where Ethiopia is influential, the Arab country was kicked out of a lucrative sea port concession. Thus, it is doubtful it is giving the new money totally out of the goodness of its heart. • The author, Dr Rafiq Raji, is an adjunct researcher of the NTUSBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. This article was specifically written for the NTU-SBF Centre for African Studies Send reactions to: comment@businessdayonline.com

When economic theory fails us

MICHAEL FAMOROTI Michael Famoroti is Chief Economist at Vetiva Capital Management. You can contact him onm.famoroti@ vetiva.com.

A “

n economist is someone who sees something in practice and wonders if it would work in theory.” – Unattributed You would not be surprised to discover that higher demand pushes the price of a product higher, or that more expensive insurance premiums discourage reckless driving. And judging by evidence across developing countries, microinsurance can transform the lives of the poor. Economics has many accurate predictions and prescriptions, many of which we unconsciously follow in our daily lives. Moreover, these prescriptions apply even when we ignore them. No matter how many times Nigeria attempts it, fixing the price of widely-used items (petrol, foreign exchange) will lead to scarcity and roundtripping. Yet, rather often, economic prescriptions fail to translate into practical experience, and there is a divide between economic theory and reality. The process

is always the same: an economist creates a model to explain a pattern of behaviour, which fits historical data and passes empirical tests but collapses once implemented through policy. Nigeria’s worst experience of this can be found in the failure of Structural Adjustment Programs recommended by the International Monetary Fund in the 1980s. And this divide between economic theory and practical experience is apparent even in micro cases. For examples, economic theory struggles to explain why petty corruption increases among the police when their salaries are doubled. Answer: it increases their appetite for bribes. Although we see the divide in other disciplines, it seems larger in economics. Perhaps this is because economic theory itself is shaky and there is rarely a consensus. Despite being the biggest macroeconomic concern in the last two centuries, we still don’t have a unifying theory of how countries become wealthier in the long-run. Why is the divide so wide? Economics pays little attention to the realism of its assumptions. Milton Friedman, the father of the Chicago School of Economics, the most influential economic thought in the second half of the 20th Century, popularised the idea that assumptions don’t matter, predictions do. Hence, economic theory has often been basedon

assumptions known to be wrong and often ridiculous, assuming people have perfect self-control, are purely self-interested, and completely rational—the oftcaricatured homo economicus. The truth is that the realism of assumptions is relevant for the predictive power of our models. We have made some progress in realism, thanks to behavioural economics, can now explain patterns of behaviour that eludes traditional theory, like why people pay for annual gym memberships and then stop going after a month. A lot of these insights are being putin use in Western economies. The United Kingdom has a behavioural insights team that works with the government to optimise government policy using behavioural science, and everyone from the United Nations to the World Bank has behavioural insights teams. The rationale is simple: the more our assumptions tally with reality, the more our predictions will tally with reality. This issue has severe real-world implications given the ubiquity of economists in the public sphere. In entrusting policy to a field with more theoretical understanding than practical aptitude, we risk further policy failure. If economists had their way, petrol subsidies would be removed in Nigeria. But many economists ignore two key variables in the discussion: the failure of Nigerian governance and the absence of public trust. Once we account for these, subsidies become a social issue as much as an economic one,

and the decision comes down to whether the economic arguments against trump the social realities in favour. (Side note: they probably do) Once we understand the limits of economic theory, we can turn our attention to the important matters. Nigeria’s annual budget compares unfavourably to its peers in per-capita terms, but an outlined focus on social safety nets and infrastructure spending has tremendous economic potential. However, bickering over the breakdown of the budget—what it says on paper—has come at the expense of execution, which often manifests in late passage and substandard implementation. On average, only 70% of the budget is implemented, and this figure is even less for capital projects and social investment programs (SIP). Despite budgeting nearly a trillion naira over two years for SIPs, the conditional cash transfer scheme has reached under three hundred thousand people in 21 states. In addition, we stop fixating on discovering the “right” economic answer. It always depends. For example, supporters of the Central Bank’s foreign exchange restrictions from a few years ago were quick to point out Egypt’s high 2017 inflation when they floated their currency, while dissenters then seemed to have the last laugh when Egypt’s inflation fell below Nigeria’s in May 2018. The argument rages on. Or take Nigeria’s borrow-

ing strategy. Are we borrowing too much? Economic theory provides thresholds to answer this question—debt to GDP ratio, debt-servicing ratio—and these give mixed messages. The answer may lie simply in how the money is spent. As Robert Asogwa, a sitting member of the CBN Monetary Policy Committee said, “Public debt not backed by productive assets will always be a potential danger to the economy in the near future.” There are simple solutions for bridging the divide between economic theory and reality. The first is to improve on our body of knowledge. Although theoretical consensus would be difficult to achieve—and not necessarily desirable—we can improve on the realism of our assumptions. Too little is known about the economic peculiarities of Nigerian culture and how it differs from our usual assumptions about economic agents. In addition, we need to get more acquainted with the real-world through better use of data and experiments. A mix of data and experimentation would help us understand people/ economy better and determine which theories fit. *The views expressed in this article are personal to the author and may not reflect the opinion of Vetiva Capital Management Limited or any of its affiliates Send reactions to: comment@businessdayonline.com

BUSINESS DAY

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Editorial PUBLISHER/CEO

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

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

Tuesday 31 July 2018

Yusuf’s bribery scandal: The honourable thing to do

he wind sweeping through Africa’s corrupt football governance structure that has seen the res-ignation or sacking of many officials including the Ghanaian Football Association Chairman fi-nally birthed in Nigeria. It did not come to many who knew the workings of football in Nigeria when the London-based British Broadcasting Corporation (BBC) aired footages of the Nigeria’s head coach, Salisu Yusuf, allegedly receiving bribe from agents of Ghanaian undercover journalist, Anas Aremeyaw Anas. The deal, according the video, was to ensure that two unnamed players are included in Nigeria’s squad at the African Nations Championship (CHAN) 2018 in Morocco. Yusuf was given a thousand dollars and promised 15 percent of future contracts those players will sign. Watchers of Nigeria’s football industry have often alluded to financial improprieties between Nigerian Football Federation (NFF) and coaches in determining which players make it to the na-tional team. Similarly, match-fixing is the

order of the day in the Nigerian Professional Football League. In 2013, Nigeria set a world record in match fixing after two lower league clubs chasing promotion and needing to boost their goal differences won game 79-0 and 67-0. Despite the scandal and the global shame, matchfixing and unethical practices have continued unabated in our football. It is generally known in Nigeria that a home team, no matter how poor or how badly they play, never loses a match. It will also be recalled that during the build-up to the selection of the 2022 World Cup host na-tion, former Conferation of African Football (CAF) and International Football Federation (FIFA) executive member, Amos Adamu, was caught on camera allegedly receiving bribes from Qataris officials in order to vote in favour of Qatar. He has since been banned by FIFA. Anas’ investigation was meant to expose the corruption rot and scandals rocking Football Asso-ciations (FAs) and match officials in African football. Others accused in the video include former Ghana’s FA president, Kwesi Nyantakyi, Kenyan referee, Aden Marwa, among others. Fol-lowing the

allegation, Aden who was billed to officiate in Russia 2018 resigned and left the mundial. The government of Ghana went a step further by dissolving the FA citing the “wide-spread nature of the apparent rot.” Both Kwesi and Aden have exited the football scenes of their countries. FIFA, CAF and NFF’s code of ethics frown at officials collecting enticement in order to influence any natural decision in the football circle. Articles 10-12 of FIFA’s “Rules of Conduct”, which deals specifically with gifts, bribery and corruption, say in part: “Officials are not permitted to accept gifts and other benefits that exceed the average relative value of local cultural customs from any third parties. If in doubt, gifts shall be declined. Accepting gifts of cash in any amount or form is prohibited. “Officials may not accept bribes; in other words, any gifts or other advantages that are offered, promised or sent to them to incite breach of duty or dishonest conduct for the benefit of a third party shall be refused. “Officials are forbidden from accepting commission or promises of such commission for negoti-ating deals of any kind while performing their duties,

unless the presiding body has expressly permitted them to do so. In the absence of such a presiding body, the body to which the ofﬁcial belongs shall decide.” Let us be clear about this; FIFA’s definition of “Officials”, according to its website, include “…coach, trainer and any other person responsible for technical, medical and administrative mat-ters” of football. Yusuf definitely falls into this category. The honourable thing for Yusuf to do is to resign like all the others exposed by Anas. But like the Nigerian that he is, he has so far refused to resign or even accept that he did anything wrong. For long, players and agents in Nigerian have been accusing coaches and FA officials of de-manding bribes from them before they are called up to represent the country. The media is also rife with allegations the criteria of being called to the national team is not current form or per-formance but the ability of the players’ agent to sufficiently settle national team coaches. The scandal is a litmus test for the NFF to prove its credibility to the world and to demonstrate that Yusuf acted independently without the knowledge of his employer, the NFF.

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Tuesday 31 July 2018

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BUSINESS DAY

Skyscrapers: Expert calls for precautionary safety measures against fire incident …suggests early MoU between property owners and helicopter operators for evacuation Stories by Daniel Obi Media Business Editor

ith several property developers, especially in Abuja and Lagos, erecting high-rise buildings of over seven to 25 floors, the crucial question on the lips of safety experts is how safe are the occupiers, particularly those on top floors in case of fire occurrence. This indeed has become a genuine concern given the increasing incidence of fire occurrence in buildings through electric fault or other sources. Fire accidents in some highrise buildings have resulted in catastrophic loss of lives and properties. Of late, skyscrapers are increasingly dotting parts of Lagos which the experts believe should be equipped with adequate precautionary measures against fire occurrence for safety of the occupiers. Perhaps, due to scarcity of land, Lagos State government appears to be encouraging skyscrapers which is commendable but in constructing such structures, the

contractors should equally submit safety procedures for the buildings before the plan is approved, Jumade Adejola, the CEO of Surveillant Fire Limited told BusinessDay recently in Lagos. “It is good that buildings are going vertical but the issue is what they are putting in place to ensure the safety of the occupiers is secured. If there is fire incidence on 10th floor, for instance, what are the safety measures for those

above the 10 floor, how do you evacuate those people? It is not just about aesthetics, rather, when vertical buildings are being put in place the major consideration is safety architecture of that building”, Jumade said. Jumade who has been in the business of fire-fighting equipment for over 20 years stated that in addition to equipping high rise buildings with genuine fire-fighting equipment, the buildings

should be constructed with helipad on top for evacuation of people. He suggested that the building owners don’t necessarily need to own helicopters, but they can sign MoU with helicopter operators within their cities for evacuation of people in case of fire occurrence. Building owner should not necessarily own a helicopter, “but if you have MoU with helicopter company in case of any emergency, the helicopter can come on top of the building and evacuate people”. Reminded that foundations of buildings with helipad should be more solid, he said anybody constructing vertical structure must be ready for the cost of stronger foundation that can carry helicopter and its vibration for evacuation purposes. He commended Lagos state for its efforts and investments on safety. On National Emergency Management Agency, he suggested the siting of at least 10 emergency centers in each geo-political zone for emergency preparation in the country. “Emergency preparation must not be reactive but proactive”, he said.

Experiential marketers’ body enhances disciplinary code, reviews constitution

he members of Experiential Marketers Association of Nigeria (EXMAN), one of the sectoral groups within the integrated marketing communication sub-sector undertook a major review of its ethics and disciplinary code as well as constitution at the 5th annual general meeting in Calabar, Cross Rivers State. During the meeting, the Association complied with its constitutional provision to elect Olurotimi Rhodes of Voyance Marketing as publicity secretary. The Association’s President Kehinde Salami said that, “the AGM had its highest turnout in the association’s history with 42 participants and it was adjudged to be the most engaging, with several notable achievements. “ The executive team achieved 80 per cent of its set objectives to date with a

promise to go further in line with its AGM theme, ‘Moving Forward’, he said. Specific highlights at the AGM included a comprehensive constitution review, ethics and disciplinary code enhancement which will now

be infused into the existing code of conduct document, bye-election for a new Publicity Secretary. Auditors, Gbenga Badejo & Co was also on ground to render account of the Association’s books, while all

Chairmen of committees gave account of their stewardship over the past one year. Having served its constitutional provision of one year in office, the Executive Management team was re-elected to continue in office for another term of one year. Salami said, “There was a commitment from all members to accelerate the drive for the EXMAN certified brand ambassadors program as well as actively support the special projects committee on the Somewhere in Naija initiative, a unique online platform that promotes identified local talents on a single portal.” Recording another first, the Salami led executive team inducted one out-ofLagos agency and three new members into the association bringing the total number of certified agencies to 42 members.

Moneytrust lifts hope of Lagos tanker explosion victims

urviving victims of recent Lagos tanker explosion along LagosIbadan expressway have received medical support to aid their quick recovery from the management of MONEYTRUST Microfinance Bank. According to a statement, the management of the bank had recently paid a courtesy visit to the Lagos State Government and the victims of the tanker inferno. Receiving the management of the microfinance bank, the Lagos State Commissioner for Health, Jide Idris, who was represented by the Permanent Secretary, Omodele Joyce Osunkiyesi commended the bank for the initiative to embark on such a worthy cause, to associate with the government to provide support for the survivors of the incident. In continuation, the Man-

agement of the bank led by the Chief Business Officer, Benedict Ikechukwu Ikeji thereafter visited the survivors of the incident at the Gbagada General Hospital, burns and trauma unit, where they presented items to the hospital for their upkeep. The Chief Matron, M.B Idowu who received the goods on behalf of the victims appreciated the bank for the gesture and called on other organisations in the private sector to emulate MONEYTRUST Microfinance Bank. Speaking on this initiative, Benedict Ikechukwu Ikeji commended the efforts of the hospital in ensuring the recovery of the survivors through adequate medical support. “We are here to lend our support to complement their efforts, and we are convinced that in due cause they will fully recover and be able to live their normal lives again.”

MultiChoice slashes GOtv price, boosts content with premier League, Serie A, others

ultiChoice Nigeria has announced a reduction in the price of GOtv Max, one of the packages on its digital terrestrial platform, from N3,800 to N3,200 starting August 1, 2018. The price review, according to a statement, does not affect the subscription fees of the other GOtv packages. GOtv Plus package remains at N1, 900, Value package at N1, 250 and Lite at N400. The company also announced that matches of the Italian football league, Serie A, will return to SuperSport from the start of the upcoming 2018-19 season, beginning 19 August and will be available to GOtv customers. In addition to Serie A, MultiChoice will also be introducing more live football from other leagues to the GOtv Plus and Max packages. Specifically, GOtv Plus customers, will now have access to over 220 live games per season,

with two games each from the Premier League, La Liga, and Serie A. Already, the reduction has been met with delight by subscribers, who took to their social media pages to share the news. Managing Director, MultiChoice Nigeria, John Ugbe explained that the price reduction has been effected to widen the access to the great content on the GOtv platform. “Our goal is to give more Nigerians access to the great content on our platform without compromising on quality or variety. With the new price on GOtv Max, our customers can now pay less to enjoy more.”

BUSINESS DAY

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Tuesday 31 July 2018

BRANDING

Uber in discussion with FG, states to ease traffic congestion, improve city branding …Plans to introduce ‘right sharing’ mobility model DANIEL OBI

ber, transportation Network Company headq u a r te re d i n San Francisco, California, with operations in over 600 cities worldwide has entered into discussion with Nigerian government and states on how to ease transportation, congestion, enhance tourism and contribute to city branding. The transport network that helps people get ride at the push of a button on their phones is negotiating ‘right sharing’ mobility model with Nigerian stakeholders. Right sharing allows Uber to pick more than one person to a destination. This model, it is believed will make more people to abandon their cars which will ease congestion on city roads, reduce pollution and give cit-

ies better look. Uber which marked its 4 years of business operation in Nigeria is also negotiating the same mobility model with ministry of transportation and other institutions in Ghana. Part of the negotiation in Nigeria is the education on right sharing, positives it can bring to a city and how it can improve the system and tourism, Lola Kassim, Uber General Manager for West Africa told BusinessDay in Lagos. She further said that Uber which is in 13 cities in Sub Saharan Africa has over 100,000 people in Lagos who are actively using Uber and over 8,000 active drivers in Lagos and Abuja. “We are also contributing to image of Lagos for tourism and we have visitors from more than 65 countries who use Uber application which to us is very great”, Lola said. In addition to celebrating its fourth year anniversary in

Lagos, Uber also unveiled its new advert campaign tagged “Moments that Matter.” The campaign highlights creative collateral across different mediums like television, cinema, radio and digital. The advert was a mix of television, radio and digital collateral humanizing the real benefits of using Uber around

Chivita wins MarketingEdge Outstanding Juice Brand of the Year Award

t the recently held Ma rk e t i n g E d g e Awards in Lagos, Chivita emerged as the Outstanding Juice Brand of the Year. Having won the award in 2016, the brand’s recognition once again highlights its consistency in the juice beverage category. For keen industry watchers, the Marketing Edge Awards offered a veritable platform to celebrate creativity, innovation, marketing and sustainability for brands, corporate institutions and distinguished personalities. According to the organizers of the Marketing Edge Awards, the nomination of Chivita for the Outstanding Juice Brand

of the Year Award was a result of painstaking review and assessment of the patriotic contributions of the brand to the growth, development and continuing evolution of the juice segment of the Nigerian FMCG industry. “The brand’s commitment to the enthronement and sustenance of global best practices in the industry as well as its impactful strides in the face of daunting challenges, especially over the last one year, very well positioned it for such recognition and celebration,” they stated. Chi Limited’s Managing Director, Deepanjan Roy, expressed pleasure at the award and reiterated that Chivita has

constantly innovated over the years by anticipating trends and focusing on consumer expectations to build a formidable brand that is a huge delight to fruit juice consumers. “In line with best practices, we would continue to sustain the confidence consumers have invested in Chivita as the preferred fruit juice brand for health, nutrition and refreshment, by ensuring the highest standards of product quality, and consumer benefits,” he said. The recognition for Chivita is seen as another milestone for a brand that has continually grown its mind share by effective communication campaigns, innovation, and consumer satisfaction.

Mamador brand rewards 2,000 consumers, concludes consumer promo

ooking oil brand, Mamador, from the stables of PZ Wilmar, a subsidiary of PZ Cussons has concluded its National Consumer Promotion, tagged ‘Mamador Kitchen Makeover’. The third and final draws of the consumer promotion was witnessed by regulatory bodies and trade partners of PZ Wilmar. The live draws show, hosted by Nollywood actress, Ufuoma McDermott for the final episode recorded over 200

winners, with last of grand prizes of the Mamador Kitchen Makeover going to Desmond Elemuo, resident in Lagos, who was called immediately. Other big wins included sets of customized Cooking Pots, Deep Fryers, Standing Cookers, Double Door Refrigerators, Chest Freezers and Gift Bags. Commercial Director, PZ Wilmar, Kalyan Bandyopadhyay expressed delight at the conclusion of the consumer promo. “Over the past three months we have rewarded over

2,000 loyal consumers with amazing gift prizes and gave out airtime. We thank our ever loyal consumers as well as the new ones who through this promo have made Mamador their number one choice. PZ Wilmar, remains committed to providing great quality, healthy food products for Nigerian families”. One of the grand prize winners of the Kitchen Makeover, Monsurat Hammed expressed gratitude as she thanked the brand for what she described as a truly rewarding experience.

the city in a locally relevant way. Speaking on the campaign, Margaret Banasko; Country Marketing Lead for Uber in West Africa said: “The key objective of the campaign is to Re-inforce Uber’s commitment as a collaborative, supportive partner that gets customers to the “last mile” in more ways than one.

How Heineken’s interactive world bottles are connecting with consumers

n June 18, 2018, international renowned brand Heineken unveiled limited edition interactive bottles through a digital campaign that deployed over 100 social media influencers. These bottles feature expressions of the colors of the countries in the famous Heineken red star, creating a learning ground for consumers to connect with the brand. The experience is taken a notch higher with the addition of codes for each country which can be scanned using Shazam app. The Shazam mobile app used by hundreds of millions of persons worldwide is notable for its high-tech entertainment features especially for music identification and more recently image recognition. By partnering with the Shazam app, Heineken takes consumers on a unique journey as they view specially curated videos about different countries by simply scanning the Heineken bottle. This innovation speaks volumes of Heineken’s lead-

ership and being in the cutting edge of innovative ways to connect with its consumers. In a digital age where brands are competing fiercely to dominate their respective markets, Heineken’s early adoption of the Shazam image recognition feature to engage its consumers is a clear stamp of the brand’s position as a leader in the beverage industry in the world. Known for excellence, Heineken has in the past curated campaigns that surged its market share. Take for instance, the ‘Trailblazers’ TV commercial that encouraged consumers to be adventurous. The campaign’s narrative is woven across four ordinary guys who were used to their comfort zone until a trailblazer among them showed them a new world of discovery. The storyline is tilted with this new campaign as Heineken opens a door of exploration for consumers by allowing them to learn more about various countries of the world through its ingenious bottle. It’s more like travelling the world through a bottle.

BD Brand Talk

Today’s targeting technology and the right time to advertise to someone Mike Umogun

hen is it the right time to advertise to someone? This is obviously an interesting but mentally challenging question for marketers and the marketing world. It seems we are getting very close to a consensus. Right now the marketing world seems to have decided that the right time to get a message to someone is as close to point of purchase as possible, but is that really true? As you may have realized, Kantar Millward Brown have been giving a bit of thought to how people make decisions recently. And it reminds us that much as people’s decisions are shaped by emotions and context, individuals try to make the right decision; the one that will have the best outcome for them. This means that people will try to make up their own mind about what to buy, particularly if the purchase is expensive. Increasingly, however, we have the ability to reach people with advertising close to the point of decision.

While the targeting may still not be as accurate as marketers might like, the chances of reaching someone close to making a purchase are probably improved. The only problem being that if someone cares enough about a purchase to exhibit behavior indicative that they are about to make a purchase – searching, reviewing, checking out websites – then they are likely also trying to make up their own minds about the purchase and will be more likely to discount the information provided by advertising. Unfortunately reaching people at the time when they are most likely to consciously deliberate their choice comparing brands in terms of features, benefits and prices - means that advertising needs to be more forceful than it might otherwise. Tangible claims and price discounts are more likely to sway someone’s deliberations. And all too often the price discount prevails at the expense of the brand’s profits. Of course the ideal is combine strong predisposition to buy with a strong call to action. Then all someone might need to sway the

purchase is a reminder of what the brand stands for. Effective activation is all about triggering the right associations at the right time not creating them from scratch. Brands grow by building salience, informed by perceptions of difference and affinity, through advertising, online content, reviews, PR and word of mouth. Given the diverse reasons why someone might consider a brand, it is important to ensure the brand is salient in relation to different category entry points for different people. This is where the true benefit of today’s targeting technology can really make a difference by ensuring that a timely reminder is delivered, triggering positive predisposition previously built through brand advertising. I believe whether a message is right or not depends on when it is delivered before or during search and shopping. Advertisement investment is expansive and therefore must be as precise as possible to ensure return on investment. Michael Umogun works Millward Brown Nigeria

Tuesday 31 July 2018

BUSINESS

COMPANIES & MARKETS

Pg. 16

Sokoto Cement records N7.6bn profit in 2017

he Cement Company of Northern Nigeria (CCNN) has recorded gross profit of N7, 605, 209, 592 in the 2017 financial year despite numerous challenges. Abdul Samad Rabiu, executive chairman/CEO of BUA Group, who made this known at the company’s 39th annual general meeting held in Sokoto identified shortage of energy as the primary challenge.

Rabiu said the company had revenue of N19, 588,260,886 for the 2017 financial year as against N14, 087,553,499 recorded in 2016 though cement demand in Nigeria came down to almost 20 percent compared to 2016. Rabiu who described the revenue increase as the highest in the company’s history said improved Cement prices and efficient cost management were factors that led to the achievement. Rabiu then assured stakeholders of sustenance in the figure and dominance in the home market and also penetration into

some key strategic markets. According to Rabiu, “Low Pour Fuel Oil (LPFO) which is the main energy used by the Company has to be supplied from sources other than the Kaduna Refinery which is the closest to CCNN’s plant and had not been supplying LPFO for quite a long time now,” Rabiu stated. “Cement demand in Nigeria in 2017 came down by almost 20 percent compared to 2016. During the year 2017, the Company had revenue of N19, 588,260,886 compared to the N14, 087,553,499 it recorded in 2016.”

Containerised, bulk cargo haulage spikes growth at Ikorodu Lighter Terminal

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

Endurance Okafor

DAY

Continuing: “Improved Cement prices and efficient cost management contributed to higher revenue and the good margin that was the best witnessed so far in the company’s long history. This is indeed an excellent achievement which we hope to sustain in the company going forward. The AGM endorsed the gross dividend of N1.25k recommended by the Board of Directors of the Company and Total equity and liabilities of CCNN, rose from N20, 030,222,016 in 2016 to N24, 648,675,929 for the financial year ended.

GTBank partners New Works, NIS on e-payment for International Passports AGNES IBOROMA

TBank has partnered with New Works Limited and the Nigeria Immigration Service (NIS) to deliver an endto-end process for Nigerians to apply for their International Passports online and also make payments at the official rates online. This multi-channel payment system will enable Nigerians apply for all international passport types (new and renewals) online and make payments on all GTBank’s e-channels using the reference ID generated at the application stage. Payment for passport services can be made on GTBank’s internet banking platforms In addition to these payment channels, GTBank is launching payment offices at six of the Nigerian Immigration Service Offices; starting with the passport office at Alagbon Close, Ikoyi, Lagos. Five other payment offices will be set up at Alausa, Festac, Port Harcourt, Kano and the NIS Headquarters in Abuja. The GTBank payment offices will

make paying for immigration services at NIS offices easy and seamless. Commenting on the Partnership with New Works and the Nigeria Immigration Service, the managing director of Guaranty Trust Bank plc, Segun Agbaje stated that, “We are delighted to be at the forefront of digital banking solutions that is making banking faster, cheaper and simpler for every Nigerian. We believe that creating a multi-channel payment system for immigration service’s reflects our commitment to driving digital banking solutions that not only drives financial inclusion, but also positions us at the center of an ecosystem that offers benefits beyond banking.” Guaranty Trust Bank plc has consistently played a leading role in Africa’s banking industry and is regarded by industry watchers as one of Africa’s most innovative financial institutions. The Bank has continued to lead the e-banking revolution in Nigeria through the provision of various e-payment solutions aimed at making it easier for customers to carry out their transactions.

VFD Group plans expansion to untapped sectors of the economy Endurance Okafor

V L-R: Sade Morgan, chairman, Food and Beverage Recycling Alliance(FBRA); Bhupendra Suri , managing director of Coca-Cola Nigeria Limited; Akinwunmi Ambode, Lagos State governor and Olusuyi Adekunle , vice chairman, FBRA, during the Memorandum of Understanding(MOU) signing ceremony on the waterways clean up between FBRA and Lagos State Government held in Lagos.

Transcorp Hotels PAT up 83% in half year

he pride and pearl of the Nigerian Hosp i t a l i t y In d u s t r y , T ra n s c o r p Ho te l s Plc (“Transcorp Hotels”) has announced its unaudited financial statement for the period ended June 30, 2018. The company showed significant growth over same period last year, recording a turnover of N8.01billion, profit before tax of N2.02billion and earning per share of 17.84 Kobo. Transcorp Hotels delivered a commendable 29 percent year-on-year growth in revenue at the close of the first half of 2018, moving from N6.20billion in HY 2017 to N8.01billion in HY 2018.

Gross profit for the period grew by 31 percent to N5.89 billion from N4.50 billion of HY 2017; profit before tax for HY 2018 was N2.02billion against N1.10 billion in HY 2017, representing a 85 percent year-on-year growth. The Group ended with an impressive profit after tax of N1.38billion, representing 83 percent year-on-year growth over N760 million in HY 2017. Commenting on the financial results, Valentine Ozigbo, chief executive officer of Transcorp Hotels Plc., said “We are thrilled with the half year results of the hotel, which was primarily driven by the increase in occupancy,

room inventory and aggressive marketing strategies. With the help of a strong and dedicated workforce, we will continue to deliver significant value to our shareholders and unrivalled service excellence to our customers.” He emphasised that for Transcorp Hotels Plc. to achieve its long-term strategy of being Africa’s leading hospitality company, the organisation is investing resources into diversifying its overall guest experience using technology. According to Ozigbo, “we recently launched the Transcorp Hilton mobile application, which allows guests request for dining services,

housekeeping services, valet services and maintenance requests with the click of a button. Guests can read up about local attractions in Abuja, explore on-site and off-site recreational services and navigate key locations around the city through the inbuilt map. He added that Transcorp Hotels Calabar is also undergoing an extensive upgrade of its existing technology and internet services, to ensure guest’s experiences are better personalised and customer service is seamless across digital platforms. “This is the only way we can remain competitive in the ever-changing business landscape”, Ozigbo said.

FD Group, a financial service focused proprietary investment company, has disclosed plans to tap into various sectors of Africa’s largest economy. This was disclosed to BusinessDay in a brief meeting with the executives of the group’s various subsidiaries in its Lagos office. “We discovered that despite the size of the formal financial sector, the informal sector is greater still, and that there are immense opportunities for value creation within this informal sector. In light of that, we developed a business model that allows us to operate in every area of the financial industry.” The group disclosed. Meanwhile, the holding company has its subsidiaries which includes; VFD Microfinance Bank, Everdon Bureau de Change, Anchoria Asset Management, VFD Bridge, Germaine Auto Centre and Dynasty Real Estate. Nonso Okpala, the group managing director/CEO said that the group has already exceeded all the targets it had set so far this year.

“We have studied our environment and seen that there are immense opportunities for value creation within the informal sector,” Okpala said. The meeting was however organised in order to let the general investing public to know more about the group, what it does and its plans to tap from other sectors where the group does not already have a wing. In February of 2018, the Lagos-based group issued a Debt Note of about N300 million to a diverse pool of investors and offered interest rates of about 19 percent. The company revealed in its prospectus that the debts raised will be used to fund its working capital requirements. The company revealed also that the offering was 75 percent oversubscribed closing at about N525 million. They accepted N428 million of the amount received from investors. It is interesting to note that retail investors made up about 87 percent of those who took the offer. The group plans to achieve its objectives of exploring the opportunities in the Nigeria economy through its force of great executives who are governing the various subsidiaries of the group.

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COMPANIES & MARKETS Containerised, bulk cargo haulage spikes growth at Ikorodu Lighter Terminal MIKE OCHONMA

s part of the efforts of the Nigerian Ports Authority (NPA) to further decongest the traffic gridlock on Apapa port axis, Hadiza Bala-Usman managing director of NPA in February this year flagged off the first export consignment of manganese, a solid mineral resource from the Ikorodu lighter terminal to Apapa port. This initiative has since resulted in the movement of almost 2,000 truck equivalents of containers and other bulk cargos from Apapa port access road by leading FMCG trading and manufacturing companies moving goods comprising mainly of solid minerals and agro commodity exports. Since then, the operations at the terminal have been on the high. In 2017, the estimated cargo throughput in Apapa and TinCan Island ports according to reports from the Nigerian Ports Authority (NPA) was put at 67 per cent of the overall country’s’ imports and exports. The Lagos ports being the preferred ports, have been faced with the problem of delay in cargo evacuation, which has led to port congestion and huge traffic queues. Several times, ‘cosmetic’ attempts have been made to clear the Apapa traffic, but as soon as the media attention dies down, the gridlock creeps back. It is estimated that the economy loses about N20 billion daily due to the gridlock, which is the country’s premier port According to Edeme Keli-

s a strategy of boosting customer satisfaction, LASACO Assurance Plc has evolved a speedy and more responsive claim settlement solution that would make policyholders get compensation under their Motor Insurance policies faster. It has also launched an instant rescue solution, which provides free towing service for vehicles with severe damage particularly for vehicles owners insured by LASACO and generally for motorists operating within major parts Lagos State. The claim settlement solution, tagged LASACO Blue Response, which is targeted at automobile insurance operations, would enable the company solve the most critical aspect of claim assessment and settle minor Automobile insurance claims immediately upon notification. The solution, first in the industry in Nigeria, would reduce the time frame between accident and claim settlement and encourage more interaction between insurance operators and

kume, managing director and chief executive of Connect Maritime Services Limited, embracing intermodal logistic solutions such as the barge services moving cargo to and from Apapa to NPA Ikorodu Lighter Terminal would significantly contribute to solving part of the chaotic traffic situation that is currently been experienced in Lagos state in the past months and years. Figures from the Nigeria Ports Authority (NPA), shows that container traffic statistics at the country’s sea ports have more than tripled since 2007. ‘’This ordinarily should be good news as it is an indication that the economy is expanding. However, in the case of Nigeria, this has become a challenge

because the infrastructure to support this growth in cargo has actually deteriorated’’. He stated. Globally, Nigeria is no longer a desired shipping destination because of the longer turnaround time for ships coming to the country. A 2018 overseas cargo and freight costs template showing the cost of shipping cargo from the United States to other destinations shows that cargo and freight costs from the New York to Nigeria are about the highest globally. For instance, cargo and freight costs of a 20 feet container from New York to Apapa Port is $4,982 almost twice the cost of the same 20 feet container to South Africa which will cost just US$2,542. For a 40 feet

container, the cost is US$7,436, which is almost twice the cost to ship a similar container to South Africa. Reports from the Department for Environment, Food and Rural Affairs (Defra) show that shipping emits less carbon than other transport modes and this has been demonstrated by one study after another. Sea and Water’s report, ‘The Case for Water’, showed that increased water freight transportation can cut the amount of carbon put into the atmosphere by 80 percent and for each tonekm, inland shipping emits only 22 grams of carbon. Rail freight is ranked a close second-best, at 28 grams.

