BusinessDay 31 Jul 2019 by BusinessDay

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news you can trust I **WEDNESDAY 31 july 2019 I vol. 19, no 361 I N300

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LOLADE AKINMURELE

nvestment-starved Nigeria may be shooting itself in the foot with a double taxation policy on holding companies that is deterring investment. This year alone, a global car manufacturer and technol ogy giant have shelved plans to make Nigeria the headquarters of a holding company (HoldCo) to manage their interests across Africa, according to sources familiar with the matter. The latest casualty of the crushing double taxation which brings effective tax rate to 60 percent is a multinational oil and gas company that wanted to create a holding company for its Africa operations. The company snubbed the chance to set up a holding company in Nigeria after tax experts broke down the implications of the excess dividend tax. “Discussions broke down immediately after the excess dividend tax came up,” a source familiar with the matter told BusinessDay. He declined to name the company. The discussions fell through last week, with the company

opting to go to another African country with a more favourable tax regime, the source said. Section 19 of the Nigerian

Companies Income Tax Act (CITA) imposes what is generally known as excess dividend tax, which provides that where a dividend is paid out of profit on which no tax is payable due to no total (that is, taxable) profits,

or taxable profits which are less than the amount of dividend paid, the company paying the dividend shall be charged to tax at 30 percent as if the dividend

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Multinationals snub Nigeria over crushing excess dividend tax As effective tax rate tops 60%

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Edo Assembly crisis: Senate gives Obaseki one week to issue another proclamation …confirms 43 ministerial nominees …Lawan announces chairmen of 69 committees OWEDE AGBAJILEKE, Abuja

he Senate on Tuesday explained why it issued a one-week ultimatum to the Edo State governor, Godwin Obaseki, to properly issue another proclamation to inaugurate the Seventh Edo State House of Assembly. Reacting to a Point of Order raised by Orker Jev (PDP, Benue) who questioned the report of the Senate ad-hoc committee set up to investigate the crisis in the Edo State House of Assembly, Senate President Ahmad Lawan said the ultimatum issued to Governor Obaseki was meant to save the nation’s

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Inside IMN pledged allegiance with foreign countries to destabilise Nigeria - IGP P. 46 L-R: Funmi Sanni, marketing director, Dangote Cement; Mujahid Shiabu, star prize winner; Olusegun Ogunbiyi, vice chairman, Iru Local Government Area of Lagos State; Halima Aliko Dangote, group executive director, Dangote Industries Limited; Aremo Adesegun Oniru (representative of Oniru of Iruland), and Arvind Pathak, group chief operating officer, Dangote Cement, at the Dangote Cement ‘Bag of Goodies’ consumer promotion star winner presentation in Lagos. Pic by Olawale Amoo

Wednesday 31 July 2019

BUSINESS DAY

news Cash-strapped Nigeria spends 10 times more than UK on past leaders

L-R: Victor Okoronkwo, group managing director, Aiteo Eastern E&P Co. Ltd., and Andrew Onyearu, group executive director, observing proceedings at the Aiteo Cup Final between Kano Pillars and Niger Tornadoes at the Ahmadu Bello Stadium.The match ended in a draw with Kano Pillars winning it on penalties 5:4.

…despite UK government earning 37 times more MICHAEL ANI

Nigeria unprepared for ‘milk ban’, but opportunities abound for investment, experts say ...buffer period, right cattle breed required to build capacity ...We are ready to meet demand – Dairy ranchers CALEB OJEWALE, GBEMI FAMINU, SEGUN ADAMS

hat Niger ia is mulling a restriction on provision of foreign exchange for the importation of milk appears to be less important, in the views of industry experts and producers. Rather, the lack of tact and provision of an efficient process before curbing importation is what has puzzled many, BusinessDay findings show. Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), had ignited a flurry of public reactions when he said recently, “The

era of forex restriction on milk importation is coming sooner than expected.” With the CBN appearing to be on course in its plan to restrict forex access to milk importers on short notice (the actual takeoff is unclear), it has become essential for stakeholders in the local dairy industry and milk manufacturers to integrate various approaches that will boost the productivity of cows for local milk production. Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI), in addressing the decision by the CBN, said the policy would likely do

more harm than good, both to investors and the citizens. “It would trigger avoidable disruptions and dislocations in the investment environment and further undermine investor confidence. It would create huge supply gaps in the market with severe harmful consequences,” Yusuf said. However, the Commercial Dairy Ranchers Association of Nigeria (CODARAN) has a different view. The body claims there is adequate production of milk by cows in Nigeria, but the problem has been collection. “There is a lot of available (milk) output but nobody

is investing in collecting it. Collection is the problem,” said Abimbola Daniyan, general secretary of CODARAN, in an interview with BusinessDay. He explained there is a lack of collection system which requires special tanks for collection, preservation and transport because an unbroken cold chain is required to collect milk so that it doesn’t go bad. Soji Apampa, CEO, the Convention on Business Integrity, an organisation that has been involved in the dairy value chain, emphasised milk production in Nigeria is constrained by various factors which include lack of machinery for milk collection and milk

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Nigeria’s infrastructure market looks a lot like its broken roads

…without reforms, Fashola’s N10trn bond proposal won’t solve it – analysts ISAAC ANYAOGU

igeria’s total infrastructural stock comprising road, rail, power, airports, water, telecoms, and seaports has been estimated at 35 percent of gross domestic product (GDP) which is a far cry from emerging economies’ average of 70 percent, underscoring a deep need for private capital. But private capital has been few and far between as guarantees for local currency debt instruments to finance big infrastructure projects in Nigeria have been lacking before the entry of InfraCredit, funded by the Nigerian Sovereign Investment Authority.

Yet, even InfraCredit’s total capital of $110 million is not enough to bridge Nigeria’s infrastructural gap. According to Nigeria’s National Integrated Infrastructure Masterplan (NIIM), Africa’s biggest economy requires $100 billion annually for the next 30 years to fix the country’s infrastructure deficit. This looks like an uphill task considering the paltry allocations for capital expenditure in Nigeria’s budgets. Between 2016 and 2019, the Federal Government budgeted N8.372 trillion for capital expenditure with the highest budgetary allocation being N2.178 in 2018 representing 28 percent of estimated spend for that year. www.businessday.ng

South Africa, in contrast, spent N7.2 trillion (R283 billion) as capital expenditure in 2016 and N6.8 trillion (R271 billion) in 2017, according to figures from the country’s Department of Statistics. The Nigerian Federal Government is yet to meet the target it set for itself in the Economic Recovery and Growth Plan (ERGP) which sought to invest US$30bn in infrastructure between 2017 and 2020, and ultimately attracting infrastructure investment of US$3trn by 2030. “To succeed in this target, fixed capital formation (government spending on infrastructure) must outperform analysts’ forecasts and the government needs to ramp

up its capacity,” said analysts at Deloitte in a report. Against this backdrop, Babatunde Fashola, former minister of Power, Works and Housing, during his screening by the Senate on Monday, called for the introduction of a new N10 trillion bond to tackle Nigeria’s crumbling infrastructure. “There is some opportunity to expand instrument like the Sukuk. We should consider something like a N10 trillion infrastructural bond issued in tranches to fund infrastructure and people can invest to address infrastructural challenges,” Fashola said.

•Continues online at www.businessday.ng

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igeria has one of the poorest people in the world, yet its cost of maintaining past leaders has been named one of the highest in the world. With over 90 million Nigerians living in extreme poverty and about six citizens falling into the poverty trap every minute, the country spends as much as N2.3 billion (£5.75m) annually in sustaining past presidents, according to data compiled by BudgIT, a non-governmental body that analyses budgetary allocations for citizens’ engagement. This figure is about 10 times as much as the United Kingdom spends on past prime ministers, despite the latter raking in annual revenue that is 37 times higher than Nigeria’s. The Economist, a London-based financial and intelligence newspaper, in a recent online article ‘The rising cost of former prime ministers’, put the annual entitlement of former leaders in the UK at £570,000($693,960) as at

2018. This amount, the article explained, covers for five past leaders from 1991 after the Public Duty Cost Allowance (PDCA) was introduced, including Theresa May, who recently resigned from office following the Brexit chaos. According to the Economist, there has been a great concern on the increasing cost of servicing past leaders in the UK. The amount, it noted, jumped by 280 percent, from £150,000 which it paid for over 10 years to £570,000 (N251m) last year. While the figure appears to be huge, it is only a meagre sum when placed side by side with what Africa’s largest economy spends annually to service its past leaders. The amount the UK spends to maintain its past prime ministers is over £5.18 million (N2.2bn) lower than the amount Africa’s largest economy spends on past leaders, despite being the poverty capital of the world.

•Continues online at www.businessday.ng

Ghana’s $24m investment in scanners, automation technology holds lessons for Nigerian ports AMAKA ANAGOR-EWUZIE

s Nigeria continues to carry out manual inspection of containers and other imports at the nation’s seaports, Meridian Ports Services (MPS), operator of the newly built Terminal 3 of Ghana’s Tema Port, has invested over $24 million in acquisition of Customs inspection infrastructure and superstructure, popularly known as scanning machines. With this development, Ghana’s port has overtaken Nigeria in running of a digitalised port system as Nigeria Customs currently carries out 100 percent physical and manual examination of containers, six years after the expiration of the Destination Inspection (DI) contract formerly handled by private companies that provided scanning services at the ports. By implication, over 500,000 twenty-foot equivalent units (TEUs) of containers and about 71,535,636 million metric tonnes of general cargo, dry and bulk cargoes that come to Nigerian ports annually are manu@Businessdayng

ally inspected by the officers of the Nigeria Customs. Meanwhile, the newly launched MPS Terminal 3 at Tema Port has the latest scanning technology installed in the port terminal, which is expected to facilitate the smooth movement of trade in and out of the port. Dorothy Arhin, head of Ghanaian Customs Unit, said building of import scanner has transformed and added value to the role of Customs in cargo handling at Tema Port. She described the new technology as a game changer to the Customs processes and cargo clearing procedure, which she said would bring better transparency. Recall that in line with the port reform agenda of 2006, the Federal Government entered into contract with Scanning Service Providers (SSPs) including Cotecna, SGS and Global Scan, responsible for approving Form M, issuing Risk Assessment Report (RAR) and scanning goods imported into Nigeria.

•Continues online at www.businessday.ng

Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

NEWS

Renmoney CEO resigns after one year in office FRANK ELEANYA

enmoney on Tuesday announced the resignation of its CEO, Oluwatobi Boshoro, barely a year after she was appointed. According to the statement BusinessDay received from the company, Boshoro resigned to attend to “personal matters”. Boshoro was previously the head of digital banking at Stanbic IBTC and was group head of issuer management at Interswitch. She was widely credited as the brain behind the verve card product before it was spurned off to become a separate company in line with CBN’s directive that switches must not have card schemes. During her period in Renmoney, according to sources close to the company, she

completely transformed the alternative lender pushing it to become the number one non-banking lender in Nigeria, growing the loan book by over 200 percent. Under her, Renmoney made a profit for the first time ever during the same period, the lender moved to a bigger office, widely considered best in class and designed by an ex-Googler. Sources also say it was due to Renmoney’s upsurge in the market, coupled with the performance of the other alternative lenders like Page Financials, Zedvance, Carbon, Branch, and Palm Credit that instigated the Central Bank of Nigeria to request banks to start lending to the much abandoned individual and SME segment of the market.

China gave N5.5bn military aid to Nigeria in two years - Defence attaché Innocent Odoh, Abuja

hinese Defence Attaché to Nigeria, Sr. Col Liu Yongxuan, says his country has signed a N5.5 billion agreement on military aid to Nigeria in the last two years, stressing that China is ready to work with Nigerian new government to improve the strategic partnership to a higher level. Yongxuan said this on Monday while making remarks at an event organised to celebrate the 92nd anniversary of the founding of Chinese Armed Forces, the People’s Liberation Army (PLA). He said for more than 90 years, the PLA had been a strong pillar in safeguarding China’s national sovereignty, security and development interests, an upholder of world peace and human progress. He said China had always been a reliable and sincere partner for Nigeria, pointing out that in recent years, the

military exchange and pragmatic cooperation between China and Nigeria has been very fruitful. “Since I come here as Defence Attaché in 2017, we have signed two agreements of military aid to Nigeria, totalling 5.5 billion Naira. We are sending more and more Nigerian officers to China for military and security training,” he said. He noted that with the steady progress of Belt and road Initiative, and under the principle of Mutual Assistance, China would reaffirm its support to Nigeria in capacity building in areas of national defence, counter terrorism and counterinsurgency. Yongxuan added that the military and security cooperation between the two countries would be further strengthened. “I strongly believe that China and Nigeria will build a stronger and closer community with a shared future and become a model of new type of international relations,” he said.

NPF Microfinance Bank opts for public offer to raise capital HOPE MOSES-ASHIKE

PF Microfinance Bank plc has announced plans to do a public offer with a viewtoraisingmorefundsfromthe Nigerian Stock Exchange (NSE) to shore up its working capital. Akinwunmi Lawal, managing director/CEO, made the announcement during the bank’s 25th annual general meeting for thefinancialyearendedDecember 31, 2018, held in Akwa Ibom State. Lawal said the bank had completedplanstoundergothemuchawaited sale of her shares this year with hopes that the offer would be hugely subscribed since the bank had maintained an unbroken trend of dividend payment for over 20 years. He said the bank would proceed to sell its shares to both existing and prospective shareholders after securing approval of the regulatoryauthorities,addingthat the proceeds would be deployed to beef up its working capital, information technology, branch improvement, among others.

However, he said the bank recommended paying a dividend of N114.332 million which translates to five kobo per share, explaining that N81.416 million would be transferred to various reserves as there was a need to conserve money for the future developmental projects. Also, the bank’s total asset increased to N17. 597 billion from N15.952 billion recorded in the previous year, representing 10.31 percent increase. The loans and advances improved by 17.59 percent to N10.593 billion in 2018 from N9.008 billion in 2017. According to Lawal, “The deposit liability moved from N9.126 billion to N10.465 billion showing a growth of 14.67 percent, which indicated the continued growth of our customer’s trust and confidence in our mission. Our borrowing from various intervention funds increased by 34.08 percent to N2.078 billion from N1.550 billion and this is accountable for the increase in interest expenses by 34.7 percent.” www.businessday.ng

Ogun mulls takeover N26bn Lagos-Ota-Abeokuta road Tony Ailemen, Abuja

... to be completed under PPP arrangements

to Abeokuta, Lagos Ota Abeokuta road will cost N26 billion. Ogun, named Gateway State for its strategic positioning to other contiguous states of Lagos, Oyo, Osun, is positioned to serve one of Africa’s biggest economies, Lagos. “You cannot go from Lagos to anywhere else without going through Ogun State. We the Gateway State stands to benefit from providing all the services that Lagos may need, that will also put us in a position where we should be the economic capital of this country. “The state is the largest industrial hubs in Nigeria, with over 500 companies; and our contagiousness to Lagos, the access, the connection, the connectivity between Ogun and Lagos,” he said. The state is focused on qualitative governance, while providing an enabling environment for a public, private sector partnership, which we believe is funda-

gun State Governor Dapo Abiodun on Tuesday said the state had plans for massive infrastructure development with some private sector players. This is as the governor, who led a delegation of Ogun State elders to meet with President Muhammadu Buhari, said they had requested the Federal Government to hand over federal roads in the state currently under construction to it for completion The governor said, “Federal roads are under funded,” especially the Lagos - Ota - Abeokuta road, estimated to require about N26 billion to complete, the state stand to benefit from providing all the services that Lagos would need. Our vision is to create an enabling environment for public private partnership, the governor said, saying people must be able to move within the contiguous states; Sagamu to Ikorodu, Epe

mental to economic growth of the state and individual prosperity of the citizens. “We must ensure that access, the connectivity, the ease with which people can move between Lagos, which has a primary port and Ogun which is a processing zone and Lagos which is also the market, people must be able to move with relative ease between Lagos and Ogun and between Ogun and other states. We border Republic of Benin, Oyo, Ondo and Osun states. “So for us, when we realised that we were beginning to lose that relative ease, the LagosIbadan Express way today remains the primary link between Lagos and the rest of the country. That road is under construction but you will notice that that corridor has far developed in excess of what was anticipated when that contract was awarded. “So, consequently we need to look at alternative roads. Shagamu to Ikorodu is one alternative

road that is parallel to LagosIbadan express road. Epe-Ijebu Ode is another alternative road, Lagos-Ota-Abeokuta is another alternative road. These are roads that lead to industrial corridor,” he said. While the state appreciates what the Federal Government is doing, particularly round the whole country, but we know that there is limited funds available to put in all projects, he noted. “Today, Shagamu to Ikorodu, Lagos-Ota-Abeokuta are federal roads which are grossly underfunded. The Lagos-OtaAbeokuta, which was contracted in 2001, is yet to be completed. “That is road is on its fourth agendum, this year the budget for that road is about a billion naira. That road requires another N26 billion to complete and we know we cannot burden the federal government, so, we are graciously asking them, ditto for Shagamu-Ikorodu. Those roads are extremely important to us.

L-R: Timi Olagunju, research and programme, Nigerian Institute of Chartered Arbitrators (NICArb); Linda Ochugbua, manager, digital sales, BusinessDay Media Limited; Patrick Atuanya, editor; Shola Oshodi-John, registrar/CEO, NICArb, and Theodora Kio-Lawson, law editor, BusinessDay, during NICArb visit to BusinessDay head office in Lagos, yesterday. Pic by Olawale Amoo

‘Senate’s resolution on Edo Assembly unconstitutional, flagrant disregard for Principle of Separation of Powers’ IDRIS MOMOH

... says resolution could set state ablaze

do State government has described as unconstitutional and a flagrant disregard for the Principle of Separation of Powers, the resolution of the Senate directing the Governor Godwin Obaseki to issue a fresh proclamation for the inauguration of the Edo State House of Assembly. In a statement issued on Tuesday and signed by Secretary to the State Government, Osarodion Ogie, the state government declared that “this illegality will not stand” and advised “powerful persons not be allowed to set our state ablaze merely to satisfy their thirst for power and control.” According to the statement: “The Edo State government watched with alarm today as the distinguished Senate of the Federal Republic of Nigeria in a step that was not totally unexpected, purported to pass a resolution in the following terms: - Directing the Governor of Edo State to issue a fresh proclamation for the inauguration of the Edo State House of Assembly, and Ordering

a fresh inauguration of the Edo State House of Assembly within one (1) week from the date of the said Resolution. “As earlier mentioned, this move was not unexpected in the light of the enormous political pressure,whichhadbeenbrought to bear on the Officers and Members of the distinguished Senate bythehighlyplacedandpowerful personswhoareintentonfoisting their will and choices on the good people of Edo State. “This is borne out by the recorded statements made by one Seid Oshiomhole (a memberelect and younger brother of the National chairman of the All Progressives Congress Comrade Adams Oshiomhole) wherein he boasted that both the Senate president, Senator Ahmed Lawan and the Speaker of the House of Representatives, Rt. Hon. Femi Gbajabiamila have been instructed on what to do in this matter.” The statement added: “The Government of Edo State wishes to observe that the Chairman and

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MembersofAd-HocCommitteeof theSenate,whichvisitedEdoState, were made aware of the existence of at least three (3) suits pending before various Courts wherein the factual and legal dispute regarding the Edo State House of Assembly inaugurationhavebeensubmitted to the Courts by both contending parties for resolution.” Ogie noted, “The Ad-Hoc Committee also failed to inform the Senate of the existence of a valid injunction in Suit No FHC/B/ OS/70/2019 wherein the Federal HighCourtrestrainedvariousparties from interfering in any manner with the activities of the Edo State House of Assembly, which said order had been brought to their attention in the course of their visit to Edo State.” Hemaintained:“Inpointoffact in Suit No. FHC/PH/CS/159/2019 theNationalAssembly,theClerkof NationalAssembly,thePresidentof the Senate and Speaker of House of Representatives among others were specifically ordered by the Federal High Court to maintain the Status Quo as at 25th July, 2019. @Businessdayng

“TheEdoStateGovernmentis furtherawarethatinsuitNo.FHC/ ABJ/CS/815/2019, wherein the Clerk and the National Assembly are defendants before the Federal High Court in Abuja, the National Assembly and the Clerk have not only been duly served with the processes but have entered appearance in the matter. “It is unfortunate that the Distinguished Senate would act in flagrant breach of these various CourtOrdersandpurporttocome to factual and legal conclusions concerning a matter in which the parties are already before the Courts and therefore subjudice. “We are also concerned that the Members of the Distinguished Senate appear to have very scant regard for the principle of separation of powers as enshrined in our Constitution which is manifested by their taking over the functions of the Judiciary in dispute resolution and giving directives to a Governor of a State who is certainly not subject to the supervision of the National Assembly.

Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Nigeria needs consistent investment of N3trn to deal with infrastructural deficit … investors to put in at least N100bn per annum for 30 years AMAKA ANAGOR-EWUZIE

or Nigeria to surmount the challenges inherent in its transportation sector, both public and private sector investors need to put in close to N3 trillion in bridging the infrastructural deficit, Hassan Bello, executive secretary, Nigerian Shippers Council (NSC), says. According to Bello, Nigeria needs to make consistent investment of not less than N100 billion per annum till the next 30 year in order to make up for the infrastructural deficit in the country. Speaking at the Kings Leadership Lecture and Awards held in Lagos on Tuesday with the theme, “Leadership in a Next Level Democracy: Striking a Positive Balance in Transport Sector,” Bello described the challenges and infrastructural deficit in the transport sector as not disadvantage, but opportunities that investors could ride on to create jobs and wealth in the nation’s economy. HesaidtherecentlysignedAfrican ContinentalFreeTradeArea(AfCFTA) agreement could be the spur that Nigerian transport sector vis-à-vis the port industry needed to grow, going by the near N2 trillion economy, 1.2 billion population as well as 54 countries, which the agreement presents to member countries like Nigeria. “Nigeria is already a hub but leadershipisextremelyimportanttohaving fair competition. We have already started winning the war because we are now getting cargoes from our competitors. Of course, we have the problem of interconnectivity, which is being solved now; at least, the chaos in Apapa has reduced drastically,” he said. Onherpart,VickyHaastrup,chairman, Seaport Terminal Operators

Association of Nigeria (STOAN), who blamed bad leadership for the ills plaguing the transport sector, lamented that despite huge revenue generated by the industry, it was not getting the needed attention from the government. “Due to congestion on the port access road occasioned by bad roads, it now takes longer time for vessels to discharge. It is unfortunate that the maritime industry is what is it is today. Federal Government is talking about generating revenue without developing where the revenue comes. The problem of this country is poor leadership. If we have the right leaders with the right policies applied in every sector, the economy would be better for it,” she said. She further said: “We are talking about optimising digitalisation and connectivity in transport sector, which we don’t have. Look at what Apapa andTin-Can Islandhave become over the years. It is a shame and national disgracetothefederalgovernmentthat accesstotheporthasbeenabandoned for so long.” Meanwhile, Bello said the NSC was contributing to bridging the gap created by the infrastructural deficit as containers were now being transported to Kaduna Inland Dry Port using the railway. “Webelievethatbythetimetheinfrastructure problems around Apapa are mitigated, we will see a resemblance of order but we are already having short-, medium- and long-term solutions,” he stated. “Though, there are challenges but we are sure that they will be dealt with. And by August, the Council will sign the $500 million Ibadan Dry Port facility. We are seeing efficiency in our ports but we need to reform our trucking and cargo clearing system,” he suggested.

CBN disagrees with IMF on exchange rate policy as liquidity costs persist Endurance Okafor

…N9.97trn OMO securities issued so far in 2019

hile the Central Bank of Nigeria (CBN) is of the opinion that the temporary exchange rate regime in the country can solve current problems as well as the long term need of inflation, the International Monetary Policy Committee (IMF) thinks otherwise. “Countries with multiple exchange rate have lower growth and higher inflation. A more flexible exchange rate in a reform scenario in Nigeria could boost Gross Domestic Product in the medium term,” IMF said. Recall that in June 2019, the central bank reiterated that there has not been any change in Nigeria’s exchange rate structure. Making the clarification at the Special Policy Dialogue Colloquium, organised by the Financial Derivatives Company (FDC) on Monday, the Senior Special Assistant to CBN Governor, Emmanuel Ukeje, said

the development has severally been clarified, except that people have chosen to go with misconceptions. He said the nation’s apex bank is not practicing multiple exchange rates, but multiple windows due to the country’s peculiar situation. “We (Nigeria) can move from 11percent to 9percent and then to 6percent (Inflation). The temporary exchange rate regime that seeks to achieve the long run term need of inflation can solve current problems,” Ukeje explained. According to Godwin Emefiele, the CBN governor, the Naira was exchanged at N525 to a dollar before it introduced the I&E exchange window in 2017, adding that the initiative coupled with other interventions by the CBN helped to forestall further currency depreciation as projected. The industry regulator said

when it started its various interventions; the exchange rate began to drop. “It got to N360, which at that time, we thought it was close to the real effective exchange rate and we said we must begin to buy the reserves,” Emefiele said. Although the stable exchange rate of the naira against the US Dollar comes with a huge monetary cost. The CBN’s 2018 Annual Activity Report revealed that the apex bank increased its liability by 250 percent from N16 trillion to over N40 trillion within three years, about 34 percent of this amount, almost N14 trillion, represented Open Market Operation (OMO) securities which were issued to manage liquidity. This implies that in order to maintain the desirable, and high value of the naira over the last three years, the CBN increased its liability to over N40 trillion,

mainly through the issuance of OMO securities. “This does not only represents threat to the same currency the bank seeks to protect, but also exposes the wider economy to several risks,” Lanrewaju Rufai, a Lagos-based Finance and Strategy Analyst said. BusinessDay analysis of the CBN’s OMO bill data revealed that for the seven month to July 2019, the apex bank has issued OMO bill to the tune of N9.97 trillion, starting from January 3rd 2019 to 4th of July. Economists have referred to Nigeria’s exchange rate structure to be a managed float system. In a fixed exchange-rate system, the value of one currency is tied to another, while a managed float exchange rate regime, the central bank is allowed to influence a country’s exchange rate direction during price fluctuation by buying or selling currencies.

Lagos Assembly to probe abandoned N7bn cardio renal hospital equipment Iniobong Iwok

agos State lawmakers have moved to probe the abandoned N7 billion Cardiac Renal facility centre in Gbagada General Hospital. The lawmakers initiated the move after the acting chairman of the House Committee on Health, Hakeem Sokunle, read a report at plenary on Tuesday. Sokunle, in his report, stated that members of his committee had embarked on a tour to ascertain health facilities across the state. According to Sokunle, “We observed that there is shortage of manpower, non-functioning ambulances, insecurity, unequipped laboratories and more importantly abandonment of multi-billion naira cardio renal facility. “Most of the equipment in the hospital are not working, I got report that the cardio renal machines only worked for two weeks before the facility was locked up. Also, most of the sensitive equipment is obsolete.” While contributing, Tunde Buraimoh (Kosofe 2), expressed his displeasure over the issue, saying, “It is disheartening that the investment of the state in the hospital is being abandoned. If these facilities are functioning, we would have saved many lives and reduce the constant medical tours to India.” He pleaded that the Committee be given authority to delve more into the matter from the point of supply of equipment and how they stopped functioning. On his part, the Majority Leader of the House, Sanai Agunbiade (Ikorodu 1), said if equipment of

such magnitude was cited in the State of Excellence, it was for a purpose and that it must not be wasted. He therefore moved that the suppliers of the equipment be invited for questioning and that the investigation must attract public participation. Sokunle therefore moved that the House give the committee the power to invite the Ministry of Health to appear before the Committee to give clarification on issues bothering on the N7 billion cardio-renal equipment in Gbagada General Hospital. Speaker of the House, Mudashiru Obasa, directed the clerk of the House, Azeez Sanni, to write a letter to the Ministry of Health and invite necessary stakeholders on the issue. However, it was reported that Lagos State Cardiac and Renal Centre, Gbagada, a multi-billion naira health facility, is presumed to be one of the signature legacies of the administration of former governor, Babatunde Fashola, neglected by his successor, Akinwunmi Ambode. The abandonment of the facility has come with a huge cost, especially with the rising statistics of Lagosians, and indeed Nigerians, who are battling with various cardiac and renal diseases. The concessionaire - Renescor Health LLP, pulled out of the management deal. The facility, according to the state’s Ministry of Health, was built at a cost of N5.6 billion. But since its contract was awarded in 2008, it had been mired in controversies over allegations of overinflated quotations, poor civil work, among others. www.businessday.ng

L-R: Bashir Hadejia, Zamfara State government official; Ifie Sekibo, managing director, Heritage Bank; Bello Mohammad, Matawalle Maradun, governor, Zamfara State; Benedict Oramah, president/chairman, board of directors, Afreximbank; Nasiru Mu’azu Magarya, speaker, Zamfara State House of Assembly; Sani Abdullahi Shinkafi, and Chris Oshiafi, chairman, PAC Capital Limited, at the $1 Billion Investment for Zamfara State meeting with Afreximbank.

How FG agencies work at cross-purposes in agric promotion Temitayo Ayetoto

hrough internal conflict and encroachment of roles, some Federal Government agencies have been working at cross-purposes in an effort aimed at growing agricultural activities in the country. With the Central Bank of Nigeria (CBN) drifting away from monetary functions to acting more as a ministry of agriculture, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has assumed the duty of distributing seedlings to farmers without certification by the National Agricultural Seeds Council (NASC), another government agency. Distribution of improved seedlings to help farmers raise productivity has been about awarding of contracts to suppliers

and less about government vetting the quality of products given to farmers, BusinessDay found. The lack of synergy and clash of roles in government administration was one of the factors identified to be capable of undermining agricultural growth in the country, at the ongoing three-day Strategy Retreat for NASC Members of Governing Board and Top Management Staff in Ibadan. Describing seedlings as a foundational part of agricultural production, Phillip Ojo, directorgeneral of NASC, said the Council had written erring agencies on the counter-productive effect of skipping vetting. But no response has come from them. He said the purpose of certification was to ensure good genetics and good varieties were made available to farmers for increased productivity and enhancement

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of food security. LastFebruary,NIRSALflagged off input distribution including seedlings to farmers in Sokoto, with plans to spread to Anambra, Delta, Ekiti, Enugu, Imo, Abia, Ondo and Zamfara states. The risk sharing system said it was spearheading the distribution as a participating financial institution under the Anchor Borrowers Programme handled by the CBN. Again in May, it began distribution of seedlings, herbicides, Nitrogen Phosphorous and Potassium and urea fertilisers for the cultivation of maize, rice and cassava in Ogun State. The NASC works to ensure adulterated seeds are curbed in the ecosystem through use of technology enhancing mechanism such as the National Seed Tracker for real time tracking of @Businessdayng

all seed activities and the NASCCODEX for authentication and anti-faking of quality. It’s target is that at least 40 percent of farmers in Nigeria use improved open pollinated and hybrid seeds across priority value chains such as Roots and Tubers (Cassava and Yam), Grains (Maize, Rice, Soybean Sorghum) and vegetable. Adesola Ajayi, a professor of Seed Science and NASC board member said the seed business is a technical one which involves adequate competence and activities ranging from variety development, seed multiplication and distribution. “Seed is not like any other commodity. There is a specification for transporting, failure of which you will experience drastic loss and reduction in quality,” he explained.

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Could the Nigerian state become more entrepreneurial and catalyse innovation?

Uyiosa Omoregie

first-generation Nigerian bank has a white horse as its logo. The problem was that the horse was tilting backwards and stationary. Corporate branding efforts sought to change this. The lethargic horse was transformed to an energetic one, reaching forward, on the move: the logo became more entrepreneurial. This new brand identity won an international award for ‘best brand development to reflect changed mission/vision/positioning’. This contrast between the dull/ lethargic/backward-looking and the vibrant/energetic/forwardinglooking symbols is the common characterization when contrasting the state sector (government) and the private sector (business). Most analysts believe that the best government is that government that creates the enabling environment then steps aside for the private sector to do the innovation and transact business. Researchers at the Nigerian Institute of Pharmaceutical Research and Development (NIPRID) deserved

the Nobel Prize for Medicine. A drug for the treatment of sickle cell disease made from traditional herbal ingredients was discovered at the institute decades ago. However, a lack of entrepreneurial spirit stalled the production, commercialization and marketing of Niprisan, the antisickle drug. It is estimated that about 12 million people worldwide are affected by sickle cell anaemia. The potential market for the drug is worth more $1 billion, with virtually no competition, as the only other drug available (Hydroxyurea) had serious side effects. The patent for Niprisan was filed in the United States of America in 1998 and expired in 2017. Entrepreneurial spirit has actually entered some state-owned enterprises in the past and present. During its time, the Midwest Line (later Bendel Line) was probably the best-run transportation company in Nigeria. Bendel Line was run professionally for decades, had well-maintained Peugeot vehicles and their stations were designed like train stations in Europe. The National Engineering and Technical Company Limited (NETCO) is a state-owned company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC). NETCO declared a profit of N6.75 billion for the year ended 31st December 2018.The simple characterization of the state as sluggish/ backward and the private sector as vibrant/innovative is not always true. The Nigerian state can become more

entrepreneurial in the 21st century. The world celebrated 20th July 2019, marking fifty years since humans landed on the moon via the Apollo 11 lunar module, on 20th July 1969. The Apollo program was birthed out of an ideological battle between the U.S. and U.S.S.R. for supremacy during the cold war. The mission to the moon produced many novel scientific breakthrough and new directions for science and technology, spill overs that created a rich scientific legacy. The lunar landing project was almost a decade in the making, since President Kennedy proposed that the U.S. government, the state, should “commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.” The term ‘moonshots’ now describes lofty targets, missions, goals. Mariana Mazzucato is the author of the book ‘The Entrepreneurial State’. Mazzucato believes that mission-oriented thinking (moonshots) is vital for the government of any country. Missions from the state can stimulate innovation, entrepreneurs, and make available opportunities for private sector profit making. The state can take risks on very large missions and projects that the private sector may hesitate about. Far from being a slow bureaucratic machine that should make way for the private sector, the state can become risk-takerin-chief. Only the state can provide

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Far from being a slow bureaucratic machine that should make way for the private sector, the state can become risktaker-in-chief. Only the state can provide the long, patient, financing needed for certain kinds of projects or innovations

the long, patient, financing needed for certain kinds of projects or innovations. Mazzucato showed that the beloved iPhone, commonly thought as being the work only of private sector entrepreneurs, actually has that state behind a lot of its success. The U.S armed forces invented the internet and pioneered GPS Positioning (without which the iPhone would be ordinary). Government funding in the U.S. enabled universities to create touchscreen technology and the HTML computer language. Funding from the U.S. government was made available to create Silicon Valley during its formative years. Even Google is not exempt. At the centre of Google’s success is its search engine, made of an algorithm that was developed through a government grant. It is instructive that the U.S. known as the home of entrepreneurs, had massive government investment that enabled vital innovation. The U.S. government is an entrepreneurial state. Traditionally, the role of the state (as taught in economics textbooks) is to fix market failures such as monopolies, negative externalities and provide public goods that the private sector cannot provide at a profit. But, in the 21st century, the state can be more that a ‘market fixer’ the state must also be a ‘market shaper’. Uyiosa Omoregie is certified management consultant and fellow of the Institute of Management Consultants He can be contacted at uyiosaomoregie@yahoo. co.uk

Why the MultiChoice talent factory matters

n recent times, there has been an awakening about the importance of cultural goods in the development of Africa’s economy. In Nigeria, the former Minister of Information, Alhaji Lai Mohammed recently identified the creative industry as the nation’s next oil wealth. If available statistics are to be relied upon, then he is quite right. For in 2012, the entertainment and media industry alone is believed to have added around $2.2 trillion to the world economy, while creative goods and services the world over generated the sum of $624 billion in revenues. But despite the pool of talent in Africa, its profit from these revenues are relatively small compared to other continents. Africa’s contribution to the world export of cultural goods as at 2010 is said to be sadly marginal at 1% compared to the rest of the world. Once again, the continent’s lack of prominence on the global stage of creative goods is not for want of talent. Lack of intellectual property knowledge, obsolete policies, limited supply capacity, non-existent infrastructure and low investment have been the bane of the African creative industry. While the United States has a total of 40,000 theatres for the consumption of their creative goods, and India and China boast of 20,000 and 13,000 theatres respectively, Africa has barely 1000 cinemas. Experts have equated this to 1 cinema per one million Africans. These deficits have forced many creatives in Africa to seek greener pastures elsewhere, leaving the continent in more challenges of brain drain. To stem the tide of Africa’s poor performance in the global creative industry, experts believe that there needs to be specialised education and training that includes entrepreneurial and business service skills, support for artistic development, modernising produc-

tion, strengthening distribution networks and promoting consumption and branding. It is for some of these reasons, if not all, that the MultiChoice Talent Factory Academy (MTF) was established. The MTFis a multi-tiered training programme (Academies, Masterclasses & Portal) designed by MultiChoice Africa to focus on positively impacting the technical and professional value chain in the film and television industry across the continent. MTF is a shared-value initiative that provides a platform for the creative industries to develop their talent and engage with one another through their shared passions. The Academies offer a 12-month educational programme aimed at furnishing deserving, young, talented people who want to innovate in film and television productionthrough accredited skills development in regional MTF Academies based in Kenya, Nigeria and Zambia.The academycurriculum provides an end-to-end solution for the entire industry covering all aspects of the value chain of filmmaking such as cinematography, editing, audio production and storytelling, whilst giving students the chance to produce content that will be aired on M-Net channels across MultiChoice platforms. During the unveiling of the West Africa Academy, Director, Femi Odugbemi had this to say about the MTF, “Professional training is key to success in any occupation. We need interventions like the MTF so that emerging filmmakers are better equipped in the creative processes that have scholarship and technology at its foundation.” He adds: “We must consciously build capacity so that our next-generation filmmakers and producers can also create wealth and create employment by being entrepreneurs as well.”

