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news you can trust I **THURSDAY 31 OCTOBER 2019 I vol. 19, no 425
FMDQ Close
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Spot ($/N)
I&E FX Window CBN Official Rate Currency Futures
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362.58 307.00
6M
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NGUS MAR 25 2020 363.53
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NGUS OCT 28 2020 365.50
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Dangote Cement to find support on proposed share buyback OLUFIKAYO OWOEYE & SEGUN ADAMS
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Vietnam’s $245bn non-oil
exports expose Nigeria’s failures I f Nigerian policymakers are desirous of changing the narrative of a mono economy , they may need to look in the direction of Vietnam, a Southeast Asian country that has emerged from the ashes of oblivion to become a manufac-
3M 0.00 11.93
NGUS DEC 24 2019 362.68
Peter Obi (l), vice presidential candidate, People’s Democratic Party (PDP), and Adams Oshiomhole, chairman, All Progressives Congress (APC), at the Supreme Court in Abuja during the hearing of the appeals filed by PDP and its presidential candidate, Atiku Abubakar, challenging the victory of President Muhammadu Buhari at the Feb. 23 poll. NAN
ODINAKA ANUDU
fgn bonds
Treasury bills
turing giant. Between January and December 2018, Vietnam earned $244.72 billion from export of finished products from garments and shoes to smart phones, according to General Department of Vietnam Customs. Nigeria, on the other hand, scratched only $3.3 billion in
2018 from more than 25 commodities from cocoa powder to cashew nuts. The big difference in non-oil export earnings between the two countries exposes the failing state of industrial policies in Africa’s most populous country, as domestic challenges continue to hinder local production.
Today, giant phone makers such as Samsung, Intel and LG produce smartphones in Vietnam and export from there. In 2018, the country fetched over $50 billion from export of phones and their components— the biggest turnover among export
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ndustrial goods giant, Dangote Cement, has announced that its Board of Directors will propose a stock consolidation and share buyback to its shareholders, a move that would shield the undervalued blue-chip from a further dip in the bearish market and provide a good exit for naysayers, experts say. “Today, the Board of Directors of Dangote Cement Plc announces that it has considered and subject to obtaining detailed advice and regulatory approvals, will recommend to its shareholders for consideration, a proposal to consolidate its share capital,
Continues on page 39
Inside GCR, Agusto & Co affirm ‘AAA’ (NG) rating assigned to InfraCredit with stable outlook P. 38
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Sexually transmitted degrees: We are all guilty!
IK MUO
T
he recent sting operation by one of our daughters working with the BBC has once more brought to the fore, the issue of sexual harassment (SH) in our universities. The girl did not say much new except that she had “desecrated” the “sanctity” of the coldroom and exposed its operations to the uninitiated. In effect, she unmasked a masquerade! In recent times, I had intervened twice on this SH business. The first instance was when female students of creative arts departments of University of Lagos on 25/6/13 carried placards against their lecherous lecturers who demanded sex for marks. As one of the placards lamented their mentors had transformed into tormentors! An online commentator had linked the increasing SH to the absence of cultists who would have kept the lecturers in check, poor research output (as lecturers have no time for research), found all lecturers guilty (arguing that the innocent ones are guilty by allowing the randy ones to get away with it) and excluded female lecturers. Of course, that was (and still is) the usual stereotype as the public sees all lecturers as lords of debauchery and dealers in handouts. Ik Muo (2013): Educational crises: sorting, SH & allied matters. My second intervention occurred when a female student of Nekede Polytechnic, Owerri boldly wrote an “application” to her lecturer asking him to get in touch if he was interested in the business. This girl crudely and brazenly offered sexual gratification to the lecturer by asking him to come and chop. (Ik Muo, Sex for Grades, sorting and allied maters; Guardian, 30/10/19). Since then, a lot has happened on
the SH environment. A professor at OAU is still in jail for SH; another professor, one of the principalities at UNILAG also made front-page news but not much has been heard of the matter. Many lecturers have had their careers destroyed because of the “temporary madness” that led them to the forbidden fruit, usually seated in a busy environment. This third intervention is as a result of the recent BBC expose. But before that, I wish to draw our attention to the case of a female PE teacher and basketball coach with Port Barre High School, Nicole Aymond, who was arrested for having sex with three of her students. According to the Daily Star (UK), the case saw the light when one of the mothers reported to the police in Louisiana. There was also the report the Guardian (UK) that SH has risen to “academic proportions in UK universities. So? Females are “fully” involved and it is not a Nigerian/Ghanaian affair. The major attraction of the BBC report was the UNILAG lecturer who gave the lady a “glimpse” of the cold room and the Ghanaian fellow who alleged that a student inserted a nude picture plus her phone number within her answer scripts. (Maybe, she learnt from the Nekede student!) In the aftermath of these, a professor has declared with professorial finality that the core of the problem were female students who want Sexually Transmitted Degrees (STDs). A student unionist has also opened an online NANS SH Registrar as a name and shame strategy to capture and document all lecturers who demand sex or cash for grades. You will also recall that Senator Omo-Agege had sponsored a bill on SH in tertiary institutions. He cleverly forgot or pretended to forget that SH takes place at the national assembly! There was an anonymous online treatise on this matter, which I came across recently. I could not trace the originator but the stories were quite revealing. There were the stories of a lady who was “chopping” a small boy in the face-me-I-face-you compound and when caught by the boys friends who peeped through the key-hole, she accused the boy of rapping her; a junior secondary school girl who of-
fered herself to the writer to be his “first babe” before all the senior girls who had been strategizing on how to capture him succeeded; and how a group of girls, amazed at his resistance to their body language, sent one of their friends to confirm that he was really a man. And these are secondary school students. Another unknown writer has also reminded us that there is, sex for employment, sex for promotion, sex for accommodation, sex for transfer, sex for anointing, sex for general assistance and sex for any imaginable thing! On this SH matter, I still stand where I stood in my two earlier interventions in 2013 and 2016 and that is that we must recognise these self-evident truths as the first step in addressing the SH scourge. It is not only the lecturers who initiate the business; there are many female students who desire Sexually Transmitted Degrees on the prowl. Also, male students are also subject to SH and in this man-to-man marriage era, it is even more complicated. Also, SH takes place in secondary schools and in some instances, in primary schools. It is not limited to universities and academic institutions; it is at the NASS, the churches and mosques, in the markets, barracks and indeed, EVERYWHERE. Indeed, we are all guilty! I think that SH is in the societal DNA and that it cannot be legislated out of existence. It is a societal scourge everywhere, including the Whiteman’s land where merely looking at a woman is considered SH. Institutions should design practical and well publicised SH policies, which should be operationalised and not just referred to the drawer. I know that women are involved but I believe that the men have a lot more to do in this matter. We should develop self-discipline and be able to help our female compatriots without ending up at their holy of holies. Even if they offer, must we accept? It is a matter of integrity; it is a matter of ethics and it is a matter of spirituality. So, help us God! Other matters: I am finger-capped! On Monday, 21/10/19, one naughty nail decided to teach me a lesson by chopping off a part of my right index finger. I ignored the nail and the wound and went about my duties. By Tuesday,
‘
It is not only the lecturers who initiate the business; there are many female students who desire Sexually Transmitted Degrees on the prowl. Also, male students are also subject to SH and in this man-to-man marriage era, it is even more complicated
it was still bleeding intermittently and I ended up at clinic, where I received an anti-tetanus injection and had the wound dressed and plastered and that was where the real problem started. The young nurse (many of them are so aged that I thought they had scrapped the nursing program in our university) who dressed the wound advised that water must not touch the distressed and plastered finger for at least two days. And that complicated my “problems”. I became incapacitated! I could not write; I could not have a “full” bath; I could not have a firm handshake, I could not even wash my tea cup or plate and worse of all, I could not eat what I wanted. I tried the left-hand option but it did not work! For instance, on Wednesday, 23/10/19, I decided to visit an under-the-bridge “joint” to swallow “ebiripo”, a local delicacy of pounded cocoyam, which I usually transported with vegetable soup and supported with bush meat. I had gone half way when I realised that it would not work. I could not use my hand, to mould the thing, (the natural mode) I could not use cutleries due to the texture of the food and even if I could, the “mama-put” has no provision for fork & knife. Even then, how could I maul the roasted bushmeat, which I had to grasp firmly before devouring? I surrendered, did a U-turn and settled for beans, plantain and fried fish! All this just because of one finger? Indeed, I had become finger-capped! Mercifully, the plaster was removed on 26/10/19 and things are returning to normal. I comfortably and successfully ate “ebiripo” on 28/10/19, and without cutleries! We learn from experience and I have just learnt from this one. I learnt about the importance of the index finger in our lives and operational capabilities. Secondly, I thanked God that I am fully, fearfully and wonderfully made (Ps 139:14). I then imagined what those who are handicapped, leg-capped, eyecapped, ear-capped, brain-capped and money-capped are going through and resolved to be more compassionate towards them. Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye
What elementary economics says about Nigeria’s much debated budget
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igeria is paying too much emphasis on its budget, ignoring key components necessary to achieve faster economic growth and bless the lives of its many citizens living in poverty. Year in year out, whenever the budget is in the phase of passage, there is always a scramble for it. From the Legislature down to the various Ministries, Departments and Agencies (MDAs), all, depending on it either to execute planned projects or for personal interest. For the common man on the street, a budget is like an obscure element that otherwise does not exist since it has little or no impact on them. That speaks a lot to the question of the curious case of increasing budget without a corresponding increase in economic growth or improvement in the well-being of citizens. In the last five years, the federal government has succeeded in almost doubling its planned expenditure yet growth has remained below 2 percent while unemployment and poverty rate has increased consistently during the same period. A flashback to the school days, what can we make out from the budget using elementary economic theory. Imagine this scenario, a bodybuilder, aiming to compete with other opponents in a weight lifting contest. To compete, he is to train with a minimum of 150kg of irons, just to be at par with other competitors. It is expected that to have the right energy to meet up with the task, he must eat good food
and rest well. However, while others are taking in the necessary food and vitamins to keep them fit and able to lift properly, the said bodybuilder went fasting. It is apparent that the said builder may either slump before the contest begins or might underperform among other contenders. Sadly, Nigeria’s budget can be likened to that bodybuilder who is fasting, thinking it can contend with other feeding countries who are preparing to lift 150kg in a contest. Elementary economics from an expenditure approach sees the gross domestic product – otherwise known as economic activities – of any economy, as a function of government expenditure, private investment and household consumption. Mathematically, the equation is represented as Y=G+I+C, where Y= output or GDP or overall demand, G means government expenditure while C means consumption by households. What the equation implies is that all the three components on the left-hand side of the equation are all prerequisite to lifting the gross domestic growth of any economy. The federal government recently, presented to the national assembly, a budget worth N10.33 trillion, which has gotten many debates from all fronts. The proposed budget set aside N2.14 trillion for capital expenditure, N4.88 trillion for the payments of salaries and overheads; N296 billion was earmarked for sinking fund to retire maturing bonds issued to local contractors
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while N2.45 trillion was set aside to service debt. To finance the proposed expenditure of N10.33 trillion, the government hopes to generate N8.155 as revenue from oil, non-oil and other sources. Taking it back to the equation earlier stated, Nigeria’s nominal gross domestic product in 2018 stood at N129.11 trillion. At N10.33 trillion expenditure, Nigeria’s budget as a percentage of the GDP is 8 percent while about 92 percent is from a combination of private investments and household consumption. What this implies is that Nigeria’s budget is too small to impact on growth. What is needed to drive its growth is an enabling environment to attract private investments which will, in turn, boost household consumption. In reality, no country in this world operates in autarky – a situation whereby a country does not trade with others – hence, the need to bring in external indicators, such as exports and imports. Even when this is considered, it is businesses and firms that produce goods and services that generate foreign exchange earnings for a country hence if manufacturing productivity falls, receipt from foreign exchange is expected to drop. The talk of an increase in government expenditure gained major prominence when John Maynard Keynes, a 20th-century British economist, raised concern on the need for government to spend more to create a multiplier effect in the economy.
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His economic thinking gained ground in 1930, during the global economic meltdown. At that time, private investment, as well as aggregate demand, was dropping hence, he advocated that the government spending to boost aggregate demand, as against a prior economy thinking that the forces of demand and supply should be allowed to determine the direction of activities. His notion of an increased government spending went far in getting the economy back on track at that time. But Keynes postulation is to a large extent a far cry from what Nigeria is practising. Nigeria’s budget, on the other hand, has headed north only to pay salaries, overheads and services its debt and not for expenditure on capital projects that would create a positive ripple effect on its economy. At N2.46 trillion, capital expenditure proposed for the 2020 budget, is 23 percent or N721.33 billion lowers than the approved N3.18 trillion for the 2019 budget. Ani is a Senior Analyst at BusinessDay Media
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Nigeria at independence: A state without a nation
REMI ADEKOYA
I
n our history series today, we look at how the politics of the years 1960-1963 set the stage for the ethnic strife that led Nigeria to a brutal civil war just seven years into independence. As we discussed last series, Ahmadu Bello’s Northern People’s Congress (NPC) emerged victorious from the 1959 parliamentary elections, eventually forging a coalition government with Nnamdi Azikiwe’s National Council of Nigeria and the Cameroons (NCNC) in which NPC was the senior partner. Emboldened by victory, Bello started asserting his impending personal domination of Nigeria. In a December 1959 speech, he announced that just like his great-grandfather Usman dan Fodio, founder of the Sokoto Caliphate, had divided the empire between his brother and eldest son for them to govern, “I too will divide this country between my two trustworthy lieutenants.” The historical analogy suggested Bello wished to view the Nigerian state as a historical continuation of the Sokoto Caliphate with himself in the role of contemporary Usman dan Fodio. His speech fuelled existing fears of impending northern domination. In response, Awolowo’s Action Group (AG) declared they had taken note “of the statement made by the leader of the NPC, Sir Ahmadu Bello to the effect that he intended to divide Nigeria into North and South and then rule the two parts: from Sokoto through his lieutenants, in much the same way as his great-grandfather ruled the Fulani Empire.” This left in no doubt plans for Fulani domination of Nigeria, AG
argued. In his 1960 autobiography, Awo stated Bello and his party were determined to make southerners “live in permanent subordination” to them. Fanfare and joy at Britain’s departure aside, it was in this atmosphere of fear and mistrust that Nigeria became an independent country on October 1, 1960. In their book, “A history of Nigeria”, Toyin Falola and Matthew Heaton aptly describe Nigeria as a “state without a nation” at independence. “The underlying cause of all the problems Nigeria experienced in the 1960s and has experienced since then is the “national question.” What is Nigeria? Who are Nigerians?” they stated. Falola and Heaton also argued that, “the regional and federal emphasis of the constitutions of the 1950s undermined the development of a unifying national consciousness by determining that access to power at the national level was to be derived from holding power at the regional level.” Meanwhile, at the regional level, political domination by Yorubas, Igbos and Hausa-Fulanis left ethnic minorities feeling alienated from the political process, fostering further subdivisions of identity and rendering virtually impossible the already uphill task of building a sense of national we-ness. Thus, while many cultural elites like Wole Soyinka and Chinua Achebe made spirited attempts to encourage a pan-Nigerian consciousness in the 1960s, they failed largely due to the politics of power consolidation at the regional level by any means necessary. On paper, the political system seemed fair and reasonable. Technically, the opposition had a chance to win power in future elections. In practice, this likelihood was rather fictional. With federal power came the power of patronage; federal jobs, decisions over industry-location, over who would get scholarships and how resources would be allocated. Aside this, the chances of a party winning an election outside its regional stronghold were illusory because re-
gional governments had the power and will to manipulate the election process. The politics of early independence Nigeria were thus dominated by corruption, election rigging, ethnic baiting and violence. By 1962, even Zik’s NCNC was feeling marginalized by the dominant NPC despite being in government with it. That same year, a crisis erupted in Awo’s party. A faction in AG believed the party, and Yorubas in general, were losing too much being in opposition at the federal level and should reach out to Bello’s NPC for access to resources. This faction included Samuel Akintola, Awo’s successor as western premier after the latter resigned the post to lead AG in the 1959 elections. Awo disagreed, arguing the western region should focus on economic selfsufficiency, reduce its dependence on the federal government and thus render NPC irrelevant to the future of the Yorubas. He then tried to remove Akintola as regional premier. But Akintola refused to budge and violence erupted in an ensuing power struggle. Prime Minister Tafawa Balewa, happy to weaken AG, declared a state of emergency in the west, suspending the AG-controlled regional government for six months. After this, Akintola was reinstated as premier, this time under the auspices of United Peoples’ Party (UPP), a new political outfit which formed a coalition with NCNC in the western assembly. Action Group thus became an opposition party in its former stronghold. Awo was accused of plotting to overthrow the government by violent means and charged with treasonable felony. He was sentenced to ten years imprisonment in 1963. Meanwhile, ethnic tensions were growing at the federal level as southerners became increasingly resentful of NPC policies. In 1961, it was decided 50 percent of all military officers would be northerners regardless of their qualifications vis-à-vis their southern compatriots. Southerners became increasingly frustrated with a federal system that prioritised ethnicity over
‘ Aside this,
the chances of a party winning an election outside its regional stronghold were illusory because regional governments had the power and will to manipulate the election process. The politics of early independence Nigeria were thus dominated by corruption, election rigging, ethnic baiting and violence
merit. Also, the bulk of development, health and education funds went to the north. Northern leaders justified this by arguing their region needed to catch up with the south following its underdevelopment during the colonial era. By 1962, many southern leaders believed the only way to reduce NPC’s power was via a census scheduled that year. At the time, the number of seats allocated to regions in the federal legislature was based on population figures from 1953. Southern governments decided to manipulate the 1962 census results so their regions could gain seats and reverse the northern advantage. The initial figures showed an improbable 70 percent increase in the south’s population since 1953, compared to a 30 percent increase in the north. This now gave the south the population majority. NPC rejected the figures as fraudulent, calling for a new census. Predictably, the 1963 result showed significant population gains for the north, in turn decried as fraudulent by the south. The difference was that NPC had the power to make the 1963 figures official. Akintola, now an NPC ally, accepted the results on behalf of the west. Dennis Osadebey, premier of the newly-created mid-west region, also accepted the results “for the sake of national unity.” The 1963 figures had Nigeria’s population at 55.6 million, of which a majority (29.7m) lived in the north. Federal representation thus continued to favour the north with all its implications. We see here how population numbers have played a crucial role in the power games of Nigerian politics from way back. It is no coincidence that no one really knows how many Nigerians there are today. Next series, we shall look at how the census fiascos of 196263 set the stage for the massive rigging, large-scale violence and ethnic strife that characterised the first national election organised in independent Nigeria in 1964. From then on, it was just a matter of time and circumstance before civil war erupted.
What exactly is the EAC supposed to be doing?
T
o distract from the doom and gloom in the country, the government, in September, announced a new Economic Advisory Council made up of seasoned professionals to replace the Economic Management Team headed by the Vice President, Yemi Osinbajo. The new council, officially, and as stated by the presidency, was supposed to “advise the president on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies.” Virtually everyone, including the harshest critic of the president applauded the move. They thought for the first time, the president was correctly reading the mood of the nation and responding to the urgent need for a new economic direction for the country. However, at the inauguration of the council and its first meeting, the president stated exactly what he wanted from the team: generate Nigeria’s own and regime-friendly data. He believed the prevailing data that ranks Nigeria as the poverty capital of the world, among others, are contrived and misleading. In fact, so critical did he see this task that he termed it “the most important national assignment” of the EAC and not the terms of reference earlier released by the presidency. It is shocking that the president did not know or pretends not to know that most of the data generated and is being used to evaluate the country’s performance is generated by a federal
government agency – the National Bureau of Statistics, headed by the brilliant Yemi Kale. Nigerians forget easily. In November 2018, the Statistician General of the country, Yemi Kale, raised an alarm that his agency couldn’t complete work on the unemployment figures of the country because funds have not been made available to the agency. Analysts didn’t take him too seriously, arguing that the cash-crunch was common to virtually all government agencies in Nigeria as government revenue targets have not been met. When the funds were eventually released and the figures were released in December 2018 showing record unemployment, Kale was summoned and the president ordered him “to change the high unemployment statistics,” according to a statement by presidential spokesman, Garba Shehu. Kale refused, calling the bluff of the president. I had feared that he may not retain his job beyond the 2019 elections. But in the absence of anything to latch onto to unceremoniously sack him, the government has decided to create another team altogether in the form of an EAC to do what Kale has refused to do. Whether the EAC members will want to take on the task of reinventing the wheel and generating new data sets different from what already exists is another question altogether. But there is even a major problem. The views of most members of the EAC are well known – and they are pretty consistent with those of the Bretton Woods institutions that Buhari pilloried. Take for example the Chairman of the
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EAC, Doyin Salami. He was the Vice Chairman of Buhari’s transition committee in 2015 and until 2017, a member of the monetary policy committee of the Central Bank of Nigeria. As a member of the MPC in 2015, he objected to the administration’s interference with the monetary policy decisions of the CBN and the refusal to allow a market-determined exchange rate even in the face of severe scarcity of foreign exchange. As he puts it then, the apex bank cannot maintain a fixed exchange rate, independent monetary policy and free movement of capital at the same time. “You’re allowed to choose two out of the three,” he argued. “The key question is which two will Nigeria choose? That will have to be answered in the coming months. I would rather Nigeria maintain independent monetary policy and have a marketdetermined exchange rate.” Also, in 2017 as a member of the MPC, Salami blew the whistle on the illegal financing of the federal government by the CBN and the crowding out of the private sector. Citing relevant figures to support his case, Salami avers that “It is clear that the CBN has provided piggy-bank services to the federal government.” However, the “massive injections of cash” to the government doesn’t reflect in higher inflation and currency weakness because the CBN through “special auctions” raised the cash reserve requirements for banks beyond the stipulated 22.5 percent thus skilfully crowding out the private sector. “We thus find ourselves at a point where government borrowing from
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CHRISTOPHER AKOR
the CBN is neutralised by raising the CRR of banks, thereby limiting private-sector access to credit”, said Salami who was categorical that “Monetary policy management is presently about funding the federal government.” Ditto for others members of the council such as Charles Soludo and Bismark Rewane. The contradiction between the Buhari government’s stated intentions and the famous body language of the 76-year-old leader is often glaring. While on the one hand the government declared in its Economic Recovery and Growth Plan (ERGP) – the government’s medium-term plan to revive the Nigerian economy – that it will leverage the power of the private sector and allow markets function optimally, in reality, on the other hand, the president continues to push for the state to control the commanding heights of the economy by not only refusing to nationalise dead state-owned enterprises, but also striving to create new ones and taking over the functions of the private sector. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng
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EDITORIAL PUBLISHER/CEO
Frank Aigbogun EDITOR Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan
The journey to 80% financial inclusion by 2020
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igerians write or cash fewer cheques these days. They’re more likely to transact electronically via NIP, an instant payment service that can be done over the internet, a mobile phone or from a bank branch, POS, mobile phone or the web. According to data from Nigeria InterBank Settlement System (NIBSS) and the CBN, the volume and value of transactions via these channels respectively increased by 39 and 42 percent between 2017 and 2018. Such data is a metric to judge the gains of the central bank’s cashless policy and the prospects of financial inclusion. NIP, a smorgasbord of different cashless transactions, accounted for close to three-quarters of the total value of transactions in 2017 and 2018. It’s not clear, however, if most of the NIP transactions were from the confines of a physical bank branch as the data on money sent via NIP lumps transfers made from bank branches, the internet, mobile phones, ATMs, POS and USSD. Monthly salary alerts are
probably the reason for the dominance of NIP. In other words, Nigerian adults who have a bank account are the major beneficiaries of the cashless policy. And they’re inculcating the cashless habit. In terms of volume, three-fifth of transactions in both years was over the web, via ATMs, POS and by mobile money operators. Money sent via mobile money operators and POS almost doubled in volume. Both surpassed the volume withdrawn from ATMs. The cashless policy is improving financial inclusion. Remote bank branches are a barrier to financial inclusion which is more than access to a bank account or an ATM. Where physical banks are absent, mobile money and POS operators are easing payments, the first most basic financial service. Nevertheless, majority of Nigerian adults (mostly women) are unbanked i.e. don’t have a bank account or underbanked i.e. most of their transactions are cashbased. Not to mention the paucity of other financial services such as loans for individuals and small businesses, insurance and wealth
management. With the emergence of companies (most of them are start-ups) that adopt technology to widen, scaleup and ease access to financial services there has been marked improvements in financial inclusion, says Findex, a financial-inclusion index compiled by the World Bank. Technology-driven innovations coupled with regulations have soothed the aches that come with sending money however remote and changed consumer behaviour. Innovations like USSDbased payments have changed how we buy airtime, open an account, check our balance, make transfers and withdraw cash. Fintechs have found a way to analyse the creditworthiness of borrowers and approve loans in minutes without physical contact. As a result, cashstrapped Nigerians are able to access credit through alternative sources of finance. The CBN’s introduction of the Bank Verification Number (BVN) allows lenders identify borrowers, has made online lending possible. The Shared Agent Network Expansion Facility (SANEF), a collaboration of the CBN, banks and
NIBSS expanded access to POS in areas distant from a bank branch. And when approved, Payment Service Banks (PSB) will further expand financial access to every unbanked Nigerian with a mobile phone. Nonetheless, experts say there are plenty of barriers, from regulators, providers and consumers to achieving Nigeria’s 80% 2020 financial inclusion target. The lessons from the gains made so far show the barriers can be overcome through collaboration A report by KPMG, a consultancy, reckons that the “right mix of technical skills, capital investments, government incentives, regulatory framework and an entrepreneurial and innovative mindset” will catalyse the fintech industry. We have the talent. Adoption of technology is increasing. The market is attractive: a significant number of underbanked and unbanked adults have a mobile phone and Nigeria is a major fintech investment destination in Africa. Collaboration between fintechs, vendors, financial institutions, regulators and other players in the industry is critical.
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Thursday 31 October 2019
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WhatsApp hack led to targeting of 100 journalists and dissidents
MEHUL SRIVASTAVA
A
t least 100 journalists, human rights activists and political dissidents had their smartphones attacked by spyware that exploited a vulnerability in WhatsApp, according to the Facebook-owned messaging service. The victims of the attack, which was first revealed by the Financial Times in May, were contacted by WhatsApp on Tuesday. Their phones were targeted through WhatsApp’s call function by customers of the Israel-based NSO Group, which makes Pegasus, a spyware program. Once installed, Pegasus is designed to take over all of a phone’s functions. WhatsApp told the FT it is filing a lawsuit in a US court that attributes the hack of its service to NSO. “This is the first time that an encrypted messaging provider is taking legal action against a private entity that has carried out this type of attack,” WhatsApp said. The targets of attacks by NSO’s customers included politicians, prominent religious figures, lawyers and officials at humanitarian organisations fighting
corruption and rights abuses, as well as people who have faced assassination attempts and violent threats. WhatsApp said it spent six months investigating the breach, discovering that attackers had used its service to target about 1,400 phones over a twoweek period this spring. In May it asked its 1.5bn users to update their apps in order to close the loophole. NSO claims that Pegasus is sold only to law enforcement and intelligence agencies to prevent crime and terrorism. But WhatsApp, which worked with the University of Toronto’s Citizen Lab to identify victims, said a sizeable proportion of the targets were members of civil society, saying there had been an “unmistakable pattern of abuse” of the spyware. “There is an unaccountable wild west of this kind of spyware and intrusion technology,” said John ScottRailton, a senior researcher at Citizen Lab, which tracks digital surveillance. “If you equip repressive governments with the power to snoop like this it is almost a foregone conclusion that they will abuse this technology.” The victims of the attacks which placed spyware on their smartphones were contacted by WhatsApp on Tuesday WhatsApp worked with Citizen Lab to contact some of the targeted human rights activists and journalists to tell them that their phones may have been compromised by one of the entities using NSO’s spyware, and to help defend them in the future. The spyware was transmitted even if a user did not answer the WhatsApp call. Missed calls were often wiped from
call logs, leaving users unaware that their phone had been attacked. Customers using Pegasus can read all the messages and emails stored on an infected phone, listen to incoming or outgoing calls, and turn on its camera and microphone to record conversations. The WhatsApp investigation is the first large-scale glimpse into how NSO’s clients are able to use and misuse its spyware. The company told potential investors earlier this year that it had sold Pegasus to at least 20 EU countries and that half of its 2018 revenues of $251m came from Middle East clients. WhatsApp called for “strong legal oversight of cyber weapons used in this attack to ensure they are not used to violate the rights and freedoms people deserve wherever they are in the world.” NSO has said it respects human rights unequivocally, and it conducts a thorough evaluation of the potential for misuse of its products by clients, which includes a review of a country’s past human rights record and governance standards. The company believes allegations of misuse of its products are based on “erroneous information”. Since a leveraged buyout in February backed by London-based Novalpina Capital, the $1bn company has rejected criticism that its clients abuse its software. It said in May it would introduce further reforms to prevent abuse. But David Kaye, the UN rapporteur on freedom of expression, wrote to Shalev Hulio, NSO’s chief executive, this month, saying its new policies were
‘
Making matters worse, it’s activities are opaque, and subject to minimal, if any, government constraints. My hope is that allegations like these encourage governments to take strong regulatory action
Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng FT
Ghana’s Union of Trades Association calls to boycott Nigerian products
I
t came as no shock to me when the Ghana Union of Traders Association (GUTA) called on the Government of Ghana to close its borders to Nigerian products and further urged Ghanaians to boycott Nigerian products in retaliation to the closure of Nigerian land borders. The call for a boycott of Nigerian products was made by the secretary of the association and repeated by the national president of the association Obeng Joseph in a television interview with JoyNews where he argued strongly for the closure of Ghana borders to Nigerian goods as a retaliatory measure. Explaining the reasons for the closure, Godfrey Onyeama, the Nigerian Foreign Minister stressed that Ghana was not the target. The border needed to be closed because goods were being smuggled into Nigeria through the Benin-Nigeria border and that criminal elements including kidnappers and cattle rustlers infiltrate into Nigeria through its land borders. He added that Nigeria spends huge parts of its budget in combatting insecurity which is partly aided by the porosity of its borders. Are Nigerian borders really porous? If Nigerian borders are truly porous then this porosity is an artefact of negligence and corruption. Nigerian borders have more security agents than any other land border in Africa. In July this year, I travelled through the ECOWAS road that connects Abidjan, Accra, Lome and Contonu through to Lagos. From Accra through Lome to Cotonou,
I met less than ten checkpoints on the road. Immediately I crossed the Seme border from the Benin side to the Nigerian side, I was thrown into a turf of novel experience. Varied security outfits mounted the roads in close succession with their men armed to the teeth. I was taken aback for some minutes, I felt as if I was in a conflict zone. Security officers which comprised of a combination of Police, Immigration and Customs officers were adequately complemented by the men of the Nigerian Drug Law Enforcement Agency (NDLEA) alongside its sister outfit, the Economic and Financial Crime Commission (EFCC) and a lot more men in uniform that I could not adequately identify. Ironically, no sincere checks were conducted on the crossing vehicles. As soon as the vehicles were stopped, drivers hurriedly dished out N200 notes to the security agents to escape being searched. If the security operatives wanted more money, they requested that the boots be opened, but smart drivers never actually carried rice in their boots. Nigeria needs to weigh the economic and social consequences that have come and are still arriving as concomitants of the closure. Can Nigeria actually close its borders? My personal experience When I made the return journey from Lagos back to Ghana at the end of August this year, I noticed that the characteristically teeming population at the Seme border had become only marginal.
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The President of Nigeria had ordered a partial closure of the Nigerian side of the border. The immigration officers consequently ordered that only persons with a valid passport could cross into the Benin Republic. I attempted crossing without a passport and was asked to pay N10 000 ($28) before I could be allowed to cross. Hitherto, one could cross with just N1000 ($2.9) through the okada boys (commercial motorbike riders). I crossed using my passport but quickly noticed an influx of okada men from a nearby bush into the Benin Republic. I quickly inquired and was told people could be crossed by the okada boys but they have to follow a road discovered a fortnight ago when the border was closed. I quickly requested to be crossed back to Nigeria using this novel road. I was told to pay N3000 ($8.33). I did gladly but almost ended the adventure after a few minutes into the journey as the wheels of the motorcycle was buried in muds, my vision thwarted by forested trees and gunshots were heard from close range. The okada man, however, assured me of my safety and off we went. A few minutes later we stumbled over a succession of roadblocks. A distance of less than 2km had over 7 road blocks manned by Nigerian security agencies. At each point, money was extorted from the okada boys under obvious gun threats. My okada rider was obliged to tip the soldier, police and immigration men and after that went the boss. All these expenses came from the N3000 I had paid. When
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inadequate, especially regarding the investigation of rights abuses raised by whistleblowers. “The record of NSO Group is troubling,” Mr Kaye told the FT. “Making matters worse, it’s activities are opaque, and subject to minimal, if any, government constraints. My hope is that allegations like these encourage governments to take strong regulatory action.” Earlier this year, Faustin Rukundo’s phone started to ring at odd times, write Mehul Srivastava and Tom Wilson. The calls were always on WhatsApp — sometimes from a Scandinavian number, sometimes a video call — but the caller would hang-up before he could answer. When he rang back no one would pick up. Mr Rukundo, a British citizen who lives in Leeds, had reason to be suspicious. As a member of a Rwandan opposition group in exile, he has lived for several years in fear of the security services of the central African nation where he was born. In 2017, his wife, also a British national was arrested and held for two months in Rwanda when she returned for her father’s funeral. Unidentified men in black suits have previously queried her co-workers about her route to the childcare centre where she works, he says. His own name has shown up in a widely circulated list of enemies of the government of Rwanda titled “Those who must be killed immediately”.