President of the Institute of Chartered Accountants of Nigeria (ICAN), Razak Jaiyeola; Past President of ICAN, Ismaila Zakari and Minister of Finance, Kemi Adeosun, at a meeting in Abuja on Friday, July 27, 2018.

LASACO launches prompt response, rescue solutions for motor vehicle insured clients Modestus Anaesoronye their clients. Covering minor accidents, the solution would only be available to policyholders in Lagos (excluding Epe, Imota and Badagry for now) who, in the event of an accident, would be required to call the company on 07000LASACO (07000527226) and their trained claim assessor would reach the location of accident within 30 minutes. It operates with fully kitted and “ready-to-go” motorbike riders who will always “swing into action” whenever there is instant notification of a claim. The riders, according to the Managing Director/CEO of the company, Segun Balogun, would inspect the accident vehicle at the scene of the accident, adjust the claim and offer an on-thespot settlement.

This novel solution, he said, would promote efficient claim settlement response and elicit a more enduring relationship between insurance underwriters and their clients, as many people will, through it, have more confidence in insurance, especially automobile insurance operations. Minor accident, the MD explained, is one which affects either the front, back, or the two sides of a vehicle “but is not severe enough to render the vehicle immovable” For major accidents, the LASACO BLUE RESCUE, would offer help to vehicles requiring towing services from the scene of the accident to “the nearest safe location” so as to decongest the ever busy Lagos roads. The rescue service, he said, would be available for members of the public free-of-charge “upon making a call to us through

our Customer Care line”. Rilwan Oshinusi, deputy managing director, Corporate Services of the company believe that “with these initiatives, our customers and the general public are assured of our focus on excellent service through prompt claims settlement”. LASACO Assurance Plc is a registered composite insurance and financial services company in Nigeria that specialises in General Insurance, Oil and Gas Insurance, Life Assurance (including Annuity), Asset Management and Investment Financial services. LASACO Assurance Plc is a registered composite insurance and financial services company in Nigeria that specialises in General Insurance,Oil and Gas Insurance, Life Assurance (including Annuity), Asset Management and Investment Financial services.

Customers win cash, other prizes at FCMB’s Millionaire Promo Season 5 Draws

irst City Monument Bank (FCMB) has rewarded another set of 644 lucky customers in its ongoing reward scheme, tagged ‘’FCMB Millionaire Promo Season 5”.The second set of winners emerged at the second draws of the promo held across Nigeria on Wednesday, July 25, 2018. This brings to a total 1,288 customers of the Bank who have so far won cash and other gifts since the promotions commenced in March this year. The FCMB Millionaire Promo Season 5, which runs till November this year, is an extension of the Bank’s previous promotions. It is designed to give extra value and reward to our customers, while encouraging financial inclusion and savings culture in the country. The promo is targeted at all segments of the society, especially existing and potential savings account customers of the Bank. This however, excludes salary and domiciliary account holders. While four lucky customers won N1million each, a total of 640 other account holders smiled home with LED television sets, generating sets, decoders, tablets, smart phones and other consolation prizes, at the end of the electronic selection exercise. At the Lagos Regional draw held in Gbagada, a suburb in the State, Mercy Ailekhue was the lucky winner of N1million, while HuleraZubairuwon thesame amount at the Abuja &North Regional draw which took place in Kano. The third N1million winner, UkwuabaAliu, came from the South-East/SouthSouth Regional draw held in

Port Harcourt, Rivers State, just as Williams Rotimi was also rewarded with N1million at the South-west Regional draw in Ijebu-Ode, Ogun state. Speaking on the promo draws, Olu Akanmu, FCMB’s executive director, Retail Banking, said ‘’We are excited that more of our customers have continued to be rewarded and empowered through this exciting reward scheme. We are committed to impacting the lives of individuals and businesses by delivering valued-added products and quality service that translate to exceptional customer experience. Our existing and potential customers are encouraged to partake in the FCMB Millionaire Promo, because it is an avenue to turn dreams to reality’’. On how to participate, Akanmu, explained that what all existing or a new customer of the Bank need do, is to increase their balance by N10,000.00 in any of the eligible savings account and maintain it for 30 days to qualify for the Zonal and Regional electronic selection of winners where the star prize of N1million and other fantastic prizes will be won. Multiple savings of N10,000.00 will increase the probability of winning. To qualify for the grand finale draws in November 2018, where four customers will each win N2million, existing and new customers are to increase their balances up to N50, 000.00 and maintain them for 30 days. Multiple savings of N50, 000.00 will also increase the chances of winning. The third draws of the promo will hold in September and the grand finale is in November.

AACN London conference showcases Nigeria’s potential for local, regional investments

ssociation of Assets Custodians of Nigeria (AACN), body dedicated to the development of the Nigerian capital market as well as establishing best global practice standards has showcased the country’s potential for local and regional investments at its recent London Conference. The 7th Annual Investor Conference 2018 with the theme “Sustaining the Nigerian Capital Market Recovery” brought together stakeholders in the capital market and the financial services industry within and outside Nigeria, looking at how Nigeria can benefit from global investments for increased productivity and value creation in the economy. Mary Uduk, acting director general of the Securities and Exchange Commission (SEC), represented by the director, Zonal Office Coordinating Department,, Edward Okolo,

opened the event with a panel discussion on key regulatory developments and changes in the Nigerian market, and the impact on Foreign Portfolio Investors (FPIs). The AACN conference offers a platform for interaction between the Nigeria capital operators, including regulators and custodians, and FPIs. It provides a platform for knowledge sharing and boosting the confidence of FPIs in the Nigerian market and showcases Nigeria as a gateway for local and regional investments. Participants at the 2018 investor conference represented various sectors including Financial Institutions, Investment Services, Financial Services and Advisory, Consulting, Asset Management, Legal Services and Stock Exchange. The conference provided indepth, informative and exploratory sessions, aligned to the theme of the event, through various presentations and panel discussions.

Tuesday 31 July 2018

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BUSINESS DAY

COMPANIES & MARKETS Use of crypto currencies as security Business Event boosts equity distribution Abimbola Hassan

he margin between crypto investors and stock owners continually draw thin as some crypto currencies are now being seen as a form of security. Crypto currency in the last 4 years have continued to receive increased buzz as more Initial Coin Offering (ICO) come in play. In recent time, question as regards classifying crypto currency as a form of security has crossed path with various countries securities and exchange commission (SEC) as new classification of tokens are now been made between security tokens and utility tokens. This new classification of crypto currency are regarded as security tokens or better still equity tokens. Equity tokens like normal stock guarantees ownership, voting rights to an asset. By employing blockchain technology and smart contracts, a startup could forgo a traditional initial public offering (IPO) and instead issue shares and voting rights over the blockchain. Enterprises are now operating business on the blockchain, creating cryptocurrency which are back by an asset. This cryptocurrency derive their value from the underlying asset which is external to it, making it now serve as a form of security which can be traded and held to receive dividends from the parent company. When the digital token appreciate in value, investors /holders can as well trade this tokens on a listed exchange for profit like every other cryptocurrency. The procedure that transforms cryptocurrencies into security starts with the tokenization of asset. Tokenization is an intrinsic part of the blockchain technology that serves the purpose of platform identification and accessibility of an asset. Speaking on this with Emmanuel Fatusin, Partner at Blockchain Asset Man-

agement, he mentioned that defining whether cryptocurrencies are securities is still up for debate. In some cases, cryptocurrencies are categorized as a security when a company initiates an ICO for a venture and is expected to give investors return on their investment via the operations of that venture. In the case of asset backed crypto currencies, the parent company who initiated the ICO offers a product to back the digital tokens upon which they can be used to create transaction around the asset. In the US today, they believe that such crypt currencies / ICOs should be regulated by Securities and Exchange Commission (SEC). Asset backed crypt currencies are made possible representing an asset on the blockchain via digital tokens, an instance where an underlying company’s asset is set to worth $1 million, this digital token issued by the company therefore can be used to purchase the asset since it is tied to it. If the price worth of 1 token is $100, this signify that 10000 tokens of the underlying company matches the worth of the asset been issued. Offering 500 tokens for this asset by individual signifies 5% ownership. Additionally, a firm could create tokens that represent debt owned by the company, enabling loans to be bought and sold in a high-liquidity environment. Many people believe that equity tokens will eventually become the predominant type of tokens from initial coin offering. According to Omobolanle Adeniran, research analyst at Cryptonomics Africa, she stated that although laid down procedures for cryptocurrency are not available in Nigeria but classifying a cryptocurrency under a security class according to US securities and Exchange Commission requires that so far it can pass the Howey test,which is a test to use to determine if an asset can guarantee dividend or a return on investment, it is termed a security. Thousands of startup

across world have sprang up thanks to ICO, with the total project for 2018 at 632 raising $12.7billion. A lot of companies are now building an entire business that revolves around the blockchain technology. The usual route which involves firm turning to public stock markets or venture capital to raise fund for their company are now turning to cryptocurrencies. A number of cryptocurrency projects are actively embracing the move to blockchain securities and creating their own protocols. One such project is the Polymath Network, which raised an ICO last year to become a platform for issuing a range of security tokens. They are working on a security token standard called the ST-20 standard — basically a security token counterpart to Ethereum’s ERC20 standard. “We’ve seen the benefits [security tokens] have over traditional forms of ownership like paper share certificates,” Polymath VP Graeme Moore. With tokens, you can have markets open 24/7/365 (instead of being open weekdays 10:15am-2:30pm), trade fees that approach zero over time (instead of NSE 0.3 percent), instantaneous settlement and raising of capital will be so much easier. Initial coin offering has been on the rise which is a method of funding for startups in which new digital tokens or coins are issued. Funds are raised using digital currency such as ethereum and bitcoin as well as fiat. Cryptocurrency are built on various numbers of platforms which include new and existing blockchain technology which includes the ethereum blockchain network, Stellar blockchain, Eos blockchain and a host of others, ethereum is mostly congested as majority tokens are been created on its platform. As waves are moving for security token which is yet to been seen as the driving buzz for the cryptocurrency community in 2018,much is still to be expected as the end of the year approaches.

L-R: Hassan Dantata, non-executive director, Guinea Insurance Plc; Isioma Omoshie-Okokuku, executive director, Corporate & Legal Services;Godson Ugochukwu, chairman; and company secretary/Legal Adviser at the Company’s Annual General Meeting in Benin, Edo State

L-R: Analyst, Youth Segment,MTN Nigeria, Oluwafemi Adesina , Nigerian rapper , actor, and songwriter“Falz”, Multiple award-winning DJ, DJ Spinall, Winner MTN Pulse house party, Abuja, Obinna Amaku and Manager, Youth Segment, MTN Nigeria, Ifeoluwa Oyeyipo, during the surprise Pulse House Party at the winner’s house in Abuja , on Friday the 27th of July 2018

L-R: Akin Salu, General Manager GOtv; Alaafin of Oyo, Oba Lamidi Olayiwola Adeyemi III and Jennifer Ukoh, Public Relations Manager, GOtv at the GOtv Boxing Night 15 held in Ibadan yesterday.

Opera News gives cars at its ‘Shake and Win’ promo OLUWATOSIN DOKUNMU

pera News, one of the most downloaded news app in Africa has been rewarding its users with brand new cars in an ongoing giveaway tagged “Shake and Win”. As part of her efforts in giving back to the society, Opera News in form of a corporate social responsibility (CSR), commemorated the final match of Russia World Cup 2018 by

giving out the second out of the three brand new cars to a female winner. Opera News on Sunday, 15th July, 2018, held the Opera Shake and Win with the senior marketing manager-Opera News, Chukwudiebele Enyi, and Albert Oluwatoyin (aka datwarrigirl) in attendance. One of the lucky winners expressed his gratitude and how the giveaway will help change his life. “I’m really happy about this, it’s an unbelievable moment, I want to dedicate this to God and to my mom. I will be shar-

ing the car with her as it will be very useful for her job. She will now be able to transport goods to her supermarket.” Damilola Omojola, the winner of the day said at the event. According to Opera thousands of winners emerge everyday since the introduction of the “Shake” feature with more than 300 thousand users in Nigeria rewarded with amazing prizes Opera News has however promised to give more gifts out, saying that there are more offers still counting in line with the car prizes.

L-R: Foluke Aboderin; former executive director, St. Cyril Cancer Treatment Foundation, Veronica Onoja, director, customer service delivery, Airtel Nigeria, Mojisola Amimashaun, executive director/ founder, St. Cyril Cancer Treatment Foundation and Chioma Okolie; team lead CSR, Airtel Nigeria during Airtel donation of clinical facilities to the Foundation in Isolo, Lagos as part of the on-going Airtel Touching Lives season 4 prize presentation in Lagos.

BUSINESS DAY

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Tips & Talking Points

Harvard Business Review TALKING POINTS Wake-Up Call 70%: A recent study from Deloitte found that 70% of participants looked at their phones within half an hour of waking up in the morning. + Intelligent Assistants Are Here to Stay 1 billion: The estimated number of devices enabled with intelligent assistant technology is 1 billion worldwide. + Strength of the State 33%: Since the 2008 financial crisis, China has focused heavily on central economic planning, with state-owned enterprises making up 33% of the country’s gross domestic product. + Fresh Talent 3 years: Research from LinkedIn found that the employee skills in highest demand today were not on most companies’ radar three years ago. + Nurture Your Workforce 30%: Firms that address and develop their employees’ eagerness to learn are about 30% more likely to become industry leaders in the long term, according to research conducted by Josh Bersin.

When setting corporate values, get everyone involved

When you’re put on the spot in a meeting, don’t panic

stablishing values for your company can have a lasting positive effect. It’s easiest to do early on, when the team is small, but doing it later in the company’s life can still be useful. Follow a process that allows everyone to contribute. Ask people to reflect individually on what’s important to them and what the company values now. Then come together, put everyone’s ideas on the table (or whiteboard), and create a short list of options. Discuss and decide on a

group of company values that everyone can commit to. Talk about what each value means, what it looks like in action, and how you’ll evaluate whether people are adhering to it. Lastly, develop a plan for integrating the values into everyday work. It should include the changes you’ll need to make and the practices you’ll need to introduce so that everyone can live the values you’ve jointly identified.

(Adapted from “How to Establish Values on a Small Team,” by Amelia Friedman.)

eing put on the spot during a meeting can be an unwelcome surprise. But if you’re prepared to speak up and say something useful, you can turn it into an opportunity to show your expertise. Before your next meeting, look through the agenda and write some notes about questions you have and any points you might raise. If you’re called on in the meeting, speak slowly and confidently, and introduce your comments with some context so that colleagues know where you are headed. Of course, if someone asks you a question that catches you off guard, don’t be afraid to say you don’t know the answer. Practice some simple responses for these moments: “I don’t have that information, but I will get it to you by 1 p.m.” And always end by asking, “Did I answer your question?”

(Adapted from “How to Respond When You’re Put on the Spot in a Meeting,” by Paul Axtell.)

Choose to be kind to someone who annoys you Senior executives need a work ally To get help from a colleague, emphasize what you have in common

hen someone you work with annoys you all the time, chances are you assume the worst about them — and that mindset shows up in your behavior. But it’s important to be civil, and even compassionate, to colleagues, both because so much work is collaborative and because that co-worker probably isn’t annoying you on purpose. Try to short-circuit your reactions toward them by making yourself do or say something nice. For example, you could compliment them on an idea they raised in a meeting, or offer to help out with a project. Or say your colleague arrives late — yet again — to the weekly team

standup. Don’t complain or roll your eyes, and don’t be passive-aggressive with a comment like, “Nice of you to join us.” (That may be your instinct, but fight it.) Instead, say something like, “Welcome. Grab a cup of coffee and we’ll get you up to speed.” This type of generosity of spirit is good for you and your colleague.

(Adapted from “How to Develop Empathy for Someone Who Annoys You,” by Rebecca Knight.)

enior leadership teams are often political, which can make them feel more competitive than supportive. When you reach the top, you may feel that you’re on your own, or that you can’t take risks or make mistakes. To get the support you need to thrive, find a close ally — a person on your team you can discuss things with and vent to. Ideally you want to find someone who shares your values. Make them known by regularly bringing up the things you care about, and then seek out someone who responds. Cultivate the relationship by creating opportunities to talk one-on-one. For example, you might

F catch up before meetings or sit next to each other on a long flight. You can also build the alliance on a personal level by exercising together or carpooling to work. Use the time to discuss new ideas and figure out how to cope with the political game around you.

(Adapted from “How Women at the Top Can Renew Their Mental Energy,” by Merete Wedell-Wedellsborg.)

ew of us enjoy asking for help, and yet we all need it. To encourage someone to respond positively the next time you ask, make them feel that they’d be helping because they want to, not because they have to. Try tapping into the person’s innate human need to belong by emphasizing the importance of the team. Use the word “together” in your request, or cite a common goal, enemy or trait, such as the desire to exceed your team’s sales targets, a rivalry with a competitor in your industry, or a love of superhero movies. Highlighting these shared experiences positions you as part of the person’s

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

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in-group. And avoid any language suggesting that they are being instructed to help or have no choice but to say yes. This includes phrases such as “May I ask you for a favor?” (which makes people feel trapped) and “I feel terrible asking you for this” (which sounds apologetic).

(Adapted from “How to Get the Help You Need,” by Heidi Grant.)

BDTECH

BUSINESS DAY

Tuesday 31 July 2018

In association with

‘Digital technology, crucial to the future of manufacturing, construction in Nigeria’

Technology is definitely disrupting several industries including manufacturing and construction where processes are rapidly evolving. In this interview, Simon Bromfield, Country Manager of Autodesk Africa, a leading 3D design, engineering and entertainment software provider talks to JUMOKE LAWANSON about the prospects of economic advancement with the use of digital technologies in Nigeria’s manufacturing, construction and entertainment industries. Excerpt.

Technology is seen as a disruptor in many industries, why have you placed particular emphasis on the construction and manufacturing industries in Nigeria? he construction industry in Nigeria does not involve technology and there are a lot of ways that technology can help, especially by cutting out repetitive tasks. Things that people do over and over again everyday can be automated and we can use software to drive those tasks. The concept is that we can bring the power of the cloud to enable us to do work faster, better, and at a lot less cost. Buildings are expensive to create, and if we can reduce the cost of the building prices by even five percent and reduce the amount of time it takes to build, that is a huge saving to the building owners. If we start a building project and it takes two years to build, it means that I’m burning cash for two years. If I can make it six months faster, I can certainly start returning on my investment much quicker, so these are the things that excite building owners and people doing construction projects and building intelligent buildings with our technology. Nigeria has huge potential, the human capital and the drive to use these technologies.

uct to customers, but what we find is that our customers are becoming multi-disciplinary; customers want to do more with less and they want to expand their horizon so that they can add value all the time. So what we have done is that we have taken the products that people use the most, and have included them into a collection. So, the AEC collection has every product that you’ll need for construction process, so it will give you auto care insights, analytics, NEP tools for electrical, plumbing, fire exchange and the likes. Everything is included in one package, and on the pricing, we have made it one price flat subscriptions that they pay per year and they get everything they need for that price. So you don’t have to spend more money to gain access to the different products.

What technology solution has Autodesk built, specifically tailored to the needs of the construction industry? Our Building Information Modeling (BIM) product allows you to make a 3D representation of a building with all of the data in it. The BIM is doing so well globally because people are breaking down these walls of working in silos between companies and have started sharing content because the more you share, the more we can get back and the better we can build. I work throughout Africa, and I love the ability for people, especially in Nigeria, to evolve and use our technology. People are changing in their dynamics and they are building things

Simon Bromfield

every day. We have met customers using our product to build the most incredible projects. The complexity of buildings that have been made using BIM here in Nigeria are world class and have been designed and built better than some projects that I have seen in first world countries. Asides buildings, you have also talked about using some Autodesk technology in manufacturing. What types of products can be manufactured using this technology? We actually met with the automotive association of Nigeria, where they are looking at building cars here in Nigeria. They are looking at how to design cars in Africa for Africa, especially for Nigeria. The software that we use, which is a product called ALIAS, allows you to design a model for vehicles here, and there is a lot of interest in doing that in Nigeria, Kenya and South Africa; where we want to build our own cars, because we can employ jobs, improve the economy, and there is a lot of upside for the government doing that. Our software products are used to design everything that you’re manufacturing. Most of

the components for mobile phones being assembled in Nigeria are designed on Autodesk products. What we are looking at doing here is to help empower customers to use our software to start doing local manufacturing. The same products that we use to design the Tesla car, those are the products that are included in that manufacturing collection. Are there any other technology solutions designed for the construction engineering, manufacturing and entertainment industry in Nigeria? We actually have three collections that we sell. The Architecture, Engineering and Construction (AEC) collection takes all the products that are being used in those sectors and puts it into one product offering. We have a similar one for manufacturing and we have a third one for media and entertainment. Autodesk has won about 19 or 20 Oscars for our 3D animation tools. So if you watch the latest super hero animation movies like Avengers; those films are designed and developed using Autodesk software. In the past, we used to sell a point prod-

Speaking about 3D printing, what is the adoption rate of this advanced technology in Nigeria’s manufacturing industry? 3D printing is an evolving business at the moment. It is something that a lot of people still use only for printing toys; so you will see little figurines, kids toys, key holders and other little things that they print using 3D. People don’t yet understand the business imperative that can be unlocked using 3D printing. I’ll give an example of a company in South Africa that makes brakes for motor vehicles; they now 3D print their components, so what that means is that the brakes that they manufacture in South Africa can be used anywhere in the world without having to ship all the components over to other countries. They can just send the design of the components to the country for customers to 3D print it on site. 3D printing is exploding in both universities and commercial use because the cost of the filaments – which is the material that you use, has been reduced radically. So every day, there are new innovations, and all of this is because of a very interesting product called FUSION, which allows you to 3D

print almost automatically from the software. You spoke about collaboration and integration for business and economic growth, do you see collaboration and integration of different sectors working here, considering that Nigerian building contractors and engineers like to work solo on projects? We always look at collaboration in terms of big projects, but the truth is that the projects that you get the biggest value out of collaboration are on the small projects, because you don’t have a lot of money. With smaller projects, there is a tight budget and also a very tight deadline to build it. So, the more cost that you can reduce, the quicker and more effectively you can build it. Collaboration is crucial to the future of making things. If we are able to empower people to collaborate better even in their own businesses, it will help them to save money on their building projects. Tell us a bit more about the solution that Autodesk has created for the entertainment industry and is planning to introduce into Nigeria’s Nollywood? One of Autodesk products is a media and entertainment collection, and we produce 3D modeling and modeling technology. Nollywood being the second or third largest movie industry in the world is something that we are very interested in. We have a product called MAYA that is used in all of the big movies such as Avengers and other 3D animation films. The explosions and all the action contents are all done on Autodesk products and we would be very interested in helping Nollywood in Nigeria to adapt that and start using it to produce better, more advanced quality movies. We have found that there are a lot of job opportunities in 3D animation globally and I think there is an opportunity for Nigeria to enter into that market and start training and educating our students on MAYA and then selling those skills into the job market.

BUSINESS DAY

Tuesday 31 July 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

How the Google station free Wifi will impact Nigeria JUMOKE AKIYODE-LAWANSON

oogle recently announced the launch of its Google station to provide free Wifi in selected public spaces in Nigeria. This is in partnership with 21st Century technologies, provider of high speed broadband internet. Although the incredible idea, especially in today’s digital age is relatively new, it is one that citizens have always longed for, as internet has now become an essential commodity for all. Google, during the recently held Google for Nigeria event, revealed that its decision to provide high speed, high quality, Wi-Fi hotspots in places with high influx of people, such as the Murtala Muhammed International Airport, Computer Village Ikeja Lagos, The Palms Shopping Mall Lekki, University of Lagos, Ikeja City Mall and LandMark Events Center is aimed at helping more people in Nigeria, and across Africa, benefit from the vast opportunities available on the web. “Google Station will be rolling out in 200 locations in five cities across Nigeria by the end of 2019, bringing Wi-Fi to millions of people,” says Juliet

Ehimuan-Chiazor, Country Director, Google Nigeria. “Sites include markets, transport hubs, shopping malls, universities, and more. Nigeria is the fifth country to get Google Station, after India, Indonesia, Thailand and Mexico.” The company is also looking to partner with other internet service providers (ISPs) to roll out this service in various locations and cities across the country. Although the idea of free

Wi-Fi across the country seems too good to be true, especially as Google is offering unlimited usage. It is a welcome idea, as information technology (IT) stakeholders say it is long overdue, particular as cities such as Lagos and Abuja aim to become Smart Cities. In fact, countries like the Philippines are looking to establish a law to make compulsory, free internet in public spaces. In European countries and the United States, public

libraries, airports, parks, museums and even train stations have free Wi-Fi connection. The benefits of free internet connection in public places are limitless and so are the detriments, as not all free Wi-Fi are safe to use. However, Google has assured maximum security to avoid phishing scams, hacking and data theft while using its Google stations. With this, experts project that Nigeria will have more than 100 million internet us-

ers by the end of 2019; up from 90 million in 2018. The numbers for smartphone ownership will also see drastic increase to about 23 million smartphones by next year. Imagine returning from a trip with no Nigerian mobile SIM or no credit on your phone, and still being able to book an Uber or call your family on FaceTime or Whatsapp using the free Wi-Fi at the airport. Or waiting for a friend at the mall and still being able to do some work on your laptop or mobile phone using the free Wi-Fi. In addition to the incredible launch of Google station, Google is also making search more powerful for ordinary Africans. Job Search launched in March in South Africa, Nigeria and Kenya, and is now rolling out in 29 new countries. In Nigeria, Google is launching a search experience that allows users to explore health conditions based on symptoms, as well as recipe search for anyone who needs a little food inspiration. StreetView’s Discover Nigeria gallery has been expanded to include more of Nigeria’s wonders including the National Museum in Lagos, Olumo Rock in Abeokuta, Millenium Park in Abuja, and Lekki Conservation Centre.

ICTEL Expo beams light on investment opportunities in ICT JUMOKE AKIYODELAWANSON

he Lagos State Chamber of Commerce and Industry (LCCI) recently held the fourth edition of its Information, Communication, Technology and Telecommunications (ICTEL) expo where stakeholders were engaged in discussions and suggestions on how to tap into huge investment opportunities in Nigeria’s ICT industry. The event which held in Lagos on the 25th and 26th of July 2018, themed Developing Efficiency and Competitiveness in the Digital age’ brought together key players in Nigeria’s ICT sector to discuss further development of the economy leveraging ICT. In his welcome remark, Babatunde Paul Ruwase, President, LCCI, said that the expo is a credible platform to advance the opportunity and linkages in the world of ICT. “The fact is that ICT has become the backbone of most businesses and we see great investment opportu-

nities coming from closer interactions and business integration among ICT players and their customers. There is no better time to harness the benefits of ICT than now when the Nigerian economy is in dire need of diversification and sustainable recovery,” Ruwase said. Information and communication technology sector has continued to drive entrepreneurship, innovation and sustainable busi-

ness models in Nigeria and beyond. The expo highlighted benefits of ICT in various sectors of the economy, and the need for technology driven services in businesses. “Today, virtually all sectors leverage ICT for optimal performance. This is evident in the financial sector, where electronic banking is the new vogue; the agricultural sector, where government allocates farm input through

mobile phones to farmers; the consumer goods sector, where online stores and ecommerce has brought an incredible transformation to retail business; the medical sciences, where ICT applications are now being widely used for efficiency and many more,” Ruwase said. Urging the government and the private sector players, he said that exploring Public-private-partnership model to mobilise needed

L-R: Nehal Batavia, head of sales – Microfinance & Saas (Africa), Temenos; Christos Panagopoulos, principal business solutions consultant, Temenos; Tope Dare, ED, Inlaks; Adesemoye Adedeji, deputy director, Other Financial Institutions Supervision (OFIS) Department, CBN; Renato Sam, bid manager, Temenos and Ondrej Valent, senior sales manager, Financial Services EMEA, HID at the Banking in Digital Forum organised by Inlaks, Temenos and HID in Lagos recently.

investments for ICT infrastructure would be key to growth of the sector. In his keynote speech, Adebayo Shittu, Minister of Communications reflected on the theme of the event, stating that the expo heralds a new dawn in Nigeria’s collective gravitation toward developing efficiency and competitiveness in the digital age. Shittu said that the federal government is committed to supporting digital economy and the ICT sector in its laudable endeavor and vision to bridge the gap between Nigeria and developed nations with ICT. Represented by Monisola Udoh, Director of ICT, Federal Ministry of Communications, the Minister said that the Minstry will ensure protection of companies and organisations through regulations and other means. “We will assist ICT companies to grow. We have accepted that Nigeria must take leadership in Africa’s ICT ecosystem. Therefore, we are amendable to public, private partnerships to drive the Ministry’s project,” he said.

ICT can alleviate poverty, create wealth for Nigerians - Expert SIKIRAT SHEHU, Ilorin

owemimo Abiodun Alex, the chief executive officer, Cvmetric Network Company has requested Nigeria’s government to commit substantial investment into Information and Communication Technology (ICT) as a way of alleviating poverty, creating wealth and employment opportunities for jobless Nigerians. The recent winner of Silicon Valley Nigeria Economic Development Award, declared that millions of youths that are jobless in the country could be gainfully employed if concerted efforts were deployed to unlock the great potentials in information technology that prompts youths building careers in the ICT sector. Alex, who is known for offering mentorship and ICT training to young entrepreneurs, said that innovations and structures were abound in the sector which are to be discovered and could fetch Nigerians and Nigeria millions of dollars in the long run if well implemented and undertaken. While urging all Nigerian youths to be technologyliterate and utilise the hidden potentials offered by information and communication technology, Alex offered himself for training and mentoring of desired youths, saying “by so doing, you (Nigerian youths) will break new grounds and build a career in the IT world.” Dedicating the Silicon Valley award he won on ICT to Nigerian youths, he noted that availability of IT potentials and opportunities in Nigeria have not reached peak and therefore, needs much more commitments to invest more and unlock more opportunities, adding that in as much as IT drives economy in the world, Nigeria must not be an exemption. Alex said, “It’s a privilege to be honored by Silicon Valley Nigeria Economic Development. Not many people get this and being among the few people recognised in the Nigeria IT world is a great honour. “This award will be an encouragement for me to do more and to continually expand the scope of technology in Nigeria to alleviate social and corporate challenges.”

BUSINESS DAY

Tuesday 31 July 2018

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

HR experts push for theory/practice learning approach in Nigerian varsities Stories by KELECHI EWUZIE

cross Niger ia, education system suffered a setback as a result of the absence of pragmatic approach to teaching and learning of academic subjects and courses. Statistics reveal that the population of students in tertiary institutions across the country is on the increase; however there is no corresponding surge in the creation of economically viable opportunities, a situation which is triggering an alarming rise in Nigeria’s unemployment and crime rates It is against this background that chief executives and human resources experts are advocating for a connection between theory and practice in the approach to teaching and learning using the business simulation method to gain needed global knowledge, adding that this approach will help undergraduates in the ever competitive world of employment. They observe that it is quite evident that in today’s fiercely competitive market, only those who can back their academic grades with some work experience usually discover the best breaks.