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The Masterclasses are industry ‘best in class’ workshops aimed at developing technical skills of established creatives in cinematography, audio and storytelling to improve the quality of local productions and are conducted by leading African and international industry experts including producers, scriptwriters, directors, audio experts, etc. To date major players in the television industry -which comprisesaudio technicians and independent production companies and Nollywood have taken part in these masterclasses. This initiative is aimed at providing useful information to industry participants about the latest practices in the industry in fast changing technological space. While the Nigerian film industry may have been forged from the stones of experimentation, reaching the peak of our creative potential will certainly require more than trials and errors as improvements in the entertainment industry have shown. It will require thinking in new ways and adopting new strategies and techniques of the new age. Masterclasses acknowledge the roles of passion and experimenting, they teachproven methods and bring participants up to speed about global changes and opportunities in the industry, as it is only through constant vigilance that filmmakers can compete with their counterparts in Hollywood, Bollywood and the rest of the globe. For many years, Nollywood has been sustained on passion. But this has not translated into the needed prosperity that the industry so desperately desires. Those who built the industry did it as a labour of love, but in a knowledge economy, cultural elements should be able to translate to more jobs and better standard of living for the general populace. For this passion to metamorphose into prosperity, it will require knowledge of best practices, to ensure that the

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Femi Odugbemi huge efforts of this generation of film makers shine in all corners of the world. It will require skills that will ensure that Nigerians can make films of international quality, fit for screening on global platforms without much reconfiguration due to poor production quality. It is for things like these that the MTF was created. The masterclasses alsotackle technical issues such as sound recording that normally takes the shine off intricately written scripts. This is a vital part of film production that has turned many production efforts into ashes in the mouth. Poor sound recording has been the bane of many Nollywood movies for years. The masterclasses will empower participants with knowledge of achieving a cleaner and better sound, reducing the cost of film productions in the process, especially in the area of additional sound recording. All in all, the MTF is also a haven for practitioners seeking to better their skills. As long as the creative industry continues to be a player in the global knowledge economy, the difference between the high-earning producer and those at the bottom rung of the ladder will continue to be the skills and the quality of information available to both. The masterclasses are for practitioners who are irrevocably committed to the pursuit of excellence in the film industry through better and newer ways of doing things. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Odugbemi is Academy Director West Africa MultiChoice Talent Factory

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comment Equip to lead Character Matters with Daps

Dapo Akande

oing evil is ultimately self destructive as your happiness and progress are inextricably linked to others. And by evil, I don’t necessarily mean someone who goes about chopping people’s heads off or casting spells on sundry enemies, but I simply mean someone whose life is bereft of good. Just as scientists take the position that black is a lack of colour rather than a colour in itself and darkness results when there is lack of light, so can evil be said to be a lack of good. Nigerians generally yearn to be treated well and those who don’t are obvious masochists who certainly need their heads examined. Sadly however, many are no longer used to being treated well and nor are they expectant of it. It’s such a pity. Unfortunately, some of us also go about it the wrong way, forgetting that what goes around comes around. The way you treat others will come back to you and this inevitably creates a vicious circle. I tried a little experiment by greeting almost everyone I came across on my early morning jogs; which gradually aging knees have reduced to a more age-friendly brisk walk, and the results were quite revealing. The majority joyfully responded and some were even visibly excited. It quickly became apparent

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that some people whom I had been seeing almost daily during my walks and who I had already labelled in my mind as proud and mannerless for never greeting me first, were no worse than me. Why should one’s supposed social status determine who should first extend a greeting? Why should I expect to be acknowledged when I’ve made it quite clear I’m not prepared to acknowledge another because “he’s not on my level?” It quickly dawned on me that the hard faced security man I’ve pretended not to see every morning only desires to have his existence recognized. To be acknowledged as a fellow human being. Extend to him a heartfelt “good morning” and watch his once grimaced face light up. I’ve always felt Nigerian leaders haven’t quite understood this. Treat people well and make them feel they matter, that they’re not invisible, that their concerns matter and back this up by actually performing well and they will willingly support you. Though our President may mean well, his propensity to talk at the people rather than with them hasn’t done him any favours. Aloofness, especially as a leader, doesn’t work no matter how noble your intentions might be. We need to enlighten our children that the education they’re receiving isn’t just for its intrinsic value. The end game isn’t to make them feel clever or for them to see themselves as better than others but its objective is to positively mould their outlook on life. They need to be made aware of the responsibility education has bestowed upon them to add value to their community, nation and to humanity. Equally important, they need to be taught that only by putting their society first do they in reality put themselves first. When things work as they should, who ultimately benefits? One of my egbons once said something which I love as it truly encapsulates a re-

curring theme in my messages and it’s this: “Lending a helping hand to others is a great virtue. Teaching that value (to our children) is a noble contribution to society, one family at a time.” That’s absolutely right. It’s a vital orientation I believe should be inculcated alongside academics at school, starting from primary through to tertiary. But it must start from home. These core values are essentially what leadership is all about. Without these, for want of a better term, we’ll just be raising clever but selfish crooks. I think our nation has more than enough of those already which is why we find ourselves where we are. Your success and that of society ought to be interdependent, interwoven and mutually beneficial. It’s my strong belief that your level of success should not be measured by how wide the gap between you and the next person is but by how close the proximity. Implanting this in our children is the best way for us to positively influence the future. What a wonderful legacy this would be. When our children were a little younger, if they had flu, I would always ask them before going to school if they had enough tissues in their bags to take them through the day. This was an effort to teach them the virtues of being proactive; to think ahead and to be prepared. It’s a quality that gives you an edge over your peers. Those who are, appear to be super smart because they hardly find themselves caught out or unawares. And yes, a disciplined person is smart. Because we used to have problems with water due to pumping machine issues, I trained my children to always fill their buckets after having their baths, so should there be any issue with running water, there’ll at least be enough water available to take care of the next bath. Be prepared. What is the obvious lesson learned from the

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We need to enlighten our children that the education they’re receiving isn’t just for its intrinsic value. The end game isn’t to make them feel clever or for them to see themselves as better than others but its objective is to positively mould their outlook on life

virgins in the bible, who missed the wedding because they ran out of oil for their lamps and had to go and get some more? They had calculated or projected that the bridegroom would arrive in two hours so they brought enough oil to last two hours. The smart virgins anticipated a possible delay in his arrival so they brought more than enough oil. That way they won’t need to go and get more later. Is this smart? Yes. Its smart because they thought ahead and prepared for possible eventualities. We all pray that by the time our children grow up and start to experience the vicissitudes of this society more directly and not vicariously through us; sans the buffer parents lovingly provide by taking the direct hit themselves and softening the blow significantly before it gets to them, they’ll be better prepared; even while we continue to pray that they won’t have to endure the unforgiving hardship we have had to put up with as a result of bad leadership. We pray too that our children who find themselves privileged enough to occupy positions of leadership in society will do things differently. This however, cannot happen by chance. A good leader, after acquiring the right qualities himself must then raise, coach, train, teach and mentor his successor to sustain and improve on the good work done. If not, we too would have acted like the foolish virgins by desiring something good for their future but failing to prepare them for it. They need to be adequately equipped with the right mindset, instilled with relevant and enabling ideals in addition to possessing required skills but like I said, none of these come by chance. Changing the nation...one mind at a time. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

What’s the future of LPG?

he LPG space still remains the least regulated product in the Nigerian oil and gas industry. It enjoys no subsidy and her merchants do not suffer any setbacks in the form of quota subscription. As far as the market goes, it is free entry and free exit. Compare LPG to AGO, merchants of LPG in Nigeria enjoy higher margins compared to merchants of AGO. Despite the attractiveness of this business, the players are fewer owing to huge capital outlay required to offer meaningful service delivery in the cooking gas space. LPG business like any other business is also susceptible to government policy. Government policy to business men is like the ocean current to sailors; it determines the direction of every meaningful investment decision in a country or state. Recently (May 21 2019), the news of one of such government policy was a front burner in the LPG space. The central idea of this program is to sell gas like coca cola beverage! Llike coca cola, the end user of the LPG is only interested in liquid content, not the bottles. This idea is a fantastic idea but so are the

limitations. Who is going to produce the bottles that will house the LPG? What will happen to those who already own cylinders? The minister’s policy provided avenues for government to regulate cylinder integrity –a defective cylinder would be confiscated due to the safety hazard it poses to the user, filler and environment at large. Would plant owners -people selling LPG from a storage capacity upwards of 10 MT- be the ones licensed to own cylinders? Would regulatory agencies punish plant owners for bad cylinders? While this would be a great idea for end-users to only bother themselves about what they actually need, which is the LPG and not the bottle; how does government hope to achieve this feet without running the risk of inefficiently going into a locked in contractual agreement with cylinder manufacturers? The challenge with bringing your empty cylinder and picking a filled one in place of it without having to wait extra time for your cylinder to get filled are plenty, like; Am I getting a cylinder of similar i. quality and integrity to mine? The plant owner and the customer faces this dilemma.

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ii. How am I sure that my cylinder would not get missing? iii. Does cylinder exchange guarantee increased patronage? iv. If I came to plant A with my cylinder and took plant A’s cylinder and gas can I freely go to plant B when my gas is finished and exchange plant A’s cylinder with plant B’s cylinder and, of course, gas? An answer to these questions would be a new value stream added to the traditional way cooking gas got to end-user and they were by peddlers, skids (storage space of 5MT and below) and plants. Whether or not this policy comes to play, a new and sustainable way of delivering LPG to the ever growing population of the Nigerian family is critical. An investor looking to come in with innovation to this space might want to reduce the installation cost of LPG as a cooking fuel. Before now LPG as a cooking fuel was elitist even though the cost of LPG/liter was cheaper compared to alternate cooking fuel like kerosene. The issue with LPG as a choice cooking fuel is not the cost of fuel but cost of cooking infrastructure such as stove and cyl-

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Ekele Onuh Oscar inders. In addressing this high infrastructural cost, some inventors mimicked the typical kerosene stove and installed burners on the LPG cylinders. That way one did not need to incur further cost in purchase of stove. Smaller capacity cylinders were also built instead of the common 12.5kg cylinders, lower Kgs were introduced like 2, 3, 5, 6, and 10. The maverick idea in this space would be how to sell gas alone. Anyone who comes up with a scheme on how to buy liquid content only is sure to strike gold. My thinking is a bit rusty, but they might be the need for insurance in the event of theft and damage. They might be need to build this exchange system into a trust communal and accountable society then they would be funding; needed for the purchase and manufacture of empty cylinders. Oscar wrote in via ekeleonuhoscar@gmail.com

Wednesday 31 July 2019

BUSINESS DAY

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Avoiding another fatal airplane accident

he frequency of near misses during domestic flights recorded in 2019 point to a slackening of safety standards. Hence, there is an urgent need to improve safety audits and tighten standards in the aviation sector. The rise in the number of accidents and incidents on domestic flights is no coincidence. Planes plying domestic routes are being kept airborne longer due to the rise in air traffic. The bad state of inter-state roads and recurring insecurity along frequently travelled routes across the country have forced Nigerians to take to the air; at least those who can afford it. According to figures by the Federal Airports Authority of Nigeria (FAAN) passenger traffic increased by 19.4 percent from 13,706,345 in 2017 to 16,371,674 in 2018. At the domestic airports in Lagos, Abuja, Port Harcourt,

Kano and Enugu in the first three months of 2019, the number of travellers rose to 13,762 from 11,842 in 2018, a 16.21 percent increase. The number of reported mishaps has also gone up. There have been 24 reported cases of accidents and serious incidents between 2018 and 2019, according to data compiled by the Accident Investigation Bureau (AIB), the body responsible for investigating air accidents. Thirteen of these were in 2018 while 11 have occurred in the first half of this year. Recent mishaps include runway excursion, contained engine failure, smoke-in-the-cabin, ground collision with baggage conveyor, in-flight total loss of electrical power, ground collision during fuelling, engine failure, depressurisation, attempting to land when number one symbol generator went off, crashed on landing, force landing, landing with gears up, hard landing and collapsed nose wheel on landing. Most have resulted in emer-

gency landing. Experts say airlines are bound to experience operational hiccups but their frequency suggests the near misses are one too many. Hence, the airlines, FAAN and the Nigeria Civil Aviation Authority (NCAA) need to ensure thorough safety audits. Safety standards need to be reevaluated as regards safety management, operational and maintenance systems. It’s important to note that we are in the peak of the rainy season. Admittedly, the weather can’t be controlled but navigational aids and infrastructure that can prevent incidents and accidents during this period need to be in working order. For over seven years there has been no fatal air accident in Nigeria. This didn’t happen by chance. The days when domestic airlines were likened to flying coffins have scarred memories; some are yet to heal. These memories are the more painful because the accidents could have been avoided. A delayed safety check,

an overlooked routine repair or failure to maintain runway or weather equipment at the airport are called unforced errors in tennis. That is, careless or foolish mistakes that are the result of the failure of an airline, or regulatory body charged with safety or management of airport infrastructure. More Nigerians will fly frequently. At least until security on the roads improve – kidnappers have made major highways in Nigeria dreadful and unsafe. And the lives of those who choose to travel by road, because they can’t afford to fly, is as invaluable as those who can afford a return ticket to Akure. Security on our roads, and their state, need urgent attention too. Airplanes are not danfos. Domestic airlines can’t be run with a “manage it like that mentality”. It’s a deranged formula for courting disaster. Airlines and regulators must look beyond the income and fees they can generate from as many trips as possible in a day at the risk of the safety of passengers.

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PMB and the governance of a plural society

Franklin Ngwu

ith over 250 ethnic groups or tribes, Nigeria is a truly plural society. According to Van Den Berghe, 1964: 2, a society is pluralistic to the extent that it is structurally segmented and culturally diverse. In more operational terms, pluralism is characterised by the relative absence of value consensus; the relative rigidity and clarity of group definition; the relative presence of conflict, or, at least, of lack of integration and complementarity between various parts of the social system; the segmentary and specific character of relationship, and the relative existence of sheer institutional duplication (as opposed to functional differentiation or specialisation) between the various segments of the society. As the above is a perfect description of our country, the question therefore is the required governance strategy to create a sustainably developing and peaceful nation. Applying a strategy best suited for a homogenous society to a heterogeneous one will expectedly give flawed outcomes. To govern a plural society, a key factor is the extent to which the society is integrated to create the required level of social trust to enhance better understanding and management of the varied interests and differences. Regrettably, this we did not effectively pursue or even pursuing at the moment. Of the four

main types of social trust- integration, linkage, synergy and organizational competence/coherence, Nigeria can only be said to have partially achieved the first one which is ‘integration’. It is the type where trust/relationship is mainly found within members of the same family/village/tribe. In a situation where trust stops at the family level (extreme point of integration), the society will be characterized with pervasive level of ‘individual amoralism’ (a state of pervasive individual selfishness). This unfortunately is the state of social trust in Nigeria with the outcomes very clear in all aspects of our individual, communal and government interactions. With the above illustration, it is important that our leaders especially the current government appreciate our socio-cultural peculiarities and our history in their governance decisions, actions and inactions. While there are many examples, the recent proscription of the Islamic Movement of Nigeria (IMN) generally known as the Shiites is the most current of such disturbing and counterproductive actions of the government. Though not supporting violence in any form, it is difficult to understand how effective the banning will be in addressing the demands and possible grievances of a deep seated religious group of about five million members. Moreover, remembering the international links and implications of the group and the in-effectiveness of other previous proscriptions indicate that a better approach might be required. As at yesterday, protests have been held in other countries with Iranians in the protest accusing Saudi Arabia as the main force behind the ordeals of ElZakzaky and his IMN members. It is imperative to exercise utmost caution and wisdom in the way the issues are handled considering developments

‘

Though not supporting violence in any form, it is difficult to understand how effective the banning will be in addressing the demands and possible grievances of a deep seated religious group of about five million members

in Yemen and Syria where similar international interests and powers are at play. Nigeria is a plural society and the only way to guarantee sustainable growth of the country is through a determined and effective inclusive governance that all especially the minority groups will perceive as fair and just. In my previous article, I had cautioned that the only way we can genuinely show lasting penitence and truly avoid a reoccurrence of wars and genocide such as the one experienced in Rwanda is to effectively address all signs that point to the emergence of genocide. These include cries of oppression, marginalization, tribal persecution, negligence and other social vices that negate or suppress the freedoms and opportunities of citizens. Most unfortunately and lamentably, Nigeria is now more characterized with pervasive signs similar to the ones that festered and caused the Rwandan genocide. If we want a prosperous and inclusive Nigeria, our leaders including religious and traditional rulers cannot continue to claim to be leaders when in brazen atrocities and irregularities, they maintain a debauched unconsciousness and sometimes even collude and affirm immorality and injustice with their revered credibility and assumed moral fortitude. When it is reported that an entire village has been wiped out with hundreds of lives including women and children killed, it should not be lightly discussed and treated. When over 300 members of a particular group are killed, a proper and unbiased investigation must be carried out and honest justice convincingly applied. When elections in areas perceived to be dominated by specific ethnic group are deliberately and violently disrupted to disenfranchise the

group in order to achieve preferred electoral outcomes, should such be encouraged and supported? When such barbarism receive little or no condemnation from our leaders and treated with levity even by relevant government agencies, then we are encouraging the development of negative sub-cultures and beliefs that might not be curtailed with proscriptions. When it is reported that Nigeria is now the poverty capital of the world with about 91 million Nigerians living in extreme poverty, it should not be glossed over rather it should alarm us and trigger concerted short, medium and long term commitment and actions of the federal, state and local governments. That about 21 million Nigerians, our brothers and sisters are unemployed is a very serious issue that should not be treated with levity. World Economic Forum describes it as a time bomb waiting to explode. Those are the voices of the people that must be heard and genuinely addressed for Nigeria to prosper. As the voice of the people is the voice of God, these lamentable human inflicted hardships and pains cannot continue to be glossed over by a few that we entrust with our life and existence. No amount of accusation, counter accusation and proscription will solve the problem. Central to this is the urgent need to restructure Nigeria. The decay is deep and corrective actions are urgently required. Restructuring through devolution of powers to the regions and states provides the most effective curative option to address our varied socio-economic and political challenges and keep Nigeria as one country. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

Forex restriction for milk importation: Need for CBN, stakeholders to re-strategize

ecently the Central Bank of Nigeria (CBN) retracted its intention to restrict allocation of foreign exchange (forex) for milk importation into the country following massive umbrage that greeted the plan by discerning citizens and stakeholders. The CBN governor, Mr. Godwin Emefiele had at the recent Monetary Policy Committee (MPC) meeting in Abuja, announced the planned policy restricting allocation of foreign exchange for milk importation into Nigeria. According to him, “In a bid to develop the local diary industry there is the need to protect such by stopping import of milk and save the nation good foreign exchange.” In the wake of the announcement, several people including some key stakeholders such as the Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce (LCCI) and Miyetti Allah Cattle Breeders Association of Nigeria (MACBAN) among others faulted the decision of the apex bank and appealed to it to retrace its steps on the proposed policy while some economic experts lauded the policy direction. According to Segun Ajayi-Kadir, DirectorGeneral of MAN, The addition of milk to restricted items will have a negative impact on the economy that may lead to downsizing, reduce government revenues and the manufacturing sector’s contribution to Gross Domestic Product (GDP). He laments that CBN’s decision was taken unilaterally without consultation with opera-

tors in the dairy industry, contending that “It is a fact that backward integration is the way to grow an economy, but there is a need to be strategic and deliberate about the way to implement the measure.” The National secretary of MACBAN, Baba Othman Ngelzarma observes that, “Although a desired long term outcome where local production substitutes importation, implementation of such a policy requires a robust strategy that addresses underlying issues.’’ According to him, MACBAN notes that the National Livestock Transformation Plan of (NLTP) as an integrated plan will holistically solve the historic challenges that have deprived the pastoralists from producing high quantity and quality beef and dairy products demanded by the Nigerian market. “In view of this, we are advising the CBN to retrace its steps and take a productive role that does not undo the work done to date,” Ngelzarma says. Conversely, a financial expert and Managing Director of Cyber1 Systems Network International, Momoh Aliyu, lauds the policy, remarking that the policy is good and will boost the economy. According to him, Backward integration had always been the Federal Government’s dream on foods and beverages, adding that currently, Nigerian Breweries is heavily investing in backward integration by empowering farmers to produce grains locally. “With the Nigeria population and its rate

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of consumption of dairy products, it is long overdue to enhance and encourage local productions of dairy products for economic and health reasons,” Aliyu contends. It is against this background that the CBN backtracked from its decision to restrict allocation of forex for milk importation into Nigeria, describing it as a misrepresentation of its position. According to its Director of Corporate Communications, Mr. Isaac Okoroafor, The attention of the Central Bank of Nigeria (CBN) has been drawn to attempts by some interests, who feel hurt by the planned policy aimed at promoting the local production of milk in Nigeria. “While we are aware that some of our policies may hurt some business interests, we are thankful to Nigerians for the buy-in and intense interest in the policies of the CBN,” Okoroafor notes, adding that as a people-oriented institution, however, they shall remain focused on the overarching and ultimate welfare of the Nigerian masses. Milk is very essential to the growth and development of the Nigerian child. It provide valuable nutrients for children’s need during their development and its consumption is essential to maintaining good health and is a great source of calcium for all ages. Rather than shelving the plan, we advise that the apex bank should re-strategize and engage more stakeholders in the milk industry before coming up with the plan again. The plan is a welcome development at this

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Friday Atufe time when unemployment is hitting the roof and government revenue is shrinking in the midst of a ballooning population. However, the planned restriction of forex for milk importation is rather premature at this time and therefore we wish to advice that the apex bank should rather invest in local production of milk as well as allocate foreign exchange for milk importation so that the market will not be stifled of quality milk products which are very essential sources of protein. The apex bank should take a cue from what has happened in the cement industry where local production has increased remarkably, thereby making bulk cement importation no longer attractive. From the foregoing, it is imperative for the CBN to rethink its plan to jettison the policy on restriction of allocation of foreign exchange for milk importation in the overall interest of the country. Atufe, a financial journalist, writes from Lagos.

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Wednesday 31 July 2019

BUSINESS DAY

AGRIBUSINESS

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Why agribusinesses need education on Mycotoxins Josephine Okojie

igh levels of mycotoxins content in food is dangerous to human health and responsible for the loss of billions of naira Nigeria would have generated from non-oil exports. My c o t o x i n s a re n a t u r a l l y occurring toxins produced by certain fungi and moulds that are threat to food and feeds for human and animal consumption with regards to long term poisoning. They are produced by the mold Aspergillus flavus and related species that cause destruction of contaminated crops. The impact of mycotoxins is devastating that it accounts for high percentage of all liver and cancer cases worldwide.There are five groups of Mycotoxins which are; aflatoxins, ochratoxins, fumonisins, deoxynivalenol/nivalenol and zearalenone. “Aflatoxins has harmful effects on humans and animals. They are very cancerous and suppress human immune system. The African environment favours the development of the poisonous compound. It is found all across Africa,” Abiodun obaleye, research supervisor, International Institute of Tropical Agriculture (IITA) said during a media tour. According to the United states National Cancer Institute, aflatoxins are a family of toxins produced by certain fungi that are found in agricultural crops such as

Dan Agbor, chairman, United Africa Company of Nigeria (UACN); Muhibat Abbas (celebrant), retired acting chief finance officer; Abdulsalam Abbas, celebrant husband and Funke Agbor, chairman’s wife of UACN during the farewell party for the immediate acting chief financial officer of UAC in Lagos recently.

groundnut, maize, cottonseed, sesame and tree nuts among others. It is estimated that Nigeria loses up to N68 billion annually in lost exports because agricultural commodities such as groundnuts contain aflatoxin levels unacceptable for European and other markets. In 2017, the National Agency for Food and Drug Administration and Control (NAFDAC) said that a total of 24 food products were rejected by the European Union (EU) because of high levels of poisonous chemical compounds. Groundnut was among the food products rejected because of the high presence of aflatoxin.

“The importance of aflatoxin in our agricultural products and their attendant implications on the safety of foods and feeds, trade and health cannot be over emphasised. Food and feeds sold in our open markets are neither regulated nor traceable and this has made the zero rejection program of the Federal Government an uphill task,” Folasade Bosede Oluwabamiwo, president, Mycotoxicology Society of Nigeria (MSN) said at the association’s 2017 annual conference in Lagos. Despite the severity of mycotoxins and its effects on human and animal health, many farmers and traders

EZ Farming selected for the 500 Start-ups Accelerator Programme in San Francisco Josephine Okojie

Z Farming, Nigerian-US agritech start-up pioneering expansion of smallholder farms to commercial sizes through micro lending has been selected for the batch 25 of the 500 Start-ups Accelerator Programme in San Francisco, United States. The 500 start-ups accelerator programme provides $150,000 in funding, mentorship and handson training in a highly competitive programme, with attendees selected from different parts of the world. A handful of start-ups from Egypt, Nigeria and other African small

businesses made it to the fourmonth accelerator programme in San Francisco, California, USA. Adewale Oparinde, founder of EZ Farming has pooled up to $1 million from investors around the world to invest in smallholder farmers in Nigeria and other African countries as well as providing a marketplace that thrives on using digital technology to address agribusiness challenges on the continent. “We are excited to have made it to batch 25 of 500 start-ups accelerator programme. EZ Farming is a unique marketplace for smallholder farmers in Africa because we provide not just financing but use technology

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to provide technical support and connect them to buyers in a different way beyond ecommerce,” Oparinde said in a statement. “This is a great opportunity for us to continue to improve our model and benefit from the bespoke opportunities the programme offers. We are confident that our time in this 4-month programme will sharpen our ability to stretch the limits and deliver more results to our various stakeholders,” he added. E Z Fa r m i n g g o t i n t o t h e accelerator programme in the wake of clinching the first prize of $5000 and the peoples’ choice award at the 2019 Georgetown African Business Conference New Venture Competition, hosted by the Young African Professionals in Washington DC, at Georgetown University’s McDonough School of Business. 500 Startups is a renowned global accelerator programme, having worked with over 2,000 start-ups from across the world. It has supported 10 tech unicorns -companies valued at $1 billion – including Twilio, SendGrid, and Credit Karma, Udemy, Grab and Canva. In addition to these 10 companies, 66 of its companies are valued at over $100M.

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in the country have never heard of mycotoxins and its effects. “I never knew the moulds on groundnuts are dangerous to human health and I have not heard about aflatoxins before,” Salisus Mohammed a groundnut farmer in Bindawa Local Government in Kastina told BusinessDay. This shows the widespread dearth of knowledge about mycotoxins and such lack of farmers and traders understanding have continued to fuel the rise of mycotoxins levels in food across the country. Mycotoxins, which are a natural occurrence, can be reduced to

the barest minimal with farmers’ education and training on good agricultural practices and storage. According to experts, farmers’ education on the dangers of the fungi, public awareness, appropriate infrastructural facilities and aflasafe intervention will help prevent and control aflatoxins contamination. Isaac Ogara, secretary, MSN and a lecturer at the department of Agronomy, Nasarawa State University said that the aflatoxins content in crops can be reduced by mainstreaming control strategies in the country’s farming systems along the value chain. “Farmers need to have awareness that there are deadly chemical substances that occur naturally without their knowing. One of the strategies that farmers can protect their crops from these toxins is to harvest their crops early. Harvesting early help to reduce the incidence of aflatoxin,” Ogara said. “Farmers must also ensure that they carry out good farming practices by ensuring that they carry out all the cultivation practices according to recommendations and dry their crops properly. Crops must be properly dried with moisture content of about 12-14 percent,” the secretary added. He also stated that the use of Neem tree and Jatropha extracts also help to reduce levels of toxins in foods. He noted that the International Institute of Tropical Agriculture (IITA) has developed a product called aflasafe which farmers can adopt to reduce the occurrence of the toxicogenic fungi.

Bayer takes 100 new young leaders on journey towards Zero Hunger …as two Nigerians win selection Odinaka Anudu

ayer, a global enterprise with core competencies in the life sciences, in partnership with Nuffield Brazil, has selected 100 participants across 45 countries for the fourth edition of the Youth Ag Summit holding in Brasília, Brazil from November 4th to 6th 2019. The Youth Ag Summit, part of the Bayer Agricultural Education Program, brings together young change makers aged 18 and 25 to tackle the challenges of feeding a growing population by 2050. Among the selected 100 youths were two Nigerians and a Ghanaian – three delegates that will represent the West and Central Africa subregion. Iyanuoluwa Aliu (23) from Nigeria is an AgriTech advocate and a social entrepreneur who is poised on leveraging technological innovations to boost food production in Africa, while Esther Ajari (23) also from Nigeria is a medical student and gender equality advocate committed to exploring different to success. Rosalinda Agana (23) from Ghana is an NGO founder, entrepreneur @Businessdayng

and alumni of CAMFED in Ghana, committed to encouraging girls to become agripreneurs. Liam Condon, a member of the board of the management of Bayer AG and head of crop science division, said, “the 100 delegates heading to Brazil in November all share a commitment to driving innovation in agriculture, which is vital if we are to both feed the world and ensure healthy ecosystems.” Also, Rodrigo Santos, head of crop science division in Latin America, Bayer AG, said, “Latin America has an important role in the challenge of feeding a hungry planet, so we´re very happy to receive these incredible young leaders to discuss such an important topic as food security. I hope Brazil’s thriving agricultural sector inspires our delegates to develop their innovative ideas.” For the 100 chosen delegates, the Youth Ag Summit will function as an idea incubator: helping them turn their ideas into reality and equipping them with the skills needed to realize their projects. They will also hear from expert speakers and participate in field trips to learn more about the agricultural industry in Brazil.

Wednesday 31 July 2019

BUSINESS DAY

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High cost of food prices contributed to global malnutrition, says research Josephine Okojie

he high cost of food prices has been identified as one of the leading contributor to global malnutrition - that accounts for one-fifth of deaths worldwide, a new research by the International Food Polic y Research Institute (IFPRI) says. Using national price data for 657 standardized food products in 176 countries collected under The International Comparison Program (ICP), the researchers develop a novel measure of how costly it is to diversify diets away from traditional calorie-dense staple foods such as bread, corn or rice. The study shows that higher caloric prices of a food predict lower consumption of that food and explores how those price differences might explain international

differences in child stunting and adult obesity. “Our research shows that most healthy foods are substantially more expensive in poorer countries. But while healthier foods become cheaper over the course of development, so too do unhealthy processed

foods, like soft drinks,” Derek Headey, senior research fellow and study co-author, IFPRI said in a statement. “Prior to this study, we already knew that the poorest children in the world were not consuming enough of the really nutrient-dense foods that promote healthy growth

Kogi farmers get N58.5m from Anchor Borrowers Program Victoria Nnakaike, Lokoja

n a bid to increas e agricultural productivity in the state, Kogi State government has released a total equity contribution of N58.560 million to the Central Bank of Nigeria (CBN) to be disbursed to 2,680 smallholder farmers under Anchor Borrowers Program for 2018. This was disclosed recently by Oloruntoba Kehinde, the state Commissioner for Agriculture in Lokoja during a Stakeholders Consultative Meeting on state’s 2020 agricultural budget. Kehinde disclosed that five percent equity fund released has made the CBN to authorise payment of N1 billion for the Anchor Borrowers Programme from which 2,680 Smallholders farmers benefitted. He pointed out that under the Accelerated Agricultural Development Scheme of the government, 600 earthen ponds were constructed at Geregu, Idah, Ejiba and AdaviEba to empower 1,000 youths, saying that the Geregu project had kick start. Represented by Emmanuel Idenyi, the permanent secretary of the ministry stated that out of the N500 million

earmarked for agricultural mechanization in 2018, N377.2 million was paid for the additional 15 Massey Ferguson and 375 tractors procured last year as well as additional new equipment for repair of old tractors. “This represents 75 per cent budget performance on the budget line item. In a nutshell the overall performance of the Ministry of Agriculture capital budget from the budget estimate of N7.3 billion was at N544.3 million representing 7.4 per cent”, he said. The commissioner also said there was tremendous improvement in the implementation of the budget in 2018, pointing out that cases of poor budget defence by various Ministries, Departments and Agencies (MDAs) and lack of participation of relevant stakeholders in the process was a setback. The commissioner therefore called on government at all levels to make the budget process participatory to enable all stakeholders contribute meaningfully to the budget, and as well, present their budgets early to the Legislature for timely approval and implementation. www.businessday.ng

Earlier in her welcome a d d re s s, G i f t O m o n i w a executive director, PICI said the purpose of the meeting was to raise awareness and sensitisation of citizens so for improved engagement and participation in the budgetary processes of the state. The stakeholders also identified some of the challenges in the budget process and implementation such as non-attainment of Maputo declaration target of 10 per cent budgetary allocation to Agricultural sector, poor releases of budgeted funds and shoddy implementation. In a related development, Matthias Okpanachi, chairman of the PFA Committee equally disclosed that the review of the 2018 budget performance revealed issues of poor releases and poor implementation as the bane of budget performance, adding that the forum aimed to curtail possible recurrence in the 2019 budget. Isah Abdullah, representative of the State Ministr y of Budget and Planning, harped on the need of citizens’ active involvement in the budget processes and promised that 2020 budget would be ready for presentation before October this year.

and brain development. “But now we have a better idea why: poor people also live in poor food systems. That combination of low incomes and high prices means they’re simply not going to buy enough and eat enough of these nutrientdense foods,” Headey said.

The study finds marked variations in the affordability of both healthy and unhealthy foods across different regions of the world, and at differing levels of development. In the world’s poorest countries, healthy foods were often extremely expensive, especially nutrient-dense animal sourced foods, which are widely known to be effective in reducing stunting, the study states. Eggs and fresh milk, for example, are often 10 times as expensive as starchy staples. Another ultra-healthy food for kids - specialized infant cereals fortified with a wide range of extra nutrients are sometimes 30 times as expensive as the nutrientsparse traditional cereals more commonly fed to infants. While poor child feeding practices are often attributed to limited nutritional knowledge in low income settings, the authors found

that the high pr ices of nutrient-dense foods offered an alternative explanation of their low consumption. Even more strikingly, they find that higher prices of milk, eggs and fortified infant cereals predict higher rates of stunting. “The link between milk prices and stunting is especially strong which is entirely consistent with a whole body of evidence on the strong linkages between dair y consumption and child growth,” said Harold Alderman, co-authored, IFPRI. “Public health agencies in upper income countries have been concerned with the high consumption of sugar-rich foods for some time but our study shows that these products often become very affordable in middle i n c o m e c o u nt r i e s, a n d sometimes even in relatively poor countries where obesity rates are really on the rise,” Alderman said.

Development of River Valley will grow Imo agriculture - Ugwuh SABY ELEMBA, Owerri

harles Chukwuemeka Ugwuh, former Minister of Commerce and Industry, has said that the attainment of food security and agricultural growth in Imo state depends on the government ability to fully develop the state’s river valley. Ugwuh who described Imo state as inherited by Governor Emeka Ihedioha as a failed state, proposed measures needed to be taken to ensure the state reap benefits from its enormous agricultural potential. He gave the advice during his presentation on ‘Rebuilding Imo State and Growing her Economy’ at the inauguration of Heartland Professionals Network held recently in Owerri. Ugwuh in his speech informed that in order to grow the agricultural sector of Imo state, much attention should be given to the development of the Imo River Valley. “The Imo river valley is an available strip of land stretching from Ideato through Onuimo, Ihitte Uboma and further down through Mbaise (Itu, Eziudo, Umuogu, Ogbor) in Imo state and to Owerrinta in Abia State, we need to develop it to grow

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our agriculture,” he said. “Our capacity to locally grow our own food and feed ourselves has declined to a worrisome level, where virtually all food crops consumed by Imo people are imported from other states,” he further said “Since the short supply of available land is a major obstacle limiting our capacity to grow our food, in my view, the first step towards growing the agricultural sector of our economy, is the development of the Imo River Valley,” he added. He stated that from the source to destination, the Imo River Valley occupies an estimated area of over 50,000 hectares of available/fertile land. He called on the Governor Emeka Ihedioha to pay critical attention to the sector as he had promised the people of Imo to focus on agric during his campaign. “In order to develop the agricultural sector, Governor Ihedioha explained during his campaign days that he would liaise with the Federal Government for the operation of FADAMA projects in the state.” But Ugwuh who was one of the industrialists that formed part of the committee for industry and agriculture and developed a blue print with which the current government @Businessdayng

intends to work with, said that with the assistance of the Federal Government, two dams could be constructed on the Imo River Valley to ensure all the year round farming. “Over 20,000 hectares of land can be sourced from the river valley in the first instance, and leased to private sector for massive mechanized cultivation of rice, maize, soya beans and other available crops in what can become a large cluster of farms linked to the Okigwe Silo project,” he said. He pointed out that another area would be the revamping of the oil palm industry, which has suffered protracted neglect. “Our government should facilitate and champion a campaign in the replacement of the old overgrown low-yield palm trees with moderns highyield palm seedlings”, he said Ugwuh further explained that for over a five year time, the State could be able to raise a huge raw material base of highyielding palm trees capable of supporting and sustaining palm oil milling and vegetable oil production. “The uprooted old overgrown palm trees could also be used as biomass for the production of particle boards and other by products,” he stated.

Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

HEALTHCARE

GSK’s H1’19 profit hits N372m amid plans to restructure supply chain operations OLUFIKAYO OWOEYE

espite the shrinking consumer wallet and harsh economic environment, h e a l t h ca re c o mp a ny , GlaxoSmithKline Consumer Nigeria Plc, (GSK) grew its half-year 2019 net profit for the period ended 30th June, by 2.76percent to N372million from N362million in the corresponding period in 2018, while revenue grew 15.9percent t o N 9 . 9 6 b i l l i o n f ro m N8.59billion for the period. The company’s cost of sales, however, grew 3 percent from N6.34billion in half-year 2018 to N6.54billion in 2019, while net profit rose slightly to N372million from N362million. GSK’s administrative expenses also dropped 27percent to N719million from N915million in 2018, however, its selling and distribution expenses grew 12.98 percent to N1.74billion from N1.54billion. Figures from GSK’s consumer healthcare seg-

ment, consisting of oral care, over-the-counter (OTC) medicines and nutritional healthcare, show revenue remain flat at N3.06bn, however, the segment returned to a path of profitability with a profit of N136.18mn from a loss of N300.8mn in half-year 2018. Also its revenue from pharmaceuticals segment consisting of antibacterial, vaccines and prescription drugs, grew to N6.89bn from N5.52bn while profit from this segment also dropped significantly by to N151mn from N497mn. GSK had earlier announced plans to restructure its supply chain operation with effect from the third quarter of 2021. And as part of its restructuring exercise which will take effect from the third quarter of 2021, GSK, recently announced the selection of Fidson Healthcare Plc as its local content manufacturing partner. According to a statement by GSK, the manufacturing of its wellness and respiratory products will be “transitioned” to Fidson Healthcare. “Until then it would be business as usual at the

Agbara factory plant as GSK continues to ensure supply continuity for all its locally manufactured brands,” the company said. Analysis of GSK’s fullyear 2018 financial results shows possible reasons for its restructuring plans. Its consumer health care segment posted N112.49 million in loss in full-year 2018 an improvement in loss position by 83 percent compared to N701.960

million in 2017. Operating expenses increased by 22percent on the year-on-year basis to N3.13 billion as against N2.56 billion recorded a year earlier, this saw the segment recording a loss of N37.6 million in operating profit. During the period, growth in operating expenses outpaced that of revenue as segment’s top line grew 12.5percent. In

the last 4 years, consumer health care segment contributed to an average 32 percent to total revenue of GSK, while the pharmaceutical segment contributed about 68 percent on the average to total revenue. The pharmaceutical segment recorded a whooping N1.89 billion loss in 2016. Being a segment for imported GSK goods, the loss was due

to foreign exchange scarcity witnessed in Nigeria in 2016 which saw the naira depreciate significantly in value against the U.S dollars on negative shock in the crude oil market. However, loss position of the segment improved significantly as the Nigeria economy bounced back from recession in 2017, although the segment still recorded a loss of N15.5 million during the period.

BANKING

Union Bank profit rises 3.5 percent to N11.85bn in H1 SEGUN ADAMS

nion Bank, a listed mid-tier lender, has announced it grew profit by 3.45 percent in the half-year 2019 period. The lender posted a profit of N11.85 billion for the six month to June 30, 2019; this is against N11.46 billion reported a year ago. On a quarterly basis, Union Bank grew profit by 26.89 percent in the second quarter after ending the first three months with 4 percent. Shares of Union bank

remained flat at N6.85 per share on Monday. It has gained 22.32 percent so far in 2019. Emeka Emuwa, Union Bank CEO noted the lender’s resilience in delivering growth despite a challenging economic environment and affirmed commitment to delivering value. “We have developed a concerted and clear plan to increase our risk assets with our loan book growing by 8% to N563.0 billion compared to year-end 2018,” he said. According to Emuwa,

the ability to take on more risk is hinged on Union bank’s robust risk management and debt recovery processes working in sync which, he said, led to recoveries of over N5 billion in the period. The Bank’s NPL ratio declined to 7.3 percent from 8.1 percent as at December 2018 ahead of full year 2019 guidance, Union bank stated in its latest scorecard. In H1, gross earnings of Union bank decreased by 8.78 percent to N76.0 billion (N83.3bn in H1 2018), due to a decrease in average

earning assets. Interest income fell 7.80 percent to N57.35 billion while interest cost rose to N31.35 billion, 12.56 percent higher than a year ago. Consequently the lender’s net interest income (net revenue from fund) declined 24.32 percent although net interest income after impairment charges for credit losses improved some 3 percent. Non-interest income declined 11.66 percent to N18.7bn from N21.1bn in H1 2018 which the bank attributed to the impact of

muted volatility on trading income. Net trading income declined by 48 percent of its 2018 value offsetting growth in credit-related fees and cash recoveries. Operating income slowed by 3.35 percent. The lender however recorded 23-fold increases in net impairment write-back on other financial assets, and lower expenses to post a 3.96 increase in profit before tax which grew to N12.13 billion. Union bank closed its Series 3, 10 year N30 billion bond in June, as part of the

bank’s N100 billion debt capital programme. “This series, which was once again fully subscribed, is the largest 10-year bond issued by a Nigerian corporate to date,” said Emuwa. “With this new injection of tier 2 capital, we are well positioned to deliver on our growth strategy and priorities.” Union Bank disclosed the funding boosted its Capital Adequacy Ratio (CAR) which stood at 19.4 percent in June 2019 compared to 16.4 percent as at December 2018.

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

Wednesday 31 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

INSURANCE

AIICO’s share price rebounds on strong earnings growth DAVID IBIDAPO

nvestors on the Nigerian stock exchange market on Monday laud AIICO insurance Plc with higher prices on company’s strong earnings during the period Q2 2019, providing respite for stocks amid market rout. AIICO’s stock price picked up 5 percent as at the end of trading on Monday pulling up investors’ value per share from a year low of N0.60 to N0.63. AIICO insurance plc in the second quarter of the year 2019 maintained consistently a 2-year growth in its net income position year on year to record N2.94 billion against N1.93 billion in corresponding period of 2018. Analysis revealed that the underwriting giant grew its profit after tax (PAT) during the period by 52 percent, although a slower growth when compared to growth recorded

in 2016 and 2018 respectively in the last 5 years. This is on the back of a surge by 43 percent in company’s net premium income to N20.6 billion against N14.4 billion in 2018, driven by a significant jump in annuity premium income stream by 180 percent to N3.10 billion. This coupled with a N14.83 billion in premium income from its Life segment which constitutes about 58 percent of total premium income saw gross income pick up 37 percent to N23.38 billion in Q2 2019. Net underwriting profit also trended northwards by 38 percent to N22.06 billion on positive effect from growth in net premium income despite income from fees and commission slid marginally to N1.45 billion from N1.53 billion in the previous period. Meanwhile, AIICO’s underwriting loss position worsened

by 742 percent to a loss of N4.9 billion in Q2 2019 from a loss N593 million in Q2 2018. This is no thanks to the company’s surge by 64 percent in total underwriting expenses to N27.05 billion against N16.53 billion. A look into company’s cash flow statement revealed that as part of its investment activities during the period, AIICO increased exposure on in the Nigeria bond market by 68 percent after investing N35.32 billion. Also exposure in treasure bill increased 19 percent from to N3.77 billion against N3.17 billion in 2018. Meanwhile, year-on-year AIICO recorded an increase by 23 percent in its total assets. Assets grew to N135.5 billion in Q2 2019 against N109.9 billion in the previous corresponding period. In the same vein, total liability grew however at a faster pace by 25 percent to N118.07 billion from N94.71 billion.

L-R: Kemi Michael-Jabagun, public affairs and communications manager, Lagos and West, Nigerian Bottling Company Limited; Muyiwa Gbadegesin, In-coming MD, Lagos Waste Management Agency (LAWMA); Adejumoke Modinat, an outstanding ‘LAWMA Women Making A Difference Award’ Winner; Nonye Mike-Nnaji, president Spotlight Africa Network, organiser of the event, and Emma Fekoya, unit commander, Ikeja, Federal Road Safety Corps (FRSC)/assistant corps commander, at the LAWMA Women Making A Difference Community Service Leadership Awards 2019 in Alausa Lagos.

MARKETS

Weak investor appetite for naira stocks exacerbate foreign portfolio deficit by 12% in H1 ISRAEL ODUBOLA

espite sustained capital flows to the Nigerian economy, the equity market continue to bleed over policy uncertainty and growth concerns as investors remain pessimistic about a possible revival of the domestic bourse. Figures sourced from the Nigerian Stock Exchange (NSE) showed foreign portfolio deficit, which is foreign portfolio inflow less outflow, aggravated 12 percent to N42.84 billion in the first half of 2019, from N38.41 billion in similar period last year. This is the lowest in the last five years. Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock

market while inflow includes purchase transactions on the Nigerian exchange. “Foreign investors who are major players are not encouraged to take risk in equities” said Taiwo Ologbon-Ori, Head of Research at Cashcraft Capital. “They saw no reason to take risk when they can get 12 to 14 percent return on fixed income securities without exposure”, Ologbon-Ori added. The activities of foreign investors on the domestic bourse has waned as the ratio of foreign transactions to total transactions slowed to 46 percent in the first six months of 2019, from 50 percent a year before. Foreign portfolio inflows to NSE slumped to N214.97 billion mid-year 2019, its lowest in two years, compared to N215.97 billion and N380.65

billion in similar periods of 2017 and 2018 respectively “The economy is not making progress as key indicators remain mute and this explains why outflow continues to outpace inflow” said Ambrose Omordion, Chief Research Officer at Lagos-based InvestData Consulting. “The few earnings that have been announced are unimpressive and this hints foreign investors that GDP figure for second quarter might turn out poor”, Omordion added. Within a five year period spanning between half year 2014 and 2019, the market recorded surplus worth N1.7 billion only in 2017, thanks to the Investor and Exporter (I&E) foreign exchange window that was introduced during that period.

Stanislas Kamamzi, Rwandan high commissioner to Nigeria; Chioma Achilam, deputy director gender, Federal Ministry of Industry, Trade and Investment Nigeria; Soraya Hakuziyaremye, minister of trade and investment, Federal Republic of Rwanda; Temitope Iluyemi, director, Government Relations and Public Policy Sub Sahara Africa, Procter & Gamble; Shweta Shah, head of education programmes, Mercy Corps Nigeria, and Eugenia Abu, Brand and Media Specialist, at the P&G’s Always Keeping Girls in School Program in Partnership with Mercy Corps

CONSUMER GOODS

Heineken grows Q2 revenue 3% as malt volumes in Nigeria grew in single-digit OLUFIKAYO OWOEYE

orld’s secondlargest brewer, Heineken, sold more beer in the first half of 2019 and saw turnover grow by 5.6 percent to 11.5 billion euros. According to the Dutch brewing company, it increased 6.9percent organically over the first half, with growth in all regions, with double-digit growth in Nigerian Brazil, Mexico, South Africa, Russia, Nigeria, United Kingdom, Portugal, Germany, and Ro-

mania among others, while Malt volumes in Nigeria grew high-single-digit. Operating profit was slightly higher than a year ago and rose by 0.3 percent to 1.8 billion euros. Less than 1.1 billion euros was left under the line, a decrease of 1.2 percent. According to the company, net profit decreased, mainly due to high-income taxes. The company also blamed lousy European weather and rising packaging costs after it missed profit forecasts, sending its share price down by the most in eight years.

The Dutch brewer reported a 0.3 percent rise in operating profit, excluding exceptional items, to €1.78bn for the first half of this year, after a damp June and rising aluminium prices hit its bottom line. This was well below the €1.91bn or 6.6 percent growth expected by analysts. Jean-François van Boxmeer, Chairman of the Executive Board / CEO, Heineken said the brewer’s operating profit (beia) was stable as the impact of the strong top-line performance was largely offset by input cost inflation.

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L-R: Oni Joseph, team lead, Team TopHill; Femi Adeolu, MD, Inlaks, Africa operations, and Omondia Vester, team member, Team Tophill, being presented the winning prize at the launch of the hatch/maiden Insurtech Hackathon in Lagos.

L-R: Sheila Ezeuko, company secretary; Benjamin Agili, MD; Jane Ekomwereren, executive director, and Chukwuma Kalu, head, Agric Business, all of Royal Exchange General Insurance, at the press conference to announce the strategic investment of the company in Lagos. Pic by David Apara

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Wednesday 31 July 2019

BUSINESS DAY

cityfile NAPTIP arrests pastor, others over rape

Security personnel at the gate of Kaduna State High Court during a special hearing to grant medical access to Islamic Movement of Nigeria’s leader, Sheikh Ibrahim El-Zakzaky, which case was adjourned to Aug. 5, in Kaduna on Monday. NAN

Lawmakers probes Lagos’ N5.6bn cardio-renal facility JOSHUA BASSEY

agos State House of Assembly has signaled intention to probe into the abandoned N5.6 billion ultra-modern cardiac and renal health facility located within the premises of Gbagada General Hospital. The move followed the report presented by Olusola Sokunle, acting chairman, house committee on health to the lawmakers on Monday. Sokunle, in his report, said that members of his committee who undertook a tour of the facility to assess the situation of the public health institutions across Lagos, “we observed that there is shortage of manpower, nonfunctioning ambulances, in-

security, unequipped laboratories and more importantly, abandonment of multi-billion naira cardio-renal facility, Gbagada.” According to him, most of the equipment in the hospital are not working. “I got report that the cardio-renal machines only worked for two weeks before the facility was locked up. “Also, most of the sensitive equipment are obsolete,” Sokunle added. Sokunle pleaded with the house to give the committee the power to invite officials of the ministry of health to give clarification on issues surrounding the multi-billion naira project. Tunde Braimoh, who represents Kosofe constituency II, expressed displeasure over the wastage of public funds through the abandonment of

the project that would have saved many lives. “It is disheartening that the investment of the state in the hospital is being abandoned. If these facilities are functioning, we would have saved many lives and reduce the constant medical tours to India and other foreign countries,” Braimoh said. He urged the house to grant the committee the authority to delve more into the matter from the point of supply of equipment and how they stopped functioning. Sanai Agunbiade, the majority leader, said that facility must not be allowed to waste away. Agunbiade, who urged the house to invite suppliers of the equipment for questioning, added that such questioning must attract public

participation. Abidun Tobun, representing Epe constituency I, who corroborated Agunbiade, said that the house should also interrogate those who took delivery of the equipment at the centre. Also, Rotimi Olowo, on his part, described the abandonment of such medical facility as a colossal waste. Other lawmakers took turns to express disappointment over the abandonment of the health facility. The speaker, Mudashiru Obasa, directed the clerk of the house, Azeez Sanni, to write a letter to the state ministry of health to appear before the ad hoc committee. Obasa also directed the clerk to write a letter of invitation to other necessary stakeholders to the meeting with the committee on the project.

Imo community halts wildlife park project

ekede community in Owerri West local government has halted ongoing government project at the Imo Zoo and Wildlife Park, claiming that the gazetted forest reserve “is their native land’’. Governor Chukwuemeka Ihedioha of Imo had during the 2019 World Environmental Day announced his desire to revive the Imo Zoo and Wildlife Park to meet international standard, which he subsequently released money for the renovation of the facility. But some leaders of Nekede community led by

a member of the Eze’s cabinet, Kamas Nkemakolam, stormed the zoo and halted the ongoing project. They also served a quit notice to all staff of the ministry of agriculture and environment occupying the government staff quarters in the area. Explaining reason for their action, Nkemakolam said that they had gotten a court judgment for the community to take over the government gazetted reserve. He said beside the agitation to take over the forest reserve, they were also laying claim to the Imo State Songai www.businessday.ng

located in the area and all the quarters currently housing staff under the ministry of agriculture and environment. However, that criticism has trailed the action of the community members. The manager, Imo Zoo and Wildlife Park, Francis Abioye, said “the land is a government property protected under the law’’. “I want to let the public know that this premises is a government forest reserve protected under the law. I think it is improper for the community to lay claim to government facility. “Even the staff quarters

and Songai are all government facilities and those living in the quarters are all government staff so I wonder why such claim will arise now that the governor wants to revive the zoo. Meanwhile, some tourists, who visited the zoo said on Monday that if government allowed the community to take over its facilities, others would engage in similar agitations. Chris Nwaebo, a tourist said “this is the only surviving zoo in the entire South East and government must not allow selfish community to intimidate them.

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enin zonal command of the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) says it has arrested a pastor and two others for allegedly raping and impregnating a 12-year-old orphan. Nduka Nwanwenne, NAPTIP’s zonal commander, said that the pastor was of a popular church in Uromi, Esan North East council area. Nwanwenne said the pastor, 30, a herbalist, 59, and another man, 30, were arrested by operatives of the zonal command for alleged repeated sexual abuse of the 12-year-old orphan. He alleged that the three suspects, at different times, engaged in continuous sexual molestation, rape and defilement of the girl who is now five months pregnant. The zonal commander said that the pregnant girl had been taken into the NAPTIP’s custody, adding that the act started when the girl was eight years old. Nwanwenne disclosed that the pastor had invited her to his house to help wash dishes with the approval of

the victim’s mother who was alive at the time and a member of the church. He noted that the pastor took advantage of his wife’s absence to rape the victim. He further explained that the victim was later taken away to stay with the second suspect, a native doctor, who was a guardian to her. The zonal commander alleged that the guardian repeatedly raped the victim in his bedroom and added that the herbalist blamed his act on frustration and drunkenness. According to him, the victim was later rescued by her aunt who enrolled her in a school. “The third suspect, a farmer who usually performed odd jobs in a restaurant owned by the victim’s uncle, molested and raped her. “One similarity among the three suspects is that they all admitted to the crime. However, the victim claimed that it was the last suspect that impregnated her. “All the suspects are in NAPTIP’s custody while investigation was being concluded for their arraignment,” he said.

3 docked over cultism, plan to rob Lagos community

he police on Monday arraigned three suspected members of a secret cult, which allegedly planned to rob Mission Street in Amukoko, Lagos State, during its initiation activities. Joseph Augustine, Ta i w o Mu d a s h i r u a n d Adam Ndubisi, aged 29, 26 and 34, respectively, were charged before a Yaba Chief Magistrate Court. The defendants, alleged to be members of an unlawful society called “Arobaga”, however, pleaded not guilty to a two-count charge of conspiracy and membership of an unlawful society. T h e p r o s e c u t o r, Modupe Olaluwoye, told the court that the defendants committed the offences at 1.00a.m. on July 18, on Mission Stre et, Amukoko. According to O laluwoye, the defendants were arrested alongside 10 other men and one woman. The prosecutor said that they were apprehended by the Anti-cultism Unit of the police during the @Businessdayng

group’s initiation process. O l a l u w oy e t o l d t h e court that the defendants planned to launch a robbery attack on Mission Street as part of the process. “My lord, cutlasses were recovered from two of the defendants, while ammunition were recovered from the other suspects yet to be arraigned. “During interrogation, they confessed to their plan and mentioned the name of their leader as ‘paw-paw’. “Some of them including their leader, however, escaped during the raid,” she said. The alleged offences contravene Sections 411 and 42 (a) of the Criminal Law of Lagos State, 2015 (Revised). Section 42 (a) stipulates a three-year jail term for membership an unlawful society while Section 411 provides for two years’ imprisonment for conspiracy. The chief magistrate Oluwatoyin Oghere granted the defendants bail in the sum of N100, 000 with two sureties each in like sum.

Wednesday 31 July 2019

BUSINESS DAY

Wednesday 31 July 2019

BUSINESS DAY

FEATURE

On the flipside, a flawed policy creates unexpected ‘millionaires’ CALEB OJEWALE

or some who may not know better, the Bank of Agriculture in Nigeria may have been merged to become a unit of the Central Bank of Nigeria. However, this is not the case, at least not formally. In the last four years, the Central Bank of Nigeria (CBN) has championed agriculture, perhaps more than even the Ministry of Agriculture and the Bank of Agriculture, which is responsible for extending credit to the sector. The involvement of the CBN in agriculture may annoy finance and economic experts who expect more monetary policy directions from it. But going by interactions with some farmers, particularly in Kebbi state, Nigeria has not had a better CBN Governor than Godwin Emefiele. Ask a farmer or finance/economics expert for their assessment of the CBN governor and the response is likely to differ. It is universally accepted that monetary policy is the primary function of the central bank. In Nigeria, however, its foray into agriculture, as much of a misplaced priority as some may view it, and as controversial as its implementation may be, it has changed the fortunes of thousands of erstwhile peasant, lowly farmers. It has transformed the standard of living of many farmers, particularly rice farmers who were interviewed in Kebbi and Ebonyi states. An almost indescribable joy radiates on their faces when they speak of how their lives have changed. The economy may be tough, the price of local rice may be unfavourable for consumers, and even not readily available for purchase, but not for these farmers, who on account of increase in local milling, now have a new story to tell. Five years ago, an 80kg bag of paddy rice could sell for at best N4000, but as at 2017 at the peak of high prices, the same rice sold for as much as N13,000; more than a three-fold increase. Prices have reduced in recent times; the same bag now sells for about N8000, but still double the price it was before

local production became incentivised. More importantly, with the improved seedlings, inputs, and knowledge support being provided under the Anchor Borrowers’ Programme, yield per hectare is also improving gradually. In 2016, Kebbi declared that it recorded over 40,000 “rice millionaires”, following the previous planting season, a claim that attracted understandable scepticism. “When they say they have 40,000 farmers becoming millionaires, the practicality and empirical proof of what they are claiming is not there,” said Moses Nomeh, Commissioner for Agriculture and Natural Resources, Ebonyi State in an exclusive interview. However, the arithmetic is quite simple. With the improvement in farm practices through trainings, and provision of farm inputs under the ABP, farmers reported one hectare gave an average yield of 90 bags of rice paddy on optimally performing land. The least was about 75 bags. Cultivating only one hectare with a bag of paddy rice selling for an average price of N12,000 (at the time) implied returns of between N900,000 to N1,080,000. However, many farmers either cultivated more than one hectare or realised more than the average number of bags, conveniently hitting the millionnaira mark after a planting season. It also took five months of hard work, and daily irrigation through petrolpowered water pumps during the dry season to achieve this. Business became even more lucrative: demand for paddy rice ultimately rose as rice mills sprung up in different parts of the country. Nomeh however, also goes further to acknowledge that farmers are changing their lifestyles, and there are improvements in approach to issues because more money is coming in. Success starts from the top: ‘Big people’ don’t want to be left out Judges are often found in courtrooms, adorned in their robes and wigs, as lawyers (regardless of age

or level) courteously address while making their case. A farm is a strange place to find ‘your honour’, tilling the soil side-by-side other peasant smallholder farmers. However, for some desirous of earning legitimate extra incomes to sustain their large families, and meet expectations of society, farming is becoming a vocation of choice. “When I was a magistrate, the salary was too meagre. But when I complemented my work with farming, I found no difficulty in meeting my obligations,” said Abubakar Umar, who until his retirement last year was Chief Magistrate in Kebbi state. He has been a rice farmer for 32 years and also benefited from the CBN intervention programme for rice farmers which started in 2015. “I have made a lot of success, and millions out of rice farming,” he said, repeating the statement gleefully. A father on nine children in universities, secondary, and primary schools, being able to cater to their education is his greatest pride. He has been able to provide all they require for their education “without any challenge”, as he puts it. True success is, according to Umar, “if you can give education to your children through what you’re doing.” But educating his children is not all he has been able to achieve, “I purchased a new car and I renovated the house. I am doing well,” he said. As Umar explained, with the existence of a lot processing and milling companies, the pricing of paddy rice in the state has increased, enabling them to make more money from their farms. Umar no longer participates in the ABP, not because he is done with rice farming. In fact, says he is increasing cultivation significantly. Retired and with a land holding estimated at 25 hectares, he can face farming fulltime. Umar is looking to expand the size of his rice farm to 100 hectares. During a visit to Birnin Kebbi, Mohammed Suleiman Ambursa, a judge of the Kebbi state high court for 21 years, walked through his rice farm content with how the crops were developing. He farms only three crops; rice, millet, and beans. Even though he had been into rice

appointed political office holders, who increasingly see rice farming as a way to legitimately earn extra income. In many cases, this extra income is becoming the major source of revenue. While most of these ‘bigger farmers’ have not been direct beneficiaries of disbursements from the ABP, they have benefited nonetheless, perhaps even more. For these new farmers, growing rice has never been more profitable as the scores of rice mills springing up in different parts of the country, mean their produce remain in high demand. Traditional peasants have new stories to tell On the flipside, for the smallholder farmers who have been the direct

A group of young men manually thresh rice in Patigi, Kwara State

farming before the Anchor Borrowers’ Programme (ABP) took off in 2015, its emergence has made farming more profitable, for him and other farmers, as findings revealed. “Before the ABP, we would cultivate rice, but didn’t have buyers,” said Ambursa. “The price was so low before.” Now with the introduction of ABP, Ambursa, beaming with excitement, said, “you can see that we now have so many rice processing companies, and they are interested in buying from farmers. So because of this, the value of rice has drastically increased.” Over a thousand kilometres away in Abakaliki, Lawrence Adum, a US trained lecturer of mathematics at the Ebonyi State University, also proudly shows off his rice farm. Adum graduated with a first class degree in the same institution he now lectures. Afterwards he went on a scholarship for his postgraduate studies at the University of Ohio, US. Cultivating across four different parcels of land, where he rotates the crops annually, Adum says he currently produces up to 300 metric tonnes of rice every year. He ventured into agriculture not just because of his passion for

it, but also because of the fragile economy. “One cannot rely on monthly pay to survive, and I realized by going into agriculture and investing in it, it will give more than government pay at the end of the year,” he said. For him, the annual pay from engaging in farming is actually more than his salary as a civil servant. “Even my duplex in the village, the money I used to build it did not come from my paid employment, but from the farm,” Adum said. “My children attend some of the best schools in the country, and I pay their school fees from this farm”. For him, rice farming has been more profitable than he could

far as rice cultivation has promoted me, I’m telling you I’m going to go more digital in it.” Ununu inherited rice farming from his parents, and cultivates29.8 hectares of land, which he plans to optimise through the use of technology. The political office is not all that changed between the last visit to Abakaliki and the recent one. Few metres away from the Abakaliki rice mill cluster, along Ogoja road, Ununu’s new house adorns the beginning of a street, with its bright colourfully tiled walls. “This my little compound was achieved

Joseph Ununu inset a shot of his newly built house

Abubakar Umar

ever imagine, and there is no going back. All courtesy of the booming rice market due to a rapid rise in demand ensuring farmers no longer have to struggle to sell their produce. Joseph Ununu was chairman of the Abakaliki Rice Mill Owners Industrial Association when this reporter first visited the state in 2016. This year, he was elected as a member of the Ebonyi State House of Assembly. The elective position “does not stop me from doing agriculture,” he said, “because as

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out, is a motorcycle. Yet, the excitement on his face as he described his achievement was contagious. During transplanting he brings his six male children to the farm, gets them to work alongside his labourers; it is his own way of ensuring they develop a firm interest in agriculture. Abubakar Hamza, a 42-yearold new rice farmer has only been farming for one year. He joined the ABP because he saw other farmers benefit from it, and their improved lifestyles. Hamza, who was for 10 years an electronics retailer, decided to give farming a chance. “Rice farming has been more profitable than the ten years I sold electronics in the market,” said Hamza who has only done two rice harvests (both wet and dry season)

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through rice cultivation,” Ununu said, trying to be modest. Without being a government official or holding any (political) position, “I thank God today through agriculture, he pushed me and carried me to another level,” he added. For these men, and thousands of others, life has been quite good to them. Rice farming has become very profitable. Many of the new rice farmers, proudly tilling the fields are successful professionals including lawyers, accountants, as well as elected and

Yakubu Suleiman rides his “new vehicle”

beneficiaries of the ABP, it has been a story of rising from poverty. A radical economic improvement many never would have imagined. Yakubu Suleiman, popularly known as ‘Jariri’, in the Far Fajya area of Argungu, Kebbi state has been a rice farmer for 25 years. A father of nine children; six males and three females, he previously cultivated half a hectare, which has now increased to 1.5 hectare following the launch of the Anchor Borrowers’ Programme. The programme according to Suleiman, equipped him with knowledge of best practices in farm management, ensured he got supply of improved seed varieties, taught him how to optimally transplant, and input administration on the farm. “Personally, I have achieved a lot,” said Suleiman, who added one wife after the boom in his farm productivity. “Before, I could not come up with money to even pay my children’s school fees. We were only farming just to feed ourselves.” But now, farming has become a business, the methods being taught under the ABP are put to use in getting more yields apart from what was previously realised, he explained. “I am now building a house, and bought a new vehicle. That long Kasea,” Suleiman said, describing his “new vehicle”, which as it turns www.businessday.ng

just a year after he swapped his shop for a farm. During the last year dry season, he cultivated one hectare and harvested 95 bags of paddy rice. This year, he has doubled it. He plans to stay in rice production for the near future and does not intend to return to his electronics business, he says in Hausa. Flawed policy, but the end may justify the means Yusuf Gabe Argungu, head of rice farmers in Argungu local government, has been into rice farming for 32 years. He started when he was 25 years old after graduating from the Federal Polytechnic, Birnin Kebbi with a HND in banking and finance and a post-graduate diploma in accountancy from Usman Danfodio University, Sokoto. As he explained, before the introduction of the Anchor Borrowers’ Programme, most farmers (in Kebbi) were producing between 40 and 60 bags of rice per hectare. However, since 2015, through trainings, seeds and other inputs provided under the ABP, farmers now get an average of 80 bags per hectare. This, for him, is a major difference in what has been observed before and after introduction of the programme. The population of farmers in Argungu for instance has also increased, according to him, from

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Mohammed Sahabi Augie

about 336 clusters pre-2015 to 640 clusters. Each cluster has between 25 and 30 members, and using an average of 27.5, there would be around 9,240 rice farmers before 2015, and following the introduction of ABP; 17,600 farmers in Argungu alone. “Previously, many of our farmers could not afford to buy cars or get money to marry since they had meagre to no income,” said Argungu, illustrating how the increase of farm output has affected individual lives of farmers. But now, “those who had uncompleted houses have gone to complete it, many now have wives, buy cars, solve all our problems of school fees for our children, pay NEPA bill, and even water bill. “If you see our farmers now, they are rich, because we consider rice as a business,” he said. Nasir Khalif introduces himself as a politician and also a rice farmer. Standing beside his new Toyota Corolla, Khalif says he has benefitted from the ABP every year since 2015. He now cultivates about four hectares of land. Before the ABP was introduced, his sole profession was being a “politician”, but now, “with the Anchor Borrowers’ Programme, I have something (concrete) to do,” Khalif said. “Before the ABP, I was not a farmer, and I had never been to a farm,” he added. Speaking of the gains he has made in the last four years of farming rice, he said “with this rice farming, I built my house,” adding he will probably stop only when he is old and “cannot even move.” Mohammed Sahabi Augie, chairman, Rice Farmers Association of Nigeria (RIFAN), Kebbi state chapter, reinforced the main driver of the profitable rice business is the reduction of difficulties farmers encounter to sell in the market. In the past, “we were only producing then selling at a loss, because there was no arranged marketing system like we now have under the Anchor Borrowers’ Program,” he said. Augie is by no means a peasant farmer, but when this reporter last visited Kebbi in 2017, he was driving a 1998/2000 Honda Hennessy @Businessdayng

car. By 2019, a Toyota Camry, 2007 model had been added to his gradually growing fleet of cars. “I am happy you observed that,” he said, laughing when asked if the new car is one of the dividends of the growing rice business. Not just him, but reinforcing some of Argungu’s earlier views, in different communities, some families living in mud houses are now able to use cement and good roof. Some are buying domestic animals such as cattle to keep for their economic upliftment, and some are buying vehicles; either actual cars or motorcycles. More young people can afford to go to school, and hence there is less insecurity because many of them are now going to the farm to produce rice, Augie explained. As he analysed, if you are able to produce 50 bags of rice, you become a semimillionaire. There are many youths below 30 years of age producing 100 bags of rice or more and with such volumes, easily cross the million naira mark in revenue. “That is why we actually have the security and a little improvement in our standard of living in Kebbi state,” he said. Data from the National Bureau of Statistics (NBS) actually supports this claim. The NBS in its 2017 report, “Crime Statistics: Reported Offences by Type and State”, stated that Kebbi has the lowest percentage share of total cases reported in Nigeria, with 205, which is 0.2 per cent of all cases reported throughout the country. “We have only seen previous CBN governors on the screens, other lofty areas and (fancy) destinations but never coming to the fields to actually have direct interactions with farmers,” said a delighted Augie. For him “Emefiele is different”. However, a nagging question remains: should the CBN governor be decking boots and touring farms? Till an answer is found, for now, tens of thousands of rice farmers across Nigeria continue to reap bountiful harvests, and find a viable market to thrive courtesy of what may have seemed like a misplaced priority at the beginning; the Anchor Borrowers’ Programme.

Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

SPECIAL REPORT ON

Collaborative Landscape of Fintech in Nigeria

The Disruptors?

igitalisation of financial services has gone from being a part of the strategy to becoming a mainstay. It has engendered transformation in not only financial products and services, but in customers’ expectation of banking entirely. It has also laid bare the fact that banks alone cannot satisfy the growing appetite and demand for innovation, speed and convenience of the 21st century customers. For that to be achieved there has to be collaboration. This is where fintech start-ups came in. One of the most misunderstood words in the fintech space is arguably “disruption”. While it was used to generate buzz for the new players using technology to bridge gaps in financial services, it also created a negative narrative that traditional banks’ businesses were under threat, thereby putting the banks in fierce protective mode to prevent the socalled imminent death. It wasn’t helped by many financial and tech analysts who prophesied that a ‘Big Bang’ was inevitable in the banking industry that will see many traditional players leave the scene for the fresh kids. Almost every bank bought into that narrative. Hence the dichotomy between start-ups leveraging financial tech-

nology to provide banking services and the traditional banks was born. Nevertheless, the disruption of the banking industry has not turned out to be a dramatic big bang as predicted; rather the erosion of bank profitability by low interest rate and increased regulatory costs has triggered an industry level response in which banks are using technology to improve efficiency and the customer experience. Instead of going extinct, the banks have been evolving. From our first report however, the creation and growth of fintech in Nigeria has more to do with collaboration between banks and entrepreneurs in the fintech space. History of collaboration in Nigeria’s fintech space Two of the first fintech companies in Nigeria, Unified Payment and Interswitch were established through collaboration. Unified Payment was founded in 1997 by a consortium of banks. At the time, the most innovation banks could boast of was branchless banking, in which customers could an account in one bank and be able to carry out transactions in another branch of the same bank. The only means of retail payment in Nigeria then was cash; hence the banks saw the need to establish a company that will be used as an industry platform to meet the needs www.businessday.ng

of the market. Interswitch was established as a project led by Mitchel Elegbe in partnership with seven Nigerian banks which seeded N200 million. The seven banks were First Bank, STB (Later United Bank for Africa), Zenith Bank, Guarantee Trust Bank (GTBank); First City Monument Bank (FCMB); and Wema Bank. Other shareholders of the electronic payment switching company were Accenture and Techinvest, the investment arm of TELNET, which actually initiated the project. From helping to establish these two companies, Nigerian banks have gone on to partner other companies such as eTranzact, Paga, Flutterwave, Paystack and many others. Why collaboration In its 2018 report, Ernst & Young (EY) noted that unless banks and fintechs work together better, neither will reap the full benefits of innovation. “They must partner or they perish,” EY said in the report. As early as 1997, banks in Nigeria realized that it was going to take more than their banking prowess or expertize to maximize the potential of emerging technologies in financial services. Hence, it needed to recruit partners to provide innovative services.