TSEER TOBIAS
we crossed to the Nigerian side, I told my okada rider I had forgotten an item in Benin Republic and needed to be crossed back. As we made our way back, my okada man had to pay the same ‘taxes’ he paid just a few minutes ago while we crossed. When we finally crossed back to the Benin Republic, I told my okada rider that I was heading to Togo. He offered to take me to a place where I can get a taxi that would send me straight to the Aflao border. Does this justify the border closure? Nigeria obviously has done a lot of wrongs in closing the borders. As a compelling power among ECOWAS states, Nigeria needs not to create a bad example particularly after signing the African Continental Free Trade Agreement (AfCFTA) Nigeria could explore internal mechanisms to deal with the influx of arms and illegal goods into the country by tackling corruption among border management agencies, improving border management facilities and imitating best practices in border management such as the Integrated Border Management System. This will better prevent the smuggling of goods, proliferation of arms and the influx of illegal persons. Tobias is a Ghanaian of Nigerian origin, a Ph.D. student at the university of development studies, Tamale, Ghana
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Thursday 31 October 2019
BUSINESS DAY
COMPANIES & MARKETS
COMPANY NEWS ANALYSIS INSIGHT
FINANCIAL SERVICES
VFD posts highest profit in 4yrs on improved treasury mgt, cost optimisation … net profit hits N1.7bn in Q3 2019 ENDURANCE OKAFOR
V
F D G ro u p, a Lagos-based financial services company, saw its biggest profit in at least four years largely driven by efficient balance sheet management, improved treasury, increased income-generating activity and effective deployment of cost optimisation strategy across the Group. The company’s profit after tax (PAT) grew 415 percent year-on-year to N1.75 billion from the N 340 million recorded in the corresponding quarter of 2018, according to its third-quarter financial report. This is the highest since it started publishing its financials. In the review quarter, VFD Group reported a 144 percent jump in gross earnings from N1.43 billion a year ago to N3.48 billion in Q3 2019. This is was as a result of the growth in interest income by 199percent YoY to N1.55 billion and non-interest income by 113percent YoY to N1.93 billion, the report stated. “The 199 percent growth in Interest Income stemmed from the surge in revenue from loan & advances, interest on treasury bills and Placement,” the company’s Q3 2019 finan-
cial report signed Nonso Okpala, the MD/CEO of VFD read. Analysis of the group’s 9-month financial report revealed that its expenditure increased by 95 percent. Its total expenses increased from N648 million in Q’3 2018 to N1.27 billion. Incorporated in July 2009 as financial services focused proprietary investment company, VFD group reported asset growth by 93.06 percent Year-to-Date due to growth on cash and cash equivalent. The total cash and cash equivalent rose from N1.13 billion in FY 2018 to N2.70 billion in Q3 2019, a 138percent growth rate. The Group maintained a good return with the annualized Return on Asset and Return on Equity at 7percent and 43percent in Q3 2019 from 3percent and 36percent in FY 2018. One of the key achievements of the Group in the period under review was the reported progress in its Regional Banking License Application. It said in its Q3’19 financials that it successful deposited the minimum required capital of N10 billion for the licence. Further analysis of the Group’s financials revealed that its net interest margin rose 400bps from 3percent in FY 2018 to 7perctn in Q3 2019 due to the increase seen in net interest income.
“Sound treasury management impacted positively on asset quality as the Earnings Yield rose from 8percent in FY 2018 to 10percent in Q3 2019. Funding Cost dropped to 9percent due to significant growth in Earning Asset within the period under review,” the report read. The company which creates value by working within Nigeria’s informal financial sector to create
innovative products and solutions has the following subsidiaries: VFD Microfinance Bank, VFD Bridge Ltd, Everdon Bureau de Change, Anchoria Asset Management, and Dynasty Real Estate. According to the Group, its strategic focus for Q4 2019 includes Public launch of Boardroom Apartments, the inaugural product of the hospitality arm of its Real Estate subsidiary. “It is a boutique guest
house located in Lekki and has been designed to host both corporate and individual guests,” the report stated. The Group has plans to finalize the investment in already identified OFI (Other Financial Institution) to achieve the objective of gaining a foothold in every sector of the financial services industry. It also stated that in the remaining quarter of this year, it will complete the
acquisition of an identified brokerage firm which is also in fulfilment of the objective stated above. “Finalise the process of obtaining regulatory approval for a banking license, re-evaluate the status of VFD Group Plc as a financial focused investment firm to become a fullfledged investment firm. Continuous enhancement of the Asset Management subsidiary’s mutual funds,” it said.
L-R: Were Odusote, Lagos State commissioner for energy and mineral resources; Fernando Madiera, CFO, Enyo Retail and Supply Limited; Babajide Sanwo-Olu, Lagos State governor; Abayomi Awobokun, CEO, Enyo Retail and Supply Limited, and Folashade Jaji, secretary to the Lagos State Government (SSG), during a courtesy call on the governor by the management team of Enyo Retail, at Lagos House, Alausa
EQUITY
Banking stocks slump lingers as earnings season fails to sway bears SEGUN ADAMS
I
nvestors in the Nigerian stocks are not showing much excitement about the latest performance of lenders despite the biggest banks growing their nine months profit at the fastest pace since 2017. The banking index, which gauges the performance of the most capitalized and liquid lenders including all tierone banks, halted its reversal from the sector’s year-low and has declined 3 percent since mid-October, when the banks started reporting their result for the three quarters to 30, September 2019.
So far the banking sector has declined 21 percent compared to the broad market which has lost 16.5 percent, as at the close of trading Tuesday. “The decline is largely reflective of Nigeria’s macro because many of the results released have been good,” said Aderonke Akinsola, banking analyst at Lagosbased Chapel Hill Denham. “In as much as we are in this kind of macro-environment, investors will be cautious regardless of how good companies’ results are.” Experts have warned yearlong that reforms to stimulate the domestic economy above population growth of 2.6
percent, alongside measures to encourage private investment are necessary to spur interest in the economy-and the currently undervalued stock market. Asides the challenging broader economy, recent regulations by the Central Bank of Nigeria (CBN) could also be weighing on bank stocks, Fola Abimbola, Lagos-based Equity analyst at FBNQuest said. Banks, through several recent policies, have been discouraged from piling depositors’ fund in highyielding low-risk government securities, a move which some analysts explain would pose a challenge to the sec-
tors’ profit and could affect investors’ sentiment. Policies by the banking regulator, however, have been aimed at refocusing the banks to their core duty of lending which would support Nigeria’s real sector, the CBN has explained. The tier-one banks which are among the ten banks on the NSE banking index grew their 2019 nine months profit in double-digit for the first time since Nigeria exited recession two years ago. First Bank of Nigeria Holdings (FBNH), United Bank for Africa (UBA), Guaranty Trust Bank (GTB), Access Bank, and Zenith Bank posted a combined profit of N521.916
billion, which is 14 percent more than they made in the same period last year. Across the board, the big banks saw improvement in their net interest income which outperformed noninterest income. Most mid-tier banks on the index grew profit, even though at a slower pace from last year. Ecobank Transnational Incorporated (ETI) grew its profit (reported in Naira) by 4 percent to N78.84 billion while Wema Bank grew profit by 55 percent to N4 billion. Fidelity Bank grew nine months profit by 20.19 percent to N21.46 billion while Sterling Bank pared profit to
N7.58 billion in nine months reported in 2019. On the other hand, Jaiz Bank and Union Bank had not released at the time of reporting. While analysts across the board say banks valuation continues to remain at attractive levels for investors to buy into, there have been divergent views on how CBN’s directive to restrict OMO market to only banks and foreign portfolio investors would affect inflow into the equity market. Banking sector closed 0.94 percent lower on Tuesday to emerge the second-worst performing sector after industrial goods (-0.95%).
Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh
Thursday 31 October 2019
COMPANIES&MARKETS
BUSINESS DAY
15
Business Event
OIL & GAS
Oben-48 gas well to be completed in Q4 2019 – Seplat DIPO OLADEHINDE & OLUWASEGUN OLAKOYENIKAN
N
igerian independent oil and gas company, Seplat has said Oben-48 gas well would be completed in the last quarter of 2019. The Oben field is central to Seplat’s future gas expansion plans and is strategically located as an important gas hub with access to Nigeria’s main gas demand centres. The Oben field is located in OML 4 and is the main producing field on the block. “The Oben-48 gas well is expected to be completed in Q4,” Seplat said in its nine months 2019 financial presented to the Nigerian Stock Exchange (NSE). Facilities on the block include a 60,000bpd capacity flow station, a 465 MMscfd capacity non-associated gas processing plant and an associated gas compressor station with five 10 Million standard cubic feet per
day (MMscfd) compressors. According to Austin Avuru, Seplat’s Chief Executive Officer, Seplat have set the next major growth phase of its gas business in motion having taken Final Investment Decision (FDI) for the large scale ANOH gas and condensate development, a development which will position Seplat as Nigeria’s largest supplier of processed gas to the domestic market. The ANOH gas processing project is managed by Anoh Gas Processing Company (AGPC), an incorporated joint venture (IJV) between Seplat and the Nigerian Gas Company (NGC). AGPC seeks to develop a 300 mscfd midstream plant on OML 53 to process future wet gas production from the upstream unit. BusinessDay analysis of Seplat’s revealed Gas sales of $105 million and tolling fees of $67 million take total gas derived revenue for the period to $172 million in nine months 2019 as gas sales reflect lower
than expected gas production owing to constrained production from the Oben-47 well and delay in completing the Oben-48 gas well. Khalil Woli, oil and gas analyst at Lagos-based CardinalStone said Seplat expects the first phase of the ANOH gas development project to be completed by Q1’2021, a development which is expected to increase Seplat’s gas processing capacity by 300 MMscfd to 825MMscfd upon completion. The licence for the field was renewed in 2018 for a further 20 years and is next due for renewal on 21 October 2038. In nine months 2019, Seplat grew after-tax profit by 103 percent to N56.6 billion from N27.96 billion. The growth was supported by the management’s decision to cut the income tax rate to 1.84 percent in 9m 2019 from 57 percent in September 2018.
Continues online @www. businessday.ng
Layer3Cloud urges MDAs to promote data localisation BUNMI BAILEY
L
ayer3Cloud, an indigenous industry leader in cloud, scalable and secure networks, has called on the federal government’s Ministries, Departments and Agencies of the government to promote data localisation through the patronage of indigenous firms who have excelled in the sector to ensure maximum benefits of data sovereignty. Speaking at an event which has the theme ‘Data Sovereignty and harnessing the power of cloud’ Oyaje Idoko, the Chief Executive Officer of Layer3cloud told Business-
Day at the conference which had over 50 Ministries, Departments and Agencies of government that Nigerians would garner greater benefits if there is an emphasis on data localisation. “To a large extent, we’ve been able to demonstrate the importance of cloud, and basically to demystify the whole understanding of cloud, and secondly to make the MDAS participating at this event to understand the importance of cloud and the need for data localisation. Speaking further on benefits of hosting data locally, he said, “For us, hosting data locally, has lots of benefits for
L-R: Babatunde Salako, director general/chief executive officer, Nigerian Institute Of Medical Research (NIMR); Jibril Abdulmalik, founder, Asido Foundation; Oluwayemi Ogun, medical director, Federal Neuropsychiatric Hospital Yaba; Taiwo Sheikh, president, Association of Psychiatrists in Nigeria, and Saliu Oseni, chairman, Lagos chapter, Nigerian Medical Association, at the lagos launch of Asido Foundation and presentation of the book ‘Optimal Mental Health: An Everyday Guide, In Lagos.
the economy, security and sovereignty, and just like in the world over, data is the new oil keys into this, why would we want our data to be in the hands of other people? Why shouldn’t we be in the custody of our oil?” ”My message to the MDAs is to bring their data back home, as in doing so they are growing the economy, and saving the country lots of forex used for offshore payments. Of course, as we build local companies that provide data and cloud services, we are also creating jobs and developing the economy. Continues online @www. businessday.ng
L-R: Ahmed Mandy,Director, Best service, Raya Distribution Nigeria limited; Habeeb Somoye, Marketing Director, Xiaomi Nigeria; Lin Chen, CEO Xiaomi Nigeria; Seifullah Balarabe Gaya, Managing Director, Ya feng Technology company limited; Xingyu Yang, Marketing Director, Xiaomi, and Narvey Deng, Sales Manager, Xiaomi, during the launch of Redmi Note 8 series by Xiaomi in Lagos.
CSR
Three Crowns flags off campaign, set to sponsor winners to Dubai
L-R: Esther Akinnukawe, chief human resources officer; Ferdi Moolman, chief executive officer, and Mazen Mroue, chief operating officer, all of MTN Nigeria while receiving the Investors in People (IiP) Platinum award being the highest global standard for people management practices, at the MTN Nigeria Head Office, Ikoyi.
recognizing the unique role they play in ensuring healthy nutrition for the family. “As a brand, Three Crowns Milk cares for mothers’ hearts so that they can in turn care for their families. This is the essence of Mum of the Year campaign. “One of the key things that we have identified is that the foundation of any family and heart of every home is the mother and for her to be a solid foundation, she needs to stay fit and healthy which is what Three Crowns Milk helps her achieve. “We strongly believe that if the pillar of the house, the mother is healthy, the whole family would be happy,” Banjoko said. The three winners of Three Crowns Mum of the Year competition will be rewarded with an all-expense-paid trip for
R-L: Ayoola Aiyelabola, marketing executive, Food Products Category & E-Commerce and Nnenna Onyenacho, media and activations manager both of TGI Distri Limited (right) giving food to some residents of Ikorodu community, during the Terra Cares4Naija Campaign held in Ikorodu, Lagos.
IFEOMA OKEKE
T
hree Crowns Milk, N i g e r i a ’s d a i r y brand and product from the stable of FrieslandCampina WAMCO, has commenced its search for 2019 Mum of the Year. This year’s edition, just like last year, will crown three Nigerian mothers as winners of the competition and reward them with an all-expense-paid trip to Dubai. According to Omolara Banjoko, the Marketing Manager, Three Crowns Milk, Three Crowns Milk Mum of the Year campaign has come to be recognized as the leading campaign dedicated to celebrating Nigerian mothers. She confirmed to journalists in Lagos that the competition was designed to put the spotlight on mothers by
themselves and three members of their families to Dubai plus one year’s supply of Three Crowns Milk, while others would win consolation prizes, including kitchen makeover and a range of Three Crowns Milk products. Three Crowns Mum of the Year campaign debuted in 2015 when Olamide Olaleye emerged winner, followed by Nkechi Brayila who won in 2016, while Oluwakemi Longe was crowned Mum of the Year in 2017. In 2018 and commemoration of its 30th anniversary, Three Crowns raised the stake of the competition by awarding the grand prize to three winners; Jennifer OtoGod, Pauline Pambolo Daniel and Adaobi Okonkwo.
Continues online @www. businessday.ng
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Thursday 31 October 2019
BUSINESS DAY
RESEARCH&INSIGHT
In association with briu@businessday.ng
A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)
08098710024
Why Nigeria should develop other transport modes ADEMOLA ASUNLOYE
S
uitable road network is essential to Nigeria’s economic growth. This is because it has a direct impact on the GDP as it enhances productivity. Roads alone account for major passengers and freight movements in Nigeria. Nigeria’s road network increased by 2,930 per cent from 6,500km in 1960 to about 197, 000 km in 2010; and to about 200,000 km in 2018. Road transport is the most commonly used means of transportation in Nigeria accounting for more than 90 per cent of passengers and freight movements. Other means of transportation in their poor state and meagreness account for just 10 per cent of passengers and freight movements. This scenario often causes significant traffic congestion especially in the cities. In most cities, particularly in Lagos, the decrepit roads and high traffic jam indicate that these road networks are poorly maintained and overused; especially because of urban migration and increased number of vehicles. In countries like USA, United Kingdom and South Africa, road transportation accounts for
Source: Pison Housing Company, BRIU
cent respectively. Countries like China has a total road network of 4,577,300 km (as at 2015); USA, 6,586,610 km(2012); Turkey, 385,754 km (2012); Brazil, 1,580,964 km (2010); India, 4,699,024 km (2015); Japan, 1,218,772 km
Source: CIA World Fact Book, BRIU
(2015 ); and South Africa, 747,014 km (2014). Road network includes all roads in the country: motorways, highways, main or national roads,
Road Network (paved and unpaved)/capita of countries Road Network( Km)
Population
COUNTRY
ROAD NETWORK(K M)
PAVED ROADS(KM)
UNPAVED ROADS(KM)
Nigeria (2014)
200,000
28,980
164,220
India (2015)
4,699,024
-‐
-‐
Japan (2015)
1,218,772
992,835
225,937
Turkey (2012)
385,754
352,268
33,486
China (2015)
4,577,300
4,046,300
531,000
Pakistan (2014)
263,942
185,063
78,879
Brazil (2010)
1,580,964
212,798
1,368,166
Russia (2012)
1,283,387
927,721
355,666
South Africa (2014)
747,014
158,952
588,062
Indonesia (2011)
496,607
283,102
213,505
USA (2012)
6,586,610
4,304,715
2,281,895 147,032
Kenya (2017)
161,420
14,420
Egypt (2010)
137,430
126,742
10,688
Ethiopia (2015)
110,414
14,354
96,060
Ghana (2009)
109,515
13,787
95,728
Sources: CIA world fact book & AFDB, BRIU
60 per cent, 65 per cent and 87 per centrespectively, while other means of transportation account for 40 per cent, 35 per cent and 13 per Country
Road Network (paved and unpaved) of some countries:
Year
Road Network/ Capita (km)
0.001034
Road Network/ 1000 people 1.03
Paved Roads
Unpaved Roads
(km)/1000 people
(km)/1000 people
Nigeria
200,000
193,392,517
2016
0.15
0.85
India
4,699,024
1,324,171,350
2016
0.003549
3.55
-‐
-‐
Japan
1,218,772
126,994,510
2016
0.009597
9.60
7.82
1.78
Turkey
385,754
79,512,430
2016
0.004851
4.85
4.43
0.42
China
4,577,300
1,378,665,000
2016
0.00332
3.32
2.94
0.39
Pakistan
263,942
193,203,480
2016
0.001366
1.37
0.96
0.41
Brazil
1,580,964
207,652,860
2016
0.007613
7.61
1.03
6.59
Russia
1,283,387
144,342,400
2016
0.008891
8.89
6.43
2.46
South Africa
747,014
55,908,860
2016
0.013361
13.36
2.84
10.52
Indonesia
496,607
261,115,460
2016
0.001902
1.90
1.08
0.82
USA
6,586,610
323,127,510
2016
0.020384
20.38
13.32
7.06
Kenya
161,420
48,461,570
2016
0.003331
3.33
0.30
3.03
Egypt
137,430
95,688,680
2016
0.001436
1.44
1.33
0.11
Ethiopia
110,414
102,403,200
2016
0.001078
1.08
0.14
0.94
Ghana
109,515
28,206,730
2016
0.003883
3.88
0.49
3.39
Sources: CIA world fact book, NBS & ICRC, BRIU
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secondary or regional roads, and other urban and rural roads. Of the total estimated 200,000 km road networks, 18 per cent (35,000 km) of the total roads are federal roads; state roads,15 per cent (17,000 km); and local government roads 67 per cent (150,000 km). Available data shows that the federal roads account for about 70 per cent of the national vehicular and freight traffic while the state and the local roads account for the remaining 30 per cent. Also, 27 per cent of the federal road network is in good condition and requires just routine maintenance, 30 per cent in fair condition, requiring recurrent and periodic maintenance and strengthening, 40 per cent is in poor condition and requires rehabilitation and improvement while the remaining 3 per cent consists of unpaved trunk roads that need to be paved. Further, 78 per cent of state roads are in poor condition, with 87 per cent of local government roads also considered to be in poor condition. Also, 18 per cent (36,000 km) of the total road network is paved while the unpaved access
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roads make up the remaining 82 per cent (164,000 km). However, with Nigeria population of over 193 million in 2016, the road network per 1,000 people for Nigeria is 1.03 km; the paved road network per 1,000 people is 0.00 km, and the unpaved road network per 1,000 people is 1.00 km. In addition, with total vehicles of 11,547,236 in 2017, the total road network per 1,000 vehicles is 17.3 km. Of the total vehicles of 11,547,236 in 2017, commercial vehicles accounted for 58.45 per cent; private vehicles account for 40.33 per cent; government vehicles accounted for 1.17 per cent while diplomatic vehicles accounted for the remaining 0.05 per cent. With the land area of 923,768.64 km, road network per land area (100 sq. km) accounted for 21.7 km. Although, Nigeria has poor road network compared to India, Japan, China, Brazil, Russia, USA and South Africa, it is relatively the same with that of Turkey, Pakistan and Indonesia, but higher than those of Kenya, Egypt, Ethiopia and Ghana. Benchmarking Nigeria to emerging economies like Brazil, South Africa and Turkey, Nigeria requires 1,380,964 Km of road network to meet up with Brazil’s road network, 547,014 km to meet up with South Africa’s and 185,754 km to meet up with Turkey’s road network. Nigeria with the total population of 193,392,517 as at 2016 had a road network of 1.03km per 1,000 people which is very low compared to countries like Japan, Turkey, Brazil, South Africa, Russia, India, China, USA, Kenya and Ghana. With 1.03km road network per 1,000 people, Nigeria ranked the lowest amongst the countries listed. Comparing road network per vehicle, Nigeria with total vehicles of 11,547,236 in 2017 had 58 vehicles to every Kilometre of road which is above the national average at 11 vehicles to every kilometre of pliable road. For Nigeria to achieve 11 vehicles to every kilometre of road, the current estimated 200,000 km of road would have to increase by about 800,000 km. Computing the road network per 1,000 vehicles, Nigeria has 17.3km ranking lower than all the countries listed except Japan which had 15.7km. Road Network per vehicles in some countries Country
Road Network( Km)
Total Vehicles
Year
Road Network/ Vehicle
Road Network/1000 vehicles
Nigeria
200,000
11547236
2017
0.01732
17.3201622
India
4,699,024
55725543
2015
0.084324
84.3244183
Japan
1,218,772
77657517
2017
0.015694
15.6941922
Turkey
385,754
19613518
2014
0.019668
19.6677618
China
4,577,300
212560000
2016
0.021534
21.5341551
Pakistan
263,942
3060791
2010
0.086233
86.2332645 44.4077302
Brazil
1,580,964
35601099
2016
0.044408
Russia
1,283,387
42192000
2014
0.030418
30.4177806
South Africa
747,014
8517563
2010
0.087703
87.7027854
Indonesia
496,607
16429693
2010
0.030226
30.2261886
USA
6,586,610
255009283
2015
0.025829
25.8289029 166.776873
Kenya
161,420
967880
2010
0.166777
Egypt
137,430
1930619
2009
0.071184
71.1844232
Ethiopia
110,414
850000
2017
0.129899
129.898824
Ghana
109,515
711395
2009
0.153944
153.944011
Sources: CIA world fact book, NBS & ICRC, BRIU
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Thursday 31 October 2019
BUSINESS DAY
Investor
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In association with
Helping you to build wealth & make wise decisions Market capitalisation
NSE All Share Index
NSE Premium Index
N11.721 trillion
Week open (18– 10–19)
31,924.51 26,448.62
N12.875 trillion
2,198.70
Week close (25– 10–19)
26,348.73
N12.826 trillion
2,191.31
Year Open
Percentage change (WoW) Percentage change (YTD)
-0.38 -16.17
2,241.37
-0.34 -0.17
The NSE-Main Board
1,456.29 1,069.27 1,064.72
NSE ASeM Index
NSE 30 Index
NSE Banking Index
NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index
130.95
723.46
NSE Lotus II
NSE Ind. Goods Index
NSE Pension Index
291.84
2,272.45
1,254.54
1,212.79
801.09
1,438.19
426.64
774.30
1,069.31 1,066.52
319.29
121.27
512.26
225.25
1,687.53
1,052.78
944.83
318.01
119.49
509.20
224.57
1,678.48
1,036.88
933.44
-0.40
-1.47
-0.60
757.63
-0.43
-2.15 -4.56
-26.05
-0.26 -24.74
-20.29
-5.53
-32.00
-0.30
-0.54
-1.51
-1.21
-25.70
-24.86
-16.24
-22.69
Zenith Bank Q3 results: Analysts’ views remain positive …stock’s ‘buy’ rating maintained Iheanyi Nwachukwu
R
ecently, Zenith Bank Plc released to the investing public its unaudited results for the nine months (9M) period ended September 30, 2019. Despite a challenging macro-economic environment, the Group recorded a significant growth across its top-tobottom line figures. The unaudited account for the third-quarter (Q3) in review which was presented to the Nigerian Stock Exchange (NSE) showed Zenith Bank gross earnings increased by 4percent from N474.607 billion recorded in third-quarter (Q3) 2018 to N491.268 billion in Q3 2019. Profit Before Tax (PBT) grew by 5percent from N167.307billion in Q3 2018 to a record N176.183 billion in Q3 2019. Also, profit after tax (PAT) rose by 5percent from N144.179 billion in Q3 2018 to N150.723 billion in Q3 2019. Non-Interest Income (NII) expanded by 22percent from N128.7 billion in Q3 2018 to N156.8 billion in Q3’2019. In this final quarter of the year, Zenith Bank hopes to sustain its competitiveness and share of market in the corporate segment and build upon its digital foundations to reinforce its retail banking initiatives. “Our views on Zenith Bank remain positive, buoyed by efficient cost-tooperating revenue profile and stable margins. Although interest income is unlikely to improve by full year 2019, stronger NII performance, cheaper funding cost and stable CIR
are expected to keep profitability attractive”, said research analysts at Lagos-based United Capital. “Again, with return-on-equity (ROE) of 23.8percent, the ticker remains under-priced at N17. Accordingly, we maintain a “buy” rating on the ticker”, United Capital analysts added. Zenith Bank’s platforms and channels were the enablers of this growth, with fees from electronic products doubling to N35.3 billion from N17.6 billion in Q3 2018. Zenith’s cost optimisation strategies and aggressive retail banking drive also yielded the desired effects as cost-to-income ratio declined from 51.2percent in Q3
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2018 to 50.1percent in Q3 2019 with Earnings Per Share (EPS) growing by 5percent from N4.58 in Q3 2018 to N4.80 in Q3 2019. Zenith Bank Plc is one of Nigeria’s largest lenders. The bank offers its clients wide range of corporate, investment, business and personal banking products and solutions across over 500 branches, predominantly in Nigeria, with subsidiaries in the UK, Ghana, Sierra Leone and Gambia, as well as representative offices in South Africa and China. The group’s retail and corporate banking franchises continued its m o m e nt u m w i t h c u s t o m e r s’ deposits growing by 7percent to N3.95 trillion from N3.69 trillion
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recorded as at December 2018, a reflection of increasing share of the industry’s deposits and customers’ confidence in the Zenith brand. These deposit acquisitions have directly contributed to Zenith Bank’s cost of funds improving from 3.3percent in Q3 2018 to 2.95percent as at Q3 2019. According to Usoro Essien’s team of analysts at Vetiva Capital, Zenith Bank stock remains a “buy”. The “buy” rating refers to stocks that the analysts consider highly undervalued, but with strong fundamentals, and where potential return in excess of or equal to 15percent is expected to be realised between the current price and analysts’ target price. The analysts have set a target price (TP) of N32.77
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for Zenith Bank shares. “Cost optimisation drives PBT growth. We find Zenith Bank numbers very impressive, as the bank was able to grow loan book while preserving asset quality (9M’19 NPL ratio: 4.95percent H1’19: 5.30percent) despite a tough operating quarter. The bank’s shares have lost 26.6percent year-to-date (YtD) and are currently trading at a price-to-book (P/B) of 0.6x versus a Tier-I peer average of 0.7x”, Vetiva research analysts further stated. Zenith Bank has continued to deploy capital to creating viable risk assets with gross loans and advances growing by 9percent from N2.02 trillion as at December 2018 to N2.2 trillion as at Q3 2019 across both the retail and corporate segments. The Group’s focus remains the search for bankable lending opportunities to ensure the attainment of the minimum regulatory loan-to-deposit ratio (LDR) of 65percent by December 31, 2019 without compromising its prudence. Also, research analysts Coronation Merchant Bank said, “We have a price target of N27.5 per share for Zenith Bank and given the potential upside relative to current price of N17.15 per share, we maintain our buy rating”. Z en it h Ban k ’s ro bust r isk management framework has ensured that non-performing loans (NPL) ratio declined from 4.98percent in December 2018 to 4.95percent in the current period. It’s commitment to maintaining a shock-proof balance sheet remains with liquidity and capital adequacy ratios at 63.8percent and 23.8percent respectively, both above regulatory thresholds.
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Mobil: Rental income supports profitability in Q3
M
obil Plc released its nine months (9 M ) 2 0 1 9 results, reporting a 13percent yearon-year (y/y) growth in turnover to N141.5 billion over the nine-month period. However, 9M’19 after-tax profit declined 19percent y/y to N6.3 billion, dragged by the persisting lean margins in the downstream industry. Notably, gross margin fell to 8.1percent in 9M’19 from 10.2percent y/y in 9M’18. Turnover jumps y/y Q3 sales advanced 24percent y/y to N48.7 billion, slightly ahead of our estimate of N46.5 billion. Though there was no revenue breakdown in Q3’18, we believe the rise in Q3’19 sales was driven by improved fuel supplies from the Nigerian National Pe t ro l e u m C o r p o rat i o n (NNPC) during the quarter, following the upgrade in MOBIL’s storage capacity in FY’18. In Q4’19, we expect turnover to strengthen to N49.7 billion (+26percent y/y, +2percent y/y), buoyed by an anticipated increase in demand for petroleum products. As expected, rental income shields earnings in Q3 Margins have remained predominantly weak since 2017 when the NNPC emerged as the sole importer
of regulated fuels in the country. For context, the ex-depot price of premium motor spirit (PMS) is currently about N137/litre while the retail pump price remains fixed at a regulated figure of N145/litre. That said, MOBIL’s gross margin worsened to 8.1percent in Q3’19 from 8.8percent in Q3’18. Nonetheless, MOBIL’s Q3’19 gross profit advanced y/y to N3.9 billion (Q3’18: N3.4 billion), driven by the y/y growth in sales. Unsurprisingly, operating profit was boosted by rental income from the fir m’s real estate property. We highlight that Q3’19 rental income came in flat y/y at N2.0 billion, accounting for 63percent (Q3’18: 57percent) of operating profit. All in, MOBIL reported a profit after tax of N2.2 billion, indicating a 10percent y/y drop—a reflection of thinner margins from sales of regulated products. F Y ’19 return on equity revised lower to 23.5percent MOBIL’s Q3’19 performance largely came in line with our projections. Nonetheless, our forecasts for FY’19 have been revised to capture the mild misses in Q3. For instance, o u r e s t i mat e f o r F Y ’ 1 9 turnover has been raised to N191.2 billion (previous estimate: N186.3 billion). However, our estimate for gross profit remains
unchanged at N15.5 billion, following the downgrade in our forecast for FY’19 gross margin from 8.3percent to 8.1percent. Meanwhile, based on the run rate witnessed in 9M’19, our FY’19 forecast for other income (comprising mainly rental income) is left unaltered at N8.1 billion, resulting in an operating profit of N12.8 billion (previous estimate: N13.2 billion). Furthermore, we have trimmed our forecast for FY’19 earnings before tax to N12.7 billion (previous estimate: N13 billion), following the adjustment in our interest income estimate. Our revised projections for MOBIL yield a ROE of 23.5percent (previous e s t i mat e : 2 3 . 9 p e rc e nt ) , resulting in a 12-month target pr ice of N282.03 (previous estimate: N285.09). Hence, we reiterate our BUY rating on the counter. MOBIL currently trades at a P/E of 7.3x and a P/B of 1.5x. 11 PLC (MOBIL) engages in the sale and marketing of petroleum products in Nigeria. The company also leases buildings, as well as blends lubricants. It distributes its products through a network of over 200 retail outlets across 36 states in Nigeria, as well as direct sales to end users. The company also has investments in Real Estate business
LCFE, Cotecna hold talks on certification
B
arring unforeseen circumstances, there are strong indications that the Pan African Commodities E xchange, Lagos Commodities and Futures Exchange (LCFE) has appointed Cotecna Nigeria, with headquarters in Geneva, as one of its certification agents to ensure global standard of commodities approved for trading on the LCFE. A s a p re l u d e t o t h i s strategic appointment, talks have commenced between the two organizations. Informed sources explained that the Managing Director and Chief Executive Officer of LCFE, Akin AkeredoluAle and Geneva based Cotecna’s Vice President, Business Development, S a l e s, G ov e r n m e n t a n d Trade Solutions Unit, Lena Sodergren had in a closed door meeting discussed the imperative of standardized testing, inspection and certification processes and procedures for agricultural products for LCFE whose market is scheduled for inauguration soon. At the meeting, perhaps, both parties were said
to have agreed on the need for certification and standardization of agricultural products for trading on the LCFE, establishment of laboratories for solid minerals and agricultural products at a distance as a risk aversion measure against contamination concerns and establishment of a Free Trade Zone where agricultural laboratories are best located. The two organizations will likely review the potential alliance between them and update their Memorandum of Understanding (MoU) in the subsequent meeting and make it public. A k e r e d o l u -A l e commended the management of Cotecna for the interest in the LCFE and and advised the company to play vital role in The Free Trade Zone, the last stage before the products are taken offshore. “We are glad to have fruitful discussions with the representatives of Cotecna. We h a v e c o n f i d e n c e in Cotecna because of the extensive care and development the company has given to the pharmaceutical industry. www.businessday.ng
Our immediate priority is to commence trading on agricultural products, oil and gas and solid minerals at the outset. But we are putting proper structures in place in developing standardization processes and procedures for certification of agricultural products. “We are working round the clock with our technical partners. We remain committed to global best practices. We are already partnering with many credit bureaus and development agencies for seamless commencement of our operations”, said Akeredolu-Ale. S o d e r g re n e x p re s s e d delight at establishment of LCFE. According to her there is a need for Commodities exchange in Nigeria. “I am thrilled with the initiatives at LCFE. My voyages in Africa show that there is a demanding need for a structure like LCFE. Cotecna has invested in tracking devices for transit cargo. We can share technology with LCFE for visibility tracking. The tracking devices inclusively come with a monitoring display board”, she said.