Richard Obire, founder of African institute of Business Simulations (AIBS) opines that there is the need help students connect theory to practice which is lacking and has created a huge gap in Nigeria educational system. Obire observe that approaching teaching and learning using a business simulation facility is one of the process required to enable students both under graduate and post graduates actually connect the theory that they learn in different areas to practice. “We have to use innovative tools and creative thinking both for teaching and for learning and simulation gives you that opportunity and offer students and lecturers a new way of teaching that is practical and if you can’t connect theory and practice, then you don’t have empowerment skill after spending four to six years going through a university courses why do you do that after you come out you are not ready for industry”. He said. He further noted that investing in simulation facilities projects across universities will impact on the national economy because with this, students are going to be industry ready meaning that employers are going to find out that they need to spend less to get new graduates off the ground running. Because they will be ready to

Tawakaltu Lukman, team presenter, Mary Anthony Ojoma, team secretary/presenter; Victor Tanya Kuma, project manager / presenter; Ajagunla Taofeeq, member and Abdulrahman Dare Habeebullahi, team leader all from Federal University, DustinMa receiving their N500, 000 award Cheque from Ndifreke Okwuegbunam, Head of Programmes , Aspire Coronation Trust (Act) Foundation for winning the Act Foundation Leadership Challenge on the platform of Enactus Nigeria 2018 National Competition in Lagos.

add value from the first day they get into the job. The method of teaching and learning in most Nigeria universities are such that cannot help the student compete on a global scale says Obi Ezeude, chief executive officer, Beloxxi industries limited. He observes that business simulation is a new method of teaching and learning that is obtainable is business schools all over the world.

Teach for Nigeria to bridge inequality gap in educational system

each for Nigeria, a Non-profit organisation focused on improving the quality of education for Nigeria’s most marginalised children recently organised a programme for leaders in the private and public sectors. The programme with the theme Educate Nigeria served as a platform to highlight the organisation’s vision, mission, strategy and progress made - since inception in 2017 - in addressing the inequality that exists in disadvantaged schools in the programme’s current coverage areas-Lagos and Ogun statesas well as its expansion efforts into the Northern region of the country in 2018. Folawe Omikunle, chief executive officer, Teach For Nigeria, observed that over the years, education in Nigeria has

suffered a steady and continuous decline resulting in poor learning outcomes for most of our students and more so, for disadvantaged students from low income communities. Omikunle said that as part of efforts to ensure that the standards are raised for all our children, Teach For Nigeria was established adding that “I am proud of all that the we have achieved so far and grateful for the support and commitment we have received from our Fellows, champions and ambassadors”. The inaugural fund raising event also provided a means to enlist the support of and recruit champions from the private sector to secure financial and strategic commitments towards raising much needed funds to be invested in transforming the educational system and ensuring that every

Nigerian child, regardless of status, has an opportunity to attain quality education. Gbenga Oyebode, chairman, Teach for Nigeria said Teach for Nigeria is focused on developing a movement of leaders across the nation who are committed to putting an end to educational inequity. The present state of education in Nigeria, where about a third of our children are not in school and over half of those in school are not learning, is not acceptable. Every well meaning Nigerian must therefore join hands to ensure that ongoing initiatives such as Teach for Nigeria that aim to make sure that disadvantaged children in Nigeria who lack access to an excellent education have a better chance at achieving a successful future are encouraged and supported”.

According to him, “I feel that investing in Business simulation laboratory in universities is a cutting edge project that is good and needful because the students can benefit when they use the lab to understand how business decisions are taken abroad”. Ezeude further said that what this means to the economy and students that will use it is that each student that passes through such programme will

have first class knowledge of what obtains outside Nigeria. In his words, “it brings the students up to international standard such that if they go and tomorrow and they are employed, they would have had a firsthand knowledge of how business works, they would have seen the tools businesses use in making their decisions, they would have benefited of at least seeing real live how thing are done

elsewhere in the world”. “This project is the first step in trying to reintegrate Nigeria students into the real world. To give them an idea of what it is like to work after graduating from school. At the end of the day, Nigeria will benefit by having real human capital development out of the university as oppose to graduate that come out without any functional knowledge” he said.

Digify train 20 unemployed graduates David Ibemere

igifyPro Nigeria, a non-profit organisation and a subsidiary of Digify Africa PRO as part of its contribution to ease the swelling unemployment figures among youth has designed an eight weeks intensive Digital Marketing training programme for the lucky 20 The training is organised with support from Facebook is for youth between the ages of 20 to 30 years with a promise to end in a job for the participants through internship. Florence Olumodimu, DigifyPro Programme director Nigeria, explained that the training could only accommodate 20 out of over 700 applicants in a bid to give attention to each participant.

Olumodimu said the programme which was designed to give trainees practical hands-on experience, would cover topics such as vocational and workplace skills, agency processes, customer care, client services and digital marketing. “This training is meant to increase youths’ employability skill; it is going to be free for all participants instead of paying N1 million being charged by some other companies. “After the eight weeks programme, each of the 20 beneficiaries will be put in one of Nigeria’s top marketing communications agency for an internship of three months,” she said. “Our end goal is to inject the Nigerian advertising industry with well-trained DigifyPRO graduates who bring with them a new burst of energy and critical cutting-edge skills,” she said.

Olumodimu further noted that the eight-week intensive training on digital skills, employability skills and how to pass interviews alongside different things will enable the young graduates at the end of the training apply for a minimum of three-month internship with different agencies in other to implement what have been impacted during the course of training” Some of the participant expressed confidence that the training will further positioned them for the digital revolution. Anthony Nwokoye, a first-class Philosophy graduate from Nnamdi Azikiwe University, said that the world had gone digital and that youths should take advantage of the digital age. “I thank God for the opportunity and DigifyPro Nigeria for this, I will make sure this transforms my life,” he said.

BUSINESS DAY

Tuesday 31 July 2018

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EDUCATION

INSIGHT

Laying a solid foundation in our children’s formative years OYIN EGBEYEMI

any of us will agree that observing the developmental stages of children is very exciting. From birth to adulthood, human beings evolve both physically and psychologically. While it is interesting to appreciate this passively, it is important to ensure that from the early or formative years (ages 0 to about 8), we get childhood development right, such that our children experience that significant

beginning needed to set a solid foundation for their continued growth into preteens, teenagers and finally, mature adults. This is something that some parents may take for granted, but if we take a careful look at our environment, we may observe certain behaviours in adults, which may be attributable to a weak foundation during their early years. Some examples include aggressiveness, abuse, lack of independence or even low social self-esteem. While this is not to dispute genetics and our natural tendencies, early years programmes offered by schools through pre-school and nursery school provides aid towards these formative

years. When it comes to education, we may tend to focus on academics alone, especially for those of us who went through the “old school” styles of teaching, which was typically instruction-based and lacking in social interaction and some forms of cognitive development. But in order to become successful and effective adults, we cannot rely on academics alone, as there are many soft skills, which need to be covered in order to tackle the realities of the world. While they are infants (0 – 2years), children are curious and explore their environment. This is the stage during which they begin to

talk, repeat words they hear and actions they see. They are really just developing a “sense of self”. Then from 3 years old, they start to develop their own character, become more inquisitive and start to form their own opinions. Many parents may not feel the need to send their children to school at the preschool and nursery school stages, and this may actually be due to the financial limits for some young parents, as the cost of quality education in Nigeria soars. However if parents can find a way around it, their children stand to benefit from some developmental elements that their peers at school experience. Interacting with their peers

GTBank, educationists, experts proffer solutions for autistic children KELECHI EWUZIE

s part of its contribution to the solution of Autism Spectrum Disorder (ASD) among children, Guaranty Trust Bank (GTB) organised a conference for stakeholders to rob minds on how best to manage children with the disorder so they can get the best care to help them function in the society. The two day conference held in Lagos presented an opportunity to parents, educators, therapists and medical personnel to learn on the best approach to tackle this health concerns among

children. Yewande Oshodi, a Senior lecturer at the College of Medicine, University of Lagos and Consultant Psychiatrist/ Child and Adolescent Psychiatrist in her presentation at the 8th Autism conference said the window for intervention for autistic children was very small, such that when missed, the children are unable to function more independently as they would have if they got help early. Oshodi observe that the most successful pathway to care for autistic children was intervention specially designed to solve specific problem of individual autistic children, adding that it is not a one-size-fit all approach.

She opines that autism was best managed by multidisciplinary team of professionals made up of teachers, therapists, doctors (paediatricians, geneticists, psychiatrists), psychologists, and others, and warned parents to be wary of specific professionals claiming to do it all. Oshodi called for a national policy on care/management of children with autism so diagnosis can come much earlier than is happening presently. Onyinade Adegbite, Head, Corporate Communications, GTBank said the Lagos State government had planned a centre to help with diagnosis and treatment of children with special needs.

L-R: Beauty Kumesine, founder, Blazing Heart Autism Centre, Port-Harcourt; Grace Bamigboye, speech language Pathologist; Omolola Aneke, executive director, C.A.D.E.T Academy, convener, special needs conference in Nigeria and Owner, Juniper High School, Ajibike Bakare at the 8th Annual GTBank Autism Conference in Lagos.

According to her, “I am happy to announce that two early intervention centres are to be built as a starting point for relief and change. The centre would cater for the needs of children affected with the four Ds, namely Defects at birth, Diseases, Deficiencies and Developmental delays and physical challenges. “The centres would be located in Oregun and Sangotedo communities. Being the first of its kind, both centres would operate with the best professionals and supportive programmes for both the children and their families. “We believe this will greatly compliment the efforts being made by amiable private organisations like GTBank,” she said. Muyideen Bakare of the Federal Neuro-Psychiatric Hospital, Enugu, said research had debunked the belief that autism only affected Caucasians, noting that many Nigerians were autistic. Ba k a re o b s e r ve t hat though there were no national figures, clinical cases showed a prevalence rate of 0.8-2.3 per cent stressing that many of the cases detected in Nigeria were discovered late because parents only sought interventions when the children began struggling in school. He said autistic cases in Nigeria also presented with co-morbidity like mental challenges, seizures and other infections. He also said over 50 per cent were non-verbal and needed the services of speech therapists.

and learning through play at school helps stimulate the five areas of childhood development; physical, intellectual, language, and emotional and social needs. Children cannot get all these from home, maybe except in situations where parents have carefully taken the time to implement an effective home-schooling programme and ensure that their children get social fulfilment through interaction at local parks, centres or other venues where their peers convene. Unfortunately, the limits of our social infrastructure in Nigeria would make achieving this challenging. The importance of the formative years cannot be overemphasised. Teachers

have been observing the some of the gaps between children who had this foundation and those who did not. Now these gaps have to be closed, and this puts extra pressure not just on teachers, but also on the children themselves. In this day where children seem to be getting smarter and smarter, getting the foundation right through the structure of preschool and nursery schools will provide lifelong benefits to the success the children and allow them to reach their full potential as individuals. Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

108 students put their maths skills to test at 2018 COWBELLPEDIA

ne hundred and eight students who scaled the first hurdle of the 2018 Cowbellpedia Mathematics TV Quiz Show will engage in the game of speed and accuracy for the ultimate prize in the competition sponsored by Cowbell, the flagship brand from Promasidor Nigeria Limited. The second stage, which is in a quiz format, will take the candidates through the preliminary, semi-final and final rounds. The show will be broadcasted in 13 weekly episodes on major television stations across the country including DSTv. The 108 qualifiers are in two categories – 54 each for the junior and senior categories – from among whom the champions will eventually emerge. A breakdown of the qualifying examination results showed there were three perfect scores in the junior category from two schools. These are Favour Okarike and Benny Sampson, both of Graceland International School, Port Harcourt, Rivers State; and Chiedozie Okezie Uzochukwu of Nigerian Tulip International College,

Abuja. Anders Einarsson, managing director, Promasidor Nigeria Limited said that the company had demonstrated its unwavering commitment to the project by doubling the prize money for the winning students and their teachers this year as part of the 20th anniversary marking the mutually beneficial relationship between Cowbell Our Milk and Mathematics. The ultimate winner in each of the categories will be rewarded with N2 million plus an all-expense paid educational excursion outside the country, while the first and second runners-up will receive N1.5 million and N1 million respectively. In each category, the teacher of the top prize winner will win N500, 000, while those of the first and second runners-up will receive N400, 000 and N300, 000 respectively. Cowbellpedia Secondary School Mathematics TV Quiz show is endorsed by the National Examinations Council (NECO), which conducts both the Basic Education Certificate Examination and Senior Secondary Certificate Examination.

Tuesday 31 July 2018

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BUSINESS DAY

Energy Report Oil & Gas

Power

Renewables

Environment

World’s projected 4.5m electric car surge leaves crude oil producers uneasy ... To shed 2million bpd daily demand by 2020 ... Nigeria’s budget funding at risk from shrinking oil market duction of electric cars and are heading a global move to form an oil buyer’s cartel that will cut back on OPEC’s influence on oil prices. In China alone, there are 487 electric car makers and according to JPMorgan Chase & Co.’s 2025 EV Outlook report, robust global growth

Stories by ISAAC ANYAOGU

y 2 0 2 5 , t h e re would be 4.5million units of electric cars on the road indicating that the world may shed over 2million barrels per day crude oil out according to forecasts by the UK-based McKinsey and Paris-based International Energy Association but the implications seem lost on Africa’s biggest oil producer. European countries are passing regulations that compel car manufacturers to produce models that run further at the same amount of petrol in line with projections to ban internal combustion engine vehicles in two decades. “The world around us is changing and the danger is that those of us in this part of the world who play ostrich, could be in a dangerous situation as time will pass quickly and others would move on,” warns Victor Eromosele, CEO of M.E Consulting, in a keynote address at the 18th edition of the Annual Petroleum Policy Roundtable, organised by Centre for Petroleum Information (CPI) held at Eko Hotels, Lagos on July 20. Tony Ogbuigwe, managing director, PEJAD Nigeria

Electricity cars

presenting on the theme: electric age and impact on refining said exploits been achieved in electric car manufacturing including reduction in charging time, investments in charging stations and more efficient engines that cover more distance on a single charge should make Nigeria who depend on crude oil to fund its budget jittery. “Now electric car makers can come to set up a recharging point for you in your house, Switzerland is constructing metal strips, a technology that helps you charge the car while you are driving on some roads and ongoing research is helping

to create lighter battery. “To recharge electric cars, takes between 30mins- 1hour, they are developing more efficient system that will enable you recharge in less than 5 minutes,” Ogbuigwe said The cost of electric vehicles, formerly a deterrent is falling. According to Bloomberg New Energy Finance, the industry average price of a lithium-ion battery pack was $208 a kilowatt hour in 2017 from about $800 in 2011, and batteries constitute about 42 percent of the total cost of an electric vehicle. It is projected to fall by 62 percent by 2030 as technological advances and ramped-up production push costs ever lower.

Western countries are granting rebates to encourage patronage. In US, the government knocks off 7 percent of cost of the first 20,000 units sold in the country. Recently, the concession has been withdrawn as Tesla sales have surpassed 20,000 units in the US. The order for Tesla Model 3 was completed before a single unit hit the market. Ogbuigwe said this will further slow oil demand and refineries will cut back on petrol refining but will look to diesel and petrochemicals as new growth frontiers. Nigeria’s three decrepit refineries on their best days run at 10 percent capacity

and the country is not making any investment in building new ones but continues to sustain a profligate subsidy on petrol because governments with little to show for in concrete achievements are afraid to stoke up popular revolt by removing petrol subsidies. Meanwhile the oil and gas market is evolving with dire implications for the country. US, formally a net importer of oil, who takes up 6million bpd from Nigeria, is angling to be the World’s biggest oil producer within a decade largely from shale oil. India and China who currently buy the bulk of Nigeria’s oil are ramping pro-

through 2025 would see China accounting for 12 per cent of the total EVs produced, from last year’s 2.3 per cent market share. Meanwhile in India, over 2,000 units of electric cars were sold last year and heightened interest from many automakers Hyundai Motors Co., Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd., Ashok Leyland Ltd. and BYD Co to open plants in the country could sales hit the roof from government tenders bulk orders from fleet operators. “We need to wake up to the fact that the world will not be needing our oil anymore,” warns Chambers Oyinbo, chairman CPI board of governors, “What is the future of petroleum in the world, especially in Nigeria? Why are more funds being invested in exploring and producing oil and gas when the industrialised countries areincreasinglyencouraging use of alternative fuels?”

Higher prices, production surge lift oil majors second quarter earnings

il majors, Shell, ExxonMobil, Eni, Total and C h e v ro n h av e reported improved second quarter earnings arising chiefly from ramping up crude oil production and higher oil prices, BusinessDay analysis has shown. Italian oil major Eni, said its oil and gas production rose 5.2% on the year to 1.86 million boe/d in the quarter, due to improve production at the giant Zohr gas field off Egypt and helped by new fields in Indonesia, Congo and Ghana. Higher production at the giant Kashagan project in Kazakhstan and the Val d’Agri fields in southern Italy also contributed to volume addition. Eni says it expects an average 4% production

growth to about 1.9 million boe/d this year, assuming a Brent price scenario of $60/b. “Eni recorded another period of strong profitability in the second quarter,” CEO Claudio Descalzi said in a statement. “Our cash generation also grew significantly, driven by the price of Brent and increased production levels.” French energ y giant Total also saw earnings jump by 44 per cent in the second quarter as higher oil prices and record production boosted earnings. Production rose to 8.7 per cent year-on-year to 2.7m barrels of oil equivalent per day, led by the acquisition of Maersk Oil and higher than expected volumes from the Yamal liquefied natural gas project in Rus-

sia. The company’s performance was also helped by higher oil price that averaged $74 a barrel in the quarter. This helped boost cash flows to $6.8bn, up by 20 per cent on the previous quarter. Adjusted net income jumped to $3.6bn from $2.5bn in the same period a year ago Patrick Pouyanne, CEO said that despite rising oil prices the company was continuing with a strategy of drilling down costs, with the company’s breakeven level before dividends dropping below $25 a barrel. “Discipline on spending is resolutely maintained,” Pouyanne said. Eu ro p e’s b i g g e s t o i l company, Shell reported that while its oil and gas

Olusola Bello, Team lead, Analysts: Isaac Anyaogu, Stephen Onyekwelu, Graphics: Joel Samson.

production during se second quarter of 2018 was 1.5% lower year on year at 3.44 million b/d of oil equivalent but its upstream output was 5.4% higher than a year-ago excluding acquisitions and divestments. Shell saw higher prices offset lower output to lift its earnings in second quarter, announcing the restart of a multi-billion dollar share buyback program as its confidence in oil and gas sector recovery grows. Shell, which failed to grow its production last year, said, however, that its upstream output was 5.4% higher than a year-ago excluding acquisitions and divestments. As for Chevron, its upstream exploration and production business was

the chief driver, doubling net income to $3.4bn from the same period last year. This lifted earnings per share to $1.78 per share from 77 cents in the same period last year, when net income was just $1.5bn. The company’s production growth slowed to just 2 per cent to 2.83m barrels of oil equivalent per day, after jumping 6 per cent in the first quarter. Refining earnings slipped primarily in the US company’s international operations, with the downstream division earning $181m overseas compared to $561m in the same period a year ago ExxonMobil reported earnings of $4 billion, or $0.92 a share, that missed analysts’ estimate of $1.24 a share as the ongoing rebound in crude prices bol-

stered its business producing oil and gas. While profits missed projections, revenue beat market expectations. Total revenue and other income during Q2 came in at $73.5 billion versus the estimated $72.58 billion. “Second quarter results were primarily impacted by significant scheduled maintenance undertaken to support operational integrity,” said Darren Woods, the company’s CEO. Exxon’s total oil and gas production fell by 7 percent from a year ago which it attributed to falling natural gas output from downtime in Qatar and Australia, as well as in Papua New Guinea, where an earthquake disrupted the company’s liquefied natural gas operations

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378;

BUSINESS DAY

Tuesday 31 July 2018

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Energy Report

3, 000 MW lost to gas flaring? Here are things to note STEPHEN ONYEKWELU

he Department of Petroleum Resources (DPR), July 27, in Lagos, released to journalists who report energy, a document which among other things stated that Nigeria’s flared gas can generate additional 3, 000 MW of electricity. This is not the first time government is acknowledging how wasteful and toxic gas flaring is to Nigeria’s economic and social development road map. At the 50th Off-shore Technology Conference (OTC) in Houston, Texas, May 2018, Mikanti Baru, the Group Managing Director of Nigerian National Petroleum Corporation promised that gas flaring in Nigeria will end in 2019 or 2020. Baru said Nigeria has reduced flared gas from 25 percent to 10 percent. This has moved Nigeria from the second to the seventh largest gas flaring country. There are some obstacles to realising this goal, legal framework and political will especially. What is gas flaring? Gas flaring is the burning of natural gas that is associated with crude oil when it is pumped up from the ground. In petroleumproducing areas where insufficient investment was made in infrastructure to utilise natural gas, flaring is employed to dispose of this associated gas. The process of burning these excess gases is similar to the burning of liquefied petroleum gases (LPG), which some Nigerians use as fuel for home cooking. Cost to Nigeria’s economy – power generation The National Petroleum Corporation (NNPC) estimates that Nigeria loses N868 million daily to gas flaring because oil and gas firms operating within its territory flare 700 million standard cubic feet of gas per day.

Source: BudgIT

In terms of power generation, the DPR says Nigeria can add 3, 000 MW to its installed capacity, when flared gas is harnessed. B u s i n e s s D a y ’s e s t i mates show that additional 3, 000 MW can p ow e r t h re e t h ou sa n d households in Nigeria. This is because an average Nigerian household would need 1000kWh per month, depending on the energy efficiency of appliances. At 1000kWh per month, three thousand households can be powered. Here is the reasoning. An average Nigerian middle class household uses about 300 kWh of e l e c t r i c i t y p e r m o nt h, which costs an average of N7500 but this is not suffi-

cient to satisfy most families’ power needs because they receive electricity an average of six hours per day for 30 days in a month. Twenty-four hours of electricity, means the bill

month, it would make life easier for them but since electricity generation is not sufficient for all Nigerians who need it, the power company normally does what is called load

gas), losing billions of dollars’ worth of economic potential to gas flaring. The Nigeria Flared Gas Commercialisation Programme (NGFCP), seeks to reverse this trend.

shedding, which means rationing of electricity to people and this offers about four to six hours of electricity on the average per day. Nigeria has over 150 flare sites, flaring hundreds of billions of standard cubic feet (scf ) of n a t u ra l g a s e a c h y e a r (in 2015, Nigeria flared 800MMscfpd of associated

Environmental and health costs On environment cost, acid rains have been linked to the activities of gas flaring Corrugated roofs in the Delta region have been corroded by the composition of the rain that falls as a result of flaring. The primary causes of acid rain are emissions of sulphur dioxide (SO2)

Source: BudgIT

could go up to N30,000 per month and that would give about 1200 kWh which can satisfy an average Nigerian family of today. An average Nigerian household would then need at least 1000 kWh worth of it per day but that may not be so quick in coming. So, if every Nigerian family has at least 1000 kW h of e le ctr icit y p e r

and nitrogen oxides (NO) which combine with atmospheric moisture to form sulfuric acid and nitric acid respectively. Size and environmental philosophy in the industry have very strong positive impact on the gas-flaringrelated CO2 emission The implication of gas flaring on human health are all related to the exposure of those hazardous air pollutants emitted during incomplete combustion of gas flare. These pollutants are associated with a variety of adverse health impacts, including cancer, neurological, reproductive and developmental effects. Deformities in children, lung damage and skin problems have also been reported. Hydrocarbon compounds are known to cause some adverse changes in hematologica l pa ra m e te rs. Th e s e changes affect blood and blood-forming cells negatively. And could give rise to anemia (aplastic), pancytopenia and leukemia. What is being done to reduce gas flaring in Nigeria? The federal government initiated the Nigeria Gas Flare Commercialisation Programme (NGFCP) with an objective to provide a commercial approach to the elimination of routine gas flares by 2020 and to drive positive social, environmental and economic impact in the Niger Delta by mobilising private sector capital towards gas flare capture project. Zero Routine Gas Flaring Programme: Introduced by the World Bank, this programme brings together governments, oil companies, and development institutions that recognise gas flaring is unsustainable from a re s o u rc e ma na g e m e nt and environmental perspective. All parties therefore agree to cooperate to eliminate routine flaring no later than 2030. Nigeria is one of the 27 governments that have endorsed World Bank’s Zero Routine Flaring by 2030. This means her government will enable the requisite legal, regulatory, investment; an operating environment conducive to upstream investments; ensure the development of viable markets for utilization of the gas, as well as provide the infrastructure necessary to deliver the gas to these markets.

Tuesday 31 July 2018

C002D5556

BUSINESS DAY

In association with

Why investors are confident in real estate amid sector’s negative growth Stories by CHUKA UROKO

ince the last quarter of 2016 which is about nine consecutive quarters now, the real estate sector has been recording negative growth despite positive growth report in the wider economy. The sector contracted by -9.40 percent in Q1 2018 from -5.92 percent in Q4 2017 and -4.12 percent in Q3 2017. The first quarter contraction was -6.3 percentage points worse than the -3.10 percent reported in the comparable period of 2017. Analysts say the negative expansion recorded by the sector in the first quarter of this year is the worst contraction the property market has seen since Q1 of 2016. This, obviously, accounts for the high number of empty houses, delinquent tenants and unhappy landlords. The Q1 2018 report by the Nigeria Bureau of Statistics (NBS) shows the economy expanded positively by 1.95 percent, a stronger growth when compared with the -0.91 percent in the first quarter of 2017, indicating an increase of 2.87 percentage points. However, despite these negative reports from the sector, investors are still confident such that the cranes are still rising and falling in many construction sites, though not with the scale and number that were seen in pre-recession years when investment level was high and returns were robust. “Real estate is not a trade. It is a long term game and when you are in it you have to look at cycles rather than any moment in time. When you are planning any real estate development, you have to do so in seven to 10-year cycle. Usually, when the demand side is strong, that is when the supply side is weak and vice versa”, explained Paul Onwuanibe, CEO, Landmark Group, in an interview with BusinessDay. The Nigerian real estate market has very strong fundamentals which a savvy and patient investor with long term view of the market cannot gloss over. Such an investor should not be discouraged by down cycles as the market is experiencing at the moment.

This is because at the time an investor conceives an idea to develop a project, it probably takes him a whole year to go to the drawing board. From the drawing board to the regulatory environment will take him another year which means two years gone. By the time he goes into the supply chain and builds, about two years are spent, making it four years from conception. By the time the project is completed, it will be about five to six years down the line. Onwuanibe argued that if the idea of this project was conceived during the boom years, the investor might go into recession when he deliver it and vice versa. “So, if you are planning real estate, you have to do so across both cycles—the boom and the recession and it is not common in any environment that you have both the boom and recession happening the same time”, he said. This is the mindset that is nurturing the development of the ambitious Landmark Village, a one-stop- shop development with one-lifestyle destination. The Village, an expansive development comprising residential, commercial, hospitality and retail business, is a specific onestop-shop market where the leisure, business and hospitality communities can meet and interact. It is a five-phase project that aims to offer spectacular opportunity for leisure, working, living, shopping and eating facilities.

“We are now in phase two of our five-year development. We have finished phase one which comprises the event centre, the Hard Rock and Shiro. The second phase is the retail. The third phase will be hotel and residential apartment. The last phase is another set of offices”, Owuanibe explained. A major market fundamental that nurtures their confidence and drives the project is Nigeria’s strong demography or what Onwuanibe called “the people issue”. “Nigeria has a large number of people who are very aspirational. The same thing with Lagos. I understand that the median age in Nigeria is 19 years while the average age is 27; so we have about 75 million people between the age of 16 and 27”, he noted. The implication of this is that the future is bright and promising for investors with long term view of the market. This is because 75 million young population of the country will have to live, work, eat and play; they will go to school and hospital somewhere and real estate envelopes all these. Provisions have to be made for them and this translates into investment opportunities. This also means that, eventually, the real estate market, with the right government enablement and right financial dynamics, will always prevail. Fabian Ajogwu, chairman, Novare Real Estate Africa, affirms, saying that as a company,

they have very strong confidence in the Nigerian economy, especiallyintheretailsegmentof the real estate market. “We are not deterred or discouraged by short term limitations because we are not here for the short term; we are here for the long haul”, Ajogwu, a professor and Senior Advocate of Nigeria (SAN), insisted. This, clearly, explains the company’s investment of over $500 million in retail development, creating over 5,000 jobs and direct tax revenue to both state and federal governments. This confidence is however tainted by challenges bordering on regulatory framework, hash operating business environment and finance. “The supply chain is a challenge but you can improvise some of the things that are not available locally; if you create a mega city, you must enable real estate; you must create a system that would enable developers to build, make it easy for them to bring in materials and the tax system must be friendly enough to enable development. “The statutory environment must be enabling; there should be landlords and tenants laws, property registration laws and things that should enable property developers to finance their real estate has to get better. Considering that real estate is a long term business, you need a long term financing to deliver it quickly”, Onwuanibe canvassed.

Workplace productivity: FG, AMDC seal pact to remodel federal secretariat

ecognising that productivity enhancement is achievable with a conducive working environment, the federal government and Alpha Mead Development Company (AMDC) have signed a memorandum of understanding (MoU) on a public private partnership (PPP) arrangement to remodel some sections of the federal secretariat, Abuja. The remodeling of the ground floor of Block A and the car parking lot of the secretariat complex, Phase II, which is part of efforts to improve the safety of civil servants and boost workplace productivity, is aimed to halt further deterioration of that section of the building that is no longer conducive for workers. The choice of AMDC for this ‘rescue mission’ is as instructive as it is well advised, given that the company, a strategic business unit of Alpha Mead Group, is Nigeria’s first real estate development company certified to international standards. “Productivity enhancement is achievable with a conducive working environment; the Federal Secretariat is the engine room that drives the nation’s economy and must be conducive. We are looking at taking limited resources and turning it into something great,” Femi Akintunde, GMD/ CEO, Alpha Mead Group, assured, assuring that the project would be delivered in six months and ready for inauguration in January 2019. Earlier, Winifred OyoIta, Head of Civil Service of the Federation, had explained that the PPP ini-

tiative became necessary in the face of paucity of funds and consequent lack of maintenance, leading to the deterioration of the secretariat facilities. She noted that the state of that section of the building was no longer conducive for workers, hence the need to give the building a facelift. “We have been looking for funds to work on the secretariat for many years; so we decided to think out of the box and go into PPP to resuscitate the federal secretariat,” she added. According to her, the Development Control Unit of the Federal Capital Territory had scrutinized and approved the modified design of the secretariat, and the process has the full cooperation of the Infrastructure Concession and Regulatory Commission (ICRC); pointing out that the success of this first phase would determine if the government will expand the project to all the phases of the secretariat. The pilot project would start with the secretariat’s Ground Floor, Block A, and the secretariat complex parking lot where over 1,000 square metres of office space and 800 car park spaces will be created to improve safety and productivity of staff. In a statement obtained by BusinessDay at the weekend, Akintunde noted that partnering with government was usually slow, “but I have seen speed and determination in this project. As private sector participants, this gives us a lot of impetus and further fuels our resolve to work with all stakeholders to create serviceable and maintainable work space that will meet world standards”.