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Collaboration, they realised, could help them enter and create new markets. For instance, collaboration between eTranzact and GTBank led to the creation of USSD. According to the founder of eTranzact, Niyi Toluwalope, the USSD has evolved over time to the extent that practically every bank has a USSD stream. The USSD came into limelight in 2014 when GTBank introduced the *737# code. Currently about 18 commercial banks have unique USSD codes. The codes include *901# (Access Bank); *426# (Diamond Bank now Access Bank); *326# (Ecobank); *770# Fidelity Bank; *894# First Bank; *329# FCMB; *322# Heritage Bank; *533# (Keystone Bank); *833# (Skye Bank); *909# (Stanbic IBTC); *822# (Sterling Bank); *826# (Union Bank); *919# (UBA); *779# (Unity Bank); *945# (Wema Bank); *966# (Zenith Bank); and *389# (Jaiz Bank). Paga also leveraged partnership with banks to kick-off its agent banking services. The company was able to deploy 250 agents at the beginning. It currently has in excess of 4,000 qualified outlets. The evolution process Collaboration has gone through different stages. In the beginning, it was largely initiated by banks which were seeking new @Businessdayng

outlets to project their innovative products and services to customers with new digital appetite. In that sense, companies like Unified Payment and Interswitch were born. From 2010 however, with the entry of players like Paga, Flutterwave, Paystack, Piggybank (Piggyvest), Paylater (Carbon), etc the hype of the fintech space grew. A few of the start-ups attracted investment that sort of convinced some analysts the banks will soon yield their dominance. The word ‘disruptors’ became a regulator fixture in describing the start-ups. As the ‘threat’ narrative grew, most banks reclined and their relationship with start-ups took a different turn. They became more of competitors than partners. Before long, banks also started launching fintech products and services in a bid to counter the threats of startups. In May 2017, Wema Bank launched ALAT to confront the threat of Piggybank and Cowrywise. Through ALAT by Wema, as it is called, customers can create a bank account in less than five minutes, carry out banking activities without stepping into a banking hall. Like Piggybank and Cowrywise, ALAT introduced 10 per cent interest rates on savings and maintenance-feefree debit cards.

Wednesday 31 July 2019

BUSINESS DAY

INTERVIEW

Our focus is the customers’ peace of mind Credit Direct Limited pioneered and provide payroll-based consumer loans and other bridge finance in Nigeria and sub-saharan Africa. Credit Direct operates as a member of FCMB GROUP AKINWANDE ADEMOSU, Managing Director of Credit Direct in this interview with FRANK ELEANYA speaks on the various issues regarding the fintech sector of the Nigerian economy.

redit Direct is a member of the FCMB group. Was it aimed at addressing the gap in SME funding or controlling retail lending? What was the primary goal of setting up? Credit Direct at the time it came into being was born out of a desire to bridge the funding gap in the retail and consumer lending space, use that channel to reach the underbanked and unbanked people in the economy. Our commencement was a product of deep understanding based on some early survey we conducted that the real growth of our economy must come from the middle-income class which unfortunately was un-catered to because they were unable to access needed financial services thus facing existential risk. Most gainfully employed people like teachers, researchers, your average government/public workers and everyday worker who are the real engine of any society had become cutoff from the support of the traditional financial services organization. This was the uncharted water Credit Direct stepped into 12 years ago and we are glad that in pioneering this vital service we have brought smiles and changed lives of millions of Nigerians through our custom made solutions, creation of a thriving industry that has employed thousands of Nigerians in significant ways. When a bank set up a nonbank institution, the latter usually finds it difficult to come out of the shadows of the parent bank. How is Credit Direct different from its parent company and what unique proposition sets it apart from the competition in the market? Right from the conception of the business, our group (the FCMB Group) was clear on the direction and structure of Credit Direct. For that reason, will operate purely independent of the bank and this we have kept till today – separate board, policies, management and recently, our Headquarters located at Ikeja GRA. Lagos. I believe this has enabled us more flexibility, creativity and grown in unique ways that allowed us stand out as we have. While we retain the core ethos of the parent group, we have always had a unique identity, sales approach and market appeal. What we brought to the Nigerian market in collateral free lending was a very welcomed novelty and the words “Sharp! Sharp!!” which simply expresses our mode of operation has become a new definition of quick and efficient service. This is a brand that has been built bottom-up and

we are delighted that twelve years on, Credit Direct has remain a name synonymous with convenient, quick, technology enabled, hitch free loans and a recognized brand in our sector/industry. What do you think are the challenges facing retail lending in Nigeria? As is the case in every other economic climate, the main challenge with retail lending in Nigeria is asset quality. Although asset quality has improved since the economic recession in 2016, it continues to be one of the biggest challenges to lenders. Customers continue to struggle to repay loans as and when due as a result of the rising cost of living in the country and the slow pace of economic improvement. When quality of lives improves asset quality improves, so also, we believe interest rates will gradually begin to decline. Another top challenge in retail lending in Nigeria is the paucity of customer background information which limits our ability within the financial services industry to lend to all segments in the country. Put simply, lack of customer data significantly increases the risk of lending. Lenders need to know their customers adequately and profile the customer to understand what financial products best fit such a customer, however, the lack of a broad and adequate citizen/customer database limits our ability to do so. The Credit Bureaus are doing a brilliant job in terms of data collection but there is still more to be done. It is therefore very critical for the government to improve its data collection modalities and strategies as well as ensure the harmonization of all data across various citizens engagement platforms to enable us to create a one-stop shop for accurate data analysis which will help to significantly reduce the risk of lending to Nigerians and small businesses. Tell us about pioneering the unsecured micro-lending space? Twelve years ago, I accepted the challenge of building a the first structured world class non-bank financial services company and against all odds, we transformed what looked like an impossible task into a reality, creating an organization that has now become the largest alternative financial services in the country. Like many innovations and business solutions in the world, the birth of the unsecured Lending Industry in Nigeria was not achieved overnight (“if you really look closely, most overnight successes took a long time” - Steve Jobs). Before we pioneered the first structured unsecured conwww.businessday.ng

Akinwande Ademosu sumer lending business in Nigeria, salary earners and small enterprises who could not get funding from traditional financial Institutions either do not have their finance needs met or borrow at unprintable rates from unstructured loan companies using their personal belongings as collateral. We at Credit Direct re-wrote this inexplicable story about the Nigerian lending space (although there are now competitions that we attracted to the Industry) and we are determined to continue extending its frontiers and possibilities. The Industry and our customers will experience better days as we are set to make the next big leap of optimizing technology to make customers dealings easier, faster and super convenient. How can banks and fintech startups collaborate better in order to address the funding gaps? The funding challenge in the economy today is huge. The traditional institutions with deep pockets are risk averse, the regulatory envi-

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ronment is high unstable, also, the enabling environment is unfriendly and few other factors. Credit Direct as one of the leading alternative lenders, is deploying and collaborating with like organizations to reach the unreached. Our Fintech enabled processes has continue to improve over the years. Aside platforms, mobile, data integrity and clear funding policy that is focused to shift the attention of traditional institutions from government TBs and bonds to their traditional function of financial intermediation – collecting from surplus to fund deficit sectors. As the sector leader, in our market segment, we continue to encourage start-ups with innovative ideas, collaborate with government agencies to take steps to help reduce cost of funds for other financial institutions and consequently translate to lower cost of funds for customers. You have 300,000 active customers, what is the volume of loans disbursed so far by Credit Direct? Credit Direct Limited has in the last 12 years created and led its @Businessdayng

market segment disbursing over one hundred and fifty billion naira to more than One Million, Five Hundred Thousand beneficiaries across the Country. Interestingly, the demand for our services is growing and it is our commitment to continue to raise the bar across all indices – corporate governance, technology, people, process, these will further drive geometric growth of disbursements in the coming years. Businesses and individuals that have used fintech lending platforms complain of high interest rate. How is this being addressed at Credit Direct? Rates have always been a major subject of discussion and decision for many and it makes for interesting discussions. Price which is one of the P’s in the four P’s of marketing is one of the item that speaks to the buyers and the bottom line. A lot of fintech lending platforms have adopted this as a method of competing and creating comparisons. Is that the best way to go really? Personally, I think otherwise. While a play on price has a short term catch which is basically to attract customers, disrupt existing players, it has always fallen short in the end. Technology, risk analysis, cost of funds (being a non-deposit taking institution), creating Top of mind awareness and delivering exceptional customer experience will have a longer-term impact. Our focus is to develop and deliver solutions that compete with world class standards and give the customers Peace of Mind. Services that give our customers more choice, greater convenience, lower transaction costs and better credit risk assessments. In spite of this, we still offer the most competitive rates in the industry with impeccable customer service, speed and ease of transactions built on technology. How are you evolving your lending technology to ensure that more people have access to loans? Lending Technology has greatly improved credit access for financially underserved individuals as well as the elites while providing additional options to investors. At Credit Direct we are consistently fine tuning our solution to provide seamless end-to-end services such that our customers would enjoy the journey with us. We are always working to ensure more flexibility and control is handed over to the customer such that they can truly take charge of the process. We make sure however that we also continue to give a youthful feel to the users to ensure they can mix business with fun. Innovating, people, customers, are at the core of our DNA.

Wednesday 31 July 2019

BUSINESS DAY

INTERVIEW ‘Customer service is our priority, key to value creation’ - Oluwadare Owolabi Xpress Payment Solutions Limited is a wholly owned Nigerian company specialising in the design, implementation and provision of platforms/infrastructure for Electronic Payments, Collections, Bills Payment and Funds Disbursement. The company’s Managing Director, OLUWADARE OWOLABI, in this interview with DOLAPO ASHIRU, speaks on the emergence of Xpress Payments, their activities and contributions in the Fintech space.

hat is Xpress Payments all about? Xpress Payments is a financial technology company; consequently, we are permitted to carry out several activities based on the operating licences we have from the Central Bank of Nigeria. We have a switching and a third-party processing licence. These licenses enable us to process international card scheme (Such as Visa and MasterCard) transactions. We can also switch and process non card-based transactions using our switching and processing infrastructure. The Switching & Third-Party Processing licenses are the highest licences that could be obtained from the CBN today by a payment service provider. We are also licensed as a Payment Solution Service Provider; this allows us to develop and deploy payment/collection platforms, to take payment from individuals and collect on behalf of corporate entities or government. Our clients can make and collect payments through our inventive payment gateway and standard collection channel called XpressPay and e-Cashier respectively. In addition to this, we are a licensed Payment Terminal Service Provider, which allows us to support Point of Sale, deploy and maintain PoS terminals. We equally have an Agency Banking Licence, which enables us to deploy and manage a network of agents that carry out basic financial services. This invariably helps in deepening financial inclusion. For example, Guaranty Trust Bank does not have a presence at every nook and cranny of this nation but would want people outside their reach to have accounts and carry out transactions; For this reason, we at Xpress Payments through our Agency Banking License, enable agents who in turn ensure that certain financial services are accessible to those who are underbanked, regardless of the remoteness or inaccessibility of their locales. Xpress Payment is a CBNlicensed payment solution firm; what has the journey been so far? It has been quite an interesting journey. We have been around for three years and within that timeframe, we have obtained all our licences, which is a remarkable feat considering that it takes some companies five years to get even one. All our licences are active, and we have successfully driven each business verticals to near perfection. The

Oluwadare Afolabi

journey has been exciting, and we have exhibited positive aggression in pushing the frontiers. What are the challenges you have faced as a payment solution company? The most potent of the challenges we have faced have bordered on training people who are getting in contact with Fintech solutions for the very first time on how to use them. While some companies just dump complex solutions on their customers, we go the extra mile to ensure that first-time users have an exhaustive understanding of how our products work by creating a training department to achieve this purpose. What are the current trends in your industry and where are fintechs moving to now? The current trend in the country is innovation; there is no gainsaying that we are witnessing a pervasive change in the status quo. Hence, players in the industry are looking to offer innovative products that offer people convenience, speed, security and smart living experiences. Whatever you have today, you should be able to deploy solutions that enable people to transact with little or no difficulty and there should be convenience doing it, either from the public sector or the private sector. Xpress Payments as www.businessday.ng

a company is offering innovative products and providing financial solutions capable of meeting modern needs and demands. Xpress Payment Solutions Limited is a wholly owned Nigerian company specialising in the design, implementation and provision of platforms/infrastructure for Electronic Payments, Collections, Bills Payment and Funds Disbursement. The company’s

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We also have a settlement and reconciliation team in-house, that checks every transaction daily, including verifying if the parties to transactions got value for the services rendered. These measures have greatly helped us in tackling cybercrime https://www.facebook.com/businessdayng

Managing Director, OLUWADARE OWOLABI, in this interview with DOLAPO ASHIRU, speaks on the emergence of Xpress Payments, their activities and contributions in the Fintech space. Where do you see banks and Fintech companies collaborating in the next five years? I just finished a meeting with GTB where we discussed at length on our partnership. The truth is; the banks cannot be ubiquitous; they have spent so much money building brick and mortar. They have been putting up structures, which are quite expensive for them; now they must rely on the likes of Xpress Payment as a Fintech with Agency Banking licence, to reach people in rural and remote areas. With the help of Xpress Agents, those people can open a GTB account, get a loan and carry out a lot of transactions. It is therefore imperative for the banks to foster their partnerships with Fintechs, because of the difficulty in building branches in rural and remote locations where the closest bank is about 45 minutes’ drive from the community. This could cause a degree of inconvenience for people seeking access to financial services. Such is the gap that we have been able to bridge courtesy our partnerships with banks and other financial institutions. What are the strides you see in Nigeria in the next five years? Virtual Banking: It is noteworthy that some banks have started selling some of their branches. I have seen banks that have sold some of their branches to a new bank. I have seen banks that have shut their branches. Another phenomenon that is rapidly unfolding in Nigeria is the emergence of mergers in the banking sector. So, you might see a bank that has four different branches in the same location, and are shutting some of them, while some banks are buying other branches. This is in sharp contrast with what is obtainable in developed countries like the United States where people own bank accounts but do not even know the physical location of the banks or its branches. Thus, if you need a loan, a statement or any other thing, it is sent immediately. The Central Bank of Nigeria recently announced that it was not on track to reach its 80% financial inclusion target by 2020. What are the constraints faced by regulators in meeting the target? One major challenge we have with financial inclusion is the lack of a national identification system. @Businessdayng

As a result of this, the Know Your Customer (KYC) requirements from the financial institutions could be quite stringent. Therefore, since most of the BOPs live in rural areas, there is the need for other players to be involved in provision of financial services in order to complement the efforts of the banks. That is a good reason to use super agents and an agent network to carry out last mile banking services since these agents (corner shops, supermarkets, pharmacies, business centres and others) exist everywhere in the country. How has your company coped with the prevalence of cyberfraud and cybersecurity challenges? I have a competent team that focuses on security. I have a lot of technology solutions that assist me on frauds related issues. I have a top-tier data centre and we do what we term “call over” on a daily basis; so, we have the inherent capacity to arrest fraudulent transactions as quickly as we can with mobile monitors to trigger alerts in and out of the office, as opposed to waiting for two weeks. We also have a settlement and reconciliation team in-house, that checks every transaction daily, including verifying if the parties to transactions got value for the services rendered. These measures have greatly helped us in tackling cybercrime. In addition, our Switching Infrastructure is fortified with an inbuilt Anti-Money Laundry (AML) and Fraud Management module for our switching business. In the past few months, Xpress Payment has been in the news for good reasons. How do you hope to sustain this momentum? What we have been able to do as a company is to focus on the pain of the customers. Even before the emergence of Xpress Payments as a switching and processing company, we have had few other companies doing that. There have been a lot of pains and issues but we have taken it on ourselves to ensure that everything we do takes care of the pain the customers are going through and I think that we will continue to sustain the initiatives that we are driving. Customer service is equally key and ranks top in our priorities. We are three years old and, in that time, we have successfully accomplished a lot and would continue to strengthen some of our achievements over the next few years. Customer service and satisfaction are key to value creation.

Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

MAN Oron workers seek Presidency, NASS intervention over unpaid December 2018 salary …Rector runs one-man government – staff allege amaka Anagor-Ewuzie

he Academic Staff Union of the Maritime Academy of Nigeria (MAN) in Oron, Akwa Ibom State has called for the intervention of President Muhammadu Buhari and the National Assembly over the failure of the management to pay the outstanding December 2018 salary. Bu s i n e s s D ay u n d e rstands that there seems to be tension among staff of Maritime Academy of Nigeria due to the unpaid salary, seven months after. Also, the staff union also alleged several other abnormalities in the Academy as the Emmanuel Duja Effedua-led management presently runs the Academy without key officers including registrar, bursar and librarian.

These above-mentioned officers, staff said, are supposed to be three key management staff that are crucial to the day-to-day running of any institution, but rather the rector prefers using staff on acting capacity. A lecturer in the Academy, who claimed anonymity, told BusinessDay that the non-payment of December salary is putting their members under financial stress, stating that salary is the only source of revenue through which members meet their financial obligations. “The executives of our academic staff union had been demanding from the Rector, who runs the affairs of the school. We urge the Presidency as well as the National Assembly to wade into this issue,” the source prayed. According to the source, it was crucial for the dispute to be resolved as quickly

Emmanuel Duja Effedua

as possible for normalcy to return to the Academy. “The delay in the payment of our last December salary and allowances is causing stress on lecturers because

for many of our members, that is the substantial source of their revenue. If the delay issue cannot be resolved, it is going to create tension which might affect academic

activities in the school,” the source claimed. The source further raised concerns as, “how it could be said that over a year after the management of the academy placed an advert seeking for qualified Nigerians to apply, they have not seen anyone qualified to fill up the positions of Registrar, Bursar and librarian. “For over a year, those appointed have been on acting capacity and do not have any say when it comes to critical issues in the Academy,” the source further alleged. Reacting to this, Emmanuel Duja Effedua, rector of the institution, said that the demand of the staff are ‘mundane issues’, adding that there are other better national matters to be discussed. He however, threatened to sack any staff involved in the matter for daring to drag the issue of unpaid salary to

the media. The Rector said that the non-payment of staff December salary is in the hands of the Accountant General of the Federation because the school authority has nothing to do with salary payment. “Talking of the recruitment of staff, nobody has applied since we placed that advert. Even if they have, I am not the Head of Service, who approves employment. The only advice I have for you is to be careful of these people. They are enemies of progress. They cause so many disharmonies,” the rector said. He further threatened: “Don’t they know that it is the Federal Government that pays salary. Those spreading the rumours are Oron people. I am looking for scapegoat and I will drag such person before the board and that person will lose his job at the end of the day.”

recordable case frequency (TRCF), demonstrating our commitment to the highest safety standards. “We are indeed very excited about this and we look forward to our next milestone. We will like to thank our customers and business partners, who have made this feat possible. Achieving these milestones is an indication of the trust and confidence they

have in us to support their business aspirations and we are indeed happy to be part of this with them”, he said. Osikoya also added that the Jetty has the capacity to receive up to 60,000MT (cargo size) vessel because the facility has a draft of 13.5 meters, which makes it the deepest privately owned midstream jetty on Lagos waters.

ASPM celebrates 100th vessel berth at Lagos Midstream Jetty amaka Anagor-Ewuzie

wo years after it became fully operational, ASPM Limited, a subsidiary of OVH Energy, has marked the receipt of its 100th vessel berth at the Lagos Midstream Jetty (LMJ), netting an average of four vessels every month. The Lagos Midstream Jet-

ty, West Africa’s first privately owned midstream jetty, was rated the highest receiving jetty by CITAC, a sub-Saharan downstream oil market report, in the month of June. BusinessDay understands that since the official commissioning of the Jetty in October 2017, it has supported the economy by supplying over 3.8 billion litres of fuels, providing quick and safe dis-

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charge services, aiding government’s zero-fuel-scarcity drive, reducing significantly the demurrage costs associated with vessels waiting to berth, and enabling employment and skills transfer opportunities to Nigerians. “With these achievements, we are progressively delivering on our value proposition, which centers on radical transformation

of the Nigerian downstream business by improving operational efficiencies in the downstream petroleum sector,” said Deji Osikoya, group head, ASPM, Engineering and Terminals. According to him, in its less than two years of operations, the Lagos Midstream Jetty has recorded zero downtime, zero lost time injury, zero spills and zero total

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Wednesday 31 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Building alternative to Lagos through investment in cargo handling equipment, the WACT example amaka Anagor-Ewuzie

bviously, Nigerian shippers have been in need of an alternative to the ports in Lagos, Apapa and Tin-Can Island Ports. The search for an alternative port especially one that can compete favourably with their counterparts in Lagos, begun few years back, when congestion within the ports and roads leading to Apapa and Tin-Can Island Ports, started to take toll on shippers and other users of the port services. At that time, access in and out of Apapa where the two ports are located, became hard nuts to crack as gridlock on the Apapa-Oshodi Expressway and Apapa-Ijora/ Wharf Roads (two major access roads into both ports), compelled laden containers and empties to spend weeks on transit in and out of the port city. The delay resulting from the persistent traffic, forced cargo owners to pay large sum to shipping companies and terminal operators as demurrage and storage charges for not taking delivery of their consignments and returning empties as and when due. The situation worsened as years went by without help in sight, when it became absolutely necessary that among other viable solutions to solving the traffic problem bedevilling ports in Lagos, was the need to build strong alternatives to them, where shippers especially those situated in the Southeast, South-south, North-East and North-Central could allocate their consignments to, as port of destination. Consequently, shippers recently started diverting cargoes from ports in Lagos to Eastern ports especially Onne

Two new Mobile Harbour Cranes recently acquired by wact Nigeria Ltd worth $10 million for cargo handling at Onne Port

Container Terminal, which started recording tremendous growth of 17 percent in 2017, 21 percent in 2018 and 20 percent growth attained so far this year. With these opportunities in mind, the management of the West African Container Terminal (WACT) started positioning the Onne container terminal to become a viable option for Nigerian shippers. Located in Onne port, part of the Onne Oil and Gas Free Zone, WACT in addition to excellent hinterland connections to the rest of Nigeria, offers excellent customer service with trained operators, modern handling equipment and superior ecommerce capabilities. Due to increase in vessel and container traffic, WACT, last Wednesday, launched two new Mobile Harbour Cranes (MHCs) worth $10million (N3.6billion) for discharge of cargoes at the terminal. The Mobile Harbour

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Cranes (MHCs), which is coming on the heels of 10 new specialised terminal trucks and two new reach stackers already acquired, are expected to increase the turnaround time of vessels at the terminal. The two new container cargoes handling facilities bring WACT, one of the most efficient container terminals outside Lagos, at par with its peers in Lagos, in terms of equipment and operational efficiency. WACT, which has capacity to handle 314,000 Twenty-foot Equivalent Units (TEUs), 570 meters berth length and 12 meters depth alongside, now has a total of two Mobile Harbour Cranes; 20 equipment handlers; nine fork lifts; 22 terminal trucks and 375 reefer plugs. Speaking at the commissioning, held in Onne, Rivers State last Wednesday, Aamir Mirza, managing director, WACT, said the massive investment at the terminal has attracted 700 direct and 2000

indirect employments in the country. Mizra described the $10 million investment as a key enabler to customers’ satisfaction. “Our vision is to make WACT the best-performing container terminal in West Africa. We believe this vision can be realised early enough if the government can support us to reduce the challenges of security by ensuring the safety of vessels on our waters, and improve road connectivity, among others,” he said. Mirza said the cranes would enable volume growth resulting in increased productivity; reduced port stay and provide bunker savings; improve reliability in cargo delivery times; reduce the impact of crane breakdown/ idle time on overall terminal operations; and increase customers satisfaction and speedy delivery. Also, Hassan Bello, executive secretary of the Nigeria Shippers’ Council (NSC), said the new cranes will aid efficiency and improve vessels turnaround time at the terminal. He reiterated the Federal Government’s commitment to encouraging more importers to patronise Onne Port, adding that government is determined to see shipping make significant contributions to the economy. “Our terminals need to grow and show efficiency. We are happy with the competition. We need options, choice for shippers where they will discharge their cargoes,” he

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said. According to him, the commissioning of the Mobiles Harbour Cranes is no doubt significant because it will improve efficiency. “We are happy with the increase in volume of cargoes and in the long run, more Nigerians would be employed and it will make the terminal operation contribute to the economy.” “The more efficiency we have, the more cargoes we will get because Nigeria is a natural hub due to the market that is available here and I am happy today that this terminal is becoming one of the most efficient in West Africa. It gladdens our hearts that the main reasons of concessioning the port to private sector will be realised by this terminal, and we will use this terminal to benchmark the performance of others.” Umana Okon Umana, managing director, Oil and Gas Free Zone Authority (OGFZA), who lauded WACT, described the investment as a show of confidence in Nigeria’s economy. “WACT has sent Nigerians out for training because it is a very specialised equipment, and the objectives of free zones is to attract Foreign Direct Investment that will support job creation, transfer of skills and technology and what government loses by tax revenues, it takes back in employment, skills and transfer of skills,” he said. Hadiza Bala Usman, managing director of the Nigerian Ports Authority (NPA), who commended the company @Businessdayng

for acquiring new cranes, urged shippers to patronise Onne Port. Represented by AlHassan Ismaila, Onne port manager, Usman said the government was looking into the security of vessels on the nation’s high sea. “The Onne Port is a nexus to connecting the North-East, North-Central, South-South and South-East. So, cargoes for these sections of the country are expected to be discharged through this port. We are calling on shippers to patronise Onne Port because of the friendly environment, and the synergy between the agencies of government operating at the port,” she added. Several stakeholders including the representatives of shipping companies, Customs, freight forwarders, truck operators, importers, exporters and government agencies, who graced the event, expressed confidence on WACT. To them, government needs to support the terminal operator by increasing the depth of the channel to Onne, address the security challenges and improve the state of East-West Road, because improving infrastructural issues and road connectivity, will position Onne to becoming a leading port in West Africa. Emenike Nwokeji, former chairman of Association of Nigerian Licensed Customs Agents (ANLCA) Onne Port Chapter, described the commissioning of the equipment as a sign that there are other parts in Nigeria with better equipment like Lagos Ports. “We have the deepest channel that is why Onne is called ocean terminal and any ship that cannot berth in Onne, cannot berth anywhere in Nigeria,” said Nwokeji, who commended the management of WACT. He said the new cranes would likely increase the cargo throughput of the port by bringing cargoes meant for east and large chunk of northern markets to Onne Port. “We are delighted because more businesses would be coming to Onne due to the improved turnaround time for vessels calling the ports,” said Okey Okoro, chairmen, National Association of Government Approved Freight Forwarders (NAGAFF), Onne chapter. WACT was one of the first Greenfield container terminals to be built in Nigeria under public private partnership.

Wednesday 31 July 2019

BUSINESS DAY

BANKING

In Association with

Access Bank targets health, education, technology in loan portfolio extension Stories by HOPE MOSES-ASHIKE

aving increasingly supported the Small and Medium Enterprises (SMEs) with funding totalling N37 billion in 2018 from N22 billion in 2017, Access Bank Plc is planning to expand its footprint into three critical sector of the economy. Consequently, the bank would be extending its loan portfolio to education, health and technology. To further ease the process of loan application and processing as part of continuing innovation to support the growth of SMEs, the bank would in the fourth quarter of this year, launch an online portal. A total of 12,000 customers benefited from the bank’s lending in 2018, which represents 9.1 percent compared to 11,000 customers in the previous year of 2017. Ayodele Olojede, head of emerging businesses at Access Bank explained that the bank was able to maintain its leadership position in SME funding because the bank introduced an innovative approach to lending, which simplified the process and made it more customer friendly. “We were able to achieve this feat because we introduced an innovative approach to lending and you know that with this innovative approach to lending, all that the customers’ needs to do to access loans is just to keep good credit record and to keep their own sales records ,” she said. Olojede said the bank also uses its lending to support societal causes including women empowerment and that 30 per cent of loans granted to SMEs were used to support women

Ayodele Olojede, head businesses, Access Bank

through the bank’s W-power initiative. The bank provides concessionary interest rate of 15 per cent per annum to businesses where women own 50 per cent shareholding in addition to other incentives. The loan portfolio is collateral free for Nigerians as Access Bank is the only bank currently using the National Collateral Registry in support of micro, small and medium enterprises (MSMEs). Through its partnership with Medical Credit Fund, she said could grant loan of up to N3 million without collateral. “We love SMEs and we do not pay lipservice to SMEs. To the extent of how much we want to support SMEs, we have invested significantly in our understanding of the risk factors in that segment. In the last three years, we have supported SMEs. In 2018 alone, we granted up to N37 billion in loans to our SME customers which won us award globally,” Olojede added. She stressed that the bank’s business

model on SMEs is an ecosystem of all what SMEs need to thrive, including credit facility, mentoring, professional advisory services on key functions such as accounting, marketing and management and networking among others. On the other hand, 10 Nigerians have emerged in the monthly draw of the DiamondXtra savings scheme season eleven initiated by Access Bank. The presentation which took place in various states across Nigeria saw Samuel Ebu, Stanley Igwe, Olusina Fadare, Amos Tochukwu, Orungbala Anna amongst others winning N1 million naira each. Samuel Ebu, a businessman, could not hide his joy, having become a million naira richer, said, “I feel so good and excited to have N1 million with Access Bank and I have had a DiamondXtra account for three years now and since I started banking with the Bank, everything has been perfect, no complaints whatsoever as they are reliable. I had initially thought their call was a mistake because I did not think I could win but here I am, a winner of N1Million. I want to encourage Nigerians to partake in this initiative and bank with Access Bank”. Another customer, Stanley Igwe, an IT professional thanked the bank for the opportunity and called on Nigerians to participate in the rewarding scheme. Speaking during the cheque presentation to winners, Robert Giles, head, products insights and capabilities, Access Bank, revealed that the initiative has paid off immensely in which over N5 billion have been given out to winners while adding that DiamondXtra savings scheme has not only transformed lives in

short term but will do that for years to come. According to Giles, the DiamondXtra rewarding scheme has improved year-inyear-out and Access Bank remains in constant engagement with its customers on what they would like in subsequent season of the rewarding scheme. “The initiative has been very successful for the bank and when we have happy customers, we have happy numbers. so customers who use DiamondXtra stay with us a lot longer and they do more with us because effectively our customers get rewarded for something they were doing before, they save and in addition to them keeping their money, they build for the future and getting interest on their savings, we give them the opportunities to win more amazing prizes, so it is a win-win situation for the bank. We have millions of customers now on DiamondXtra and so we are no longer counting in hundreds or thousands because the initiative is a lot bigger and much more improved now”. Giles further said, “You can come to the bank, open a Diamondxtra account in any one of our access bank branches accross the country or you can call us and we will send an agent to you, then fund the account with N5000. Every N5000 you have in that account, you have an opportunity to be in draw to win salary for life, education allowance for 5 years and so many prizes”. DiamondXtra is an interest yielding hybrid account which allows deposit of both cash and third party cheques. Hybrid means a combination of both savings and current account features. The DiamondXtra reward scheme was launched in 2008 and has been running till date.

The Pitch by Sterling debuts, offers entrepreneurs N10m seed capital

he Pitch, a type of Shark Tank challenge for budding entrepreneurs powered by Sterling Bank, debuts on Monday on YouTube. The 13-episode show provides aspiring and emerging entrepreneurs with the opportunity to pitch their ideas for seed funding. It fosters innovation and supports new businesses to unleash their potential. Developed in partnership with the Enterprise Development Centre (EDC) of the PanAtlantic University, The Pitch received over 8,000 applications from entrepreneurs across

the country. Entries were screened with 1000 applicants benefitting from entrepreneurship training through the EDC learning platform. The training was put together to help beneficiaries develop financial management and corporate governance skills required for their firm’s survival and growth. Abubakar Suleiman, CEO, Sterling Bank and Executive Producer of The Pitch, said the entrepreneurship course which preceded The Pitch would help all participants grow their companies. “It was a capacity building programme for aspiring entrepreneurs who want to learn about

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business, and for emerging entrepreneurs who are intent on growing their business.” Abubakar added that 200 out of the 1000 beneficiaries of the entrepreneurship training will have the opportunity to present their business ideas and businesses to experts for funding. They are aspiring and emerging entrepreneurs with innovative solutions and projects requiring funding that have skilled up on financial management and corporate governance through the entrepreneurship training programme. Gbenga Adegoke, Project Manager, The

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Pitch, said the goal of the programme is to stimulate the economy by creating sustainable businesses which will equally create new employment opportunities. He added that The Pitch will help startups and small business owners run better businesses. “The Pitch was developed to provide aspiring and emerging entrepreneurs with the opportunity to bring their dreams to fruition. It allows them to pitch their ideas or businesses to experts with the goal of convincing them to invest N10 million in their idea or business”, Adegoke disclosed.

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Wednesday 31 July 2019

BUSINESS DAY

PENSION today

In Association With with contributions from

How RSA holders can make informed choices to better their pension earnings through multi-fund structure

into four distinct Funds. The current RSA Fund will be sub-divided into three separate Funds, while the RSA Retirees Fund would be the 4th Fund.” It is the risk features of the different funds that differentiate them. In investment, investors are free to choose portfolios that align with their risk appetite and further informed by a cocktail of reasons including stock of investments, age, level of income and needs. For instance, young people have a higher disposition to risks with regard to pension funds investment. This is because the invested funds would naturally have longer gestation period and would in the long-term most likely earn higher returns on their investment. Some would keep contributing for up to 35 years. But someone already in his 50s and close to retirement would not be able to take high risks. In Nigeria, age and level of income should be the major determinants of choices to make. Following the regulations, the maximum exposure to variable investments is 75 percent for Fund I, 55 percent for Fund II, 20 percent for Fund III and 10 percent for Fund IV while the minimum exposures are 20 percent for Fund I, 10 percent for Fund II, 5 percent for Fund III and 0 percent for Fund IV. This implies that Fund I is amenable to aggressive and high risk investment while Fund IV naturally deserves a more careful and conservative approach with regard to

investment. Fund I is available to RSA holders on request who are above 50 years old even when contributors who are above 50 years old by this regulation are placed in Fund III. Those 49 and below are in Fund II while retirees are in Fund IV. There is an opportunity to migrate from one Fund to another subject to other regulations and/ or restrictions. “Subsequently, an active contributor

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The new structure allows RSA holders more control over how their pension funds are invested based on their risk tolerance

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ince the coming on board of the Multi-fund Structure not many Retirement Savings Account (RSA) holders are aware they could actually take advantage of the investment guideline to increase their pension purse. Paddy Ezeala, a communication and development specialist based in Enugu in this article review the scheme and how RSA holders can strategically boost their pension earnings. The Contributory Pension Scheme (CPS) has largely been successful. But proper understanding of the workings and the immense opportunities inherent in the system would enhance the maximisation of its potentials, especially by Retirement Savings Accounts (RSA) holders. One of the major differences between the old Defined Benefit Scheme (DBS) and the current CPS, apart from the deregulation of pension administration with its concomitant private sector participation, is the opportunity to grow accumulated funds. Pension funds are becoming increasingly relevant to economic development. There is need for proper enlightenment and sensitisation of the general public on the opportunities available to the RSA holder to direct his or her Pension Fund Administrator (PFA) in line with available investment options. For proper understanding, since July last year, The National Pension Commission (PenCom) created options in the CPS with regard to how pension funds are invested. Previously, from inception of the industry in 2004, contributions of workers, those in active employment, are lumped together by the PFA in a single Investment Fund and invested in various instruments in line with the guidelines laid down by the regulatory body, PenCom. The choice of the actual portfolio composition is made by the PFA without any input by the account holder. As it is today, the story is different. In what is called Multi-funds Structure, three separate investment funds, i.e. Fund I, Fund II and Fund III are available to active contributors, while retirees are in Fund IV. What is Multi-fund Structure? “The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holders by dividing the RSA Fund

can make a request to his PFA to move between Funds subject to certain restrictions. An active contributor of 49 years and below can opt for Fund I, while an active contributor in Fund III may elect to be assigned to Fund II. However an active contributor in Fund III is not allowed to opt for Fund I while an active contributor in Fund II is not allowed to opt for Fund III. Fund III is strictly for active contributors above 50 years. To be assigned to any fund based on the preceding, an RSA holder must make a formal request to his/her PFA.” The Multi-fund Structure unpacks tremendous advantages. The new structure allows RSA holders more control over how their pension funds are invested based on their risk tolerance. For instance, an RSA holder in Fund III owing to the default classification based on age, may have more tolerance for risks and uncertainty and could opt to be assigned to Fund II. But to ensure that RSA holders maximise the gains of the scheme, there should be proper understanding of how it works. This is why pension operators and the regulatory body must continue and even expand and intensify public enlightenment programmes on its workings and benefits. It should be noted that the age of the RSA holder and the amount of investible funds to a large extent should determine or inform penchant towards risk or otherwise.