Investor’s Square •Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com
Economy & markets
Reps say interested in capital market growth Iheanyi Nwachukwu
T
he House of Representatives Committee on the Capital Market and other Institutions has assured that the Committee is willing to provide support by way of supporting enabling laws to support the growth of the Capital Market. Ibrahim Babangida, Chairman of the Committee stated this in Abuja during an interactive session with the Executive Management if the Securities and Exchange Commission (SEC). He said, “We have invited you to brief us on your activities so that we can all be very familiar with your work and how we can assist to deepen the Capital Market. We also need to know your challenges if any, and find ways of assisting to ensure that you do your work well. We are available to make new Laws, amend existing laws, resolve inter agency conflicts if any. “We also need you to espouse your plans to us and let us know what we can do to make your job easier. We assure you that the committee will support you in your efforts to make our capital market one of the best” he added. In her presentation, Mary Uduk, Acting Director General of the SEC said most of the Commission’s recent initiatives
L-R: Isyaku Tilde, acting executive commissioner, Operations, Securities and Exchange Commission; Henry Rolands, acting executive commissioner, Corporate Services SEC; Babangida Ibrahim, chairman, House of Representatives Committee on Capital Market and Institutions, Mary Uduk, acting director general, SEC and Reginald Karawusa, acting executive commissioner, Legal Enforcement SEC, during an Interactive Session with House of Representatives Committee on Capital Market and Institutions in Abuja.
are guided by the ten-year (2015 to 2025) Capital Market Master Plan which was launched by SEC in 2014 for the purpose of positioning the capital market for an accelerated development of the national economy. “In implementing the plan and other policy initiatives, the Nigerian capital market has been contributing its quota towards the growth and development of the country. For instance, with the dematerialisation process completed, investors no longer need to worry about the loss or damage to their physical share certificates as they are now electronically stored”, the acting DG said. Further, Uduk stated that
the SEC’s e-Dividend system enables shareholders’ dividend to be paid directly into their bank account without the stress of dealing with physical dividend warrants. Also, the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds from sales of their shares are credited directly into their own account, as against that of the stockbroker. “We are equally working on ensuring that companies’ annual reports are distributed electronically thereby ensuring timeliness of information to shareholders and cost reduction to public companies” she added.
SEC says fintech will increase Capital Market participation
T
he need to expand access to finance, provide new ways to ra i s e f u n d i ng, enhance financial inclusion and foster increased participation in the capital market has again been emphasised. This is even as greater prospects arise as the global FinTech sector is growing at an incredible rate of 200 percent year-on-year. Acting Director General of the Securities and Exchnage Commission (SEC) Mary Uduk stated this at the official launch of the Fintech Roadmap of the Nigerian Capital Market at the Nigeria Fintech week held in Lagos, Tuesday. Uduk said the Roadmap highlighted Collaboration as a key ingredient for deepening market penetration. In order to improve the penetration of investment products, there must be strategic alliance amongst regulators and
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other stakeholders within the ecosystem. Going forward, I am confident that together, we can surmount the challenges inherent and seize the potentials of FinTech to transform people’s lives for the better. “It is our belief that this policy document will broaden the robust conversation and engagements within the ecosystem, encourage resp onsible us e of new technologies and digital finance in the capital market, influence i n c re a s e d i nt e r nat i o na l participation & cooperation, and also provide investors with more choices in the Nigerian Capital Market. She said the SEC is allso looking to adopt regulatory and supervisory practices for orderly development and stability of the system, as we will pay close attention to sustaining confidence and safeguarding the integrity of our market. In this way, our policies will facilitate the safe entry of new products, @Businessdayng
activities and intermediaries. In addition, we will ensure that regulation does not stand in the way of innovation. She said While is it clear that FinTech has already made huge inroads into many aspects of the financial industry, what is perhaps even clearer is that the surface has barely been scratched in relation to what FinTech can do for us in the future. According to the SEC acting DG, “it is estimated that emerging markets will experience rapid growth in financial services provision, in substantially less a time than it took developed markets to achieve, adding that it is right to presume that financial services over the next decade will experience a higher degree of change than in the last century.” She said that as regulatory compliance is a prerequisite for the success of FinTechs globally, RegTech offers many of the same benefits to regulators as it does to financial institutions.
Thursday 31 October 2019
BUSINESS DAY
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Competitive return offerings attract investors to United Capital mutual funds …as Asset Management business records significant growth Iheanyi Nwachukwu
T
he Nigerian market has witnessed exponential growth in the popularity of Mutual Funds over the past few years, making it the fastest growing asset class. This record growth is driven by investors desire for increased returns as well as to hedge possible risks of having their “eggs in one basket” when they invest in just a particular asset class. Mutual fund A Mutual Fund is an investment vehicle made up of a pool of funds collected from numerous investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual Funds are operated by professional fund managers, who invest the fund’s capital and attempt to produce capital gains and income for the investors. These investors may be retail or institutional in nature. In addition to the Money Market Funds, other Mutual Funds under the regulation of the Securities and Exchange Commission (SEC) are: Equity-based funds, bond funds, fixed income funds, real estate funds, mixed funds, and ethical funds. The Net Asset Value (NAV) of Mutual Funds grew to about N817.2billion as at September 20, according to the Securities and Exchange Commission (SEC) data on fund management and collective investment schemes as at that date. Mutual funds record asset growth is fueled by the 21 Money Market Funds cumula-
tively valued at N611.4billion, which represents 75percent of the total value of the Mutual Funds United Capital Asset Management The United Capital Asset Management team delivers top-ofthe-line investment management services to its clients, with assets under management currently in excess of N100billion. The asset management team also provides innovative solutions such as Portfolio/Fund Management, Mutual Funds, and Investment Advisory services, ultimately helping all their clients to achieve their financial goals. The company which is registered and licensed by the Securities and Exchange Commission (SEC) to act as Investment Advisers, Portfolio and Asset Managers has its expertise across Portfolio/Fund Management, Mutual Funds, Wealth Management and Investment Advisory Services. Looking at its array of mutual funds (Eurobond fund, Money Market fund) and their competi-
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tive return offerings, United Capital Asset Management no doubt contributed to the record growth in Nigerian Mutual Funds market. United Capital Mutual Funds The United Capital Eurobond Fund is an open ended fund regulated by the Securities and Exchange Commission (SEC), with a separate Custodian, and Trustees. Each investor is allocated units based on prevailing price at the date of entry. Dividends are paid annually. Dividends are a portion of interest earned on the fund per time. The fund accrues interest daily, so appreciation in the invested amount can be redeemed at any time. The Money Market fund which earned the fund manager BusinessDay money market fund manager of the year 2018 comes with key benefits such as low entry thresholds, quarterly dividends, tax-free returns, 24-hour redemption, and guaranteed principal investment. The fund’s consistent and
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timely dividend payments, strong growth in asset under management (AUM) and strong credit rating had earned it the award. Nairametrics also rated the United Capital money market fund as a top high-yield money market fund that beats inflation in Nigeria. Fund manager’s comments Speaking on the Mutual funds, Sunny Anene, Group Executive Director, United Capital Plc said: “Our Asset Management business continues to record significant growth in Funds Under Management (FUM). “Our Eurobond Fund, a dollar denominated mutual fund, has grown by over 255percent since the beginning of the year from $8million to $30million. Currently at 8percent per annum, return on the Fund has also beaten industry benchmarks and peer averages.” “Our Money Market Fund also continues to grow. The Fund size has grown by over 480percent within the same period while the return remains competitive at 12.6percent per annum as at date, above short-term treasury bill and inflation rates”, he added. “Aside our competitive returns which continue to endear investors to these funds, our focus on partnerships with key institutional and retail outlets are major drivers of growth. “ Wi t h ou r Mo n e y Ma rke t Fund, investors can gain exposures to a diversified portfolio
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comprising high quality money market instruments like treasury bills and certificates, commercial papers and bankers’ acceptance. The Fund provides liquidity, capital preservation, and high returns. Investors’ capital investment is guaranteed compared to a direct exposure to Treasury bills where principal investment may decline or increase if the bills are not held to maturity. Our Money Market Fund thus preserves capital, while offering quarterly interest payments, safety of funds, and liquidity,” he stated further. Anene added that, “The Eurobond Fund is invested in Dollar denominated Eurobonds, floated by the Federal Government of Nigeria, as well as top-tier corporates. Subscribers can expect to receive competitive short to medium term capital appreciation on their USD holdings invested in the Fund much better than they would receive on domiciliary deposits. The minimum investment is $1,000 and multiples of $500 thereafter”. According to the Group Executive Director, “our consistent performance above market benchmarks can be attributed to active management of our portfolios supported by rigorous investment research. “Our highly experienced portfolio management team continues to seek opportunities to improve returns despite the tough operating environment. We have set our internal benchmarks much higher than market averages and we continually mandate our portfolio managers to deliver highly competitive returns (within SEC approved Trust Deed) to the delight of our clients.” “We are also mindful of the risks in the operating environment ; as such, we have instituted a robust risk management framework to guide investments in these funds. Our Money Market Fund is A-rated by Agusto & Co”, he stated.
20
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Thursday 31 October 2019
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Bargain hunters await Black Friday as major retail outlets roll out campaigns OLUFIKAYO OWOEYE
I
t is about time of the year again when massive discounts are offered to both new and existing customers across all product categories ranging from smartphones, electronics, kitchen appliances and many more, referred to as Black Friday. The Black Friday refers to the day after Thanksgiving Day, a holiday on the fourth Thursday of November, and is symbolically seen as the start of the critical holiday shopping season. For many wondering the origin of the name “Black Friday”, it was actually first associated with a financial crisis, not sales shopping. Two Wall Street financiers Jim Fisk and Jay Gould, together bought a significant amount of US gold in the hope of the overall price soaring and in turn, being able to sell it for huge profits. On Friday, September 24, 1869, in what became
referred to as “Black Friday”, the US gold market crashed and Fisk and Gould’s actions left Wall Street barons bankrupt. It was not until later years that the postThanksgiving period became associated with the name
Black Friday has become an important period for many retailers as they hope to offer discounts will boost their profits. However, the increase in consumer demand and competition between retail-
LUXURY
L
ing macro-economy. Jumia, a major online shopping mall it is Black Friday for every Friday in the month of November. According to Jumia, this year’s edition of Jumia Black Friday will start on 8th of November and it would be offering massive discounts of up to 80 percent off from its millions of products. Shoppers will also enjoy amazing discount packages such as free vouchers; free shipping using Jumia Prime among others. There would also be Jumia flash sales. Konga, another online shopping mall, Black Friday has been present since 2013. The shopping holiday called “Black Friday Yakata”, where customers find all kinds of products at even more competitive prices. Sadly, online scammers have also taken advantage of the massive sales during this period to send spam mails to anxious customers promising them mouth-watering deals and telling them to provide information about their credit card
Company
Luxury goods giant LVMH mulls $14.5bn Tiffany takeover VMH Moët Hennessy Group, the French luxury g o o ds conglomerate owned by Europe’s richest man Bernard Arnault has confirmed it had made an offer to buy U.S. jewellery giant Tiffany for $14.5bn . The of Christian Dior, Fendi, Givenchy, Louis Vuitton as well as watchmaker Tag Heuer, is planning to scale operations in jewelry one of the fastest growing part of the multibillion dollar luxury goods market. According to Bain & Co, management consulting firm, jewellery was one of the strongest-performing areas of the luxury industry in 2018, forecast that comparable sales in the 18 billion euro ($20 billion) global market were set to grow 7percent this year. Tiiffany with about $4 billion in revenue, is famed for diamond and sterling silver jewellery packaged in
ers has led to an overwhelming amount of visitors to online retail sites and chaos in high street shops. To help improve the process of sales and online deliveries, deal with competition and satisfy custom-
ers’ needs, retailers are now choosing to run their sales across an extended period, rather than the traditional 24 hours. In recent years, a number of promotions and offers have started in the days building up to Black Friday, a move which has been dubbed “Black Fiveday” In 2010, online retail giant Amazon introduced the concept to the UK, promoting a range of discounts and deals to consumers. In 2013, supermarket Asda, owned by American retailer Walmart, later held its own Black Friday sale - one which resulted in chaos as customers physically fought for televisions and gadgets. Following this, Black Friday has grown significantly throughout the UK, with more and more retailers choosing to hold sale events. In Nigeria, retail outlets and supermarkets are not left out in the excitement that comes with Black Friday sales as Nigerians are known shoppers despite the stutter-
boxes shaded a distinctive blue known as “1837 Blue” and sold at more than 250 stores in the U.S., Europe and Asia. Under its CEO, Alessandro Bogliolo, Tiffany is trying to appeal to younger shoppers with more modern takes on jewellery. E a r l i e r t h i s y e a r, i t launched a men’s jewellery collection, and it’s increasing its marketing to a more diverse customer base like same-sex couples. It’s also been renovating its flagship store in Manhattan. LVMH, which is already the world’s largest luxury goods company, confirmed it “has held preliminary discussions regarding a possible transaction with Tiffany”, but refused to comment further. If the deal goes ahead it would be LVMH’s biggest takeover under the 32-year reign of its chairman and chief executive, Arnault, a 70-year-old Frenchman who has built up a vast portfolio of luxury names www.businessday.ng
at LVMH including Bulgari, Givenchy and Céline. Jewellery and watches accounted for 9percent of revenue and 7percent of LVMH earnings in 2018, about only a fifth the size of its core fashion and handbag business, home to brands like Christian Dior, Givenchy and Louis Vuitton. LVMH’s move on Tiffany stirred speculation about more luxury sector deals, boosting shares in European watch and jewellery companies, including Salvatore Ferragamo, Pandora, Swatch and Richemont. The potential deal also comes as some of LVMH’s watch brands like Tag Heuer have struggled, in part as they try to adapt to the rise of smartwatches. The sector has been hit hard by turmoil in Hong Kong, a major market for high-end timepieces. LVMH’s rivals, Gucciowner Kering and Switzerland’s Richemont, which owns Cartier, are also bulking up in high-end jewellery.
TGI Distri’s Terracares4Naija campaign berths at Ikorodu Seyi John Salau
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erracares4Naija, the corporate social responsibility (CSR) initiative of Terra seasoning cube aimed at putting smiles on the faces of 10,000 residents of 10 Lagos communities from now till Christmas by providing them nutritious food visited Majidun community in Ikorodu on Saturday, October 26, 2019. Speaking at the event, Nnenna Onyenacho, Media and Activations Manager of TGI Distri Limited, makers of Terra Seasoning Cube, said the Terracares4Naija was initiated as part of the activities to mark the United Nation’s World Food Day on October 16; to put smiles on the faces of Lagosians by providing 10,000 0f them with nutritious, wholly
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produced and prepared Nigerian meal. According to Onyenacho, the initiative is not a brand promotion as there is no condition attached for communities to be visited. Indeed, it was early Christmas in the fishing community as children, youths and adults in their thousands trooped out to savour the hospitality of Terracares4Naija. She said that Terra Seasoning Cube launched earlier in the year in two variants of chicken and beef has received overwhelming acceptance in the market hence the Terracares4Naija is a way of showing love and care to Nigerians especially in the rural communities. The residents of Majidun community were full of appreciation for the gesture. An excited community @Businessdayng
leader in the suburb of Lagos, Biodun Ogunsanya called on other corporate organisations and wealthy individuals to emulate the gestures of TGI Distri Limited by assisting the government in the care of the poor and the underprivileged in the society as it will help in cushioning the economic hardship faced by millions of Nigerians in this class. Doubra Titiboh, a senior secondary school student of Ipakodo Secondary School, Ikorodu who won one of the dancing competitions said TGI Distri is the first company to visit the community with such a welfare programme. She said the experience will linger in her mind for a long time. The Terracares4Naija campaign will move to the next Lagos community on Saturday having visited Agege and Ikorodu.
Thursday 31 October 2019
BUSINESS DAY
BUSINESS TRAVEL
Stakeholders seek right models for airport concession Stories by IFEOMA OKEKE
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takeholders in the aviation sector have said if federal government must concession Nigerian airports, it must adopt the right models in a bid to address infrastructure deficit. Speaking during the annual colloquium organised by NigeriaTravelsmart.com in Lagos, on ThursDay last week, Nnaji Nnolim, chairman House of Representatives Committee on Aviation said privatization reduces the need for public sector investment, provides access to larger commercial sectors, and allows airports to diversify services without the fear of government control and interference. He said in theory, this may lead to increased operational efficiency, as well as create new paid incentives for management and employees. Available statistics indicate that more than 50 percent of European airports have some form of private ownership, with this percentage increasing significantly since 2011. Nnolim noted that most large Australian airports are now owned by consortiums of private companies. He said Gold Coast Airport for instance, is arguably an example of a successful privatization model, having seen almost USD233m of investment since it was taken over by Queensland Airport Limited in 1998. “Many countries are seeking to replicate this model. In May, Japan invited the private sector to submit proposals for the operation and management of seven airports under a 30 to 35 year concession. The country’s transport ministry is
attempting to leverage on the private sector to promote tourism in the Hokkaido region. “Elsewhere, Brazil is planning to shut down its National Airports Authority and sell its 54 airports to private companies. It kicked off the ambitious programme last year, raising $889.08m through an auction of concessions for four airports,” he said. Nnolim added that sadly in Nigeria, the story has been one experiment, too many challenges. “Examining the first experiment we had in this sector, which was the build, operate and transfer (BOT) arrangement the Federal Airports Authority of Nigeria (FAAN) entered with Bi-Courtney Aviation Services at Murtala Mohammed Airport local terminal, popularly known as the
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MM2. It has been riddled with controversies leading to many court cases,” chairman House of Representatives Committee on Aviation stated. Mohammed Magashi, a technical board member of Arik and Aero Contractors said development of airports is still very new to private sector. Magashi stressed that it is the responsibility of government to develop the airports until they get to a level when they can be concessioned. “I see no economics behind concessioning all the airports in Nigeria, especially the unviable ones because private sector wants to make money from it. Government is responsible for airport infrastructures and it is only when these things are developed that it can change
hands,” he added. Simon Tumba, the organiser, the CEO of NigeriaTravelsmart. com and organiser of the event said the government needs to explore a Public Private Partnership (PPP) and concession the airports carrying along the workforce at FAAN. “With Nigeria’s God given natural and Human Resources, and a solid leapfrogging plan and strategy, we should be aiming for a futuristic airport of $2.5billion. We have the population, the market and geographic position to make and realize such aspirations. “The aviation unions who are averse to concession of our airports are merely shooting themselves in the foot, and in the long run, may end in regret and bitter cries,” Tumba added.
L-R: Patrick Tamba Musa, senior transport engineer, African Development Bank (AFDB); Nnolim Nnaji, chairman, House of Representatives Committee on Aviation; Simon Tumba, CEO/publisher, NTM; Dapo Olumide, CEO, Ropeways Transport Limited; Ali Magashi, CEO, Kitari Consult Limited at the 2019 NigerianTravelsmart (NTM) Colloquium recently in Lagos.
Emirates president Tim Clark weighs in on the Boeing 737 Max crisis
n First Move, CNN’s Julia Chatterley interviewed the President of Emirates Tim Clark. Clark spoke about the Boeing 737 Max crisis and the uncertainty around Brexit. Following two fatal crashes, Boeing was forced to ground its 737 Max planes in March 2019. This affected airlines across the world, including Emirates. Clark believes it has disrupted Boeing and compelled the company to reevaluate itself, “This will be a real disruptor to Boeing, it is. I think they will re-examine themselves, that’s what they should be doing, turning themselves inside out.” As well as affecting current flights, the grounding had an impact on orders for new 737 Max planes. Clark expresses doubt that Boeing’s competitor Airbus will be able to fulfil any extra orders, “For Airbus to crank up manufacturing plants to produce the Max cancellations is probably not going to be feasible.” Boeing is hoping to have the 737 Max airborne again by the end of the year.
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However, Clark tells Chatterley that he feels this date will not be reached, “I would say sometime in the first quarter of next year, calendar – January, February, March, latest April.” C lark goes on to des cr ibe Boeing as, “a company which is haemorrhaging cash”, but believes that, “They will get it right”, when it comes to solving the 737 Max crisis. Emirates also have orders for the new Boeing 777X which was due to be delivered by next June. Again, Clark is doubtful that Boeing will reach this date, “I would say that’s a little bit optimistic.” Clark also spoke about Brexit and the uncertainty it is causing. He said that the Brexit process has been, “Pretty ugly”, and that deliberations cannot be allowed to go on for much longer. “This cannot go on indefinitely. And if it is allowed to go on indefinitely, the destabilisation of both the European economies and the UK will be out there for so long. It’s not a good place to be in,” he said. www.businessday.ng
Arik Air wins most recognizable airline brand award
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rik Air, Nigeria’s leading airline has again won the award of the Most Re cog nizable Airline Brand in West Africa. The award was bestowed on Arik Air at the African Travel Times 2019 Awards held at Movenpick Ambassador Hotel, Accra, Ghana. This is the second consecutive year the airline will be winning the prestigious award. Lu cky O n o r i o d e G e o rg e, the publisher of African Travel Times, said Arik Air has remained consistent on the Accra route, despite all odds, since its entry into the region in February 2008. Arik Air operates daily flights from Lagos to Accra and three weekly flights from Lagos to Monrovia via Accra. The airline also operates two weekly flights from Lagos to Dakar, Senegal. Commenting on the award, Roy Ilegbodu, Arik Air’s Chief Executive Officer, Captain said: “We are pleased that our determination in ensuring that the West Coast remains connected is being appreciated by African Travel Times. We remain committed to providing a customer friendly and reliable service. “We will continue to strengthen our operations in the West Coast as we explore opportunities for route expansion.”
British Airways rewards partners with Trip to London
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s part of its commitment to drive and strengthen i t s re l a t i o n s h i p w i t h its partners, United Kingdom’s mega carrier, British Airways, recently organised a three day getaway trip to London for its top travel agents. Six agents from across Nigeria were selected to go on the trip. They had the opportunity to experience first-hand the Super High J which was recently relaunched into the
Lagos route, pay visit to the British Airways Head Office and Heritage House as well as go on a tour of Terminal 5 Departures Landside, Check-in area, First Wing, Cabin Crew Report (CRC), Airport Centre and Airside Gates, First class lounge and others. Kola Olayinka, British Airways Regional Commercial Manager for West Africa, remarked that the trip was put together to show gratitude to the agents for their contribution
L-R: Chukwudi Ofili, associate partner, DETAIL; Nike Anani, CEO, Nike Anani Practice; Audrey Joe-Ezigbo, founder and executive director, Falcon Corporation; Temidayo Ajayi, senior associate, DETAIL, during the 9Th DETAIL Business Series.
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to the airline’s business growth, “It is always good to give honour where honour is due. We have an amazing team, internally and externally who continuously contribute to the growth of the airline.” He went on to state, “It was also great to know the Super High J exceeded expectations. It was one of the highlights of the trip.” Among the selected agents were, Joy Idehen, Assistant Manager, Corporate Desk Qantum Travels L i m i t e d , S u l e i m a n Ib ra h i m, Managing Director, Ibbsa Travels and Tours, Alkali Habib, Managing Director, Hinterland Travels and Tours, Temitayo Shittu, Airline Relationship Manager, Travel Start, Ene Ogunnoiki, Business Development Manager, Travelbeta, and Victoria Nwaimo, Leisure Travel Manager, Bon voyage Travel. British Airways is a full service global airline, offering year-round low fares with an extensive global route network flying to and from centrally-located airports. Its newest addition to the Lagos route, the Super High J, recently refurbished, provides more for its passengers and has an increased capacity.
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Thursday 31 October 2019
BUSINESS DAY
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Thursday 31 October 2019
BUSINESS DAY
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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships
THEPRACTICE
It is unlikely that the AI will ever break the barrier of human intelligence – Aisha Rimi In this edition of ‘The Practice, ALP partner , Aisha Rimi speaks about the concept of a pan African network of law firms; use of artificial intelligence for practice development; educating young African law scholars and advancing the cause of women and girls in career/leadership. EXCERPTS…
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Who is Aisha Rimi? am a working mother, wife and partner at ‘Africa Law Practice’ (‘ALP Legal’). An indigene of Katsina State, I was born in Kaduna and I have had the privilege of living, studying and working in Abuja, Lagos, England and the US. ALP Legal prides itself as Nigeria’s first truly African law firm, tell us about the journey so far. ALP Legal is a Lagos, Nigeria based Corporate Commercial and Dispute Resolution firm with an ever growing network of law firms across the continent. We started the practice just over two years ago and it has so far been an exciting and certainly rewarding journey in every sense of the word. The concept of a pan African network of law firms, has been welcomed with huge support and interest by our clients and colleagues across the country and internationally. The network is growing organically, as we work hard to ensure that we have the right partners as well as team members who share our values and commitment to providing
INSIDE Assessment of the Deep Offshore and Inland Basin Production Sharing Contracts Amendment Bill 2019 26
FoI: SERAP seeks details of spending on failed $460m CCTV, other Chinese loans 27
Expert opinion on Nigerian law by past Judicial Officers
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Aisha Rimi
client focused, legally sound, commercially viable and innovative legal advice and business solutions to their issues, wherever they
may occur. What services does your law firm specialize in? ALP’s focus is on corporate,
commercial law and related litigation and alternative dispute resolution. We have the good fortune of having a Senior Advocate and former state Attorney General as a founding partner. Some of our partners are actively involved in the arbitration scene, and regularly participate in institutional (LCIA, ICC and ICSID) and ad-hoc arbitrations. On the corporate-commercial side, we are focused on commercial transactions and have had the opportunity of rendering legal and advisory services to clients across various sectors such as energy & infrastructure, financial services, and real estate development. We also have a group dedicated to private client work. With significant experience in regulatory work, we have a strong focus on assisting clients in risk mitigation and government relations. In our pan-African practice, we provide our clients with legal and business advisory services wherever our network permits across the continent. Would you say you have had some remarkable success in the
last two years? For a “start-up” I don’t think we have done too badly. ALP Legal is a combination of several practices, which like I mentioned earlier, came into being just over 2 years ago and has gained significant market recognition in a short time. The partners come from different areas of practice – government, business and private practice - and collectively have over 100 years’ experience, which has been instrumental in propelling the firm to its current status. Tell us about some of the legal representation you have had? Every client and each instruction is important and treated with the same level of professionalism. All assignments are partner led and/or supervised. Our clients range from abused housewives (pro-bono) engaged in custody battles to advising one of the largest infrastructure development projects on the continent. Somewhere in between, we serve, banks, insurance companies, multinationals, government agencies Continues on page 27
Global law firm, White & Case deepens knowledge in oil and gas sector in Nigeria
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o celebrate 35 years of supporting clients in Nigeria, global law firm White & Case, in collaboration with Standard Charted bank, hosted an oil and gas workshop for select participants in the sector. Speaking during the workshop in Lagos, London-based White & Case partner Jason Kerr said the law firm has been advising on Nigeria-related transactions for 35 years, and that the workshop was a good way to mark the firm’s sustained presence in Nigeria. “We have built many friends over the years in Nigeria and we wanted to bring them together to celebrate these 35 years,” said Kerr. “We have had a series of events over the last several days culminating in this workshop, which is a knowledge transfer exercise. We are just here to say thank you to our clients for the support they have shown us over the years.” He acknowledged that Nigeria has one of the largest gas reserves in the world, with NLNG being one of the biggest producers of LNG in the world. He also expressed confidence in Nigeria’s oil and gas market, which Kerr said has a strong fuwww.businessday.ng
ture. “NLNG is growing in Africa and, if you look at Nigeria over the last 25 years, it has had its hurdles but it has had some significant international transactions that have been great for this market and have been given a serious profile internationally,” said Kerr. “Nigeria has got some great fundamentals and some serious busi-
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ness people.” Kerr is impressed with Nigerian lawyers, companies and law firms because of their efficiency and exposure to international transactions. He said: “When I look at the legal community here in Nigeria, I’m very impressed because they have been exposed to serious international players in the oil and gas market for more than two @Businessdayng
decades. They are highly efficient and professional. “When we come into Nigeria with our clients, we are more than happy to work with Nigerian law firms because they are of fantastic quality. We work with a number of law firms in Nigeria and have done so for two decades.” On the future of arbitration in Continues on page 29
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Thursday 31 October 2019
BUSINESS DAY
PERSPECTIVE
BD
LegalBusiness
Assessment of the Deep Offshore and Inland Basin Production Sharing Contracts Amendment Bill 2019
below. This structure would enable the federal government earn revenue via royalty on incremental surge in oil and gas prices in addition to other taxes applicable in the upstream oil
million naira). Impact of the PSC Bill on the Nigerian Oil and Gas Sector • Improved Economic Benefit to the Federal Government With the increased royalties which would accrue to the federal government from the activities of the IOCs, the PSC Bill when passed will ensure that the federal government has access to improved revenues which could positively impact on the Nigerian economy and shore up earnings. The federal government has been deliberating on a number of ways to improve the revenue to its coffers as a way to improve its liquidity position, such as the proposed increase in the rate of Value Added Tax in Nigeria and the introduction of new tax regimes. The PSC Bill, when enacted into law, would allow the government to increase its cash collections from the IOCs. These receipts can then be deployed to other viable sectors of the Nigerian economy. The President of the African Development Bank, Mr. Akinwunmi Adesina recently stated that Nigeria
and gas sector. According to the PSC Bill, a graduated royalty payment will be due to the federal government in the following manner: With the above price-based royalty structure, the PSC Bill has deleted the provision of section 16 of the PSC Act which is to the effect that PSC fiscal terms are subject to review to ensure that if the price of crude oil at any time exceeds USD$ 20 per barrel, real terms, the government’s take in the additional revenue shall be adjusted to such extent that the production sharing contracts shall be economically beneficial to the government of the Federation (c) Review of Production Sharing Contracts (PSCs): The PSC Bill is to the effect that the Minister shall cause the Corporation (that is, the Nigerian National Petroleum Corporation) to call for a review of the production sharing contracts after eight (8) years. The implication of the PSC Bill in this regard is that it provides a more specific term for the Federal Government to vary the terms of the PSCs rather than on the price fluctuation mechanism in the PSC Act. (d) Penalty for Non-Compliance: The PSC Bill also seeks to criminalize non-compliance with the provisions of the PSC Act particularly with respect to the periodic review of the PSCs. The PSC Bill indicates that non-compliance with provisions of the PSC Bill (that is an offence punishable with a term of imprisonment for a term not less than five (5) year or an option of fine of N500,000,000 (five hundred
has a liquidity problem and not a debt crisis. Thus, the increased royalties to the Federal Government can be seen to be seen as potential solution to the illiquidity issues currently plaguing the government. • Increased costs to the IOCs The royalty structure proposed under the PSC Bill will no doubt result in increased cost of business to the IOCs under the PSC arrangement. Considering the fact that under the PSC framework, the IOCs will still be liable to pay signature bonuses to the Federal Government upon the execution of the PSCs well as other relevant taxes applicable. Thus, the increased royalty structure could impact on the cost to the IOCs’ bottom line. Conclusion It is pertinent to note that the increased royalty liability consequent upon the PSC Bill, if the PSC Bill is enacted in its current form, will lead to a substantial impact on the re-negotiations of some of the first set of Nigerian PSCs which are nearing the end of their primary tenures. It would most likely be the case, that IOCs would capitalize on the increased royalties to oppose the quantum of increased share of crude oil production revenue that the federal government may be aiming for. In the alternative, they may request a higher cap on cost oil than they were initially negotiating. It is expected that the PSC Bill will receive a speedy passage in the lower house of the federal legislative house, that is the House of Representatives and thereafter forwarded to the President for his assent before the PSC Bill becomes law.