BUSINESS DAY

Tuesday 31 July 2018

Property tax: Reasons government is considering voluntary compliance Stories by CHUKA UROKO

enerally, tax is a civic duty and responsibility of citizens of a state or country. In advanced societies, people pay tax voluntarily and willingly because they know it is a thing they must do. But in less developed countries, particularly in Nigeria, the rate of tax compliance and payment is very low. Taxes are paid in order to fund development projects. Therefore, tax and development go hand in hand. In most African countries, however, the rate of default and unwillingness to pay tax is high. It is even higher in Nigeria, the continent’s largest economy and the reasons are not far-fetched. Development is hardly seen no matter which area one is looking at. There is no infrastructure; no good roads, rail system, well equipped ed schools, hospitals; no electricity, water etc. The assumption then is that tax proceeds are not utilized for the purpose they are meant, leading to apathy and lack of interest in the tax system. The same thing applies in property tax. Generally, property owners lack both the moral and unwillingness to pay tax on their property. That intrinsic motivation of fulfilling what should be their civic duty is not there. But analysts say the reasons for this apathy are not difficult to see in a society where owning a property is a huge project because, “you are literally your own government who has to provide your own water, electricity, and in some cases, your own road; and you must have paid so much to acquire the land, perfect the titles, and secure approvals from the same government

that will collect tax from you”. “We are a responsible citizen; we pay our taxes to the last kobo, but we are not getting as much from government in return; infrastructure is still a huge problem”, said Paul Onwunibe, CEO, Landmark Group in an interview with BusinessDay. Landmark, a property development and investment company with strong footprints in seven African countries, does not stop at just paying its tax, Onwuanibe said they also build and maintains roads infrastructure in their host community. The road leading to their Lagos head office is a typical example. The Lagos State government, well aware that compliance rates for property taxes are low when compared with developed nations, is moving to engender a culture of voluntary compliance and to prosecute defaulters for improved compliance. The state recognizes that the greatest failing of property tax is the unwillingness of government to enforce it as there are many high net-worth indi-

viduals in the society who own big properties but do not pay tax on them, hence the need for a strong institutional support to improve compliance. The implication of this, according to the state government, is that the entire community suffers because there will be no money to carry out development projects that will impact on the lives of the people. Analysts have expressed reservations with the idea of voluntary compliance, saying that it has over 80 percent chances of increasing default rate which is already high, unless government gives payers good cause to comply by reciprocating the payment with critical infrastructure development. Reasons for the high default rate could be traced to some administrative challenges which the state government is grappling with. These include inaccurate assessment of property, wrong classification, large number of un-assessed properties as a result of lack of capacity. Other challenges have to

do with inability to do a periodic valuation as a property may appreciate or depreciate; distribution problems, and inability to correctly identify who owns which property, all translating into poor coverage, valuation and wrong data collection. This is where professionals like estate surveyors and valuers who are also known as land economists should come in and play their role. They are the ones with the professional expertise and capacity to calculate the land use charge and the average market value of properties. As part of the lessons learnt from the ill-advised Land Use Charge (LUC) 2018, the state now allows individual property owners to do independent valuation of their property, using professional valuers and, thereafter, calculate their LUC payment. Those contesting the assessed value of their property can assess same for the purpose of filing their own counter assessment which will then be considered by the state’s commissioner for finance.

ROYAL lifts building materials subsector, gets recognition at NHA

he building materials market received a major boost recently as the Royal brand of marble stones and granite which is manufactured by Royal Engineered Stones Limited was recognized and rewarded recently for its innovative marble products at the Nigerian Housing Award (NHA). The ‘Best Innovative Marble Company of the Year 2018’ award given to the company was part of the high points of the just concluded 12th edition of the Abuja International Housing Show (AIHS)—Africa’s largest international real estate conference and products exhibition. Expectation is that this award will not only encourage the company to aim higher with more quality and innovative products, but will also spur healthy competition among producers of similar products, leading to production efficiency and competitive pricing to the advantage of the consumer. Fesadeb Communications, organizers of both NHA and AIHS, explained that the award was a mark of recognition and encouragement to the company for its immense contributions to housing development in particular and the built environment in general. “Emerging as the ‘Marble Company of the Year’ is very inspiring and rewarding to us. Anybody who works hard towards a goal and gets recognized for his hardwork feels good. Being in the industry for over three decades, leading the pace through thick and thin, yet with a resolve to continue to serve Nigerians and all stakeholders with high quality products has indeed paid off with this recognition”, enthused Bello Abdulrahman, head of admin and

public relations manager at Royal Engineered Stones Limited, who received the award for his company. Ab d u l ra h m a n c o m mended the organizers of the NHS, describing it as a source of encouragement in Nigeria’s building and construction industry which promotes healthy competition aimed at inspiring excellence and innovativeness in solving housing challenges and making huge contribution to improve the housing sector. “We remain grateful to our trade, professional, and technical partners as well as the end users of our products and industry regulators who have stood by us all these years. We appreciate all those who voted for us because, evidently, each vote has proved a successful count.” Abdulrahman said. Festus Adebayo, CEO, Fesadeb Communications, explained further that NHA aimed to recognize and celebrate, recognize and encourage outstanding government officials, corporate bodies and individuals in the Nigerian housing sector. Adebayo disclosed that NHA did due diligence in all phases of the project from searching for companies, brands, institutions that met the criteria and individuals who have contributed to housing positively, to the screening, nomination and voting process, culminating in the award night. “The award was set up to encourage competition and competitive pricing in the housing construction industry. The award categorization is carefully designed to recognize the efforts of both established and up-coming organizations in the Housing and construction sectors of the Nigeria economy”, he stated.

We are open for business, FCTA assures investors as Novare Central Mall opens

he federal capital territory administration (FCTA), Abuja, has assured investors that it is open for business and is enabling its environment to attract as well as encourage particularly foreign direct investment (FDI). A good number of investors have strong footprints in Abuja and the success of Novare Real Estate Africa, which opened its latest retail outlet, Novare Central Mall, recently, is a testament of the enabling environment created by FCTA to encourage FDI in the federal capital and Nigeria. Muhammad Bello, the FCT minister, who gave this assurance also assured in-

vestors of the safety of their investment. The minister who was represented by Chinyeaka Ohaa, the Permanent Secretary, Ministry of the FCT, welcomed other investors to Abuja’s peaceful and safe business environment. The opening of Novare Central Mall brought to three the number of retail malls developed by Novare and opened in the FCT. The two earlier ones are the Novare Gateway Mall that was developed at a cost of US$68 million and includes a second phase that will, in future, see another 10,000 square metres added to accommodate 33 more shops. The second mall is the 8, 267-square metre Novare Apo

Mall located about 18km from Novare Gateway to the southEast of Abuja. The company is also the owner of the 22 000-square metre Novare Lekki mall, which commenced trading in August 2016 in Lagos. The opening of the Novare Central was an exclusive event attended by government officials and members of the businesscommunity,including Bello, FCT minister; Justice IU Bello, the chief judge of the FCT, and Funsho Akere, the chief executive of Stanbic IBTC Capital. Novare Central Mall is a three-storey mixed use facility comprising7,178squaremetres of retail space on the ground floor and A-grade avant-garde office spaces occupying the first,

second and third floors measuring 1,690 square metres , 1938 square metres and 1685 square metres respectively. Fabian Ajogwu, chairman of Novare Real Estate Africa, commended the FCT minister for the enabling environment created to encourage and accommodate FDI in Abuja. He revealedthatthenewfacilitywas developedatacostofUS$54million as FDI financed by a hybrid of equity and debt financing. The retail section of the centre consists of 33 high end stores, housing major brands with Shoprite, Africa’s largest food retailer, as the anchor tenant. Other stores at the centre include PEP, Office Everything, Active Leisure, Timekeepers

and Kilimanjaro with a growing number of established retail brands and big corporates still expressing interest to take up space at the centre. The unique feature of the mall is that it was strategically designed to delineate the section of the centre reserved for offices from the retail portion, thereby offering the best of both worlds to people who patronise the centre. Thechairman commended members of the board and management of the company including Munir Ja’Afaru, Yerriman Zazzau, Peter Bamkole, Jan Van Zyl, Pierre Groenewald, Hein Du Plessis and the group CEO, Derrick Roper for their support and encouragement.

“We congratulate the board and management of Novare Real Estate Africa on the success of the project while pledging the commitment and support of our bank to encouraging FDI in Nigeria”, said Funsho Akere, chief executive, Stanbic IBTC Capital, the financial partner of Novare Real Estate Africa. Novare Equity Partners has a 10-year track record of real estate development in sub-Saharan Africa. The group attributes its ability to successfully develop and manage modern retail and commercial facilities to its hands-on approach and onthe-ground presence in the countries where it operates.

Tuesday 31 July 2018

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BUSINESS DAY

FEATURE

Push for border-town refinery, a journey to achieve refining sufficiency Nigeria and Niger Republic enter into a strategic alliance that will see them build refinery at a border town between both countries. HARRISON EDEH writes on the ability of the border-town refinery to address the huge concerns of fuel importation in Nigeria, since Northern Nigeria consumes about 40 percent of imported fuel in the country.

igerian and the Nigerien governments are pushing a proposed border town refinery that would specifically assist Nigeria address concerns of attaining self sufficiency in refining locally, meeting local demands while addressing huge sums spent on fuel importation. With growing concerns of importation of fuel amid dwindling forex scarcity, there is no better time than now for the Nigerian government to ensure refining capacity is met locally. The Nigerian government seeks to end fuel importation by 2019, and is heavily relying on Dangote’s 650,000 barrels refinery to cut down the huge importation. With the proposed border-town refinery, Nigeria is poised to reduce the huge importation and heavy burden of trucks on Nigerian roads, with attendant negative impact on Apapa with gridlocks. Nigerian government’s proposed border town refinery with the Nigerien government has been hailed by many industry stakeholders, who believe that the deal when consummated and comes alive, has the capacity to cut down fuel importation into the country to the tune of 40 percent. Notably, Nigerian government is still struggling with refining of its crude at home, with the three refineries not performing optimally, prompting huge importation of fuel products from the mainly Russia, United States, Japan and some other key European countries. BusinessDay findings reveal that with the proposed border-town refinery, the bulk of fuel consumption in the Northern Nigeria would be cut down by 40 percent because of the proximity Niger to Nigeria’s Kano, Jigawa, Katsina, Borno, and Gombe. ”Nigeria spends huge money on fuel importation. You are witness to the Apapa gridlock caused measurably by loading of trucks. This Federal Government’s move with the Nigerien government on a border town refinery would lessen huge imports from mostly European and Asian country and encourage our local refining at home,” Kingsley Obiakor, an energy expert told BusinessDay. Kingsley went further to state that huge amount of money paid by the federal government to bridge the gap of truck movement of lorry load of fuel and even it’s the consequences of pressures on our roads would be highly reduced to ensure refining sufficiency in the country.

“Nigeria has proximity of about 200km linking it to Niger, with states of Jigawa, Katsina, Kano, and Borno also having close links to the border country,which means Nigeria technically could use the pipe linkage of the depot from Kano which is closer to Niger and link up to the neighbouring states in Northern axis, with Kaduna refinery also on course” Recall, Nigeria and Niger Republic had already cemented agreement of the proposed refinery by signing an agreement to build a hydrocarbon and pipeline refinery to process 150,000 barrels of crude oil per day. President Mahammadou Buhari of Nigeria and President Muhamamdou Issofou of the Republic of Niger witnessed the signing of the agreement at the new banquette hall of the Presidential Villa, Abuja. The refinery, which will be the sixth after those of Warri, Kaduna, two in Port Harcourt and the Dangote Petrochemical and refinery, will be private sector driven, according to President Buhari. The refinery President Buhari gave December 2018 deadline for the submission of the technical reports on details of the project to enable government fast tracts its take off. Nigeria had set a target of 2019 for stoppage of petroleum products importation, with the current efforts geared towards the accomplishments of that goal. The project regarded as mutually beneficial to both countries, will see the construction of pipeline that will supply crude oil from the Republic

of Niger to the new refinery, to be located in a border town in Katsina State. The project is also expected to foster the development of small and medium scale industries through backward and forward linkages Industry experts believe the project will also help to reduce carnage and deterioration on Nigeria roads with the less movement of petroleum products from the existing Nigeria refineries to the far northern parts of the country. The project is also expected to engender strong socio economic development of the rural areas, especially where the refinery will be located as more social amenities are expected to spring up in the area. President Buhari at the MoU signing specifically noted, “This project will be private sector driven with the full support of the governments of both countries and I am happy to understand that several expressions of interest (EOI) from prospective investors are already being received. “In this regard, a Steering Committee has been set up to be chaired by the Nigerian Minister of State for Petroleum Resources and the alternate chair is the Nigerien Minister of Petroleum, to provide strategic leadership, direction and governance oversight for the project.” Buhari announced that enior level Joint Technical Team headed by Rabiu Suleiman, carefully selected based on competence to develop the implementation roadmap and strategy on both the refinery and pipeline projects.

“It is my expectation that by December 2018, this group will come up with a detailed roadmap and guideline leading to actual execution of the projects. “The detail roadmap should cover the feasibility studies for both the Refinery and pipeline projects, Security plan, selected consortia of investors for both the Optimal project site, pipeline routes and details refinery and pipeline projects. On the heels of this development, the Federal Government has confirmed receiving expression of interest from Russian and Turkish investors with additional 14 other upbeat and willing to invest in Nigeria-Niger joint venture refinery project. Confirming this development to BusinessDay, Rabiu Sulaiman the special assistant technical to the minister of petroleum resources, Ibeh Kachikwu, who heads the technical committee to the refinery project said, “Niger share a boundary of over a 1000km from Nigeria. From Borno, Katsina, Jigawa, Sokoto, in terms of very large expanse of culture and neighbourhood, there are lots of things both countries share in common.” Suleiman pointed out further that,” Since the discovery of a billion barrel of oil in Niger incidentally, because of the landlocked nature of Niger is looking for a closest market for its crude which Nigeria naturally offers, given the proximity, since 40 percent of fuel consumption in Nigeria happens in Northern Nigeria.” Kano in particular provides the highest consumer states outside

Lagos; being a commercial city and the distance between Kano and Niger is about 180km distance. Kano is surrounded by Jigawa, Sokoto, Borno and also Gombe, which are neighbouring states, which naturally take their fuel consumption from around Kano. It would be noted that Nigeria imports 70% of its Petroleum requirements from outside the shores of the country from far away Russia, United States and other European countries, where we could easily do business with our neighbours to cut down massive import cost. The border town refinery he said presents an opportunity of exploring the advantage of the proximity of about 150km refinery project to cut down on about 40 % consumption in Northern Nigeria which would see Nigeria becoming self-sufficient in Petroleum refining and even becoming net exporter. “Here comes an opportunity for a billion barrel of crude that is land locked, and here is an opportunity for a large market with proximity to cut down market needs of the Northern Nigeria in petroleum products which hinges around 40%.” Another opportunity for the Nigerian nation when the border-town refinery comes on stream is huge impact on lessening the burden of truck transportation on Nigeria’s road infrastructure. Above all, bridging cost mostly born by the Petroleum equalisation fund on behalf of the government as a result of transportation of imported Petroleum products is to be reduced drastically, since the border-town refinery has proximity to key Northern states earlier mentioned that consumer enormous fuel in the country. Most notably, the Nigerian government said, the equity it is seeking is something close to the Nigerian LNLG model of partnership, where you have people with the majority share, and controlling share and also having huge influence on the board management and that is why you have robust management there without undue interference by the government. That is why the LNLG is run absolutely like a business venture. Industry watchers say the government must be determined to see to the completion of the project in record time to enable it meet the target time of fuel importation stoppage in 2019,as well as ensure heavy trucks loads always log jammed in Apapa for fuel loading is lessened with supply cutting down in the North by 40%.

BUSINESS DAY

C002D5556

Tuesday 31 July 2018

Markets + Finance ‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Union Bank Nigeria: Record drop in NPLs validates risk management strategy ...Reverts to positive retained earnings ...Increased interest income underpins earning BALA AUGIE

nion Bank Nigeria Plc recently released its results for the year ended June 30th 2018 which shows significant growth in key metrics. Investors and shareholders will soon be rewarded for investing in the bank as Union Bank reverted to positive retained earnings, thanks to consistent profit growth amid a tough and unpredictable macroeconomic environment. Increased interest income boost earnings Union Bank reported growth of 15.63 percent in gross earnings to N83.30 billion in June 2018 from N72.10 billion recorded in the corresponding period of 2017; the growth in revenue was largely driven by a significant rise of 22.30 percent in fees and commission income. The bank’s interest and similar income grew by 9.83 percent to N62.20 billion in the period under review as against N56.63 billion the previous year; driven by improved yield on loans and government securities. Interest and similar expenses were up 4.97 percent to N27.85 billion in June 2018 as against N26.53 billion as

Emeka Emuwa, CEO, Union Bank

at June 2017; the single digit growth in interest expense was due to an 11.35 percent increase in deposit from customers and a reduction in other borrowed funds to 19.56 percent to N26.53 billion and y N4.40 billion respectively Non-Interest income was up 36.53 percent to N21.13 billion in the period under review from N15.43 billion the previous year; driven by a combination of trading income and alternate channel revenues Due to the uptick in interest income and the slow pace in interest expense, net

interest and similar income increased by 12.83 percent to N29.72 billion in June 2018 from N26.34 billion the previous year. Net interest margin increased to 8.20 percent in June 2018 from 7.90 percent as at June 2017, thanks to improvement in interest and non interest income. Operating income increased by 21.73 percent to N50.85 billion in June 2018 as against N41.77 billion the previous year, a breakdown of operating income shows disposal of fixed income securities surged by 203.80 percent

to N6.38 billion in the period under review from N2.12 billion the previous year while credit impairment increased by 23.20 percent to N4.62 billion in June 2018 as against N3.75 billion the previous year. As a result of a 25 percent in Nigerian Deposit insurance Corporation and Asset Management Corporation of Nigeria (AMCON) charge, Union Bank’s total operating expenses increased by 20.93 percent to N39.20 billion as against N32.40 billion as at June 2017. Despite the impact of the impact of regulatory induced cost on expenses, the lender is efficient as its cost to income ratio reduced to 70.70 percent in June 2018 from 71.20 percent the previous year. Union Bank’s pretax profit grew by 23.30 percent to N11.67 billion in the period under review as against N9.46 billion as at June 2017. Profit after followed the same growth trajectory as it grew by 24.45 percent to N11.45 billion in the period under review from N9.20 billion the previous year. The bank has utilized shareholder’s resources in generating higher profit as return on equity (ROE) increased to 7.30 percent in June 2018 from 6.60 percent as at June 2017. Balance sheet position improves as NPLs drops The bank’s total asset witnessed a slight growth of 1.36 percent to N1.47 trillion in the period under review from N1.45 trillion as at December 2017, while cash and cash equivalent rose by 6.14 percent to N243.06 billion in June 2018 from N222.57 billion as at December 2017. Loans and advances were down 7.95 percent to N508.50 billion in the period under review as against N560.70 billion the previous year. Deposits from customers were up 3 percent to N826.70 billion in the period under review as against N802.40 billion the previous year. Property plant and equip-

ment increased by 3.75 percent to N58.08 billion in the period under review as against N55.98 billion the previous year. Union Bank is less aggressive about lending as loans to deposit ratio fell to 61.50 percent in June 3018 from 70 percent the previous year. Shareholders fund increased by 15.93 percent to N290.34 million in the period under review from N345.67 billion the previous year. Union Bank’s risk management strategy has paid off as Non performing Loans (NPLs), tough lower than the 5 percent threshold, fell to

issue are to be channeled towards boosting the bank’s capital base and lending to the agriculture sector, according to the bank. Funds raised from the bond will be applied to the same objectives. “In the first half of the year, we have continued to see positive results from our efficienc y and productivity drive. Across all our business lines, we witnessed strong underlying performance, translating into improved earnings. We continue to focus on the recovery of non-performing loans. With the resolution in Q2 2018 of the large real estate exposure which was

10.80 percent in June 2018 from 19.80 percent as at December 2017. Coverage ratios reduced to 97 percent in the period under review from 103 percent the previous year, validating the lender’s efficient portfolio management. Cost of risk (Cor) increased to 1.70 percent in the period under review as against 1.40 percent the previous year. While Union Bank was founded in 1917 is one of Nigeria’s oldest commercial banks, the Asset Management Company of Nigeria (AMCON) injected N239 billion as capital into the bank in 2011. In order to strengthen its balance sheet and bolster capital buffers, Union Bank may be considering a Eurobond raise. The bank in December last year concluded a N50 billion rights issue. Proceeds of the rights

impaired in December 2017, the Group NPL ratio is down to 10.8% from 14.9% at 31 March 2018 and 19.8% at 31 December 2017,” said Emeka Emuwa Chief Executive Officer (CEO) and managing director of Union Bank “The Group continues to demonstrate its ability to deliver strong results notwithstanding a competitive and challenging operating environment. “With low-cost deposits now accounting for 70% of total deposits, up from 67% as at December 2017, our cost of funds fell in H1 2018. Consequently, the Group NIM has improved from 7.9% in H1 2017 to 8.2% in the period. Our foreign currency deposits are up 66%, compared with December 2017; and up 40% compared with March 2018, as we continued to optimize our balance sheet,” said Emuwa

BD MARKETS + FINANCE (Business Team lead: PATRICK ATUANYA - Analysts: BALA AUGIE and LOLADE AKINMURELE)

Tuesday 31 July 2018

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BUSINESS DAY

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Live @ The Exchanges Nigerian Breweries berths with disappointing H1’18 scorecards Stories by Iheanyi Nwachukwu

igerian Breweries Plc has released its financial scorecard for the first-half (H1) ended June 30, 2018 with disappointing top-to-bottom line scorecards. The unaudited financial results released at the Nigerian Stock Exchange show Nigerian Breweries reported profit after tax (PAT) of N18.4 billion, representing 22 percent decrease over the N23.7billion recorded in the corresponding H1 period of 2017. Also, the group revenue decreased from N192billion recorded in the same period in 2017 to N183billion in the H1 of 2018 period. Gross profit was down to N76.1billion in H1’18, from a high of N81.8billion H1’17. Net Finance Cost declined to N4.06billion from a high of N5.2billion in H1’17. Basic Earnings Per Share (BPS) declined to 230kobo from 297kobo recorded in H1’17. At the Lagos Bourse on Monday

July 30, 2018, the share price of Nigerian Breweries Plc which opened at N104 closed at N104.5, representing 50kobo gain. The share price is still within its 52-week low of N102.60 after reaching a 52-week high of N193. Nigerian Breweries has issued N57 billion out of its N100 billion Commercial Paper programme. “While we expect new CP issuances in the year, we have modeled interest expenses to halve in 2018F, on expected reduced working capital pressure and lower interest rates”, according to analysts at Cordros Capital who had asked investors to ‘hold’ Nigerian Breweries Plc share. Meanwhile, the company’s interest expense in H1’18 increased to N2.3billion against N1.7billion in H1’17 period. The H1 scorecard at the NSE shows Nigerian Breweries has revolving credit facilities with five Nigerian banks to finance its working capital. The approved limit of the loan with each of the banks range from N6billion to N15billion

(total of N66billion) – N15billion was utilized in H1’18 against N13billion in H1’2017, according to its net cash coverage/interest bearing debt position for the six months period ended June 30, 2018. The financial statement shows that results from operating activities declined by 20 percent from N39.3billion in 2017 to N31.6 billion in the corresponding six months in 2018, just as Profit before Tax (PBT) dropped by 19 percent in H1’18, from N34billion in 2017 to N27.5 billion. In a letter dated Friday July 27, 2018 sent to the Nigerian Stock Exchange, the company notified investors about Board resignations/appointment and top management appointment. The Company stated in the filing statement signed by its Company Secretary/Legal Adviser, Uaboi Agbebaku, that the new excise duty regime and higher rate of beer introduced by the Federal Government in June 2018 further impacted on affordability in the period under review.

Seplat, 30 other stocks lift Lagos Bourse by 0.84%

he Nigerian Stock Exchange (NSE) All Share Index increased by 0.84percent on Monday July 30, 2018 as Seplat Petroleum Development Company Plc led the basket of 31 stocks that gained as against 22 losers led by Total Nigeria Plc. Many investors at Lagos Bourse moved speedily to take positions in Seplat stocks following impressive firsthalf (H1) revenue which increased by 160percent to N104.794billion against N40.317billion in the corresponding H1 period of 2017.

The company’s profit before taxation increased by 559percent in H1’18 to N37.093billion against a Loss Before Tax of N8.090billion in H1’17. The Nigerian stock market year-to-date (ytd) return remained negative at 3.39percent. The All Share Index closed at 36,946.05 points against the preceding day close of 36,636.97 points while Market Capitalisation closed at N13.384 trillion against preceding day close of N13.272 trillion. The volume of stocks

traded increased by 2.58percent, from 311.36million to 319.40million, while the total value of stocks traded decreased by 12.60percent from N3.48billion to N3.04billion in 4,091 deals. The Financial Services sector led the activity chart with 157.6million shares exchanged for N1.27billion; followed by Services with 102.57million shares traded for N201million. MedView, Sterling Bank, UBA, Transcorp and FBN Holdings Plc were actively traded stocks on Customs Street.

Challenging setting for DMO auctions - FBNQuest Capital Research

t its latest monthly auction of FGN bonds, the Debt Management Office (DMO) last week offered N90billion, attracted a total bid of N77billion and raised N67billion ($220million) from sales. It offered the same paper as the previous month, and the marginal rates were higher for all three instruments by 19basibps to 49bps. The auctions since April have seen a sharp fall in the total bid and a

pick-up in rates. In June the DMO raised just N31bn, and still had to set higher rates: last week it perhaps answered the call to raise funds towards its target for the 2018 budget year, and collected twice as much. It would appear that the domestic institutions are now less drawn to the returns on NTBs and more to the longer maturities in the FGN bond market. The overall modest bid last week was concentrated, as at the two previous auctions, on the

longest maturity on offer (Feb ‘28s). Our call is that FGN bond yields have settled on a plateau, with a slight upward bias, for the weeks ahead. We see evidence of fatigue on the part of domestic institutions and sense that the offshore community is guided by the normalisation of US monetary policy. The returns on Nigerian paper are among the best in the EM universe for local currency government debt.

Tuesday 31 July 2018

BUSINESS DAY

Tuesday 31 July 2018

STRATEGYBRIEFING IDEAS THAT POWER High PERFORMANCE

The strategy and execution gap

Closing the gap that breeds corporate mediocrity BRIAN REUBEN

tatistics available from statista.com indicates that advertising spending in Nigeria in 2017 amounted to US$618.06 million and is expected to increase in 2018. That’s a lot of money. This spending only represents a part of what companies spend on their sales effort. Borrowing from the words of Mark Twain, ‘put all your eggs in one basket, then watch that basket’. Meaning if you are going to spend that much money on sales, then you better take your sales very seriously. Unfortunately business executives don’t seem to do this. Research indicates that sales is, by far, the most expensive part of strategy execution in many companies. Yet, on average, companies deliver only 50% to 60% of the financial performance that their strategies and sales forecasts have promised. And more than half of senior executives (56%) say that their biggest challenge is ensuring that their daily decisions about strategy and resource allocation are in alignment with their companies’ strategies. That’s a lot of wasted money and effort. This limits growth, impedes superior performance and therefore a case of serious concern. What this mean is that the decisions, behaviours, allocation of time and other

resources at many companies cannot enable them follow in the strategic direction they have determined. So even though a company may have committed resources to the development of a strategy, it cannot translate into a superior performance. The reason for this is not difficult to find. Strategy is still generally misunderstood by many executives. Of those that understand, misconceptions about strategy shuts them out of strategic effectiveness. For example an assessment by GrowthPlay, a sales focused consulting firm among senior executives and sales professionals indicates the problem stems from gaps between the perceptions, attitudes, and information flows between executives and sales reps. The results from the assessment shows that executives have a high level of understanding of their companies’ strategic priorities, while sales professionals usually not involved in the crafting of their company strategy did not demonstrate the same understanding. Senior leaders have a better relative understanding of the company’s direction than sale reps, but are concerned that they lack the right sales processes and people to executive the strategy. On their own, sales processionals are confident in their abilities to produce results but admit they have little understanding of the strategic

direction, and its implications for their behavior. When sales professionals lack the understanding of their companies strategic direction, they more efficient at their routines, even when these same routines keep the firm, and its top team, from gaining experience with procedures more relevant to changing market conditions. Why does this happen? Why are the front line sales professionals and senior executives in such disalignment even at the expense of superior performance? Well to begin with many companies don’t even have a strategy even though think they do. They have mission statements, they have shared values, they have particular intentions they want to pursue like internationalizing but for them any of these might be the strategy. Unfortunately none of that constitutes a strategy. If there is no strategy how can senior executives communicate something that does not exist? Strategy is a company’s unique approach to competition and the competitive advantages on which it will be based. Its not a particular action, its holistic and cuts across all the functions. Another issues and its a pretty one is that most senior executives are scared that communicating their strategy will expose them to strategy theft. But come to think about it, such executives should

understand that they stand a more serious problem than strategy theft. You see strategy is useless without execution. Preserving your strategy so that your competitors don’t know about it and at the same time shutting your people out means it will not be executed and that means you will at best play along others as a corporate mediocre. How often have you read about the strategy of Google, Apple, Bulberry and Nike? For example it took US car manufacturers many years to get good atToyota’s lean manufacturing methods,even though Toyota willingly gave factory tours to it’s rival executives.More recently,traditional companies continue to struggle to adopt the digitally powered methods of online leaders like Amazon.com and Google,although the outlines of these methods are well known. What does it show? Communicating your strategy doesn’t compromise your position if you really have a strategy (read my

article on ‘Nigerian companies rarely have a. strategy’) In a world with a global infrastructure of consulting firms and others paid to disseminate corporate information, confidentiality as a reason for not communicating strategy is myopic and a pathway to failure. Your people cannot execute what they don’t understand. This gap is the reason most companies only struggle along. Brian Reuben is an author, advisor to business leaders, keynote speaker and an entrepreneur. He has trained and advised senior executives at renowned organizations including Africa Reinsurance Corporation, UAC, United Securities Limited, BusinessDay among others. He is the Director of BusinessDay Training and sits on the board of a number of organizations in Africa. Was this article helpful? Share your thoughts with us on Facebook @bdtraininglive or email us on trainings@businessdayonline.com

Brian is an author, advisor to business leaders, keynote speaker and an entrepreneur. He has trained and advised senior executives at renowned organizations including Africa Reinsurance Corporation, UAC, United Securities Limited, BusinessDay among others. Brian is the Director of BusinessDay Training and sits on the board of a number of organizations in Africa.

This Page Is Open For Sponsorship, for details call 0708 234 5251.

Politics & Policy Tuesday 31 July 2018

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Purported suspension of 15, impeachment notice illegal - Ortom …As Atiku condemns plot to sack governor BENJAMIN AGESAN, Makurdi

overnor Samuel Ortom has described the purported suspension of 15 PDP members of the Benue State House of Assembly by seven of their APC colleagues as well as the claim to serve him an impeachment notice as illegal and display of impunity. He stated this today at the Benue People’s House, Makurdi, while addressing the press on recent political developments in the state. Governor Ortom said it was the height of illegality for an impeached speaker to preside over an Assembly with only eight members, noting that an already subsisting court order restraining him from parading himself as speaker further made the sitting a nullity. While responding to allegations of corruption and nonperformance levelled against him by the eight members of the Assembly as justification for the

Samuel Ortom

impeachment move, he asked where the speaker and seven others were for the past three years that they could not raise

such issues. He described the allegations as unfounded and unsubstantiated, stressing that laudable projects

executed by his administration in education, health, agriculture and infrastructure abound for the public to see. The governor appealed to President Muhammadu Buhari to call the Inspector General of Police and the Director-General of the State Security Services to order, adding that the siege on the State Assembly by the security agencies was against the tenets of democracy. Reacting to comments credited to the factional national chairman of the APC, Adams Oshiomole that he was no longer marketable; Ortom described Oshiomhole as an overzealous party chairman who has usurped the powers of the President, police and even ministers. Meanwhile, Atiku Abubakar, a former vice president and presidential aspirant, has condemned the awkward political development in Benue State where some lawmakers, aided and abetted by the Nigeria Police Force came together to illegally occupy the

State House of Assembly and serve impeachment notice to Governor Ortom. Atiku regretted that for a state facing security challenges like Benue, the introduction of lawlessness in the impeachment process could only complicate an already bad situation. He urged the police to remain politically neutral and avoid aiding lawlessness, adding that partisanship could professionally destroy the image of police. He stressed that the loyalty of the police should be to the constitution and the rule of law. The former Vice President noted in the statement that whatever might be the short term political benefits of lawlessness, the long term dangers are by far greater than those perceived benefits. He warned that, if unchecked, the political situation in Benue State could lead to a domino effect across the country, thereby jeopardising Nigeria’s democracy and endangering innocent lives and property of lawful citizens.

from the division. “There should be no do-or-die or defection from our division, we are the ruling party and all of you must work together for the progress of the party.” Oluwa, the party chairman, explained that the meeting was organised to bring aspirants together and warn them against divisive tendencies, as the party supremacy is sacrosanct. He urged the aspir-

ants to work together towards the victory of the party in forth coming elections. Oluwa warned that the party would not condone acts of sabotage by any aspirant, just as he regretted the loss of seven seats in the federal and state House of Assembly in the 2015 general election due to lack of cohesion among the aspirants after the party’s primaries.