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Diamond Pension Fund Custodian Limited with contributions from

1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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

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Wednesday 31 July 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Expert reviews insurance industry regulation, offers panacea to market development Modestus Anaesoronye

fter about 35 years experience in the insurance industry in Nigeria, Olatunji Oluyemi, managing partner, Tespauruth Consulting Limited thinks the insurance industry should have grown more with better collaboration between the regulator and the operators. He also believes that focus of every regulation should be market development and growth. In this review of the insurance industry regulations says with consideration to developing countries like Nigeria, the regulator is saddled with an additional burden of work- to actually stimulate the growth of the industry. “Regulators have the job of policing the players, while encouraging the development of the industry they oversee. They can do this in two major ways. In the first place the regulator lays down regulation that will encourage fair play, fair pricing, fair activity, and promote an overall level playing ground. But in particular, with consideration to developing countries like Nigeria, the regulator is saddled with an additional burden of work- to actually stimulate the growth of the industry. Let us look at how both aspects have been carried out under the Mohammed Kari led NAICOM.” “As to regulation, insurance brokers and insurance companies seemingly are subject to a new directive every other month. These directives are taxing and lay out in minute detail the format for returns to the regulator, procedures for approving middle to senior level appointments, etc. Effectively it may

L-R: Adegbola Lewis, admin director, Lagos State Security Trust Fund (LSSTF); Getrude Olutekunbi, company secretary/legal adviser, LASACO Assurance Plc; Abdurrasaq Balogun, executive secretary/ CEO, LSSTF; Segun Balogun, managing director/CEO, LASACO Assurance Plc; Ada Nwankwo, executive assistant, LSSTF and Kayode Abraham , head corporate communications ,LASACO during the donation of of N10 million to support LSSTF operations in Lagos

be said, with fairness, that the regulator is micro-managing the industry. Protests from operators, it is said, are simply brushed aside, while more directives are churned out....The operators end up maintaining an army of accountants, lawyers, consultants etc. to prepare and file returns to meet the ever-changing requirements of NAICOM. It would not be out of place to say that this is inherently destabilizing.” “NAICOM cannot be unaware that the modern trend of financial services regula-

Prestige Assurance increases authorised share capital to N10bn ...Pays 3kobo divided Modestus Anaesoronye

nderwriting firm, Presitge Assurance Plc has increased its authorised share capital to N10 billion from initial N3 billion by the creation of additional fourteen billion ordinary shares of 50 kobo each. This is in line with the company’s determination to meet new minimum capital requirement set for underwriting companies in the industry. The general insurer also got approval of its shareholders to raise capital by way most suitable to the company in line with the recapitalisation requirement of the National Insurance Commission (NAICOM). The Company’s board of directors got the nod during its 49th Annual General Meeting held in Lagos. Muftau Oyegunle, acting chairman of the Company said during the meeting that it’s no longer news that the industry regulator has increased the minimum capital requirement of the general insurance business to N10 billion, effective June 30, 2019. Meeting this capitalisation imperative is critical for our business, Oyegunle said. Oyegunle stated that, “to this end, your board is examining various options to ensure that we meet the new requirements and re-

main a significant participant in the sector”. “We shall continue working to ensure that we retain our brand name and identity as one with a penchant for quality.This in keeping with our commitment to firm regulatory compliance, vital to sustainable growth in this business environment”. Looking at the Company’s performance during the 2018 financial year, Oyegunle noted that despite the challenging business environment, the company was able to underwrite healthy business volumes due to earnest enthusiasm and relentless effort of the management and staff, support from respected clients and shareholders and the valuable guidance and monitoring of the board. “Your Company’s gross premium rose from N3.809 billion in 2017 to N4.792 billion, an increase of approximately 26 percent.” The company also closed the year with an investment income of N365.36 million, as against N291.370 million in 2017, while profit for 2018 was N423.79 million as against N531.841 million in the previous year, attributing the increased underwriting expenses as a result of rising claims from business. The shareholders also got a dividend payout of 3 kobo for every 50 kobo share. The company also close the year with total assets of N13.02 billion from N11.775 billion in 2017. www.businessday.ng

tion (banks and insurance companies in particular) internationally is to lay out broad frameworks of standards of action and activity, within which boundaries; players have limited freedom of action. Under successive BASEL (banks) as well as Solvency 2 (insurance companies) regulations in the European Union for example, banks and insurance companies are encouraged to develop and present to local regulators for approval, their own internal risk management models. Once these internal models are tested and

meet the minimum parameters laid down in the relevant directives, the operators are allowed to utilize their models to test for capital adequacy (the capital adequacy risk), as well as the whole gamut of other risks an insurer is confronted with such as market risk, credit risk, etc.” “And then, in 2019 NAICOM actually introduced the extant directive for recapitalization that only refers to minimum paid up capital requirements (capital adequacy risk, as measured by the solvency margin)! This ignores the other range of risk exposures with which an insurance company is confronted. But we recall that the suggested capitalization requirement in 2018- later withdrawn- laid down different capital requirements for the different classes of insurance underwritten, with the more ‘risky’ classes of insurance requiring more capital. I think the 2019 capitalization directive is quite unsophisticated. It is the antithesis, say, of the Solvency 2 EU Directive which came into effect on 1st January 2016. In this respect, Nigeria is swimming against the tide of recent international financial services regulation. “The major attempt to stimulate industry growth in recent times has been the MDRI, an initiative that pre-dated the present NAICOM. Launched with fanfare at the initiative of the regulator, MDRI set overly ambitious targets of insurance industry restructuring and growth. The aims of MDRI have not been met, by a long mile. But MDRI is a subject that deserves detailed consideration. I would love to go into the detail in another, separate interview. Perhaps we could have another interview, just for consideration of MDRI, Oluyemi said.

LASACO Assurance boosts Lagos security with N10m donation to LSSTF

s part of its corporate social responsibility, LASACO Assurance Plc has expressed its support to the Lagos State Security Trust Fund (LSSTF). Balogun, group managing director/CEO of the Company said this when he led a management of the company to present a cheque of N10 million to the LSSTF in Lagos. While commenting on the fund, Balogun said, “Many states are trying to copy the concept, it is a unique thing and you are doing a good job. We at LASACO appreciate what you are doing, and we hope other states will emulate this and you will be a consultant to other states.” When comparing with other states in the country, he said Lagos was still relatively safe, so it felt it should encourage the fund. Abdurrasak Balogun, executive secretary/ CEO, LSSTF, appreciated LASACO for the gesture and consistent support. He said, “This is an organisation that has expenditure side but not a revenue side. This is a model for all states in Nigeria. It has

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clearly shown that this is a model that can take Nigeria out from this underfunding, particularly for Nigerian police. According to him, the fund was working with a meagre funding but making the best use of it. He said, “Lagos has about 90,400 roads. We feel that if we had just 1,000 vehicles, that will be one vehicle to 900, is grossly insufficient. If we have 10,000, that will be one to 90. “You can see why the response time is not that fast because again, the assets are not enough. But the little one we have, we continue to maintain and repair. But what is most important is that the end users, the police, lay down their lives for us and yet the tools that is required for them is not there. “This donation is becoming difficult, and any donation we get is well appreciated. But the truth of the matter is we will continue to ask for more. If you have the confidence in us that the resources are well managed, you will tell us.” As Lagos seemed to be more secure and stable, he said it was cogent to continue to keep the city safe

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Wednesday 31 July 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Opportunity calling for local insurers as renewable energy attracts investment Modestus Anaesoronye

s a growth market, the renewable energy insurance sector h a s a t t ra c t e d significant capital, leading to a soft market and many challenges for insurers. Premium has developed in line with installed capacity in the industry which has grown at an annual rate of around 8 percent since 2010. However, recent loss trends in many segments of the renewable energy industry have raised concerns over deductible and rate adequacy, analyst at Allianz Global Corporate & Specialty (AGCS) said. Carl Angelo Dill, Senior Underwriter, Renewable Energy, Allianz Global Corporate & Specialty (AGCS), said from large hurricane losses to PV plants in Puerto Rico during Hurricane Maria in 2017 to fires devastating onshore wind turbines and repeated theft claims, the renewable en-

ergy industry suffers from frequency as well as severity events. Apart from this, challenges include a mix of risk engineering, price modeling, digital distribution and comprehensive product innovations, above and beyond traditional insurance solutions. He also noted that risk consulting and engineering are challenged by rapidly evolving technologies requiring close monitoring of different elements like new wind turbines being developed and upgraded in ever shorter cycles. Keeping up with international engineering standards as well as certifications for equipment (e.g. type certification) and projects is also challenging. Predictive maintenance and data analytics will drive innovative concepts for the evolving risks, eventually opening up opportunities for tailored insurance solutions. Digital distribution continues to be influenced by the smaller size but higher numbers of risks. While utility-scale PV and

onshore wind plants can reach installed capacity in the gigawatt range, many installations are on the smaller end which requires more efficient handling. PV and onshore wind continue to be standardized (e.g. through broker facilities and digital trading platforms), larger, more complex segments, like offshore wind, geothermal or concentrated solar power require thorough, case-bycase underwriting. Renewable energy requires a comprehensive insurance product offering due to complex financing and ownership structures. Traditional products often are bundled across project phases and lines of business, while non-traditional products, such as protecting against a lack of wind or sun, aren’t fully exploited by customers yet, requiring further product integration. If implemented before financial closing, these can reduce financing costs and free-up capital. Other products cover upfront decommissioning costs

for assets and lower capital requirements at the start of a project. Traditional insurance solutions cover renewable energy “all-risks” across multiple products and lines of business, as well as across

project phases – planning liability for architects and engineers during the development phase; cargo allrisks and delay in start-up (DSU) during the transport phase; erection all-risk, advance loss of profit and

project liability products during the construction phase; and operational all-risk, BI and public- and product-liability covers, as well as environmental liability, during the operational phase.

Office Fire Accident display at Ikeja City Mall, Lagos portraying the importance of insuring your office and other assets. This display is part of the ‘’Live with Freedom Campaign’’ powered by NIACOM, NIA and all the insurance companies in Nigeria.

Universal Insurance provides group cover STI shareholders positive firm will meet for passengers travelling on Nigerian roads new minimum capital requirement

n a bid to play significantly in the insurance industry’s retail space, The Universal Insurance Plc has keyed into the Passengers Manifest Scheme (PAMS) project of the Nigerian Union of Road Transport Workers Association (NURTW) as the official insurers of the scheme. With the partnership, Universal Insurance will be the official insurer of all the passengers and drivers under the scheme. The PAMS initiative is designed to ensure that passengers traveling by road across the country have their names authenticated in the union’s digital manifest and are covered with genuine insurance policy. In event of an accident, passengers who sustain injuries are treated in the designated hospitals near the location of the incidence and in case of death, or permanent disability, The Universal Insurance Plc, will pay compensation to the victimS or to their next of kin. Speaking to journalists

during the launch of the project, Ben Ujoatuonu, managing director/CEO, Universal Insurance Plc said as the official insurance company of PAMS, the company will do everything within its powers to support the scheme as well as ensure prompt settlement of claims. He said the scheme will go a long way in improving insurance awareness and penetration in the country. “This scheme is intended to ensure safety on the road and provides benefits to the passengers and the driver in event of an accident. The benefit is in the position of death, permanent disability, medical expenses to both the passengers and the driver in an event of an accident. For those, who because of the injuries sustained, become permanently disability there is an insurance package by Universal Insurance to make compensation to them. Unfortunately most of the accidents on our roads result to death, www.businessday.ng

in such a situation the next of kin of the deceased also receive compensation from Universal Insurance.” He said. He advised the travelling public to take a cue from the NURTW and also consider taking up personal insurance policies for themselves and their family members to boost the level of compensation they can get when claim occurs, adding that drivers and the PAMS operators should ensure that every passenger completes the passenger manifest form correctly so that in event of any accident the details and information concerning them could be quickly extracted and receive adequate compensation that is due to them. Alhaji Najeem Tajudeen, president, National Union of Road Transport Workers (NURTW) while unveiling the new Passengers Manifest scheme in Lagos on Thursday, 25thof July said PAMS is “an upgrade from manual to a fully digital system.

hareholders of Sovereign Trust Insurance (STI) Plc are optimistic that their company will scale through the minimum capital requirement to remain afloat after the 30th June 2020 dedline set by the regulator, the National Insurance Commission (NAICOM). The shareholders, who gave their unanimous support to the Company’s ongoing rights issue, said they will take up their rights as part of support to the company. Seun Ajayi, chairman of Sovereign Trust Insurance Plc said during the Company’s 24th Annual General Meeting in Lagos that the firm’s mandate to scale up capital base is already at an advance stage, stressing that the program for capitalisation will take off with the issuance of rights to existing shareholders of the company. According to him, the company is issuing a total of 4.17 billion ordinary shares to its esteemed sharehold-

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ers, adding that the decision will be finalized by the third quarter of the this year. He called on the shareholders to pick up their rights so as to have a successful program. The shareholders lauded the efforts deployed by the board and management of the firm to keep it afloat, whilst pledging to support the firm in all ramifications. He also disclosed that said soon, the company will unveil bespoke products to harvest opportunities to be created by the nation’s new minimum wage law. Ajayi adding stated that the new minimum wage bill recently passed and accented to by the Federal Government will to a great extent increase demand and supply in the economy. He posited that insurance service is expected to benefit by the law in terms of premium generation as disposable income improves. According to him, the products which will be affordable will also help deepen retail end of the firm’s @Businessdayng

product lines. “We believe that the change in our business environment present uncommon opportunities for operators. We shall continue to deploy several initiatives and strategies to address any industry challenges while harnessing the inherent opportunities,” he said. Showcasing the firm’s 2018 financial performance, Ajayi, noted that the company recorded Gross Premium Written (GPW) of N10.5 billion, representing 23 per cent increase over the N8.5 billion recorded in 2017. Ajayi noted that the net premium income equally grew by 31 per cent to N5.5 billion over N3.85 billion achieved in the previous year. He said the company recorded a profit before tax of N540 million as against N202 million achieved in 2017 representing over 167 per cent increase and profit after tax also stood at N344 million, a 118 per cent increase when compared with N158 million recorded in the previous year.

Wednesday 31 July 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Has sexual harassment at work decreased since #metoo? STEFANIE K. JOHNSON, KSENIA KEPLINGER, JESSICA F. KIRK AND LIZA BARNES

t’s been nearly two years since the #MeToo movement gained widespread momentum, and some big questions remain: What has changed? Do we know if reports of sexual harassment in organizations have decreased? What has happened to the women who have spoken up? It helps to look at data. In 2016, before #MeToo first took off, we surveyed 250 working women in the United States, asking them about the pervasiveness of sexual harassment in their workplaces and how it affected them at work; we also interviewed 31 women about their individual experiences. We conducted a second survey after the #MeToo phenomenon had begun, in September 2018, of 263 women, and we reconnected with some of the women we had previously interviewed to see whether they had seen changes or have changed their views. The survey was meant to gather quantitative evidence about the changes since #MeToo, and the interviews were meant to provide insight into why and how the those changes had occurred. We measured sexual harassment along three dimensions: gender harassment, unwanted sexual attention and sexual coercion. Gender harassment involves negative treatment of women that is not necessarily sexual, but that may include things like a supervisor or co-worker making sexist remarks, telling inappropriate stories or displaying sexist material. Unwanted sexual attention includes co-worker or supervisor behaviors such as staring, leering, ogling or unwanted touching. Sexual coercion includes bribing or pressuring women to engage in sexual behavior. We also measured participants’ self-esteem and self-doubt, to see how these correlated with their experiences. What did we find? In terms of what has changed, we saw that fewer women in our sample reported sexual coercion and unwanted sexual attention following the inception of the #MeToo

movement. In 2016, 25% of women reported being sexually coerced, and in 2018 that number had declined to 16%. Unwanted sexual attention declined from 66% of women to 25%. In contrast, we noticed an increase in reports of gender harassment, from 76% of women in 2016 to 92% in 2018. This suggests that while blatant sexual harassment — experiences that drive many women out of their careers — might be declining, workplaces may be seeing a “backlash effect,” or an increase in hostility toward women. When we examined women’s feelings of self-esteem and selfdoubt, we found an increase in self-esteem and a decrease in self-doubt since 2016. More important, the relationship between unwanted sexual attention and both of these outcomes (lower self-esteem, higher self-doubt) was weaker in 2018. Likewise, the relationship between gender harassment and the outcomes decreased. We believe that knowledge of the pervasiveness of sexual harassment has tempered its deleterious effects on self-doubt and self-esteem. Social psychological theories suggest that stigmatizing experiences, like sexual harassment, can be very damaging to self-esteem, especially because the stigmatized individuals fear that they are

alone and share in the blame for their mistreatment. The women we interviewed told us that the #MeToo movement helped them realize that they were not alone in their experiences. A marketing executive in her late thirties explained, “I started seeing [#MeToo posts] coming in, and I was just like, ‘Oh my gosh, they’re being so brave. Telling very personal stories that I never knew about.’ …. It isn’t like I’m vindicated; it is more, I’m validated.” What should companies and managers be doing now? On the most basic level, we need to continue to highlight the importance of preventing sexual harassment. Within organizations, human resource departments need to maintain this as a priority, by offering bystander intervention training, having clear zero-tolerance policies on sexual harassment and responding dutifully to complaints. Several women told us that it is imperative that human resource departments remain vigilant. One woman said, “I think that it’s more and more common for people to say something when they see something, or feel uncomfortable …. The bigger issue isn’t somebody saying something in the first place; it’s the response from an employer when they learn that one of their employees is sexually harassing another.” Managers can also en-

sure that women and men feel safe to speak up about harassment. Organizations should also pay attention to gender harassment, including bullying and sexist comments about women. One woman told us she believes that women who have been empowered by the #MeToo phenomenon to call out inappropriate behavior have faced more hostility among co-workers. It is important that organizations are aware of this, as constant exposure to gender harassment can be just as damaging to women as the most egregious forms of sexual harassment. Offering training that is focused on this issue as well as on microaggressions and unconscious bias could be useful not only for encouraging civil behavior but also for empowering peers and leaders to step in when they see bullying or harassing behavior in the workplace. It can be stressful for a woman to stand up to sexist comments when they are directed at her, but it can be a lot easier for a bystander to step in and diffuse the situation. These efforts will be the most successful if organizations are able to successfully enlist male allies in the gender equity conversation. Importantly, men need to hear the message that taking these issues seriously is not an accusation against them, but rather

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is part of a mutual effort to create an environment of respect in the workplace. I like the Twitter campaign #yesallwomen, which is intended to remind men (and women) that no one believes all men are sexual harassers, but that all women do experience harassment in their careers. And we cannot forget the most vulnerable workers. Most efforts around gender equity and reducing sexual harassment in the workplace focus on full-time, salaried potential leaders. However, there is evidence that the people at greatest risk for harassment are gig workers, those making minimum wage (or server wages), and part-time or temporary employees. People in these roles are often the most powerless, because they are not protected by EEOC laws. Creating a safer workplace means keeping everyone in mind. Greater legislation to protect non-employees would be an obvious first step, but until that happens gig workers and organizations can be proactive in putting anti-harassment clauses in their contracts to increase worker protection. Gig workers can also use online platforms to crowdsource information about which organizations are safe. While our results point to the benefits of #MeToo in reducing sexual harassment over the last two years, we need to ensure that we protect these changes, that women as well as men provide support for those who are harassed, and that vulnerable workers are not ignored. The goal of these efforts is continued progress on achieving workplace equity, and this goal benefits all employees.

• Stefanie K. Johnson is an associate professor of management and entrepreneurship at University of Colorado’s Leeds School of Business. Ksenia Keplinger is a Scholar-in-Residence at University of Colorado’s Leeds School of Business. Jessica F. Kirk is an assistant professor of management at the Fogelman College of Business & Economics at the University of Memphis. Liza Barnes is a doctoral student in Organizational Behavior at Leeds School of Business, University of Colorado Boulder.

Wednesday 31 July 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

Are companies about to have a Gen X retention problem? STEPHANIE NEAL

CONNECTING eneration X has been written off as the “slacker generation” — apathetic, cynical and anti-establishment in its outlook. Like members of other generations before them, most Gen Xers have adopted a stronger affiliation for stability and tradition as they’ve aged. But their unambitious reputation may be holding them back in the workplace; new data reveals that Gen X members are overlooked for promotions at higher rates than their millennial and baby boomer counterparts. In fact, in late 2018, we found that in the previous five years, the majority of Gen X leaders (66%) had received only one promotion or none at all. Gen X workers — who are now in their late 30s to early 50s — should be at the peak of their careers. However, many baby boomers are deciding to stay in the workforce much longer than previous generations, which may be affecting Gen X’s opportunities to advance. At the same time, companies are focusing a lot of effort on nurturing millennial talent in the face of changing work habits and values. As a result, Gen Xers often play

an underappreciated role in the workforce. BEARING THE BRUNT Gen Xers in both first-level and midlevel positions manage seven direct reports on average, in comparison to only five direct reports for millennials holding a management role at the same level. Gen X is also playing a critical role in bridging the digital divide.

While millennials are often thought of as particularly digitally savvy, Gen X leaders are just as confident in their digital leadership capabilities. They also excel in traditional leadership skills. REACHING A BREAKING POINT Nearly 1 in 5 Gen X high-level managers indicated that their intentions to leave have increased in the last year, a

significantly higher proportion than millennials and baby boomers. As millennials and Gen Xers start to compete for the same roles, companies risk losing many of their highest performing employees. Here are three things organizations can do to retain and develop their Gen X employees: — PERSONALIZE LEARNING AND DEVELOPMENT: Personal-

ization is essential in a multigenerational workforce because individual skills and development needs vary widely across generations. — PROVIDE GEN X LEADERS WITH MORE EXTERNAL GUIDANCE: Gen Xers crave insight and knowledge from mentors outside their organizations. Employers should invest in helping Gen Xers participate in professional organizations and industry conferences to foster new relationships. — USE DATA TO ADD OBJECTIVITY IN HIRING AND PROMOTION PRACTICES: A manager might unfairly assume that a millennial would be a better fit than a Gen X leader for a digital marketing position. Assessments that measure leadership capability and potential can help organizations be more objective in their hiring practices. Challenging generational stereotypes while fostering development and mentorship opportunities among multiple generations of leaders will ensure a longer, healthier pipeline of talent for organizations. Those that do all this successfully will be better prepared when Generation Z enters the workforce.

• Stephanie Neal is director of the Center for Analytics and Behavioral Research.

When a colleague is grieving GIANPIERO PETRIGLIERI AND SALLY MAITLIS

OW TO PROVIDE THE RIGHT KIND OF SUPPORT. Strong time-off policies, sensitive managers and open conversations can all make a big difference for employees in times of mourning. Yet those are rare in the workplace. In researching this article, we spoke with managers, grief experts, executive coaches and academics, and examined seminal studies, books and articles on death and mourning. On the whole, we found, managers come to work prepared to celebrate births and birthdays, and even to handle illnesses, but when it comes to death, they fall silent and avert their gaze. Companies need a better approach to grief. There is value in finding efficient and humane ways to help workers return to productivity, but managers’ obligations run deeper. Over the past few decades, as traditional support systems such as the extended family, religious communities and government institutions have lost influence, the workplace has emerged as a primary domain where people seek to fulfill their spiritual and social (as well as economic) needs. When grief is disenfranchised, the natural withdrawal that accompanies mourning is more intense and lasting, eroding performance in the short term and diminishing commitment and loyalty to the organization in the long term.

HOW MANAGERS CAN HELP GRIEVING WORKERS Half a century ago, John Bowlby’s groundbreaking work on grief identified three phases of mourning: one marked by defiance and anger; one by pain, despair and disorganization; and one by slow reorganization and reinvestment in life. Bowlby cautioned against assuming that these phases unfold in a progression. Although popular interpretations of David Kessler and Elisabeth Kübler-Ross’s five stages of grief paint the process as a steady march forward, researchers have confirmed Bowlby’s assertion that grief ebbs and flows. Mourning workers will experience both progressions and regressions after a loss. That’s why managers should understand the three phases and the most helpful response to each. THE VOID: BE PRESENT. In the immediate aftermath of the death of a loved one, or at any point in which grief flares up acutely, acknowledging the loss without makwww.businessday.ng

ing demands is the best a manager can do. Let the griever take the lead. It is important at this stage to ignore the impulse to “fix” that drives most managerial actions. Death is unfixable. Instead, managers should be present and support employees by managing the boundary between the worker and the workplace. Close colleagues typically will reach out to grieving co-workers, but it is especially important that a manager does. Managers represent the organization, and their demonstration of support is a signal that the workplace cares. There is no formula or agreedupon recommendation for when it’s best to return to work. Federal law does not require companies to provide time off, but according to the Society for Human Resource Management, nearly 90% of organizations in the United States offered paid bereavement leave in 2018. In 2016, employees received, on average, four days for a spouse or a child, three for another close family

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member and one to two for a more distant member. Although this may give employees time to deal with the practical demands of a death, it is unlikely to be enough for them to process their loss. Individuals’ responses differ with the kind of loss they have experienced — how close they were to the person and the nature of the death itself. Unexpected deaths, violent deaths and suicides are likely to be more traumatizing. All these factors should be taken into account when agreeing on time off, especially in organizations without a formal policy. And when the employee is ready to return to work, managers play an important role in preparing co-workers, through communication about the returning employee’s wishes and perhaps an expert-facilitated workshop on how to deal with grief. THE ABSENCE: BE PATIENT. Most workers resume work after a few days or weeks. But grief typically remains intense for months, and it can flare up years later. So even when the return to work has been handled sensitively, managers can’t assume that everything will go back to business as usual. The person in mourning will continue to be in the grip of intense confusion, exhaustion and pain. Furthermore, the months that follow the initial shock of loss are often a time of ambivalence. We go back and forth between feeling pain and wanting to move on. It is important for managers to realize that grief destabilizes focus, @Businessdayng

consistency and drive — the very things we describe as “talent” at work. Inconsistency is normal for some time after a loss, as is a lack of appetite for challenges and change. Neither is a sign that an employee has lost talent or interest in work. Recognizing and managing these behaviors can avert a good deal of misunderstanding and conflict. • Gianpiero Petriglieri is an associate professor of organizational behavior at INSEAD. A medical doctor and psychiatrist by training, Gianpiero researches and practices leadership development. He directs the INSEAD Management Acceleration Programme, as well as leadership workshops for global organizations. Sally Maitlis is a professor of organizational behavior and leadership at the University of Oxford’s Saïd Business School, where she directs the High Performance Leadership Program. She is also a practicing psychotherapist and an executive coach.

Wednesday 31 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

N2.5tr investment in local auto assembly wastes … As University don calls on FG to drop policy

automotive assembly should be encouraged, and arguing that the federal government cannot force assembly plants into reality. The university don and automotive consultant also an automotive industry consultant said “Even some stakeholders are not comfortable with the policy and there have been too much ado in doing nothing. He also advised the Federal Government to allow auto assembly plants to evolve: “Let the industry move on. Revolution is not by force. It starts with evolution. We must evolve to revolve. Let our auto industry evolve, then, it can revolve”. The University lecturer called

on the Nigerian Customs Service (NCS) to increase tariff on used imported vehicles from 30 percent to 80 percent, reduce tariff on brand new imported vehicles from 70 percent to 30 percent as well as consider the introduction of zero percent tariff on locally CKD assembled vehicles” The National Automotive Design and Development Council (NADDC) according to Oscar Odiboh should restrict itself to design, development of infrastructure and campaigns on patriotic patronage of Made-In-Nigeria vehicles. Going back memory lane, Odiboh questioned what the Federal Government have achieved since 2013 when the National Auto-

motive Industrial Development Plan has achieved. He queried how many genuine automobile assembly plants that the country has, describing them as many auto assembly plants that are licensed, where few are working, some fatlly wounded, while others are dead on arrival. He queried the patriotic credentials of Nigerians both as government or individuals in buying what is produced locally, describing a patriot as one who loves and supports all that belong to their country, one who employs countrymen and women out of poverty into prosperity and someone who is a hid or her country’s regular customer.

Bosch, Daimler obtain approval for driverless parking

osch and Daimler have reached a milestone on the way to automated driving: the two companies have now obtained approval from the relevant authorities for their automated parking system in the Mercedes-Benz Museum parking garage in Stuttgart. The automated valet parking service is accessed via a smartphone app and requires no safety driver. This makes it the world’s first fully automated driverless SAE Level 4¹ parking function to be officially approved for everyday use. “This decision by the authorities shows that innovations like automated valet parking are possible in Germany first,” says Markus Heyn, member of the board of management of Robert Bosch GmbH. “Driverless driving and parking is important building blocks for tomorrow’s mobility. The automated parking system shows just how far we have already progressed along this development path.” In the words of Michael Hafner, the head of drive technologies and automated driving at Daimler AG; “This approval from the authori-

ties sets a precedent for obtaining approval in the future for the parking service in parking garages around the world. As a pioneer in automated driving, our project paves the way for automated valet parking to go into mass production in the future’’. From the very beginning, Bosch and Daimler’s top priority for the driverless parking service was safety. Since there is as yet no official approval process for www.businessday.ng

automated driving functions that do not require a driver, the Stuttgart regional administrative local authority and the state of BadenWürttemberg’s transportation ministry oversaw the project along with experts from the German technical inspection service TÜV Rheinland from the outset. Their aim was to assess the operating safety of the automotive and parking-garage technology.

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etsy Obaseki, wife of the Edo state governor has declared open the Uber Greenlight Hub in Benin City, Edo State. This is coming on the back of Uber officially launching operations in Benin, the capital city of Edo State. Representing the Godwin Obaseki, the Edo state governor; she said: “Uber launching in Benin is one more proof that the state is making great strides to its next level of its economic transformation. Over the past two and half years of this administration, we as government have made deliberate and concerted efforts to make Edo State conducive and attractive to businesses, investors and people from all walks of life’’. She expressed delight with the work done by Uber to bring development into the state, which will further encourage self-reliance

MIKE OCHONMA Transport Editor

ollowing the inability of the administration of former President Goodluck Jonathan and President Muhammadu Buhari’s refusal to sign the automotive industry bill, Oscar Odiboh, academic doctor and lecturer at the Mass Communication department of the Convenant University Otta, has expressed fears that an estimated N2.1 trillion in local investments into the setting up of local auto assemblers by may be threatened. In his presentation titled,: “Zero Patronage, Zero Tariff and the Redefinition of Patriotism by Nigeria’s Automobile Industry,” at the just concluded 2019 training workshop of Nigeria Auto Journalists Association (NAJA) in Lag os, O dib oh obs er ve d that, the huge resources so far deployed in the sector may go down the drain due to alleged refusal of the Federal Government to endorse the National Automotive Industry Development Plan (NAIDP). The Federal Government under the administration of former President Goodluck Jonathan had in October 2013, announced the concept of NAIDP as part of measures to stimulate investment in local vehicle production. Pointing out the sector is strategic to economic growth and development, he advocated that those who have investment in

Uber Greenlight Hub opens in Benin City

The result is a comprehensive safety concept with appropriate testing and approval criteria that can be applied beyond this pilot project. In the concept, the developers defined how the driverless vehicle detects pedestrians and other cars in its path and reliably comes to a halt when it encounters an obstacle. They also set up secure communications between all systems components and took steps to ensure the reliable activation of the parking maneuver. In terms of project milestones, Bosch and Daimler started developing fully automated driverless parking in 2015, and in the summer of 2017, their pilot solution in the Mercedes-Benz Museum parking garage in Stuttgart reached an important milestone: automated valet parking in real conditions, with and without drivers at the wheel, was presented to the public for the first time. This premiere was followed by an intensive testing and start-up phase. Starting in 2018, museum visitors could use the parking service live, accompanied by trained safety personnel, and share their experience. @Businessdayng

Wife of Edo State governor, Betsy Obaseki, cutting the ribbon to officially open the Uber Greenlight Hub in Benin City recently, flanked by Kelvin Uwaibi, head, Investment Promotion Office, Lola Kasim, GM, West Africa Uber, andUkinebo Dare, head, Edo State Skills Development Agency (Edo Jobs).

and self-dependence for the people of the state. Lola Kassim; general manager West Africa at Uber said during the press conference that; ‘’We are happy to be launching the UberX product in Benin City, Edo State today. We collaborated closely with the state government on the launch because of a shared vision. This shared vision is to promote innovation and create business and economic opportunities in the cities where we operate. As we reiterate Uber’s commitment to expansion within the African continent, it’s important to us to work closely with policy and regulators to unlock new markets”. For Ukinebo Dare, head Edo State Skills Development Agency (ESSDA), “The government of Edo State says welcome to Uber. We are also quite happy that Uber has chosen to be located at the Edo Innovation Hub, because we realize how important it is for our youth who are being trained here to be exposed to the power of technology and disruptive business models’’. The new facility is located within the Edo Innovation Hub complex will open Monday through Friday excluding public holidays.

Wednesday 31 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Modest hospitality price rises predicted for 2020

Earth tremor: FMoT allays fears on Lagos-Ibadan rail project MIKE OCHONMA Transport Editor

he Federal Government has assured that the recent earth tremor that occurred along the at Ifo local government area of Ogun State will not disrupt the ongoing Lagos-Ibadan standard gauge railway project under construction. Sabiu Zakari, permanent secretary, Federal Ministry of Transportation (FMOT) who stated this during an inspection tour of the site where earth tremor occurred expressed satisfaction with the action taken by China Civil Engineering Construction Corporation (CCECC), the contractor handling the project to prevent the earth tremor from obstructing or causing damage to the project. According to the permanent secretary;, “I believe the work being done as assessed by our consultants and our engineers is what is supposed to be done. I’m satisfied. Remedial action is being taken on the area where earth tremor occurred. That is where gas line passes and there was a slide in the place”. Responding to a question on

whether work done to checkmate the earth tremor involved an extra monetary cost to the original contract value, transportation ministry chief said: There is no extra cost for now. He expressed confidence in the ability of civil engineering experts of the project in handling the natural occurence. In his submission, “Well, that is part of the contingencies that are likely to come up in this type of engineering. What is being done is within the parameter of what is provided. What happens when you’re doing an engineering work like this is that there are places where you make savings on what you want to achieve. So these types of provisions that are made, one will take care of the other.”Zakari elaborated The earth tremor did not cause any vissible damage to the project, but a reliable source disclosed that whenever it rained, the highland collapses and fills the railway corridor in that spot with sand. With Ibrahim Alhassan chairman, Nigeria Railway Corporation as the leader of the inspection team, Zakari was not specific on when commercial activities will begin on the completed standard gauge railway project from LagosIbadan, stressing that he did not

want to commit himself because it is an engineering work. “I don’t want to commit and say exactly this is the date that commercial activities will start because as you have seen rightly, it’s an engineering work. The very earth tremor you’re mentioning, was it anticipated? They are things that come up as you go along doing this work. You cannot exactly say or predict this thing can happen, the FMOT permanent secretary declared. Fidet Okhiria, managing director of Nigeria Railway Corporation (NRC), announced on the occasion that tracklaying of the remaining four kilometres to Ibadan from Lagos has been completed. On the next line of action, he said: “We now want to concentrate on Lagos, and sooner than later we’ll start up operations from Iju to Ibadan. The two lines of the tracklaying from Lagos to Ibadan have been completed up to Ibadan end from Iju in Lagos’’. Meanwhile, as at the time of filing this report, there is still a lot of job to be done on the standard guage rail project work from Iju to Apapa seaport which many described as a very critical corridor in the movement of passengers and freight.

he Hotel Monitor 2020, published by American Express Global Business Travel, predicts that hotel prices in most key cities will experience only modest rises next year. A global boom in hotel construction is increasing the supply of guest rooms just as international trade tensions put a dampener on demand: together, these factors will restrict the ability of hotels to raise room rates in many business destinations. Joakim Johansson, vice president, global business consulting at GBT, said: “Despite signs that the global economy is facing challenges, the number of people travelling for business and leisure continues to grow. But, in most cities, a full hotel development pipeline means this sustained level of demand will not feed into big rate rises’’. The Hotel Monitor 2020 forecasts small room rate rises across

Toronto will see the biggest increase in room rates (five, five and four per cent respectively). In contrast, guestroom rates for New York are expected to decrease by three per cent as 29,000 new guestrooms become available over the coming months. Concerns about political and economic uncertainty have negatively impacted business travel in Central and Latin America. Nonetheless, prices are expected to rise as demand outpaces growth in a region that has seen its hotel construction pipeline decrease by 25 per cent year-on-year. A hotel construction boom across the Middle East, but largely focused on the United Arab Emirates, means supply will outstrip demand and lead to forecast falls of as much as ten per cent in Doha and eight per cent in Riyadh. As host to the 2020 Expo, Dubai should see rising visitor

Europe’s main business cities as low growth, and uncertainties about Brexit and the general global economic outlook take their toll on demand. On the supply side, hotel development is at a record high in Europe. Germany is leading the development boom with 379 projects in the pipeline. The UK follows closely behind with 281 hotels in the works. London will see a further 10,000 new rooms open in 2019 and 2020. In the United States, flat occupancy and a full pipeline of rooms in construction will drive competition and limit the ability of hotels to raise prices. Canada is more likely to see rates rise, thanks to a relatively strong economic performance and slowing capacity growth. Chicago, San Francisco and

demand: however, room rates are expected to be static. The hospitality industry is growing rapidly across the Asia Pacific region, with thousands of additional beds in key cities every year. Despite the added capacity, the sustained demand in these growth economies means rates are likely to increase. For example, Bangalore and Tokyo will see rates increase by five and four per cent, respectively. Domestic travellers are increasingly filling hotel beds, compensating for any falls in international visitor numbers stemming from a less optimistic global economic outlook. The Hotel Monitor 2020 explores key trends shaping global hospitality.

CCCECC on slow start as Lagos-Badagry poor road condition lingers

hat the Lagos-Badagry is in a terrible bad condition is no longer news, however, what is very disturbing is the harrowing experience that commuters along the corridor go through everyday as a result of the slow pace of work by the China Civil Engineering & Construction Company (CCECC). In response to several lamentations of road users plying this ECOWAS corridor, the Lagos state government recently ordered the CCECC to return to site that

will see the company resume the 10 lane integrated intermodal transport road network. The mandate by the Lagos State government preceding several visitations by Obafemi Hamzat, the current deputy governor to the project site long neglected by the previous administration of former governor Akinwunmi Ambode came as a relief to many Lagosians, but it seems, that excitement that greeted the directive of the new administration is fading away as a result of the slow approach to work by www.businessday.ng

the contractors. Pat Ginika, a trader at Lagos Island market and resident at Topo, Badagry and regular user of the corridor wondered why, the CCECC is not moving at a faster pace especially at the thickly congested Under Bridge of ASPAMDA International market. In expressing her concern, she wondered why vehicular density and human traffic along the axis will be increasing at geometric progression while the construction work will be moving at arithmetic progression.