Proem AYODELE ONI & BOLAJI FASEHUN (Bloomfield Law Practice)
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nce a host country is considered rich in hydrocarbons, investors involved in upstream petroleum operations, then become concerned about a number of other critical issues. Chief amongst these issues are, investors’ rights to monetize investment(s), stability of the legal and contractual regimes together with the enforceability of their rights. These issues have been referred to, broadly, as the Security of Investments for Upstream Operations (“The Three Pillars of Security of Investment Under PSCs and Other Host Government Contracts”, by Frank Alexander, Fasken Martineau LLP). Thus, upstream oil and gas investors consider these issues as key aspects of every contractual and legal regime when investing in upstream activities or operations. Whilst investors are concerned about those key contractual and legal issues, the host country is concerned about getting a fair share of any revenue that is derived from successful petroleum activities by any investor in the upstream petroleum sector. Nonetheless, it is difficult determining what is fair, as there is no universally accepted standard and the level of development together with the needs of each host country plays a critical role in determining what mechanism works best for such a host country. Thus, it is usually an arduous task to forge a delicate balance between the concerns of upstream investors and those of their host countries or governments. In reality, different fiscal mechanisms evince divergent outcomes for the different host countries and the relevant investors, when there is a variance in the profitability of the specific upstream venture. Under certain regimes, the host country receives lesser royalties, bonuses, rents etc., when profitability surges. Other regimes have a neutral system such that the host country’s-take, does not change, whether or not projected profits increase. Other regimes adopt systems that cream off excess profits such that the host country either takes all of any profits beyond the projected or pre-agreed profits/ profit levels or have a system that ensures that as the profits of upstream operations increase, the host country-take also increases. Finally, hybrid regimes adopt a mixture of features such as sliding scales applied to production sharing, royalties etc. Many host countries usually modify their fiscal toolboxes as certain circumstances, such as level of economic development, need to encourage investments, level of income, level of hydrocarbons exploitation, oil prices etc., change. In this regard, Nigeria is no different as it is now in the process of modifying the fiscal toolbox of its Production Sharing Contract regime from what was previously, at best, neutral (as far as government-take is concerned) to a more progressive/
hybrid fiscal model. State of Play On the 15th of October 2019, the upper chamber of Nigeria’s federal legislative house passed the Deep Offshore and Inland Basin Production Sharing Contract Act Amendment Bill (the “PSC Bill”). It was reported that the PSC Bill was considered and deliberated upon by the Senate upon receipt of a formal request from President Muhammadu Buhari, seeking the amendment of the Deep Offshore and Inland Basin Production Sharing Contracts Act CAP D3 Laws of the Federation of Nigeria 2004 (the “PSC Act”). It is projected that, the federal government will earn an estimated sum of $1.5 billion, upon the enactment of the PSC Bill into law from revenue due from International Oil Companies (IOCs) operating in the country. The proposed amendment directly impacts the fiscal terms of existing PSC arrangements between IOCs and the Nigerian National Petroleum Corporation (the “NNPC”), Nigeria’s national oil company. Thus, the aim of this piece, is to highlight the elements of the PSC Bill vis-à-vis the PSC Act (which commenced in January 1993) and highlight some of the potential impacts on Production Sharing Contracts (“PSCs”) specifically and the Nige-
prejudice to any change in oil prices, the PSC Act is liable to review, after a period of fifteen (15) years from the date of commencement and every five (5) years thereafter. It is however important to note that the provisions of the PSC Act replicated above have now been deleted by the PSC Bill (please see section D below). Further, it is trite that only the legislature can amend statutes. Hence, premised on the foregoing, it would appear that the federal government of Nigeria is well within its rights to make the requisite amendments to the PSC Act by virtue of the PSC Bill. Elements of the PSC Bill These elements are discussed in more detail below: (a) Field Basis Fixed Royalty: The PSC Bill introduces a new royalty oil regime not provided for in the PSC Act. Under the PSC Act, the royalty to be paid to the federal government was to be at a graduated rate, depending on water depth (in the case of deep offshore area) while the royalty rate, in the case of inland basin, is fixed at 10%. This provision has been dispensed with, in the PSC Bill and replaced with a new provision which seeks to introduce a fixed royalty structure based on the oil and gas field,
rian petroleum industry together with the economy, as a whole. Basis for the Proposed Amendment(s) Except as provided by the PSC Act, the terms of extant PSCs may only be amended pursuant to negotiations and as mutually agreed in writing by the NNPC/ federal government and the relevant IOCs. The PSC Act allows for the adjustment of the fiscal toolbox and consequential revenue sharing formula in the PSC whenever the price of crude oil exceeds $20 per barrel, with a view to making the PSC more economically beneficial to the federal government of Nigeria. Additionally, without
in question. The PSC Bill provides that royalty shall be at a rate of the chargeable volume of crude oil and condensates produced from the relevant area. The field-based royalty is indicated below: (b) Royalty by Price: In addition to the royalty structure based on field area, the PSC Bill also introduces royalty based on the price of crude oil, condensates and natural gas. This suggests a progressive government-take royalty regime. According to the PSC Bill, a graduated royalty payment will be due to the federal government, such that the government-take increases with price increases as is spelt-out
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Thursday 31 October 2019
BUSINESS DAY
27
BD LegalBusiness RIGHTSWATCH FoI: SERAP seeks details of spending on failed $460m CCTV, other Chinese loans
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he advocacy group know as SocioEconomic Rights and Accountability Project (SERAP) has sent a Freedom of Information (FoI) request to Zainab Ahmed, Minister of Finance, Budget and National Planning, asking her to “urgently provide information on the total amount of money paid to contractors from the $460 million loan obtained in 2010 from China to fund the apparently failed Abuja Closed-Circuit Television (CCTV) contract, the loan which the Federal Government has continued to re-pay.” SERAP urged Ahmed to “disclose specific details of local contractors, if any, that have received funds from the loan for the CCTV contract, reportedly awarded to China’s ZTE Corporation, as well as the implementation status of the project.” It is also seeking the disclosure of details of repayment for other Chinese loans for allegedly failed projects between 1999--2015, the status of any such projects, and details of local and Chinese contractors involved in the projects. We urge you to clarify if the N1.5 billion paid in 2010 for another apparently failed contract to construct the headquarters of the Code of Conduct Bureau is part of another Chinese loan. In the FoI request dated 25 October 2019 and signed by SERAP deputy director Kolawole Oluwadare, the organization said: “We are concerned that Nigerians are being made to pay for the Chinese loans for appar-
ently failed projects, and for which they have not benefited in any way, shape or form. Transparency in the spending of Chinese loans is good for everyone, as this would help to increase the effectiveness, legitimacy, and contribution of the loans to the development of public goods and services, and the general public interests.” SERAP said it would take legal action “if the requested information is not provided to us within 14 days of the receipt and/or publication of this letter.” “Servicing Chinese loans for failed projects is double jeopardy for Nigerians—they can neither see nor benefit from the projects; yet, they are made to pay both the loans and the accrued interests. The loans should never have been
obtained in the first place, as successive governments should have drawn funds from the over $670 million (N241.2 billion) budgeted annually as security votes, but which remain synonymous with official corruption and unaccounted for,” it said. The organization expressed “concern that the $460 million loan got for the failed Abuja CCTV project and the N1.5 billion for the construction of CCB headquarters, which may be part of another Chinese loan, may have been mismanaged or stolen, and in any case, remain unaccounted for.” The FoI request read in part: “SERAP is concerned that the allegations of corruption involving the use of the funds and other similar Chinese loans may be responsible
for the security challenges confronting Abuja, and the limited capacity of the CCB to discharge its constitutional and statutory mandates to prevent corruption in asset declarations of presidents, vice-presidents, governors, and other public officers, as prescribed by the Nigerian constitution of 1999 (as amended).” “As trustee of public funds, SERAP contends that your Ministry has a legal duty to disclose details of spending on the $460 million Abuja CCTV project and N1.5 billion for the construction of CCB headquarters, to the beneficiaries (Nigerians) of the trust, if and when called upon to do so. Any failure or refusal to provide the information will also be clearly inconsistent with the letter and spirit of the FoI Act.” “If the allegations of mismanagement and corruption in the execution of projects for which loans have been obtained from China are true, such allegations will clearly amount to a fundamental breach of national anticorruption laws and the country’s international anticorruption obligations including under the UN Convention against Corruption to which Nigeria is a state party. The facts relating to these serious allegations require your immediate and urgent disclosure and clarifications.” “As a key agency of government, the Ministry of Finance, Budget and National Planning has a sacred duty to ensure that the country’s loans including those obtained from China are transparently and accountably used solely for
the purposes for which the loans are obtained, and for the effective development of public goods and services as well as the general public interests.” “This implies providing strong leadership in the efforts to curb public sector corruption, and to refer to appropriate anticorruption agencies any allegations of corruption in which any agencies of government and/or contractors may be involved. This leadership is important if the Ministry is to enjoy the public trust and confidence essential for its effectiveness and impact.” “We would like you to clarify if the N1.5 billion mobilisation fee reportedly paid in September 2010 to contractors for the construction of the headquarters of the CCB in Abuja is part of another loan obtained from China.” “We are concerned that the CCB building project is still in foundation level several years after payment of N1.5 billion of the total contract fee of N3.5billion. However, the contract was reportedly reviewed in October 2012 from N3.5 billion to N8.7 billion, with the contract agreement signed on February 5, 2013.” “SERAP notes that the consequences of corruption are felt by citizens on a daily basis. Corruption exposes them to additional costs to pay for health, education and administrative services. Another consequence of corruption is the growing inequality in the country, where the privileged few have access to all public resources, while the vast majority of citizens are deprived of access to public goods and services.”
“Also, corruption undermines economic development of the country, trapping the majority of Nigerians in poverty and depriving them of employment opportunities.” SERAP therefore urged Mrs Ahmed to: Disclose the total amounts of money, if any, that have been paid/released for the execution of projects for which loans have been obtained from China; Compel the contractors and companies including Chinese companies that have been paid from the loans to go back to sites and urgently complete the projects; Suspend repayment of any Chinese loans until there are specific guarantees by local and Chinese contractors and companies that transparency and accountability will be ensured in the execution of the affected projects; Disclose the amount of interests so far paid on the loans obtained for the project which have allegedly not been fully, properly or satisfactorily executed; Refer any allegations of corruption involving the execution of projects for which loans have been obtained from China to the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) for investigation; Ensure that anyone involved in alleged corruption in projects supported by China is brought to justice if there is relevant and sufficient admissible evidence; Set up processes and proContinues on page 30
It is unlikely that the AI will ever break the barrier of human... Continued from page 25
and individuals. As far as I am aware, every Client has remained satisfied to date. That is success! Amongst the range of services the firm offers, which in your opinion has been the most used by clients? To be honest, we see a mixed bag, perhaps leaning in favour of Dispute Resolution, because we have a world-renowned senior advocate with a wealth of experience in litigation as well as domestic and international arbitration. What are some of the firm’s sustainability approach to educating young African law scholars and providing them essential tips to thrive in the legal space? We have a robust internship programme for young students thinking about studying law; and another for law university students. We also
accept Youth Corpers. At each stage of their engagement with the firm, we ensure that interns or youth corpers, acquire the right practical tools and knowledge to assist them in either making a decision to study law or to guide their journey into the legal profession. As we grow, we also plan to support a law prize for students in top universities across all the geo-political zones. Do you see technology such as online advisory services, predictive analysis and AI chatbots, playing a huge role in Africa’s legal space? Technology has an increasing role to play in the legal services market and we think this is to be encouraged. Globally, you see progress in medicine, education, banking and so on; law is far behind, but this is changing. AI is a reality of the world we live in, from smart phones, to speech and face recognition, automated systems, www.businessday.ng
self-driving cars and so on. However, it is unlikely that they will ever truly break the barrier of human-like intelligence. A famous mathematician, (Gian-Carlo Rota) said, “I wonder whether or when AI will ever crash the barrier of meaning”. We subscribe to this school of thought. AI systems, whilst impressive, are not immune to vulnerabilities. Hackers and slight changes to memorised visual or linguistic abilities can render systems unreliable. This notwithstanding, ALP Legal is currently working on a project that will promote greater accessibility to legal information and documentation especially to those members of society, who have the need, but necessarily the means to engage lawyers. Watch this space in H1 of 2020. Technology is also needed in the institutional side of justice delivery from the courts, to records, archives, data processing and support
equipment for judges. You were recently a guest speaker at the African Women Board’s event in New York with the theme “Fast Tracking Black Women into the Leadership Roles of the Future.” What does this theme mean to you? Women have globally been disadvantaged in the corporate world. Whilst it is not exclusively restricted to black women or women of African descent, the statistics show that we have an even greater disadvantage. The panel I sat on, discussed the statistics and progress made, we shared our stories and agreed on how we can compel the corporate world to take notice and acknowledge and reward capable and competent women. Studies have shown that companies with a higher number of women on their boards, tend to perform better. What approach do you think will lead to the inclu-
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sivity of black women into leadership roles in the future? It’s about performance, visibility i.e. sharing the success stories of black females that are excelling in leadership roles and in some cases, insisting whether by laws, directives or corporate regulations that companies must have a minimum number of women on their boards and in positions of management and authority. At ALP Legal, we have made gender equality and balance a priority at all levels. How can we manage the perception of women and girls in Nigeria to help advance their roles in the society especially as it relates to career and leadership? It is important to focus on and encourage women to be proactive, focused and determined whilst ensuring they are equipped with the right tools to pursue and sustain a commitment to their career. Women should be judged fairly and equally @Businessdayng
on their merit as individuals contributing to the working environment in a professional manner. At ALP Legal, women are supported at all levels and not penalised for having to take time off to attend to those issues, that so often retard their progress at work. As a highly visible, successful black woman, how do you think women such as yourself can open up opportunities for future generations of black women? It’s simple, women have to support each other; we need to act as good role models, encourage and mentor younger women and give them opportunities when the situation presents itself. We should provide networking opportunities also where women can interact with other successful women in informal and yet professional settings. When women support each other, great things can and do happen.
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BUSINESS DAY
JUSTICESECTOR
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Expert opinion on Nigerian law by past Judicial Officers … Recent whistle-blower complaint against President Trump and some lessons for Nigeria (Pt. 2) ORJI UKA
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Continued from last week
a ra g ra p h 1 o f the Fifth Schedule provides that a public officer shall not put himself in a position where his personal interest conflicts with his duties and responsibilities. Successive paragraphs of the Schedule then list certain conducts which public officers are prohibited from. These however refer to serving public officers. Paragraph 5 specifically provides that retired public officers who have held the offices of President, VicePresident, CJN, Governor and Deputy governor of a State are prohibited from service or employment in foreign companies or enterprises. It is very easy to understand the intendment behind the above provision, to wit, to safeguard the national security of Nigeria and prevent persons who have held such offices from giving away state secret. As noted above, it is on the strength of the above provision that it has been contended that the former CJN has contravened the Code of Conduct. But has he? It is a cardinal rule of interpretation that words should be construed in their usual grammatical sense and be given their ordinary and natural meaning, omitting no words and adding none. Although this has not yet been the subject of any judicial interpretation as far
Orji Uka
as I can tell, it is submitted that there is a difference between being of “service or employment in foreign enterprises” and being of “service to foreign enterprises” in the same way that there is a fundamental difference in law, between a contract of service and a contract for service. The former contemplates the existence of an employee-employer relationship (and therefore what the Code of Conduct seeks to prohibit) while the latter merely contemplates an independent contractor relationship. Thus, applying the literal rule of interpretation, the mere provision of expert evidence by a former CJN in favour of a foreign
enterprise does not amount to service or employment IN a foreign company or foreign enterprise. The same conclusion will be reached if the courts employ the fortissime contra preferentes rule which stipulates that provisions of the law which seek to take away the rights of citizens should be interpreted strictly against the State and sympathetically in favour of the citizens whose rights are threatened to be taken away. H o w e v e r, N i g e r i a n courts are also known to adopt other canons of interpretation especially where the words employed are ambiguous. An example is the
GLOBALREPORT Lawtech investment nearly triples in two years to £62m
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nvestment in UK legal technology has almost tripled in the past two years with start-ups receiving £61m in 2018, according to research by Thomson Reuters and Legal Geek. Some £62m has been invested in UK lawtech start-ups so far this year, compared to £22.2m in 2017, £25.1m in 2016, and £5.8m in 2015, the Legaltech Startup Report 2019 has shown. The UK has generated 44% of all lawtech start-ups in the EU, almost double its share of the European legal services market (23%). The report suggests the rapid development of the sector is the result of an extensive network of ‘tech labs’ created by law firms, universities and other corporate organisations. Jim Leason, vice president of customer markets at
Thomson Reuters, said: ‘The UK benefits from a unique mix of a large tech and data science talent pool and worldleading law firms as well as easy access to capital through financial markets. ‘Legaltech is now attracting funding from a variety of sources, including law firms themselves, private equity www.businessday.ng
and venture capital funds. This interest has given startups the crucial leg-up they needed to take their products quickly through to the next stage of development and testing.’ Legal Geek is a lawtech start-up community and its London conference, which is due to be attended by 2,000 people, is taking place today.
‘ut res magis valeat quam pereat’ rule which dictates that where there are two choices of interpretation, the courts must avoid the choice which would reduce the legislation to futility and should rather accept the choice that would bring about the purpose behind the legislation and an effective result. Put differently, words should be given a purposive as opposed to an expressive interpretation. It therefore follows that the question of whether the former CJN breached the code of conduct by giving expert evidence in favour of a foreign enterprise before an international arbitration tribunal and was thereby of service or employment in a foreign company or foreign enterprise is open for argument. And the prophesies of what the court will do in the event that the question is put to them is also up for conjecture. For such a vital question touching on the country’s national security, this is not good enough. For the avoidance of doubt, it is not in dispute that it is morally reprehensible for former CJNs and indeed other retired judicial officers especially Supreme Court Justices to offer their expertise to foreign entities in cases which are clearly against the interest of the country which afforded them to platform to acquire such expertise and skills. And indeed, this appears to have become common place. Another relevant question is whether assuming it is not a breach of
the code of conduct for the named retired public officers in paragraph 5 of the Fifth Schedule to the Constitution to give evidence against Nigeria in foreign proceedings, there are other provisions of the law, which can offer protection to the country. The answer appears to be in the negative. It is against this background that this writer contends that the present case has raised the need for the National Assembly to remove any lingering doubts surrounding the illegality of the practice. The National Assembly is constitutionally empowered to make laws for the peace, order and good government of the Federation. And while law is generally couched in general terms to encompass future occurrences, there are certainly occasions where even the greatest foresight is not sufficient to cover all possible scenarios. In such a case, the legislature must immediately step in and reform the law. That is how the law develops. In the example of the Logan Act 1799, the Act was passed in response to the actions of a Philadelphia Quaker Dr George Logan, who took it upon himself to negotiate directly with the French government in 1798, as a private citizen, during the Quasi-war between the U.S. and France, and after President Adams had sent three envoys to France to negotiate without success. His actions, which ultimately undermined his country’s
negotiating position, led to a big scandal in foreign affairs and the ultimate enactment of the Logan Act in 1799. Nothings stops the Nigeria National Assembly from doing the same in this instance. In the meantime, and without prejudice to the outcome of the ongoing investigations, it is hoped that the others can learn and be circumspect before accepting another instruction that pits them against their national interest. Conclusively, as Nigeria launches its appeal to overturn not just the decision of the English Commercial Court but also the P&ID arbitral award in its entirely, it is clear that the outcome is out of our hands and we are at the mercy of the English and the US courts. For now, we can only do that which is within our reach, which is to forestall a repeat of a situation where a former CJN can painstakingly analyse Nigeria’s laws, exploit its shortcomings and cite case laws for the benefit of a foreign enterprise, to the detriment of Nigerian tax payers. This is imperative, not just for the purposes of the ongoing dispute, but for the peace, order and good government of the Federation.
Orji A. Uka is a Nigerian legal practitioner and recently completed his studies for a Masters’ Degree in International Business Law from King’s College London.
Big four entrants way down list of perceived threats, say law firms
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ccountancy firms are not perceived as big a competitive threat as the traditional legal sector, a survey of law firm leaders has found. The poll of 130 senior executives from top-250 firms found more than two-thirds see current direct rivals as the main source of competition over the next three years. International firms, niche firms and online service providers were all perceived as a bigger threat than the Big Four’s entry into the legal market. Even accounting for respondents’ second choices, competition from accountancy firms lagged behind existing law firms, and was also considered less of a threat than clients’ in-house teams. The legal market report, compiled by financial and professional services group Smith & Williamson, found
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nearly a third of respondents reporting a significant increase in the competitive landscape, up from just 23% last year. Competitive pressure was felt more keenly in the capital: 94% of respondents from London felt this pressure had increased, compared with 76% across all other regions. This was thought to be caused by the growing presence of US firms in the City. @Businessdayng
Since the advent of the Legal Services Act, all the big four accountancy firms have moved into the legal market. The report states that perceptions of threat from this sector have increased this year - but that it still ranks below other competitors. Tim Adams, partner in assurance and accounting at Smith & Williamson, said it was surprising that curContinues on page 30
Thursday 31 October 2019
BUSINESS DAY
INDUSTRYFILE
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DealHQ holds inaugural enterprise roundtable today
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ealHQ, a boutique commercial law firm focused on supporting businesses and positioning them to operate efficiently within their market sphere, will today, October 31st, 2019 host its inaugural Enterprise roundtable series focused on driving C - Level conversations around emerging trends in the firm’s practice areas. The event, themed, “Building Sustainable Enterprises Through Adaptive Corporate Governance Practices” will take place at the HQ in Lekki Phase 1, Lagos. According to the firm’s Lead Advisor, Tosin Ajose, the session, which is aimed at supporting private enterprises to ease seamlessly into compliance with the Nigerian Corporate Governance Code 2018 (“Code”), will have over 40 c – level executives and Non – Executive Directors of Private Companies operating across finance, energy, manufacturing, aviation and the
FMCG sectors in attendance Speakers at the roundtable include, Dan Asapokhai, CEO, Financial Reporting Council of Nigeria; Dele Alimi, DG, Institute of Directors, Nigeria; Bisi Adeyemi, Managing Director, DCSL Corporate Services Limited; Banji Fehintola, President, CFA Society Nigeria; Femi Awofala, CEO, Brickstone, Africa; Moshood Afolabi, ED, Forte Oil, Nigeria; Charles Ojo, Company Secretary, CSCS PLC and Tosin Ajose, Lead Advisor at DealHQ.
The firm will also be unveiling its latest DHQ Corporate Governance Reporting Manual for Private Companies (which is compliant with the Code). Since its inception, the DealHQ has been deeply committed to knowledge management through stakeholder engagements and active conversations that birth solutions, influence business practices, with the aim of driving policy changes and ultimately deepening the performance of enterprises within our demography.
Photo of Babatunde Irukera, CEO, Federal Competition and Consumer Protection Commission (FCCPC) at the Federal High Court, Uyo, Akwa-Ibom State, on Tuesday, where he led the Federal Government’s legal team in the prosecution of 5 defendants arraigned for alleged sale of unsafe, re-bagged rice, unfit for human consumption. The case was adjourned to December 4th, 2019 for trial.
Global law firm, White & Case deepens knowledge in oil and...
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African-related arbitration is on the rise with more than 72 known arbitration institutions operating in 39 African countries
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Nigeria, Kerr said international arbitration is tried and tested and has its advantages in that it is internationally recognised and can be enforced in a number of different jurisdictions, and that Nigeria is an active participant. Deji Adegoke, London-based associate at White & Case, gave a presentation on key trends in the Nigerian midstream financing sector and the rise of hybrid financing structures using a recent transaction in Nigeria as a case study. London-based White & Case partner Robert Wheal presented on dispute resolution in the oil & gas sector. Wheal said a survey carried out in 2013 by White & Case in association with Queen Mary University, London revealed that arbitration was the most widely used dispute resolution
mechanism, and the preferred method of dispute resolution in the energy sector. He said that when the survey was carried out in 2018 arbitration’s appeal to the oil and gas sector had only grown stronger.
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Wheal said that reasons for this include the finality of the process, the ability to enforce an arbitral award in a great many jurisdictions worldwide courtesy of the New York Convention, the neutrality of tribunal, flexibility of procedure, privacy and the parties role in selection of the Tribunal members. According to Wheal, disadvantages of arbitration include an arbitrator’s lack of coercive powers, higher risk of jurisdictional disputes, less use of summary procedures as compared to litigation, no right to appeal and difficulty in dealing with multi-party and multi-contact disputes. In conclusion, Wheal noted that African-related arbitration is on the rise with more than 72 known arbitration institutions operating in 39 African countries.
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@Businessdayng
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Thursday 31 October 2019
BUSINESS DAY
DEALS
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• B&I acts for interswitch
FoI: SERAP seeks details of...
n Wednesday October 23, 2019 Interswitch established its Debt Issuance Programme Africa One Plc’s N30 Billion Bond Issuance Programme; under which it also successfully issued its 15% N23 Billion Series 1 Bonds. The law firm of Banwo & Ighodalo advised Interswitch on the issuance programme as well as the issuance of 15% N23billion Series 1 bonds.
cedures to safeguard Chinese loans and mitigate corruption risks in the spending of the loans and to promote
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fair and free competition, consistent with Nigeria’s anti-corruption legal frameworks and international standards
Big four entrants way down... Continued from page 28
rent direct competitors are still seen so emphatically as the biggest threat over the next three years. ‘This may be because law firms tend to encounter the usual suspects when competing for work,’ he said. ‘However, take a step back and the greatest challenge may just be emerging.’ Adams said that in the 1990s and early 21st century, accountancy firms had entered the legal market by replicating, and in some cases buying, traditional law firms and their approach. ‘This time, however, the approach is different. Without
B&I partner Ayotunde Owoigbe seen here, closing the ‘deal’.
much fanfare, the big four accountancy firms have now amassed an estimated global fee earner base of over 10,000, using technology to deliver a more cost-effective approach.’ With more competition, retaining the best talent has become increasingly difficult and high-profile moves are more common. As a result, more than half the respondents cited talent retention as one of their top three concerns. The salary gap between top-tier and mid-tier firms is wider than ever before, with the difference in pay for newly-qualified lawyers reaching £23,000.
• TNP acts for FBN Quest, the Trustee Academics to explore lawtech ‘ecosystem’
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n the same transaction above, top private equity firm, The New Practice (TNP) acted as solicitors to the Trustee in the establishment of the Bond Issuance Programme. TNP Partner, Yinka Atere & Associate Zainab Babalola (Pictured below) attended the signing ceremony.
• Templars advises on US$13 Million Military Apparel Deal
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n another development, Templars only recently advised Sur Corporate Wear of Turkey on their US$13 Million Military Apparel Deal with Defence Industries Corporation of Nigeria (DICON). In this transaction, the Defence Industries Corporation of Nigeria (DICON) entered into a US$13 million public-private partnership (PPP) based on the “Build, Operate and Transfer” model with Sur Corporate Wear of Turkey for the establishment of a modern integrated military and paramilitary apparel and accessories factory at the Defence Industry Complex in Kaduna State, Nigeria. This initiative will involve
SUR revamping, upgrading and managing the existing facilities of DICON, building a new state of the art cotton milling plant and a machine yard. When fully operawww.businessday.ng
tional, the facility will meet the apparel requirements of the Nigerian Armed Forces, Security Agencies and other paramilitary organizations The Templars team that
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xford academi c s hav e b e e n awarded £213,000 to study the lawtech ‘ecosystem’ in the latest government effort to nurture the burgeoning sector. The 18-month project will ‘map the movement of people in and out of the system,’ according to the project’s leader, Professor Mari Sako of the University of Oxford’s Saïd Business School. Investment in lawtech systems that apply technologies such as machine learning and cloud computing in the legal sector - is booming, latest figures suggest. The Oxford project, funded by the government’s Economic and Social Research Council, will aim to enhance the innovation and startup scene by identifying principal players. ‘The career trajectories and typical skillsets of legal practice innovation leaders at law firms and lawtech providers will be explored, with a view to establishing how this talent pool might be expanded,’ the business school said. ‘The key funders of lawtech
worked on the transaction was led by Partner, Inam Wilson and supported by Senior Associates Moses Pila and Oyeyemi Aderibigbe.
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@Businessdayng
startups – and their prior legal sector exposure – will be identified, which should provide valuable market intelligence for startups currently seeking finance.’ The project will complement existing University of Oxford research, also funded by the research council, which is seeking to ’unlock the potential for AI for English law’. Sako, professor of management studies at Saïd Business School, said that the surge in investment is due to a ‘happy coincidence of factors’ including the availability of cloud computing and a ‘new generation of lawyers’. Other members of the team include Professor John Armour of Oxford University’s Faculty of Law, Dr Matthias Qian from the Department of Economics and Dr Richard Parnham, also from the Saïd Business School. The project is due to complete in March 2021. ‘We hope the lawtech sector will be able to draw directly on our research, to help it prosper,’ Sako said.
Thursday 31 October 2019
BUSINESS DAY
TECHTALK Innovation
Apps
Fin-Tech
Start-up
Gadgets
Ecommerce
IOTs
Broadband Infrastructure
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Bank IT Security
Plentywaka, MiziBus, OPay’s bus-hailing innovation mark days for Danfo...but Stories by FRANK ELEANYA
School; etc.
ee my guy, if you enter this bus, ehn, you will know this life is sweet and we have been going through hell at the hands of these Danfo drivers,” Kayode Oloye, a videographer, told this reporter out of excitement. He had taken a ride from Ajah to CMS with Plentywaka, one of the three startups bringing bus-hailing services to the bustling commercial city of Lagos. The other startup is OBus, a unit platform under Opera-owned OPay, and Mizibus. The joy on his face is something anyone who does not have to face a Danfo bus any would relate with. A ‘Danfo’ bus - usually yellow - is a passenger bus that operates in Lagos and carries approximately 16-18 passengers. Although they play an essential role in moving millions of Lagosians from one part of the city to another, they have also left many passengers with lots of tales of woes. From constantly ‘high’ and drunk drivers and conductors to rickety and dirty looking buses that tear at passengers’ clothes, as well as fierce-looking touts harassing passers-by in the
Mizibus Launched in October, Mizibus carries people to any bus stop within the Oworonshoki-Ikate axis. To get a ride, users have to first download the app which is available on Android for now. Within the app, they will need to select their destination and load their wallets. God is Good Motors (GIGM) and Uber is said to be looking at the space as they expand their transport businesses in Nigeria. It is still early days for bushailing startups. First, the number of buses they each own cannot make a dent on Danfo business. Second, all three of the startups are yet to get their user experiences right as many customers are already complaining of multiple deductions, bus inaccessibility even when a booking is confirmed on the app and being left stranded for hours at pickup points. The market could get better with more investment and competition. If the startups give more attention to customer experiences, there is likely to be an improvement that would, in turn, lure more people to adopt the new way of commuting within Lagos.
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name of scouting. Passengers have also reported cases of armed robbery, kidnapping and physical assaults by drivers using Danfo buses. Also, hundreds of them break down consistently on Lagos roads, leaving passengers stranded and vulnerable. The Lagos State government under Governor Akinwunmi Ambode had vowed to take a precisive step in reforming the Danfo bus system in 2018, following
increasing complaints from passengers on their ugly experiences. The Bus Reform Initiative by the government included a three-year plan aimed at introducing over 5000 airconditioned buses to replace the yellow commercial buses. The plan was suspended after the governor failed to secure the second term in office. The current government under Babajide Sanwo-Olu have yet to release their transport roadmap for the state.