2019: Work for APC success, Adebule urges aspirants JOSHUA BASSEY

head of the 2019 elections, leaders of the ruling All Progressives Congress (APC) in the Badagry division, Lagos, have advised aspirants to work together for the success of the party irrespective of whoever emerges party flag bearer for any of elective posts. The advice was given at a peace-

talk held at the official residence of Oluranti Adebule, the state deputy governor, who is from the division, and other top APC members from the zone, among them Sarah Sosan, a former deputy governor; Rabiu Oluwa, APC chairman, Badagry division; Cornelius Ojelabi, a former commissioner, as well as serving members of the state executive council and House of Assembly from the area.

APC mocks planned defection of former state chairman to PDP SAMUEL ESE, Yenagoa

he Bayelsa State Chapter of the All Progressives Congress (APC) has rubbished the planned defection of a former state chairman, Tiwei Orunimighe to the People’s Democratic Party (PDP), saying he was expelled since August 2017. APC State Publicity Secretary, Doifie Buokoribo, said in a statement on Monday that Orunimighe was no longer in its fold and described as irresponsible the attempt to use the party as a leverage in his negotiations as he has the right to join any party of his choice. Orunimighe, a former chairman of Southern Ijaw Local Government Council, was accused of anti-party activities during the past governorship election in the state and was expelled by the APC. However, he went to court to challenge his expulsion and a high court in Sagbama declared him as state chairman of the APC just 18 days to

the end of his tenure. It was reliably gathered that Orunimighe was part of the aggrieved APC members who organised a parallel state congress at Azikoro, Yenagoa, though they eventually lost out as the national leadership of the party did not recognise the parallel congresses nationwide. The APC statement read in part: “Orunimighe and his group of renegades were expelled from APC for anti-party activities since August last year by the party’s National Working Committee (NWC). “The party advised members of the public to disregard the defection claim by people who want to join a party of their choice. APC in Bayelsa State remains intact, united, strong, and focused.” Bayelsa State has witnessed a wave of defections with politicians either defecting from the APC to PDP or vice versa; the high point being the defection of Ibarakumo Otobo who was commissioner for Youth Development from the PDP to the APC on June 20 this year.

Oluranti Adebule, the deputy governor who, alongside other political leaders, initiated the meeting, told the aspirants to show commitment to the party by working together as single body and ensuring that APC is victorious in all future elections. Adebule said that the meeting became necessary in view of the increasing number of people aspiring for different political offices

2019: INEC sensitises Ondo traditional rulers YOMI AYELESO, Akure

he Resident Electoral Commissioner (REC) of the Independent National Electoral Commission (INEC) in Ondo State, Rufus Akeju, has solicited the cooperation and assistance of traditional rulers in the sensitisation of their subjects for the 2019 general election. Akeju made the appeal during a stakeholders’ meeting organised by INEC and Forums of Heads of Federal Establishments for traditional rulers in Ondo State ahead of the forthcoming elections. He explained that the commission was not slack in voters’ education and sensitisation of stakeholders, and added that traditional rulers are closer to the people and their subjects, hence the appeal. “I have held a stakeholders meeting once since my advent in the state, played host to various media practitioners and youth bodies and have been interviewed at state television and radio houses within this period also.

“I have also held a meeting with the various political parties in the state under the aegis of Inter Party Advisory Council (IPAC) and I intend to sustain these engagements as we get closer to the elections”, he said. On Continuous Voter Registration (CVR), he said the Commission has made it public that the ongoing CVR will be stopped by 17th August, 2018 and will recommence after the General Elections. “I wish to solicit the help of our Royal Fathers to help in sensitising their subjects on the need to collect their PVCs and those who are yet to register as voters should avail themselves of this last opportunity in the year. “Collection of PVCs has not been encouraging in this State. As at Friday 13th, July, we still have a total of 362,982 PVCs (from the old stock) yet to be collected. “The remaining balance from the PVCs of those who registered in 2017 CVR is 32,429 out of 37,391 PVCs that were sent to the state. “The total valid votes in the just concluded Ekiti State gubernatorial

election was just a little bit above this; I made reference to this for comparative reasons and to rattle our citizens to wake up from their apathy”, he stated. According to Akeju, the commission had been regularly taking stock of all electoral materials, and had ascertained what was on ground and what was needed. “Headquarters is aware of our needs and we have assurances that all those needs will be met as we plan for the election. “On the movement of personnel and materials, we have built a cordial working relationship with the various transport unions (land and water ways) over the years,” he explained. Responding on behalf of the traditional rulers, Chairman of the Oba’s Council and the Olukare of Ikare, Oba Akadiri Momoh described the seminar as interesting and educative. He added that the messages would be taken to their various domains and passed to their subjects with a view to encouraging a wider participation in the forthcoming 2019 general election.

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DisCos dodge 60% loss from eligible customer... Continued from page 1

Nigerian Electricity Regulatory Commission (NERC) has been directed to compensate them.

BusinessDay obtained a copy of the directive Fashola issued NERC directing it to enforce a transition charge on eligible customers. The Eligible Customer declaration was issued in May last year, which allowed electricity consumers who use up to 2MW of power to buy directly from Generation Companies (GenCos), a move, DisCos have largely resisted. “Pursuant to powers conferred on the minister by Part II, Section 28 of the Electric Power Sector Reform Act 2005, (the Act), I direct that the competition transition charge a distribution licensee is entitled to collect from a group of consumers or eligible customers in a month, for such loss of revenue or inability to earn permitted rates of return on its assets, as a consequence of the issuance of a permit or license by the Commission for the supply of electricity to such a consumer or eligible customers, be limited to the average monthly total energy supplied to the group of consumers or eligible customers over the three months preceding the issuance of the permit or license for the alternative supply (in kWh), times the average tariff chargeable by the distribution licensee to the group

of consumers or eligible customers less the average wholesale cost of the electricity supplied by the distribution licensee to the consumer or the eligible customer,” said the directive issued to NERC obtained exclusively by BusinessDay. The minister explains that if, for the three months prior to the issuance of the permit or license to an eligible customer, the average tariff is N29.00 per kWh, the average cost of electricity from the Nigerian Bulk Electricity Trader is N19.50 per kWh, the average consumption when the consumers is receiving supply is 2MWh/h and the average hours of supply is 6 hours per day, over the preceding three months, the competition transition charge is limited to (N29.00-N19.50) per 2,000 kWh/h X 6 hours/day X by 31 days, or N3,534,000. Stripped of all technical verbiage, it means the DisCos would be compensated for the loss of revenue from their customers by getting an additional charge on the energy supplied from GenCos. “The competition transition charge is additional to the charges to the consumers and eligible customers under the proposed permit or license. If the group of consumers or eligible customers are contracted to pay N35 per kWh (net of any competition transition charge) under the proposed permit or license, the total monthly payment to their contracted supplier, additional

to the competition transition charge, would be Nn35.00 per kWh multiplied by 24 hours/day X by 31 days, or N52,080,000,” said the minister in the directive. Fashola also said, “I further direct that if the consumers and eligible customers agree to pay this maximum competition transition charge (based on parameters and evidence of payment reflected in their electricity bills for the previous three months), for the duration of the proposed permit or license, and are not indebted to the distribution licensee, then the Commission shall issue the proposed permit or license without any further explicit consent of the distribution licensee.” NERC has received eleven applications so far from interested eligible customers but no application has been approved yet based on an inability to agree on a transition charge and other modalities to effectively operationalise the directive. DisCos had opposed the policy on the grounds that it is immature to declare it in a transition electricity market and it would shrink their profit margins. “Discos obviously could lose a good number of their large customers, and revenues from these customers. Most of the customers affected by the declaration are Maximum Demand customers; this category of customers generate more than 60% of Discos’ revenues,” Odion Omonfoman, energy consultant and the CEO of New Hampshire Capital Ltd told BusinessDay at the time. Continues on wwwbusinessday online.com L-R: Olawale Akinwumi, executive vice chairman/ CEO, Tellco Europe Nigeria; Frank Oteri, and Victor Ayodele Fodeke, managing director, TellCo Europe Nigeria, all awardees, during the conferment of honorary doctorate degree - Doctor of Science in Solar Energy Management and Power Development - by the EuropeanAmerican University (EAU) conferment of degree/ Honorary Doctorate Degree Ceremony, in Abuja.

NASS says impeachment notice on Ortom... Continued from page 1

signed by their aides in charge of media, Yusuph Olaniyonu on behalf of Saraki and Turaki Hassan for Dogara respectively. Describing the development as illegal, they said the impeachment move is not in line with parliamentary procedure. The two Presiding Officers expressed concern that the 22 other lawmakers who constitute more than two-third majority were prevented from accessing the Assembly Complex by security operatives. “We have monitored closely the development in Benue State in which the impeached Speaker, Terkimbir Ikyange, led seven other members to serve impeachment notice on the state Governor, Samuel Ortom, while the 22 other members who constitute more than two-third majority have been prevented from having access to the chamber. We believe this is illegality and does not conform to parliamentary procedure on impeachment. “We also note with surprise the

role of the Police in this undemocratic event in which the minority is seeking to impeach a Governor against the position of the majority. We believe it is the sacred institution of the legislature that is being desecrated and rubbished in all these negative developments.” “The situation in Benue State House of Assembly has grave implication for the nation’s democracy and it represents a throw-back to the period of dictatorship in our country. “We believe this unlawful and unconstitutional move to impeach Governor Samuel Ortom by a minority should be condemned by all lovers of democracy, at home and abroad. We call on President Muhammadu Buhari to call the police to order and prevent a break-down of law and order. We also call on friends of Nigeria in the international community to lend their voice in condemning the perpetration of illegalities and actions that can subvert our democracy. “There is already a tense atmosphere in Benue State following

the recent killings. Nobody should encourage any action or move which may exacerbate the security situation in the North Central State. As leaders of the Federal legislature, we are ready to work with our colleagues in both chambers of the National Assembly to prevent any attempt to destroy any state legislature or use it to derail democracy,” Saraki and Dogara stated. Also, the main opposition Peoples Democratic Party (PDP), has condemned the impeachment notice served on the governor. Rising from an emergency meeting of the PDP National Working Committee (NWC) on Monday, spokesperson of the party, Kola Ologbondiyan, also condemned the use of the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS) to harass and intimidate officials of the Benue State Government. He accused the National Chairman of APC, Adams Oshiomhole, President Muhammadu Buhari and a serving senator, George Akume of encouraging lawlessness and anarchy in the state. Continues on wwwbusinessday online.com

Tuesday 31 July 2018

FMDQ shareholders approve N5bn... Continued from page 1

Board of Directors to change its name to FMDQ Securities Exchange, a development that would broaden capital raising options for Nigerian corporates and government issuers. With an average annual market turnover of about N124trillion ($560 billion) over the last four (4) years, FMDQ operates the largest securities exchange in Nigeria. The approved name change simply involves removing the Over-TheCounter (OTC) tag which may have constrained its reach as Nigeria’s foremost debt capital, currencies and derivatives securities exchange. Looking at the register of members, as shown in the directors’ report for the year ended 31 December 2017, no shareholder other than the under-mentioned held more than 5percent of the issued share capital of the Company as at December 31, 2017. The Central Bank of Nigeria holds 100million units or 15.61percent ; Financial Markets Dealers Association (FMDA) holds 79.074million units or 12.34 percent ; while NSE Consult Limited holds 41.666million units or 6.50percent. In 2017, the Company invested in a new entity, FMDQ Clear Limited. It is a wholly owned subsidiary of FMDQ OTC Plc. FMDQ Clear Limited was established to operate a securities clearing and settlement system for the confirmation, facilitation, clearing and settlement of securities, trades and contracts in the capital and financial markets. “The OTC Exchange will, in 2018, expand its technology market systems offering with the deployment of its Proprietary Market System, FMDQ Q-ex, in line with regulatory requirements and FMDQ’s aspirations of global competitiveness and operational excellence of the Nigerian financial

markets,” said Bola Onadele. Koko, Managing Director/CEO, FMDQ OTC Securities Exchange. He told shareholders that the full deployment FMDQ Q-ex shall be based on a phased delivery plan, with the Q-ex Clearing and Settlement System Solution being the first delivery to go-live. “This solution will facilitate straight-through-processing capabilities for the clearing and settlement of sovereign fixed income transaction between market participants on the OTC Exchange’s platform. Extensive collaboration with and support from market stakeholders and financial market regulators were evident during 2017 in preparation for, and to ensure the success of, this much-needed market development initiative in 2018,” he further said. Despite the recessionary trends which shaped activities for most of 2017, FMDQ delivered a good performance across all revenue lines. It recorded a commendable financial performance with total revenue of N2.57billion; a 25.94percent increase from N2.04billion in 2016. Overall market activity levels have direct impact on FMDQ’s Transaction Fees revenue. For instance a look at most of its revenue lines in 2017 show Transaction Fees of N1.634billion against N1.381billion in 2016, up by 18.29percent. Bond Listing Fees of N190.868million against N164.725million in 2016 represents an increase of 15.87percent; and Commercial Paper Quotation Fees of N92.645million against N33.993million in 2016, represents an increase of 172.54percent. The OTC Exchange’s total market turnover in the fixed income and currency (FIC) markets totaled N142.03trn in 2017, representing 25percent increase compared to the value recorded for the same period in 2016 (N113.66trillion). Continues on wwwbusinessday online.com

FBNH customer deposits hit N3.3trn, up 4.1% Continued from page 1

and recovery.

The Lagos-based lender is looking to target manufacturing, trade and retail-distribution companies for loans this year, according to Urum Kalu Eke, the Chief Executive Officer and Group Managing Director at FBN Holdings who was speaking on a teleconference call yesterday with analysts and investors on the unaudited results for the six months 30 June 2018 period. “Loan-growth target has been cut to 5%-7% from 7%-10%, after payments by borrowers and delays in approving new loans,” Eke said. Meanwhile FBN is expected to make a 35 percent provision on its loan to 9mobile Nigeria and a 30 percent provision on credit to Atlantic Energy, according to its Chief Risk Officer Olusegun Alebiosu. “The resolution of the 9mobile debt is expected in 3Q; while the Atlantic Energy resolution will happen this year,” said Alebiosu on the same conference call. FBN Holdings Plc., on Friday announced its unaudited results for the six months ended 30 June 2018, showing total assets of N5.3 trillion, up 1.3 percent year-to-date (y-t-d) (Dec 2017: N5.2 trillion), customer deposits of N3.3 trillion, up 4.1 percent y-t-d (Dec 2017: N3.1 trillion), Profit before tax of N38.9 billion, up 9.1 percent y-o-y (Jun 2017: N35.6 billion), and profit after tax of N33.5 billion, up 13.7 percent y-o-y (Jun 2017: N29.5 billion). Commenting on the results, UK

Eke, the Group Managing Director said: “FBN Holdings continues to make steady progress towards delivering on its strategic targets. This has been demonstrated with a 13.7% y-o-y increase in profit after tax, 21.4% y-oy growth in non-interest and 15.4% y-o-y decline in impairment charge. Clearly, the Group is on its way to delivering its promises on asset quality, enhancing revenue generating capacity through non-interest income and driving further efficiencies.” The Commercial Banking business contributed 90.2 percent (Jun 2017: 90.3%) to the Group’s gross earnings and 84.0 percent (Jun 2017: 78.3%) to the Group’s profit before tax. Commenting on the results Adesola Adeduntan, the MD/CEO of FirstBank and its Subsidiaries said: “The Commercial Banking Group reported a relatively strong set of results and I am pleased to report consistent improvement towards our strategic objectives. This is reflected in a strong 28.5% y-o-y increase in non-interest income, 15.5% y-o-y reduction in the impairment charge and a marginal increase of 0.9% y-o-y in operating expenses, despite the high inflationary environment. It is clear that our efforts to enhance our revenue generating capabilities, strengthen the risk man-

agement and control environment as well as to optimise efficiencies within our business are paying off.” Continues on wwwbusinessday online.com

Tuesday 31 July 2018

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NEWS China’s debt threat: time to rein in the... Continued from back page crises are possible in countries that are relatively immune to such runs: Japan in the 1990s is an example. Another response is that China’s banking system has a lower ratio of credit to deposits than those of most countries that have experienced funding crises. But this ignores non-loan assets. In China the ratio of non-loan assets — assets other than conventional bank loans — to total assets was 50 per cent in 2016, a relatively high level. This is one indicator of the scale of China’s shadow banking system. It is also asserted that the financial system’s assets are relatively sound. True, lending to non-financial corporate borrowers accounted for just over a half of the increase in debt between late 2008 and early 2018. But the quality of much of this lending is questionable. Moreover, “if debt is rising, but GDP is not, then the payment capacity is deteriorating”, the IMF paper argues. The strongest reply is that the government is powerful and has a well-run central bank, effective control over the banking system, ownership of vast domestic and foreign assets, untapped fiscal capacity and tight controls over transactions with, and by, foreigners. If it were determined to protect the financial system from collapse it could do so. But if gross debt were to rise above 400 per cent of GDP over the next decade, even that would be less certain. Imagine, however, that there is a financial crisis. Would it be followed by lower growth? The answer is: yes, in both the short and long term. In the short term, a financial crisis would be followed by weaker investment. Given the decline in the trend rate of growth, the economically justified rate can hardly be higher than it was in 2000, when it was 34 per cent of GDP. That is 10 percentage points below the actual rate in 2017. If this adjustment were to come quickly, in the aftermath of a crisis, such a decline would generate an outright recession. The extent and duration of such a recession would depend on how far and how quickly other spending would rise. China might be tempted to revert to a weaker exchange rate and a big increase in net exports. But the Trump administration would not tolerate this. The alternative would be much higher private and public consumption. The constraints on the former are persistently high household savings rates and the low share of household disposable incomes (incomes after taxes and transfers) in GDP. The latter fell from 67 per cent of GDP in 1997 to 57 per cent in 2007. This has reversed a little, to an estimated 61 per cent in 2015, but estimates by the World Bank suggest it has fallen a little since then. A surge in consumption sufficient to offset the impact on domestic demand of a big cut in investment spending would be impossible without a far bigger shift in incomes towards households. Moreover, that would squeeze profits, which would reduce investment still further. Ultimately, the only

plausible offset to the impact of a big crisis in demand would be a huge increase in spending financed by central government. A crisis, then, would probably mean a recession in the short term. In the longer term, growth would also slow from current reported levels. That would be largely because a significant part of the credit-fuelled investment spending had been wasted, partly in building unneeded dwellings and excessive industrial capacity. What about a more palatable world with no crisis? This would represent a soft landing. The longer the authorities take to control debt trends the more difficult it will be to achieve such an outcome. But this is clearly the animating principle behind current policy, which is aimed at strengthening the financial system and halting the trend towards higher debt. Just how difficult it will be to stick to those principles is shown by this week’s announcement of another round of infrastructure spending, in order to stimulate demand. That implies more investment and debt. But the trade war with the US may make such backsliding inevitable. How likely is success? The encouraging feature of the relatively recent past is that debt has stabilised, relative to GDP, since early 2017. Yet officially reported growth has held up. An obvious question then is whether the economic policy team, now under the leadership of vice-premier Liu He, has already found a way to sustain growth without increasing indebtedness. It is reasonable to be sceptical. After all, China has only achieved this one period of stable debt ratios since 2008. Given its reliance on high investment, debt might need to rise rapidly again. Furthermore, the slowdown in credit growth could be an example of Goodhart’s law, named after Charles Goodhart of the London School of Economics. It states that “when a measure becomes a target, it ceases to be a good measure”. This has long been true of GDP in China. Might it now be true of reported debt? The People’s Daily, the flagship newspaper of the Communist party, reported in May 2016 that an “authoritative figure” — widely believed to be Mr Liu — said “high leverage is the ‘original sin’ that leads to risks in the market for foreign exchange, stocks, bonds, real estate and bank credit”. Furthermore, “according to the authoritative figure, the country should make deleveraging a priority, and the ‘fantasy’ of stimulating the economy through monetary easing should be dropped. The country needs to be proactive in dealing with rising bad loans, rather than hiding them.” The authoritative person was right. China has a choice between a whimper today and a destructive bang tomorrow. It can curb the debt surge and allow growth to slow now, or risk a crisis followed by a more severe slowdown later. Making the needed changes will be difficult, particularly now, when a trade war has begun. Yet, if President Xi Jinping’s apparently unlimited authority allows him to do anything, it has to be this. The time has come to halt China’s debt surge.

“33” Export Lager Beer heeds UN’s call to friendship ENDURANCE OKAFOR

n Celebration of the great bond of friendship, July 30th was designated as the International Friendship Day. A day slated by the United Nations (UN) to highlight the roles that friendship plays in promoting peace in societies around the world. In marking the day, the UN encourages governments, organisations and community groups to hold events, activities and initiatives that promote solidarity, mutual understanding and reconciliation. In response to this August body’s global call, Nigeria’s only friendship themed brand, “33” Export Lager Beer, instituted three national initiatives that aimed at bringing the celebration of the day to the front burner and provide actual platforms to promote friendship among Nigerians. The initiatives are the “City of Friends”, the “Pen Down for Friendship Competition” and the That One Friend consumer engagement competition.

The City of Friendship, a two-day event was hosted in Lagos and Calabar, further cementing “33” Export’s standing as Nigeria’s no.1 friendship beer. The Calabar event held at the Municipal Gardens Calabar, Cross River State on 28 – 29 July, while the Lagos event will hold at the Eagles’ Club in Surulere on 3 – 4 August, 2018. The assemblage of A-list musicians including Phyno, Kizz Daniel, Simi, Harrysongs, Wasiu Alabi Pasuma, Mc Galaxy and Small Doctor headline this musical fiesta. Other side attractions include the 33 giant sized games that friends can play, enjoy and also have the opportunity to win over 5,000 gift items at both venues. Th e Pe n - D ow n - f o rFriendship Competition is an initiative targeted at Nigerian journalists and bloggers to tell their rich friendship-themed stories for a handsome reward. Interested journalists and bloggers are only required to publish their stories in any of the media platforms,

online, print or electronic, and send evidence of publication or broadcast to the organisers along with their particulars. The entries will be reviewed by a list of judges who will score the entries and select the best ten, whose publishers would be invited to the award presentation ceremony. The first, second and third works from these ten will get N500, 000, N300, 000 and N200, 000 training grants respectively in addition to laptops, free drinks of the “33” Export Lager Beer among other gifts. From the third runners up to the ninth runners up will also get consolation prizes which include laptops, free drinks and other exciting prizes. The That-One-Friend Competition is meant for the consumers of the “33” Export Lager Beer to share their friendship memories and be part of another prize giving fiesta, courtesy of the Friendship themed brand at this season of friendship. To participate in the competi-

tion, interested consumers would only have to post their memories - pictures, text or videos - on their social media pages – Facebook, Twitter and Instagram, and tagging the “33” Export brand. The Top ten winners with the most shared and liked posts will get high-end mobile phones and other exciting prizes at the City of Friendship venue in Lagos or Calabar. Emmanuel Agu, Portfolio Manager, Mainstream Lager and Stout Brands, NB Plc, said that the “33” Export Lager Beer is the only Friendshipthemed beer in the country which naturally disposes it favourably to anything that promotes friendship. “The United Nations and the “33” Export Lager Beer have a coincidence of interest as to the need to promote friendship in the world. This is because we both appreciate the roles friendship plays in promoting peace, prosperity and progress among individuals and societies of the world,” he informed.

L-R: Umaru Farouk Aminu, head, research and strategy management department, PENCOM; Tayo Aduloju, senior fellow, public policy and institutional development, facilitator and head, governance and institutions policy commission, NESG, and Fola Laoye, director, Investment Fund for Health in Africa, during the HBSAN and Northern chapter mid-year event with the theme “leveraging our Endowments, The way forward for Nigeria” in Abuja.

How our policies and laws... Continued from back page

sometimes secretive until they become policy. Policy makers rarely seek enough consultations. But it is naïve to think these are errors; they are often deliberate because planned policy changes are often for the benefit of a select group people. A look at the power sector reform process shows that it has been stalled at least twice now. The MYTO process is currently stalled, and it no surprise that the entire value chain is in serious debt crisis. Meanwhile, in the last four years, Egypt has expanded their power supply by about 50%. And the crown jewel of unpre-

dictable public policy is the yearly ritual christened national budget - Haphazard, unpredictable, unworkable, and compromised. In closing, it is important to note that virtually the whole world started poor. So, each developed country at a point found a way to be rich. We can also. But we must harness ideas, be prudent, disciplined and consistent. And it starts with policies and ideas that help to build an internally and externally competitive, and productive economy and not ones that continue to entrench narrow interests. I thank you.

FAAN replaces faulty scanners, assures of security of passengers IFEOMA OKEKE

ederal Airports Authority of Nigeria (FAAN) has fixed and replaced some of the faulty scanning machines at the Murtala Muhammed International Airport (MMIA). Yesterday, BusinessDay reported that hundreds of passengers were stranded during the weekend at the Lagos airport, as three of the four functional scanners failed to work. However, the authority swung into action to effect the repairs of the three machines. Henrietta Yakubu, general manager, corporate communications, FAAN, told Busi-

nessDay that the security of the airport and those of departing aircraft and passengers was not compromised in any way. “While any inconvenience experienced by anyone on account of the situation is regretted, we assure all users of MMIA that adequate measures and efforts have been put in place to guarantee minimal impact on their facilitation and security. “An extra machine has been installed with an x-ray generator and currently serviceable and operational. All hands are on deck to ensure that all the machines are functional. All the scanning machines are up and functional,” Yakubu said.

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FINANCIAL TIMES Deutsche Bank shifts half of euro clearing from London to Frankfurt

BoJ intervenes for third time as investors eye policy meeting

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World Business Newspaper

‘Unlawful interference’ not ruled out in MH370 disappearance Safety report says Malaysia Airlines flight not on autopilot and was diverted manually Stefania Palma

alaysia’s safety investigation team said the disappearance of Malaysia Airlines flight MH370 may have been caused by “unlawful interference” and that rescue operations could have started sooner had traffic control in Malaysia and Vietnam followed protocol. The publication of the safety report comes four years after MH370, with 239 passengers and crew on board, went missing on March 8 2014 en route from Kuala Lumpur to Beijing. Limited information and the missing wreckage mean the real cause of the incident remains unknown, leaving one of the world’s greatest aviation mysteries unsolved and stirring the frustration of passengers’ families. “Investigating MH370 is the toughest job in the world,” said Kok Soo Chon, head of the safety investigation team. The report concluded that the flight’s pilot and first officer had no history of mental illness or anxiety, and that the aircraft, which unexpectedly changed direction mid-flight back towards Malaysia, was flown manually and not on autopilot. The report noted that the loss of communication with MH370 before the diversion was likely due to systems being manually turned off, “whether with intent or otherwise”. Mr Kok said he could not say with certainty that there was “unlawful interference”, in part because nobody has so far claimed responsibility for the aircraft’s disappearance. Background checks run by local authorities on all passengers did not flag up anyone who was

considered to be “at risk”. The safety report also unveiled negligence by traffic control in Kuala Lumpur, Ho Chi Minh City and the flight’s pilot, resulting in a 20-minute gap in the tracking of MH370. Kuala Lumpur handed over the monitoring of the flight three minutes ahead of schedule. It did not notify Ho Chi Minh City, but rather asked the pilot to send out the alert, which he never did. Vietnam checked in on the aircraft 17 minutes after the pre-determined transfer time, at which point the MH370 had already disappeared. “Air flight controllers did not initiate various emergency phases … thereby delaying the activation of search and rescue operations,” said Mr Kok. The safety report dismissed earlier allegations that MH370 plunged into the ocean after running out of fuel or due to aircraft malfunction. But it did confirm that the batteries in the aircraft’s underwater locator device had expired in 2012. Two search missions in the south Indian Ocean — the first led by Australia, China and Malaysia and the second carried out in the three months to the end of May by Ocean Infinity, a Texas-based surveying company — have both ended in failure. Aircraft debris — three pieces of which have been confirmed to be from MH370 — have been discovered from as far as South Africa’s coasts. But Mr Kok said failed search missions did not mean the MH370 mystery would be let go, despite Monday’s report being initially labelled as final. “The wreckage has not been found. The passengers have not been found. How can we call our report a final report? There must be some form of closure,” he said. Mr Kok and his team will travel to China later this week to give a briefing on their findings.

Apple accessories at risk from Trump tariff threat iPhone maker’s ‘other products’ revenue including Apple Watch set to be Q2 highlight Tim Bradshaw

pple’s fastest-growing division, which includes Apple Watch, AirPods earphones and HomePod speaker, is at risk of being caught up in US President Donald Trump’s latest proposals to slap a 10 per cent tariff on Chinese imports. Despite the tech group’s iPhones and Mac computers so far being exempt from US tariffs, the devices that make up the bulk

of Apple’s multibillion-dollar “other products” unit are exposed to Mr Trump’s looming trade war. Apple could be forced to raise US prices to compensate for higher duties on the Chinesemade products or take a hit to profit margins. In a research note last week, analysts at Morgan Stanley pointed to “increasingly heated trade rhetoric between the US and China” as among the “greatest risks” to Apple’s share price in Continues on page A2

Malaysia Airlines flight MH370, with 239 passengers and crew on board, went missing on March 8 2014 en route from Kuala Lumpur to Beijing

Zimbabwe votes in first post-Mugabe election Billions of dollars in international investment ride on a credible result Joseph Cotterill & David Pilling

imbabweans were voting in the most important election in the country’s history on Monday — the first without Robert Mugabe and with billions of dollars in international investment riding on a credible result. Voters queued from before sunrise after a campaign largely free of the violence that marred polls during the 37-year rule of Mr Mugabe, who was overthrown in an army coup last year. The contest is seen as a watershed for ending decades of economic mismanagement and political turmoil. The result is too close to call after a campaign that pitted probusiness promises by Emmerson Mnangagwa, Mr Mugabe’s successor as president, against those

of Nelson Chamisa, leader of the main opposition Movement for Democratic Change. “I’m feeling good because things need to be changed,” said Lloyd Nekati, a 30-year-old repairman lining up to vote in the Mbare district of Harare, Zimbabwe’s capital. “Mugabe and Mnangagwa are the same people. We are sick and tired of them.” Mr Mnangagwa, a 75-year-old former security chief, has pledged to make Zimbabwe “open for business”.But his ruling Zanu-PF is overshadowed by Mr Mugabe’s legacy. The 94 year-old broke a long silence this weekend to declare “the gun is directing politics” in the liberation movement he controlled for decades and said he would not vote for those who “tormented” him. “How can the old become the new? I don’t believe it,” said Beaven Mutsata, proudly displaying an

inked finger as he emerged from casting his ballot for Mr Chamisa at a polling station north of Harare. Mr Chamisa, a 40-year-old lawyer and pastor, has energised opposition supporters, especially younger Zimbabweans facing mass unemployment. A survey by Afrobarometer earlier this month placed Mr Chamisa only 3 points behind Mr Mnangagwa. But a fifth of voters polled were still undecided and Zanu-PF’s grip on the rural electorate, two-thirds of the total, is widely acknowledged. A result is expected within days. If no overall winner emerges, a run-off is set for September. International observers kicked out by Mr Mugabe have returned and their verdict on the election will be crucial to whether aid and investment flow to help clear Zimbabwe’s crippling debt and a severe cash shortage.