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@Businessdayng

Wednesday 31 July 2019

BUSINESS DAY

INTERVIEW

‘The textile industry was killed to strategically weaken the economic sector in the North’ Fatuhu Mohammed represents Daura/Sandamu Federal Constituency in the House of Representatives. In this special interview with Bashir Ibrahim Hassan, GM, Northern Operations, BusinessDay, the 40 year old lawmaker, who is also a graduate of Political Science from Ahmadu Bello University, Zaria, speaks about economic and security challenges in the North, in particular, and where the problem lies. Excerpts: As a member of the House of Representatives, what is your feeling on the general insecurity in the country, with specific reference to Katsina State where you came from? his is a very challenging question. I am the Rep member representing the constituency of the president and I’m lucky. Out of the 360 members in the 9th assembly, I’m the only one voted by the president because we came from the same constituency and he had only one vote for one Rep member. So, by virtue of that, I’ve double responsibility. One, in terms of family background, he’s my uncle, my guardian and above all, a father to me. So, I know what I went through with him over the years to be what I’m today. The major concern of the president is a better Nigeria. His concern is to have a peaceful and better Nigeria. I know his pains. I know what he is thinking about right now in respect of security issues. I know that security is a general phenomenon, not just in West Africa but the world generally. In the past few years, Nigeria started witnessing banditry, kidnapping and other crises here and there. But we have to look in between the lines to identify the root causes of the problems. Our borders are open. Nigeria is probably the only country you can come in and stay without proper documentation. Thank God, I heard the president last week giving instructions that the Immigration Service should register each and every immigrant. That’s the first step. The second step is that we should secure our borders, even if it means shutting down the borders for at least ninety days so that we can control the influx of ammunitions and bandits. If you look at the geographical location of all these crises, they are virtually happening in states that share borders with other countries. States such as Katsina and Borno share borders with the francophone countries. It is not a problem of leadership; it is a structural problem. Why am I saying is a structural problem? Last Sunday, I came back from my constituency where I held a town hall meeting and interacted with my people to get first-hand information. I drove to Kongolam, just about 15 kilometres from my home (in Daura). It is a border town but the barricade is still a rope that demarcates Nigeria and Niger Republic. I parked by the side, engaged in conversation with some people; they are water vendors. They don’t know who I am. I looked at their appearance and had the idea that these people are not Nigerians because the way they speak Hausa is not as fluent as the way we do. And during the conversation, they told me that they pay N500 weekly as foreign-

Fatuhu Mohammed

ers. That’s how worse the situation has gone. So, you have to agree with me that it’s not a leadership problem but structural problem. Who do they pay the N500 to? Nigerians should look at things the way they are. We should not blame or point fingers at the leadership. He (Buhari) is doing his best. He’s the only president who is accommodating input from all political shades. He personally goes to the National Assembly to defend his budget but despite all these, you keep hearing noise from politicians and statesmen, tribal and religious groups instigating problems far from what is really on ground. I believe Nigeria has come of age to look ahead for the future of our unborn children. As a people, what do you think should be done to tame banditry and kidnapping in the North West? Thank God you say as a people. We have leaders in each and every community. We have traditional leaders; we have political elites. I grew up to witness a lot of meetings of the northern elites in Kaduna. It was

normally a monthly meeting. There were lots of sirens; the emirs were coming but that doesn’t happen now! Why? Why can’t the northern leaders come together like before, sit down, dialogue and find solutions to these problems? It is not the responsibility of the government alone. It is not the responsibility of the presidency alone. The political elites also have responsibility. Is it during elections alone that they would start converging in Kaduna to talk about who becomes the president? These are some of the loopholes, the gaps the northern elites created for us. And that’s why we are seeing these problems. We are not as united as we were. That is the bottom truth; the unity is missing. The northern elites need to come together as one irrespective of their geopolitical region. We only have one North. Don’t you think the government has a role to play, the National Assembly to be precise considering for instance the underfunding of the military in the past few years, especially the capital budget?

“

I can bet you if you go to my constituency, they are more conscious of their rights, they know what it means to have a representative. It’s an open -door policy. I’m opening my first constituency office, and I will be going their every month

“

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The legislature should be the strongest arm of government. This is my belief as a political scientist. The 8th Assembly is history. We all knew what happened; let us not reflect back. We are heading for the future now. Thank God the 9th Assembly came in with one voice and there is a synergy between the executive and the legislature. We will work as a team; we will strengthen our oversight function. When there are opportunities like this, the National Assembly should step in and cover the gaps. We will make the laws; we will know how to generate the money. It is just a matter of time and in the next three to four months, you will see tremendous changes in the legislature. Now let’s talk about politics. What inspired you to contest for the House of Representatives seat from Daura? I did not. I am a full-time public servant. I worked at the Nigerian Communications Commission (NCC) for almost nine years. I was a banker before joining the commission. What happened was through my foundation, the Fatuhu Foundation, these are some of the records I can show you (records of philanthropic interventions). This is what inspired people to push me to run for this post. I was actually thinking that I still had some time in the civil service or public service. But I have no choice, I gave it a try and it paid. How did it pay? Someone could just say as nephew of the president, he must have influenced your election… Well, you said maybe. I think you the journalists know him better than anyone else. He never knew I was contesting until the dying minute. I met him and told him that I have bought my form and also resigned from the public service. What he told me was, ‘You’re not here for an advice; you’re here to tell me your decision.’ And that was it. He said ‘Well, I don’t have money to give you, I wish you all the best. But remember, you’re in the mud, you can’t go out of politics, that’s all.’ It was that wish that made me take the next step. As a member of the National Assembly, what do you think is the way out of the series of problems in the North? Whenever you say National Assembly, you harass me a little because everybody mounts pressure on the legislature. Remember, legislature has no budget, we are only lawmakers. If you want to control a strong man, you don’t give him ample opportunities; you don’t give him the budget and give him the power. You either give him the power and take away the budget or vice versa. But, if you combine the two for them, then, there will be conflict between the judiciary and the executive. The major problem @Businessdayng

was allowing the industrial sector in the North to collapse especially the textile industries in Kaduna and Kano states. Many industries have collapsed. To me, the textile industry was killed to strategically weaken the economic sector in the North through inadequate power supply. We all know where the problem started. If those factories were active, we wouldn’t be having all these banditry and kidnappers; people would have been busy engaging themselves in labour hours. Now as a legislature, what do you think you will do differently that the people who voted for you will say we have somebody there now and this is what he’s doing? I have started. I have organized a town hall meeting which is the first of its kinds in my constituency and in Katsina at large. I collected a lot of information and complaints from my constituency and I am working on them to see those that I can bring on the floor as a motion and those that I can work with other legislatures. As a follow up on Kongolam, the border has been closed and hundreds of youths who were bringing in rice and other products are now doing nothing. Don’t you think this is a time bomb since they don’t have any alternative? With due respect to that question, the borders are only officially closed but they are not closed. Just take a drive from Daura roundabout to Kongolam which is about 18 kilometres. You’ll see line of foreign pasta (spaghetti, rice and all that), where do they come from? So, who is to blame now? I told you it is a structural problem. As I earlier told you, it is not the problem of leadership in Nigeria, it is a structural problem. The president is one man; he can’t be everywhere all the time. He has done his best. It is left for Nigerians to contribute. Of course, he is not perfect; he is a human being too. But he has good intention and everybody knows that. Should we expect him to start going to the border and bushes with guns blocking the people? He can’t. He has to assign someone to do it. In that process is where the issue of structural problem comes in. In your constituency, what legacy do you want to live behind? Well, I believe in one Nigeria. I don’t care where you come from, who you are is not my business. And for now, I can bet you if you go to my constituency, they are more conscious of their rights, they know what it means to have a representative. It’s an open -door policy. I’m opening my first constituency office, and I will be going their every month. I’ve set up five departments including administration, projects, welfare, political and publicity department. The office will be operated 24/7.

Wednesday 31 July 2019

BUSINESS DAY

INTERVIEW

‘We are investing in more digital technologies to grow retail banking space’ Lamin Manjang, Chief Executive Officer of Standard Chartered Bank Nigeria spoke to select senior journalists in Lagos including IHEANYI NWACHUKWU. Excerpts:

ell us about your role as the new CEO for Standard Chartered Bank in Nigeria. How would you describe your experience working across several markets in Africa? I started with Standard Chartered in Gambia in 1999. Incidentally that was the same year we also commenced operations in Nigeria, so we are both celebrating twenty years’ anniversary this year. Having worked in Gambia for about three years or so, I then moved to Tanzania in 2002, stayed there for about a year in the corporate banking business and then in 2003 I went to Sierre Leone as the CEO there and since 2003 I have been CEO across multiple markets, before moving to Nigeria and West Africa. So I am very delighted to be joining the team here. Nigeria is incidentally the biggest market for us in Africa. In absolute terms, Nigeria is a very strategic market for us. In terms of your sustainability banking concept in Nigeria which includes SME and infrastructure banking, what is SCB doing differently? Like you said, we are a commercial bank and that is our core function, which we will continue to engage in, to the best of our capability. However, beyond just a core function of banking, we also look at sustainability and for us sustainability is not something we see as separate from our core business, we believe that it is integral to our core business because when we do our core business, we are actually contributing to the overall economic development of the country. In terms of the pillars of our sustainability agenda we have now refreshed it to focus on three areas which are education, employability, entrepreneurship. We believe that these three are critical in terms of enabling the future workforce especially the youths to be able to contribute meaningfully to economic developments. Once people are educated, either they get employed or they go into entrepreneurship. So we are looking at ways we can support all of these three pillars.

Lamin Manjang

The recent announcement of our women in tech programme is to actually empower women entrepreneurs in the tech place because that is an area that is untapped. Generally, women are known for being entrepreneurs but when it comes to technology, you will find out that it is usually male dominated. So this programme was specifically targeted at women entrepreneurs, to take them through an incubation programme in partnership with Pan-Atlantic University. This is something that we have started in the United States about

“

five years ago and then took it to Kenya two years ago, before launching it here in Nigeria. In terms of the other areas on infrastructure or SMEs, these are areas that the bank has the capacity to support. We have different units within the bank- there is a commercial banking division and a business banking division. In the commercial banking, we look at larger enterprises and the business banking we look at smaller enterprises and it is my intention to grow that portfolio in line with the desire of seeing more lending to SMEs and more lending to the

We believe that investing in the digital banking space will give us that opportunity to wider customer base in our retail business, not necessarily in terms of where we are physically present but the opportunity to reach out to the clients across the markets www.businessday.ng

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real sector.

75percent.

When it comes to power, Standard Chartered is one of the biggest supporters of power Africa. Can you tell us how far you have gone with some of these partnerships? Especially because power has remained one of the greatest challenges in Nigeria Across other markets, we have supported power projects. In Zambia for instance, there are projects we have supported there. As a commercial bank, it depends on the projects that we get to our table in terms of viability, the requirements of those projects, so we do have both financial and technical capabilities to be able to support those types of infrastructure projects but it depends on what kind of projects represented.

Do you think these models should be Telco driven or bank driven? For Nigeria it is going to be bank led because Nigerian banks are active.

Coming from Kenya, we know that when it comes to mobile money on the global landscape Kenya is a model. What can we learn from Kenya to ensure that Nigeria can get it right in terms of mobile money? I think M-Pesa started as one of the most successful mobile money solutions that were pioneered in Kenya. Initially it was its ability to give out macro loans and collect the repayment that recorded its success. For example, if you give a macro loan of a 100 dollars, obviously you have to have a system to be able to collect the payments for that loan even if it is 5 dollars a month, with less expensive processes to reclaim loans. That is how the idea of coming up with a mobile solution where individuals can pay macro loans using a mobile app was generated. From that, the opportunities for people to make payments continued to expand. The good thing about the M-Pesa was that at the time, the regulators were supportive, including the Central Bank of Kenya. So I think that initiative, to be able to create space for the innovation to flourish is really what distinguishes Kenya from many markets including its high financial inclusion ratio of about @Businessdayng

Having been in Nigeria for almost 20years, would you say that your focus strategy has been successful? Especially in trying to bridge the gap in financial inclusion? In terms of our strategy going forward we want to look at the retail business and how we can actually scale it up. We believe that investing in the digital banking space will give us that opportunity to wider customer base in our retail business, not necessarily in terms of where we are physically present but the opportunity to reach out to the clients across the markets. So I think going forward that is really what we want to focus on. How do you evaluate your collision on international trade finance? We are one of the strongest banks when it comes to international trades given our unique foot print as an international bank whose operation are primarily in Asia, middle east and Africa. You find that most of the trade flows today are between Africa and either Middle East or Asia, especially China and India and these are markets where Standard Chartered is very strong. So for our clients that bank with us, it is usually a very seamless transaction. So for trade finance we are actually very strong. It is one of our areas of strong competitive advantage. As the CEO, and with Nigeria being your biggest market in Africa, what are some of the challenges you expect? I think the area of service is an area that we want to leverage on. We are in the service industry, so the whole customer experience, service space is something that we believe we should really step up and be distinguished for - equality of the service and equality to the products that we bring to the market.

Wednesday 31 July 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

New report highlights five-pillars in advancing financial inclusion …points direction in bridging gender gap Stories by Endurance Okafor

recent repor t produced by the Bill and Melinda Gates Foundation, in partnership with the French G-7 presidency, has recommended interoperability, digital identification, regulation, planning, and genderspecific research as the fivepillars in advancing financial inclusion in Sub-Saharan Africa. According to the report with the title; Women’s Digital Financial Inclusion in Africa, between 2014 and 2017, the share of sub-Saharan African adults with a mobile money account nearly doubled (from 12 percent to 21 percent), and a growing number of people used these accounts to pay bills, move money, and buy goods. Sub-Saharan Africa is home to the 10 economies worldwide where more adults now have mobile money accounts than have accounts at a financial institution. However, even those who can access digital finance often find that the system is not as valuable, reliable, or affordable as it could be because individuals can only send and receive money with users of the same service. Hence the report recommended the development of inclusive, interoperable payment systems to accelerate inclusion rate. This is as

a result of the fact that most digital finance systems in Africa do not allow customers to transact with anyone they choose; the vast majority of digital transactions are still peer-to-peer money transfers within the same network. “Another critical barrier to financial inclusion and the use of available financial accounts is an inability to prove one’s identity. Donors and national governments have an opportunity to address both barriers by building integrated systems that combine payments interoperability with a biometric ID database, enabling previously excluded women to easily transact with one another and verify who is on the other side of a given transaction,” Melinda Gates, Co-Chair and Trustee, Bill & Melinda Gates Foundation said. A person’s ability to prove

their identity is fundamental to participating in modern life. A formal ID is often a prerequisite to accessing healthcare, receiving government services, gaining formal employment, voting, and opening a bank account. However, many low- and middle-income countries do not have ID systems with the capacity to provide secure and trustworthy ID credentials to the entire population, nor the necessary legal and technical safeguards to prevent the misuse of data or other privacy breaches. As a result, nearly 38 percent of the population in low-income countries lack a foundational or national ID. According to the report, even though digital financial technologies hold potential to accelerate women’s economic empowerment, they also pose considerable risksfrom over indebtedness to digitally-enabled fraud. It

is thus critical that financial regulations keep pace with technology innovations. “The G7 can help by supporting efforts like the United Nations Capital Development Fund (UNCDF) Africa Policy Accelerator, and the Alliance for Financial Inclusion (AFI), which assist African regulators in their efforts to design regulatory frameworks that harness emerging payment and ID technologies and advance women’s financial inclusion, while mitigating the downside risks associated with these new technologies,” the report suggested. According to the World Bank data, 51 percent of male adult in Nigeria had a bank account in 2017 compared to the 27 percent recorded for female; this brings the gap between the male and female to 24 percentage points. This gap is wider than the

20 percentage points gap that was recorded in 2014 when the total male population with bank account stood at 54 percent with female at 34 percent Inequitable or regressive legislation can be an underlying cause of women’s economic or financial exclusion. For example, laws that require a husband’s permission for activities, such as getting an ID card, registering a birth, or obtaining a loan, act as major barriers to economic empowerment. These laws directly hinder a woman’s ability to access financial services, find employment, or even own a cellphone. In 17 countries, married women cannot legally travel outside the home in the same way as men; this restricts women’s ability to find and attend work, access banking or other social services, or live in a place that offers economic opportunities for them. Legal restrictions on driving can have similar impacts Also, the explained that the assessment of Digital financial inclusion efforts should not be conducted in isolation instead, they should be anchored within a country’s broader digital strategy, including national efforts to expand the electricity grid or increase broadband coverage, as compiled from the report. “As a first step, countries should carry out assessments of their digital

readiness through research into the state of their digital networks and the actions needed to address digital infrastructure gaps,” Gates said. Nigeria has an exclusion rate of 36.8 percent but the Central Bank of Nigeria (CBN) has a set target to ensure it reduce that number to 20 percent by the year 2020. Despite the several barriers to financial inclusion in Africa’s most populous nation, the apex has said it is poised to ensure it include 80 percent of Nigerian adult population by 2020. To drive home that course, the apex introduced various financial inclusion schemes. On October 23, 2012, the central bank of Nigeria in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from about 53 percent in 2008 to 20 percent in 2020. Less than a year to the deadline, the apex bank has 16.8 exclusion gap to bridge to achieve the set target. According to Godwin Emefiele, the governor of Nigeria’s central bank, over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the Payment Service Bank (PSB), the apex bank intend to broaden access to financial services to individuals in underserved parts of the country.

basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs).” Telco led model in driving financial inclusion in Nigeria’s peers has reported tremendous progress owing to the already existing large customer base of the Telcos, but Africa’s largest economy with one of the highest exclusion rates in the continent has continued to lag its peers owing to its bank-led financial inclusion model. Data by the National Communications Authority (NCA) in Ghana as analysed by BusinessDay revealed that MTN Ghana has been the consistent market leader by number of subscriptions between 2012 and 2017. Across the five-year period, the company’s market share rose to 47.5percent in 2017; Vodafone Ghana’s

market share also rose from 21 percent in 2012 to 24.1 percent in 2017. While Airtel Ghana and Tigo Ghana experienced marginal changes in market share, falling 0.37 percent and rising 0.71 percent respectively. Leveraging its large market share by subscriber base, MTN Ghana has also reported the highest percentage of mobile money transactions. This give hint of how the Nigerian arm of the Telco Company may perform if given PSB licence to operate in the country where it already has the largest share of the market. According to the 2018 second quarter data by the Nigerian Communications Commission (NCC), MTN Nigeria grew its subscribers to 66.45 million. This was followed by Globacom Limited with 40.11 million while Airtel Nigeria and EMTS Limited (9mobile) were left with 39.89 million and 15.81 million respectively.

MTN obtains super-agent licence in preparation for PSB permit

TN Nigeria Communications Plc., a subsidiary of the South African multinational mobile company, said it has been granted super-agent licence by the Central Bank of Nigeria (CBN). The new licence will enable the biggest telecommunication company in the country to join forces with other financial technology companies to deepen financial inclusion in the country through an agent network. The move by MTN Nigeria is also in line with its application for a licence to operate as a Payment Service Bank (PSB). According to industry sources, the Y’ello Digital Financial Service is part of the Central Bank of Nigeria requirements for obtaining a PSB licence. “We are pleased with obtaining a super-agent licence from the Central Bank of Nigeria, which will enable

us to build an agent network and accelerate the growth of our Fintech business,” Ferdi Moolma, the Chief Executive Officer, MTN Nigeria, confirmed in the company’s 2019 half-year interim financial report published Friday on its website. Checks by BusinessDay revealed that MTN Nigeria recently registered the Y’ello Digital Financial Service Limited with the Corporate Affairs Commission. The subsidiary, which has yet to commence operations, was created in June 2018 to provide mobile financial services to Nigerians. “We are still expecting the approval from CBN. The PSB is to provide mobile financial services upon incorporation,” MTN said in its 2018 financial report. Other mobile network operators such as 9mobile, Globacom, and Airtel have also shown interest in offering mobile financial services in

the country. Some of the telecom operators are already offering mobile money services in collaboration with Deposit Money Banks but are now seeking to offer financial services independently. Haven obtained the superagent licence through its subsidiary, Y’ello Digital Financial Services Limited; MTN Nigeria said it has invested N50million in the Fintech business during the first half of the year, with respect to the minimum shareholding requirement stipulated by the CBN for a super-agent licence. Recall, MTN, along with Airtel, Globacom, 9mobile and ntel, had pledged to deepen financial inclusion in 30 months by collectively reaching 90 million Nigerians through the deployment of over one million airtime agents as mobile money agents. Nigeria’s Telco industry players have a combined pres-

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ence in 773 local government areas across the country further emphasizing their ability to reach especially hard to reach areas of the country. The communication service providing companies in Nigeria also have about one million unique agents already in place selling airtime across the country, and analysts say this can quickly be converted to establish mobile money agent networks which can help reach out to the unbanked Nigerians especially those in the rural areas. Approximately 36.8 percent of adult population in Nigeria, Africa’s most population nation are excluded from the financial cycle, this translate to 36.6 million people, but the country’s apex bank have a set target to reduce that number to 20 percent by 2020, less than six from now. According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one

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Wednesday 31 July 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

PRIVATE EQUITY DEALS IN 2019 MONTH

ACQUIRER/FUND MANAGER

ACQUIREE

SECTOR

ACCESS BANK

DIAMOND BANK

BANKING

200

JAN

CARLYE GROUP

WAKANOW

AVIATION

JAN

VecIs and AGL

LEVENTIS

CONSUMER GOODS

JAN

ADVANCED FINANCE and INVESTMENT GROUP (AFIG)

NEM INSURANCE

INSURANCE

29%

JAN

COCA-‐COLA

CHI LIMITED

CONSUMER GOODS

100%

JAN

STAKE

AMOUNT ($ Million)

12 500

JAN

CDC Group plc

CCAGF

FMCG/AGRIC

JAN

GeneraIon Investment Management (GeneraIon IM)

ANDELA

TECH

100

JAN

ABRAAJ GROUP

ABRAAJ group

FIN SERVICES

MARCH

SIEMENS LIMITED

DRESSER-‐RAND

AUTOMATION

600

MARCH

VEROD CAPITAL MANAGEMENT

DAYSTAR POWER

ENERGY/POWER

MARCH

COX VENTURES ET AL

FARMCROWDY

AGRIC

MARCH

LENDABLES

ONE FINANCE (OneFI)

FIN SERVICES

MARCH

QUANTUM CAPITAL

TEAMAPT

FINTECH

MARCH May

THEMIS Rise Capital, Adventure Capital, IC Global Partners, First MidWest

KINGLINE GoKada

POWER TRANSPORTATION

5.3

JUNE

Consonance Investment Managers

Mdaas

HEALTH

June

NORTFUND and FINNDUND

STARSIGHT POWER UTILITY LTD

POWER

June

BREAKTHROUGH ENERGY VENTURES, NORTFUND

ARNERGY

ENERGY/POWER

June

IGNITE INVESTMENTS and COMMODITIES

FORTE OIL

OIL

235.8

IDG Capital, Sequoia China, Source Code Capital

OPAY

TECH

JULY

InsuResilience Investment Fund

Royal Exchange General Insurance

INSURANCE

JULY

CANAL+

ROK TV

ENTERTAINMENT

Are entrepreneurs increasingly seeking to partner with Private Equity?

t the start of June, I attended EY’s annual World Entrepreneur of the Year event in Monaco – a week-long, wall-to-wall assembly of some of the brightest, most innovative minds from around the world. These are the people driving disruption – finding fresh avenues for growth and new, improved business models in an uncertain, rapidly-changing landscape. It’s a remarkable event, with entrepreneurs from all over the world coming together, sharing insights, building relationships. Entrepreneurs know they can’t just do it alone, and this is a great opportunity to make connections to help them get even better at what they do, even as they inspire the rest of us. Being the private equity (PE) guy, I was getting introduced to the entrepreneurs as someone who can advise on funding and growth strategies. The conversations I had made clear a few things I’ve been suspecting for some time. 1) There’s a growing openness to PE First, I found a much greater openness to PE as a source of capital – and, most importantly, a growing recognition that PE isn’t just about capital, but also a valuable source of strategic advice and tactical support. This is a continued evolution of shifting perceptions of PE – but the change has been especially notable in the last

Andres Saenz

couple of years. Whether it’s market volatility or geopolitical uncertainty, there’s a sense that public listing can be less of a reliable route to growth and may not be for everyone. Not only can PE firms use their expertise to help navigate this uncertainty, but they can also help growing businesses create greater value, open more channels, and even diversify into different geographies. There’s also a growing understanding that PE can help with two other big challenges for growing firms: picking the right technologies and finding the right talent to enable sustained growth. 2) Technology remains a focus Many of the on-stage presentations and panel discussions were framed by the theme of technology continuing to impact industries. This is nothing new, but now – just like established businesses – even techled entrepreneurs are looking to continually innovate and adapt

their business models as technology evolves and customer expectations shift. In recent years, entrepreneurs have increasingly started to recognize that private equity partners may already have the tech toolkits and expertise they need to strengthen their own business models. This makes PE firms’ wider portfolios’ tech capabilities a distinct and highly-sought-after part of their value offering. They are no longer being seen simply as sources of funding, but as sources of valuable strategic advice that individual entrepreneurs simply can’t build at sufficient scale. 3) Finding the right talent is more crucial than ever In a highly competitive global talent marketplace, even entrepreneurs who have already developed unique products, captured niche markets or accessed new geographies find acquiring talent to be a challenge. The people who will have built up the business to $50 million are not the same kind as those who will build it out to $500 million, and then to $5 billion. So, the question is, how do you attract the right kind of talent? EY’s Entrepreneur of the Year country award-winners have a moniker that can give them an edge when it comes to attracting talent. Yet, even for them, talent wars across all sectors can be aggressive. Here, PE firms have a role to play in offering their portfolio

companies access to a wide range of contacts, helping identify the best talent and accelerating onboarding processes. As much as EY’s World Entrepreneur of the Year is a great forum for making connections and inspiring new ideas, so too can PE firms’ portfolio and networks help businesses get connected to other organizations that can drive fresh growth with their technical expertise and advice. From private equity to positive equity My conversations with various entrepreneurs highlighted how businesses are increasingly seeing PE as a way of strengthening their value proposition. More and more, PE firms are being perceived as partners for good, rather than purely transactional. This is a critical change for the evolution of PE – the value-add is becoming much more about long-term value. Not only has WEOY 2019 given entrepreneurs an opportunity to engage in invigorating discussion, it’s also provided a vital networking forum for successful peers. And while I left convinced these are the people who will be inspiring the next wave of growth with their innovative approaches, it was also clear that the old idea of entrepreneurs going it alone is no longer the case. In a complex landscape, collaboration, partnership, and the advice and support of third parties will be key to successfully seizing the upsides of disruption.

Consonance Investment Managers leads on Seed Round for Healthtech Company to tackle US$1.6bn diagnostics sector in Nigeria MICHAEL ANI

ealthtech company MDaaS Global, in June, closed on seed funding totalling

US$1mn. The deal was led by Consonance Investment Managers, with participation from TechStars, FINCA Ventures, an investment initiative of FINCA International, and others, the round will see MDaaS scale and replicate its innovative diagnostic center business model, as the company seeks to open 100 additional centers in Nigeria and West Africa over the next five years. MDaaS was created to address the lack of high-quality, affordable diagnostic services available for low- and middleincome sub-Saharan Africans, starting with Nigeria’s 130 million low- and middle-income patients where available and up-to-date health services are unaffordable for most of Nigeria’s population, and expensive out-of-pocket costs discourage patients. MDaaS leverages its vertically-integrated supply chain, technology platform, and patient-centred design to provide modern, convenient services at a price point patients can afford. It offers a wide array of high-impact diagnostic procedures from simple malaria tests to echocardiograms and pap smears. MDaaS’ affordability is helping change the healthcare narrative, with basic procedures, like obstetric ultrasounds, starting at just US$4. Founded in 2016 by Oluwasoga Oni, Opeyemi Ologun, Genevieve Barnard Oni, and Joseph McCord, MDaaS was incubated at MIT’s Legatum

Center for Development and Entrepreneurship and was part of the inaugural Techstars Impact class of 2018. The company launched its flagship diagnostic center in Ibadan, Nigeria’s 3rd most populous city, in November 2017 under its patient- and physicianfacing brand BeaconHealth. To date, the company has served over 9,000 low- and middle-income patients, speedily identifying health issues and connecting them with a variety of medical specialists and affordable treatment options. Having partnered with over 60 referring health facilities, MDaaS serves as the centralized diagnostic department for surrounding hospitals and clinics within Ibadan. MDaaS also partners globally with corporates, Health Maintenance Organizations (HMOs), and developmental organizations seeking top-tier diagnostics for their employees and beneficiaries. Speaking on the funding, MDaaS Global’s CEO and CoFounder Oluwasoga Oni said, “this funding round fuels our next phase of growth, allowing us to continue providing modern, connected healthcare for Africa’s next billion. With diagnostics as the bedrock of modern medicine and the key to the treatment of diseases like cancer, heart disease, and diabetes - which are on the rise within the continent - unbridled access to quality healthcare is crucial. We are immensely proud of our brick-and-mortar presence; merging physical patient care with state-of-the-art technology enables us to reach more patients with the care that they deserve.”

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 31 July 2019

BUSINESS DAY

POLITICS & POLICY

Insecurity: Buhari must urgently reorganise nation’s security set up - ADP Iniobong Iwok

midst the escalating security situation across the country, the Action Democratic Party (ADP) has urged President Muhammadu Buhari to urgently reorganise the nation’s security apparatus. The party said the President was aware of the solution to nation’s worsening security situation facing the country, while urging him to act. Yabagi Sanni, national chairman of the ADP, stated this in an interview with BusinessDay, noting that current heads of security agencies in the country had failed and should be

replaced. “He should appoint more young men as head of security agencies, he put them in

this positions; Buhari knows where the problem lies, let him act,” he said. Sanni, who was also the

party’s presidential candidate in last February election, however, stressed that the worsening security

L-R: President Muhammaduh Buhari (l) receiving a congratulatory card from Dapo Abiodun, governor of Ogun State, at the visit of Elders and Leaders of Thought from Ogun State to the Presidential Villa in Abuja, with them is Naimot Salako, deputy governor, yesterday

Edo Assembly: NASS in a hurry with take over decision - Okorocha …Says crisis is APC’s family affair

ochas Okorocha, a senator, representing Imo West senatorial district, has faulted the decision of the Senate to take over the Edo State House of Assembly if Godwin Obaseki, the state governor, failed to issue a fresh proclamation in one week. Okorocha, a member of the ruling All Progressives Congress (APC), said the Red Chamber is overreaching itself on the Edo Assembly issue, adding that the matter should be constructively resolved among concerned interests as a family affair and not the manner the National Assembly was going about it. The Senate had during its plenary on Tuesday given Governor Obaseki one week to issue a fresh proclamation

for the constitution of the Edo State House of Assembly or it would take over its legislative functions. The Senate took the decision when it received the report of its ad hoc committee led by Senator Abdullahi Sabi (APC Niger), which had, in the past two weeks, investigated the crisis in the assembly. The committee had initially recommended three weeks for the take-over, but the recommendation was later amended to a week. However, Okorocha took a contrary position on the take-over bid, saying the Senate appeared to be in a hurry to take-over the state Assembly. The immediate past governor of Imo State said: “The National Assembly seems to be overreaching its boundary

in this matter. We appear to be in a hurry to take over the Edo State House of Assembly. “We should see this as a family affair in APC and we must not ridicule ourselves in public, rather we should look into the matter instead of this position the Senate is taking. “I have been a governor before and I think what is happening in Edo is simply a failure of leadership which can be addressed,” he said. President of the Senate, Ahmad Lawan, while defending the position, said: “The decision is in conformity with the decision of the House of Representatives two weeks ago. Recall that there have been crises in Edo State House of Assembly since June 17, following the refusal of some members-elect

to get inaugurated due to their disagreement of the choice of the leadership of State Assembly. However, the National Chairman of APC, who happens to be the former governor of Edo State, Adams Oshiomhole, has been accused of masterminding the impasse. Many civil society organisations and prominent Nigerians have condemned the action of the National Assembly on Edo State House of Assembly crisis as it amounts to illegality as the National Assembly lacks the constitutional power to give directives or order to a governor of a state in Nigeria. In addition, It has been adjudged subjudice and disrespect to rule of law since the matter is already before courts of competent jurisdiction.

situation needs a radical approach. According to him, “The President needs to do more; you don’t just put people into positions, there is need for him to be proactive and carry out radical changes before things get out of hand.” Speaking on the list of ministerial nominees, Sanni, faulted the President’s decision to exclude attachment of portfolios on the names of nominees before they are screened, stressing that that the objective of the screening would not be achieved. He further advised President Buhari to set up a performance appraisal mechanism for the new ministers, adding that several of the

ministers in the last administration performed below expectation. “It is only in Nigeria that we still doing things as if we were in stone age; if you send someone as minister, you have to tell me what position or portfolio you are nominating that person for; so the Senate can do what the law says they should do, in terms of screening of the ministers. “There are other positions the President appoint people into, like the position of Chief Justice of the federation and INEC chairman, and their names are there. What we have now is only a mockery of the system. It will not give us the desired result,” Sanni pointed out.

Utomi’s book on politics for launch August 6

he latest in the collection of books authored by Pat Utomi, a professor, will be presented to the public on Tuesday, August 6, 2019; a statement from his office has said. Titled, ‘Why Not- Citizenship, State Capture, Creeping Fascism and Criminal Hijack of Politics in Nigeria’, the book examines the nature of politics in Nigeria and the growing new fascism in which the complete domination of others in the impunity that beggars belief was the norm. An ambivalent educated middle class, by action, and inaction had become complicit in 21st Century slavery generally directed by conmen wearing the toga of the politician. Recall that the book was

introduced in February this year at the 16th Centre for Values and Leadership (CVL) Annual Lecture and International Leadership symposium at Muson Centre. The launch is slated to hold at the Chattered Institute of Bankers of Nigeria, Victoria Island, Lagos. Time is at 11 am and the host is Utomi, founder of CVL.

Abiola’s Presidency could have saved Nigeria from religious crises - Buhari Tony Ailemen, Abuja

resident Muhammadu Buhari on Tuesday described the late MKO Abiola as a bridge builder who could have prevented the religious and tribal issues besetting the country now from happening, if he had been allowed to rule Nigeria. The President stated this when he received Elders

and Leaders of Thought from Ogun State at the State House, Abuja. The President, citing the Muslim-Muslim ticket of MKO Abiola and Babagana Kingibe, said in a statement by the Special Adviser on Media and Publicity, Femi Adesina that “If MKO Abiola was allowed to rule, the religious and tribal issues now in Nigeria would not have been as strong, because he www.businessday.ng

ran on a Muslim-Muslim ticket.” He noted that the President also chose his deputy from the Kanuri, a minority tribe and because of his personality, he went across Nigeria and was accepted. According to Buhari, “He used his resources and energy to convince Nigerians that all he wanted was a solid Nigeria and nothing else.” President Buhari also said

that he named the National Stadium, a national monument, after the late politician because he knows that the youth would want to find out why such an important national institution was named after MKO Abiola in future. He expressed appreciation to Governor Dapo Abiodun for mobilising such a strong delegation to thank him for the gesture towards their illustrious son.

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The Ogun State delegation, led by the governor, had come to thank the President for the honour done the late MKO Abiola, an indigene of the state, by conferring on him the highest national honour, Grand Commander of the Federal Republic (GCFR) for his ultimate sacrifice in enthroning democracy. The delegation, which presented a big talking @Businessdayng

drum to the President, also used the opportunity to solicit for the rehabilitation of some federal roads as well as other critical infrastructure in the state, which they are convinced will decongest the gridlock occasioned by the movement of consignments along the Apapa - Oshodi expressway and improve the standard of living of Nigerians along the corridor.

Wednesday 31 July 2019

BUSINESS DAY

news Edo Assembly crisis: Senate gives Obaseki ... Continued from page 1

democracy.