STEM Training targets 4500 students in three Nigerian states
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total of 4500 students in Oyo, Rivers and Kano states are expected to participate in a Science, Technology, Engineering, and Mathematics (STEM) being organised by TechQuest STEM Academy in partnership with IHS Towers. The training is part of an initiative called Mission - T program developed with the objective of improving ICT education and empowerment in selected and communities across Nigeria. Also benefiting from the training are 60 educators from 45 schools as the students. In a statement BusinessDay received, TechQuest said the Mission - T program has been strategically designed to align with IHS Towers’s four sustainability pillars namely; ethics, people, environment and
education. “We believe that by empowering our communities and promoting ICT education, we are creating sustainable opportunities for competitiveness and improved ICT awareness in a digitally driven world,” said Cima Sholotan, IHS Nigeria Corporate Social Responsibility Senior Manager. The program will be implemented by the TechQuest STEM Academy, a nonprofit STEM education provider which currently supports over 11,000 young people across 12 states in Nigeria. IHS Nigeria will help fund the design, development and delivery of a practical based ICT curriculum which includes textbooks, workbooks, academic videos, an interactive portal and a mobile app to assist teachers and Mission
– T ambassadors in the delivery of STEM education. According to the Director and Co-Founder of the TechQuest STEM Academy, Charles Emembolu, “We believe that the Mission – T program aligns with the fourth United Nations Sustainable Development Goal (SDG4) by focusing on merging locally designed STEM content and toolkits with government engagement. This is made possible through the support of firms such as IHS Nigeria.” He added, “This collaboration contributes to closing the gap in terms of digital skills shortage and supports TechQuest’s overall mission to help one million Africans become digitally literate. Developing countries like Nigeria have a huge part to play and we are delighted to provide that support.”
In the meantime, Plentywaka a subsidiary of Farmcrowdy, Mizibus OBus are filling the big shoes, amid little resources. Aside from the comfort riding in air-conditioned buses provide, there is also the convenience passengers derive from booking rides from their mobile applications. Passengers also get to plan their income around transportation in a month. OBus OBus was the first startup
to launch following the success of its sister unit ORide in motorcycle-ride-hailing business in the state. Like ORide, OBus which is still in beta operates within the larger OPay super app and its services and mainly focused on the Mainland part of Lagos. OBus provides services for passengers along Yaba; Oshodi Terminal; Shawarma Yaba; Maba; Yaba College; Christ Embassy Church, Yaba; Yaba Baptist Children’s
Crypto users can now trade Ethereum in naira FRANK ELEANYA
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ryptocurrency traders in Nigeria no longer need to convert their money to bitcoin first before buying or selling Ethereum, as they can trade directly in the local currency - naira, according to global cryptocurrency platform, Luno. Ethereum is a public, peer-to-peer network or blockchain with its own cr ypto cur renc y calle d Ether. Created by Vitalik Buterin in 2014, Ethereum was designed to be a platform on which smart contracts can be built and run. Many experts view Ethereum as more than just a cryptocurrency and foresee a world where a wide variety of applications are built and run on the Ethereum blockchain. It is the second largest cryptocurrency by
market cap, and its practical applications are vast in comparison to others. Ethereum is the secondlargest cryptocurrency by market capitalisation and it is the second crypto asset, after Bitcoin, that Luno will be enabling users to buy in local currency in Nigeria. Luno currently has its headquarters in London with regional hubs in Singapore and Johannesburg and a team of over 290. Luno noted in a statement that a reBitcoin as the most well-known asset among cryptocurrencies in Nigeria. 30 percent of Nigerians who answered the survey said they owned Ethereum, compared to 80 percent for Bitcoin, 23 percent for Bitcoin Cash and 22 percent for Litecoin. In terms of activity on cryptocurrency exchanges, the company said Ethereum has more liquidity in the local
Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng
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market in Nigeria compared to South Africa and that the 24-hour volume of cryptocurrency markets in Nigeria is highly competitive. Marius Reitz, General Manager for Africa at Luno, says Nigerians are increasingly aware of the various benefits and applications of Ethereum, and cryptocurrencies in general. “As a result, making it easier, cheaper and faster for Nigerians to buy and sell Ethereum will only serve as a catalyst for connecting more people to these benefits and applications. We are excited to be at the forefront of making this happen.” Co-founded by CEO Marcus Swanepoel and CTO Timothy Stranex, Luno has raised over $13m in funding since launch in 2015 and is backed by global tech giant the Naspers Group and Rand Merchant Investment Holdings.
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BUSINESS DAY
UNDERSTANDING NIGERIA’S
DAIRY VALUE CHAIN
Making a case for the development of the Nigerian Dairy Sector OYEBAMIJI OLUMIDE
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alima is an adolescent girl who lives in a pastoral community in Northern Nigeria. Each day she wakes up at 5:00am to help her mum with house chores and to milk her father’s cows. At 7:00am, instead of going to school, Halima departs on her hawking route, to sell fura da nono and maishanu (locally processed raw milk products), making between N500-N1,000 per day. She usually returns late in the afternoon, in time to help her mother prepare dinner for the family. Halima wants to go to school, but formal education is out of reach as her parents cannot afford it and need the income she contributes daily, though it is meagre. Also, every year the entire household migrates from the North to the South in search of pasture and water. This will be Halima’s routine until she is given away in marriage. Halima is not alone. Millions of women and girls from pastoral communities in Nigeria are engaged in the informal dairy industry. Despite the labor-intensive nature of the work, the financial rewards are insufficient and will not move smallholder pastoralists out of the bottom of the wealth pyramid. This sad reality can be avoided if the Nigerian dairy sector is developed further. Nigeria has over 180 million residents, consuming about 1.3 billion tons of milk annually. This is a huge market for locally produced milk and dairy products. Unfortunately, about 60% of dairy products consumed are imported. According to the Central Bank of Nigeria (CBN), Nigeria spends between $1.2 billion and $1.5 billion annually importing milk and dairy products. This huge import bill contributes to food insecurity and is one of the reasons behind the CBN’s decision to add milk imports to its restricted list for foreign exchange sales. When the policy comes into effect, milk imports will no longer be eligible under payment terms known as “bills for collection” which allows importers to buy on credit. Importers will need to fund their Naira accounts and open letters of credit which will significantly reduce the profitability of importing milk and dairy products. Although billions of dollars are spent on milk annually, domestic milk consumption levels are low. The average annual per capita consumption in Nigeria is between 10 and 20 liters compared to the U.S. dietary guidelines of 267 liters per year. Low consumption is a corollary of the low purchasing power of the average Nigerian household, who rank milk and dairy products as non-essential luxuries and prioritize other staple foods such as rice, beans, and yam.
A thriving dairy sector in Nigeria will add value to the economy, empower local milk producers, and will ease herdsmen-related communal conflict. Self-sufficiency in dairy will reduce the country’s import bill, thereby reducing the pressure on the Naira as demand for foreign currencies drop. In addition, more jobs – for skilled and unskilled workers – will be created across the value chain. More importantly, the livelihoods of pastoral households will be improved. For instance, dairy farmers who participated in the Nigerian Dairy Development Program (NDDP) in
Notwithstanding the low per capita consumption volume, the Nigerian dairy production system is still unable to meet current demand. This inability stems from the fact that the Nigerian milk production system is mainly subsistence-oriented and marred by low productivity. According to H.J Makun (2018), the average annual production per cow is 213 liters, which is less than one tenth of the global average. Local milk producers, mostly women, are unorganized and are limited by gendered cultural norms and a lack of agency – it is said that while the milk belongs to the women, the men own the cows. Women are thus largely excluded from decision making that affects their primary business. Other limitations on the cows such as their genetic composition, long distances covered for grazing, inadequate supply of feed and water, combine with poor production practices by dairy farmers, to lead to low production
volumes of milk , and women consequently receiving little income from the dairy business. Another hallmark of Nigeria’s underdeveloped dairy system is the absence of a fodder production value chain that provides farmers with year-round access to quality feed for their cattle. During the dry season when pasture is scarce in Northern Nigeria, pastoralists migrate to the more arable South in search for grazing land and water. In many cases, they encroach on land used for crop farming, leading to conflict with landowners, farmers and, in some instances, entire communities. According to the International Crisis Group, in 2018, the conflict between herders and farmers was six times deadlier than Boko Haram, with a death toll of 1,949. In the last decade, farmerherder clashes have led to the death of more than 10,000 people, making it a national crisis that the government is yet to find a permanent solution to.
Oyo and Kano reported that their income from milk sales increased by as much as 198%. Increased income allowed dairy households to increase their expenditure on food, education, and healthcare. Hundreds of girls like Halima no longer have to hawk and are now getting formal education in schools. (To learn more about NDDP, visit: https://www.youtube.com/ watch?v=o7PESi93uck) Additionally, a developed dairy sector would include a fodder production system that will allow for the emergence of settled pastoralists who do not need to migrate in search of pasture. This would contribute to reducing the levels and severity of farmer-herder conflict, thereby improving national security. The NDDP highlighted this potential through its feed and fodder program. In communities where integrated pastoralists settle, crop farmers were supported to cultivate fodder crops such as bracharia, lablab and maize to produce hay, silage and haylage which was sold to pastoralists. The establishment of an economic relationship between natives (who own the land) and pastoralists promoted community cohesion and mitigated conflict. The same can be achieved across the country. Lastly, the increased sourcing of local, raw milk, as dairy companies crowd in, will create economies of scale which will gradually lower the cost of production leading to lower prices for milk and other dairy products, making it more affordable and accessible to Nigerians. The development of the Nigerian dairy industry should be a priority. The government at all levels must create an enabling environment for this to happen. Beyond limiting access to foreign currencies, the government must develop and enforce coherent policies that encourage investment. Government action should also include an improvement of critical infrastructure such as feeder roads, electricity supply, and water resourc-
es. To sum it up, there is a need for a comprehensive national dairy policy that must be developed through an inclusive consultative process. An enabling environment will encourage the private sector and development organizations to invest in farmer led and/or private sector led dairy development models. Through its co-investment model, the NDDP proved that pastoralists, if organized, trained, and provided with the required infrastructural support, can supply quality milk to dairy companies. Nigeria has the potential to have the biggest dairy industry in Africa. What is needed is a well-thought-out strategy to develop the sector and concerted collaborative action to implement the plan. When this happens, Halima’s life will be remarkably different. The livelihood of her household, and that of millions of Nigerian women and girls in pastoral communities, will be improved. Pastoral communities will have access to basic social amenities and infrastructure such as potable water, schools, health centers, good roads, and power. Halima’s future will no longer be gloomy. Instead, the future of tens of millions of Nigerians will be brighter.
Picture here Oyebamiji Olumide Sahel Consulting Agriculture & Nutrition Ltd. www.sahelconsult.com
Thursday 31 October 2019
BUSINESS DAY
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ENERGYREPORT Oil & Gas
Power
Renewables
Environment
How amended PSC Bill, 2019 will impact Investments and Nigerian Economy OLUSOLA BELLO
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igerians are of the opinion that the country is not having a fair share of the revenues accruing from the Production Sharing Contract ( PSC) operated fields. Hence the clamour for a review of the contracts so that the country can get more revenues, especially now that she is in a desperate need for money to execute a lot of her projects. This situation compelled the National Assembly to look into the matter with the aim of creating avenues for the government to earn more revenues. The senate and the House of Representative immediately after they were inaugurated set in to motion committees to look at the issues and report back to the committee of the general house to consider their reports. While the senate has passed an amended PSC Bill, the House of Representatives is yet to pass its own bill. The Amended bill can only become law only if the two chambers pass the bill and it is passed on to the president for assent. The senate which has passed the bill made some far reaching recommendations which may either affect the Nigerian economy positively or negatively. Precisely on Tuesday October 15, 2019, The Senate passed the Deep Offshore and Inland Basin Production Sharing Contracts (Amendment) Bill, 2019
Bonga FPSO
(“PSC Amendment Bill”). This is sequel to the adoption of its Committee’s report on the Bill after its Public hearing. Some details of the bill highlight the approval of various royalty rates based on price range of crude oil & gas, and water depth of fields (deep offshore or frontier/inland basin). Of particular interest in the amendment Bill was a proposed amendment to Section 5 of the Act which highlights Royalty by Water Depth; Royalty by Price,. The recommendation is that “Royalties shall be calculated on a field basis and shall be at rate per centum of the chargeable volume of crude oil and condensates produced from the relevant period as follows: In deep offshore: greater than 200m water depth - 10%, and in frontier/inland basin - 7.5%”. In addition to the water depth-based royalty rate, the Bill further recommends that the Act also reflect a Royalty by Price where: “The royalty rates shall be based on increase that
exceeds US$ 20 per barrel, and shall be determined separately for crude oil and condensate as follows: From US$ 0 and up to US$20 per barrel - 0%; Above US$20 and up to US$60 per barrel - 2.5%; Above US$60 and up to US$ 100 per barrel - 4%; Above US$ 100 and up to US$150 per barrel - 8% and Above US$ 150 - 10%” The Senate also amended the timeline for the review of the contracts to 8 years and included a penalty for failure to comply with the obligations of the Act of not less than N500 million or a prison term of not less than 5 years, or both.Procedurally, the Bill will be sent to the House of Representatives for concurrence before onward transmission to the Nigerian President for Assent. It is a fact that Nigeria, with the largest oil and gas reserves in Africa, has significant untapped hydrocarbon potential available to advance its economic development goals. The development of Deepwater Production Sharing Contracts (PSC) has been a major con-
tributor to the Nigerian petroleum industry, the economy and to government revenue. Currently Deepwater PSCs account for ~40% of Nigeria’s oil production. Analysts indicate that the Deepwater PSC 1993 terms have attracted ~USD86Bn of investments since the commencement of Deepwater developments in 2001. From 2001 to 2019, FGN has received about US$180 billion from Deepwater oil production. Furthermore, the structure of PSCs is such that with increasing cumulative production, the share of profit oil to the Federal Government of Nigeria, through the Nigerian National Petroleum Company, increases. However, in the last decade, the Nigerian oil industry has been able to sanction only three (3) new Deepwater projects whereas other African countries with less hydrocarbon potential have attracted significantly more investments than Nigeria, because they offer more attractive Deepwater fiscal terms that encourage investments. Industry watchers are concerned that both introducing an additional price-based royalty and increasing water depth-based royalties on revenues already burdened with a plethora of other taxes, fees, levies and other tariffs would worsen Nigeria’s competitiveness. Analysts believe that US$48billion of currently planned oil and gas investments would no longer be economically viable, result-
ing in significant decline in production and government revenues by 2023. Analysts, also believe that there are another US$43 billion of future Deepwater investments that will also not likely occur due to the lack of competitiveness Nigeria’s fiscal policies. This will mean that the Nigerian contractors will not have work and the thousands of jobs that would have been created from the projects will not materialize for Nigeria. Industry operators believe that the Bill, which seeks to extract more revenue for the Federal Government of Nigeria through additional royalties in a high oil price regime, did not factor the corresponding increase in capital expenses, operating expenses and associated service costs. Furthermore, the bill does not consider its potential negative impact on long-term Deepwater investment and development. Analysis shows that Nigeria currently has one of the least competitive Deepwater fiscal terms in Africa and is losing substantial amount of potential investments in the oil and gas sector to other countries, particularly to Mozambique, Angola and Ghana. In the last decade, for instance, the Nigerian oil industry has been able to start up production of only three new Deepwater projects – Usan, Aje and Egina. Nigeria, with significant reserves of 55 billion barrels of oil equivalent, has attracted only US$27 billion of invest-
ments, while Egypt, Angola and Ghana with about half of Nigeria’s reserves combined, have attracted US$130 Billion for new projects, because they offer more attractive Deepwater fiscal terms to encourage investments. Analysts, therefore, recommend that one of the most sustainable ways for the Federal Government to increase its revenue is by enabling new production from Deep Offshore and other locations. Investments, they believe, can be attracted through: “Timely conclusion of ongoing industry reform to guarantee legislative certainty and clarity; ensuring fiscal terms remain globally competitive to maintain investment commitments, and enabling a conducive business environment”. With a competitive fiscal framework in place, further income for the Federal Government can be quickly garnered by conducting a new and transparent oil licensing bid round. The Nigerian Legislative and Executive arms of government should take a holistic approach in addressing issues around the fiscal terms, taking into consideration all fiscal elements (taxes, royalties, incentives etc.) of the industry, and aim to finalize and pass a petroleum industry bill that is sustainable and encourages investments. Until competitive fiscal terms (with all fiscal elements) are achieved, the Federal Government’s objective to attract investments and grow the Nigerian economy may remain a mirage.
NAPE decries decline in crude oil price PACEGATE to make steel drums sustainable and affordable solution in downstream
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he Nigeria Association of Petroleum Explorationists (NAPE) has decried the decline in crude oil price at the international market. Crude oil price was selling at $81.03 per barrel in October 2018 but fell to $58.09 per barrels as at 16th October 2019. This represents over 28 per cent decline in one year. Speaking to journalists in Lagos ahead of the association’s 37th Annual International Conference and Exhibition, the National President, NAPE, Ajibola Oyebamiji, stated that the association observed that the low oil price regime has led to dwindling reserves, more burdens on foreign reserves, pressure on infrastructure and social services, inability to meet commitments to institutional lenders. He also argued that other challenges bedeviling the oil and gas sector which stakeholders will address at the conference include the procurement and contracting cycles which is about 36 months making it the longest and most inefficient in the world. “The long contracting cycle Olusola Bello, Team lead,
results in high levels of uncertainties in costing and planning thereby creating a sluggish business climate,” he said. He however concluded that there is an improvement, but the reality is that we still find that the contracting cycle still exceeds what ought to be for investors, especially for the International Oil Companies (IOCs) who needs quick decisions. “They need a shorter contracting cycle, shorter time to achieve this. In some other countries, even nine month is too much not to talk of between nine months to 36 months. Though there is little improvement in some areas but it is not all encompassing, it doesn’t cover the entire life cycle of oil and gas projects,” he said. He said it is against the backdrop of the foregoing that NAPE will at its 37th edition of its annual conference be deliberating on the Petroleum business and regulatory environment with a view to addressing the challenges of exploration and production in the onshore, offshore and frontier basins.
Graphics: Joel Samson.
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ACEGATE Limited,has said that it is determined to make steel drum, a very critical material commonly used in the downstream sector of the oil and gas industry for lubricants a sustainable and affordable packaging solution in Nigeria. The company which is a subsidiary of Hana Group and Manufacturer of steel drums, now celebrates one year of continuous production without interruption. It is also pioneering Africa’s largest fully automated steel drum factory in Nigeria. Currently, most Independent lubricant blenders are using plastic drums, however the global industry standard in the Oil and Gas sector is steel drums. This is because steel drums are more superior to plastic drums and also environmentally friendly.. Umesh Amarnani, managing director, Pacegate Limited, who spoke on the operations of the company, said: “At the moment, most Independent lubricant blenders are using plastic drums, however the global industry standard in the Oil and Gas sector is steel drums.
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This is because steel drums are more superior to plastic drums. They perform very well in extreme temperature, humidity, and pressure variations while maintaining their structural integrity irrespective of heat and flame, without any leakage or spillage”. It also distributes lubricant additives and industrial Greases some downstream companies, he stated. The company, according him, is the first and only UN Certified steel drum factory in Nigeria. The UN approved packaging guarantees that the drums have been built, tested and certified to carry precious liquid or solid which can be either hazardous or nonhazardous. The certification also confirms that the drums are environmentally friendly and with no leakages. Also, UN Certification is mandatory for the export of steel drums. PACEGATE’s automated, state-of-the-art steel drum factory located in Lagos can produce 5,000 steel drums per day. Each steel drum has a capacity of 210 litres. The Company produces various
types of steel drums - open top and the closed top drums. The closed top drums are closed on the top while the open-top drums are open to allow access from the top for ease of application. The closed top steel drum is typically used for storing low viscosity fluids while open top drums are convenient for storing solids, powder and highly viscous fluids. PACEGATE manufactures a number of drums which are suitable for various industries/ sectors: the varieties of drums it manufactures includes: • Closed top drums for packaging industrial lubricants and non-hazardous chemicals • Lacquered closed top drums which have internal coating to package hazardous chemicals that are blended locally or are imported in bulk and repackaged here • Open top drums for Styrene Acrylic and for Industrial paints • Lacquered open top steel drums for the Agricultural Industry to package orange pulp, mango puree, pineapple pulp, amongst other fruit pulp and also items Soya Lecithin which
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is used for animal feed He said as the company celebrates one year of producing the highest quality drums with minimum lead times, its fundamental goal is to convert users of Plastic drums to Steel drum by educating them on the benefits of steel drums. PACEGATE has various clients in Lubricant, Paint, Chemicals and Agricultural sector. It supplies closed top steel drums to most of the Oil and Gas companies in Nigeria. For the paint sector, they supply opentop drums as it is easier to mix and apply thinners, styreneacrylic and industrial paints. The chemical sector also has good potential for steel drums. At the moment, a huge amount of chemicals packaged in drums are shipped into Nigeria, he stated. But he said this notwithstanding, as Nigeria evolves and with local content policy implementation and awareness of the availability of UN Certified steel drums at reasonable prices, more chemicals will be produced and packaged in Nigeria.The company is an ISO 9001:2017 certified company.
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Thursday 31 October 2019
BUSINESS DAY
cityfile Oyo delivers 687 projects in 157 communities REMI FEYISIPO, Ibadan
C L-R: Ajiboye Oluwatomiwa, head boy, National College, Gbagada Lagos; Titi Oni, acting head, Thinktank, Nigerian Economic Summit Group (NESG); Femi Ewata, vice principal, National College, Gbagada Lagos; Chioma Aladimma, head girl, National College, Gbagada Lagos; Adesipo Oluwanifemi, student of National College, Gbagada Lagos; Atudume Ugonnanyere, marketing and communications, junior Achievement Nigeria, and Olayinka Iyinolakan, head, communications, NESG, during the Gbagada Lagos leg of the NESG 25 Schools Tour, themed “United People”, in commemoration of the Think Tank’s 25th anniversary in Lagos. Pic by Olawale Amoo
Condition of Itu-Calabar Highway worsens ANIEFIOK UDONQUAK, Uyo
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he condition of Itu-Calabar Highway, the major link between Akwa Ibom and Cross River States has worsened following the continuing downpour, forcing the partial closure of a section of the road by the Akwa Ibom State government. This is as controversy continues to trail the award of contract for the construction of the road, with federal lawmakers alleging that only a section of the road was covered in the contract. Gully erosion on the highway, near the Akwa Ibom broadcasting station at Ntak Inyang, in Itu local government area, is now devastating, almost completely cutting the road into two, Ephraim Inyangeyen, Akwa Ibom State commissioner for
… as A/Ibom orders partial closure works said in a statement, announcing the closure of the road. According to him, the closure of the road is informed by the need to protect lives and property, and will enable the reconstruction of the road while motorists and other road users have been advised to make use of alternative routes. Speaking on a radio p ro g ra m m e, A n i e k a n Umanah-PDP, representing Abak federal constituency in the House of Representatives, said only a section of the road was captured in the contract for the construction of the Itu/Ikot Ekpene-Calabar dual carriage highway. U m a n a h, w h o i s a member of the house adhoc committee, said the project covered 87km but the contractor started the construction at the mid-
dle of the road in Ibion Ibom local government area of Akwa Ibom State. “Dualisation to Oku Iboku junction is 12.2 km. They left it at that point with nothing except bush and swamp for 21.9 km which is from the junction to the power plant in Odukpani local government area of Cross River State. “How do you dualise the middle of a bush and middle of a swamp with N54.1 billion? Does it make any sense,’’ he asked. It was gathered that out of the proposed 87km road, only 21.9 km was awarded for construction at a cost of N54 billion with 65.1km not covered in the contract. A breakdown of the project showed that from Ikot Ekpene to Idedep in Ibiono Ibom, about
36.1km had been awarded while the portion from Ididep to Ayadehe bridge, about 12.2 km was also covered in the contract. However, according to checks, from the Ayadehe bridge to the power plant in Odukpani local government area of Cross River, about 29 km was not awarded while the remaining portion from the power plant to Odukpani junction, about 9.7 km had been awarded. Before the Itu-Calabar highway became the key link road between the two states, the Oron beach REMI FEYISIPO, Ibadan was the alternative route to Calabar with the use of he Federal High ferry boats which helped Court 1, sitting in to drive business activities Ibadan, Oyo State around the Oron beach. has ordered the reThe ferries which were run by the Inland Water- mand of a fake native docways Authority had since tor, Fatai Olalere Alli (a.k.a. Baba Abore, Baba Oshun), been abandoned.
Juju scam: Court remands suspects in prison
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NDLEA arrests 200 suspected drug traffickers in Ebonyi NKECHINYERE OGINYI, Abakaliki
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ational Drug Law Enforcement Agency (NDLEA), Ebonyi command, says it arrested over 200 drug traffickers in the state between Januar y and October 2019. Mohammed Bashiri Ibrahim, deputy state commander in charge of operations, NDLEA Ebonyi State, disclosed this in Abakaliki, the state capital, during a two-day workshop for men of Neighbourhood Watch in the state.
The two-day programme with the theme ‘Ebonyi must remain free from crime’ was organised by the office of the commissioner for border peace and conflict resolution. Ibrahim also said that the command secured 35 cases of drug offenders which are still in the court. According to him, because of the increasing rate of drug trafficking in the state, the command has stepped up awaren e ss ca mp a ig n w h i l e drug-free club is being established in secondary schools to track them www.businessday.ng
down on time as they are the major victims of drug abuse. “From January to October we have arrested about 200 drug traffickers and the cases are going on in the court. I think this year alone we have secured about 35 convictions of drug offenders and we are still counting,” Ibrahim said. “Just on 22nd of this m o nt h, t hat w a s l a s t week, we arrested 189kw of cannabis. The same day we arrested over 200 pinches of cocaine and 150 heroin within the
o m mu n i t y a n d Social Development Agency (CSDA), Oyo State, charged with the task of implementating World Bank-financed micro projects at the grass-root level, has completed 687 projects in the state. The projects touched on education, health, water provision, rural roads, environment, rural electrification and socio-economic empowerment from 2015 till date. The projects were completed in 157 communities while 48 others ongoing would be delivered before the year 2020. Th e p e r ma n e nt s e cretary, local government service commission, Williams Funmilayo who disclosed this at a workshop organised by C SDA for members of the local government review committee in Ibadan, urged the stakeholders overseeing World Bank-assisted Community and Social Development Projects (CSDPs) within the state to evolve and maintain sustainable development strategy for all community projects in
their areas. Williams who hinted that the incumbent administration placed high priority on the development of the grass-root noted that the workshop was important because of the roles played by the review committee in monitoring projects embarked upon at the local businesses communities. He urged the local government administrations and unit heads to cooperate and support the activities of CSDA in their respective areas. “The CSDA has a strategic developmental role in developing the grass-root with these projects that touch the core needs of the people and this is the major area of interest of the present administration as promises were made to provide good governance to the people by the governor. “With the completion of 687 projects at various communities and another 48 that an ongoing, it is incumbent upon the host communities to give cooperation to the government so as other areas that need attention can be identified and worked upon.
town just in a single day,” he said. He attributed the increasing rate of drug trafficking in Ebonyi to the rapid development in the state. Stanley Okoro Emegha, the commissioner for border peace and conflict resolution, said that training of the Neighb orho o d Watch members was done quarterly to enable security personnel to tutor them. He said the government was w orking to reduce drug trafficking to the barest minimum.
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and two others - Adigun Fatai Olusegun and Olufemi Kolawole in prison custody pending the filing, hearing and determination of their bail applications. The accused persons were arraigned by the Economic and Financial Crimes Commission (EFCC), Ibadan zonal office on criminal charges bordering on conspiracy, money laundering and obtaining money by false pretense. Justice Patricia Ajoku of the Federal High Court 1, had earlier granted the commission’s prayer for an order of interim forfeiture of properties traced to Alli as well as freezing of accounts he allegedly used to received proceeds of crime. According to the count charges, Olusegun and Kolawole conspired with Alli to obtain money under false @Businessdayng
pretenses from one Attiogbe, Daniel Babatunde. The charges against the trio contravene Section 8 (a) of the Advance Fee Fraud and Other Fraud Related Offences Act, 2006, Section 1 (10 (a) and punishable under Section 1 (3) of the Advance Fee Fraud and Other Fraud Related Offences Act, 2006 and Section 15 (2) (d) of the Money Laundering (Prohibition) Act, 2012 (As Amended) and punishable under Section 15 (3) of the same Act. Before their arrest, the commission had received several intelligence reports linking Alli to series of fraud allegations involving large sums of money. Details on the intelligence alleged that he engages in money doubling through which he swindled and collected money from his victims with the promise of using his ‘spiritual powers’ to multiply the sums for them, but would instead divert same to his personal use. He was arrested on July 9, 2019. His confessions later led to the arrest of his conspirators.
Thursday 31 October 2019
BUSINESS DAY
news
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CCNN to merge with Obu cement company – Vetiva … plans delisting from NSE Vincent Nwanma ement Company of said, citing CCNN. CCNN also Northern Nigeria said it would be delisted from (CCNN) is in the pro- the NSE and Obu would be cess of merging with listed in its place, according its sister company, Obu Ce- to Vetiva. ment Company, Vetiva Capital Consideration to the Management Limited reported shareholders of CCNN will be Wednesday, citing a statement shares of Obu in a ratio that issued by CCNN to the Nigerian was yet to be determined, Stock Exchange (NSE). Vetiva said, noting that the In a note to its clients merger is a continuation of Wednesday, Vetiva quoted a consolidation exercise that CCNN as saying it had re- saw CCNN merge with Kaceived pre-requisite approvals lambaina Cement Company from NSE, the Securities and (another sister company), Exchange Commission (SEC), which raised its production the Federal Competition Con- capacity from 500k MT to 2 sumer Protection Commis- million MT last year. sion, and the Federal High Upon completion of this Court, to carry out a scheme merger, Vetiva expects proof merger between it and Obu. duction capacity of the new Upon completion of the entity to jump to 8.0 million merger, all the assets and li- MT. “The merger also porabilities of CCNN would be tends cost benefits as the new assumed by Obu, making Obu entity is poised to benefit from the resultant entity, Vetiva economies of scale,” it said.
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L-R: Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI); Jan Van Weijen, consul general, Kingdom of the Netherlands, and Babatunde Ruwase, president, LCCI, during a courtesy visit of the Consul General of Netherlands to LCCI in Lagos.
begins investigation into Sandbox for FinTechs to address regulatory challenges AIB Bristow’s incident HOPE MOSES-ASHIKE
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entral Bank of Nigeria (CBN ) has signalled plans to address the challenges of regulating Financial Technology Companies (FinTechs) with the creation of regulatory sandbox. A sandbox is said to be a type of software testing environment that enables the isolated execution of software or programmes for independent evaluation, monitoring or testing. (Techopedia) Aishah Ahmad, deputy governor, financial systems stability directorate, CBN, notes that FinTechs are constantly evolving, with new players emerging on the scene and introducing so
many apps that are disrupting savings, lending and a lot of other things. Speaking at the ongoing fourth Nigeria FinTech Week (NFW 2020), she narrated how she regularly got text messages from her friends and associates seeking to confirm if some FinTech firms carrying out business in the country were licensed by the CBN. With the sandbox, the regulator will be able to address the issue, she said. While in Washington two weeks ago, she said the CBN looked at moving from regulation by identification to more around regulating their activities of FinTechs. “As we speak, we are working on a regulatory sandbox. That is what I tell my friends that send me the text mes-
sages; don’t worry, we are looking at all of these companies. This is because if you don’t understand what the participants are doing, it is very difficult to make a regulatory response that is fit for purpose,” she said. She noted that regulatory agencies in many parts of the world were trying to come up with a regulatory framework that would keep up with innovations in the FinTech space. “On FinTech, the conversation was around what the industry can do to bring in the 1.7billion people that are financially excluded around the world. Most of them are located either in Africa or in developing economies,” she said. In March 2018, the CBN in collaboration with the Ni-
geria Inter-Bank Settlement System (NIBSS) disclosed plans to create a regulatory sandbox that allow the startups FinTechs companies test their solutions in a controlled environment. The 2020 Nigerian Fintech week, with theme, “Surviving with Fintech Innovaton, what are the sustaining factors?” brings together organisations and individuals in the disruptive technology ecosystem both within and outside Nigeria. The CBN deputy governor commended the Fintech Association of Nigeria and its president, Segun Aina, for organising the event and said the CBN would continue to take very seriously its primary mandate of ensuring financial system stability.
FG commissions 100KW solar mini FCMB, SystemSpecs sign MoU, launch a grid in Akwa Ibom payroll solution for SMEs KELECHI EWUZIE
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etermined to provide uninterrupted electricity to unserved and underserved communities across the country, the Federal Government of Nigeria, through its Implementing Agency, Rural Electrification Agency (REA) will today commission a 100KW solar hybrid mini grid power plant in Akpabom Community in Akwa Ibom State. Akpabom is a community in Onna Local Government Area of Akwa Ibom State with a population of over 2,000 people, with viable economic activities include fishing and cassava farming. The project, the third to be commissioned under the Rural Electrification Fund (REF), is part of the Federal Government developmental goals to provide clean, safe, affordable and reliable electricity for the community members. With this newly installed basic amenities, Akpabom Community now joins Upake (80KW) in Kogi State and Kare-Dadin Kowa and Tsulaye
(98.8KW) in Kebbi State in experiencing social and economic progress thanks to the solar mini grids project under the REF. According to Damilola Ogunbiyi, managing director/ CEO, REA, as an agency, the REA has the responsibility for powering unserved and underserved communities, therefore, it is fulfilling every time homes, businesses, schools and medical centres are connected to sustainable solar power. To Ogunbiyi, “With this project, we are able to witness rural communities being transformed with clean energy through the jobs that are created during construction, to their micro and small businesses scaling to larger capacity thanks to reliable electricity.” Ifeanyi Orajaka, CEO, GVE Projects Limited, while enumerating the benefits of the newly installed mini off grid, said the installed mini grid comprising a total of 306 solar panels and a distribution network cable of 5.5KM, would adequately energise the community.