China plans tighter controls on foreign acquisitions Proposed rule changes follow increased tensions with US over trade and dealmaking Gabriel Wildau

hina’s commerce ministry has drafted rules that would require a national security review for “strategic” investments by foreigners in listed companies, echoing moves in other large economies to strengthen controls in sensitive industries. The proposed amendments to existing rules on foreign investment in listed Chinese companies, published late on Monday afternoon, expand the universe of foreign investments that are covered by China’s existing formal national security review process. The proposed change follows a string of decisions by the Committee on Foreign Investment in

the United States (Cfius) to reject Chinese acquisitions of US companies in recent years. In other respects, however, the rules lower barriers to foreign investment. The minimum amount of total assets that a foreign investor must own in order to acquire a strategic stake in a listed company would be lowered to $50m from the previous level of $100m. The rules also cut the lock-up period for listed shares following acquisition by a foreign investor from three years to one. The draft amendment will be open for public comment until August 29. Over the past year Chinese companies have been singled out by regulators in the US, Germany and, most recently the UK, over investments in strategic sectors

such as semiconductors and telecommunications. While US President Donald Trump recently ruled out a strict new vetting regime for Chinese investments, legislators are tightening the current review process overseen by Cfius. Beijing, however, is engaged in a delicate balancing act. As Mr Trump threatens additional tariffs against Chinese exports for alleged intellectual property theft, the Chinese government wants to attract more overseas investment. It is also wants to be seen to be liberalising its investment environment at a time when many US and European critics accuse it of operating one of the world’s most closed economies.

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FT Apple accessories at risk from Trump...

Big reversal for once bestselling funds

Continued from page A1 the months leading up to September’s next iPhone. The potential tariffs form part of the Trump administration’s latest $200bn list of affected product categories. Smart speakers from Apple’s rivals, such as Amazon’s Echo, Google Home and Sonos, could also be hit, as well as Fitbit’s smartwatches. As iPhone sales growth has slowed, accessories have become an increasingly important source of revenue, with Apple expanding into wearable technology and audio accessories. Analysts expect the division to perform strongly when the world’s most valuable company reports its results on Tuesday. Canalys, a market researcher, estimated that Apple shipped 3.5m watches in the second quarter, up 30 per cent year on year, with more than half of those sold in North America. “If there was a change in price, obviously that’s going to impact demand,” said Vincent Thielke, a Canalys analyst. Neil Cybart, an Apple analyst at Above Avalon, forecast “other products” revenues rose 38 per cent to $3.8bn in the quarter, compared with iPhone revenues up 17 per cent year on year to $29.1bn. “Over time, it is inevitable that ‘other products’ will become the third-largest revenue line item for Apple,” Mr Cybart said, overtaking Macs and iPads, while still behind iPhones and services. Smartwatches and smart speakers fall under an import code, set for a 10 per cent tariff under the latest proposals, which encompasses “machines for the reception, conversion and transmission or regeneration of voice, images or other data”, according to the Consumer Technology Association. “It’s a broad category that captures everything from gateways to modems to bluetooth-enabled devices,” said Sage Chandler, the CTA’s vice-president of international trade. “In short, the ecosystem of products that enable users to access and ‘interact’ with the internet.” Tech companies still have time to lobby for the category to be excluded from the next wave of tariffs, or could appeal for their products to be imported under a different code that is not affected. Ms Chandler — who previously served at the US International Trade Administration and the office of the US Trade Representative — said that smartwatches could ultimately fall under different categories that are not captured by the tariffs, such as traditional wristwatches. Tim Cook, Apple’s chief executive, has criticised the tariffs, calling the approach a “lose-lose”. He met Mr Trump in May to seek assurances that the iPhone, Apple’s most profitable product, would not get caught up in the dispute, although analysts have warned that if it continues to escalate, few imports will be spared.

Tuesday 31 July 2018

Investors shun risk as central banks lift rates and emerging markets hit turbulence

Owen Walker & Attracta Mooney

BoJ intervenes for third time as investors eye policy meeting Speculation has intensified that central bank could tweak vast stimulus programme Leo Lewis, Emma Dunkley & Robin Wigglesworth

he Bank of Japan intervened in the bond market on Monday for the third time in a week in a show of resolve to cap bond yields within a target range as traders bet the central bank might adjust its multi-trillion yen stimulus programme. The BoJ launched a new round of purchases as it started a two-day meeting on monetary policy that is being closely watched by investors after unusual volatility in Japanese government bonds. This came after the yield on 10year Japanese government bonds moved above 0.11 per cent to hit its highest level since February 2017 and after the benchmark rate saw its biggest move in two years last week. The 10-year yield, which runs inversely to price, moved back to 0.102 per cent following the intervention to stand flat on the session. But the intervention and ongoing concerns over any changes to the BoJ’s monetary policy stance

still rippled through global bond markets, pushing the 10-year US Treasury yield up 3 basis points to 2.98 per cent and the 10-year German Bund yield to a six-week high of 0.45 per cent. The BoJ meeting, which as recently as 10 days ago was widely expected to be routine, is drawing increased scrutiny after several reports fanned speculation of changes to the stimulus programme whose effects have been felt globally. Traders said the recent market volatility has been a reminder of the role the BoJ’s policy has had anchoring global bond yields and the risks to financial markets if the central bank starts to rein in its stimulus. The BoJ’s policy decision will follow another from the Federal Reserve on Wednesday at which interest rates are expected to remain unchanged. Meanwhile, economists expect the Bank of England to lift rates on Thursday for only the second time since the financial crisis. Naohiko Baba, Goldman Sachs Japan economist, said the BoJ would likely be prompted to clarify that it will prolong monetary easing

even further, assuming the inflation trend is weaker than expected. Chart showing BoJ holdings of JGBs by maturity Markets last week began to price in some change to the BoJ’s yield curve control (YCC) policy, which it introduced almost two years ago with the aim of keeping the yield on the 10-year JGB at about 0 per cent. The BoJ’s arsenal of stimulus measures, which include negative interest rates and an annual ¥6tn exchange-traded fund buying programme that has left the BoJ as shareholder in several Japanese companies, is designed to stoke an inflation rate that remains stubbornly below the central bank’s target. Alongside the YCC policy, speculation has also centred on whether the ETF programme policy will be changed this week. “While recent, sluggish data points give it [the BoJ] cover not to change policy, a change in stance could have a material bearing on fixed income internationally,” noted Michael O’Sullivan, chief investment officer in the international wealth management division at Credit Suisse.

Private equity accelerates ‘buy-and-build’ strategy Groups seek to compete head-on with cash-rich corporates and family offices Javier Espinoza

rivate equity groups have sharply increased the number of investments in so-called buy-andbuilds — the bolting together of smaller companies into business empires — as rising competition for assets leads to record-high valuations. Buy-and-builds have become so popular for private equity groups globally that they have gone from representing 28 per cent of total deals in 2004 to nearly half of all transactions during the first half of this year, says a study from Bain & Company. From dental businesses to veterinarian clinics, buyout groups were spotting opportunities in fragmented sectors where they can amalgamate companies, quickly cut costs and eventually sell them at a profit, the study revealed. This comes as private equity

groups are increasingly facing competition from each other in a booming market as well as deeppocketed corporations and new rivals such as family offices and sovereign wealth funds. By merging small companies, private equity groups can boost sales and access larger financing pools for expansion, according to industry insiders. But merging dissimilar cultures and integrating systems is often a challenge. In the US, private equityowned Advanced Dermatology and Cosmetic Surgery, for instance, has acquired more than 40 smaller businesses. In Europe, private equity group Nordic Capital bought veterinarian services company AniCura and grew the number of clinics four times in four years before selling to Mars, the pet food to chocolate conglomerate. The €2bn deal delivered seven times return on investment for the buyout fund, a person with direct knowledge of the transac-

tion said. “Private equity groups are thinking about how they compete more effectively and create value,” said Brenda Rainey, a senior practice director at Bain & Company. “One way is to buy a platform and the argument that a corporate can pay more because of synergies is gone. This way PE can compete head on with corporations.” She added: “If I can buy a platform and add on small companies that tend to be sold at smaller multiple, I can create something bigger that tends to go for a higher multiple.” But it is not just growing competition for assets that is encouraging private equity groups to bolt companies together. It is also the pressure to deploy cash as the industry raises a record amount — from CVC’s €16bn to Apollo’s $25bn. “ This is a strategy of the times,” added Ms Rainey.

urope’s top-selling funds have suffered a spectacular reversal in fortune and now lead the list of groups with the biggest outflows. Flagship funds managed by Pimco, Standard Life Aberdeen, Nordea and Jupiter have bled billions of euros in recent years as investors lost their appetite for risk in the face of rising interest rates and volatile emerging markets. “Risk aversion is the investment story of the year,” said Ali Masarwah, director of editorial research for Emea at Morningstar, the data company that provided the figures. “Big funds are always those that suffer the biggest outflows when events change.” The Pimco GIS Income fund, which was Europe’s best-selling last year and scooped up €41.5bn of assets, has the biggest redemptions so far this year, with €4.6bn of net outflows. The fund started the year as it had ended 2017, but more than €5bn flowed out in May and June. Mr Masarwah said investors had been put off by the fund’s allocations to riskier high yield and EM debt, but added that the fund’s performance and management team was unchanged from a year before. SLA’s Global Absolute Return Strategies fund, or Gars, had the second biggest outflows this year with a combined €4.3bn from its UK and Luxembourg products. It was once Europe’s largest fund but had the biggest redemptions last year. The fund has suffered underperformance and investors have turned away from its oncepopular category of products that use alternative investment techniques. The Stable Return fund by Nordea was hit by €3.3bn of outflows between January and June. It was the best selling fund in Europe in 2016, but the Scandinavian manager closed it to new money in September 2016 after it had reached €17bn. The group reopened the fund this May in the hope of reversing its decline. Mr Masarwah said, however, that he was surprised outflows had increased in June, though he said it took time for fund distributors to recommend it again. Dynamic Bond, UK manager Jupiter’s flagship fund, had €2.6bn outflows in the first half, having grown more than 3,000 per cent between 2012 and 2017. As with Pimco’s fund, the product has exposure to high yield and EM debt. Pimco and Nordea declined to comment, while SLA said it was unable to do so ahead if its half-year results on August 7. According to Morningstar, US fund house Franklin Templeton was the worst-selling fund manager globally so far this year, with more than $20.6bn in client redemptions between January and June. The EM specialist has suffered a torrid few years, ranking as the second-worst selling fund manager of 2017 and the worst-selling of 2016.

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Deutsche Bank shifts half of euro clearing from London to Frankfurt German lender’s move is latest Brexit blow as European rivals win City business Olaf Storbeck

eutsche Bank has moved almost half its euro clearing activities from London to Frankfurt, in the latest sign of European cities winning financial business from the UK ahead of Brexit. Germany’s largest lender said that its overall risk exposure to euro-denominated derivatives cleared in Frankfurt in recent months had risen to roughly the same level as those cleared in London. Deutsche Bank does not disclose its clearing volumes but says it is one of the five largest clearers of interest derivatives. The move has provided a significant boost to Deutsche Börse’s ambition to steal business from LCH after Britain leaves the EU in March next year — six months ago, Deutsche Bank’s euro clearing operation was almost entirely done in London. The clearing of euro-denominated interest rate derivatives has become a key Brexit battleground for regulators, banks and exchanges. In the past, London’s LCH was the undisputed leader for clearing euro-denominated interest rate swaps, processing up to €1tn of notional deals a day. “To minimise risk for financial stability, it is indispensable that [the clearing of euro-derivatives] is subject to strong regulation and supervision in full conformity with EU standards,” said Olaf Scholz, German finance minister, last month, suggesting

Frankfurt would be the natural place. Deutsche Bank has been one of the early adopters of Frankfurt-based clearing. “Our outright risk positions at LCH and Eurex [in euro-denominated derivatives] are pretty similar these days,” said Jürgen Feil, head of rates for Germany at the bank. Hubertus Väth, chief executive of marketing group Frankfurt Main Finance, said that moving euro clearing from London to Frankfurt was “on top of our priority list from the very first day after the Brexit referendum”. While only a few hundred jobs are directly linked to derivatives clearing, Mr Väth said the indirect effects would be substantial, adding that Frankfurt had lost most of its trading rooms to London over the past three decades: “This was the best chance to bring them back.” London Stock Exchange Group, which owns LCH, has warned that as many as 100,000 jobs could leave the City if London loses its status as the euro clearing hub. But at Deutsche Bank, the shift to Frankfurt-based clearing has not led to relocating jobs. “It’s the same London-based person who clears a transaction. We’re just using a different clearing house,” said Stefan Hoops, the bank’s global co-head of institutional and treasury coverage. European policymakers are calling for direct regulatory oversight after the UK’s departure from the EU, as so-called central counterparty clearing houses directly affect financial stability.

High Court dismisses claims against RBS restructuring unit Bank took control of struggling bowling business in wake of financial crisis Nicholas Megaw

high court judge has thrown out a case against Royal Bank of Scotland alleging that its disgraced restructuring unit broke the law when it took control of a struggling bowling business in the wake of the financial crisis. The ruling represents a victory for RBS, which has apologised for inappropriate activities at its Global Restructuring Group between 2008 and 2013, but has never acknowledged any unlawful conduct. The case was brought by the former owners of Bowlplex, a 16-strong chain of bowling alleys that was referred to the GRG in 2009. They alleged that RBS and West Register — an indirectly owned RBS subsidiary — conspired to force Bowlplex’s owners to give up a disproportionate amount of their company to maintain access to RBS banking facilities. However, Chief Master Matthew Marsh wrote that the case was

“bound to fail”, adding: “despite the criticisms that have been directed towards the GRG . . . the claimants have neither identified a basis for their claim under the current law, or a relevant area of developing jurisprudence”. A spokesperson for RBS said: “The bank is pleased that these allegations have been dismissed on all counts”. The decision follows a legal success for RBS last month, when the court dismissed claims brought by the owner of a construction plant hire business. In March, another former GRG client also lost an appeal relating to claims it was mis-sold interest rate swaps and wrongfully transferred into the restructuring unit. However, the bank still faces significant criticism and further potential legal issues relating to the unit. Earlier this month RBS was attacked over plans to close the compensation scheme for GRG customers to new complainants, though less than 10 per cent of eligible customers have so far submitted complaints.

Deutsche Bank’s action has boosted Deutsche Börse’s ambition to steal business from LCH after the UK leaves the EU next year © Bloomberg

The lopsided march of active and passive investors Companies should look out for ETFs working with others to become engaged investors van Steenis

ew debates become as heated in investment circles as those between the advocates of active and passive investing. Duels are compelling. But focusing on this fight risks missing trends which are starting to appear elsewhere in the investment world. Three new reports on my summer reading list illustrate them well. My guiding view has been that investor flows would polarise into a barbell shape, weighted at both ends. At one extreme, investors would flock to passive funds and exchange-traded funds in order to access benchmark returns cheaply and conveniently. At the other, investors seeking higher returns would increasingly allocate to specialist fund managers investing in private equity, hedge funds, real estate and the like. The conventional fund managers, caught in the middle, would be pressured to up their game, become more specialised or merge for scale. Fifteen years after I first aired this hypothesis, it is striking quite how lopsided this barbell has become. Although investors have moved almost $3tn into ETFs and index funds globally, the real money is being made at the other end. Forty-three per cent of all the management fees in the investment industry went to alternative asset managers in 2017, up from

29 per cent in 2003, according to new research by Boston Consulting Group. But even this understates the purple patch firms have enjoyed from low rates and changes in bank regulation. If you include an estimate of performance fees, then the alternative strategies now represent over half of the fees paid by investors for the first time. One thing I did not expect was that investors would still be paying almost the same level of fees, on average, as they were 15 years ago. Even though technology has enabled investors to save billions via ETFs, index funds and cheaper mutual funds, large investors have upped their risk and fee budgets on high margin private equity, hedge funds and other specialist managers instead. Understandably, investors are starting to become pickier about value for money — and some of the largest Canadian, American and global schemes are trying to make savings by doing more in-house. But I do not anticipate this will fundamentally alter the lopsided pattern of investment any time soon. At the other end of the barbell, the march of passive investing has been one of the defining themes of asset management over the past decade. ETFs have grown 17-fold since 2003, and may double again over the next four to eight years, according to BlackRock. ETFs have democratised access to investing. Individuals can now

save for their retirement in ways only previously available to sophisticated institutional managers. But the good news for investors hasn’t translated into the same degree of success for the firms. As the benefits of technological innovation and industrial scale have been passed on, ETFs represent just 3 per cent of industry fees paid, according to BCG. Indexing has come in for much abuse: it has been called Marxist, and even a weapon of mass destruction. Hyperbole aside, it is clear that the dramatic growth of ETFs has thrown up a number of public policy questions. Do passive firms risk becoming absent landlords, for instance? Intriguingly, firms at either end of the investment barbell are starting to work in tandem. An updated piece of research by Ian Appel at Boston University demonstrates that the managers of ETFs and index funds are starting to vote far more frequently with activist and engaged investors. Indexers are starting to recognise that as stewards of stocks they have no option but to engage, hiring the same proxy voting services as traditional firms, or beefing up their governance teams. The study shows that a high passive share has materially increased the odds of activist success, both in proxy fights and getting board representation. Not all activist ideas are good, by any means.

Regional lenders: China’s most dangerous banks Gabriel Wildau & Yizhen Jia

t dusk under a smoggy sky, in the heart of north-east China’s rust belt, workers in beige uniforms file out of Shenyang Machine Tool, a lossmaking state-owned enterprise that is a pillar of the regional economy. It looks like the end of any day in the company’s 35-year history, but workers know the factory’s best days are behind it. The manufacturing and construction boom that powered

China’s economy, fuelling demand for heavy machinery, is winding down, and Shenyang Machine has posted losses every year since 2013, once government subsidies — of between Rmb29m and Rmb53m ($4.3m to $7.8m) — are excluded. “They’ve been talking about reform for 10 years, but personally I haven’t seen much change here,” says one worker who only gives his surname, Kong, who does aftersales service for Shenyang Machine and has worked there for 30 years. “Peo-

ple aren’t using geared lathes any more. We’re being forced out of the market.” The workers are oblivious to the company’s $78m loan from Bank of Shengjing, the largest regional lender in Liaoning province, whose capital city is Shenyang. But the nexus between lossmaking companies and regional banks has emerged as a key risk to China’s economy, where an explosion of debt since the global financial crisis has sparked warnings from the IMF and other watchdogs.

BUSINESS DAY

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Tuesday 31 July 2018

ANALYSIS Bill Browder’s sanctions row with Putin heats up US-born investor says attack motivated by dislike of Magnitsky Act

nvestor Bill Browder has long framed himself as Vladimir Putin’s enemy number one. “He has hunted me down through Interpol, made numerous requests of the British government to extradite me,” said Mr Browder, who was briefly detained in Spain two months ago. “Putin made it clear I was his number one foe in Helsinki a week ago, and it’s been the case since 2012.” This month, the Russian president used a joint appearance with President Donald Trump to accuse Mr Browder’s business associates of tax evasion. The next day Mr Browder was named alongside 10 former US diplomats, intelligence officials and others who Moscow wanted to interrogate. But the US-born businessman, whose company made billions in Russia until he was barred from the country for unexplained reasons in 2005, said the real grounds for the opprobrium is his decade-long lobbying for the 2012 US Magnitsky Act. It levies sanctions on Russian officials for corruption and human rights abuses, banning those named from visiting the US or doing business with

partment of justice also brought a 2013 lawsuit against a Russian company, Prevezon Holdings, which it accused of laundering money into New York real estate from the fraud that Mr Magnitsky uncovered. Prevezon settled the case last year, agreeing to pay $5.9m without admitting guilt, although missed a repayment deadline. “There was not a single person on that list [released by Moscow last week] who wasn’t connected to Magnitsky or Prevezon,” Mr Browder told the Financial Times. Former congressional aide Kyle Parker, another of those named who said he believed he was on the list because he drafted the Magnitsky Act, said it infuriated Moscow because it was the first time the US deployed sanctions of a sort previously reserved for the likes of Iran, Cuba, North Korea and Libya. “At the time, Russia had just acceded to the W TO, was a member of the G8 and was seeking OECD membership, and so in many senses was nearly totally integrated [into the west], and so Magnitsky was the beginning of US willingness to escalate, cross the Rubicon and wield these tools against the Kremlin,” he said. “It laid the groundwork for our wider sanctions response in

Americans. Since it was passed, the US has imposed sanctions on 49 people in six separate rounds. Moscow has often sought to play down the impact of sanctions, but this latest episode underlines the Kremlin’s preoccupation with the Magnitsky curbs and the significance of the infamous 2016 Trump Tower meeting, a focus of Robert Mueller’s investigation into collusion between the Trump campaign and Russia. “Russian elites bristle at the Magnitsky Act,” said Cliff Kupchan, chairman of Eurasia Group. “It’s a sanction that names and shames elites for repressive acts. The Kremlin objects to US sanctions generally, but this measure — viewed as moral preaching — really elicits anger.” The act was named after Sergei Magnitsky, Mr Browder’s auditor who he said exposed a $230m tax fraud by Russian officials and a criminal gang against the Russian state. Russian authorities arrested Mr Magnitsky over a tax case against Browder’s firm, however, and he died a year later in 2009 in a Russian jail after being beaten. In 2016, the US enacted a broader law that targets similar crimes in countries outside Russia — the Global Magnitsky Act. That has so far penalised 76 individuals and entities. The de-

the wake of Russia’s invasion of Ukraine.” Mr Browder said this month’s summit essentially repeated the aims of the 2016 Trump Tower meeting. “It was the same meeting, the same talking points,” he said. In June 2016, members of the Trump campaign team including Mr Trump’s son Don Jr and son-in-law Jared Kushner met several Russians offering to dish the dirt on the Clinton campaign. Some of the Russians at that Trump Tower meeting — including Moscow-based lawyer Natalia Veselnitskaya and former Soviet army officer Rinat Akhmetshin, now a Washington lobbyist — worked on the Prevezon defence. During the meeting, the pair, who met through their work on the Magnitsky case, lobbied Team Trump against the Magnitsky Act. Jamie Fly, senior fellow at the German Marshall Fund, said the Trump Tower meeting and Mr Putin’s public attack were best seen as part of a broader effort by Moscow to dislodge the Magnitsky law and discredit Mr Browder. “There’s been an organised influence effort by the Russian state on the Magnitsky Act for years,” he said. “It is striking that Mr Putin felt so emboldened to raise Browder personally with Mr Trump.”

Katrina Manson

Bike-sharing backpedal puts China manufacturers in a spin Hub near Tianjin is latest victim of new economy’s boom-and-bust cycle Emily Feng

n the western outskirts of Tianjin, a port city near Beijing, idle workers at a bicycle factory reminisce about better days. “Even last year, shared bikes were all the rage, but we get no orders any more,” said one of the managers at Luoda Bicycle in the Tianjin suburb of Wangqingtuo, a Mr Xue, adding that the hot item this year was electric scooters. “With so many shared-bike companies going bankrupt, who could be ordering new shared bikes now?” said Ling Yang at Mingzhou Bicycle. His neighbour, once a manufacturer for ofo and now-shuttered Bluegogo, shut up shop last year. Wangqingtuo is emblematic of how free-flowing Chinese investment often allows a sector to rapidly expand to multiple competing participants before consolidating around the biggest start-ups or those with the biggest backers. China’s shared-bikes sector is just the most recent example of the boom-and-bust cycle of Chinese technology start-ups. Similarly, the food delivery and ride-hailing sectors have traced the same arc of multiplication then consolidation, eventually settling around no more than one or two of the biggest participants. The breakneck growth of shared-bike services breathed new life into bicycle manufacturing — but now it is bearing the brunt as the trend reverses course. China’s “bike graveyards”, where tens of thousands of discarded shared bikes have been dumped, are now complemented by the scores of bike factories that lie deserted in Tianjin after a pronounced contraction in the sector. The contraction follows nearly two years of frenetic fundraising and subsidy wars between rival platforms. In 2017 alone, Mobike — backed by Hillhouse

Capital, Temasek and Foxconn — and Alibaba-backed ofo together raised nearly $2bn in outside funding. China’s bike-sharing market brought in an estimated Rmb10.3bn ($1.5bn) in revenues last year, more than 8 times the Rmb1.2bn revenue in 2016, according to Beijing consultancy iiMedia Research. User numbers followed the same trajectory: last year 209m people in China used bike-sharing platforms, up from 28m in 2016. But ofo has started backpedalling, becoming the largest start-up yet to stumble. It has reined in an ambitious overseas push, unable to keep up with the spending of rival Mobike, which was acquired by food delivery and online services group Meituan Dianping this year. Like many bike-sharing startups, ofo relied on outside funding to fuel its expansion, at one point boasting 10m bikes worldwide. It has raised $2.2bn from investors including Alibaba and Ant Financial, according to Crunchbase. However, in the past two months alone, ofo has retreated from Israel and India and begun scaling back operations in Australia and Germany — an abrupt reversal from plans to have 20m bikes in 20 countries by the end of last year. Ofo, which expanded aggressively to 30 cities in the US, is now also planning to reduce its operations in the country. Smaller companies across China, including Bluegogo and Hong Kong-based GoBee, have already stopped operating. The rise and fall of Asia’s shared-bike sector is having a ripple effect across China, where urban planners and transport authorities have had to revamp services to accommodate the rapid influx of bikes. But hardest hit have been the manufacturers, which in the past two years have pumped out millions of bikes. The impact is readily apparent in Wangqingtuo, a town 110km south-east of Beijing. Historically the manufacturing hub for several classic bike brands,

business had slumped in recent decades as upwardly mobile Chinese consumers traded up to cars. However, as bike-sharing took off, trade flourished once again, with hundreds of private bike factories — some making a few hundred bikes a day, others thousands — popping up across the town. Bike production turnover reached Rmb3.92bn in 2015 — equivalent to 70 per cent of the town’s gross domestic product, according to local media. As the fortunes of the bikesharing start-ups have turned, Wangqingtuo’s entrepreneurs are struggling to find new clients. “We loved making shared bikes, because the requirements are lower and you can make a lot, fast,” said Ma Jingwei, a former worker at a manufacturer that shut down this year. Electric scooters, while in demand, are more complicated and costly to make, hitting margins hard. “At least 30 per cent of the factories here have closed, especially among those that opened specifically to make shared bikes,” he said. “There are just too many [bike-sharing platforms]. I cannot even get them straight,” said Max Hu, founding partner at Shanghai-based technology investment firm Lighthouse Capital. According to research firm IDC, there have been about 60 shared-bike start-ups in China over the past two years. To stand out from the crowd, start-ups have relied on subsidies to lower the average ride cost to woo Chinese users. Mobike, for example, recently waived user deposits on bikes after receiving new funding from owner Meituan-Dianping, while periodic coupons issued by various platforms can still make rides, in effect, free. “The abnormal competition and investors who followed the crowd have created a huge amount of waste [in the sharingbike sector],” said Mr Hu. “It made for an unreasonable business model in the short term.”

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

Ijedi Iyoha, APCON, DG

Toks Modupe

Celey Okogun

Steve Babaeko

Kayode Ebatamehi

Udeme Ufot

Odion Aleobua

Jenkins Alumona

Mojisola SAKA

Tunji Olugbodi

Ayeni - Adekunle

Feyi Olubodun

Top players in Nigeria’s Integrated Marketing Communication industry Daniel Obi

igeria’s Integrated Marketing Communication industry has evolved over the years. It is no more a market dominated by big size firms, but what underlines the industry now, more than ever before, is departure from traditional approach to marketing solutions. This is in addition to creativity, innovation and ability to enthrall audience with creative works that tell inspirational stories, which are likely to result in consumer action. The leading players have over the years, no doubt played crucible roles in helping organisations and

institutions build and manage their brands for growth. Brand Building has increasingly become important for consumers and to the respective companies as brands’ identity is essential property that enhances the value and significance of a company. Experts establish that strong brand enhances followership, market performance and sells the company to consumers. This is why Terry Tyrell of Brand Union Agency, says ‘What the nervous system is to the body, the brand is to a healthy organisations’ as quoted by BrandNigeria Magazine. “This means that for an organisation to grow followership, it has to pay serious attention to building its brand” Ordinarily, brand building increases awareness of the product

as businesses that are well branded stand out from the lot. As further stated by Baer Performance Marketing Blog, Brand building generates trust. “A professional appearance is important in establishing credibility. Consumers may think twice about doing business with a company that appears unpolished or illegitimate. Emotional reactions to the look and feel of a brand are hardwired into our brains, and those reactions can heavily influence buying decisions”. It also stated that Brand building creates customer loyalty. “Consumers (especially millennial consumers) are attracted and loyal to brands that share their beliefs. When developing your brand messaging, it’s important to communicate your values to help build

that emotional connection with your target market. Allegiance to a brand can often last a lifetime and it’s many times passed down to children and grandchildren” Thirdly, Brand Building, it says boosts employee morale and job satisfaction. “If an employee works for a business with a highly-regarded reputation, and they feel strongly about the business’ mission and values, they will take pride in what they do and feel more satisfied with their job. They will also likely tout the company and the work they do to their family and friends” With clear understanding of these brand building benefits, companies therefore make sure they engage reputable, innovative, creative and purpose-driven media agencies to assist them with cre-

ative and PR works that will easily connect with consumers. In this special report, BusinessDay is highlighting these top marketing Communication firms that have over the time engaged in either Public Relations or creative advertising works, employing unique approaches, data and consumer insight to assist various companies’ brand building efforts. These reliable listed companies which have won several recognitions both locally and internationally for their creativity are no doubt top players, brand builders, great thinkers in Nigeria’s crowded IMC industry. They stand out as they are driven by ground-breaking ideas for companies looking to engage consumers in this dynamic economy.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

Bluebird Communications: Helping brands fly

luebird Communications Limited is an ideasdriven communications agency that has impacted the competitive industry of advertising and brand building in Nigeria by disrupting and redefining market segments of her clients with tailor-made marketing strategies and compelling creatives across multiple media. The knowledge-based and insight-driven culture in the Bluebird Group is founded on the realization that every client is unique. It encourages the deployment of specialized competencies in Advertising, Public Relations, Media Consulting, Digital Marketing and Corporate Communications in responding to every brief. In today’s busy media space, the Agency has continuously helped clients cut through the clutter and reach the target market using unconventional approaches. The agency’s activation and experiential marketing approach emphasizes activities that bring brands to life with differentiating experiences. The unique approach to positioning the different brands in its stable makes it possible for regular consumers of these brands to become loyalists. Bluebird Communications Limited, the flagship of the Group com-

menced business in July 1995 and built within 5 years a robust client portfolio in financial services, automobile and other market segments. The agency’s level of success was accelerated by acquiring a purposebuilt property after only 8 years of opening shop. This feat enabled the creation of an ambience that spurred uncommon ideas, unparalleled bonding and an endemic culture of excellence. “Pushing the limits’’ has gone from being a buzz word to a mantra which every staff across board in the agency understands is at the heart of the company’s spirit of innovation; a commitment to exceeding expectations of clients regardless of challenges at all times. The Agency has fundamentally changed the relationship between agencies and clients by shifting from being a mere service provider to a strategic consultant and partner renowned for delivering worldwide recognizable marketing communications value to its stakeholders. To sustain its reputation as a haven for effective creative ideas, Bluebird deploys a time-tested strategy that helps it offer an enduring competitive advantage for clients. The Agency when crafting solutions for briefs, questions all assumptions, discards templates and demystifies

Kayode Ebatamehi

marketing strategies that are not informed by intelligent data and proven insights. The Agency has a knack for using thorough analysis and planning to create premium value for the brands it works on, helping them build and maintain the desired reputation and top of shelf positioning they deserve. Undoubtedly, the agency’s years of experience and the strong relationships it has built across print, broadcast and new media are veritable tools deployed to clients’ advantage in managing public percep-

tion regarding their mission, brands, policies and practices, in a positive, consistent and credible manner. This is made possible by a pool of proven partners in audio-visual, print production as well as in-house eggheads with hands-on experience across the production chain. This is the reason Bluebird offers impeccable quality for TV commercials, film, radio and print production. Some of the agency’s recent campaigns include work done for FBNQuest Trustees, a leading Trustees Services provider in Nigeria;

Centurion Systems, Africa’s premier gate automation and access control products manufacturer among others. In a bid to deepen its service, create a new pool of clientele and position FBNQuest Trustees as thought leaders in the industry; Bluebird was briefed to design an innovative marketing platform to drive this ambition. To upend this challenge, Bluebird created a media asset for FBNQuest Trustees called ‘Legacy Series’. Legacy Series is designed to be a platform where Nigerians get to learn everything they need to know about Estate Planning and how best to bequeath their assets to their loved ones. After 10 years and counting, Legacy Series, beyond being a lead generation platform, has positioned FBNQuest Trustees as a knowledgebased institution and a thought leader among its peers in Nigeria. The agency prides itself as one that provides creative solutions driven by effective strategy and unrivalled passion. Proof that this approach works is seen in the number of the agency’s accounts, some of which are motivated by referrals from past and existing clients. After 23 years, Bluebird is still helping brands take to the sky.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

X3M, driven by innovative ideas for clients’ businesses

3M Marketing Ideas is a full service Advertising Agency driven by innovative ideas that support and build clients’ businesses. Backed by a sound strategy, the agency works tirelessly to understand its clients’ businesses in a unique way with the aim of delivering the utmost value. The agency opened for business officially on August 1st 2012 and has for the past 5 years delivered cutting-edge marketing solutions that give its clients that competitive edge. Barely 4 years into its operations, the agency achieved an unprecedented feat for a young creative agency. It moved into our own multi-million naira fully owned building. It is from this multi-million naira, state-of-theart facility that it has been servicing its Clients. The agency’s creative solutions journey started with Inbisco- makers of Kopiko and Kis and shortly after, Etisalat and DStv walked in. “Since then we have had the privilege of working on accounts like Diamond Bank, Interswitch, Verve, Quickteller, Etisalat, 9mobile, Access Bank, Pernod Ricard, Peak, Glo and Betking to mention just a few”. As a fast rising creative agency, it has had the opportunity of partnering with its clients to provide cutting-edge marketing communications solutions that delivered value from a business and consumer standpoint. Following the rebranding of Diamond bank, in 2013, the agency was commissioned with the task of creating a Masterbrand campaign for the bank. The campaign “You need a new bank,” told customers of their power of choice especially when it comes to choosing a bank. We asked the public this pertinent question ‘why do you stay with a bank that does not meet your needs’? Using wit and humor, we offered the audience some advice - You need A New Bank. Peak Milk’s unique selling proposition- from generation to generation is one that can’t be contested by any other milk as it is the oldest in the country. But with the entrant of cheaper brands, Peak Milk’s market share was been slowly depreciating. To bring back Peak’s glory days, the agency told a simple but well thought-out story that deploys the brand’s unique assets to reinforce its position as Nigeria’s No. 1 milk brand. “Using the brand’s assets such as the Peak Island, Canoe, Palm Tree, the campaign had us travelling back in time to tell the brand story in a nostalgic and compelling way. All of these reinforced

our campaign idea- A Heritage of Quality”. In 2017, there was a need for Etisalat to rebrand to 9mobile following the exit of its foreign investors. This exit took away its equity and everything the brand Etisalat was known for. In less than a month, the brand had to undergo a total and complete change of identity. The agency stepped up to the plate and gave this its best shot as the client relied heavily on the agency to turn this around within a short period. After many long nights of hardwork, the 9mobile brand was birthed. The agency, led by Steve Babaeko was able to design the new logo, jingle, rebranding creative and all the collaterals needed for a smooth transition. Very recently, the agency also successfully launched a major campaign for Glo- The Data Unmatched campaign. The campaign was born out of the truth that only Glo can offer you this much data at such incredible price- talk about having an unfair advantage that helps you achieve more. The campaign was also well received and earned the agency more than a few accolades. “For us, doing business is beyond making profit, it’s about impacting lives. This is why we have been committed to CSR initiatives since we opened our doors. We believe that giving back to the society shouldn’t be a function of how long you’ve been around but how much you believe in a cause. We leverage on worthy causes designed to impact the society” the agency said. It has been said that the only thing more expensive than investing in education is not investing in education which is why our CSR initiatives have always been centered around the future generation. The agency celebrated its first anniversary with the renovation of a block of five classrooms equipped with furniture and chalk boards to Opebi Junior High School, Opebi, under the Ikeja Educational District. Second anniversary in 2014 saw the agency donating educational materials and ICT tools to enhance teaching of ICT at Oregun Senior High School, Oregun and Community High School Wasimi, Maryland both in Lagos. In 2015, we constructed and equipped modern bathrooms and toilets for the use of the students and teachers at the Lagos State Special Correctional Centre for Boys, Oregun. In 2016, its CSR project took the agency to Ikeja Senior High School, GRA, Ikeja, Lagos where it constructed a library and equipped it with furniture and relevant textbooks. “Our passion for impacting lives took us to Chibok Community

Steve Babaeko

in 2017 where we delivered over 317 set of chairs and tables to the displaced students and teachers”, Steve said stating that promoting Social Causes has also been a passion point for the company. In 2014, the agency partnered with the Lagos State Government to create the first ever Lagos Horn Free Day. The Horn Free Day was intended to encourage citizens particularly Commercial Bus Drivers that there is a better way to live than indulging in noise pollution which has been found to be harmful to health. The erstwhile

Governor of Lagos State Governor, Governor Babatunde Fashola, SAN expressed his pleasure that a nongovernmental agency could take up such social initiative. In celebration of International Women’s Day which holds on the 8th of March, Female employees in the agency unveiled a new campaign that focused squarely on workplace gender bias tagged the ‘The XX Takeover’. The XX Takeover Campaign was its own way of addressing the gender bias women face in the workplace and showing them support.