The Senate had earlier on Tuesday adopted the report of its Ad-hoc Committee on the Edo State House of Assembly Crisis and concurred with the House of Representatives to take over the functions of the state assembly over its inability to carry out proper inauguration of the Seventh Assembly. Specifically, it issued a oneweek ultimatum for Governor Obaseki to comply with its order or risk takeover of the state assembly. Although the committee recommended three weeks for the governor to comply with its order, Senate Leader Yahaya Abdullahi moved that the timeframe be reduced to one week. However, the recommendation was not seconded and neither did Lawan put it to vote, in line with the Senate Standing Order, before he hit his gavel and approved it. The report by the chairman of the panel and Deputy Senate Leader Aliyu Sabi Abdullahi recommended, among other things, “that the Edo State governor should issue a fresh proclamation letter for the proper inauguration of the Seventh Edo State House of Assembly” and “that the Clerk to the Edo State House of Assembly should in line with previous practice formally inform all the 24 members-elect of the inauguration of the state house of assembly upon receiving the proclamation letter through media adverts in both print and electronic in conformity with parliamentary best practices”. “In the event that a new proclamation letter is not issued as recommended above within a period of one week, the National Assembly is at liberty to invoke Section 11 (4) of the 1999 Constitution of the Federal Republic of Nigeria (as amended),” the report said. It would be recalled that on June 17, 2019, nine out of the 24-member assembly were inaugurated under controversial circumstances. The inaugurated lawmakers are said to be loyal to Governor Obaseki, while 14 other lawmakers-elect enjoy the backing of the Adams Oshiomhole, national chairman of the All Progressives Congress (APC). But explaining the decision of the upper legislative chamber, Lawan said it was in the best interest of democracy for the National Assembly to intervene at this time, adding that the crisis had become intractable. Speaking on Jev’s Point of Order, Lawan said the matter had been laid to rest. “The Senate has taken a decision and let me say that this decision is in conformity with the decision the House of Representatives took two weeks ago. And I believe that our colleague, Orker Jev, can bring this Point of Order at the appropriate time if it will do any good. But I believe that this resolution should be sent immediately so that one week is not in any way reduced by keeping the letters here. I

think the National Assembly must always insist on the right things to be done even by state governors,” he said. Lawan said the National Assembly “is the home of democracy” and should, as such, query decisions even by presidents. “This motion was taken on the 10th of July. We had almost three weeks allowing for this to go through some kind of political process. But I think it has proved impossible,” he said. “So I want to congratulate the Senate for coming to the rescue of democracy. And I believe that the message is very clear. We want this issue resolved. We are not in a hurry to take over. Actually, the one week is to allow for the proper thing to be done. And I pray that the proper thing will be done in the next one week,” he added. But the lawmaker representing Imo West, Rochas Okorocha, expressed concern that the National Assembly may end up embarrassing itself on the matter, adding that there is no proof that the Edo Assembly is not functioning. “I think the caucus of the APC should try and settle this family matter rather than making it a National Assembly issue. We must not be eager to take over the Edo State House of Assembly. What is happening there is a complete failure of leadership and they should resolve it,” Okorocha said. “I was once a governor. Giving three weeks mandate to the governor is insulting on the government of Edo State. This is not proper. I advise that we should look into this before we bring ourselves to ridicule of interfering in a matter that we shouldn’t,” he said. The Senate, meanwhile, on Tuesday confirmed the list of 43 ministerial nominees sent by President Muhammadu Buhari. The approval followed five legislative days of screening the nominees at the Senate chambers. Out of the 43 appointees, 12 served in President Buhari’s first term, while seven are women. With the confirmation, the stage is now set for the inauguration of the cabinet by President Buhari who will assign them portfolios. The 43 minister-designates include Uchechukwu Ogah (Abia), Muhammadu Musa Bello (Adamawa), Godswill Apkabio (Akwa Ibom), Chris Ngige (Anambra), Sharon Ikeazor (Anambra), Adamu Adamu (Bauchi), Mariam Katagum (Bauchi), Timipre Sylva (Bayelsa), George Akume (Benue), Mustapha Baba Shehuri (Borno), Goddy Agba (Cross River), Festus Keyamo (Delta), Ogbonnaya Onu (Ebonyi), Osagie Enanire (Edo), Clement Agba (Edo), Niyi Adebayo (Ekiti), Geoffrey Onyeama (Enugu), Ali Pantami (Gombe), Emeka Nwajuaba (Imo), Suleiman Adamu (Jigawa) and Zainab Ahmed (Kaduna).

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

L-R: Ike Uche, executive director, United Bank for Africa (UBA) plc; Kennedy Uzoka, GMD/CEO, UBA plc; Ayodeji Ibrahim Balogun (Wizkid), music star, and Tony Elumelu, group chairman, UBA plc, at the fireside panel session themed ‘Suits and Stars, Afropop meets High Finance’ and the unveiling of Wizkid as UBA Ambassador, at the UBA marketplace in Abuja.

Multinationals snub Nigeria over crushing excess... Continued from page 1

is the taxable profits of the company for the year of assessment. This means the income of a company will be subjected to another round of taxation if the company declared dividend higher than its taxable profit. The double taxation is irrespective of whether the company already paid the nominal 30 percent corporate income tax. The excess dividend tax was intended as a punitive measure for the prevention of tax avoidance mechanisms, but has also attracted wide criticism for overburdening the profits of tax abiding companies. Tax experts say the controversial law deters investment into Nigeria and is particularly harsh for a holding company. A holding company is a parent corporation, limited liability company, or limited partnership that owns enough voting stock in another company, that it can control that company’s policies and oversee its man-

agement decisions. Although a holding company owns the assets of other companies, it merely maintains oversight capacities and therefore does not actively participate in running a business’ day-to-day operations. It is not uncommon for a holding company to receive dividends from its subsidiary or subsidiaries. In fact, dividends received some time may be the only income accruing to such holding company in a year of assessment, thereby resulting into zero taxable income. However, where such dividends are declared and distributed, such holding company will be liable to pay excess dividend tax, because its dividends would have become more than its taxable profit, thereby attracting the applicability of Section 19. For multinationals and local investors unwilling to set up a holding company in Nigeria, finding another African country with a more favourable tax regime is very straightforward. Nigeria’s nominal 30 percent tax rate compares to

South Africa’s 28 percent, Egypt’s 22.5 percent and Ghana’s 25 percent. None of the three countries subscribe to the excess dividend tax practice which means their effective tax rate is closer to the nominal rate, unlike in Nigeria where there is a 100 percent spread. Nigeria’s review of the controversial tax rate has stalled for more than a decade, bucking the increasing trend of emerging markets lowering their tax rates to attract investment. “Having an effective tax rate of 60 percent borders on the ridiculous for a country in dire need of investment to revive an underperforming economy and create jobs for a fast growing population,” said Taiwo Oyedele, a partner and head of tax at consulting firm, PricewaterhouseCoopers (PwC). Such a tax regime renders the country uncompetitive in the global tussle for investment capital. “It contradicts the country’s investment objective and shows the government is not walking the talk of attracting investment,” Oye-

Nigeria unprepared for ‘milk ban’, but opportunities abound... Continued from page 2

preservation, lack of adequate transport systems for large volumes of milk, lack of innovative technological innovations, and structural value chain problems. “Without backward integration, Nigeria is dead,” Daniyan said, questioning what happens if there was no forex to import in the first place. According to him, there are at least 6 million

lactating cows in Nigeria, and even at one litre a day per cow, this will give 6 million litres of milk. However, the Agriculture Promotion Policy document released by the Ministry of Agriculture in 2016 stated milk/dairy production in Nigeria is 0.6 million metric tonnes (MMT), whereas demand is 2 million MT, indicating a 1.4 million MT deficit.

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While it is logical to encourage backward integration as well as the local production of milk, Nigeria in comparison with some other African countries, much less those outside the continent, is not currently structured to competitively run local milk production. A research by Lagosbased Sahel Consulting Agriculture and Nutrition Limited showed Nigeria can @Businessdayng

dele said. According to analysts, discouraging multinational HoldCos from setting up shop in Nigeria has negative implications on the economy because senior executives of such HoldCos usually reside in the country, pay taxes and consume goods and services, which Nigeria is currently losing out on. HoldCos also often take decisions on which jurisdiction Research and Development (R&D) spending is channelled to, as well as help to consolidate and manage treasury operations of all subsidiaries. Nigerian banks which were mandated by the central bank of Nigeria (CBN) to form holding companies if they wished to keep their non-bank subsidiaries were given a waiver on the excess dividend tax. “Even with that, a lot of them chose to dispose of their subsidiaries, because they didn’t want to deal with the headache and tax issues that come with the HoldCo structure,” another source said. borrow a leaf from India and Kenya in laying a solid foundation to ensure a successful take-off of backward integration in the milk industry. Kenya is Africa’s leading dairy manufacturer with an annual milk production of 5.2 million MT. This is 8.7 times Nigeria’s output. Kenya’s dairy sector boasts of 1.8 million smallholder dairy farmers, 600 million litres of formally marketed milk per year, and 1.2 million jobs created directly and indirectly.

•Continues online at www.businessday.ng

Wednesday 31 July 2019

BUSINESS DAY

NEWS

Page Financials unveils loan box in Lagos to promote access to financial services SEGUN ADAMS

mysterious “loan box” was sighted across locations in Lagos over the last couple of weeks. It has turned out that the creative and striking teaser is an initiative of Page Financials, a leading retail financial services provider in Nigeria with a bold move to create awareness and promote access to financial services including loans.

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I, formerly known and addressed as Miss Olukanni Adeshola Juliet now wish to be known and addressed as Mrs Adeyemi Adeshola Juliet. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Omeke Promise Grace now wish to be known and addressed as Mrs Okwuma Chukwunwe Promise Grace. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Obi Gift Chinalu now wish to be known and addressed as Mrs Ogidi-Obinna Gift Chinalu. All former documents remain valid. General Public please take note.

As a retail financial institution focused on digital finance services, Page offers unsecured, easy and fast lending to Nigerians who can show a verifiable and stable means of repayment. The loan box is a reminder that loans are easily accessible at Page Financials and aims to demystify the concept of consumer lending – Nigerians should have easy access to credit to manage emer-

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I, formerly known and addressed as Odionyenfe Patrick now wish to be known and addressed as Odimnfe Patrick. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Owulu Evelyn Ifeoma now wish to be known and addressed as Ubgoesotu Evelyn Ifeoma . All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Ogunmola Caroline Bolanle now wish to be known and addressed as Mrs Ayodele Caroline Bolanle. All former documents remain valid. NSCDC, Ministry of Interior and general Public please take note.

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gencies and sort out financial obligations without any hassles. “The initiative is part of Page’s agenda to assure Nigerians that the organisation is committed to supporting consumers in achieving short- and long-term financial goals through easy access to loans as well as aid their journey to wealth creation,” said Chinelo Ngene, head of marketing, Page Financials.

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I, formerly known and addressed as Jennifer Onyinyechi Inyam now wish to be known and addressed as Jennifer Onyinyechi Eke . All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Anoliefo Justina Nwakaego now wish to be known and addressed as Mmaduabia Justina Nwakaego . All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Adebowale Titilayo Ruth now wish to be known and addressed as Mrs Olagunju Titilayo Ruth. All former documents remain valid. General Public please take note.

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Wednesday 31 July 2019

BUSINESS DAY

news FoodCo nominated for award at BusinessDay IMN pledged allegiance with foreign Nigerian Business Leadership Awards countries to destabilise Nigeria - IGP GBEMI FAMINU

oodCo Nigeria Limited, a diversified consumer goods company with interests in retail, manufacturing and fast food, has been shortlisted as a nominee for the Multigenerational Leader of the Year award under the Global category of the inaugural Nigerian Business Leadership Awards. The Nigerian Business Leadership Awards, organised by BusinessDay Media Limited, Nigeria’s foremost business media, financial intelligence and corporate events hosting company, is scheduled to hold on Saturday, August 3, 2019, at the Grand Ballroom, Lagos Continental Hotel, Victoria Island. In a letter notifying FoodCo of the nomination, Frank Aigbogun, publisher, BusinessDay Nigeria Limited, stated that the company’s selection followed a rigorous review process by an independent panel of judges handpicked for their professional background and familiarity with Nigerian retail business and the private sector in general. The letter read in part: “The decision to nominate you for

this award was informed by certain factors. First, your track record as leader that is shaping the future of business in Nigeria through innovation and investment in the Nigerian retail sector. Second, the impressive growth trajectory and market share acquisition of Foodco Nigeria Limited over the past year in a tough operating environment and third, your values for maintaining integrity and the highest professional standards at a time when stakeholders and regulators are holding boards accountable to stringent governance expectations. “FoodCo Nigeria Limited has sustained it’s commitment to national development as a Proudly Nigerian entrepreneur and the company represents one of the shining examples of Nigerian businesses that competes with and stands shoulder to shoulder with international retail brands.” In his response, Ade SunBasorun, CEO-designate, FoodCo Nigeria Limited, expressed gratitude to BusinessDay for the recognition bestowed on the company. According to Sun-Basorun: “We are humbled that our activities have attracted the attention of no less a body than

Business Day Nigeria Limited. Right from inception, FoodCohas been driven by a passion for people, passion for service and passion for excellence and this common thread runs through every touch point of our operations. Our key objective remains to deliver superior customer service to customers leveraging on innovation and technology and we.” Established 37 years ago as a fresh fruits and vegetable store, FoodCo has since expanded its service offerings to include supermarkets, quick service restaurants and entertainment. With eight branches already in its portfolio, FoodCo Supermarket is currently ranked amongst the Top-10 national supermarket chains in Nigeria, the no.2 Supermarket Chain in South West Nigeria (outside Lagos) and the No.1 supermarket chain in Oyo State, by National Consumer Brands. FoodCo is invested in several social responsibility initiatives including a staff scholarship scheme and the Adegbenga Sun-Basorun Scholarship Scheme aimed at providing financial succor to help staff and indigent secondary school students attain their educational aspirations.

… says group has set up para-military outfit ‘HURRAS’ to terrorise citizens Innocent Odoh, Abuja

nspector-General of Police (IGP) Mohammed Abubakar Adamu has alleged that the Federal Government had to proscribe the Islamic Movement in Nigeria (IMN), otherwise called Shiites, because the government uncovered facts that the sect has pledged allegiance to some foreign countries from where they are enjoying political, financial and training support with the aim of destabilising Nigeria. IGP Adamu disclosed this on Tuesday during the monthly security conference with DIG, AIGs and Command CPs, adding that the IMN was guilty of setting up of a para-military guard known as ‘HURRAS’ through which IMN had been terrorising local residents. He said further that IMN members instituted unregistered security outfits and performed paramilitary ceremonies, hoisting of flags, combat exercises, parades and inspection by the IMN leader. “Also, the activities of the Islamic Movement in Nigeria led by Sheik Ibrahim El-Zakzaky has over time evolved to constitute a grave threat to national security, law and order, socio-religious harmony,

peace, good governance and the sovereign integrity of the Federal Republic of Nigeria,” he said. The police boss pointed out that the members of the IMN have engaged in extreme radicalism, series of terror-related activities, violence and other unlawful activities, which threaten national security interest, good governance, and the corporate existence of the Federal Republic of Nigeria. According to the IGP, some of the nefarious activities include: “They engage in unauthorised blocking of public highways, engagement in illegal roadblocks, imposition of illegal curfews and checkpoints, raids on security assets, prevention of arrest of their members, invasion of court premises to abort legal proceedings involving IMN members, refusal to submit to ordinary security checks and attacks on security agents which led to the death of several Nigerians. “Provocative preaching and hate speeches aimed at inciting members against non-members while working towards its agenda of creating an Islamic State in Nigeria and challenging the legitimacy of the Federal Government in favour of Islamic

government, non-recognition of the Constitution of the Federal Republic of Nigeria, nonrecognition of State Authority, non-recognition of our democratic values and disrespect for our judicial processes. “The IMN has over the years manifested its penchant for launching attacks on Nigerians and the symbols of state authority. Since 2018 till date, the IMN has engaged in coordinated and organized violent protests within the Federal Capital Territory. “Two weeks ago, the IMN extended its violent protest on 9 July 2019 to the National Assembly in the course of which they violently attacked and fatally injured security operatives in an attempt to overrun the National Assembly and threaten the nation’s democratic order. The protesters overwhelmed the first gate of the complex, inflicting damage on the security post, and marched on to the second one just before the main complex while the lawmakers were in session. The protesters also damaged a police vehicle and several other vehicles belonging to visitors, lawmakers and staff of the National Assembly who also sustained varying degrees of injuries, the IGP said.

Buhari’s certificate saga: Military never asked us to submit certificates to board - Buhari’s witness Felix Omohomhion, Abuja

ne of the witnesses of President Muhammadu Buhari at the Presidential Election Petition Tribunal, Tuesday, contradicted the president who had earlier claimed his certificates were with the military board. President Buhari had in 2015 claimed that his certificates were with the military board on request. However, one of his witnesses, Major General Paul Tafa, (rtd), who claimed to have been enlisted in the Nigerian Army with President Buhari on April 16, 1962, denied that no such order was issued by the military. Tafa, who made the assertion while answering a question from lead counsel to INEC, insisted that the Nigerian Army never asked them to surrender their certificates for whatever reason at any time. When probed further by Usman to confirm that the army had asked them to submit their certificates in 1962, Tafa insisted, “There was nothing of such during our time.” Atiku and PDP in their petitions are challenging the eligibility of President Buhari for the 2019 presidential election on grounds of non-possession of requisite academic qualification, election malpractices, among others. Tara however confirmed English as the official language of communication during their time in the army. Under cross examination by Atiku and PDP’s lead counsel,

Levy Uzoukwu, the first defence witness said President Buhari being the Commander in Chief of the Armed Forces of the Federal Republic of Nigeria had all military formations under him. Another witness and current Chief of Staff to President Buhari, Abba Kyari, who claimed to have known Buhari for nearly 40 years, told the tribunal that he received and signed for Buhari’s Cambridge WASC Certificate 12 days ago. Kyari had told the tribunal that Buhari possessed credit in five subjects including English Language in his West African School Certificate (WASC) examination conducted by Cambridge University. But under cross-examination by Uzoukwu, Kyari told the tribunal that he personally received and signed for Buhari’s Cambridge University WASC Certificate on July 18, 2019. The witness further admitted that Buhari in his Curriculum Vitae listed the schools he attended but did not list any of the certificates obtained. He also admitted not being Buhari’s classmate at any time and never a member of the army, adding that he was not in possession of any of Buhari’s certificates. Further cross examined by Atiku’s counsel, Kyari admitted that the Diploma Certificate in Strategic Studies he claimed Buhari possessed in his witness statement was not listed in Buhari’s CV. While he told the tribunal that Atiku was a Cameroonian by birth, he however admitted he never knew nor met Atiku’s father and grandfather. www.businessday.ng

L-R: Mbanugo Udenze, company secretary; Chukwumah Okolo, chairman, and Andrew Otike-Odibi, MD/CEO, all of C&I Leasing plc , at the 28th annual general meeting of the company in Lagos, yesterday. Pic by Pius Okeosisi.

Seplat’s N20.5bn maiden gas tolling revenue drives half-year profitability to 6-year high ... firm plans to be Nigeria’s largest supplier of processed gas in 2021 OLUWASEGUN OLAKOYENIKAN & OLUFIKAYO OWOEYE

eplat Petroleum Development Company plc, Nigeria’s largest listed Oil and Gas firm by market value, showed improved profitability in the first half of 2019 buoyed by gas tolling revenue from Nigerian Petroleum Development Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC). Seplat’s revenue from contracts with customers in the period rose by 3.98 percent on a year-on-year basis to N108.97 billion, thanks to N20.53 billion realised from gas tolling and

recognised for the first time, which resulted to increased net income margin of 42.61 percent, the highest in 6 years. Gas tolling is revenue received from the NPDC for processing its share of the gas extracted from OML 4, 38 and 41 from 2015 to 2018, according to Seplat. “In prior periods, the Group had not recognised the related income or receivable for the service because the basis for determining the fees was yet to be concluded with NPDC,” the Group said.

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As a result, when total revenue is adjusted for the gas tolling revenue, gross revenue will decline by 15.61 percent to N88.44 billion in the review period since revenues from gas and crude oil sales fell to N22.15 billion and N66.29 billion, respectively. Analysts at Lagos-based investment house, Chapel Hill Denham, attributed the declines to “tight operating environment”. Cost of sales fell some 11.75 percent to N45.44 billion from N51.5 billion after a 20 percent decline to N15.27 billion in royalties from N19.06 billion. Owing to this, gross profit increased by @Businessdayng

19 percent from a year earlier to N63.5 billion, pushing its gross margin to 58.3 percent from 50.87 percent. Seplat’s finance costs dropped by 40 percent to N7.6 billion from N12.7 billion, reducing the impact of the cost of borrowing on its pre-tax profit which fell marginally by 0.39 percent to N36.96 billion from N37.1 billion. A 98 percent decline in Seplat’s tax expense to N437 million boosted its after-tax profit, making it grow 152.6 percent to N37.5 billion in the first half of 2019 as against N14.8 billion in the same period last year.

Wednesday 31 July 2019

BUSINESS DAY

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BUSINESS DAY

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BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper COLBY SMITH IN NEW YORK

uying US government bonds could soon become a more enticing prospect for overseas investors as the sky-high cost of protection against dollar gyrations starts to recede. For months, foreign investors looking to buy safe US assets have faced a tough choice: buy pricey protection against swings in the dollar and earn tiny, even negative yields, or grab higher returns by leaving the risk of a weakening dollar unhedged. Since 2018, many overseas investors have chosen the latter option because so-called hedging costs have proven prohibitively expensive. Now, that is starting to crack. “Clearly if we have [0.75 percentage points] of Fed rate cuts over the next six months, that would change the hedging economics very meaningfully,” said David Riley, chief investment strategist at BlueBay Asset Management. If, at the same time, longer-term bond yields picked up from their lows, “then that would be quite a powerful combination and make US assets more attractive to overseas investors”, he added. Since the Federal Reserve opened the door to interest rate cuts in April, the trade-weighted dollar has come under pressure, sliding from its most expensive levels in two decades. The tilt towards easier monetary policy — coupled with extremely dovish language from the Fed in the ensuing months — has also fuelled expectations of a further

Cooling hedging costs take sting out of US-dollar debt investment Foreign investors face easier ride as price for dollar hedges starts to back down

Since the Federal Reserve, under chair Jay Powell, opened the door to interest rate cuts in April, the trade-weighted dollar has come under pressure, sliding from its most expensive levels in two decades © FT

move lower in short-term rates. Markets are pricing in a 77 per cent chance the Fed will cut its benchmark interest rate by a quarter of a percentage point when the central bank convenes this week,

according to futures prices compiled by Bloomberg. If chair Jay Powell complies, traders are betting he will concede to at least two more cuts by year-end. Hedging costs have fallen as a

result, but they remain elevated enough that many foreign buyers still face a loss when buying US Treasury debt. European investors with a threemonth dollar hedge now earn a

roughly minus 0.8 per cent yield on a 10-year US Treasury, according to Bloomberg data, compared with an unhedged yield of 2.05 per cent. Hedged Japanese investors earn minus 0.6 per cent. Still, Nikkei reported this week that the world’s largest pension fund, Japan’s Government Pension Investment Fund, has already shifted course when it comes to protecting itself against currency fluctuations. In the fiscal year ending in March, the GPIF snapped up hedged European and US bonds. But according to Adam Cole, the chief currency strategist at RBC Capital Markets, few are likely to follow in the GPIF’s footsteps for now. Rather, the Fed will have to cut more deeply and over a longer period of time if hedging costs are to move low enough for more of them to put hedges back on their foreign exposures. In fact, he noted that the current expected path of US rates brings hedging costs only back to levels last seen in early 2018 — a time when Japanese investors started going “naked” into trades.

Stock drop picks up after Pound under renewed pressure Trump tweets add to angst on rising Brexit jitters German stocks down more than 2% and on track for steepest fall since February MICHAEL HUNTER AND ADAM SAMSON IN LONDON AND DANIEL SHANE IN HONG KONG

broad decline across European stock bourses accelerated and New York’s S&P 500 opened lower after Donald Trump criticised China’s handling of key trade talks between the two countries. The Wall Street index fell 0.7 per cent in early Tuesday exchanges, having finished the previous session at a fresh record high. German stocks, which had been down much of the session, fell further after the US president said China has not “come through” in trade negotiations. Germany’s benchmark Dax 30 index was recently down over 2 per cent and on track for its heaviest one-day fall since February. Germany’s economy, with its sprawling factory sector, is particularly sensitive to trade fluctuations, meaning its market often swings when there are changes in sentiment. The continent-wide Stoxx 600 was down 1.4 per cent, with Spanish and Italian stock markets down around 2 per cent. Only the UK’s FTSE was relatively

unscathed, down just 0.3 per cent, with the main London stock index sheltered by the pound’s sharp decline to two-year lows. Mr Trump’s comments come as a new round of negotiations kicked off in Shanghai. Expectations for a major breakthrough were subdued, but some analysts hoped negotiators would at least extend a symbolic olive branch. “Well I guess the negotiations aren’t starting out that well between China and the US,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, referencing Mr Trump’s tweets. Richard Hunter, head of markets at Interactive Investor, added: “The latest Trump tweet tirade on China has taken the gloss off [forecast] Federal Reserve rate cuts and better than expected US second-quarter earnings — for the time being at least.” Banking and financial stocks were under the most pressure. The Stoxx index tracking the sector in Europe was down 2.4 per cent, leaving it faced with one of its biggest single-session losses since December, when a bout of volatility on global markets shook stocks from their last record-breaking run. www.businessday.ng

Currency has shed 4% since end of June as concerns deepen UK will leave the EU without a deal ADAM SAMSON, PHILIP GEORGIADIS AND GEORGE PARKER IN LONDON

terling was under pressure on Tuesday, a day after heavy selling sparked by deepening market concern that the UK will drop out of the EU without a deal. Britain’s currency fell 0.36 per cent to $1.2172. It has shed 4 per cent since the end of June, leaving it on track for its worst month since October 2016. The pound declined by a similar margin against the euro on Tuesday and has fallen 2.5 per cent over the past four trading days. It also fell against other major currencies on Tuesday, such as the Japanese yen. Monday was a “huge day” of selling in the pound against the US dollar, said Robert Turner, a quant trader at RBC in London. Mr Turner said flows out of sterling were the highest since December 11 last year, “the height of the concern over an imminent no-deal exit”. Traders expect more volatility in sterling, pushing the price up to

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hedge against large swings. Implied volatility over a three-month period has risen in July by the widest margin since the financial crisis in 2008, according to Bloomberg data that track activity in the options market. “The spectre of Brexit casts a shadow again,” said Antje Praefcke, currencies analyst at Commerzbank. She said investors were increasingly anxious over the hard line pursued by Boris Johnson’s government over Brexit talks and his vow to pull the UK out of the EU by the end of October with or without a deal. Karen Ward, market strategist at JPMorgan Asset Management, said: “Whilst ‘no deal’ is still not our expected outcome, the newsflow — politically and economically — is likely to get worse before it gets better, so sterling may have further to fall.” UniCredit on Tuesday said it now sees a 40 per cent chance the UK will leave the EU with no deal, up from its previous forecast of 25 per cent to 30 per cent. Chiara Silvestre, an economist at the Italian bank, said she expected Mr @Businessdayng

Johnson to call snap elections in early September “in pursuit of a mandate from the electorate for a no-deal Brexit”. Mr Johnson will travel to Wales on Tuesday where he will meet hill farmers, amid warnings from farmers’ leaders of “civil unrest” in rural areas if he pushes ahead with a no-deal exit. The prime minister was booed in Scotland on Monday and faces an equally difficult visit to Northern Ireland this week, where he will attempt to allay fears in the region about the consequences of a no-deal exit. Mr Johnson’s tour around the UK has been accompanied by front page headlines about the sharp drop in the pound, and that is being keenly felt by British tourists heading abroad for their summer holiday. While Mr Johnson insists he believes a deal can be struck with the EU, his no-deal planning minister, Michael Gove, will on Tuesday chair the first daily ministerial meeting to prepare for a disorderly exit on October 31.

Wednesday 31 July 2019

BUSINESS DAY

NATIONAL NEWS

US-China trade talks resume amid barrage of mutual criticism Recent accusations from both sides dent hopes of breakthrough raised at G20 meeting LUCY HORNBY IN BEIJING AND JAMES POLITI IN WASHINGTON

onald Trump said there were “no signs” that China was moving ahead with promised purchases of US farm goods, adding to a barrage of mutual criticism as a new round of trade talks began in Shanghai. “That is the problem with China, they just don’t come through,” Mr Trump wrote in a tweet on Tuesday morning. “My team is negotiating with them now, but they always change the deal in the end to their benefit.” The two-day meeting between US trade representative Robert Lighthizer, Treasury secretary Steven Mnuchin and their Chinese counterpart, vice-premier Liu He, was organised after Mr Trump and Xi Jinping agreed to a trade war truce at the G20 meeting in Osaka only a month ago. Optimism has been dented since then. Mr Trump warned last week that there might be no deal before the next US presidential elections in November 2020. On Friday he attacked China’s claims to developing economy status at the World Trade Organization, saying it was among a group of nations that are “cheating the system at the expense of the USA”. China’s foreign ministry retorted that the Trump administration’s criticism “further exposed its wayward arrogance and selfishness”. On Monday, Mr Trump lashed out at both China and the EU for their loose monetary policy, amid his latest attack on the US Federal Reserve — and then followed up on Tuesday with more blustery rhetoric against Beijing’s failure to make concessions. Expectations for a big breakthrough are “modest”, said Jake Parker, head of the US-China Business Council’s Beijing office. “We hope both sides will take a pragmatic and realistic approach to compromise.” Meanwhile, political pressure mounted again on Mr Trump from Capitol Hill not to “sell out” to Beijing. “This is a game of who is stronger and who can last longer — I hope it’s us,” Chuck Schumer, the top Democrat in the Senate, said on the floor of the upper house. Mr Schumer added that the Trump administration should “not give up leverage on Huawei in exchange for anything less than concrete commitments on market access, intellectual property theft and forced technology transfers”. Rather than a final deal, outcomes this time could include an agreement on what issues to tackle, and some agricultural purchases by Chinese companies, Mr Parker said. “Hopefully we’ll go back to where we were in May. And we, very much on the American side,

want China to begin buying agriculture goods and products as they promised,” Larry Kudlow, the director of Mr Trump’s National Economic Council, told Fox Business Network on Friday. Both sides could agree to return to a document cobbled together this spring as a basis to proceed, said Chris Krueger of financial services company Cowen Group. “The real deal breaker, as became clear with the collapse of talks in May, is how the agreement should be enforced,” he wrote. Choosing Shanghai for the talks signalled a willingness to reach a deal by the Chinese side. Twelve years ago, China’s then-commerce minister, Bo Xilai, met in Shanghai with Peter Mandelson, then EU trade commissioner, to seal a deal that temporarily curbed a “surge” of Chinese textile exports to the EU. Earlier in July, the US lifted its additional tariffs on 110 Chinesemade industrial goods following appeals by American companies. Most of the lifted tariffs apply to engines, motors and equipment parts, as well as medical devices. There has also been some movement on granting licences for companies partnering with Chinese telecoms equipment maker Huawei. China’s state-run Xinhua news agency said on July 19 that Chinese companies had resumed buying US soyabeans, cotton, pork and sorghum, adding that it would continue to do so if prices were appropriate. Agricultural purchases by Chinese companies had slackened after a deal to end the trade war fell apart in early May. But Mr Trump appeared to dispute that there was any progress on that front. “China is doing very badly, worst year in 27 — was supposed to start buying our agricultural product now — no signs that they are doing so,” Mr Trump wrote on Tuesday. Any attempt by US negotiators to pin down grain purchase commitments is complicated by the fact that Chinese agricultural imports are unlikely to return to previous levels. The country is still digesting a massive build-up in state grain stockpiles in the years before 2016, which raised Chinese prices well above global levels and artificially inflated import demand. In the short term, Chinese demand is further weakened by an epidemic of African swine fever that has decimated the country’s pig herd, reducing demand for feed. The drop in Chinese grains purchases as it unwound its excess state grains reserves contributed to the wave of anti-China feeling that swept the US around the time of Mr Trump’s election. That has given soyabeans centre stage in the talks, even though most of the White House’s tariffs are designed to counter industrial offshoring. www.businessday.ng

Police have launched a massive search for entrepreneur VG Siddhartha, who was reported missing on Monday evening © Reuters

India’s ‘coffee king’ goes missing, hitting his company’s shares VG Siddhartha’s Café Coffee Day is one of country’s best-known retail chains AMY KAZMIN IN NEW DELHI

ndian entrepreneur VG Siddhartha, known as “the coffee king of India”, has been reported missing, sending shares in his flagship company, Coffee Day Enterprises, tumbling nearly 20 per cent. Café Coffee Day, which was founded in 1996 in the information technology hub of Bangalore, is one of India’s most ubiquitous retail brands, with more than 1,700 cafés across the country. But despite the coffee chain’s size and scale, it is far from a major money spinner, reporting a post-tax profit of just $6m in the past financial year, according to a company presentation. In a notice to the Bombay Stock Exchange on Tuesday, Coffee Day Enterprises, the holding company, reported that Mr Siddhartha “had not been reachable since yesterday evening”. “We are taking the help of concerned authorities. Company is professionally managed and led by competent leadership team, which will ensure continuity of business,” the notice said. Mr Siddhartha, his wife Malavika Hegde, and companies associated

with them together held 53 per cent of the equity in Coffee Day Enterprises but, according to stock exchange filings, most of these shares had been pledged to various financial institutions as security for fresh loans taken by the businessman. As of July 1, Mr Siddhartha, his wife and related entities had pledged 40.8 per cent of the company’s total equity as collateral to various lenders, BSE filings show. The Bangalore-based businessman was last seen by his driver on Monday night, when he got out from his car close to a bridge across the Nethravathi River, near Mangalore, a city on the Arabian Sea 350km west of Bangalore. The driver sounded the alarm after Mr Siddhartha failed to return. Police have launched a massive search for Mr Siddhartha, whose father-in-law, SM Krishna, had served as India’s foreign minister and chief minister of the state government in Karnataka, of which Bangalore is the capital. Indian media reported on a note purportedly written by Mr Siddhartha to the Coffee Day Enterprises board, in which he apologised that he “let down all the people who put their trust in me”, adding: “I have

failed to create the right profitable business model despite my best efforts . . . I fought for a long time, but today I gave up.” Mr Siddhartha’s disappearance has shocked India’s business community. “The VG Siddhartha news is just stunning,” Amit Ranjan, cofounder of tech company SlideShare, wrote on Twitter. “He certainly wasn’t a failed entrepreneur. Black letter day for start-ups & entrepreneurship in India.” Café Coffee Day faces growing competition from Starbucks, which entered the Indian market in a joint venture with Tata Group in 2012, and now has about 146 outlets, as well as other foreign rivals such as UK-based Costa Coffee, owned by Coca-Cola. With its slightly suggestive slogan, “A lot can happen over coffee”, Café Coffee Day developed India’s café culture, capturing the zeitgeist of a young country keen to adopt western lifestyles — and in urgent need of public spaces in which to meet. In 2010, private equity firm KKR led a consortium that invested $200m in Coffee Day Enterprises. The company’s listing on the BSE in October 2015 marked a revival of interest in India’s then dormant IPO market.

Leon Cooperman: a wealth tax will not solve US inequality Hedge fund magnate argues that eliminating waste and income tax loopholes are better options LEON COOPERMAN

here has been much written lately about imposing an explicit wealth tax, as well as higher income taxes, on the richest Americans. Several Democratic presidential contenders, most notably Elizabeth Warren, have called for a wealth tax and it has been embraced by more than a few members of the very group that would be hit hardest by such a levy. Proponents such as George Soros, Chris Hughes and Abigail Disney argue that such a tax could raise tril-

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lions of dollars over a decade, money that might be used to address myriad social challenges such as climate change, crumbling infrastructure, student loan debt relief, structural poverty and universal childcare. They claim in an open letter that a wealth tax is patriotic and would strengthen our democratic freedoms, and that arguments against the tax “are mostly technical and often overstated”. As a taxpaying American businessman with more than a passing familiarity with the ways of Washington, I disagree. I question whether an explicit wealth tax is the best path forward for the country and whether the federal @Businessdayng

governmentiscurrentlyuptothetaskof allocatingthosetaxresourcesefficiently. While I have been richly rewarded by a life of hard work combined with good luck, I was not to the manor born. My father was a plumber in the South Bronx after emigrating from Poland. I benefited from a good public education system and my parents’ constant prodding, becoming the first in my family to earn a college degree. When I joined Goldman Sachs, I had no savings, a negative net worth, a student loan, and a six-month-old baby (not to mention his mother, my wife of now 55 years) to support.

Wednesday 31 July 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Saudi Arabian wealth fund to invest in NHS chatbot maker Babylon Health

Public Investment Fund to make first high-profile direct investment in a UK start-up JAVIER ESPINOZA, ARASH MASSOUDI AND ANTONIA CUNDY IN LONDON

audi Arabia’s sovereign wealth fund is in late-stage discussions to invest in the UK’s Babylon Health, a controversial digital health start-up used by the National Health Service, according to people with direct knowledge of its plans. The planned investment, which is part of a new funding round running into hundreds of millions of dollars, may be announced as soon as later this week, these people said. The exact terms are yet to be finalised and could still change. It marks the latest tech bet by Saudi Arabia’s Public Investment Fund, the principal vehicle through which Crown Prince Mohammed bin Salman has attempted to diversify the oil-dependent country’s holdings. The deal will mark the first highprofile direct investment by the PIF into a UK start-up. It comes as the British government continues to court the Gulf country for deeper economic ties, including in the healthcare sector, even as the international community wrestles with the fallout from the killing of journalist Jamal Khashoggi last October. The size of the planned investment is not clear but is expected to amount to between $100m and $500m, one of these people said. The funding is thought to be part of a wider investment round.