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irst City Monument Bank (FCMB), in collaboration with SystemSpecs Limited, has launched a solution focusing on aiding different aspects of business operations. In a memorandum of understanding (MoU) signing ceremony held in Lagos October 24, 2019, the bank said the product was a payroll solution designed to meet the yearnings of thousands of its SME customers seeking more efficient, easyto-use and affordable business tools to seamlessly operate their businesses. This, it was disclosed, will be very useful to individuals in business, small and medium enterprises as well as corporate organisations. Tagged “FCMB Payroll,” the solution comes with exciting features that enable SME owners to easily process payroll; pay employees’salariesintocommercial/ micro-finance bank accounts or walletsandissuethemregularpay slips. To all staff of any customer or registered SME, the solution also over-ridescollateralrequirements, evenwithoutthetraditionaldocumentation to access loans from FCMB.
“The product enables these customerseasilymaintainhistoricalpersonalandpaymentrecords of all employees, including items such as their taxes, pensions and other possible transactions. “Besides other benefits, staff who are on the payroll solution will have access to payday loans after 3-6 months of enrolment. This is on the premise that salary payments are consistently done through the portal. The lender also declared the solution is open to both FCMB and non-FCMB account holders. “Meanwhile, salaries can be paid from any bank account in Nigeria to any individual salary account in any other bank,” according to the bank. FCMB Payroll is delivered in partnership with SystemSpecs, one of Nigeria’s leading payroll solution and services companies with over 25 years’ experience of providing payroll solutions and services to public and private sector organisations in Nigeria and other African countries. The company is also the provider of Remita Payments Application, Payment Gateway and Payment Infrastructure.
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… as Bristow says it followed established aircraft procedure as precautionary measure
IFEOMA OKEKE ccident Investigation Bureau (AIB) Nigeria has commenced investigations into the incident involving a Sikorsky 92 aircraft operated by Bristow Helicopters, with registration marks, 5N-BOA, at about 2:10pm local time on October 25, 2019. In a statement sent by AIB, it stated that the aircraft, with 13 passengers on board was en route Port Harcourt from GERD, an offshore platform, when it declared emergency. There was no fatality. “From the information gathered so far, the pilot contacted the ATC at about 1421 declaring left Engine Failure. The aircraft was cleared left Base Runway 22 for expeditious landing and landed safely.
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“The AIB team of safety investigators from our regional office in Enugu has commenced investigation,” the statement added. Tunji Oketunbi, general manager, public affairs, AIB, said AIB had dispatched its investigators to site immediately, notin, “The Cockpit Voice Recorder (CVR) and the Flight Data Recorder (FDR) have been retrieved. It is a serious incident since they declared emergency. We have commenced investigation. “AIB wants the public to know that we would be amenable to receiving any video clip, relevant evidence or information any member of the public may have of the serious incident that can assist AIB with this investigation.”
JA Nigeria honours Adefisayo, Omikunle, others for contribution to youth empowerment KELECHI EWUZIE
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or their contributions to youth empowerment in their various fields of endeavours, Junior Achievement Nigeria (JA) has honoured Folasade Adefisayo, commissioner of education, Lagos State; Folawe Omikunle, CEO, Teach For Nigeria, and other individuals and schools as part of its 20th anniversary programme. Other notable personality honoured with the accelerator awards include: Modupe Adefeso-Olateju, managing director, The Education Partnership Centre; Enase Okonedo, dean, Lagos Business School. Orondaam Otto, founder/ executive director, Slum2School initiative; Femi Taiwo, Gbenga Sesan, who were honoured with ambassador awards. Mo’Abudu, Simdul Shagaya, Tayo Oviosu. The 20th anniversary of JA also witnessed awards given to the Most Outstanding School, Volunteer, Teacher, Staff, and Venture in Management Pro@Businessdayng
gramme (ViMP) class. Simi Nwogugu, executive director, JA Nigeria, while speaking at the event, noted that when JA Nigeria set the theme for her 20th anniversary earlier in the year, it did not actually realise that “20 Years of Impact, Partnering for Growth,” was a prophecy! Over the past few months, the organisation has ramped up activities towards the anniversary in the month of October, 2019, Nwogugu said. According to Nwogugu, “It is impossible to describe the feeling of knowing that JAN is standing at a very important vantage point, from which we can see not only the almost million lives already impacted doing fantastic things but also the potential of the millions more we’re about to reach with these landmark partnerships we have signed over the past few months.” She further said JA-Nigeria was envisioned to inspire and educate young people to become conscientious business leaders.
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Nigerian marketers advised to stop treating achievements as trade secrets Daniel Obi
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arketing and communication practitioners in Nigeria have been advised on the need to improve the practice and nurture future generations of practitioners by sharing their experiences and documenting them in forms that will be available to the general public. Ikem Okuhu, brand analyst and publisher of the marketing news portal, BRANDish, said the trend of treating knowledge like trade secrets by most industry leaders had lingered for so long and had denied the wider marketplace the wealth of knowledge and history required for enhanced understanding of the immense progress being made daily in the country’s marketing environment. Okuhu, who, on November 26, 2019, will be presenting to the public, his book
titled, PITCH: Debunking Marketing’s Strongest Myths, at the Chartered Institute of Bankers auditorium, Victoria Island, Lagos, lamented the situation whereby most of the knowledge acquired by Nigerians were drawn from foreign literature, wondering why the many successful marketing activities were not being properly documented, especially in book forms for the benefit of everyone. “Researching the Nigerian marketing and marketing communications environment is every researchers’ nightmare. Literature here is very scanty and when you find some, they are largely academic with most important case studies that enhance proximity and understanding missing. In my journey in the industry, I have read a lot of books on brands and marketing and I always found some sort of dissonance in most of the case studies and examples used to drive home points by these authors.
Nigeria needs skill-based education to reduce high rate of unemployment – financial advisor Seyi John Salau
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nternational financial advisor and CEO of Futures and Bonds, Akin OladejiJohnBrown, has advocated for skill-based education to reduce the high rate of unemployment in Nigeria. Oladeji-JohnBrown, who is also the president of Dora Foundation, stated this while unveiling the Foundation’s forthcoming entrepreneurial conference for youths slated for Ogbomosho, Oyo State. He expressed the view that many young graduates in Nigeria are jobless because they had degrees without critical skills, disclosing that his non-governmental organisation (NGO) would begin a series of training designed to turn young graduates into employers of labour. He recalled that Yemi Kale, head of the Nigerian Bureau of Statistics (BoS), disclosed that
the nation’s unemployment rate had risen to 23.1 percent as at December 2018 from 18.1 percent in 2017. According to him, “Kale in a report added that over 11million youths were jobless.” He appealed to the public and private sectors to make efforts to solve the problem. Dora’s Foundation programme, Oladeji-JohnBrown stated, is part of the efforts to save the nation from the terrible consequence of unemployment of the youth population. He said the theme of the conference was ‘Developing Entrepreneurial Mindset of a Game Changer.’ Expected to speak at the conference are the Vice Chancellor of Ladoke Akintola University and his Bowen University counterpart. Over 500 young graduates, according to OladejiJohnBrown, are expected to participate in the conference.
Promasidor restructures, appoints Enahoro director of external relations Daniel Obi
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ndrew Enahoro, corporate communications and legal professional, has become the director of External Relations at Promasidor Nigeria Limited effective October 1, 2019. With his over 20 years’ experience in helping companies to improve their relationships and business performance, Enahoro in his new position will be responsible for high level engagement of identified stakeholders, including but not limited to government regulators and industry sponsors. He will also lead Promasidor’s backward integration initiatives to guarantee the continued sustainability of the business while providing top-level supervision to the communications team.
Before the elevation, Enahoro has been the company’s head of corporate communications and legal services since September 2010, leading the corporate communications department in developing, articulating and driving the Corporate Brand engagements and Corporate Reputation Management of the firm. During this period, he also managed the external and internal communications strategy and acted as the in-house attorney with overall responsibility for managing the company’s legal issues in collaboration with the external counsels. Widely travelled, he went to Federal Government College, Warri, Delta State, University of Benin for his Law degree, after which he proceeded to the Nigeria Law School.
Kayode Fayemi, governor, Ekiti State (l), presenting the Special Recognition Award to Biodun Shobanjo, chairman, Troyka Group, on behalf of the University of Lagos Alumni Association at the Association’s Golden Jubilee Awards and Gala Night, themed ‘Driving Nigeria’s Sustainable Development Agenda’, in Lagos.
Ngige accuses governors of abandoning healthcare delivery JOSHUA BASSEY
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inister of labour and employment, Chris Ngige, has challenged the Nigerian Medical Association (NMA) to take the battle to uplift the national healthcare system to the 36 states of the federation where the governors have completely abdicated their responsibilities. This, according to Ngige, has become imperative, saying the Federation Government “as a willing horse must not be ridden to death.” He said: “The state governments have abdicated their responsibilities and nobody is talking to them, nobody is doing anything. Everything is now federal. Federal Government will provide tertiary healthcare, secondary and even primary healthcare as well as provide a place for residency programme. How can we?” The minister, who received the leadership of the NMA in Abuja, said health was on the concurrent list and nothing
…says General Hospitals home to rodents, reptiles stopped the states from doing the primary, secondary and tertiary healthcare. “In fact, when as a young doctor I did my houseman ship, we had a hybrid of secondary and tertiary. That is why I left the teaching hospital and did mine at the Onitsha General Hospital while some of my colleagues had theirs at Enugu-Ukwu General Hospital and Parklane Hospital in Enugu. But today, the state governments have run away from even primary healthcare. The secondary - most of their general hospitals are glorified residents for rodents and reptiles,” he said. The minister called on the NMA to mobilise and sensitise its state chapters to take up the issue of the abandonment of the responsibilities in healthcare delivery with the state governments. “Your state branches should live up to expectation. Their job is not just to come to the general assembly to vote for strike and go back to their people and report. They should fight to protect the state health system.
It is an incongruous situation that you go to a teaching hospital and see people on out-patient care for malaria, gastroenteritis etc. It mounts pressure on those teaching hospitals, making them unable to deliver on the major jobs they are supposed to do,” he said. He said it was becoming impossible for the Federal Government to fund the health system, in line with the Abuja Declaration, as a result of dwindling resources, saying the effective use of resources was now mandatory. “Let us use whatever we have effectively and efficiently. Let’s plug leakages and wastes. There is a lot of waste in the system. Some doctors don’t take call duties but are paid call duty allowance. Why do you take call duty allowance when you are not on call? Some doctors also are not exposed to hazards but take hazard allowances. Why? Providing insight on the just concluded consequential adjustment of the national minimum wage, he regretted that
a heavy chunk of the Federal Government budget was being used to fund the current expenditure, thus limiting the capacity of government to deliver on physical infrastructures. The need to think out of the box, he said, was overriding. “How do we reconcile the fact that we are doing a budget of N10.3 trillion in 2020 and out of that, personnel cost alone is N3.88 trillion, amounting to one third of the total? And when you add the running cost to it, it comes to N4 trillion. How do you explain that? It means we have no money left to even fund health, education and other infrastructures. We are abandoning all to pay just salaries. It is frightening and worrisome. That’s why we have to put on our thinking caps.” President of the NMA, Francis Adedayo Faduyile, urged the Federal Government to declare emergency on the health sector and set up national healthcare fund, in the same manner government intervened in the entertainment industry.
Service sector contributed N1.2trn to Edo’s GDP in 2017 – NBS
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igeria Bureau of Statistics (NBS) says Edo State’s service sector contributed N1.2 trillion to its N2.3 trillion Gross Domestic Product (GDP) in 2017. Commissioner for finance, Joseph Eboigbe, disclosed this while presenting the “2020-2022 Medium Term Expenditure Frame Work (MTEF),” at a day workshop organised by the Ministry of Budget and Economic Planning, at the Government House in Benin City. The workshop was organised by the ministry in collaboration with the Edo State Employment and Expenditure for Result (SEEFOR) programme. Eboigbe said despite the vast land and gas deposit in the state, the agricultural and industrial sectors contributed less to the state’s GDP, noting that the information provided
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by the NBS had availed the state government with data to address the structural imbalance in the state. According to Eboigbe, “NBS published the GDP of Edo State covering the period 2013 to 2017, which measured economic activities in the state. It showed which sector contributed the most to the GDP, allowing the state to know the areas of focus. It broke the state into three sectors which include agricultural, industry and services sector.” He said the total GDP of the state for 2017 was N2.3 trillion, out of which the services sector contributed N1.2 trillion. In her welcome address, the Commissioner for Budget and Economic Planning, Otse Momoh Omorogbe, said the workshop was organised to facilitate engagement with
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members of the public for improved service delivery and development. The workshop allows for the participation of residents in the state’s budget preparation, she said, adding, “The state prepared a citizens’ budget which is a simpler form of the state’s approved annual budget. Its main objective is to present Edo State’s budgetary information in a manner that is easily digestible for its citizenry.” Director of Budget, Ministry of Budget and Economic Planning, Oseh Michael, who delivered a paper on Edo State Citizen’s Budget, said the objective of the 2019 approved budget is to consolidate on government’s efforts in building a viable state. Michael noted, “The objectives of the 2019 budget is to consolidate on government’s efforts to build the Edo @Businessdayng
of our dreams and to reflect government’s desire to carry everybody along in its plans and projects, aimed at bringing growth and development to Edo State. “Key goals of the budget are continuous investment in repairs of existing structures and the development of new socio-economic infrastructure; strengthening internal capacity for projects execution and governance; continuous investment in programmes and projects for wealth creation, particularly through industrialisation, agriculture and Micro Small and Medium Enterprises (MSME) development.” One of the stakeholders at the event, Stella Ojeme of Child Protection Network, described the programme as apt as it gives stakeholders the opportunity to share ideas to enhance the 2020 budget.
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news Nigeria-US trade volume falls 37% as LCCI tasks FG to attract investors ODINAKA ANUDU
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rade volume between Nigeria and the United States as at August 2019 was $5.21 billion, representing 37.2 percent drop from $8.3 billion recorded in 2018. Speaking at the 2019 Lagos Chamber of Commerce and Industry (LCCI) International Investment Conference held in Lagos on Wednesday, Claire Pierangelo, US consul general, who was represented by Christine Kelley, US commercial attaché, said the US was one of Nigeria’s largest trading partners, and tasked the Nigerian government to create the enabling environment to attract both local and foreign investors In 2018, Nigeria’s Foreign Direct Investment fell to $2.2 billion, from $3.5 billion the previous year, according to the United Nations Conference on Trade and Development. Pierangelo advised that any nation clamouring for fresh FDIs must prioritise de-
velopment of infrastructure, security, intellectual property protection and incentivise local and foreign investors. Earlier, Babatunde Ruwase, president, LCCI, said the theme for the conference tagged ‘Promoting investment, connecting businesses’ was appropriate as the Nigerian economy was in dire need of private investments to move the economy forward, stressing that investments would help to create jobs, diversify the economy, grow government revenue and improve the welfare of the people. According to Ruwase, Nigeria’s recovery from recession in the second quarter of 2017 had elicited calls for policies that would support sustainable growth and development, adding that steps had been taken and policies put in place to ensure revamping of the economy through the promotion of industrialisation and non-oil export policies for sustainable economic recovery.
NACCIMA appoints Adefeko chairman agric trade group
“However, if the recovery is to be sustained, there must be added drive for domestic and foreign direct investments, promotion of non-oil exports and continued efforts at improving the ease of doing business in Nigeria,” he said. He noted that it was critical that the government provide an enabling environment that would encourage investors to bet in the Nigerian economy by addressing the security challenges in the country and ensuring improved regulatory framework. Bongo Adi, senior lecturer, Department of Economics and Business Intelligence, Lagos Business School, said although Nigeria had moved up the ladder on the World Bank Doing Business Index, growth was still not inclusive. He said Nigeria’s return on investment (RoI) remained the highest in Africa, but was yet to give the country an advantage it deserved, adding that key determinants for FDI were trade, capital inflow and Diaspora remittances
MTN grows revenue by 12.1% to N854bn in Q3 2019
Jumoke Akiyode-Lawanson
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TN Nigeria released its unaudited financial results for the nine months ended September 30, 2019, showing a significant increase in service revenue by 12.1 percent to reach N854.9 billion, mainly driven by increase in voice and data revenues. The results also show an increase in earnings before interest, tax, depreciation and amortisation (EBITDA) margins, its capital expenditure (Capex) and active data users on the network. The telecoms company, listed on the Nigerian Stock Exchange (NSE) in May 2019, saw earnings per share rise by 29 percent to N7.29k (IAS 17:36.6 percent to N7.72k). EBITDA margin increased by 10.5 percentage point (pp) to 53.7 percent (IAS 17: 44.7%, up 1.5pp) while active data users increased by 1.6 million to 22.3 million and the company
increased its capital expenditure (Capex) by 39.5 percent to N154.1 billion (IAS 17: 20.9% to N133.5 billion Year on Year (YoY). Commenting on the results, Ferdi Moolman, CEO, MTN Nigeria, said, “Our performance was very encouraging, demonstrating the resilience of our business despite a challenging operating environment. We sustained double-digit growth in service revenue led by growth in voice and data revenue. We recorded 61.6 million subscribers, representing a 0.1 million increase QoQ. We were required to undertake a SIM re-registration process, which resulted in a disconnection of around 0.6 million active subscribers, limiting base growth. During the quarter, we focused on the end-to-end optimisation and repositioning of our data offerings.” MTN has in the last year made significant investment in accelerating the 4G network expansion. Leveraging its 800MHz spectrum acquired
from Visafone and activated in the second quarter of 2019, the telecoms network operator launched enhanced 4G+ services in Lagos, Abuja and Port Harcourt. “We also changed our pricing strategy, placing us in an even stronger competitive position going forward. As a result, we have begun to see promising results with active data subscriber net additions of 1.6 million and 4G population coverage at over 35 percent in 64 cities. Data traffic volume also increased by over 68 percent, while data revenue rose by 34.9 percent yoy,” Moolman said. Speaking on the significant increase in service revenues, Moolman said: “Voice remains a key contributor to service revenue at 73.5 percent (Q3 2018: 74.8%), with its growth supported by an increase in subscribers, relatively stable tariffs and our targeted segment offerings using our customer value management toolkit.
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he National Association of Chamber of Commerce Mines and Agriculture (NACCIMA) has appointed Ade Adefeko chairman of the its agricultural trade group. NACCIMA agricultural trade group is a network of operators within the agriculture and agribusiness sector to enable them interface on the challenges and opportunities in the sector while also liaising with relevant government agencies and developmental organisations in policies formulation and influence
of policies/other areas of interest. In a letter of appointment seen by BusinessDay, NACCIMA said the new appointment would be for an initial one year from the date of the letter. W i t h t h i s a p p o i n tment, Adefeko becomes a member of the NACCIMA Council, the second-highest decision-making body of NACCIMA after the General Meeting. Adefeko is currently the vice president, corporate and government relations, Olam International Nigeria.
Conoil sustains profit, as Q3 revenue soars by 49% Iheanyi Nwachukwu
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onoil plc continues on it streaks of performance this year with the oil marketing company posting an 8 percent increase in Profit Before Tax for the nine months period ended September 30, 2019. The unaudited results of the company submitted to the Nigerian Stock Exchange (NSE) on Monday, shows Conoil recorded a 49 percent increase in revenue to N112.7 billion from N75.8 billion in the same period
in 2018, indicating that the company’s shareholders are assured of another bumper reward in the 2019 financial year. The report also showed that the company declared a profit before tax of N2.45 billion compared with N2.26 billion recorded in the previous year, while profit after tax also jumped from N1.58 billion last year to N1.7 billion this year. The performance of the major fuel marketer so far this year showed that it continued to brave the stifling operating environment
Nigerian T-Bills auction rates crash after CBN’s OMO directive OLUWASEGUN OLAKOYENIKAN
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pot rates on Nigerian Treasury Bills (T-Bills) fell across tenors at the primary market auction conducted by the Central Bank of Nigeria (CBN), Wednesday, as investors oversubscribed the bills following the apex bank’s restriction of individuals and Nigeria’s corporates from participating in both primary and secondary markets of its Open Market Operation (OMO) window. Rates on the 91-day bill cleared at 9.49 percent, the lowest since June 15, 2016, while those on 182-day and 364-day bills cleared at 10.45 percent and 11.50 percent,
respectively. These rates compare with 10.80 percent, 11.00 percent and 12.94 percent on the 91-day, 182-day and 364day bills at the previous T-Bills primary market auction. “The most suitable alternative for OMO bills will be investment in government T-Bills as they are similar in tenor and have been largely interchangeable in recent years,” analysts at CardinalStone had said. “We expect to see increased demand in the bills market and at subsequent NTB auctions through the year.” The CBN’s T-Bills auction worth N132.55 billion conducted Wednesday to roll over an equal amount of bills maturing Thursday recorded oversubscription across the www.businessday.ng
“Part of your assignment will include elaboration of strategies for national and sub-regional rebirth in the agricultural sector and agribusiness in Nigeria and West Africa,” the letter said.
three tenors with a bid-offer ratio of 4.27x with the 364-day recording the strongest demand as investors bids were 4.72x more than the offered amount. Investors bid N565.62 billion on the instruments, but CBN could only allot bills worth N132.55 billion at N28.02 billion, N10.62 billion, and N93.92 billion on the 91-day, 182-day, and 364-day bills, respectively. The decline in T-Bills auction rates is in line with analysts’ expectation following the CBN’s intention to block OMO market participants excluding foreign investors and local banks in a bid to reduce the cost of borrowing and spur investment to the real sector of the Nigerian economy. https://www.facebook.com/businessdayng
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in the downstream sector of the nation’s petroleum industry. The company attributed this performance to the adoption of robust growth strategies, efficient management of resources and total elimination of waste in its operations. Revealing its edge, the company said it strengthened and repositioned its core businesses, with huge investments in retail network expansion, which involved building multimillion naira mega stations across the country.
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Thursday 31 October 2019
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news NERC vs DisCos: Lawmakers wade in
...ask NERC to rescind order cancelling DisCos’ licences …DisCos’ reputation takes a hit as IFC pulls out of loan deal with BEDC ISAAC ANYAOGU
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L-R: Uche Obiofuma, divisional head, human capital solutions, SystemSpecs Limited; Adam Nuru, managing director/CEO, First City Monument Bank (FCMB); John Obaro, chief executive officer, SystemSpecs, and Olu Akanmu, executive director, retail banking, FCMB, during the signing of a Memorandum of Understanding (MoU) and launch of the FCMB Payroll Solution for Small and Medium Scale Enterprises and other Businesses, in Lagos.
Governance faces acid test in Lagos as gridlock locks down businesses …journey time increases as transport fare soars …but task team claims Apapa gridlock will end in 24hrs CHUKA UROKO, MIKE OCHONMA, JOSHUA BASSEY & AMAKA ANAGOR-EWUZIE
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here are very strong indications that many Lagosians have resigned to fate as travelling from one point to another within the city is becoming frustrating due to dilapidated and flooded road networks, blocked drainages and perennial traffic snarls that have impacted business activities significantly. The citizens appear to be helpless as the road networks keep deteriorating by the day without any serious government intervention. Lagos residents say the situation should worry the state government, especially one that aspires to become a 21st century
economy. It is an acid test for governance, they say. Some of the flashpoints within the metropolis where heavy traffic has become the order of the day include Lagos-Badagry Expressway, Apapa, Agege Motor Road, and most roads in the hinterland. For 10 years, the LagosBadagry Expressway has been under construction without completion. Many businesses have continued to count their losses, while many people living as far as Badagry, Agbara and adjoining suburbs and working on the Lagos Island and other parts of the city have rented living apartments uptown to make their movement easy. This impacts negatively on household income. In Apapa, for reasons rang-
ing from multiple command structures, vested interests, and alleged uncooperative stance of federal government agencies, the traffic congestion, which defined the port city some months ago, has returned as all routes to the city have been overrun by trucks as of old. However, the Presidential Task Team led by Kayode Opeifa, its executive vice chairman, has assured that the gridlock would be cleared in 24 hours starting from Wednesday afternoon. On Wednesday particularly, flooding and collapsed road networks combined and conspired to inflict more pains on already traumatised motorists and commuters in Lagos, Nigeria’s commercial nerve centre.
Since the rainy season set in, it has been anguish for a large chunk of the estimated 21 million residents, as major roads and streets have become impassable, with potholes and craters sinking deeper, as the rains pound. From Surulere to Victoria Island, Alimosho to Badagry, Agege to Mushin, Apapa to Lekki and Ikoyi, the situation is the same – gridlock and flooded roads, leaving vehicles stuck in the middle of nowhere. From Ikeja-Along in Ikeja to Egbeda in Alimosho, transport fare was raised from N200 to N400, while from Oshodi to Mile 2 went up N300 from N150 charged under normal situation. The long stretch of Ahmadu Bello Way in Victoria Island was left in flood, with vehicular movement imped-
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GCR, Agusto & Co affirm ‘AAA’ (NG) rating assigned to InfraCredit with stable outlook ENDURANCE OKAFOR
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lobal Credit Rating Company Limited (GCR), a leading rating agency, has in its latest report affirmed InfraCredit’s public national scale long-term rating of AAA (NG) with a stable outlook. Agusto & Co. Limited, Nigeria’s first credit rating agency, also affirmed InfraCredit’s ‘AAA’ (NG) public national scale rating with a stable outlook in its latest report. GCR noted in a statement that InfraCredit’s ‘AAA’ (NG) rating reflected the assessment of its business model, governance structure, capitalisation, risk mitigation mechanisms, financial performance, as well as the profile of the shareholders and capital providers. According to the statement, InfraCredit has demonstrated strong financial flexibility through diversification of its capital base during
FY2018. This was as a result of an increased capitalisation of N21.8 billion via a combination of equity capital from Africa Finance Corporation and a long-term subordinated unsecured loan from KfW Development Bank in 2018. The assigned rating also recognises InfraCredit’s stringent risk management process and obligations under its guarantees that have helped to strengthen exposure risk protection. InfraCredit guarantees the timely scheduled payment of principal and interest by the Issuer under the guaranteed debt, which confers unrestricted monitoring and step in rights on the Institution. “The rating reflects the strength of our business model, diversified capital base and strong risk management framework in line with global best practices,” Chinua Azubike, managing director/ CEO, InfraCredit, said on the www.businessday.ng
ratings action. “We have continued to make significant strides in Nigeria’s financial markets by strengthening our product portfolio and partnerships to unlock the potential for local currency infrastructure in Nigeria,” Azubike said. Agusto & Co said in a statement that InfraCredit’s ‘AAA’ (NG) rating reflected the expanding and implicit support of its sponsor base. InfraCredit is sponsored by the Nigeria Sovereign Investment Authority (NSIA), Africa Finance Corporation (AFC) and GuarantCo Management Company Limited (GuarantCo) which provide funded and unfunded capital for the Corporation’s guarantee operations. “The assigned rating also recognises InfraCredit’s good asset quality backed by an acceptable risk management framework as well as its strong capital base, liquidity pro-
file and financing capacity. The support being received from its sponsors continues to ensure that asset quality remains good as evidenced by the nil impairment since InfraCredit’s inception,” the rating agency said. Azubike said the rating reflects InfraCredit’s strong balance sheet, solid capital consistent with ‘AAA’ credit ratings and commitment to the highest standards of corporate governance and best practices in all aspects of our business. “We are building a vibrant institution that serves as a catalyst in the attraction of long-term capital into infrastructure finance in Nigeria, by fostering our development impact in Nigeria’s debt capital markets and in helping to bridge the infrastructural gap in the country,” he said.
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awmakers have waded into the on-going rift between the Nigerian Electricity Regulatory Commission (NERC) and the electricity distribution companies (DisCos), directing both parties to reach a negotiated settlement while urging NERC to stay action on its order to revoke the licences of eight DisCos. BusinessDay gathered that the Senate Committee on Power met with the managing directors of DisCos, NERC chairman and representatives of the Bureau of Public Enterprise (BPE) on Tuesday, October 22, in Abuja. The meeting was heated and saw fierce outbursts and pentup frustrations, according to a source with knowledge of the proceedings. N E RC o n O c to b e r 8 served notice to eight DisCos of its intention to cancel their licences for failure to meet their obligated remittance to the market. The affected DisCos
are Abuja Electricity Distribution Company plc, Benin Electricity Distribution Company plc, Enugu Electricity Distribution Company plc, Ikeja Electric plc, Kaduna Electricity Distribution Company plc, Kano Electricity Distribution Company plc, Port Harcourt Electricity Distribution Company plc and Yola Electricity Distribution Company plc. In response, the DisCos threatened to declare force majeure. The regulator has consistently said the DisCos have failed to meet their remittance obligations to the market. “During the first quarter of 2019, the eleven (11) DisCos were issued a total invoice of N190.1 billion for energy received from NBET and for service charge by the MO, but only a sum of N52.8 billion or around 28 percent of the total invoice was settled, indicating a significant deficit of N137.3 billion,” NERC said in its first quarter report for 2019.
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Supreme Court affirms Buhari’s election victory …judiciary sabotaged by cabal – Atiku …APC, PDP differ on judgment FELIX OMOHOMHION, INNOCENT ODOH, JAMES KWEN, SOLOMON AYADO, Abuja, & ENDURANCE OKAFOR, Lagos
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he Supreme Court on Wednesday dismissed the appeal filed by the presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar, and his party against the judgment of the Presidential Election Petition Tribunal which upheld President Muhammadu Buhari’s victory in the February 23 general election. Atiku and his party had filed a 66-ground of appeal before the Supreme Court, challenging the judgment of the Presidential Election Petition Tribunal, which affirmed Buhari’s election. The tribunal had said Buhari was not only qualified, but eminently qualified to contest the post of President of the Federal Republic of Nigeria in the said election. In their final submission on Wednesday, Levi Uzoukwu, the lead counsel for Atiku and PDP, submitted that Buhari did not make any effort to tender his original certificates, photocopies or certified copies in the course of the trial. He stated further that the certificate cadet officer course Buhari said he attended was not also ten@Businessdayng
dered in court, which made his academic qualifications speculative. He insisted that a server existed where the result of the election was stored. “There is something curious about the case, the respondents are relying on Section (52(2) of the Electoral Act to contend that electronic election is prohibited in this country,” Uzoukwu said. In dismissing the appeal, the Chief Justice of Nigeria (CJN), Ibrahim Tanko Mohammad, who led other six justices of the apex court, said the appeal was lacking in merit. “Having gone through the appeal in this past two weeks, we found the appeal lacking in merit. It is thereby dismissed,” said the CJN. He said reasons would be adduced later on why the appeal was struck out. Reacting to the judgment, Atiku Abubakar said the judiciary has been sabotaged and undermined by a dictatorial cabal. “It is said that the Supreme Court is not final because it is infallible, but that it is infallible because it is final,” Atiku said in a statement signed on Wednesday.
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news Dangote Cement to find support on proposed share... Continued from page 1
as well as a share buyback programme,” the cement maker said in a note issued October 29, 2019, and seen by BusinessDay. The details of the action, the company said, are yet to be finalised and will be communicated at a later date. “The previous sell-pressure on the stock is uncomfortable to the cement maker and it is trying to give those that want to get out an opportunity to exit,” Paul Uzum, a trader on the floor of the Nigerian Stock Exchange (NSE), told BusinessDay. “A reverse stock split would reduce the company’s float but prop price up. It would ease sell-pressure on the stock.” Although Dangote Cement is yet to state the ratio for the reverse split, Uzum believes the current market situation would see a price range of N150-N170. Dangcem advanced 2.05 percent to N149 at the close of trading Wednesday. A reverse stock split, also called a stock merge, is a process by which a company boosts its stock price by reducing the total number of shares held by all its shareholders. If a company announces one-for-two reverse split, for instance, shareholders would receive one share of the company’s new stock for every two shares they hold. If a shareholder owned 1,000 shares each valued at N5 before the split, the shareholder would own 500 shares valued at N10 after the reverse stock split. On the other hand, a share buyback occurs when a company chooses to reacquire its own stock as
an alternative to issuing a dividend, to boost its financial ratios or buy when it is undervalued so it can reissue once its fair price realised, without having to provide new shares. Dangcem’s proposed move follows a recent measure by NSE to check the frequent fluctuations in the market and ensure market stability. The stock exchange earlier in October announced an amendment to the price movement of equities traded on the nation’s bourse amid a rout that has plunged stocks to new lows and seen returns currently at -16.3 percent. With the new rule, the minimum trade quantity required to change prices for equity securities traded on the Exchange will henceforth be 100,000 units for all securities groups. Oscar Onyema, NSE CEO, said the Exchange remains committed to maintaining a platform that engenders a fair and efficient market, noting that the change is born out of the need to ensure that all price improving (up/down) transactions are material, making the market more efficient and attractive. Dangote Cement result for the nine months to 30 September shows revenue dropped slightly to N679.79bn from N685.29bn in the same period in 2018. The cement giant thus reported its profit also reduced, albeit slightly, to N154.35bn from N158.27bn in the same period last year. Data from Bloomberg show Dangcem currently has a dividend yield of 10.64 percent.