The agency opened for business officially on August 1st 2012 and has for the past 5 years delivered cuttingedge marketing solutions that give its clients that competitive edge

To launch the initiative, all the female employees took over Management roles and ran the office smoothly for one day. It was such a huge success that we got more companies to buy into the idea. Not only did they applaud it, they also bought into the initiative and set aside a day for their Female employees to assume Management roles for one day. Beyond the one-day takeover, thought provoking communication materials were deployed to keep the issue on the front burners. The initiative was well received by the general public so much that it won the agency a Gold Award at the Lagos Advertising Ideas Festival in 2017. Few years ago, discussions around mental health were at a minimum and in most cases, a nogo area. Recent happenings have however created the need to raise awareness of this silent scourge. Statistics show that Nigerians suffer from one of the most ignored forms of disorder- Depression. To therefore mark World Depression Day, we launched a social advocacy campaign that raised the muchneeded awareness about mental health. Using a 2-way chat simulated on Textstory, the agency revealed all the inner thoughts of an individual that he is afraid to share. The Nigerian Suicide Prevention Initiative Hotline was included at the end so people who might be in such predicament can reach out to someone. The short ‘socialmercial which was our way of lending our voice to the increasing rates of suicides was short-listed for Gold in the Digital Category for the Luhzer’s Archive Grand Slam Maiden edition. Winning is part of the X3M DNA. Not just winning at home but on the global forefront too. At the just concluded Africa Cristal Advertising Festival, the agency carted home 17 awards for major clients like Peak, Glo, and 9mbile. “Our self-sponsored anti – depression social service advertising tagged “Look Beyond” which we ran last year to support the government’s effort at fighting the sudden increase in the rate of suicide, won a grand Cristal. The agency also received the Goodvertising Grand Cristal award”. At the Lagos Advertising Ideas Festival in 2017, the agency also made a showing with it going home with 20 awards including 10 Gold for the XX Takeover campaign- a call for gender equality in the work place, 9mobile rebranding Jingle, Martell Be Curious and a whole lot more. For us at X3M ideas, it’s all about doing business differently. This is why we will never relent in our pursuit for excellence.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry Could you tell us more about Strategic Outcomes Limited? trategic Outcomes Limited was established in 2004 to provide integrated marketing solutions, with the objective of consistently adding value to our clients’ businesses. We offer a broad spectrum of professional services, which include communication strategy, strategic consulting, corporate communication, political communication, public affairs consulting, sponsorship consulting, marketing design and implementation as well as advertising. We have been around for a while and have contributed our quota to the development of the industry. What clients have you worked for? The list is a mile-long. I’d give you some of them so that I don’t clog your pages. On that list are the Federal Inland Revenue Service (FIRS), Lagos State Inland Revenue Service (LIRS), Federal Ministry of Finance, Akwa Ibom State Inland Revenue Service, MultiChoice, GOtv, Economic and Financial Crimes Commission (EFCC), Etisalat, National Films and Video Censors’ Board (NFVCB), Royal Exchange Assurance Plc and Phoenix Assurance. Some of these we continue to work for. We have also worked for some politicians on strategy, but we’d rather not mention names. What would you say the DNA of Strategic Outcomes is composed of?

FEATURE

oulcommunications limited also known as Soulcomms is one of Nigeria’s leading multi service marketing and communications firm operating from the bustling city of Lagos. Soulcomms has consistently remained relevant in the communications industry by proffering strategic solutions and engagements across multiple touch points and delivering world class services in the areas of Perception and Reputation Management, Media and Public Relations, Consumer Marketing - Direct/Experiential Marketing/Activations – and Events. The marketing communications industry in Nigeria continues to grow and agencies willing to keep tab must adopt innovative approaches, remain true to professional standards and set world class benchmarks to keep clients perpetually infatuated. Soulcomm’s ability to keep up with industry trends and excel is driven by ethical practices, pursuit of excellence, innovative service delivery, creativity, a sense of partnership and commitment, unimpeachable integrity, and above all, a 24-7 accessible group structure of

‘Strategic Outcomes Limited niche is adding values to clients businesses’ Jenkins Alumona is the CEO of Strategic Outcomes Limited, a value adding firm that offers a wide range of 360 degree marketing communication solutions to clients. In this interview, he described his company as a fountain of passion and said it is wired to get results. Excerpts

Jenkins Alumona

We are wired to get results. We have continually done this through creative thinking, focus, attention to details and execution. We take pride in our ability to execute and for us, attitude is everything. These attributes are what keep our clients satisfied. What determines the company’s approach to proj-

ect execution? First and foremost, we consider ourselves partners to our various clients. Happily, our clients see us in the same light. We are not the contractor type. I am not saying being the contractor type is necessarily bad. What I’m saying is that we feel what our clients feel. We are that way because that it is the only way

we know how to do it. That is our default mode. It has worked for us and our clients and we have no reason to change. It is even a wasteful expense of time trying to change because that is the way we are configured. Of course, we infuse a great deal of innovation into whatever we do. Without passion, I bet you know that success is not possible. Strategic Outcomes Limited is a fountain of passion. Occasionally, I get scared at the level of passion displayed by our team. But we’d rather have that than be tepid in execution. We are a fountain of passion. What are the CSR/Community engagement projects you have executed in recent times? While we publicize what our clients do, including CSR, we’d rather not have our own publicized. I have been a journalist and I know how reluctant Nigerian journalists are to have themselves written about or interviewed. Guess I am still afflicted by that syndrome that I should not be the news. It is the same here. More foreign companies are coming into the country

and politicians are seeking firms that could provide the kind of services you offer. What do you think should make your organization attractive to them? I think we have adequate experience and skill set in variety of fields, which I earlier stated. We have worked for international companies as well as for politicians seeking to be properly positioned. We have sufficient understanding of the country, a factor that puts us at an advantage when advising clients. We are able to manage all brand building challenges by generating and implementing impactful ideas as well as communicating same. The IMC industry is faced with many challenges, including unhealthy competition, client debt and dearth of talents. How have you been able to navigate these challenges? First, it is important to recognize that fact that there will always be challenges in the industry. I agree that there is a paucity of talents in the industry. But then, there is paucity of quality in almost all aspects

of our national life. The lack of quality isn’t exclusive to our industry. The quality of education available to most Nigerians has dipped, in my view. That has had the unfortunate effect of delivering to the society university and polytechnic graduates, the pool from which the industry fishes. Occasionally, you find some hugely promising ones, but you have to invest in training to get them to the level you expect. All hope isn’t lost. Unhealthy competition, sure, exists. But what can you really do about it besides conducting your own operations ethically, which is what we have always done. The issue of client debt, sometimes crippling, is in some way the result of the bad economic climate. I also do believe that some clients just think they won’t pay up because they can escape the consequences of not paying. We have been fortunate enough to have been shielded from such clients and we pray not to have them. If they continue to mount, debts will cripple your operations however hefty your bank balances are.

Soulcomms Limited Redefining Marketing Communications through Deft Innovation experts and quality resources. Little wonder major players within the FMCG, IT, Hospitality and public sector players as well as federal government institutions engage the organization’s expertise for strategic solutions to address varying engagement needs. Without a doubt, this professional expertise has sustained relationships with these organizations, a reflection of the level of satisfaction derived by these clients. Ongoing investments in staff trainings and developments within and outside the country continues to pay off as staff are up to date with industry trends and the high level of exposure leading to improving quality of engagements. From gaining market insights to developing ideas/concepts and execution, Soulcomms leverages the trends to methodically develop result oriented marketing campaigns. Soulcomms has been involved in some of the most breath taking public relations, activation campaigns and

events in the industry. Its client portfolio includes some of the leading brands in FMCG, Hospitality, financial sector, Real Estate sector, Information

Mojisola SAKA

Technology sector as well as Federal government parastatals. The company’s successes have been highlighted by its

various industry recognitions including being recognized as amongst the Top 5 most active PR agencies by M2 magazine, PR company of the year in 2007 at the Global Excellence awards, PR company of the year at the City People awards in 2008, PR company of the year at the Top celebrity award in 2012 and recently a recognition of service from the Special Olympics Nigeria for excellent PR support. Over the years, Soulcomms has focused on community development through its support for causes with social impact. Since 2009, Soulcomms has been one of the biggest supporter of Special Olympics Nigeria, a non-governmental organization committed to changing attitudes about the talents of people with intellectual disabilities. It also offers publicity support to LEAP Africa, a nongovernmental organization committing to equip a new cadre of African leaders by providing the skills and tools for

personal, organizational and community transformation as part of its corporate Social responsibility to the society. According to the Chief Operating Officer of Soulcomms, Mojisola SAKA, the company is looking forward with optimism to achieve its business strategy for 2018 and beyond. “We would focus on heightened visibility, focused specialization and driving business expansion noting the dynamism and operating realities of the market which include quest for innovative and out of the world ideas, effective use of digital technology, cost consciousness, value and leverage for spend, proliferation of supposed experts, industry’s low entry barrier and sentimental influences” she stated The future trajectory for the organization is bright as it seeks to explore news areas of growth in the marketing communications industry especially as the digital age continues to redefine the relationship between brands and customers.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

Survey: Consumer trust holds key for organisations’ success

rust and credibility survey among the Nigerians in the mainstream institutions of government, business, media and nongovernmental organisations has revealed that 72 per cent of Nigerians rank trust in an organisation as number one consideration above other factors when buying a product or relating with an organisation. In the first ever 2018 Edelman Trust Barometer Report unveiled in Lagos, recently, Nigerians sampled in the survey said although a good reputation may get them to try a product; but unless they trust the company behind the product, they will soon stop buying it regardless of its reputation. “Eighty-seven per cent of the respondents say companies that only think about themselves and their profits are bound to fail”, the report indicated, noting that respondents’ expectation is that businesses should be the driver of economic prosperity rather than mining profits to themselves only. “Fifty-seven per cent agree that driving the economic prosperity of our country is one of the most important things businesses should do”, it affirmed. The presentation of the 2018 Edelman Trust Barometer in Nigeria by Edelman was organised by Chain Reactions Nigeria, Edelman’s Exclusive Nigerian Affiliate and the Preferred West African Partner with the theme, ‘The Battle for Truth’. Speaking at the presentation of the global data from the report, Managing Director, Edelman South Africa, Jordan Rittenberry, expressed concern that the overall global assessment of the four mainstream institutions showed declines in trust about business and non-governmental organisations in 14 of the 28 countries sampled, and therefore called on key decision makers in the respective organisations to be deliberate in building their trust asset through increased investment. “Over time trends have shown there is low trust in business and non-governmental organisations, so it is important that people in these institutions pay more attention to how the citizens trust them”, he stated. Rittenberry added that globally “media is now least trusted institution” as a result of the menace of fake news which he noted has moved from being just a

phenomenon to a key factor in shaping perception. “People define media as both content and platforms, so nearly seven in 10 worry about false information or fake news being used as a weapon”, he declared. Managing Director/Chief Strategist, Chain Reactions Nigeria, Israel Jaiye Opayemi enthused that the inclusion of Nigeria in the an-

nual survey for the first in the 18-year-old history of Edelman Trust Barometer was in fulfilment of the company’s promise last year to ensure Nigeria was in focus among the comity of nations of reckon annually sampled by Edelman. “Trust sits at the heart of social capital. For those who were here last year, we made a promise that Nigeria would

be included in the 2018 deck of the Edelman Trust Barometer. I am happy to announce that we are here today to fulfil that promise”, he said. Speaking on the Nigerian data from the survey which showed that government was the least trusted of the four institutions of the Nigerian society, Opayemi counselled against a quick condemnation of govern-

ment by stakeholders. He cautioned that, rather than condemnation, government requires help from communications professionals to help redesign the architecture of government communications in Nigeria. He likened the current situation in most government communications departments to a hospital that is manned by a pharmacist

where people with cardiac conditions go to for help simply because the pharmacist is a product of a medical school. He therefore advocated engagement of communications professionals by key occupiers of government positions like the president and governors in order to overcome the challenges around trust and credibility assets of government.

BUSINESS DAY

Tuesday 31 July 2018

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

From One Small Shop to PR Agency of the Year - The Rise and Rise of Ayeni Adekunle’s BHM

hen Ayeni Adekunle, a public relations practitioner, journalist, scientist and businessman founded the All You Ever Need In (A.Y.E.N.I) Entertainment, he thought he was starting a modest company that will cater for the local entertainment market. Little did he know that he was building an institution that will not only dominate media and entertainment but will also deliver disruptive services within the public relations and marketing communications community. From a one-man entertainment company in November 2006, A.Y.E.N.I Entertainment grew to Black House Media (BHM), a full scale corporate and marketing communications company in 2009 and today, one of the continent’s most promising PR firms, involved in reputation management, consumer engagement, content development, digital assets management, research & intelligence and media relations. The company has in its employ over 60 full time staff, and dozens of roving consultants in Nigeria, Kenya, London, Germany and many other countries around the world. BHM, whose mission is to provide the best possible corporate and marketing communications to top tier brands and organisations, using traditional and digital strategies that no one can beat, aims at becoming the world’s leading media and public relations network. This, it hopes to achieve by working with its partners in the media, business, government and technology industries, to achieve the best possible solutions for clients, consumers and other stakeholders. BlackHouse Media has worked with various clients in Nigeria, South Africa, Kenya, Milan, Paris, Las Vegas, Ghana, Barcelona, etc. in diverse sectors of the economy, from financial services to consumer goods, telecommunications, education, media, lifestyle and ICT. It also supports causes close to its heart. It co-sponsored Big Daddy, the award-winning short film on rape; #NECLIVE - Nigeria’s foremost entertainment conference; and regularly provides pro bono services for NGOs, with beneficiaries including Wecyclers, Action Aid, and more. BHM provides an array of services, ranging from crafting brand strategies, crisis management, perception management, government relations, advocacy, to help brands tell the right stories to the right audiences in the right places;

Ayeni - Adekunle

to experiential communication, using big ideas to plan PR events and activations that break boundaries and connect conversations from real-life-offline situations to online in ways only few can dare. The company has a veritable team of consultants who enjoy a deep understanding of, and relationship with, local and global media following years of association. On social marketing, BHM has an in-house team of experienced social community managers and marketers who focus on listening, engagement and conversations; content marketing and promotion; influencer management ; and fan-building. This team and the assets they manage reach over three million users weekly on Facebook, Twitter and Instagram alone. BHM’s digital agency, ID Africa, generated over 1 billion combined social impressions for its clients and own campaigns in 2014. This number was tripled in 2015, with total impressions exceeding three billion. In 2016, social impressions grew further to 3.7 billion in 2016.

ID Africa is responsible for the pioneering Nigerian Twitter Map. Apart from working for its teeming clients, BHM has demonstrated thought leadership in the communications sector in Nigeria. It launched the BHM app – the first and only mobile application in Nigeria’s public relations market serving as a resource centre for the country’s media and marketing

industries in 2014. Similarly, BHM, has in the past, introduced few initiatives to boost knowledge and provide data for researchers, who want to know about PR practice in Nigeria. They include; Smart PR, a social media campaign initiated to showcase the good works that Nigerian PR agencies have done. It further launched the first ever Nigerian PR Report in

As an agency, we are proud that we don’t offer just lip service when we say we want to be a global company. We are currently the only agency in our market, with the caliber of infrastructure that can rival any of our contemporaries from anywhere else

2015, an annual report on the PR industry in Nigeria; BHM further went on to publish “the Concept of Virality”, an e-book and case study on Olajumoke Orisaguna and other viral stars in Nigeria. It also launched #PRISDEAD (a campaign on the current state and future of PR in Nigeria) reaching over 4 million people and recording over 46 million impressions in 2015. BHM, as a part of its celebration of its decade-long operations in 2016, published a free 138-page book BHM Guide to PR for professionals interested in Smart PR. According to Ayeni Adekunle, the founder and CEO of BHM, ‘the combined skills an agency needs to have today goes beyond understanding strategy, how to write, client service or community management. Today, the PR agencies that want to survive needs to understand blogging, technology, social media, psychology, entertainment and basic things that would help a brand thrive in today’s marketplace’. “As an agency, we are proud that we don’t offer just lip service when we say we want to be a global company. We are currently the only agency in our market, with the caliber of infrastructure that can rival any of our contemporaries from anywhere else. It is a big deal for us, because we truly want to build Nigeria’s first global agency”. BHM owes its success to its people, a team of young, passionate professionals who to deliver unbeatable results for clients, investors, stakeholders and audiences. As a reward to, and motivation for, these professionals, Black House Media adopts what it calls the policy of 3C’s of Capacity, Convenience, Compensation which puts its people before profit, integrity before image, and unlimited possibilities before general platitudes. The policy made for the creation of an environment that allows staff think and work outside the conventional four walls of an office. It created a lounge, nap rooms, provides free lunch, games center among other facilities. This pro-employee policy earned Black House Media the Best Agency to Work award in the Nigerian Institute of Public Relations (NIPR) Lagos State Chapter awards in 2017. BHM also won the Agency of the Year category in 2017 at the NIPR Lagos State Chapter awards, in recognition of it strides in the Marketing communications sector in Nigeria. BHM became an active member of the Public Relations Consultants Association of Nigeria (PRCAN), the umbrella body for PR agencies in Nigeria in 2013.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

‘Verdant Zeal always thinks out of the box’ Tunji Olugbodi is the Group CEO of Verdant Zeal, a top marketing communication agency in Nigeria with offices in Ghana, The Gambia and partnerships in other West African countries. The 11 year old company has a vision that speaks of leading Africa’s marketing communications industry with ‘innoventive’ solutions. Equipped for any marketing communication task, Olugbodi who was recently elected President of International Advertising Association, IAA told BusinessDay in this interview that the company has made substantial investments in mining data useful for developing bespoke solutions across varied locations. Excerpts Could you kindly tell us more about Verdant Zeal? he 1st of March, 2007 was a remarkable date in history as a game changing idea that had been burning in my heart finally found expression. The name, Verdant Zeal, at the time attracted a lot of eyeballs and enquiries, mostly around the origin of the name and its possible mysterious connotations. We were glad to take them all in stride. It’s been 11 years since we opened Verdant Zeal Marketing Communications Group for business and in that time, we have had a great time providing multidisciplinary business solutions to our clients in Nigeria, Ghana and The Gambia. We also have partners in Sierra Leone, Liberia, Senegal and Cote D’Ivoire. Our areas of specializations are in Branding, Development Communication, PR Management, Media Consulting, Digital Marketing, Events and Entertainment. What would you say is Verdant Zeal’s DNA? Just like our name implies, Verdant stands for growth, progress and advancement while Zeal connotes passion and a can-do spirit. When you combine those elements, you get a combustive creative organisation that can make magic happen at the flip of the switch. So, to capture this in a nutshell, it’s really about spreading optimism with our can do attitude towards designing marketing and communication solutions. How have you been able to grow such indigenous company to international standard? It’s all in the vision and the size of the dream. As Abraham Lincoln said, “the best way to predict your future is to create it.” When we started Verdant Zeal, our vision was clear. We wanted to play on a continental scale. We wanted to increase the level of professionalism and respectability for our industry. We wanted to spread optimism across our continent by telling inspirational stories of triumph, progress and possibilities. So, to answer your question – our vision says it all – we are on a journey to be the biggest multidisciplinary marketing and communications group providing innoventive solutions. This vision drives our processes, positioning and expansion strategy with in-

tentional emphasis on creating a world-class environment powered by professionals. Again, what underlines the company’s approaches to project executions – passion? innovations, and partnership with clients or understanding of the briefs? Let me paint a typical case scenario – about 5 years ago, we had the opportunity to host perhaps the largest fashion event, east of the Niger. It was a 3-Day International Fashion show, featuring a blend of renowned and emerging runway models and designers. It was huge. We had participation from New York, Cape Town, Lagos, London and the host city, Port Harcourt. But guess what? There was no brief for that event. It was purely an idea that we initiated and found the guts to execute with the partnership of a headline sponsor and other category sponsors. That’s the Verdant Zeal approach to every project we handle. This is a far departure from the traditional approach of most advertising agencies who typically wait for briefs and execute based on fixed parameters. Verdant Zeal always thinks out of the box. Rather than being just an executioner of the idea, why not own the idea? And we have taken the liberty to own many of the ideas. The truth is that by the time a client sends you a brief, it’s already late – the problem has been identified and the solution will probably be reactive rather than being proactive. We believe in taking the proactive route through the power of data, analytics and observation to design solutions in the interest of the consumer and eventually, the business. So, long before a brief ever surfaces, Verdant Zeal would have been on the scene, solving the superordinate challenges. Could you let us into your bouquets of awards in the recent time? We have a few laurels to our credit, including various categories at the prestigious Lagos Advertising and Ideas Festival (LAIF) Awards; Nigeria Media Nite-Out Awards, Excellency Recognition Awards; Nigeria Brand Award and several others. But the real reward for our work is in the growth of our clients’ businesses and portfolios. This is the real satisfaction we get.

Tunji Olugbodi

May we know some of the CSR/Community engagement projects you have executed in the recent time? So, 2018 makes it exactly 10 years since we launched our Good Cheer Initiative, Verdant Zeal’s

It’s no news that foreign companies are finding their way into Africa and the reasons are clear: nominal GDP of $2.2 Trillion driven mostly by consumerism, cost effective labour, an abundance of natural resources and leapfrogging technology adaptabilities

Corporate Social Responsibility outreach designed to provide creative, media and promotional support to a number of committed organisations that cater to special causes. Over the years, the numbers have increased marginally from 6 to 8, namely: Atunda Olu School for the Physically and Mentally Challenged Children; Live Well Initiative; Federal Nigeria Society for the Blind; Save the Needy; Spinal Cord Injury Association of Nigeria; Wesley School for the Hearing Impaired 1 & 2 and Children’s Development Center. Through the years, we have had the rare privilege of nurturing these relationships by providing creative support, coordinating media attention to some of their activities and getting our staff members to adopt them as personal causes. When Verdant Zeal clocked 10 in March, 2017, we organised an art exhibition at the Renaissance Hotel, Ikeja and invited all our stakeholders to participate in seeing some of the beautiful photographs our staff had taken in the course of their time at Verdant Zeal. Suffice it to say, we had entries from Ghana

and The Gambia in addition to the repertoire from Nigeria. These artworks were sold and the entire proceeds were donated across board to the charities. Again, it’s for a good cause so we’ll prefer to be discrete. More foreign companies are entering into Nigeria looking for creative agencies to work with. Also politicians are in search of reputable firms for reputation building, why do you think your firm and its subsidiaries should be an attraction to them. It’s no news that foreign companies are finding their way into Africa and the reasons are clear: nominal GDP of $2.2 Trillion driven mostly by consumerism, cost effective labour, an abundance of natural resources and leapfrogging technology adaptabilities. Nigeria, the most populous nation on the continent occupies a strategic position in attracting all that the continent has to offer. The premise for partnership is therefore natural for businesses as well as for political reasons. Nigeria’s large population base, diverse ethnic colouration and socioeconomic cadres create many marketing and communication challenges that only competent organisations like ours can resolve. Structurally, we have the capacity to operate in geographically and economically diverse parts of Nigeria and by extension, West Africa where we operate from Accra and Banjul. We have made substantial investments in mining data useful for developing bespoke solutions across these varied locations. We also have strategic partnerships across the country and region that support our bid to execute projects, while paying attention to cultural nuances and cost. Suffice it to say, we have also invested heavily in our people, though unconventionally. For about a decade, we would take a yearly trip to an African destination to learn about the culture, the language, the people and how business works in those climes. This crash course in leisure and learning has deepened our understanding of the African consumer and how to create narratives to connect with them. In a nutshell, Verdant Zeal has all that it takes culturally, intellectually and creatively to handle any corporate or political assignment for reputation management, corporate brand building and everything in between.

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

The importance of diversity when creating communications strategies Warren Moss

ost marketing and communications strategies are created in a very similar way: a team of trained marketing strategists sit around a table for a few weeks, do their research and then work within a strategic framework, based on what they think will have the most impact in terms of the client’s goals. These goals may be telling a story, communicating the brand’s values or encouraging a specific action from their target audience, among However, it would be argued that the traditional strategic planning approach to marketing campaigns we see around the world these days is a clear example of why this isn’t working. Look at financial services marketing and advertising globally, as an example: if you were to remove the logos and colours in various advertising campaigns, you would find that their messaging was all extremely similar. This shows that the strategic planning approach to all of these brands, even though they come from different marketing agencies, are all very similar. Deep level diversity It’s becoming commonly known that what’s fundamentally missing from the brand strategy process is the diversity of the talent. Not just diversity in race and gender but also diversity in experience, background, vocation and even age. A simple example would be the brand “fail” by Doritos with their “ladies chip”, or H&M with their “jungle” kids’ t-shirts - if there had been more diversity among their marketing strategists, perhaps there would have been more debate and discussion among internal creative teams, and these sorts of campaigns would never have been approved in the first place. Diversity can mean many things, from gender to race, to age, to experience or background. All these types of diversity have been proven to make teams more creative, but it’s worth noting that “deep-level diversity” is one of the most powerful. This term, mentioned in an article by the Harvard Business Review, refers to the diversity of personality, values and abilities – and it is apparently what matters the most. So how do you get people with different skills, characters and personalities around that table? At my company when we start the strategic planning process, we bring together participants with deep diversity (example: an

anthropologist, an architect, an engineer and a marketing strategist) instead of a team made entirely of marketing strategists. It’s truly fascinating to see how differently these team members approach problems. The way that the anthropologist looks at a customer problem is totally different from the viewpoint of the engineer, and so on. The thinking here is that deep diversity in input drives a more robust and pure

output. Anthropology can help tell the deeper stories Anthropologists are such an important part of what we do, because anthropology is the study of culture and people, observing how they behave and the challenges they face. But it also has many practical applications in a business context, because businesses are about relationships, and about solving people’s problems.