London-based Babylon has been searching for fresh investment since earlier this year to fund its expansion. Founded in 2013 by Ali Parsa, a British-Iranian entrepreneur and banker, Babylon developed a “chatbot” to check the symptoms of patients, which is used by the NHS. It also offers a service connecting patients in south-west London to doctors through the cameras of their smartphones. The company, which also has contracts with South Korea’s Samsung and China’s Tencent, has been hailed by Matt Hancock, the UK health secretary, as one of the “biggest names in AI”. But the start-up has faced scrutiny in the UK by regulators following complaints from doctors that its chatbot symptom checker could miss signs of serious illnesses. That has compounded attention on Mr Parsa’s ability to secure funds from investors. He previously led Circle Health, the private manager of an NHS hospital, before it fell into financial difficulty in 2012. In March 2018, Saudi Arabia’s minister for health development met his UK counterpart in London to discuss deeper co-operation between the two countries. They announced a memorandum of understanding with Babylon that was tied to “the future delivery of health solutions for the Saudi Ministry of Health through their local partner Thiqah using Babylon’s artificial intelligence application”.

US inflation edges up as investors await Fed decision Incomes and consumer spending also rise ahead of expected rate cut MAMTA BADKAR IN NEW YORK

he Federal Reserve’s preferred measure of inflation inched toward the central bank’s target in June while consumer spending rose moderately, data on Tuesday showed, as investors brace for the central bank to cut interest rates this week. Core personal consumption expenditures, an underlying gauge of inflation, rose 0.2 per cent month-on-month in line with expectations, the Commerce Department said. However, the 1.6 per cent year-on-year increase is up from the downwardly revised 1.5 per cent reading in May, but shy of economists’ expectations for 1.7 per cent. That compares with the central bank’s target of 2 per cent. The data comes as the Fed is widely expected to deliver a 25 basis point rate cut on Wednesday. In recent weeks there had

been debate about whether the central bank would deliver a one or two notch cut and some held out hope that concerns over global growth and sluggish inflation might prompt a sharper half-point cut but that view has since petered away. Sluggish inflation in the face of a declining unemployment rate has been a puzzle for the central bank. During his recent Congressional testimony, Fed chair Jay Powell cautioned that downbeat prices could lead to an “unhealthy dynamic” of lower interest rates and less room to act in a downturn. Tuesday’s inflation report also showed personal incomes rose 0.4 per cent month-on-month in June in line with expectations. Meanwhile, spending rose 0.3 per cent in June, also in line with expectations, but cooling from a 0.5 per cent rise the previous month. The pace of spending growth cooled for the third consecutive month. www.businessday.ng

Ali Parsa founded Babylon Health in 2013

Deutsche Bank sets deadline for equity derivatives sale Co-head of German lender’s bad bank expects bids in September as it seeks to dispose of assets LAURA NOONAN IN NEW YORK, STEPHEN MORRIS IN LONDON AND OLAF STORBECK IN FRANKFURT

eutsche Bank has set a September deadline for bids on the vast portfolio of equity derivatives it is selling, as the struggling lender looks to expedite a key part of its ambitious restructuring. The derivatives are among the assets earmarked for disposal in Deutsche’s bad bank, which it is relying on to free €10bn to help foot the bill for the overhaul as well as fund investments in technology, compliance and control functions. The so-called capital release unit, or CRU — the second non-core unit Deutsche has created since the financial crisis — stands in contrast to traditional “bad banks” which have often been used for defaulting property loans and other toxic assets. Alongside equity derivatives, Deutsche’s CRU includes cash equities that it is looking to offload as well as interest-rate trades with poor returns. “We’ve had a huge amount of

interest, people saying they want to be part of the auction process, and expect to start getting firm bids in September,” Ashley Wilson, the cohead of the CRU told the Financial Times in his first public comments since taking the role. The bank will begin auctioning the equity derivatives portfolio in the middle of next month. The bank has wound down almost all of its cash equities positions, Mr Wilson added, despite only announcing it would close the trading business three weeks ago. The business is one of the casualties of Deutsche chief executive Christian Sewing’s effort to refocus the struggling lender on its German retail operations and banking services to corporate Europe. The cash equities business has already been “de-risked” after the bank exited block positions with its clients and eliminated its central risk books, which it uses to offset risks both for customers and itself. French rival BNP Paribas is in talks to buy Deutsche’s prime broking business, as well as its electronic equities platform.

“Right now, we’ve been focused on de-risking and selling the equities portfolio,” Mr Wilson said. A senior investment banker at rival to Deutsche Bank said there was “a lot of appetite” for the German lender’s assets, with international banks, private equity firms and hedge funds all considering the portfolio. “Quite a few people who are very well funded are looking for yield,” he added. “The big question obviously will be the price.” However, any sales of equity derivatives will probably take months to complete as buyers must complete the arduous process of taking over individual client accounts. Deutsche has said that it plans to sell or run down 60 per cent of the CRU holdings by the end of 2019, but has not given timetables for specific assets. Mr Wilson’s division, which he co-heads with Louise Kitchen, also has around €80bn of fixed-income assets. Mr Wilson said those assets had been “categorised and prioritised and we are close to completing the de-risking strategy for each asset class”.

P&G sales rise on higher prices across all divisions Territory reels after three consecutive days of clashes between police and activists

rocter & Gamble pushed up prices in all five of its main divisions in its fiscal fourth quarter, the latest sign of how the US consumer packaged goods company has recovered since activist investor Nelson Peltz took aim at its “chronic underperformance”. The company behind household brands such as Pampers nappies, Ariel detergents and Pantene hair care generated organic sales growth, a metric that strips out the impact of foreign exchange, acquisitions and divestitures, of 7 per cent in the quarter.

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Wall Street cheered the figures even though the company slipped to a loss of $5.24bn in the fourth quarter, or $2.12 per share, driven by an $8bn after-tax goodwill and intangible assets charge in its Gillette shave care business. Shares of the company were up more than 4 per cent to $121.19 in pre-market trading. P&G said the impairment was due primarily to long-term currency devaluations, although it also recognised the business had been hit by “market contraction of blades and razors, primarily in developed markets”. P&G and its big rivals have @Businessdayng

been under pressure from changing consumer tastes and intensifying competition. In grooming, P&G’s Gillette has lost ground to the likes of Dollar Shave Club and Harry’s. The rise of retailers’ own brands, such as Costco’s Kirkland, has added to the difficulties. Jon Moeller, chief financial officer, urged investors to look past the non-cash writedown and said the fortunes of the business were improving. “This is a business that both on a value and volume basis is growing in a majority of countries in the world,” he said.

Wednesday 31 July 2019

BUSINESS DAY

ANALYSIS

FT Capital One data breach affects 106m people

US bank says details of credit card customers and applicants were exposed HANNAH MURPHY IN SAN FRANCISCO AND KADHIM SHUBBER IN WASHINGTON

apital One, the US bank, said on Monday that it had suffered a massive data breach, reporting that an outside hacker obtained the personal data of more than 100m customers and applicants for its credit cards. About 100m individuals based in the US and 6m in Canada had their information compromised in the breach, according to a statement by Capital One, which is among the top credit card issuers in America. The breach took place in late March but was not discovered until this month, the company said, adding that it would notify those affected and make “free credit monitoring and identity protection” available to them. The alleged hacker, Paige Thompson, was arrested on Monday and appeared in court in Seattle, according to court records. Prosecutors have moved to keep her in jail ahead of her trial. She was charged with one count

of computer fraud and abuse. Ms Thompson worked as a systems engineer at an unnamed cloud computing company from 2015 to 2016, according to an FBI affidavit filed in her case. Her online resume said she worked at Amazon Web Services from May 2015 to September 2016. Amazon Web Services declined to comment. The data theft revelations come just days after the credit reporting agency Equifax agreed to pay almost $800m in a record US settlement after a 2017 hack that exposed the personal data of close to 150m people. In the case of Capital One, the hacker largely tapped the personal information of consumers and small businesses that applied for credit card products between 2005 and 2019, collecting names, addresses and phone numbers, self-reported income, credit scores and payment history, among other personal information. About 1.1m Canadian social insurance and US social security numbers* and 80,000 linked bank account numbers were also accessed, Capital One said.

German court hears case against ECB bond-buying Fresh hearing about QE in long-running legal argument over €2.6tn stimulus programme CLAIRE JONES IN FRANKFURT

ermany’s constitutional court has embarked on a fresh hearing about the legality of the European Central Bank’s programme of asset purchases — just as the ECB gears up for an expansion of its economic stimulus measures. After more than four years and with around €2.6tn-worth of bonds already bought, the quantitative easing programme remains controversial in northern eurozone states. Nowhere more so than in Germany, where the Karlsruhe court’s hearing is part of a long-running case that centres on whether the purchases constitute so-called “monetary financing”, which is prohibited under EU law. The timing of the hearing is delicate. Last week ECB president Mario Draghi said that the bank’s officials would look at a range of stimulus options — including rate cuts, a commitment to keep policy exceptionally loose for years to come and another round of QE — to counter fears that the bank would persistently undershoot its inflation target of just under 2 per cent. What is monetary financing? Eurozone treaties prevent the ECB from financing member states’ governments by buying their debt, a tactic known as monetary financing. This rule aims to protect the central bank

from political pressure and avoid stoking inflation. QE involves the central banks of eurozone member states buying government bonds in massive quantities, financed by the ECB. The complainants in the case — a group of almost 2,000 people, led by German economists and law professors — argue that it is therefore illegal. They want the Bundesbank, which has been the biggest purchaser of bonds under QE, to stop participating in the ECB programme. They first brought their case against the ECB after the eurozone’s central bank embarked on QE in 2015, attempting to get the German constitutional court to block it. The ECB argues that QE does not constitute monetary financing because it is only buying the bonds in secondary markets from other investors, rather than purchasing the debt directly from governments. And the ECB’s QE rules prevent it from holding more than a third of any member state’s outstanding debt. What have the courts said? The German courts have been busy for years with a series of court cases about the scope of the ECB’s mandate. In 2016 the constitutional court ruled in the ECB’s favour in a separate case about its Outright Monetary Transactions programme, which was unveiled in 2012. www.businessday.ng

López Obrador takes on Mexico’s institutions As the president attacks corruption and poverty, some worry he is flirting with demagoguery JUDE WEBBER IN MEXICO CITY

tanding beside a sugar cane farmer who uses a wooden, horse-drawn press to squeeze juice into a plastic bucket, Mexican President Andrés Manuel López Obrador gave a demonstration of his economic world view. On a visit to La Huasteca last week, near the Bajío region that is Mexico’s high-tech manufacturing powerhouse, the leftwing nationalist president — who prides himself on not having a checking account or credit card — extolled the virtues of artisanal microbusinesses that he said were “as or more important” in terms of job creation and development than big business. “This is the economy we are boosting,” he said, sipping his cane juice. The day after his trip, he abruptly fired the head of the agency charged with measuring poverty and evaluating the social programmes that are a pillar of his eight-month-old government. Gonzalo Hernández Licona’s dismissal from Coneval, four days after he wrote an editorial saying budget cuts were crippling the agency’s ability to function, was the latest in a purge of technocrats and institutions the president says are corrupt, profligate or standing in the way of his transformation of Mexico after 36 years of failed market-focused “neoliberal” policies. But some investors and analysts fear that in pursuing the mirage of a return to the golden era of growth of half a century ago, with the state firmly in the driving seat, the silver-haired shopkeepers’ son is flirting with the sort of demagoguery that could take Mexico down a dangerous populist path. “There is a sense that history begins with him, that nothing of the past works and that he has to start a new era,” says Enrique Krauze, a prominent historian who has himself clashed with a president he once dubbed a “tropical messiah”. “He is not only taking decisions — good or bad

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— on economic policy but also institutions, which took so much effort to build. I’m truly worried.” Mexico will publish secondquarter GDP data on Wednesday that are expected to show the economy close to recession, after a shock contraction at the start of the year, a fall in job creation and the lowest construction activity in 13 years. Citibanamex, a leading bank, has slashed its 2019 growth forecast to just 0.2 per cent in stark contrast to the president’s promise of 2 per cent. Yet with approval ratings as high as 70 per cent and his main economic barometer, the peso, holding steady against the dollar, Mr López Obrador feels vindicated in his rush to jettison past policies and overhaul institutions in line with his beliefs, no matter who he upsets. “I think that if your project is to change the status quo, political tensions are normal,” says Ignacio Marván, a professor at CIDE university and former adviser to Mr López Obrador when he was mayor of Mexico City. “He’s not risk averse. He’s not afraid of taking tough decisions, then he backtracks. “[But] he may be thinking that . . . giving concessions now would weaken his support.” The 65-year-old politician swept into office in December after a landslide victory that gave him a huge popular mandate and control of both houses of Congress. He has moved speedily to centralise decision-making in his hands and to consolidate an unprecedented level of power now that he has finally made it to the presidency at the third attempt. In tandem with his own ethic of frugality, Mr López Obrador has pushed to shake-up the way many government departments and agencies spend money — with large reductions in operating expenses to allow more social spending to go directly to people. But hopes that he would prove a pragmatic steward of the economy — as he was during his period as mayor of Mexico City — are fading fast. Mr López Obrador @Businessdayng

has already alarmed investors by scrapping a partially-built $13bn airport project and pushing ahead with a planned $8bn refinery that few in the oil industry believe makes sense or can be built on time and to budget. While his goals of eradicating corruption and fairer wealth distribution are widely lauded, many fear his methods spell a return to the failed nationalist policies of the 1970s. As he hurtles ahead in a quest he hopes “with all my heart and soul” that future governments will never be able to undo, Mr López Obrador’s confrontational style has put him on collision course with energy regulators, whom he has dismissed as “real shysters”, the federal police which he said was “not up to scratch” and the “shameful” national human rights agency. Carlos Urzúa, a longtime ally, resigned as finance minister in July after a dramatic falling-out with the president, claiming that policy decisions were not being “based on evidence”. He joins a growing list of casualties: Germán Martínez quit as head of the state social security agency IMSS, Guillermo García Alcocer as head of energy regulator CRE and Tonatiuh Guillén as head of the National Migration Institute amid budget cuts, interdepartmental meddling and policy differences. The message that many in Mexico have drawn is not just that awkward critics — those deemed not to be on board with the president’s radical crusade to sweep away corruption and all vestiges of the “neoliberal period” — are either enemies or expendable. But that the institutions they serve may be sacrificed, too, as the president imposes his uncompromising agenda on Latin America’s second-biggest economy. “The problem is that his idea is not to build more technical institutions,” says Jacqueline Peschard, a former head of the agency in charge of access to information. “He subordinates everything to his narrative, which is more moralising than technical.”

Wednesday 31 July 2019

BUSINESS DAY

tax issues Forum on Harmful Tax Practices includes Nigeria in ‘out of scope’ regimes …sets 2020 for annual monitoring of jurisdictions’ mechanisms Iheanyi Nwachukwu

emarkable progress continues on the implementation of the Base Erosion and Profit Shifting (BEPS) Action 5 minimum standard, with a further 22 jurisdictions changing their laws to address harmful tax practices. Recall that Action 5 of the BEPS Action Plan committed to “revamp the work on harmful tax practices with a priority on improving transparency, including compulsory spontaneous exchange on rulings related to preferential regimes, and on requiring substantial activity for any preferential regime.” It takes a holistic approach to evaluate preferential tax regimes in the BEPS context as it engages with non-OECD members on the basis of the existing framework and consider revisions or additions to the existing framework. In January 2019, the Inclusive Framework agreed on a peer review process for these jurisdictions to be carried out by the Forum on Harmful Tax Practices (FHTP), which commenced with a review of the domestic legal framework, and then proceeded to an annual monitoring process to review the effectiveness in practice.

Interestingly, the Inclusive Framework on BEPS on July 19, 2019 approved the latest results of reviews of jurisdictions’ domestic laws conducted by the OECD Forum on Harmful Tax Practices (FHTP). The review covered not only preferential tax regimes, but the results of the review of the substantial activities factor for no only nominal jurisdictions. Cabo Verde, Nigeria, Paraguay and Viet Nam are the regimes found to be out of scope for the FHTP. Nigeria is classified under a regime that is ‘not operational’, and is said to have no benefits for income from geographi-

cally mobile activities.’ The Inclusive Framework had in November 2018 agreed to resume the application of the substantial activities requirements for no or only nominal tax jurisdictions, ensuring a level playing field between those introducing substantial activities requirements in preferential regimes, and those offering a general zero or only nominal corporate tax rate. Since the publication of the substantial activities requirements, no or only nominal tax jurisdictions have enacted new legislative provisions to meet the standard. During its June 2019 meeting, the

FHTP made new and updated decisions on 56 regimes, some of which were reviewed for the first time. For instance, 13 regimes were abolished (Cabo Verde, Malaysia, Mongolia, Montserrat, Morocco, Switzerland, Thailand). Three regimes were amended to remove the potentially harmful features (Cabo Verde, Malaysia, Mauritius) and four new regimes were classified as “not harmful”, as they were specifically designed to meet the Action 5 standard (Malta, Poland, Thailand). Four regimes are in the process of being amended (Aruba, Greece, Kazakhstan). Eight regimes were found to be out of scope for the FHTP (Cabo Verde, Nigeria, Paraguay and Viet Nam). Two regimes were found potentially harmful but not actually harmful (Aruba, Viet Nam) and one regime is not operational (Paraguay). One regime was found actually harmful (Jordan); 21 additional regimes are now been placed under review (Cook Islands, Dominica, Dominican Republic, Jamaica, Morocco, North Macedonia, Qatar). The 1998 report on “Harmful Tax Competition: An Emerging Global Issue” had set out the framework to identify harmful tax practices, with specific criteria for assessing harmful preferential regimes and for assess-

ing “tax havens” (as they were then called). After agreeing the new substantial activities standard for no or only nominal tax jurisdiction in November 2018, the 12 “no or only nominal tax jurisdictions” identified by the FHTP introduced the necessary domestic legal framework to meet the standard. The standard requires that for certain highly mobile sectors of business activity, the core income generating activities must be conducted with qualified employees and operating expenditure in the jurisdiction. The FHTP has now reviewed the new domestic laws of the 12 no or only nominal tax jurisdictions. For 11 of these jurisdictions (Anguilla, the Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands) the FHTP concluded that the domestic legal framework is in line with the standard and therefore “not harmful”. Regarding the remaining jurisdiction reviewed by the FHTP (United Arab Emirates), the FHTP concluded that the legal framework was in line with the standard but with one technical point outstanding. In this respect, the United Arab Emirates committed to make further legislative changes and the law is now “in the process of being amended.”

Why tax policies are only one piece of an investment puzzle Businesses will scrutinise national tax policy when investing, but they also want growth and stability in the mix, writes Jay Nibbe, EY Global Vice Chair – Markets.

ountries today are locked in a race to retain existing capital and attract more inbound investment. This is no easy feat amid a global landscape marked by political uncertainty and uneven economic growth. A nation’s tax policies can certainly make a critical contribution to long-term economic growth. As taxes are one of the largest expense and liability items in many organizations’ financial statements, CEOs, CFOs and other decision-makers closely review a country’s tax policies when looking for a destination for their capital. They may ask: Is the rate competitive? Are business costs treated fairly? Are there attractive incentives? Is the approach to collection, enforcement, taxpayer rights and dispute resolution sound? Governments know tax policy is only one ingredient for optimal growth. Others include sound infrastructure, stable social and fiscal policies, fair and effective legal systems and an educated and competitive workforce. Tax matters When it comes to the global tax environment, governments’ current mantra is a low headline rate, but with

a typically broader base. To attract investors, some countries are opting to cut corporate income tax (CIT) rates and/or roll out innovation incentives such as patent boxes. In our outlook for global tax policy in 2017, eight of 50 countries surveyed planned to reduce their CIT rates in 2017. Of the remainder, 40 planned no change to their tax rates, while just two nations forecast rate increases. Eleven of the 50 respondents said they plan to introduce more “generous” R&D incentives in 2017. The entire environment While such moves are helpful to business, governments need to recognize that organizations will look beyond tax rates or incentive

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packages and consider the entire tax environment. Businesses want assurance that a country will treat taxpayers fairly. It’s one matter to qualify for some form of tax incentive, but what happens if an investor fails to get the proper stamp on a form or misses a deadline and the incentive disappears? Similarly, business will assess if taxpayers are given the following: fair treatment in the examination process; access to an appeals process, including unfettered access to courts; and the opportunity to avail themselves of dispute resolution procedures or competent authority processes under international tax treaties without repercussion.

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Businesses and government policymakers are typically aligned in the objective of growth — for their company and their country, respectively — but neither are willing to take on undue risk in exchange. Government policy coupled with fair enforcement is a critical balance to achieve the growth desired by all. Solid foundation Businesses want to invest in stable and growing economies. This means destinations where governments are investing in their infrastructure, education and health care systems to support the flow of goods and a competitive workforce. And where there is stability in leadership and transparent legislative and legal processes, there is a basis for solid, long-term growth. The United States is one country currently debating its tax system. The US policy of taxing US-based businesses on their global earnings (instead of a territorial approach) leaves the US as the only G7 country with this system. When coupled with a corporate tax rate that exceeds all other developed nations, reform is a real possibility. @Businessdayng

Despite these perceived negatives, the US has been able to avoid undue capital flight. How? In general, the country’s trade and immigration policies have been viewed as positive for encouraging US investment. Balancing act To attract steady, long-term investment, a country must evaluate the whole of its tax, fiscal and legal systems, along with its physical infrastructure and labor resources. Achieving the right mix is a balancing act that countries are attempting all around the world. While tax policy is certainly a key factor in choosing where to invest, when viewed in isolation it is rarely sufficient to change the economic behavior of a business or investor. For most businesses, it is about finding the right mix between the tax environment and other growth and value drivers. As policymakers seek new ways to drive economic growth, they want and need to hear from companies about what that mix would be and how potential changes would affect business decisions. The economy can only grow when all the right pieces are in place.

Wednesay 31 July 2019

BUSINESS DAY

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Wednesday 31 July 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 30 July 2019

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 223,934.92 6.30 -1.56 145 6,276,744 UNITED BANK FOR AFRICA PLC 198,356.64 5.80 -1.69 209 21,234,945 ZENITH BANK PLC 577,695.49 18.40 -0.27 339 14,972,846 693 42,484,535 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 199,218.87 5.55 -1.77 188 12,052,915 188 12,052,915 881 54,537,450 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,585,023.16 127.00 -0.31 146 2,510,662 146 2,510,662 146 2,510,662 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 42 1,073,514 LAFARGE AFRICA PLC. 235,173.81 14.60 1.39 104 8,008,018 146 9,081,532 146 9,081,532 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 288,337.83 490.00 - 10 3,045 10 3,045 10 3,045 1,183 66,132,689 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 800 1 800 1 800 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 800 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 49,603.32 52.00 - 14 21,020 PRESCO PLC 44,800.00 44.80 - 9 20,883 23 41,903 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 1 500 1 500 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,350.00 0.45 - 5 54,080 5 54,080 29 96,483 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 847.13 0.32 - 0 0 JOHN HOLT PLC. 179.01 0.46 - 1 690 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 39,022.07 0.96 -3.03 84 8,575,127 U A C N PLC. 16,711.52 5.80 - 36 173,638 121 8,749,455 121 8,749,455 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,750.00 18.75 3.59 14 114,590 ROADS NIG PLC. 165.00 6.60 - 0 0 14 114,590 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,936.19 1.13 - 2 1,618 2 1,618 16 116,208 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 2 3,340 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 2 26,734 GUINNESS NIG PLC 100,757.61 46.00 - 62 614,763 INTERNATIONAL BREWERIES PLC. 107,448.27 12.50 - 19 4,003,090 NIGERIAN BREW. PLC. 439,829.61 55.00 -8.33 126 1,139,249 211 5,787,176 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 96,500.00 19.30 -1.53 133 1,082,829 DANGOTE SUGAR REFINERY PLC 129,600.00 10.80 1.89 58 851,714 FLOUR MILLS NIG. PLC. 60,890.64 14.85 - 42 162,351 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 1.01 28 1,115,458 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 2 3,267 NASCON ALLIED INDUSTRIES PLC 35,899.89 13.55 - 14 38,499 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 277 3,254,118 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 21,411.50 11.40 - 20 60,350 NESTLE NIGERIA PLC. 1,030,056.80 1,299.50 -0.80 60 101,864 80 162,214 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,378.63 4.30 5.13 41 1,255,159 41 1,255,159 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,822.86 6.00 - 40 327,279 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 51 896,628 91 1,223,907 700 11,682,574 BANKING ECOBANK TRANSNATIONAL INCORPORATED 146,796.41 8.00 - 34 244,414 FIDELITY BANK PLC 46,939.17 1.62 -0.62 48 2,808,311 GUARANTY TRUST BANK PLC. 838,788.61 28.50 -0.70 166 22,273,889 JAIZ BANK PLC 12,374.98 0.42 - 4 76,130 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 64,490.54 2.24 -2.61 11 4,363,184 UNION BANK NIG.PLC. 199,477.16 6.85 - 61 1,094,142 7,364.28 0.63 8.62 9 774,542 UNITY BANK PLC 23,144.68 0.60 -3.23 19 1,357,471 WEMA BANK PLC. 352 32,992,083 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 2 10,000,000 AIICO INSURANCE PLC. 4,435.33 0.64 1.59 30 2,341,652 17,325.00 1.65 - 0 0 AXAMANSARD INSURANCE PLC CONSOLIDATED HALLMARK INSURANCE PLC 2,682.90 0.33 - 3 61,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 1 970 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 9 1,022,220 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 1,228.00 0.20 - 0 0 GUINEA INSURANCE PLC. INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,489.97 0.34 -8.11 12 1,195,000 LAW UNION AND ROCK INS. PLC. 2,019.28 0.47 - 2 120 LINKAGE ASSURANCE PLC 4,160.00 0.52 1.96 7 400,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 10.00 25 3,488,839 NEM INSURANCE PLC 11,353.08 2.15 - 29 612,670 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,422.15 0.45 - 5 3,200 REGENCY ASSURANCE PLC 1,333.75 0.20 - 6 11,400 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 16 933,437 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 6 30,500 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,219.27 0.39 -2.50 15 280,901 168 20,381,909

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,949.76 1.29 - 5 21,397 5 21,397 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 1 10 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 1 10 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,400.00 3.70 - 27 392,300 CUSTODIAN INVESTMENT PLC 35,879.37 6.10 - 7 52,100 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 31,882.36 1.61 -1.83 27 982,664 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 390,165.07 38.10 -0.13 25 593,841 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 12,840.00 2.14 -0.47 30 1,035,737 116 3,056,642 642 56,452,041 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 300 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 - 0 0 1 300 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 8,554.08 4.10 - 3 590 GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,567.01 8.00 - 11 63,841 3,968.04 2.30 - 7 163,680 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 - 0 0 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 21 228,111 22 228,411 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 5.00 11 2,157,936 11 2,157,936 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 3 1,150 NCR (NIGERIA) PLC. 626.40 5.80 - 8 158,000 346.47 0.70 - 8 15,471 TRIPPLE GEE AND COMPANY PLC. 19 174,621 PROCESSING SYSTEMS CHAMS PLC 1,220.98 0.26 -3.85 11 441,556 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 500 12 442,056 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 21 2,846 21 2,846 63 2,777,459 BUILDING MATERIALS BERGER PAINTS PLC 1,825.89 6.30 - 6 10,244 17,325.00 24.75 - 15 17,434 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 157,064.84 11.95 1.70 88 2,331,528 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 313.43 0.59 - 2 15 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 1 10 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 112 2,359,231 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,747.66 1.56 - 20 274,500 20 274,500 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 2 30 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 30 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 134 2,633,761 CHEMICALS B.O.C. GASES PLC. 2,110.36 5.07 - 2 1,015 2 1,015 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 1 10 1 10 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 3 1,025 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -8.70 12 2,676,000 12 2,676,000 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 -1.28 35 315,565 35 315,565 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 11 3,829 CONOIL PLC 14,052.53 20.25 - 30 182,229 ETERNA PLC. 4,303.68 3.30 -1.49 21 268,188 FORTE OIL PLC. 23,444.66 18.00 - 29 195,707 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 4 3,828 TOTAL NIGERIA PLC. 38,977.11 114.80 - 21 11,996 116 665,777 163 3,657,342 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 10 1 10 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,112.54 5.28 - 2 1,300 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 1 2,250 3 3,550 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 20 1 20 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 800 IKEJA HOTEL PLC 3,035.04 1.46 8.96 5 112,512 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 100 41,042.18 5.40 - 6 4,980 TRANSCORP HOTELS PLC 13 118,392 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 100 1 100 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 14 281,626 LEARN AFRICA PLC 1,080.03 1.40 - 8 66,800 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 8 102,816 30 451,242

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BUSINESS DAY Wednesday 31 July 2019 www.businessday.ng

Are tech companies Africa’s new colonialists?

n 1886, barely a year after Europe’s great powers met in Berlin to carve up the continent of Africa, Queen Victoria granted Sir George Goldie a charter for his Royal Niger Company. The charter gave Goldie, a moustachioed, waistcoated gentleman of Scottish descent, the right to administer the Niger Delta and its hinterland. Like most of his peers, he was motivated by extraction, which in those days meant kola nuts, peanuts and palm oil. There were many variations across subSaharan Africa, but the pattern of exploitation was basically the same. Europeans arrived with power and technology, and left with goods and profits. First, they took slaves — the original sin — before turning their attention to commodities including gold, cocoa, rubber and coffee. Chartered companies would in due course give way to formal empire and Goldie’s was no exception, transferring its rights to the British government in 1900. Much has changed in Nigeria since independence in 1960. But here, as elsewhere in Africa, the economic template established by the Europeans has proved difficult to shift. Trade continues to be conducted through political elites with access to resources. Most value is added to commodities after they leave the continent. The perennial puzzle of African development in the postcolonial era has been how to break the mould — how to extract Africa from its history of extraction. For some, the great leveller of new technology offers a solution. The technological revolution sweeping the world is beginning to have a profound impact on the continent. Many have put their faith in “leapfrogging”, the idea that Africa can escape its poverty and colonial heritage by skipping whole stages of development. The biggest example of that has been Africa’s jump straight to mobile phones, almost entirely bypassing fixed-line technology. Behind such hopes, however, lies a familiar anxiety over ownership and control. What if Big Tech, far from being a liberating force, turned out instead to be a new kind of colonialist? On April 12 this year, Juliet Anammah, chief executive of the Nigerian operations of a company called Jumia, stepped forward to ring the opening bell of the New York Stock Exchange. Anammah was one of several senior executives there to celebrate the initial public offering of an e-commerce company that had been dubbed the “Amazon of Africa”. Jumia, which operates in 14 African countries from Nigeria to Egypt and from Ivory Coast to Kenya, this year became the first entirely Africa-focused e-commerce company to be listed on the prestigious US stock exchange. There is, however, one problem with the Jumia story. No sooner did the company complete its New York listing than a backlash began. Jumia, say its detractors, is not an African company at all. Jumia does fit squarely into the narrative of a technological solution to Africa’s problems and a path towards a future in which commerce, not extraction, becomes a motor of African growth. With a combination of online technology and strategic offline infrastructure — including warehouses and fleets of motorbikes — Jumia promises an expanding African consumer class the opportunity to have goods delivered directly to their homes. Customers are able to order anything from an iPhone or

Jumia co-chief Sacha Poignonnec, left, and Jumia Nigeria chief Juliet Anammah at the New York Stock Exchange on April 12

an LED television to a chicken korma at the touch of a screen, bypassing the potholed roads and exhaust-filled traffic jams that characterise many fast-growing African cities. Interest in Jumia’s initial public offering had been intense. Not long after the ceremonial bell ringing, the company’s stock began to surge from its initial price of $14.50. By the end of the day, it was up 75 per cent, valuing the company within a whisker of $2bn and making small fortunes for its founders. In the following few days, the share price continued surging to break through $40. Though that was still tiny by the standards of Silicon Valley, to the Afro-optimists, particularly ones with a technological bent, Jumia’s listing was a hugely significant event. It showed the world that African tech had come of age and that investors could make money out of a company with big African expansion plans. Surely now more investment would follow, argued Jumia’s advocates, helping African businesses and African economies to chart a new future. Jumia’s listing had shone a light on what close watchers of Africa had long known: that the continent was buzzing with tech ideas. After the leap to mobile, the story began in earnest a little over a decade ago in Kenya, with the invention of M-Pesa, a system for transferring small amounts of money by mobile phone. As easily as sending a text message, people could transfer money home to relatives in their village or pay for goods or utilities. M-Pesa and dozens of variants like it are now used by hundreds of millions of Africans, many of them otherwise excluded from the formal banking system. Even the poorest can build up a credit history and take out microloans. In the Kenyan capital Nairobi, the ecosystem has given rise to a vibrant tech hub known, almost inevitably, as “Silicon Savannah”. Hundreds of companies have built on the spine of the money transfer network to offer services such as the renting of solar panels, where customers make micropayments by phone. Online pharmacies have been launched, enabling customers to screen for fakes and cut out gouging middlemen. Not to be outdone, Lagos, Nigeria’s commercial capital, has its own tech hub in the district of Yaba, known to some as “Yabacon Valley”.

Even neighbouring Cameroon, with its far smaller economy, has not one but two tech hubs: “Silicon River” and “Silicon Mountain”. Across the continent, an explosion in the use of mobile phones — and the increasing penetration of smartphones — has opened the possibility of app-based services that can, at least theoretically, address problems from poor education standards and low farming yields to dire infrastructure and even corrupt tendering processes. Health apps in Rwanda offer the poorest citizens the prospect of cheap medical consultations driven by AI. One online company in Nigeria, known as Cars45, seeks to address the problems of theft and fraud that plague Africa’s huge second-hand car market by offering a realtime online auction. Other companies, including Bridge, backed by Bill Gates and Mark Zuckerberg, hold out the possibility — still controversial to many — of tech-based solutions to poorquality education in which a standardised curriculum is relayed to tablet-wielding teachers. Much of this remains at the prototype phase. In spite of all the activity, Africa’s technology sector is still relatively small. Last year, African start-ups raised a record $726m, according to WeeTracker, just over a 10th of the $7bn mustered by Indian tech start-ups in the same period. But interest and activity are rising fast. Last year’s figure represented a 300 per cent rise over the previous year. Anammah, the Nigerian country manager who rang the bell at Jumia’s IPO, is among those who believe in the power of technology to transform the continent. Jumia, she says, is already employing 5,000 people in Africa and using technology to solve the logistical problems with which African states have long been saddled. “We are an African company,” she says. “We are solving problems for Africans on the continent.” But critics wonder how “African” the company really is. Jumia was incorporated in 2012 in Berlin, though it has been known to tell inquirers that it was headquartered in Nigeria. It was originally called Kasuwa, which means “market” in Hausa, a language used in northern Nigeria. Later, it was renamed the Jumia Group. At the most senior level, the company is managed not by Africans, but by French execu-

tives, who operated out of Paris until they moved to the current headquarters in Dubai. Most of the technicians who design and maintain Jumia’s online systems work out of Portugal and many, though not all, are Portuguese nationals. Much of Jumia’s capital was raised in Europe and America. So how does it differ, precisely, from companies such as Shell or Coca-Cola, which both employ thousands of Africans, but which can hardly claim to be African? Jumia has made much of its supposedly African roots. On listing day, co-chief executive Sacha Poignonnec, a French citizen, emphatically told CNBC: “We are completely an African company.” To his detractors, it was an odd thing to say about a business that was about to make millions for the company’s mainly white directors. If Jumia isn’t really African, say its critics, is it not merely the latest iteration in a long history of exploitation stretching back to the likes of Goldie’s Royal Niger Company? Though that is far-fetched to some, Jumia has become a lightning rod for a sometimes heated debate about the nature of technology and foreign capital in Africa. While some see much hope in Africa’s participation in this brave new world, others see the old patterns of extraction reasserting themselves in a new guise. Instead of oil, they say, companies such as Jumia are plundering data and profits. You might call it “techsploitation”. Rebecca Enonchong, a Cameroon-born tech entrepreneur, is among those who insist that Jumia is a foreign company dressed in African robes. Jumia, she says, is the brainchild of Rocket Internet, a German company that she says “copy pastes” ideas developed in Silicon Valley and applies them to the rest of the world. “This is a Rocket Internet company. It is not an African start-up,” she says. “We have a painful history with European companies, this colonial legacy that is very recent. It seems like it’s being repeated in the start-up world.” Enonchong does not question Rocket Internet’s right to do business in Africa, though she does doubt the strength of a business model run by a senior management team based outside the continent. Far from helping Africa, says Enonchong, Jumia and companies like it are throttling Africa’s homegrown tech industry at birth. That is because of what its critics say is the great unspoken advantage of such companies: their access to capital. “I don’t see any African start-up that would be permitted to lose that kind of money,” says Enonchong, referring to the near $1bn that Jumia burnt through in seven years on its way to listing. “That robs Africans of an opportunity to be the first,” she says, arguing that many African start-ups have been steamrollered out of existence because of their inability to match Jumia’s deep pockets. A 2018 study of start-ups in east Africa confirmed that 90 per cent of funding had gone to foreign founders. Many African entrepreneurs complain that foreign companies use a false African identity as a marketing tool, raising capital on the basis that they are “doing good” through “impact investing”, but in the end cashing out like any savvy capitalist. TMS Ruge, a Ugandan entrepreneur, detects what he calls a “digital recolonisation” of the continent. African start-ups are being deprived of capital by age-old prejudices and power relations, he says. “What you’re going to have is this outmuscling of really good talent, this outmuscling of really good innovation by well-funded, fast-moving western-linked organisations that are willing to lose money for a number of years.”

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.