Governance faces acid test in Lagos as gridlock... Continued from page 38
ed. It was the same situation on Akowonjo-Egbeda-Isheri stretch, where residents were seen scooping water from their homes, in what was largely attributed to collapsed drainage system. Remedial efforts by the state government have led to nowhere. Areas where the Lagos State Public Works Corporation (LSPWC) had carried out palliative works have collapsed again all too sudden. Commissioner for works and infrastructure, Aramide Adeyoye, says government is waiting for the rains to subside to return to the roads. Her position was recently re-echoed by the state governor, Babajide Sanwo-Olu, who spoke at The Platform, an event organised annually by the Covenant Christian Centre, Iganmu. The situation, expectedly,
has been worse in Apapa where, like before, tankers and sundry trucks have come back forcefully, occupying available spaces and making access to the port city pretty difficult. The present situation has also raised both journey time and transport fare by over 200 percent. Apapa before the last six months was a nightmare, a degraded and suffocating environment where traffic congestion paralysed economic activities, forcing residents to flee and businesses to die or relocate to sane environments at great cost. But the setting up of the PTT, which has Vice President Yemi Osinbajo as chairman, put an end to that. It seems, however, from the current traffic situation, that joy in this port city has a slender skin because the gridlock is here again.
•Continues online at www.businessday.ng
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L-R: Austin Okere, founder/CEO, CWG plc; John Obaro, MD, SystemSpecs; Ezinne Obikile, executive director; Segun Aina, president, Fintech Association of Nigeria, and Uche Olowu, president, Chartered Institute of Bankers of Nigeria (CIBN), at the 2019 Nigeria Fintech week dinner and award in Lagos. Pic by Olawale Amoo
Vietnam’s $245bn non-oil export earnings expose... Continued from page 1
items— according to the country’s General Statistics Office. It has earned $27.3 billion from phones between January and July 2019. The Southeast Asian country attracted Foreign Direct Investment of $16.74 billion between January and July 2019, according to the country’s Foreign Investment Agency. In the whole of 2018, Nigeria’s FDI was $2.2 billion, from $3.5 billion the previous year, according to the United Nations Conference on Trade and Development. “The Nigerian economy is in dire need of private investments to move the economy forward,” Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), said in Lagos on Wednesday. “If economic recovery is to be sustained, there must be added drive for domestic and foreign direct investments, promotion of non-oil exports and continued efforts at improving the ease of doing business in Nigeria,” he said. Key to Vietnam’s growth was market reforms, said Vo Tri Thanh, a Vietnamese economist. The country worked on private business right, macroeconomic and social stability, while opening and integrating its economy into the regional and world economy, especially in the areas of trade and FDI. Vietnam sees trade as the most important part of its manufacturing sector. In an article entitled ‘Vietnam’s manufacturing miracle: Lessons for developing countries’, three economists Sebastian Eckardt, Deepak Mishra, and Viet Tuan Dinh said Vietnam has numerous bilateral and multilateral free trade agreements, which dra-
matically cut tariffs, anchor difficult domestic reforms, and open up the economy to foreign investment. Vietnam likewise reduced its cost of doing business for enterprises. The World Bank said in its 2019 Doing Business report that the country made paying taxes less costly for companies by reducing the corporate income and value added tax rates while eliminating the surtax on income from the transfer of land use rights. Taxes in Nigeria (state, federal and local governments) today are 54 and are increasing as states go increasingly cash-strapped, experts say. As a serious country open to business, Vietnam made starting a business easier by publishing the notice of incorporation online and by reducing the cost of business registration. It equally made enforcing contracts easier by making judgments rendered at all levels in commercial cases available to the public online, the World Bank said. It made exporting and importing easier by upgrading the automated cargo clearance system and extending the operating hours of the customs department. Scanners at the Customs in Nigeria are barely working, with roads to Apapa and Tin Can ports in Lagos nightmares. “Of particular concern and importance to us (MAN) are the challenges we face in moving our raw materials and goods to and from the ports,” Seleem Adegunwa, chairman, Manufacturers Association of Nigeria (MAN), Ogun State chapter, said at a recent CEOs business luncheon at Agbara, Ogun State, when referring to challenges faced by Nigeria’s manufacturers at the ports. Nigeria is yet to initiate
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reforms at all levels, with statist policies trumping market reforms. The country still pays over $1 billion on fuel subsidies and is yet to reform its outdated gas policies. Manufacturers self-generate over 13,000 megawatts of energy, according to MAN. President Muhammadu Buhari has shut borders to halt smuggling of fuel and rice, but exporters can’t ship out their goods or import inputs through land borders. Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Group (MANEG), said the losses incurred by genuine exporters will further cut Nigeria’s non-oil export projections. “I am sure the government would not be closing all banks because of the discovery of bank fraud and similarly should not close all land borders to catch those that are smuggling,” he reasoned. The list of items barred from accessing foreign exchange is getting longer with essential industrial inputs being added from time to time by the central bank. The Export Expansion Grant has been suspended since 2013, and industries can’t sell because 49 percent of the population is multidimensionally poor. Nigeria and Vietnam have things in common. One is that half of the population in both is less than 35, which provides ready labour force for industries and firms. But unlike Nigeria, Vietnam has well-trained skilled labour who fit into its industrial dream. This began with reforming the education system, paying attention to sciences which are important for industrial growth. Two, agriculture employs more than half of the population in both Nigeria and Vietnam. Rice is the most important crop in both countries. Furthermore, both countries have comparative advantage in leather/shoes and @Businessdayng
have enormous raw materials in food and agro-allied sector. But Vietnam strengthened access to credit by adopting a new civil code that broadens the scope of assets that can be used as collateral. Most banks in Vietnam, including VietcapitalBank, NamABank and ABBank, lend at between 8 percent and 8.6 percent, but almost all Nigerian banks lend at above 20 percent, and even up to 30 percent. Vietnam likewise increased the reliability of power supply by rolling out a Supervisory Control and Data Acquisition (SCADA) automatic energy management system for the monitoring of outages and the restoration of service. According to energypedia.info, 100 percent of Vietnamese have access to electricity. However, things are different in Nigeria, with over half of Nigeria’s population without access to energy, and firms resorting to diesel or gas to fuel their generating sets. “Vietnam invested in infrastructure, especially in the power sector and connectivity. To keep pace with rapidly growing container trade (which expanded at a staggering average annual rate of 12.4 percent between 2008 and 2016), Vietnam also developed its connective infrastructure, including seaports and marine terminals,” said economists Eckardt, Mishra and Dinh. “Vietnam has leveraged its demographic dividend through effective investment in its people. In the latest 2015 OECD Programme for International Student Assessment (PISA)—which tests high school students in math, science, and other disciplines—Vietnam ranked 8th out of 72 participating countries, ahead of OECD countries such as Germany and Netherlands,” they added.
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Thursday 31 October 2019
news Access Bank releases 9-month financial results Nigeria’s $5bn domestic debt service … supports Art X Lagos Fair 4th Edition crowds out social sector spending
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fter a successful completion of the second phase of its integration, bringing together all its core banking platforms onto a new and highly scalable worldclass platform, Access Bank says one of the benefits of the integration is the simplicity of initiating and receiving bank transfers, as customers will no longer need to select between ‘Access’ or ‘Access (Diamond)’ when transacting. Customers should simply select ‘Access Bank’ for all transactions. On the back of this, it has released its unaudited results for the nine months ended September 30, 2019. The results show a 71 percent increase in net interest income, with the Bank declaring profits of N90.7billion in September 2019 compared to N62,911,088 declared in September 2018. Herbert Wigwe, group managing director, Access Bank, said the growth witnessed this year was evidence of the bank’s adaptability, add-
ing that the financial institution remains committed to rewarding all shareholders for keeping faith with the bank. “The Group delivered a robust performance in the first six months’ post-merger, despite a challenging and fastchanging macro and banking landscape. The results which reflect the performance of the combined entity post-merger has outstripped those of the combined entities on a standalone basis. This further reinforces the Bank’s sustainable business model and brand promise to deliver more to all stakeholders as we work to realise the envisioned synergies of the merger. “Going into the last quarter of the year, our focus remains on consolidating our retail momentum and driving financial inclusion. Furthermore, we will remain disciplined in our efforts to deliver enhanced shareholders’ value, with a focus on offering more than banking,” he stated.
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Meanwhile, the bank again supports the 4th edition of Art X Lagos, West Africa’s premier international art fair, scheduled to run from Friday, November 1 to Sunday, November 3, 2019. Art X Lagos through its partnership with Access Bank has evolved into the largest art, culture and lifestyle fair in West Africa. The fair, which will hold at the Federal Place Hotel, Victoria Island, Lagos promises to be an even bigger affair than previous editions. Art X Lagos is designed to showcase the most innovative contemporary art from the African continent and Diaspora. In line with Access Bank’s philosophy to offer “More than Banking”, the Bank is a strong proponent of the Nigerian art scene, passionate about helping Africans tell the African story through creative and innovative ways. This years’ edition promises to celebrate some of Africa’s emerging, most exciting, underground mavericks.
HOPE MOSES-ASHIKE
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ayment of domestic debt service averaging over $5 billion has crowded out needed spending on other social sectors of the Nigerian economy according to Baba Yusuf Musa, director-general, West African Institute for Financial and Economic Management (WAIFEM). Musa disclosed this while delivering a keynote address on “Nigeria’s Emerging New Economy: Opportunities, Challenges and Prospects,” at the 2019 investiture of the Chartered Institute of Bankers of Nigeria (CIBN) held weekend. Nigeria’s total debt service stood at $7.35 billion in 2018, as domestic debt grew by N458.36 billion between December 2018 and March 2019, according to the Debt Management Office (DMO). He listed the challenges confronting the Nigerian economy as corruption, lack of patriotism and nationalism, poor infra-
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structure, and environmental issues. “Most of our past leaders are corrupt; the nation has a failure to patronise it products (made in Nigeria). Citizens prefer holidaying in foreign countries and undergoing medical treatment oversees, possibly because our health system is comatose,” Musa said. The WAIFEM DG said government should continue to create a sound macroeconomic environment to stimulate strong growth. Fiscal and monetary policy coordination should continue in order to ease inflationary pressures with declining interest rates. The private sector has to respond positively to the government’s development programmes and the improved business environment, he said. He said government and the private sector must collaborate for the development of the manufacturing sector of the country, saying, “It is important to have a transformational lead-
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ership and a followership that is alert, asking relevant questions and demanding answers from the leadership.” In his welcome address, Uche Olowu, president/chairman of council, CIBN, encouraged the banking community to further explore the opportunities of sustainable and responsible banking which would not only improve their bottom line but contribute to employment, economic growth and development. “As bankers, my charge to us today is that as we move into the future, we should be mindful of the Environmental and Social impact of our lending. We must ensure that we finance projects that support de-carbonization in order to save our planet. Essentially, we must embrace the “green revolution or green initiatives” in every facet of human endeavour such as transportation, housing, power, Agric, etc, as a way of stemming the ugly tide of global warming,” Olowu said.
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POLITICS & POLICY Assembly committee bows to court ruling, adjourns Ambode’s probe INIOBONG IWOK
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he joint committees of the Lagos State House of Assembly probing the activities of former governor of the state, Akinwunmi Ambode over some of his expenditures has bowed to the ruling of a state High Court to stay action on the matter and adjourned the matter until further notice. The court gave its ruling on Wednesday 29th October in response to the prayers of Ambode, who sued the Assembly, which summoned him to appear before its committee over the purchase of 820 buses without the approval of the House. The Mudashiru Obasaled Assembly had mandated the then Adhoc Committee on Transport headed by Fatai Mojeed and Committee on Budget and Economic Planning headed by Gbolahan Yishawu to probe the purchase of 820 buses by Ambode.
The House had threatened to issue a warrant of arrest on Ambode and four others who served under him as commissioners. The decision followed two preliminary reports presented by two different ad-hoc committees set up by the House to investigate the 820 buses purchased by Ambode and to appraise the 2019 midyear budget.
The former commissioners involved included Kazeem Adeniji (Attorney General and commissioner for Justice), Olusegun Banjo (commissioner for Budget), Akinyemi Ashade (commissioner for Finance) and Wale Oluwo (commissioner for Energy and Mineral Resources). “Over N48 billion was spent for the purchase of the busses and N22 billion
were spent on import duties. 520 of the buses are still at the seaport,” Mojeed had said. He further said that the Accountant General of the state told the committee that she depended on the approval of Ambode for the purchase of the busses and that no payment voucher was made available to the committee. The lawmaker added that they also demanded for the budget instrument used for the purchase, but that there was no budgetary provision for the purchases. “They could not produce any newspaper where the purchase of the buses was advertised,” Mojeed said. On his part, Gbolahan Yishawu, chairman adhoc on mid-year budget review, alleged that the above mentioned commissioners were invited by his committee but that they refused to appear without giving any excuses for their absence. Yishawu also claimed that the former governor gave some directives on spending without the ap-
Sanwo-Olu congratulates Buhari on victory at Supreme Court
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agos State Governor, Babajide Sanwo-Olu has congratulated President Muhammadu Buhari on his victory at the Supreme Court, describing the judgment as ‘yet another landmark’ in the country’s annals. The governor said he received the news with “great joy”, noting that the Supreme Court’s judgment had not only consolidated the nation’s democracy, but also further strengthened the citizens’ belief in the judicial process. A seven-man panel of the Supreme Court headed by the Chief Justice of Nigeria, Justice Tanko Muhammed, on Wednesday, dismissed the appeal filed by the People’s Democratic Party (PDP) and its presidential candidate, Atiku Abubakar, challenging the victory of President Buhari in the February 23, 2019 presidential election. Sanwo-Olu, in a statement signed by Gboyega Akosile, his chief press secretary, said the APC’s victory at the apex court affirmed the will of majority of Nigerians, stressing
that the judgment averted the danger of returning the country to the period of plague, which, the governor said, defined the PDP’s “16 years of misrule”. Today’s judgment, Sanwo-Olu said, shattered all hurdles set against the President and has fully set him and his team on the journey to take the country to the Next Level in infrastructural renewal and economic development. The statement reads: “With great joy in my heart,
I have received the news of the victory of President Muhammadu Buhari and my great party, All Progressives Congress, at the Supreme Court today. This is yet another landmark judgment that will enrich our democratic and political processes. “The judgment is a great relief for all Nigerians after a period of fierce contest and bickering that marred the last general elections. The Supreme Court has not only upheld the choice
of greater number of Nigerians who chose APC and the President at the polls, it has also affirmed our belief in the judiciary as impartial arbiter whose pronouncements have strengthened our democracy in great leap. “I felicitate with President Buhari, APC national leaders and all Nigerians on this sweet victory. The judgment is instructive because it has cleared all hurdles set against our collective march to the Next Level of good governance heralded by renewed energy to restore the country’s glory in infrastructure, economy and social wellbeing. “The nation cannot afford to go back to the period of plague that characterised the PDP’s 16 years of misrule that pushed the whole country to the edge. Therefore, I see the judgment as a victory for good governance instituted by the APC-led Federal Government and for all patriotic Nigerians who share our philosophy for the rebirth of a new nation where everything will work.”
proval of the lawmakers. Addressing journalists on the matter after the adjournment by the Committee on Wednesday, Mojeed said that the matter was adjourned indefinitely as the committee got court summon to stay action on the matter and that they had to respect the opinion of the court. “We are lawmakers ; we are not lawbreakers which was why we had to adjourn the matter indefinitely. The people of Lagos should be expecting more from us,” he said. Also speaking, Hon. Gbolahan Yishawu said that the House was not trying to witch hunt anybody or put anybody on the spot for any reason. Yishawu stressed that the Assembly was not being pushed by any individual on the matter, while recalling that the issue dated back to 2017, when it was included in the appropriation law but was not approved by the House. However, Olaniran Obele from the chambers of
Tayo Oyetibo (SAN), the counsel of former governor Akinwunmi Ambode, protested that they were not allowed into the committee meeting. Obele stated that they were at the Assembly to hand over the court summon to the Chairman of the Committee and the Speaker of the House, but that the summon was not accepted and that they were prevented from witnessing the Committee meeting. “The court said that nothing should be done about the matter and we tried to serve notices to the Chairman of the Committee and the Speaker of the House, but they refused to accept it from us. “We were around, while the preliminary of the proceeding was on, but we were not allowed in. We didn’t come here to submit court proceedings alone, but we came to represent the former governor. If they didn’t take any step, we don’t have problem with that, but it would be very sad if they took any action,” he said.
Supreme Court judgment shocking - Bode George INIOBONG IWOK
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labode G eorge, former deputy national chairman of the People’s Democratic Party (PDP), has expressed deep shock over the Supreme Court verdict delivered in favour of President Muhammadu Buhari, saying that he was disappointed with the ruling. Atiku had challenged the victory of Buhari in the February Presidential election, alleging wide spread manipulation of the result. However, George des cr ib e d the Supreme Court decision as not only too swift and fast but was also unprecedented in the annals of the country. “I am shell-shocked. It is unbelievable,” he said. The politician gave this reaction on Wednesday in a statement made available to BusinssDay, pointing out that as a party man, he was disappointed with the ruling, which happened to be the verdict of the highest court in the land. According to him, “The
decision of the Supreme Court is too swift, too fast and unprecedented. I am shell shocked. It is unbelievable. As a party man I am disappointed with the ruling. But that is the pronouncement of the highest court in the land.” He called on the leaders and members of his party, PDP to come together to do a thorough soul searching to move the party forward, saying this was not the time to engage in blame game. “Our party must now come together to do a thorough soul searching. This is not the time to blame anyone. Let us shut our doors and look within and do an honest and sincere appraisal about the way forward,” he added. George equally called on President Buhari to heal the wounds, rectify the wrongs and bring the country together without malice and retribution. “It is now equally incumbent upon President Buhari to heal the wounds, rectify the wrongs and bring this nation together without malice, without retribution’”.
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JOSEPH COTTERILL IN JOHANNESBURG
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hapelo Maphoto, who owns a car-repair shop in the Johannesburg township of Soweto, is sad but not surprised that South Africa’s main opposition party has lost its first black leader. Mmusi Maimane, the Sowetoborn pastor who quit the Democratic Alliance (DA) last week after months of infighting, was only ever a “front,” said Mr Maphoto. “There were white people at the back who were in charge.” Mr Maimane was for four years the face of the only serious electoral threat to the ruling African National Congress (ANC), which has governed South Africa since 1994 and the end of white minority rule. But his admission last week that it was no longer “the best vehicle” to unite South Africa was a damning verdict on the DA’s attempts to transform itself from a mainly white liberal party into a vehicle that could win over the black majority and mount an election challenge to the ANC. “It has become more and more clear to me that there exists those in the DA who do not see eye-to-eye with me, who do not share the vision for the party,” Mr Maimane said as he quit on Wednesday. His transformation attempt has now collapsed in ugly recriminations, causing an exodus of senior politicians including
Opposition rift highlights South Africa’s race inequality
Maimane’s resignation a damning verdict on DA’s attempts to transform itself
Mmusi Maimane quit as Democratic Alliance leader last week © Reuters
Herman Mashaba, mayor of Johannesburg. The infighting has not only exposed a deep cleft in South Africa’s post-apartheid democracy, it has weakened an important check on President Cyril Rama-
Vote by US lawmakers comes after Trump administration lifted separate penalties on Ankara
Cost overruns at delayed Hollywood outpost squeeze co-working space’s finances
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econd Home, the co-working space run by a former aide to David Cameron, the former UK prime minister, has been forced to seek new funding after multimillion-dollar cost overruns at its long-delayed Hollywood outpost squeezed the start-up’s finances. Rohan Silva, the start-up’s cofounder, told the Financial Times he had agreed terms for a new injection of capital from existing investors, dismissing concern from several people close to the company who said it was facing a cash crunch. Second Home’s search for new funding, a year after it had raised £20m, came just as investors were cooling on shared-office start-ups, following the spectacular implosion of SoftBank-backed WeWork. The UK-based start-up, which has five other locations in London and Lisbon, has also been hit by the recent resignation of its chief financial officer, Matt Roeser, according to two people familiar with the matter. Mr Roeser, who joined Second Home a year ago, resigned in Septem-
AIME WILLIAMS IN WASHINGTON
ber but agreed to stay on a little longer in a limited capacity, one of the people said. Mr Roeser declined to comment. Mr Silva said he expected the new funds to arrive before the end of November, which should help to cover the extra costs incurred by the build-out of its flashy new Los Angeles space, as well as fund future expansion. He declined to name the followon investors or specify how much they had promised. The start-up has previously raised over £60m from big-name investors including Martin Lau, Tencent president, Jim O’Neill, former Goldman Sachs chief economist, and Yuri Milner, a Russian billionaire, as well as top European venture capital firms Index Ventures and Atomico. Second Home was launched in 2014 by Mr Silva, who was an adviser to Mr Cameron in government and played a key role in the London “Tech City” initiative, and Sam Aldenton, a London-based food and entertainment entrepreneur. The pair built the company with a heavy emphasis on design and aesthetics that helped Second Home, with the assistance of its architects, SelgasCano, stand out in a crowded co-working space market and win plaudits in the press. www.businessday.ng
party this month despite past comments that colonial rule in South Africa was not all bad. “I cannot reconcile myself with a group of people who believe that race is irrelevant in the discussion of poverty and in-
House passes bill for sanctions on Turkey over Syria offensive
Shared office start-up Second Home forced to seek fresh funding KADHIM SHUBBER IN WASHINGTON, TIM BRADSHAW AND JUDITH EVANS IN LONDON
phosa’s government as the country grapples with weak economic growth, frequent power blackouts and ANC infighting. The trigger was the return of Helen Zille, a former leader who rejoined the senior ranks of the
equality in South Africa in 2019,” Mr Mashaba said in response. “I cannot reconcile myself with people who do not see that South Africa is more unequal today than it was in 1994.” South Africa remains the world’s most unequal country. The top 10 per cent, mostly whites, hold 70 per cent of the wealth, while the bottom 60 per cent, overwhelmingly in the black majority, have ten times less, data from the World Bank show. Sithembile Mbete, a Pretoria University political scientist, said the fact that South Africans were unable to agree on the historic causes of inequality, let alone address them, made it “almost impossible” to build a non-racial coalition that can take on the ANC. The average white and black person had “fundamentally different starting points for what apartheid was, what colonialism was, and what has happened since 1994. That is what the DA exemplified,” she said. “It shows there is no common view across races of what the national question is.”
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he US House of Representatives has overwhelmingly passed a bill threatening fresh sanctions on Turkey to punish it for its offensive into north-east Syria, signalling continuing unhappiness with Ankara on Capitol Hill. The bill, which threatens to freeze the assets of senior Turkish officials and ban arms transfers to Turkey, as well as threatening large Turkish banks with penalties, passed with 403 votes to 16. The strong bipartisan support for the bill comes shortly after the Trump administration lifted a separate package of sanctions to reward Turkey for holding to a ceasefire agreement following its attacks on US-allied Kurdish fighters in Syria. That agreement, brokered by Mike Pence, US vice-president, saw Kurdish-dominated Syrian Democratic Forces promising to withdraw from an agreed 32km “safe zone” area near the Turkish border in exchange for a pause in the Turkish attack. Turkey and Russia separately reached a deal to push the Kurdish forces away from the border and conduct joint patrols in the area, from which US troops have withdrawn.
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Mr Trump has been criticised by US lawmakers, including members of his Republican party, for abandoning Washington’s local ally in Syria, and handing a strategic victory to Bashar al-Assad, the Syrian president, and his two main foreign backers Russia and Iran. Eliot Engel, the Democrat chair of the House foreign relations committee and a co-sponsor of the bipartisan bill, said the measures were “targeted, smart sanctions to incentivise Erdogan to stop his military offensive, cease violence against Syrian Kurdish communities, and withdraw from Syria”. “President Trump has let Erdogan off scot-free for a heinous assault that is destabilising the region and threatening international security,” said Mr Engel. “President Trump and President Erdogan are responsible for the catastrophe in north-east Syria. They both must be held accountable.” Lindsey Graham, a Republican senator who has sponsored a similar bill outlining sanctions measures to be taken against Ankara in the senate, said the House vote was an “awesome bipartisan takedown of Turkey’s invasion”. Writing on Twitter, Mr Graham, who has been a vocal critic of Mr @Businessdayng
Trump’s decision to withdraw troops from Syria, said he expected the senate to “take up this cause and let Turkey unequivocally know that the United States will not sit on the sidelines as they create problems for us and our allies”. The measure also has broad bipartisan support in the Senate. The House bill also threatens to impose sanctions on Turkey under the Countering America’s Adversaries Through Sanctions Act — known by its acronym of Caatsa — to punish Ankara for its purchase of a Russian missile defence system despite US objections. The Trump administration has refrained from levying the sanctions, despite Ankara taking delivering of the Russian S-400 system. The vote follows an earlier House resolution condemning Mr Trump’s decision to withdraw troops from north-east Syria. US officials have now said some troops will remain in the oil-rich regions of the north-east to protect oilfields from falling into the hands of Isis. Mark Esper, the US secretary of defence, has confirmed that US forces remaining in Syria to carry out counter-terrorism operations would remain in “close contact” with Kurdish-backed forces.
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Laos’s Belt and Road project sparks questions over China ambitions High-speed train line in one of Asia’s poorest countries may benefit Beijing more than locals JOHN REED IN LUANG PRABANG AND KATHRIN HILLE IN TAIPEI
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ear Bom Or, a village of dirt streets and shacks in northern Laos, Chinese construction crews have cut a tunnel through a mountainside to carry high-speed trains along a 400km rail line across the country, a section of a planned route from Kunming in south-west China to Singapore. The tunnel is part of a $6.7bn project through the rugged countryside around Luang Prabang, the ancient capital of Laos, one of the highest profile being built under China’s Belt and Road Initiative. Beijing has used the programme to build roads, ports and power stations in some of the world’s poorest countries. But critics have raised concerns about the social and environmental impact of the projects, saying that many of them are white elephants that have left states heavily indebted to Beijing. The project in Laos, one of Asia’s poorest countries which has no independent media and limited civil society groups, has been carried out with little public consultation. A villager in Bom Or told the Financial Times that some 30 households had been visited three times in September by the Laos government and Chinese company officials, who asked them to move to make way for the train. They refused because they had not been offered financial compensation or alternative housing. “We will not leave,” said one man, who asked not to be identified for fear of repercussions. “We want to see a place where we can live.” Laos’s Communist government sees the rail line as central to its strategy of making the landlocked country “land-linked”, a term officials are using in their quest to refashion it as a regional transport hub. “This project is very good for Laos,” Lattanamany Khounnyvong, vice-minister of public works and transportation, told the FT at the Asia Infrastructure Forum 2019, a conference of which the FT was a partner. The railway, set to open in 2021, will facilitate Laos’s ability to transport goods around the region faster and “about three times cheaper” than today, he added. The Laos-China Railway Company, which is building and will operate the link, is 30 per cent owned by Laos’s state railway company and 70 per cent by Chinese state-owned companies. These include the investment company of Yunnan, the province of which Kunming is capital; an affiliate of the sovereign
wealth fund China Investment Corporation; and civil engineering affiliates of the state-owned rail, power and water companies. Chinese companies have won tenders to build six sections of the railway in Laos. The opening to the new tunnel sits under a sign for PowerChina, a subsidiary of which is building this section of the line. Laos’s government has taken on $480m of loans from China’s Eximbank, on concessional terms. The amount is equivalent to about 2 per cent of Laos’s gross domestic product. However, the IMF classifies Laos as a country with an “elevated” risk of debt distress because of its high existing debt, which amounts to nearly 65 per cent of GDP. The project’s backers have not made the business plan public, so little is known about its assumptions of how many passengers will use the train. “The main problem is that the high-speed train is driven by a political economy agenda that serves the promoting nation much more than the recipient country,” said Ruth Banomyong, a professor of supply chain logistics management at Thammasat Business School in Bangkok. “Apart from the debt incurred by Laos, it will also be very difficult for the Lao private sector to gain benefit from this new infrastructure, as they are less competitive than the Chineserelated business ecosystem.” One likely source of business will be Chinese tourists visiting Laos, whose numbers have roughly doubled from 400,000 in 2014 to 800,000 last year. “It is Chinese tourists and products in, and raw materials out,” said Nadège Rolland, an expert on BRI with the National Bureau of Asian Research, a US think-tank. “But eventually the BRI is about much more than infrastructure — it is policy coordination that will align the claimed needs of the region with those of Beijing.” Ms Rolland added that, like its neighbour Cambodia, Laos — with its small economic base, history of Chinese immigration and shared Communist party rule — was fertile ground for Beijing to build influence. While Laos has moved quickly on its section of the proposed Kunming-to-Singapore link, other parts of the proposed rail line remain unbuilt. The Thai part is only set to be completed by 2025. “This is a demonstration of China’s ability to overcome all natural obstacles in pursuit of economic development and broader strategic goals,” said Sebastian Strangio, author of a forthcoming book on China’s impact in south-east Asia. “What’s in it for Laos is a little bit more contentious.” www.businessday.ng
Margrethe Vestager has taken a robust stance on Big Tech © STEPHANIE LECOCQ/EPA-EFE/Shutterstock
Margrethe Vestager eyes toughening ‘burden of proof’ for Big Tech
EU antitrust chief says dominant groups such as Google should face tougher obligations JAVIER ESPINOZA AND SAM FLEMING IN BRUSSELS
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arge internet companies could be held to higher standards of proof in competition cases as part of changes to EU rules being considered by Margrethe Vestager. The EU antitrust chief said she was examining a proposal from independent experts suggesting that digital platforms suspected of anticompetitive behaviour be required, in certain cases, to demonstrate clear gains for their users to avoid punitive measures — instead of Brussels having to show the damaging effects on consumers. “I think it’s an important discussion in figuring out what kind of regulation would be useful,” Ms Vestager told the Financial Times. Stressing she had yet to reach a decision on whether to tighten the standard of proof, the Danish
politician said that companies such as Google should bear extra responsibilities because they are so dominant that they have become “de facto regulators” in their markets. “When you own a market and you’re the de facto market regulator, what are then the obligations that you get? And how do you show that you actually meet your obligations?,” the commissioner said. Ms Vestager’s tough line on Big Tech has won her both admirers and political enemies on both sides of the Atlantic during her first term in Brussels. The commissioner levied more than €8bn in antitrust fines on Google and demanded that Apple cough up €13bn in an illegal state aid case. As she prepares for a wider role under incoming commission president Ursula von der Leyen, Ms Vestager is envisaging an overhaul of EU regulation alongside further competition enforcement actions. The change in the burden of
proof would be limited in its scope, according to a person with direct knowledge of the talks. It would apply to companies preventing users from accessing multiple apps and companies blocking access to their data for third-party applications looking to offer supplementary services — such as apps that read emails. “Say for instance, Uber started offering higher rates for those drivers who used its platform more often,” said this person. “This would put competitors at a disadvantage because drivers would start favouring Uber to carry out their trips over competing apps. Under the proposed change it would be Uber who would need to show its behaviour is causing no harm to competition rather than the commission having to prove it.” An EU official stressed that changing the burden of proof was one of several suggestions under review and there was no certainty it would be adopted.
Senior Democrat queries link between Biden probe and trade talks Ron Wyden ‘concerned’ negotiations with China tied to president’s personal interests DEMETRI SEVASTOPULO IN WASHINGTON
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on Wyden, the top Democrat on the Senate finance committee, has asked the Trump administration to make clear whether the president or his cabinet attempted to link the USChina trade negotiations to a request to find compromising information on former vice-president Joe Biden. In a letter to several cabinet secretaries — including Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state — Mr Wyden said he was “deeply concerned” that recent comments by two of Donald Trump’s advisers suggested the president was attempting to connect his personal political interests with a trade deal.
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Mr Wyden said he became concerned after Mike Pillsbury, an informal White House China adviser, told the Financial Times this month that he received details about Hunter Biden’s business activities in the country during a trip to Beijing. Mr Pillsbury’s remarks came after Mr Trump had urged Beijing to investigate Mr Biden, a top contender for the Democratic presidential nomination, and his son Hunter. The Oregon Democrat also expressed concern that Peter Navarro, a White House trade adviser, refused to clarify whether the Trump administration had raised the issue of Joe Biden or his son’s activities in China at any time during the trade negotiations in two television interviews on CNN. “There is every reason to believe that the administration is seeking to @Businessdayng
link advancement on a trade deal with advancement of its own domestic political agenda,” Mr Wyden wrote in the letter, which was also sent to Robert Lighthizer, US trade representative. Earlier this month, Mr Trump publicly called on China to investigate the Bidens, in comments that came amid an impeachment investigation into whether he tried to pressure the president of Ukraine to help unearth dirt on Mr Biden and Hunter’s business activities in Ukraine. After returning from a trip to China, Mr Pillsbury told Fox Business that he had raised the Biden issue during his visit. Asked by the FT if he had been successful, Mr Pillsbury said via email: “I got quite a bit of background on Hunter Biden from the Chinese.”