Anthropology also delves into the “grey areas” of problems, for example, the fact that the sales cycle of a product may be longer because the purchase is a series of negotiations, decisions and triggers, rather than a yes/no answer. Anthropology can help tell the deeper stories that ultimately resonate with people. So, from a team of diverse thinkers, we’ll get extraordinary human insights from the anthropologist, the true re-

sourcefulness of an engineer, the communication skills of a marketing strategist and the design mind of an architect and suddenly: we’ll have an elegant and impactful idea that’s never been done before. These solutions are typically robust and always more creative than anything achieved the “normal” way. Why is this important? Well, audiences all across the globe are diverse – so in order to reach and resonate

with those diverse audiences, you need a diverse output. And that’s impossible if you don’t diversify the creative and strategic team that comes up with the campaign in the first place. It’s so simple really: diversify the input to the creative process, and you get a different, completely unique and powerful output. That’s why diversity matters in the creative process. Culled from Bizcommunity

B10

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

Insight Publicis: No signs of slowing down

he recession of 2016 was reported to be Nigeria’s worst in over two decades. It was a strong punch below the belt for many Nigerians in their millions, witnessed the closure of many companies and forced more to adopt water-tight survival strategies. If there was any takeout from the recession, it will be that no industry is impregnable from the effects of the recession that gave the Nigerian economic boat a big hit. The advertising industry, a unique one in many respects was not immune from the sting of the recession. This is not to come as news to many, except industry newcomers who may now learn that the communication spend of many companies were slashed in the excess of sixty percent and this put the existence of many advertising agencies on the line. The attendant effects caused many agencies to streamline their human resources as well as cut down heavily on operational and overhead costs in the most calculative manner. With the knowledge of the prevalent financial quandary, it becomes not only proper but plausible that advertising agencies be singled out for applause in respect to the ingenuity and show of strength and relevance in what was a trying time for all. The stories are left to be told some other time but if there is one industry player that has remained as relevant in the years before and after the recession, Insight Publicis is unarguably that agency. For an Agency known as “the university of advertising”, ingenious is the only way to describe how Insight Publicis is repositioning to remain relevant within the industry, competitive for the brands they manage and impactful in the life of the employees and customers they work with daily. As the economy gradually ex-

Feyi Olubodun

its recession, brands are already looking to their agency partners to help them identify relevant opportunities, remain competitive and relevant with impactful commu-

Insight Publicis is known as the leading creative solutions company; an agency imbued with the power of never-ending thinking. The agency believes in the power of ideas to creatively tell the stories of brands while helping to achieve clients’ business objectives

nication while keeping their eyes on delivering business value. It is at this important intersection that Insight Publicis carefully positions itself. While the recession hit the advertising industry hard, Insight was able to weather the difficult storm. Under the leadership of Feyi Olubodun, the agency burrowed a tunnel through the uncertainty and has continued to gain new grounds and new territories. Insight Publicis is known as the leading creative solutions company; an agency imbued with the power of never-ending thinking. The agency believes in the power of ideas to creatively tell the stories of brands while helping to achieve clients’ business objectives. This is evidenced in the nature in the number and nature of accounts the agency keeps raking in. Apart from the beefing up activities for brands it is currently handles, the activities on businesses like Nigerian Breweries and PepsiCo International have not only received international accolades for ground

breaking creative solutions, they have also helped increase market penetration. At the present, Insight Publicis manages the flagship alcoholic beverages of Nigerian Breweries. These include international premium lager, Heineken; national premium beer, Gulder, STAR Lager, STAR Radler, STAR Lite as well as Strongbow, and Tiger brands. The Nestle business is also one of the newest additions to the agency as it handles brands like Milo and Maggi. The agency has successfully delivered on both creative and value delivery fronts. In an industry that has completely gone digital, Insight is already proving its mettle. While most brands struggle with deploying creative solutions in the digital space, Insight Publicis is already delivering solutions that can travel across channels. n 2016, Insight became the first African agency to win the globally acclaimed Word Advertising Research Council’s (WARC) Silver Prize for Social

Strategy. This placed the agency on the same digital pedestal as BBH London. During the same year, Insight became the first African agency to host seminar at the Cannes International Festival of Creativity. Such feats are built into the pathfinder DNA of Insight. Not resting on its oars, the Brand has gone on to deliver Pepsi’s ‘Turn-down-to-Turn-up’ and the ‘No Shaking carry go’ campaigns last year to ‘Naija All the Way’ campaign before the 2018 World Cup, the brand has proven its competence. The brand has gone on to run digital campaigns for leading brands in the market; Pepsi, Aquafina, H2Oh!, Vitafoam, and Nasco are a few of the brands the agency has worked on. In recognition of these efforts, the agency was just awarded the digital account of Nestle’s Maggi brand. As part of efforts to deliver on digital campaigns hinged heavily on content, the agency recently launched Guava, an in-house Branded Content Studio. Guava was created to conceptualize and develop video content that delivers high octane quality content, on time and on brief. The move to build Guava was a wellcalculated move. As brands are tasked in need of quick-response to market dynamics and with tactical solutions, it is just smart for a brand like Guava to help deliver on such tactical and large-scale projects that are video-led for digital media. Insight Publicis is the most experienced indigenous advertising agency in Nigeria and the biggest in West Africa. She is also the only agency with 30years experience in engaging the youth market, an experience that is longer than the existence of most competing agencies. Given the country has 67% of its population below the age of 35, Insight is clearly the go-to partner for clients seeking to win in the Nigerian market. Its recent successes will make sense to many when viewed through the prism of the inputs and exploits of its very young and dynamic workforce. The median age of the agency is about 30years old, making it a youthful agency for a youthful, post-digital economy. We can say that the agency is run by the youths; a true representation of Nigerian youths who have proven that if given the opportunity, they can do great things. The reward for great work is more work. Insight Publicis is reaping the rewards of excellence and quality it has been known for over the years. Through it all, the agency has grown through changing times because more than accolades, our biggest rewards are in the fact we help our clients grow.

Tuesday 31 July 2018

BUSINESS DAY

B11

B12

BUSINESS DAY

Tuesday 31 July 2018

SpecIal Project

on Nigeria’s Integrated Marketing Communication Industry

SO&U sees marketing communications as opportunity to solve problems Biodun Adefila, is the Executive Director, Brands and Client Management, SO&U Group. She is one of the amazons that are giving the marketing communications industry a totally new colouration. She is also one of those that have signaled the arrival of women in an industry where men held sway, until recently. In this interview, Biodun, whose driving philosophy sees the glass as half-full, rather than half-empty, never sees any situation as hopeless, tells us more about SO&U and says the company has the purpose of building brands that live in the consumers mind, influence their lifestyle and at the same time deliver profit to clients. Kindly give us in the world of SO&U? O&U Ltd was established in 1990. We are a full service marketing communications company with the purpose of building brands that live in the consumers mind, influence their lifestyle and at the same time deliver profit to our clients. We have been involved with some of the most creative, effective and memorable communications in the industry since inception. For instance, we were responsible for the communications campaign that launched Guaranty Trust Bank into the market. The communication was different, engaging and what you would call ‘pace-setting’. They set a benchmark of the high standard of service that could be expected from the bank and an image that made it ‘the bank’ other banks had to beat. In the case study conducted on the Bank by The Harvard Business School, communication was highlighted as a key element that positioned the Bank as a leader in the pack and gave it the strong foundation upon which the equity it still enjoys till today was built. I must also mention Access Bank. We began working with Access Bank over a decade ago from when the bank was number 69 out of 80 something banks. Today, the bank is among the top 4 in the country. We’re breaking new grounds with GLO whom we’ve worked with in the last 5 years as the longest serving agency. There are also new wins. We have just had the good fortune of bringing Mitsubishi into the SO&U fold through Massilia Motors, the sole distributors in Nigeria. We have a whole list of leaders in various industries including manufacturing (where we work with Unilever, Guinness Nigeria, PZ Cussons), hospitality, properties, Government, etc. Whoever we sign on, we continue to uphold our strong creative pedigree, and remain creatively driven with a strong service orientation. SO&U Limited is part of the SO&U Group, which includes a Media Independent (Maxi Media Global) an activations and Image & Perception Management company (Soulcomms), a digital Agency (Vyrus) and an Audio/Visual Production agency (Lucid AV)

You are a major player in Nigeria’s IMC industry, what is unique about your services? Three things stand us – Creativity, Professionalism and effectiveness. As I mentioned above, SO&U was built on creativity. We believe in being original and one of our core values is ingenuity. For us at SO&U we see marketing communications as an opportunity to solve a problem. SO&U has been in place for over 20 years, how have you managed to grow such an indigenous firm to earn global attention? We set out to establish new standards of creativity in the industry. Our objective was to be recognized for our creativity within 2 years. We did it in less. Creativity is still the core of our being and we bring originality to play. We rely fully on consumer insights to create communication that is relevant. Having worked with multinational clients like Guinness Nigeria, Procter & Gamble, etc, we bring to bear local relevance. Could you state some of the local and international awards the company has won in recent times? We have won various awards from the Lagos Advertising and Ideas Festival (LAIF) In 2017, we had 8 LAIF awards cutting across film, print, Out of Home, ( OOH), etc. Our Glo film (Grandpa Goes to School) won an emerald in the Telco category at the Africa Cristal Awards also in 2017.This year, we have won Gold for our Mother’s Day digital campaign at the Africa Cristal Awards, 2018 edition. More foreign companies are entering into Nigeria looking for creative and PR agencies to work with. Also politicians are in search of reputable agencies for reputation building, why do you think SO&U should be an attraction to them? On the back of our creative orientation and effectiveness of communication campaigns we have built a reputation based on actual clients benefitting from our wealth of experience and are happy to talk about us to others. Add to that our group structure which enables us to analyse communication challenges from an holistic point of view and own the process from start to finish , we are able to extend the big idea beyond the narrow limits of what any one discipline would do. In fact, the

Biodun Adefila

consumer is the beginning and end of our initiatives. All ideas have to extend to different touch points where they can experience the brand first hand. We also have some of the best hands in the industry that bring their experience and exposure to bear in our communication plans. Finally, we have a reputation for being totally involved and committed to the clients we sign on. With us there are no half measures. This is why we have maintained relationships with most of our clients for upwards of 10 years and beyond.

IMC industry is faced with a lot of challenges including dearth of talent, unhealthy competition, client-debt, how have you been able to navigate through these challenges to play tops in the industry? Most industries have their challenges, ours is not different. Someone once said that challenges are meant to be dealt with, not worshipped. With this in mind, we remain focused on our mission. Where we have analysed collaboration to be the solution to the challenge, we have engaged with

At the end of the day, good work speaks for itself so we are not unduly concerned about competition, unhealthy or otherwise

and collaborated with all levels of suppliers across disciplines. We take training (both internally and externally) seriously to improve the output of our employees and remain in the lead. We also do our utmost best to retain them. For long term planning and sustainability we run a Management Traineeship program where we groom young talents for the future. At the end of the day, good work speaks for itself so we are not unduly concerned about competition, unhealthy or otherwise. We are very objective when we analyse our work. We always say to ourselves when we’ve done good work that if anyone can beat what we’ve done, they deserve the job. We’ve always won. For the occasions where clients have left good work to engage someone else, we knew it was their loss. Incidentally, they come back to see if we would still be interested. Client debt is an on-going challenge. We find that remaining in conversation with them always works. When you remain relevant to your client and they know you’re journeying with them to a destination, even if they don’t have the means to reimburse you in the immediate it will be done eventually. This is not to say we have not had to write off some debts but more and more, these are getting to be the exception rather than the norm. Integrity is a huge part of who we are so we do what we must and play our cards as best as we can. It’s paid off so far. What is the future of the IMC industry in Nigeria and would you kindly shed light on the future of SO&U Company as a business? The way we see it, the IMC industry will remain relevant to marketing communications. It’s all about consumers and their interests. As human beings consumers have different interests, lifestyles, behaviours and outlook towards the world. All of these come into play when we consider IMC. For communication effectiveness you need to be able to speak to consumers using different touch points and this is the essence of IMC. The platforms may change as we have seen in the past few years with the advent of technology but the concept of IMC will always remain. SO&U as a company will continue to reinvent itself in order to remain relevant but the core offering of creativity will always be our DNA.

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New thinking in Nigerian Railways as Corporation concessions assets for outdoor advertising Daniel Obi

here is a new thinking in Nigeria’s railway system. Collaborating with the private sector, managers of the railways are giving the system a facelift through branding purposes. They are not only bringing new couches but they have incorporated interior and exterior outdoor advertising by top brands on the fixed and moving assets of the railway. This development, analysts believe will not only assist in decorating and beautifying the poor perceived Nigerian’s railway system but it will enhance its status, create traction to commuters who originally were not using trains and boost the system’s income. Outdoor advertising on railway assets is a new phenomenon in Nigeria as this development will change the outlook for trains and stations as how people perceive the system. How it started Last two years, management of NRC threw open the pitch to concession its fixed and mobile assets for outdoor advertising. Some outdoor advertising firms bided but Tranxeon Nigeria, a young Nigerian outdoor advertising agency won the bid. The concession is a major deal for Tranxeon and the young firm led by Ayomide Ogunjobi, who was a pioneer staff of Lagos State Signage and Advertisement Agency, LASAA and its Oyo counterpart, OYSAA promises to deliver value to the concessioners and to advertisers through advertising on the Nigerian Railway corporation assets. Leveraging trains for consumer engagement Ayomide sees the new thinking to advertise on railway assets as novel. With confidence, he strongly believes that advertising on railway assets both internal and external trains and also in and outside the stations will deliver value to advertisers as the trains move within populated areas in Lagos and move from Lagos to Kano and Abuja to Kaduna. “Some people still think that when you refer to trains, you are talking of trains that people sit on top of the roof. There are two new trains now that have been deployed in Lagos. They are called Lagos Diesel Multiple Units. DMU come with factory fitted air conditioners , well organised and cater to the working class of low earned strata of the society. The old trains are being

faced out soon”, Ayomide said. For the Abuja new trains, they look good with ambience and comfort for the passengers. Abuja trains are designed with seats like in aeroplanes while Lagos trains have more spaces for easy drop off of passengers. He explained to BusinessDay that Lagos has two

DMU trains with three human carriage couches each. Abuja has two trains with five and six couches respectively while Lagos- Kano train has 10 couches. “These are within Tranxeon purview for purpose of advertising”, he said. “For Lagos trains, we envisage that almost one million people can view advertise-

ment on the couches daily. In the morning, the trains move from Ijoko in Abeokuta and come down to Lagos through Apapa –Oshodi expressway. It passes through Alimosho with highest population in Lagos where people can see the advertisement. The number of people that pass through this route is amazing”, he said.

According to him, the rail lines in Lagos is used by 22,000 commuters daily; and “we intend to park the train at either Oshodi or Ikeja Stations at least once a week. Oshodi boasts of one million commuters passing through daily while Ikeja boasts of not less than 500,000 commuters daily. “In addition to internal and

external advertisement on the trains, we will be playing advertisers’ jingles inside the trains. Organisations who brand also have opportunity to put their marketers and promoters inside the train to engage the customers as they go. It is a comprehensive consumer engagement package for advertisers”, Ayomide promised.

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Our strength lies in our capacity to leverage data, trends to craft compelling narratives - Modion Communications CEO

he Chief Executive Officer of Modion Communications, Odion Aleobua, is just fresh from receiving marketing communications industry accolade as Nigeria’s ‘Outstanding PR Personality of The Year’ at the just concluded 2018 edition of the Marketing Edge Brands & Advertising Excellence Awards which held on Friday, July 6, 2018, at the Balmoral Events Centre, Oregun, Lagos. But he is not keen to celebrate, insisting that the team is hungry for more laurels, international laurels. A year earlier, the young and emerging public relations firm he established in 2015, was recognised as the Outstanding Young PR agency of the year. Odion told BusinessDay that the successive accolades have humbled him and his team. “To be recognised by the industry for the work we do at Modion Communications, is a testament that we evolving into back, year-on-

ne of Africa’s most sought-after Public Relations agencies and Nigeria’s most celebrated PR firm, TPT International is a perception management firm with a globally aligned structure. Founded by Adetokunbo Modupe in 1998, the company has come to be acknowledged for practice innovation, which has earned it recognition and awards from regulatory bodies and reputable organisations. Last December, for instance, TPT, the serial award winners, had two awards conferred on it by governing bodies of the public relations industry in the country – the national body of the Nigerian Institute of Public Relations (NIPR), and its flagship chapter (Lagos). In presenting the “Corporate Practitioner of Excellence 2017” award to TPT, NIPR President, Rotimi Oladele said the agency beat other competitors to the highly-coveted honour because of its “innovative, excellent, professional and creative” approach to campaigns as well as contribution to the growth of PR practice in the past two decades. On his part, the NIPR Lagos State chapter Chairman, Olusegun McMedal explained that TPT International was voted the “Best Agency to Work” through a survey, which scored the organisation high on a range of parameters such as integrity of senior management team, quality of professional development, creativity, empowerment, risk-taking, staff welfare, mobility, retention and

Odion Aleobua

year in the three years since our establishment. This is an indication that we are driving our vision of being Africa’s most respected PR agency in

the right direction and must continue to produce compelling and superior ideas for our clients,” Mr. Aleobua said. “We understand that

though we are a very young agency, we have been able to touch brands and corporates that are way older. We take that opportunity to demonstrate our capacity to these brands very seriously. Which is what we are eternally grateful to brands like Oando, Leadway Assurance, Lagos State Government, Arcskills, Axxela, Rainoil, Nexus, Lumus Nigeria, Platform Petroleum, Nepal Oil, Nigerian Content Development and Monitoring Board (NCDMB), Nigerian Gas Association (NGA) to mention but a few, for believing in our ability to drive or shape their narrative or their reputation building efforts. “Working with this calibre of clients had been instrumental in our continually pushing the envelope to ensure we deliver the most thoughtprovoking PR initiatives at all times and at different levels, even under the tightest of schedules. We will continue to develop new initiatives, give insights and as well cre-

ate mind-blowing innovations that will shape how the end users perceive our clients in line with achieving brand objectives. We will continue to show competence as we offer dynamic, strategic, clienttailored initiatives in our quest for providing unique solutions with unparalleled excellence.” Mr. Aleobua, who prior to starting Modion Communications, was the head honcho of the brand and communications unit at the NSE-listed Forte Oil PLC, said the strength in the team lies in their capacity to leverage data and trends to deliver compelling PR initiatives and crafting creative narrative for their clients. “Today’s world is not only driven by those who use data to deepen their enterprise but also those who can creatively unpack the data to positively position for market disruption or leadership. “We understand the place of data in creating relatable narratives for our clients,

hence the reason for setting aside a team dedicated to research and data mining. In fact, in the next two years, we would chiefly be a research-led PR agency, providing deeper insights into our clients’ markets, their customers’ behaviours and the stakeholders’ sentiments. In the longer term, we intend to infuse technology into every aspect of our operations, such that the evaluation of our initiatives will take a completely new dimension and meaning. We want to be able to digitally measure the affinity levels from our initiatives in a live and uncontrolled situation and environment.” Odion revealed that Modion Communications will be partnering with international agencies to deliver a robustly packaged Image Building offering for emerging Chief Executives who want to build their public image in the face of their new roles that requires thought leadership and elocution above and beyond their technical skills.

TPT distinguishes self in professional, creative approaches to campaigns emolument. Other awards by TPT in the last decade included the “Most Friendly PR Agency of the Year”, “PR Agency of the Year”, “Outstanding PR Agency of the Decade”, “Most Outstanding PR Campaign of the Year”, and “PR Company of the Year”. Modupe sees the awards and recognitions as validation of the company’s focus in managing clients’ perception in line with global standards and result delivery, as well as its determination to emerge as one of the most-sought reputation managing firms in Africa. “In today’s PR world, storytelling driven by creative and persuasive content generation has become a major driver for perception management, which my team and I have used in firming our belief in innovation and professionalism in our practice. Our edge in the industry is our creative solution to clients’ briefs,” he said. A full-service PR firm which has partnership with Waggener Edstrom, based in Seattle, United States, TPT International maintains practice areas in corporate communications, brand PR, crisis management, media relations, lobbying, lifestyle communication, public affairs, social media conversation management, among others.

Its clientele has grown from just Rothmans of Pall Mall at the beginning to cover a huge portfolio of top brands, institutions and multi-nationals across various sectors in West Africa. TPT’s premium clients – present and past – include Nigerian Breweries Plc, Promasidor Nigeria Limited, Chi Limited, mediaReach OMD, Heritage Bank Plc, Federal Government of Nigeria, General Electric, Buildcon Global Service, Homework Development and Properties Limited, Cross Rivers State, BAT, Pfizer, MTN Nigeria and Oceanic Bank International. Also in the list are Spring Bank, FinBank, Lagos Lotto, Guinness Nigeria, Procter & Gamble West Africa, British Council, Starcomms Plc, MasterCard, WFM 97.1 Radio Station, Chivita, Lenovo, Lotto, Reckitt Benckiser, and many others. TPT International has been at the forefront of industry innovations and professionalism. Its vision of providing creative and measurable communication support for its clients in order for them to gain favourable perception in a highly volatile and fiercely competitive business environment resonates very well with its core values of integrity, professionalism,

and human capital development. “We are perhaps the only agency currently in Nigeria using the Kaplan-modelled Balance Scorecard, a strategic performance measurement model in translating our vision and mission into operational actions with the aim of creating values for our clients,” the TPT helmsman said. TPT is reputed for the passion it brings into every campaign and activity of its client. Its revolutionary PR practice has justified the need to have the agency on retainership in places where its counterparts

were so glad to be paid commission on third party costs. “We have increasingly gained the respect of our clients and partners because they have come to see us as solutionproviders,” Modupe added. The agency keeps adapting to the ever-changing environment by recruiting talents, developing capacity and building a team of very passionate unconventional professionals who have subscribed to its philosophy of ‘challenging the logic to achieve the magic.’ Indeed, TPT International is reputed as the enemy of

the ordinary. “For us, there is no one solution that fits all challenges. We subject every challenge to a rigorous examination as we consistently challenge convention and proffer bespoke solutions,” Modupe explained. TPT continuously equip its staff with contemporary skills in PR and communication. Apart from training programmes from reputable institutions, its relationship with reputable professional and academy institutions is usually exploited to give its staff requisite knowledge.

From Left: Muyiwa Akintunde, COO TPT International; Mike Okereke, Chairman, Mike Okereke Consulting; Adetokunbo Modupe, Chairman/Lead Consultant,TPT International and Olusegun McMedal, Chairman, NIPR, Lagos State Chapter at the presentation of the Best Agency to work Award to TPT International in December 2017

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From NOVELPOTTA Y&R to Y&R Lagos, firm still maintains values, leads in servicing businesses - Closer to you in ECOWAS and CEMAC Regions

he desire to expand beyond the frontiers of Nigeria was a major strategy from inception. Nevertheless, the anticipated joy that accompanied that thought did not eliminate the surprise factor when the opportunity finally came. Back then, a new client with interest in oil and gas across ECOWAS and CEMAC regions requested the firm’s presence in these markets. It was sudden. A few months is required to do some groundwork. But the client insisted and off to Cameroon, we went. That was ten (10) years ago; thus becoming the first Nigerian advertising agency to establish a wholly owned (100%) office outside the shores of the country. Today, Y&R Douala (formerly NOVELPOTTA Y&R Cameroon) is the Francophone sub-hub

Celey Okogun

for French territories in Senegal, Cote d’Ivoire, Mali and in the CEMAC region. N O V E L P O T TA w a s founded in 2001, and in 2002 became NOVELPOTTA Y&R which was as a result of its early affiliation to the globally renowned Young & Rubicam worldwide. Within a short period of its existence, the agency became a household name, servicing businesses across different sectors of the economy on the strength of the creative prowess it brought into the industry. Founder/Chief Executive Officer, Dr. Celey Okogun said: “Y&R Lagos is a demonstration of the considerable brand affinity between the network and us. The network has decided to play up our strengths and the values that bind us together. That’s the Y&R brand. Thus, affiliate offices and strategic partners were migrated to

become Y&R brands in their cities. We are particularly delighted that Lagos is one of such offices. It is an opportunity for us to redouble our efforts therein adding value to the businesses of our various clients and the creative industry in Nigeria generally. Therefore, the organization formerly known as NOVELPOTTA Y&R is now Y&R LAG or Y&R Lagos whichever you prefer. Yes, the change has occurred but the values associated with us over the years remain. It’s deliberate. Take a look at the new logo: NOVELPOTTA, our very first name by which some of you still refer to us is present. Y&R, our second name, which merged with the latter to become NOVELPOTTA Y&R is alive and vivid. And of course, Lagos, the city we all love to call LAG comes into full prominence in the new arrangement. Similarly,

NOVELPOTTA Y&R Cameroon becomes Y&R DLA or Y&R Douala. I dare say, in a positive sense, the more things change, the more they remain the same and more engaging!” As we approach the double decade mark, Y&R Lagos will continue to strive to be the best workplace where every young fertile mind wants to realize his/her dreams. Y&R is one of the most iconic global marketing communications companies in the world. We operate as a Global Boutique, connecting deep local insights with strategies and objectives that transcend borders. United by a global infrastructure and market-leading tools and technology, Y&R clients have access to top talents, hands-on experience and resources across our worldwide network of 331 offices in over 60 countries.

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NEWS YOU CAN TRUST I TUESDAY 31 JULY 2018

Opinion How our policies and laws discourage investment

OGHO OKITI Dr. Okiti is the president, Time Economics Ltd @ Dr_Okiti 081.7153.0058

n the run up to the 2019 elections, we are currently seeing a repeat of the “awada keri keri”, “girin gori”, and “shenanigans” that we saw four years ago. As I wrote few weeks ago, its “Shaku Shaku” season, following on its predecessor of four yours ago – “Shoki”. In the meantime, while we await the full conclusion to the response by PDP, nPDP, rAPC e.tc. to the choreography started by the All Progressive Congress (APC), mere mortals like us must continue to think and share ideas. On Wednesday last week, we had a very interesting “town hall” discussion on twitter. The initiative was by my very good friend Dr. Abimbola Agboluaje, and

he managed to assemble excellent thought leaders to share their thoughts on the path from poverty to wealth, with focus on the factors that continue to keep us poor. If you missed it, you can still follow the discussion on the threads #TFLPolicyTownHall and #PovertyToWealth. As a panelist, my focus was to try and point out our failure in doing the little or critical things that have serious and long-term implications for investment, growth and jobs. The areas I focused on were law, security and the predictability of policies. I argued that very few people understand how critical business decisions are hinged on legal measures and framework. When the laws guiding investment generally, or in certain sectors are appropriate, and interpreted in the same manner for all, it provides a level playing field that helps drive investment, generates growth that leads to job creation, and of course poverty reduction. Today,

our law is more shaken than ever before, in the context of the modern challenges that is supposed to deal with, but especially in the context of its interpretation. Indeed, at least two things are generally wrong with our laws and how they are implemented and interpreted. In today’s Nigeria, while it used to be a pretense, it is now generally accepted that might is right. What this means is that the law is now generally disregarded, and its just a matter of who has the greater might. That was the essence of the message to farmers recently by Femi Adesina, the media adviser and spokesman to Mr. President. By justifying the violent attacks on farming communities by herdsmen, Adesina practically argued that might is right. What is often missing is that it’s not only the farmers that heard those words, the investors we are seeking from foreign countries also hear them, and they react accordingly. Of course, the might referred to here is not only

physical, but also wealth and influence. The second point is delayed justice. The wheel of justice in Nigeria is perhaps the slowest in the world. And that is even when it comes, which is rare. The implications for investment are huge. The uncertainty provided by delayed justice gives the protagonist the impression that it can get away with might is right, and gives no protection to those who seek to play by the rules. In the end, these parameters act as interference and lower investment in the long run, drive up the costs of investment, and destroy existing investment. By lowering the rate of investment and driving up the costs, it not only lowers the rate of return on investment but also keep productivity very low. Consequently, incomes are low, and poverty reduction slow. From a security point of view, the challenges include herdsmen, Boko haram, kidnapping, armed robbery, cultism etc, and they are rising. They have serious

implications for investment, both domestic and foreign. Foreign investors see Nigeria as a homogenous country when it comes to security. This means that there is a huge correlation between Boko Haram, and the recent escalation of crisis in the North Central and investment plans in Lagos and the rest of the West that are without any significant crisis. In the context, FDI is lackluster, while portfolio flows are doing well, and will continue to do so as long as oil prices are going up. FDI requires the risk analysis of whether Nigeria will enter a civil war, but portfolio flows do not. So, while those in government make noise about attracting investment, and spill out fundamentals on the basis of population, investors are looking at the escalating security situations and the rise in conflicts. On policy predictability, there are two elements that are important. One is that we do not make many policies and reforms to reflect

changing global dynamics. Most of the existing policies have largely become irrelevant due to changes in the last two decades. A good example is the land use act, and the never-concluding petroleum industry bill. The other point is that, when we do, we bungle them. And sometimes, when we get them right, we change them often. In the end, we leave investors wondering what’s wrong with us. PIB is not so much a bad, but a nonexistent law. For so many years now, no tangible investment in the oil and gas industry as the world waits for changes to our laws that never came. For so many years, we have known that the Land Use Act is awful, but we have not changed it. This leaves investors handicapped. And generally, when we make changes to our policies, its often remarkable how they are changed and compromised at the implementation stage. A variant of this is that, in many cases, policy deliberations Continues on page 35

China’s debt threat: time to rein in the lending boom MARTIN WOLF Wolf is the Chief Economics Commentator of The Financial Times.

f something can’t go on forever, it will stop.” This statement by Herbert Stein, chairman of the US council of economic advisers under Richard Nixon and Gerald Ford, tells us that debt cannot grow faster than an economy forever. That is going to be true for China, too. What we do not know is when and how it will end. Will it be sooner or later? Will it be easy to cope with or will it be devastating? The manageability of China’s enormous domestic debts will be of great importance, not just for China, but for the many economies whose exports depend on it. We cannot yet know how the debt surge will end. But we do know how it started. The trigger was the global financial crisis. Between early 2004 and late 2008, Chinese gross debt was stable at between 170 and 180 per cent of gross domestic product. This was higher

than in other emerging countries, but not much higher. This seemed manageable. Then, in 2008, came the meltdown of the western financial system and subsequent deep recession in high-income countries. China responded with a huge investment programme amounting to some 12.5 per cent of GDP, probably the biggest ever peacetime stimulus. The challenge confronting Beijing was to offset the impact on demand of a fall in China’s net exports of 6 per cent of GDP between 2007 and 2011. In 2007, net exports had been close to 9 per cent of GDP. Since this was neither economically nor politically sustainable, the fall was permanent. Such a decline in net external demand needed a permanent offset. Given the structure of the economy and the levers in the hands of the authorities, only investment could be increased quickly enough and on a large enough scale. As a result the share of gross investment in GDP soared from an already extremely high 41 per cent of GDP in 2007 to 48 per

cent in 2010. This huge investment boom maintained measured growth at close to 10 per cent after the crisis. It also led to a huge and sustained surge in debt, predominantly to non-financial corporations, including off-balance sheet local government financing vehicles. But ominously, far from raising China’s underlying rate of growth, a marked slowdown followed. In the longer term, China’s raised investment rate has delivered the disturbing combination of more debt and slower growth. According to the Institute for International Finance, between the fourth quarter of 2008 and the first quarter of 2018 China’s gross debt exploded from 171 to 299 per cent of GDP. A simple measure of the efficiency of the investment is the incremental capital output ratio, which measures the ratio of the investment rate to the growth rate. Until the crisis, the ICOR had not exceeded four for any sustained period. Ever since 2011, it has been close to six. It was as though the high-income countries had passed the credit baton to

China. For Beijing, this response to the financial crisis had an additional drawback — distracting it away from a necessary rebalancing of its economy. In 2007, then premier Wen Jiabao declared that China’s growth was “unstable, unbalanced, uncoordinated and unsustainable”. In that year, net exports were 9 per cent of GDP, up from 2 per cent in 2000, investment was 41 per cent of GDP, up from 34 per cent in 2000, public and private consumption were a mere 50 per cent of GDP, down from 63 per cent in 2000, and gross debt was 174 per cent of GDP, up from 146 per cent in late 2000. By 2017, net exports were back down to 2 per cent of GDP: that did represent a rebalancing. But investment was still higher than in 2007, at 44 per cent of GDP, private and public consumption was still only 54 per cent of GDP and debt had soared to three times GDP. In sum, the rebalancing of China’s external accounts came at the cost of still greater domestic imbalances. So what happens now? There are four conceivable

possibilities: a crisis, followed by lower growth; a crisis, not followed by lower growth; no crisis, but reduced growth; and no crisis and no reduction in growth. In a paper published in 2010, Moritz Schularick of the Free University Berlin and Alan Taylor of the University of California Davis argued that “credit growth is a powerful predictor of financial crises”. This finding was from a database of 14 high-income countries. Yet a paper by Sally Chen and Joong Shik Kang of the IMF, published this year, argues that the evidence also applies to China, saying: “China’s credit boom is one of the largest and longest in history. Historical precedents of ‘safe’ credit booms of such magnitude and speed are few and far from comforting.” This analysis suggests that a crisis of some kind is likely. The salient characteristics of a system liable to a crisis are high leverage, maturity mismatches, credit risk and opacity. China’s financial system has all these features. Among other things, China has a shadow banking sector, though a study by the Bank for Inter-

national Settlements argues that “securitisation and market-based instruments still play only a limited role”. It is, in all, less complex and more directly connected to the banks than the US system was. So why might the outcome in China be different than elsewhere? One answer is that the high indebtedness is just a result of China’s extraordinarily high savings rates. But its national savings rates were already very high before the crisis, when the levels of indebtedness were not exploding. Another proposition is that the rapid credit growth simply reflects normal expansion in the provision of financial services. But the IMF paper notes: “The leverage ratio in China is significantly higher than in countries with similar levels of development.” It could also be argued that China is a creditor nation with a controlled capital account. That makes it relatively invulnerable to a run by foreign lenders of the kind familiar to observers of financial crises in emerging economies. Yet financial Continues on page 35

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892, 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.