Thursday 31 October 2019
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FINANCIAL TIMES
COMPANIES & MARKETS
@ FINANCIAL TIMES LIMITED
Default risk rises rapidly in frontier markets Almost half of countries already distressed or at high risk of distress, IMF says STEVE JOHNSON
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lmost half of frontier market countries are either at high risk of falling into debt distress or are already distressed, the IMF has said, up from zero as recently as 2014. The warning comes as issuance of hard currency frontier market debt is set to hit a record high this year, with $38bn set to be raised, according to the IMF. Several African states, in particular, are already struggling to service their debts. Mozambique is already in default after it borrowed more than $2bn, much of it concealed from the IMF and donors, ostensibly to finance a tuna fishing fleet and maritime security projects, only for much of the money to be diverted to kickbacks for bankers and government officials, according to US prosecutors. The Republic of the Congo, Africa’s third-largest oil producer, Zimbabwe, The Gambia and Grenada are also on a list of nine states the IMF classes as being “in debt distress”. A further 24 countries, including Ethiopia, Ghana, Zambia, Haiti, Laos and Tajikistan are deemed to be at “high” risk of following suit, by far the highest level since comparable records began in 2010. “There have been many drivers: wider fiscal deficits, there has been an exogenous shock because of the commodity shock in 2014; civil conflicts: there have been many examples in the low-income space in recent years; there have been a few cases of weak governance, where debt was concealed,” said Dimitris Drakopoulos, co-author of the IMF’s analysis. “Another driver has been the change in composition of debt, from more concessional sources to more commercial borrowing.” Yields on frontier market bonds have fallen from a peak of 8.2 per cent in November 2018 to 6.2 per cent. However, the IMF’s Global Financial Stability Report said this rally was
driven by “favourable” external conditions — ever more dovish global monetary policy conditions and a resultant intensification of the hunt for yield — rather than an improvement in frontier markets’ underlying domestic economic fundamentals. Against this backdrop, an issuance freeze in the second half of 2018 has melted away, leading the IMF to forecast that a record $38bn of hard currency frontier market debt will be minted this year. The outstanding stock of such debt has already tripled to $200bn over the past five years with the median issuer now labouring under a debt pile equivalent to 7 per cent of gross domestic product and close to half its gross reserves, compared with 3 per cent and 20 per cent respectively in 2014. In terms of debt to GDP, the median frontier issuer now has a ratio of about 55 per cent, a rise of almost 20 percentage points since 2013. The IMF cited Angola, Gabon, Tunisia, Zambia, Belize, Ecuador and Jamaica as countries that, over the coming years, will see their debt service obligations to the private sector “rise substantially or remain elevated”. Moreover, a rise in bilateral loans from non-Paris Club lenders, including China, particularly to the very poorest countries, presents additional risks as “the total exposure of some of these creditors does not appear in government debt statistics”. Some other observers are perhaps a little less worried about the build-up in frontier debt than the IMF, however. David Spegel, founder of bond market consultancy Fundamental Intelligence, accepted that levels of distress have risen, largely driven by the rash of countries that have issued their inaugural external bond in recent years. However, he argued that the problems are not as deepseated as in 2008-09, during the global financial crisis, or even 2011 when the eurozone crisis was raging, events that sapped appetite for risk more broadly.
Venezuela opposition files lawsuit against holders of PDVSA bonds Juan Guaidó’s team tries to shield oil group’s crown jewel Citgo from being seized COLBY SMITH IN NEW YORK AND GIDEON LONG IN BOGOTÁ
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he Venezuelan opposition led by Juan Guaidó has filed a lawsuit against holders of a bond issued by state-owned oil company PDVSA, claiming the debt should be annulled and that creditors do not have the right to seize a 50.1 per cent stake of Citgo, the Texas-based oil refiner, which serves as the bond’s collateral. The legal action comes just days after the US government extended an eleventh-hour lifeline to the Guaidó team and temporarily shielded Venezuela’s crown jewel from seizure by creditors. The opposition government, which is recognised by the US and almost 60 other nations as the legitimate one, owed creditors $913m on Monday and had indicated before
this week’s payment deadline that it would not be able to service the bond set to mature next year. Without the protective measure from the US Treasury department, which bars bondholders for 90 days from collecting on the collateral tied to the bond, the creditors could have laid claim on Citgo. PDVSA’s ad hoc board, which is a plaintiff and filed the lawsuit against the trustee of the bonds, MUFG Union Bank, in the US District Court for the Southern District of New York, claims the debt is illegal because the government led by Nicolás Maduro did not ask permission from the oppositioncontrolled Congress to issue the debt and use Citgo as collateral. Legal experts and investors have pushed back on this argument, warning it may not stand up in a US court. www.businessday.ng
Workers at an Indiabulls Real Estate project in Mumbai. A liquidity crunch in India’s non-bank financial sector could also threaten the country’s banks and realestate sector © Bloomberg
India’s shadow banking crisis raises spectre of contagion Financial groups such as Indiabulls see shares fall as crisis grows BENJAMIN PARKIN IN MUMBAI
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t the turn of the millennium, a group of entrepreneurs in their twenties banded together in a cramped office near a New Delhi bus terminal to start what they hoped would be India’s answer to Charles Schwab. Almost two decades later, founder Sameer Gehlaut — the son of a politician and army officer, once dubbed India’s youngest billionaire — and longtime executive Gagan Banga have more than achieved their dream, turning their company Indiabulls into one of the country’s most prominent financial groups. Today, Indiabulls comprises a non-bank financial company, or shadow bank, with $17bn in assets and a real-estate developer. It has thrown its weight behind eye-catching projects such as the construction of India’s tallest building and the Mandarin Hotel
in Mayfair. “They came out of nowhere,” said one Mumbai-based executive. But the group’s success has been overshadowed in recent months by a growing crisis in India’s shadow banks, whose problems investors and analysts increasingly fear could spark contagion among conventional banks and real-estate companies and cause a broader financial crisis. Shares of Indiabulls Housing Finance have fallen about 50 per cent since late September after the central bank blocked an attempted merger with a local bank, cutting off an important source of financing. A court, meanwhile, also agreed to hear a lawsuit alleging that Indiabulls misused funds — claims the company strenuously denies. “We took on the big daddies of that time,” Mr Banga said, referring to the company’s rise. “It’s not the first time that we’ve been hurt.” The woes at Indiabulls come only a year after the collapse of
another shadow bank, IL&FS, sparked panic known as India’s “Lehman moment”. With the funding crunch since spreading to many of India’s 10,000-odd NBFCs — which are broadly less regulated than conventional banks — analysts say last year’s scare may not be a one-off. A Reserve Bank of India report estimated that the failure of the largest NBFCs or housing finance companies could cause defaults in up to two banks. Nervousness about the financial sector rose this month after the RBI, responding to troubles at a small co-operative bank, issued a statement that the “Indian banking system is safe and stable and there is no need to panic”. “It’s only a matter of time, if things are not resolved, that we’ll start to see bigger defaults in the sector,” said Saswata Guha, Fitch’s head of financial institutions in India. “There’s a risk of contagion which may flow through [NBFCs] and also banks. It’s very hard to say how this will unravel.”
Citi plans to withdraw from two-thirds of foreign exchange platforms Market’s third biggest dealer is whittling down its list of third-party price aggregators EVA SZALAY IN LONDON
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ne of the biggest banks in the currencies market is learning to say no to customers. Citi, the third biggest dealer in the $6.6tn-a-day foreign-exchange market, plans to whittle down the number of websites and systems on which it competes with other banks on prices to win business from clients. The bank plans to reduce the number of systems it uses to connect with customers by two-thirds by the first quarter of next year, people familiar with the matter told the Financial Times. This could save the bank millions of dollars a year in costs.
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The move also suggests that after two decades during which competing banks have leapt at almost any chance to join third-party systems in response to customer behaviour, they now want to wrest back more control. One person familiar with the matter said there is a feeling that banks are paying the bills to provide a “free option” for clients. Citi is seeking to cut the total number of supported platforms from 45 to 15 by the first quarter of 2020. It has sent a survey to all those providers, seen by the FT, which scores each one on the breadth of products they offer, the fees they charge and transparency on processes, as well as other metrics. All big banks invest heavily in their own systems for churning out @Businessdayng
currency prices to clients but many of those customers prefer to line up various banks’ prices in one place, especially since Europe-wide Mifid II rules have forced them to show they have sought the best price available for each deal. So-called multibank systems such as FXall and 360T have flourished to meet that need, catering to different types of customer and imposing a good deal of discretion over how prices are processed and executed. Some of these systems are popular with clients and have become an established feature of how currencies change hands each day. Others, Citi thinks, are less worth the effort and expense. A spokesperson for the bank declined to comment.
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Will Boris Johnson’s high stakes election gamble backfire? PM’s bid to end ‘paralysis’ with snap poll risks deepening Brexit crisis, Tory MPs fear GEORGE PARKER AND LAURA HUGHES IN LONDON
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oris Johnson declared on Tuesday he wants a December election to end the “paralysis” at Westminster and to deliver Brexit; for some Conservative MPs it is a high-stakes gamble that could end up producing the opposite result. Tory MPs are haunted by Theresa May’s 2017 election, which was supposed to create a House of Commons majority to allow her to push through a hard form of Brexit. Instead the Tories went backwards and Brexit became a quagmire. “It’s possible this is the moment he threw Brexit away,” one former Conservative minister said. “I think we will end up with another hung parliament.” Rory Stewart, former Tory leadership contender, agreed: “It will be a repeat of what happened in 2017.” Ken Clarke, former Tory chancellor, said of Mr Johnson: “Of course he could lose Brexit. That’s why the Liberal Democrats and the SNP want an election now, they want to stop Brexit.” If Mr Johnson fails to secure a House of Commons majority, there is a risk that a coalition of Labour, Scottish National party and the Lib Dems could combine to frustrate Brexit, probably by holding another referendum with Britain remaining in the EU one of the options. Inside Downing Street, Mr Johnson’s team concluded that they had no choice other than to push for an early election to end the debilitating political stalemate at Westminster, but even behind the polished black door there is a sense of nervousness. “Of course it’s a gamble,” said one senior adviser to the prime minister. “But it’s the least worst
option.” If Mr Johnson’s election gambit backfires, Tory MPs will be asking whether he could have taken a different route. Mr Johnson and his advisers had always favoured holding an election once Brexit had been delivered. It was the logic that drove his ill-fated “do or die” promise to take Britain out of the EU on October 31. The politics were simple. If Mr Johnson could deliver Brexit against the odds, he could run a Christmas election campaign as the hero of Leave voters who was now best placed to reunite the country with a One Nation form of Conservatism. Better still, Mr Johnson could neutralise Nigel Farage’s Brexit party and hobble the Lib Dems, the pro-EU party that threatened the Tories in Remain areas by promising to overturn Brexit. That plan effectively died on Tuesday when MPs voted against Mr Johnson’s motion to railroad his Brexit deal through parliament in a matter of days, effectively removing any hope of a pre-Christmas election. “We knew at that point we had a problem,” one Tory insider said. “There was a sense that no matter what we did, parliament would always choose delay.” Mr Johnson feared that MPs would wage a winter parliamentary war against his Brexit deal, amending the legislation needed to put it into effect in a series of parliamentary ambushes, sapping his party’s morale and undermining his authority. Julian Smith, Northern Ireland secretary, was among Tories who argued that Mr Johnson should not give up that easily and should carry on trying to pass his Withdrawal Agreement bill, which received its second reading with a 30 majority.
US Federal Reserve rate decision: 4 things to watch
Chairman Jay Powell expected to deliver third interest rate cut BRENDAN GREELEY IN WASHINGTON AND COLBY SMITH IN NEW YORK
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he US economy is “in a good place,” Fed officials say: Unemployment remains at a half-century low, with little pressure on inflation. And yet after the Fed slashed its benchmark policy rate in July and in September, investors expect another cut this week. Fed officials have described the cuts as an insurance premium, to prevent a global slowdown in trade and manufacturing from dragging on American consumers. Here’s what to look for when the Fed’s Open Market Committee concludes discussion of its policy rates on Wednesday: Has the insurance premium been paid? Traders have priced in a 95 per cent likelihood of another 25 basis point cut this week, according to an analysis of bets on the Fed’s policy rate by the CME Group. Fed policymakers have said little that would discourage them. That would make
75 basis points of easing since July. Michelle Meyer, chief US economist for Bank of America Merrill Lynch, said that’s the norm for insurance cuts, and will be watching for language from chair Jay Powell’s press conference on whether insurance is still the right metaphor. “Now that they’ve delivered their insurance cuts,” said Ms Meyer, “what are they looking for in the real-time data?” Tim Duy, professor at the University of Oregon said the Fed may be done fending off the trade war, and is going to have to lay out what the conditions are for any further action. “A lot of things seem to be going right,” he said, “It just doesn’t look to me like there’s any strong evidence that there’s anything falling off a cliff.” Markets have come round to the idea the Fed could pause after this week’s cut to have another look. According to the CME Group, investors are pricing in just a one-in-five chance of another quarter-point reduction in the benchmark policy rate in December.
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Inside the WhatsApp hack: How an Israeli technology was used to surveil Countries from Rwanda to Saudi Arabia accused of spying on dissidents and journalists MEHUL SRIVASTAVA IN TEL AVIV AND TOM WILSON IN NAIROBI
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arlier this year, Faustin Rukundo’s phone started to ring at odd times. The calls were always on WhatsApp — sometimes from a Scandinavian number, sometimes a video call — but the caller would hang-up before he could answer. When he rang back no one would pick up. Mr Rukundo, a British citizen who lives in Leeds, had reason to be suspicious. As a member of a Rwandan opposition group in exile, he has lived for several years in fear of the security services of the central African nation where he was born. In 2017, his wife, also a British national, was arrested and held for two months in Rwanda when she returned for her father’s funeral. Unidentified men in black suits have previously queried her co-workers about her route to the childcare centre where she works, he says. His own name has shown up in a widely circulated list of enemies of the government of Rwanda titled “Those who must be killed immediately”. In the two decades since Paul Kagame became president of Rwanda, dozens of dissidents have disappeared or died in unexplained circumstances around the world. In response, those willing to criticise the regime or organise against it, such as Mr Rukundo, say they have learnt to be cautious, masking their presence on the internet and using encrypted messaging services such as WhatsApp. But the missed WhatsApp calls were more ominous. Powered by a technology built not in Rwanda but in Israel, the calls were a harbinger of Pegasus, an all-seeing spyware so powerful that the Israeli government classifies it as a weapon. Developed and sold by the Herzlia-based NSO Group, which is part-owned by a UK-based private equity group called Novalpina Capital, Pegasus was designed to worm its way into phones such as Mr Rukundo’s and start transmitting the owner’s location, their encrypted
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chats, travel plans — and even the voices of people the owners met — to servers around the world. Since 2012, NSO has devised various ways to deliver Pegasus to targeted phones — sometimes as a malicious link in a text message, or a redirected website that infected the device. But by May this year, the FT reported, NSO had developed a new method by weaponising a vulnerability in WhatsApp, used by 1.5bn people globally, to deliver Pegasus completely surreptitiously. The user did not even have to answer the phone but once delivered, the software instantly used flaws in the device’s operating system to turn it into a secret eavesdropping tool. WhatsApp quickly closed the vulnerability and launched a sixmonth investigation into the abuse of its platforms. The probe, carried out in secrecy, makes apparent for the first time the extent — and nature — of the surveillance operations that NSO has enabled. In recent days, the University of Toronto’s Citizen Lab, which studies digital surveillance around the world and is working in partnership with WhatsApp, started to notify journalists, human rights activists and other members of civil society — like Mr Rukundo — whose phones had been targeted using the spyware. It also provided help to defend themselves in the future. NSO — which was valued at $1bn in a leveraged buyout backed by Novalpina in February — says its technology is sold only to carefully vetted customers and used to prevent terrorism and crime. NSO has said it respects human rights unequivocally, and it conducts a thorough evaluation of the potential for misuse of its products by clients, which includes a review of a country’s past human rights record and governance standards. The company believes the allegations of misuse of its products are based on “erroneous information”. The NSO Group said in a statement: “In the strongest possible terms, we dispute today’s allegations and will vigorously fight them. Our technology is not designed or licensed for use against human @Businessdayng
rights activists and journalists.” But WhatsApp’s internal investigation undercuts the efficacy of such vetting. In the roughly two weeks before WhatsApp closed the vulnerability, at least 1,400 people around the world were targeted through missed calls on the platform, including 100 members of “civil society”, the company said in a statement on Tuesday. This is “an unmistakable pattern of abuse”, the Facebook-owned business said. “There must be strong legal oversight of cyber weapons like the one used in this attack to ensure they are not used to violate individual rights and freedoms people deserve wherever they live. Human rights groups have documented a disturbing trend that such tools have been used to attack journalists and human rights defenders.” The two-week snapshot provides a rare glimpse of how some of NSO’s clients use its spyware — with greater frequency than previously known, and often to monitor people unrelated to terrorism or criminal activity. Those targeted include people from at least 20 countries, across four continents, with many showing clear evidence that the attempted intrusions had nothing to do with preventing terrorism, says John Scott-Railton, a senior researcher at Citizen Lab. The targets include several prominent women who have had intimate material released; opposition politicians; prominent religious figures of multiple faiths; journalists, lawyers and officials at humanitarian organisations fighting corruption and human rights abuses. Some have previously been the subject of assassination attempts and face continuous threats of violence. It appears that the surveillance originates from multiple customers of NSO’s technology, he adds. “This is in stark contrast to NSO’s claim that there is not a systematic pattern of abuse — rather, it indicates that there is a global pattern of abuse,” says Mr Scott-Railton. “The window that this represents shows us that anyone looking systematically at how this technology is used will find a similar pattern.”
Thursday 31 October 2019
BUSINESS DAY
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Thursday 31 October 2019
BUSINESS DAY
51
Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 30 October 2019 Company
Market cap(nm)
Price (N)
Change
Trades
Volume
Company
Market cap(nm)
Price (N)
Change
Trades
Volume
PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 266,589.19 7.50 2.04 171 18,707,751 UNITED BANK FOR AFRICA PLC 196,646.67 5.75 0.87 189 11,031,975 ZENITH BANK PLC 532,170.57 16.95 -0.29 394 14,502,344 754 44,242,070 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 190,245.05 5.30 0.94 153 4,658,740 153 4,658,740 907 48,900,810 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,585,023.16 127.00 0.04 46 1,982,790 46 1,982,790 46 1,982,790 BUILDING MATERIALS DANGOTE CEMENT PLC 2,539,035.60 149.00 2.05 199 3,818,663 LAFARGE AFRICA PLC. 215,844.46 13.40 -6.62 87 1,333,871 286 5,152,534 286 5,152,534 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 304,225.84 517.00 - 28 15,481 28 15,481 28 15,481 1,267 56,051,615 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 13,074.52 4.90 - 1 1,420 1 1,420 1 1,420 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 1,420 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 52,417.35 54.95 - 20 57,672 PRESCO PLC 38,400.00 38.40 - 4 1,600 24 59,272 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,380.00 0.46 - 7 28,770 7 28,770 31 88,042 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 0 0 JOHN HOLT PLC. 214.03 0.55 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 1 2 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 -3.81 75 7,971,164 U A C N PLC. 18,584.36 6.45 7.50 48 732,761 124 8,703,927 124 8,703,927 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 9 36,574 ROADS NIG PLC. 165.00 6.60 - 0 0 9 36,574 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,780.28 1.07 - 3 10,100 3 10,100 12 46,674 DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,907.79 1.01 -0.98 2 497,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 52,240.63 23.85 - 29 60,579 INTERNATIONAL BREWERIES PLC. 108,307.86 12.60 - 1 238 NIGERIAN BREW. PLC. 369,856.72 46.25 - 53 221,183 85 779,000 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 111,250.00 22.25 - 0 0 DANGOTE SUGAR REFINERY PLC 124,200.00 10.35 - 46 364,622 FLOUR MILLS NIG. PLC. 57,405.31 14.00 -9.68 64 2,406,651 HONEYWELL FLOUR MILL PLC 7,533.69 0.95 - 6 34,658 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,344.16 14.85 - 9 19,540 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 125 2,825,471 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,030.74 9.60 - 21 58,500 NESTLE NIGERIA PLC. 967,040.63 1,220.00 - 67 55,831 88 114,331 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,377.95 3.50 - 20 160,124 20 160,124 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 21,837.62 5.50 - 21 196,955 UNILEVER NIGERIA PLC. 153,391.64 26.70 - 5 37,228 26 234,183 344 4,113,109 BANKING ECOBANK TRANSNATIONAL INCORPORATED 130,281.81 7.10 - 34 177,370 FIDELITY BANK PLC 48,967.41 1.69 0.60 103 8,092,126 GUARANTY TRUST BANK PLC. 750,495.07 25.50 0.20 233 9,971,384 JAIZ BANK PLC 13,258.91 0.45 -4.44 10 4,462,627 STERLING BANK PLC. 57,580.84 2.00 -1.50 214 19,450,078 UNION BANK NIG.PLC. 205,301.31 7.05 - 24 28,246 UNITY BANK PLC 6,896.71 0.59 -6.35 19 1,080,925 WEMA BANK PLC. 21,601.70 0.56 -6.67 29 2,112,378 666 45,375,134 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 100 AIICO INSURANCE PLC. 4,643.24 0.67 -2.90 36 1,260,057 AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 4 11,373 3,008.10 0.37 - 0 0 CONSOLIDATED HALLMARK INSURANCE PLC CONTINENTAL REINSURANCE PLC 24,894.59 2.40 - 6 70,302 CORNERSTONE INSURANCE PLC 6,628.28 0.45 - 3 60,250 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 2 2,800 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,830.86 0.25 -3.85 11 658,483 LAW UNION AND ROCK INS. PLC. 2,105.20 0.49 8.89 5 260,000 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 5 150,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 3 10,000 NEM INSURANCE PLC 10,561.01 2.00 - 19 276,177 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 2 23,821 REGENCY ASSURANCE PLC 1,333.75 0.20 - 3 11,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 1 100 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 - 2 30,100 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 3 11,500 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,550.13 0.34 - 35 1,135,549 141 3,971,612 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,721.10 1.19 - 0 0 0 0
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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,800.00 3.90 - 50 598,920 CUSTODIAN INVESTMENT PLC 32,056.16 5.45 - 8 93,070 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,882.36 1.61 0.63 62 4,942,875 1,029.07 0.20 - 1 2 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 387,517.72 37.00 - 14 21,727 UNITED CAPITAL PLC 12,240.00 2.04 - 57 447,212 192 6,103,806 999 55,450,552 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 1 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 888.28 0.25 - 0 0 1 1 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 8,345.44 4.00 - 0 0 GLAXO SMITHKLINE CONSUMER NIG. PLC. 7,534.02 6.30 - 12 42,104 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 21 237,153 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 740.67 0.39 - 4 2,215,870 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 37 2,495,127 38 2,495,128 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 -4.35 8 1,442,000 8 1,442,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 0 0 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 4 123,963 4 123,963 PROCESSING SYSTEMS CHAMS PLC 1,033.13 0.22 - 5 572,616 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 5 572,616 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,157,510.66 308.00 - 8 5,562 8 5,562 25 2,144,141 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 6 4,370 CAP PLC 17,885.00 25.55 - 8 13,550 CEMENT CO. OF NORTH.NIG. PLC 208,981.67 15.90 - 13 87,820 MEYER PLC. 313.43 0.59 - 0 0 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 27 105,740 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,465.85 1.40 - 10 49,777 10 49,777 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 13 90,095 GREIF NIGERIA PLC 388.02 9.10 - 0 0 13 90,095 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 50 245,612 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 4 58,886 4 58,886 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 1 2,333 1 2,333 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 2 25,000,100 2 25,000,100 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 7 25,061,319 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 7 345,186 7 345,186 INTEGRATED OIL AND GAS SERVICES OANDO PLC 41,769.55 3.36 - 30 550,442 30 550,442 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 10 13,426 CONOIL PLC 10,686.86 15.40 - 18 33,612 ETERNA PLC. 3,716.81 2.85 - 4 12,343 FORTE OIL PLC. 20,709.45 15.90 - 37 163,506 MRS OIL NIGERIA PLC. 5,166.13 16.95 - 1 1,000 TOTAL NIGERIA PLC. 41,829.09 123.20 - 11 7,683 81 231,570 118 1,127,198 ADVERTISING AFROMEDIA PLC 1,642.45 0.37 -9.76 1 550,000 1 550,000 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 294.09 0.25 - 2 2,790 2 2,790 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 5 3,527 TRANS-NATIONWIDE EXPRESS PLC. 393.83 0.84 - 0 0 5 3,527 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 3 10,000 3 10,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,224.31 1.07 - 3 32,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 3 32,000 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 3,333 1 3,333 PRINTING/PUBLISHING ACADEMY PRESS PLC. 205.63 0.34 - 4 109,440 LEARN AFRICA PLC 856.31 1.11 - 9 116,340 1,183.82 1.99 - 0 0 STUDIO PRESS (NIG) PLC. UNIVERSITY PRESS PLC. 522.01 1.21 10.00 8 303,486 21 529,266 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 729.39 0.44 - 5 64,534 5 64,534 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0
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industry Insight
BUSINESS DAY Thursday 31 October 2019 www.businessday.ng
Lessons from India’s industrial model ODINAKA ANUDU, MICHAEL ANI & GBEMI FAMINU
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according to World Bank data. Beginning in the early 1980s, a mild trend towards deregulation started. Economic reforms were introduced and it started to liberalise trade, industrial and financial policies. Subsidies, tax concessions, and the depreciation of the currency improved four of 13 export incentives. These measures helped GDP growth to accelerate to over five percent per year during the 1980s, compared to 3.5 per cent during the 1970s. This reduced poverty more rapidly. However, India’s most fundamental structural problems were only partially addressed. Tariffs continued to be among the highest in the world, and quantitative restrictions remained pervasive. Moreover, a significant government influence continued in the allocation of credit to firms and discouragement of foreign investment. Relatively inefficient public enterprises, controlling nearly 20 percent of GDP, remained a drag on economic growth. The government expanded antipoverty schemes, especially rural employment schemes, but only a small fraction of the rising subsidies reached the poor. Competition between political parties drove subsidies up at every election. The resulting fiscal deficits (8.4 percent of GDP in 1985) contributed to a rising current account deficit. India’s foreign exchange reserves were virtually exhausted by mid1991 when a new government headed by Narasimha Rao came to power. The Late 90s could be described as the straw that hit the camel’s back for the Indian economy. The government flagged off economic policy reforms in the business, manufacturing and financial services industries, targeted at boosting economic growth. The reform was encroached in a model referred to as Liberalisation, Privatisation and Globalisation (LPG). The major aim of the LPG
model was to slacken government regulations hurting the growth of investment in the country, transferring of state-owned assets and position the country for consolidation among various economies of the world. In July 1991, India launched an economic reform programme. The government committed itself to promoting a competitive economy that would be open to trade and foreign investment. Measures were introduced to reduce the government’s influence in corporate investment decisions. Much of the industrial-licensing system was dismantled, and areas once closed to the private sector were opened up. These included electricity generation, areas of the oil industry, heavy industry, air transport, roads and some telecommunications. Foreign investment was suddenly welcomed. Greater global integration was encouraged with a significant reduction in the use of import
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ast Wednesday, we provided insights into China’s industrialisation strategy, highlighting lessons Nigeria can learn from key reforms taken by the Asian nation in the early 80s that boosted its growth and economy, pushing it up to the third largest in the world after the United States and the European Union. But China is not the only nation that has taken the pains to enact bold reforms. India, world’s second most populous country, is also a sure example to learn from. In this write-up, we would delve into India’s industrialisation policies that helped its nation to attract sufficient investments, reduce unemployment and lift well over 37 million of its populace out of poverty. Shortly after colonial rule, the Indian government followed a non-industrial model where it believed that the economic activities of what and how to produce should be determined by the state. The East Asian economy, between 1947 and 1964, under the leadership of Jawaharlal Nehru, the then prime minister, practised a bureaucratic centralised government that made licensing requirements stringent and accompanied by a gamut of procedures that required private investments to go through tight clearance by several disparate and uncoordinated ministries. With the claim of supporting local production of goods and services, the Indian government at that the time subjected almost all trade and capital imports to quantitative restrictions in the form of import licenses. This unhealthy policy was supplemented by tariffs at rates that were among the highest in the developing world. Aside from the high tariffs and imposed import restrictions, the government also subsidised produce from the nationalised firms, directed investment funds to them, and also controlled both land use and prices. This over-restrictive, and often self-defeating nature of the regulatory framework, began to become evident by the late 1960s and early 1970s. Comprehensive planning was increasingly criticised as planned targets were not met and many plans were not even implemented. The lack of success in some dimensions led to a new and more restrictive set of regulations. One example is the attempt to reserve sectors for small industries and to restrict the growth of large firms. The effect of these policy stances was liquidity squeeze, high unemployment, multinational poverty and weak economic growth. Not too long after, the country had the most number of poor living, with over 321 million of its populace living below the poverty trap in 1974,
Multiple taxes were removed and incentives were given to investors. Less than two decades after the policy, the industry has made a lot of impacts already on the economy
licenses and tariffs (down to 150 per cent from 400 per cent), elimination of subsidies for exports, and the introduction of a foreign exchange market. Since April 1992, there has been no need to obtain any license or permit to carry out import-export trade. As of April 1, 1993, trade is completely free, barring only a small list of imports and exports that are either regulated or banned. The World Trade Organisation (WTO) estimated an average import tariff of 71 per cent in 1993 which has been reduced to 40 percent in 1995. With successive additional monetary reforms, the rupee, since 1995, can nearly be considered a fully convertible currency at market rates. India now has a much more open economy. With these reforms, the Indian economy grew the overall amount of overseas investment to $5.3 billion from a microscopic $132 million in four years and today, the country is ranked the secondhighest destination for investment in the world, according to data from the United Nation Continental Trade and Development (UNCTAD). While there are few similarities and relationships between India and Nigeria, in terms of development, the two countries are far apart. India earned $37.4 billion from export of textiles and cotton in 2017. Textile and clothing exports between April and September 2019 stood at $18.56 billion. In 2000, the India government came up with the National Textile Policy (NTP), targeted at manufacturing textiles for global export. The policy was also aimed at injecting competition through the liberalisation of stringent controls and encouragement of Foreign Direct Investment in the sector. The Ministry of Agriculture and the Ministry of Textiles were given responsibilities to ensure that cotton and textiles exported reached
global standards. Multiple taxes were removed and incentives were given to investors. Less than two decades after the policy, the industry has made a lot of impacts already on the economy. The country’s textiles industry is estimated at $108 billion, contributing five per cent to Gross Domestic Product (GDP) and 14 per cent to overall Index of Industrial Production (IIP), according to India Brand Equity Foundation. Nigeria ranks 116 with 48.3 points on the Global Competitiveness Index and 131st on the World Bank’s 2020 Doing Business Index. Although this is an upward shift by 15 places from its previous position of 146, it is yet to match up with India which ranks 68th with 61.4 points on World Economic Forum(WEF)’s Global Manufacturing Index. In the World Bank’s 2020 Doing Business Index report, the country moved up 14 places to the 63rd position from the 77th position it held the previous year. On the WEF’S manufacturing index report, India was ranked 25th in growing innovation capacity. The Indian government launched the ‘Make in India’ initiative in 2014 to encourage companies to manufacture their products in India and it was strictly adhered to. In addition to this, the government provided an enabling business environment attractive to local and foreign investors in a bid to convert India into a Global Manufacturing Hub India’s economy is thriving on a single-digit rate of 6.75 percent which improves loan accessibility for manufacturers and business owners, while Nigeria operates a double-digit monetary policy rate of 13.5 percent. Report from India Brand Equity Foundation (IBEF) states that the manufacturing sector of India has the potential to reach $1 trillion by 2025 and India is expected to rank amongst the top three growth economies and manufacturing destinations of the world by the year 2020. https://ssl.gstatic.com/ui/v1/ icons/mail/images/cleardot.gif After 1991, however, the licensing of India’s pharmaceutical industries was abolished and movement of international capital was liberalised, according to Shikha Chauhan and Indra Giri of Project Guru. Following liberalisation and support in the form of incentives, 70 percent of India’s demand for bulk medicines was fulfilled by Indian pharmaceutical companies. Due to an adoption of new technologies and modern scientific approach, the Indian pharmaceutical sector was ranked 3rd rank in the world in terms of volume and 14th in terms of value. A PriceWaterhouseCooper’s (PWC) report estimated that the value of the sector would reach $74 billion by 2020.
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